iPhone: The Day The Cell Phone Died?

If you listen to the Mac O’Philes the iPhones upcoming release this Friday spells gloom and doom to all non-iPhone cellular device manufacturers, and indeed the entire cellular industry will soon be on it’s knees worshipping at the altar of Steven Jobs.

Interesting story by Jordan Robertson I read on My Way News today points out that the hype has reached such a level that any negative news sends the market into a tailspin:

It goes on sale this Friday, and die-hard Apple fans are expected to line up overnight or longer outside retail stores to get their hands on an iPhone for either $500 or $600.

But skeptics wonder whether even the most innovative product could live up to the iPhone’s lofty expectations – and whether the pre-launch anticipation has spiraled too far out of control. Scrutiny of the product is so great that any small disappointment could send Apple’s stock plunging, experts say.

Technology analyst Mike McGuire said Apple fans have elevated the status of the iPhone to unprecedented proportions – “somewhere between electricity and sliced bread.”

“The blessing is you’ve created an amazing amount of demand. The curse is you have a very high level of expectations to meet,” said McGuire, a research vice president with Gartner Inc. “If there’s a misstep, there will be a lot of gloating people in the industry.”

But the hype has also hurt Apple.

The launch is being so closely watched that Apple’s share price plunged more than 4 percent in a matter of minutes last month after a rumor about a delay was reported on Engadget.com, an electronics Web site. The rumor was quickly corrected by Apple, and the stock largely recovered by the end of the day.
“That just shows how powerful this has become,” said Chris Hazelton, analyst with market researcher IDC, who said the amount of hype is “almost dangerous to the success of the device.”

No one can deny Apple’s ownership of style and the simple elegant user interface, but the key difference here is that the iPhone will not only come with a hefty price tag but with a two year service committment to AT&T as well. Regardless of how cool the device is it’s performance will be inextricably tied to AT&T’s 2G cellular data network. If this version disappoints, by the time the 3G version comes out next year the user base could be disillusioned and skeptical, not to mention still  a year short of being eligible for a hardware upgrade for another year.

My view is that Apple has entered a market they know nothing about, tied themselves to a single sales channel, overhyped their product, and overestimated the “Wow!” factor they are counting on to drive sales.

All things considered, I’ll wait this one out. If the iPhone is still around in a year or so when I’m eligible for an upgrade, I’ll give it a look.

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