iPhone 3G - An Anticlimax?

Big news day today. So, there is indeed a 3G iPhone, cleverly called the iPhone 3G. It's quad-band and has got HSPA, GPS, support for Microsoft Exchange ActiveSync, and IPsec. And it's only US$199 for 8 GB and $299 for 16. This was probably the worst-kept secret in recent memory, but, then, the Belden/Trapeze rumors had been flying for some time as well. I'm concluding in the case of the iPhone, however, that the leaks were intentional - this is great marketing, and all that we've come to expect from Apple. The new handset will ship on 11 July, and will be available globally in more than 70 countries this year. Apple has, BTW, sold about six million of iPhone 1.0 - certainly no flop here, as many had predicted.

Apple is clearly gunning for the cell phone market the same way as they went after the computer market, with innovative products that delight the true believers. There have been plenty of complaints about the original device; there is no single handset that will make everyone happy, after all, but I'm willing to bet this one will do just that for a lot of people. Can they sell 25 million of these between now and the middle of next year? I think they can - especially at that rock-bottom price. And how about all those applications we're about to see? A few will likely be both useful and unique to the iPhone, driving at least some sales.

OK, a couple of initial questions: Does AT&T have enough HSPA capacity so as not to disappoint those expecting a truly desktop-like experience? The introductory demo at Apple's Developer Conference showed little difference in performance between HSPA and Wi-Fi (which remains in the new phone). Can we expect such in typical use? I doubt it and, as usual, I don't expect AT&T to guarantee any particular levels of service. But HSPA is regardless much better than EDGE.

And how will the competition react? Just as unlimited cellular voice service at $99/month put a ceiling on that class of service charges, so will the iPhone put a ceiling on handset prices. BlackBerry isn't really impacted at this point; corporate users will still flock to that service and the physical keyboards on those products. But price pressure they will indeed feel.

And I don't expect this announcement to impact Google's Android or other LINUX open-source efforts. The Symbian and Windows Mobile folks will need to do a little thinking, however. Cost reduction is now the name of the game, and there will be very few new handsets priced above $300 announced over the next year. Squeezing cost out of these products has always been important - and systems software is the last frontier here.

All around, then, this announcement is an anticlimax, more evolution than revolution. But the new iPhone 3G is, regardless, a pretty cool product that will accellerate the momentum that Apple started only - hard to believe - about a year ago.