The Unloading Zone: iPhone iFlops but it Could Rise From the Ashes...

Apple fanatics were stunned this week when Apple announced a $200 price drop on the 8GB iPhone and stated that they were (gasp) phasing out the 4GB version. Personally, I wasn't the least bit surprised. Feature for feature, the iPhone was overpriced, over hyped, overly locked down, and the only thing brilliant about it was it's initial marketing kickoff.

To add insult to injury, Apple also announced new and improved versions of the iPod. Wasn't the iPhone supposed to make the iPod obsolete with music AND wireless phone AND Internet in one device?

And my prediction from earlier this year came true: the iPhone would be the most expensive brick other than gold before the end of the year. But is the iPhone truly dead? Here's my latest predictions for the iPhone family this year.

Steve Jobs made a lot of money and a lot of people nervous when the iPhone was launched. Now that the luster has worn off and carriers are bringing in REAL Smartphones, He's taken a good kick in the teeth. But like a good politician, he'll regroup and relaunch.

His first order of business was to price-position the existing 8GB iPhone where it should be at $399. That's a comfortable price-point for iFanatics. It also more closely aligns the iPhone and it's features against a more reasonable field of competitors. But that's not the end to the price adjustments. Let it be said here first that well before the end of the year, ATT will be giving $150 to $200 additional off the iPhone with the signing of 2 year contract. ATT and Apple's experiment into high price/no rebate is hopefully over. Without carrier subsidies, only the rich and stupid will have the top end phones.

Next, he had to quickly placate the iFanatics who stood in line like lemmings for 2 weeks to ensure they got their iPhone FIRST. Apple fanatics are almost cult-like. As High Priest, you don't denigrate your followers who are no doubt being laughed at by all their non-Apple friends today. He made that move yesterday by offering $100 in store credit to anyone who purchased the iPhones at the old Retail Price. With his markups, that's about $60 in actual cash he's giving up. Will it apply to the insane who paid $1100+ on eBay to be the first on the block with an iPhone? Who cares, they obviously don't need the money. But this gesture shows the iFanatics that STEVE cares about THEM and loves them. So they'll keep buying from him.

With the iPhone soon to be at an adjusted price which is reasonable, Jobs has three options: either leave the single iPhone where it is and concentrate on the iPod family as he is apparently doing now, open up the software on the 8GB iPhone OR release iPhone2. iPhone2 will be an expensive phone and hopefully be worth it. His main competition is HTC who makes the T-Mobile Wing and the could-be-released-as-soon-as-tomorrow ATT Tilt 8925 Kaiser, Both are feature-rich (the Kaiser more so), have WiFi, WM-6, and the Kaiser even has a GPS antenna built right in. Download your maps (from who I don't know yet) and you supposedly get turn-by-turn vehicle navigation on a 2.8" color screen.

If Apple wants to play in THAT market, they need to remember it's the business people who are the target market and build a phone accordingly.

The easier and cheaper option would be to follow the Palm model and open up the current iPhone to 3rd party software and freeware. Palm's early success can be directly attributed to THEIR Fanatics who generated so many useful and interesting applications for the Palm Pilots that Palm rocketed past better made or Windows based competition. The same cult mentality applies to Apple and early Palm users. Jobs could ride the iPhone for quite some time just by letting his fanatics make the iPhone more powerful and attractive. It will let the iFanatics in on the fun. And it wouldn't cost him a dime in development costs.

This third option above is one I think the most likely of the three presented, but Apple has fooled me before. Only time will tell. But at least for now, few are focused on the iPhone and all eyes are tuned towards The Kaiser. Now if ATT would only replace the Samsung Blackjack with the Samsung 600i (same thing with WiFi and WM-6), then all would be right with the world.

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