While everyone has pretty much accepted that Apple will eventually release an iPod phone device of some sort, an equally divisive debate is raging among analysts and pundits.
Whether or not they should?
On the one side you have analysts and mainstream journalists who argue that Apple needs to counter the threat to its iPod dominance by the ever-increasing number of mp3 capable cell phones. This is indeed a valid point, although somewhat hard to quantify. At the moment, market share of portable players does not include cell phones. The other problem is that it’s impossible to determine how many music playing cell phones are actually used to play music.
On the other side of the coin, you have what seems to be a consortium of mac faithful, both journalists and bloggers that seem openly hostile to the idea of an Apple cell phone. They argue that the cell phone market is an established market, and therefore a tough market to crack, and that manufacturers have to cede too much control of the device to service providers. The other argument often bandied about is that releasing an iPhone would cannibalise existing iPod sales.
I have to say, I find many of these arguments silly. It seems that every time Apple tries to think outside the box and expand its product portfolio, people seem to panic, as if this will somehow affect them personally, or that the company will suddenly stop developing computers, its core market. Like I said, silly.
The idea that iPod sales would be cannibalised makes little sense too, as either way Apple is making a sale. The same arguments were used when the iPod mini and the shuffle were first released and neither of these had a negative impact on iPod sales. As for the phone market being established, that may be true, but it is also crying out for some innovation, especially when it comes to the user interface. Most modern cell phones have dire user interfaces. The greatest multi mega pixel cameras do nothing to combat the click fest it often takes just to write a simple text message. If anyone can revolutionise consumer expectations of what a phone should be its Apple. An Apple cell phone could revitalise the whole industry, which has been stagnated, not by falling sales, but by the fact that when it comes to cell phones, consumers will buy anything. The market may be crowded but aside from the odd exception, current phone designs hardly excite. Certainly not the way an Apple product launch does.
For my own part I think Apple needs to release a cell phone. Not just to counter music capable phones, but to have a phone at all. Steve Jobs has always rebutted calls for an Apple branded PDA by claiming the future is in cell phones. And he was right. The PDA market is constantly shrinking, but the cell phone market has exploded. I’m not sure whether or not people realise just how big the cell phone market is. According to wikipedia, the current total number of iPod sales as of Q4 2006 was 67,635,000. By contrast the total number of cell phones sold annually is expected to be over 800 million by the end of this year – for this year alone. By 2009 the market is expected to be 1 billion handsets sold per year. That’s a huge market. If Apple could tap even a small percentage of this market it could double the sales of its music division.
It’s quite an achievement for Apple to have excited this much debate about a possible product. Analysts and technology leaders are looking to Apple for direction in a crowded market. I read recently of someone using this argument as a negative reason as to why an Apple phone is a bad idea, but I strongly disagree. Only a short few years ago everyone had pretty much written the company off. The global icon of Apple could and should do incredibly well in becoming a big time player in the cell phone industry. You don’t see the launch of the latest Nokia or Motorola handset being done in the style and flash of an Apple launch. And Apple knows this. They know they can bring their huge brand weight to a massive potential market and make boat loads of cash. If anyone can shake up the cell phone market it’s the company that took over the world with a simple little music player.
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