The Unloading Zone: Why the iPhone Could Destroy the Mobile Phone Market

The iPhone has the potential to destroy the retail mobile phone market as we know it today....and for no good reason.

First, about the iPhone. It's nothing to write home about, especially for the money. Among its shortcomings:

The battery is not user-replaceable. If/when the battery goes bad, you have to send your entire phone, complete with your address book, contacts, files, music, etc to Apple for replacement. This also means you can't have a backup battery charged up and ready for use. Are you willing to be without your phone for 2 weeks while Apple changes out your battery with an over-priced replacement?
The iPhone is bragged about as a great internet surfing tool, But it doesn't have 3G, the fasted cellular web connection today.
The software is locked down. Don't look for any cool 3rd party applications to make your iPhone even more useful.
It is not compatible with MicroSoft Outlook, only THE most popular email/contact manager software on the planet today.
The iPhone released yesterday is not the iPhone they hyped at the Consumer Electronics Show. So many people complained about other missing features that they retooled it prior to release. TRANSLATION: a new iPhone with a lot more features will be out by Christmas and you'll be stuck with an overpriced brick.
That's enough to establish the iPhone is not worth the price. If you want more reasons, visit the forums at places like CNET. They have thousands of posts on the shortcomings of the iPod.

OK, so we have an overpriced/under-featured phone with people lining up in front of retailers two weeks early to make sure they get one. I checked eBay the day of the release and there were over a thousand people selling iPhones for $700 to $1000.....and they were selling.

So who are these lemmings? They're the people who believe Steve Jobs is God and that everything Apple makes is the best on the planet regardless of the facts. And they're the people who simply HAVE to have the latest status symbol. And they're people afraid to look stupid by NOT buying one. I'm not bashing Apple: to the contrary, the marketing hype they created is a work of art. And in fairness, there's the other crowd who sat in line for 2 weeks awaiting the release of Windows Vista, although the lines were shorter and these people either had no life, are idiots, or both.

And the hype continued today: "att's computers bog down under the load...some iPhone buyers had to wait hours for activation!!!!!"

When you read the fine print, there weren't a significant amount of these folks and almost all the cases involved switching their existing number into the iPhone: people getting new att phone numbers had no real problems.

And why the rush to buy? I never read or heard ANYTHING that said the iPhone was on allocation, was in short supply or limited quantities. Kudos to the Apple marketing team again.

So to my point, how will the iPhone launch, if as successful as it apparently is, destroy the retail cellular phone market as we know it today? Its because Steve Jobs did do one revolutionary thing with the iPhone: he set the price and said no discounts.

When you go to pick up your "free" cellular phone, do you really think it cost nothing to manufacture? The phone service carrier is subsidizing the price: basically paying for the phone for you, based on a service commitment. This costs them a tremendous amount of money. If Jobs is successful, they are all going to rethink their subsidy policy.

There will always be "free" mobile phones, but those that cost you today $200 to $600 are prime targets of reduced/eliminated subsidies. Want to see what your current mobile phone REALLY costs? Go to eBay cellular phone section and look for your phone in the "unlocked" version. Unlocked means it can be used on any compatible system and there is no carrier subsidy. You'll be shocked at how much your "$19,95 Motorola Razr" REALLY costs. I know what I paid for mine: $599 two years ago because I had to have the first Razr on the block. Early adopters of new technology know the price is going to come down but I really hosed myself with the Razr. It did make me look cool for the first few months before the price plummeted, though. But not as cool as when I bought my first car-mounted cellular phone (handhelds didn't work back then) in 1985. I had a Mazda RX-7 then and the handset assembly took up half the passenger's leg room. But when you pulled up to a traffic light pretending to talk on your phone (bills averaged well over $1000/mo back then) next to a car with a pretty girl.......... I got screwed with my first phone and my last phone, the latter financially, the former......it was worth every dime.

If you read CNet's coverage of the last wireless phone show, you probably noted that the best, most powerful mobile phones are only sold in Europe and Asia. Here's a website that will show you what we're missing. I've never done business with these folks and endorse them in no way. They do have a great on-line catalog of all the import-only unlocked phones though. Go to www.wirelessimports.com if you're interested.

Sincerely, Mr. Unloadingzone

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