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June 28, 2007


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don  Williams

I think your right on. This thing will be huge, but the second version will be even bigger yet. Go Apple!


Fully agree, especially the trojan horse aspect. I'm sure Apple studied the Origami/UMPC flop, and said there's a much better way to build, market, and sell a mobile, pocketable "computing" device.

So Apple put in the ipod to bring immediate familiarity. The phone brings familiarity but moves beyond in simplicity, AND (very key) brings in the paying-for-service aspect (not found in the iPod). The third aspect is the truly something new, the thin client, always networked computer that will be fleshed out over time. Yes, other phones/pdas have had web access but they didn't make it known or really easy to use. I don't know how quickly Apple will build but Apple already showed what looked like an RSS reader at reader.mac.com (but now changed it just shows the iPhone clock screen), mentioned Leopard's Back to the .Mac feature that allows web access to your home computer, and put forth the iPhone web app message at WWDC that was pooh-poohed or overlooked by most.

The iPhone does not yet have the "computer" capability that you envision; it doesn't have writing/editing capability other than email and its bluetooth doesn't yet support a physical keyboard (or anything other than a headset). But there's still lots to learn about what people want in a pocketable computer.


Guess I should amend that last paragraph. To be accurate, the iPhone also has SMS and Notes in terms of general writing/editing capability.



Thanks. Agree about the full computer capability, and lack of Office-type apps. Should have made that clearer. Once a few million people are toting these about though, and it isn't seen as a threat, and connectivity's already been established to corporate email, doesn't it make perfect sense?

Bluetooth keyboard seems like a really obvious add-on, although I know that's not there yet either. Have read elsewhere that it also lacks any kind of cut/paste ability.

Still, this is Apple's way to convince corporate America that the Mac is good enough for general business use, and I'm sure that some of features I'm looking for will be that much easier if you can upload presentations from your Mac. Look how much Mac sales have been enhanced by people using iPods -- this will drive billions more in add on revenue.

Thanks for the note.


Thank you for the nice post.

Jeff at www.thenewsroom.com

Ah, but about life after Steve?




There's no doubt that Steve is the company. Look how messed up it got when John Sculley and Gil Amelio tried to run it.

Steve is not only the visionary, he is the charisma and the brand. Many companies in tech are like this, Apple just happens to be the number 1 example.

My recommendation is neither to look inside nor to conduct a traditional search when the time comes, but to look for a small to mid-size, but rapidly growing company started and run by a similar leader who is 30-something, cares about technology, has a similar feel for design, is passionate and opinionated with a lot of backbone, and to acquire that company in order to acquire its CEO. A company like Google about 5-6 years ago.

Regardless, the company will change dramatically, and not all transitions are successful, especially following someone of Steve's stature.


Your article is dead on!

The iPhone will revolutionize the computer industry. It will be very disruptive and will mark the rise of the third computer Era, the "Computer Devices Era", a post Mainframe and post PC Era.

As you put it, the Cellphone and the iPod are divergent devices, and although both have a computer inside, they are basically focused in doing only one thing.

The iPhone is a convergence device, like the PC was.

iPhone's differential will be its advanced user interface and its ability to leverage the network services. Not the Cellphone or the iPod functions inside it.

The PC will be the computer device at the office, sort of the "digital hub", as the mainframe became the server for the PCs.

Initially there will be at least 3 new computer devices: the handheld, at the living-room and at the car.

The iPhone will be "The Handheld Computer Device".

It allows the user to interact seamlessly with other computer devices and network services. This will become clearer over time as Apple deploys software updates.

The Apple TV will be the computer device for the living-room. The iPhone will eventually interact with it directly.

You can also expect a computer device for the car, that will also interact with the iPhone.

For example, you will see audio and video streaming between these devices, among other features.

Remember Sun's vision that "the network is the computer". The iPhone will represent the successful implementation of this vision.

A next generation iPhone will include support for 3G, 802.11n, Wi-Max and a webcam.

iChat functionality will certainly be incorporated in future versions, but it needs more bandwidth and a webcam for this.

AT&T is a necessary evil for Apple to enter the cellphone market. Note that HP and Motorola were used by Apple in the past, for iPod distribution and the iTunes phone.

In the future, the iPhone will bypass cellphone networks all together. Wi-Fi and Wi-Max will be widespread, and other carriers will be willing to partner as well.

Steve Jobs is the greatest IT visionary of all times and has a master plan that has been very successful and is still unnoticed by analysts and competitors.

I only disagree with your statement that Steve Jobs lost the battle of the Mac versus the PC. Please note that Steve Jobs was fired from Apple in 1985, just one year after the Mac was launched.

He did not have the opportunity to develop the Mac as a real contender to the PC, which was developed in response to the very sucessful Apple II. The PC only knocked out Apple in the 90's.

Without Steve, Apple lost its innovation edge.

The iPod was initially considered by many analysts as too expensive and a likely failure.

It was only sometime later, when the iTunes for Windows and the iTunes Music Store were launched, that the iPod became an unquestionable success.

