Apple should pull the plug on the iPhone

Market Watch ^ | 7:18 PM ET Mar 28, 2007 | John Dvorak

[The_Victor]

Commentary: Company risks its reputation in competitive business

BERKELEY (MarketWatch) -- The hype over the unreleased iPhone has actually increased over the past month despite the fact that nobody has seen or used the device. This, if nothing else, proves the power of branding and especially the power of brand loyalty.

It's the loyalists who keep promoting this device as if it is going to be anything other than another phone in a crowded market. And it's exactly the crowded-market aspect of this that analysts seem to be ignoring.

Apple Inc.'s past successes have been in markets that were emerging or moribund. Its biggest hit has been the iPod. But let's examine what happened here.

First the MP3 player business was segmented and unfocused with numerous players making a lot of cheap junk and not doing much to market any of it.

Apple does what? Advertise. Gosh, what a concept.

Then there was the online music distribution business, again unfocused and out-of-control with little marketing and a lot of incompatible technologies. So Apple comes in with a reasonable solution, links it to the heavily promoted iPod and bingo. A winner.

It advertises on TV, on billboards and on the Internet. Within no time the company takes over the business that would probably still be languishing without Apple.

Thus Apple does what it does best. It produces a jazzy product and promotes it like any good business should do. And in the process manages to get a high margin.

This is nothing more than the fundamentals.

[milwguy]

Iphone will be announced within two months and it will rock the cellphone world. Say bye to your Blackberry, RIM and PALM will be history when Apple announces their phone.

[Red Badger]

What will make the iPhone any better than the current crop of phones, Blackberries, etc?..........

[js1138]

If John Dvorak says it will fail, it's time to buy stock.

[The_Victor]

Iphone will be announced within two months and it will rock the cellphone world.

Apple announced the iPhone months ago. Do you release?

[The_Victor]

Do you release? ===> Do you mean release?

[billybudd]

This guy's industry analysis is just embarrassing. I would expect better from a 5th grader.

[Ieatfrijoles]

"Telephones are for emergency purposes only."bukowski

[MARKUSPRIME]

I agree. Im buying one on launch day.

[js1138]

The Blackberrys are being bought by corporations, and I suspect they will be reluctant to spend many hundreds of dollars for phones that don't integrate with corporate security.

[detch]

It's obvious Dvorak is not familiar with this phone and how computer friendly it is, rather than Cingular, Verizon, Sprint friendly -- as they are NOT!!!!

The great thing about this phone is that Cingular agreed to sit on the sidelines and let Apple dictate EVERYTHING about this phone.

iPhone will blow the top off the others, with no way to catch up in the near term.

[HEY4QDEMS]

These phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months.

Yeah but are the other phone y3k compatible like the iPhone??? ;^)

[blues_guitarist]

"Apple should pull the plug on the iPhone"

--- John Dvorak

Well, he ought to know when to "pull the plug on something!"

QWERTY!!

LOL!

[bwteim]

"If John Dvorak says it will fail, it's time to buy stock."

He recently tends to be wrong more often than right; perhaps sitting too close to his monitor for decades has finally gotten to him.

[montag813]

What will make the iPhone any better than the current crop of phones, Blackberries, etc?..........

It LOOKS cool. That's it. Of course it doesn't run Office, or hold customized inventory databases and apps, like my Palm does. And my palm also plays mp3's of course, hundreds of them with my 4GB SD card and pockettunes. But the Palm doesn't look as COOOOL. Yawn. I am so bored with "Apple chic".

[SlowBoat407]

What Apple risks here is its reputation as a hot company that can do no wrong. If it's smart it will call the iPhone a "reference design" and pass it to some suckers to build with someone else's marketing budget. Then it can wash its hands of any marketplace failures.

And that, sir, is why you are a market writer and Apple is a thriving, growing company. They are willing to take risks that seem to frighten you, even from afar.

[LexBaird]

Dvorak is the Dick Morris of computer pundits.

[discostu]

Currently nobody knows how computer friendly it is, only Apple employees have even touched the thing. All you've really got are Apple's promises. The core of Dvorak's criticism is true, Apple is entering a high competition well saturated market with much lower margins than they're used to getting. I'm not convinced that means they're going to fail, but it's not going to be the coast they had with the iPod.

[HEY4QDEMS]

It does have some cool features.

If you go to a local MAC store, you can see a demo. One of the things I thought was cool was it's "orientation awareness" when watching a video clip, viewing photos, or using the camera, rotate the device 90^o and within seconds the image rotates to right itself.

[js1138]

I'm not sure what you mean by recently. I've been watching him since the early 90s. things like the internet will collapse from overload, and so forth.

I suppose he has been right on small issues, but I tend to remember the big ones.

I do believe tha iPhone will have trouble getting adopted by big business. Probably the same people who buy iPods will buy it. My wife wants one.