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Apple Readies iPhone For Release

Apple Stakes Its Future on an Expensive, Unproven Gadget

By Mark Huffman
ConsumerAffairs.com

June 26, 2007 

The iPhone does so many things that you tend to forget that it actually makes phone calls. It uses the Cingular – now AT&T wireless – network to send and receive calls, just like any ordinary mobile phone. But at prices starting at $499, the iPhone will need to do a lot more if Apple loyalists are going to spend that kind of money, analysts suggest.

Apple has positioned the iPhone more as an Internet device than a telephone. It has provided rich HTML email, web browsing, searching, and maps. It uses a touch screen interface for most functions, just like a computer.

In fact, users will place phone calls from the address book just by pointing to a particular contact.

Apple says the iPhone syncs with the address book you already use on your computer — Address Book or Entourage on a Mac, or Outlook or Outlook Express on a PC. If you keep your contacts on the web using Yahoo! Address Book, iPhone can also sync with them.

The iPhone is also an electronic organizer or daytimer. Using its built-in calendar, iPhone lets you check appointments using your finger as a mouse. iPhone uses iTunes to sync with the calendar application you already use on your computer — iCal or Entourage on the Mac, or Outlook on a PC — just as it does with your contacts.

In fact, Apple iTunes is a major beneficiary of the iPhone, since you can’t use the new phone without an iTunes account. The account is required, regardless of whether you plan to use the phone to play music or videos.

The iPhone comes equipped with a 2-megapixel camera and a 3.5-inch display. It uses iTunes to sync photos from iPhoto on a Mac or Adobe Photoshop Elements, Adobe Photoshop Album, or any picture folder on a PC. If you were so inclined, you could carry thousands of photos on your phone.

Apple is especially pround of the iPod feature on iPhone, calling it “the best iPod ever.” It comes with a 3.5-inch “widescreen” display for music, TV shows, and movies you have in your iTunes library.

But despite all the gee whiz features, there are skeptics.

The Washington Post reports the phone does not work on AT&T's fastest network, which runs on so-called 3-G technology. It's possible Web surfing with the iPhone could be, at times, frustratingly show – at least slower than on other, less expensive phones.

Meanwhile, other gadget enthusiasts maintain that the first version of any new technology is usually not going to be as good as it will eventually be.

Then, there’s the price. At $499 -- or $599 for the more-memory model -- it’s definitely a luxury purchase for most young people, Apple’s demographic of choice.

On the other hand, diehard Mac fans have never displayed much price sensitivity and appear willing to sacrifice performance for trendy design -- sort of like Prius owners.

As we reported in January, the market research firm iSuppli predicts Apple will quickly cut iPhone's price, saying the profit margin at the introductory price is abnormally high.

Apple’s stock price has skyrocketed in the months leading up to Friday’s iPhone debut, but some on Wall Street are bracing for disappointment. Apple has set sales expectations very high, saying it plans to sell 10 million units in the next year.

While market analysts say Apple may sell as many as 200,000 phones in the first two days and as many as 3 million in the second half of the year – that may not be good enough to satisfy the investors that have pushed Apple stock over $120 a share.

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