Of course, Steve is today much more mature and dangerous to competition.

But still, Apple lost that battle, not Steve.

Abhishek Kumar

One truly intelligent article....made it an interesting read, though the concept is quite logical to extent that we may dub it 'obvious' :)

Looking forward to the time when the revolution truly sets in.
Of course the road will not be easy; becoz it means that other mobile players will move out of business, and we all know how inductive the opposition to change is!

Of course dear Microsoft is not gonna sit idle. Although Zune has turned out to be a failure, there is a lot of buzz about Microsoft's Surface Computer technology. Im sure there's something coming from Redmond.

As for the Jobs strategy...Ill sit with a blank head for now and see how things turn out. Its too soon to make any sort of a prediction. The game's just begun!

Nice to discover you on the web...will keep a checkout.

Sean Howard

f'ing brilliant, Paul.

You are the ONLY person I will read posts of that are this long.

And at the end I'm always looking for more.

Going back to read it again.


@Marcus - I prefer the term "synthesized device" to differentiate the iPhone from "convergence devices", which usually means a bunch of separate things in a single box, but without much thought as to how they are integrated to work together or manage and simplify workflow. The reason convergent products usually fail is that there isn't significant benefit to having them glued together versus as separate products. They don't become a unique product on their own, but always appear as multiple things. If the sum of the parts is significantly greater than the individual pieces, and the parts interoperate so seamlessly that they don't seem like separate parts, then they have been "synthesized" rather than "converged".

re: losing PC vs Mac battle. In 1984, Apple did not run as tight a ship as today. While trying to sell the Mac, they still were gearing up production to sell more Apple IIe and portable Apple IIc computers, while IBM was dramatically dropping prices to move inventory. At the same time, Compaq was coming into its own and producing better PCs at lower prices than IBM, and there were dozens, if not over 100 manufacturers making IBM clones. All the business software applications were released for IBM compatibles first, and business buyers felt more comfortable buying a machine based on an open architecture and which had the business apps they wanted. When the PC market was flooded with oversupply and a slumping economy, Apple got caught with its pants down, with major losses, major writedowns and major layoffs of people in late 84 through most of 85. Much of the company was demoralized as the Mac got all the attention, but it was the old stuff that generated most of the revenue. At this point, Sculley garnered sufficient political strength at the board to push Steve out. Thus, Steve lost the initial battle for market dominance of the Mac vs PC, and control of the company. While I admire Steve for what he's done, all of this is public record, and while Sculley may have lacked the vision and competence to run a company like Apple, Steve's business skills were also not ready for this sort of battle. No matter how much better the Mac was, the battle he set out to win in 1984 was not winnable. In fact, as painful as it was to watch at the time, I'd argue that the reason Steve is so successful and so much smarter about running Apple today is because of what he went through then.

I think we're pretty close to agreeing on the rest.

@Abhishek - I think it's an idea that's obvious in hindsight, but I think it is less "obvious" than it is "deceptively simple". If it was obvious, wouldn't most people be able to see it? The Surface Computer looks to me like consoles I first played video games on in bars in the 1970s (e.g. Pong, etc.) -- am I dating myself -- not like something useful as a modern computer. Perhaps it will find a niche for playing more up-to-date games in bars, but it certainly doesn't appeal to me as being practical for anything else. See Microsoft Surface vs iPhone. This link was posted in the Other Links section at the end of my article for those who already had at look at that.

@Sean - thanks. You are a loyal fan. Keep on reading.

Roger Anderson

What a love fest this is for Apple. Steve can do no wrong and everyone will be transformed into an Apple user without knowing it.

When do we start to hate Steve like we hate Bill? Should we just skip to that and save the steps in between?

Paul, put me in with Michael - a B- , marginally disruptive, not transformational, beautiful device.


Sorry Roger,

An ad hominem attack on my objectivity and credibility scores no points here. Nor does it score points against other commenters, if that's who you are referring to. If you have an evaluation based on facts, research, numbers, and/or a true understanding of what disruption is (or some other basis for evaluation, -- not all things stem from disruption), then please share it.

For the record, I respect Steve Jobs' accomplishments. I like that he cares about design and taking risks that have potential to change the world. But, my respect for him as an individual in no way influences my evaluation. His charisma and cult-like hold on the Mac faithful are reasons for a baseline market share that Apple will always get, and certainly influence the outcome, but they alone do not create success.

It's also true that he isn't infallible. Nor will everyone be transformed into an Apple user, any more than everyone will be transformed into a Microsoft user, or an Oracle user, or an IBM user. They're all great companies, with things to like and dislike about them. So, I don't get ridiculous comments like "love fest" and "hate Bill", and I'm not sure who you think you influence with such statements.

So, with that, your B- is meaningless. Do you know how Mike came up with his scoring? Do you think there is something in error in my analysis? A gut feel, or an emotional reaction to other people's slightly over-the-top enthusiasm doesn't equal a credible assessment of disruptive potential, or of likely market success.

