iPhone is pure eye candy, say analysts

Mind you, they haven't been given their free sample yet

Analysts are already questioning if Apple's much vaunted music phone will have mass-market appeal.

In one of the most hyped launches of the year, Apple's iPhone finally hit the streets of the U.S. amidst a crescendo of comment, criticism and fervour.


The entry of technology giants such as Apple into the mobile space has come as a massive wake-up call to the mobile industry.


The high-end iPhone device, combining mobile and music technology, has so far wooed analysts and consumers with a sleek design and even more enticing, user-friendly Apple end-to-end experience, a quality that most mobile content users are unfamiliar with.


But the success of the device – Apple aims to sell 10 million devices by 2008 - is dependent on hitting the right note with people looking to upgrade their MP3 players or smartphones, but is unlikely to strike a chord with average mobile phone users, say analysts.


One of the largest barriers to mobile phone owners buying the device is the hefty price tag of $499 (for a 4GB device) with the larger memory version (8GB) available for $599, with AT&T's lofty price plans starting at $60 per month.


The elevated price may deter mobile phone users looking to change their phones because "it is a lot of money to invest, [consumers] need to want the device and exploit all the capabilities, or [need to] want a device to show-off," said Carolina Milanesi, research director for mobile devices at Gartner.


"It will not replace a phone, they will buy it to replace an iPod. The iPod side of the device is fantastic," said Milanesi who admitted that she'd been impressed with the device, particularly the user-interface and ability to crawl album covers, though remaining sceptical of the virtual keypad.


Matt Hatton, program manager, wireless research EMEA at Yankee Group agreed that the high price of the phone is likely to impede mass-market appeal.


"You can have multiple music players but not multiple phones," said Hatton.


Nonetheless, the iPhone selling as a fashion accessory is not to be underrated, especially in European and Asian markets, where releases are planned for the end of the year. "In the U.S. market people don't spend money on phones. In Europe, fashion status is more important," added Milanesi.


Stephen Hartley, analyst at Ovum also argues that the iconic status of the iPhone will help justify the price tag.


"For the consumer the iPhone is expensive and technically not unique. It is being sold as iconic rather than simply functional, so the high price will have little impact in the short term," he added.


To capture on the originality of the product, Apple and AT&T need to be proactive in releasing new products and services in the wake of the initial iPhone launch says Gartner in a research note. A cheaper version is necessary within the next nine months.


Whether or not the device appeals to the masses, the phone will help boost the smartphone market "by showing the potential of content manipulation," said Milanesi.


The device may also have a knock-on effect for mobile content.


Scott G. Silk, CEO of Action Engine said that finding and downloading a song on the iPhone takes less than five taps compared to a music download taking typically between 18 to 39 clicks.


But mobile music has failed to live up to its expectations, with many choosing to sideload music from PCs to mobile devices as opposed to buying tracks over the mobile network.


Despite Nokia and Sony Ericsson selling more than 130 million music phones in 2006 (versus 46.4 million iPods), mobile music revenue will only reach €1.47 billion in 2011, growing from €166 million in 2006 according to Screen Digest.


A further criticism resonating from the mobile community is the speed of AT&T's EDGE network, in comparison to faster 3G networks, which will slow down web browsing.


Steve Jobs himself admitted yesterday that browsing could be faster. "Where you wish you had faster speed is ... on a Web browser," Jobs said, according to the Wall Street Journal. "It's good enough, but you wish it was a little faster."

The device however can be used in conjunction with WiFi hotspots to enable faster browsing.

But as most people agree, the proof is in the pudding and it will be up to the American public to decide if the reality of the iPhone is going to live up to the hype.

 

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