Suzanne Obermire

Isn't it great to be excited about a technology product again! I want an I-Phone!!!

Thanks for the insight. Had to read to the end :)

Roger Anderson

I'm not sure why I have earned your disrespect but so be it. If my B- is meaningless it really does not matter. I am not trying to influence anyone's opinion. I am just giving mine. If that is not allowed or desirable then just say so. Isn't the whole blog thing about wanting to open the floodgates of opinion?

Where did I attack your objectivity or your credibility. You are obviously capable of writing and expressing your opinion quite well. I happen to disagree with it but time will tell if I am wrong. If I am, what then? If you are, what then? Perhaps this is just your "contrariness" way of expressing yourself.

My views come from my experience of watching, as you have, this industry and others like it. Your analysis is based on an error - the iPhone is not transformational. You want to see it as such and so you built your argument on a false assumption. To be transformational it must make prior art and skill obsolete and it does neither. It raises the bar, it makes an improvement, and it is a great new product. Just as the iPod was not transformational, it was a substantial improvement on an existing technology.
I did read Michael's analysis and as I said, I agree. Do I have to "quantify" my response to be valid if I disagree while those who agree with you get a free pass? Did I miss a note in your about that says all comments must include quantitative substantiation to be excluded from acceptance?

If this post is meant to show your expertise in the domain then time will tell if it was effective. I on the other hand am just commenting on my take of the comments and the post. If this serves to lessen my public brand then I will just have to live with that - ad hominem and all.



Ok, time out.

My reaction is to your original snarky put down, I assume of other commenters here. When you use emotionally-laden words such as "love fest" and "hate Bill", etc., you are deliberating attacking without reason, and without any back up. This is the sophomoric sort of comment I expect from teenagers, not from Phd's who hold patents in molecular biology.

If you are going to throw that kind of language around, then regardless of preemptive guidelines about how to write comments, my answer to your question is "Yes, I demand back up". No question, there are many many Apple and iPhone enthusiasts out there, but they haven't said anything nasty about you, so I guess if I let them have a pass because they're excited -- it is what it is. But negativity doesn't substitute for analysis.

It isn't that you disagree. It's how you disagree. And, as a Phd I assume you are smart enough to understand rhetorical devices. The point of an ad hominem attack (e.g. "Bill haters") is to deflect attention away from logic and from the main discussion, and hope no one notices while you're taking someone down a peg with insults rather than reason.

The point of my blog is to try to educate people about a different perspective, a different way of understanding innovation and why some things succeed and others don't. Why does it matter? Because that's how knowledge advances. We analyze, we disagree, we examine why, and we look at the evidence after the dust has settled to better understand which theory best explains the events and outcomes and therefore offers predictive value. On that basis, I'm happy to debate you.

Clearly we disagree about what Transformational means -- you say black, I say white -- but again, I'm looking at it through the prism of market success and how it got there. No product ever enters a market that is already crowded with incumbents and takes an 80% share (e.g. the iPod) without something about it being significantly different -- not better, necessarily, but almost always transformational/disruptive.

Does iPod and/or iPhone technology obsolete what came before? Does it force the market to compete on a different playing field? Yes, in the same way that graphical interfaces replaced character-oriented ones, and in the same way that computers replaced pencil and paper. On that basis, I believe they are both transformational, and time will tell.

I absolutely want people's opinions and participation in a conversation, and I hope you'll be passionate in defense of your argument, but let's keep it about the discussion at hand, not about the personalities voicing an opinion.



First off, Great blog!

I am an MBA student assessing the introduction of the iphone and Apple's use of innovation as a strategy for comp. adv. and your insightful article has clarified alot of my research thus far.

Paul, can I ask, what do you think will be Apple's biggest hurdle in attempting to achieve great success (i.e. 1% global market share predicted buy Jobs for end 2008) ? Besides the issues with AT&T ?

Have they truely overcome the inventory woes of the 90s? Are there any other internal processes that may act as rigidities to achieving these forecasts?

I would greatly appreciate any help you can provide with answering my questions and/or recommending any sources where I may find additional information concerning Apple's internal environment.

Kind regards,

MIke Elek

Very interesting post.

A new development that really begs the question “what is Steven Jobs up to” is the reports that a new software update from Apple caused phones to stop working if owners installed new applications (http://www.nytimes.com/2007/09/29/technology/29iphone.html).

This type of paternalistic behaviour flies in the face of producing a consumer friendly general purpose computer. Plus, it is reminiscent of the time where Macintosh tightly controlled their platform and stagnated, while Windows welcomed third parties. As a result. the greatly inferior Wintel platform captured all but the entire personal computer market.

I would be interested in hearing your take on this, especially given your strong opinions on Maytag’s “brandicide” through mistreating their loyal customers (http://thewaythingsare.typepad.com/antimarketer/2006/10/brand_mismanage.html).


Small Business Answering service

Well, after 3 years, what do we have now? An Iphone 4 rich with new features. I can say iphone is a success for apple.

Ben Cliff

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