| The next phase of Apple’s plan to reinvent itself as a consumer electronics company — the iPhone — was unveiled by Apple CEO Steve Jobs, at the recent annual Macworld Conference and Expo in San Francisco. The news received a warm reception from Wall Street and consumers alike. The touch-screen-controlled device plays music, surfs the Internet and delivers voice mail and e-mail differently than any other cell phone.
Iintroduced by Jobs during his keynote speech the iPhone was accompanied by Apple TV, a set-top box that streams video from computers to television. Jobs also announced that the company will get a name change — from Apple Computer Inc. to just Apple Inc. — to better reflect its transition to a full-scale consumer electronics manufacturer and retailer.
The iPhone is less than a half-inch thin — slimmer than almost every other phone on the market. It comes with a built-in, 2-megapixel digital camera, as well as a slot for headphones and a SIM card. The phone automatically synchs the user’s media — movies, music, photos — through iTunes on computers running either Mac OS X or Microsoft Corp.’s Windows. The device also synchs e-mail, Web bookmarks and nearly any type of digital content stored on a PC.
The phone supports Wi-Fi and Bluetooth wireless technology and can detect location from GPS satellites. It also can send and display e-mail and text messages. Apple is partnering with Yahoo Inc. on Web-based e-mail and Google Inc. on maps.
To make a call, users can tap out the number on an on-screen keypad or scroll through their contacts and dial with a single touch. To zoom in on a photo or Web site, tap twice. To zoom out, tap once with two fingers.
“It works like magic,” Jobs said. “It’s far more accurate than any touch display ever shipped. It ignores unintended touches. It’s super smart.”
Tim Bajarin, principal analyst with Creative Strategies, said the iPhone appears poised to revolutionize the way cell phones are designed and sold. “This goes beyond smart phones and should be given its own category called `brilliant’ phones,” he said. “Cell phones are on track to become the largest platform for digital music playback, and Apple needed to make this move to help defend their iPod franchise as well as extend it beyond a dedicated music environment.”
But it remains to be seen whether a $500 phone and some other gadgets will be enough for the company to remain a Wall Street darling and sustain the market dominance enjoyed by iPod, Apple’s iconic digital music player. Others wonder whether the phone — despite its slim elegance and wide-screen monitor — is priced competitively.
“Prospects for the new device are positive, but it is not a given that Apple can win against a slew of wireless providers, phone manufacturers, and Microsoft, all of whom are similarly motivated to raise their flag on the same territory,” said James L. McQuivey, a communications technology professor at Boston University.
The phone’s name is also an issue. Linksys, a division of Cisco Systems Inc. unveiled its new iPhone line of Internet-enabled phones in December. Cisco has owned the trademark on the name “iPhone” since 2000.
Despite that uncertainty — and that the iPhone won’t be available until June — Apple shares jumped $7.10 to close at $92.57 on the day of the announcement, while, shares of other phone makers slid.
Apple’s iPod currently commands about 75 percent of the market for downloaded music and portable music players. The company’s iTunes digital media store has sold more than 2 billion songs, 50 million television episodes and more than 1.3 million feature-length films, catapulting iTunes beyond Amazon.com for digital media sales.
Initial projections for the iPhone are relatively modest.
The company hopes to sell about 10 million units in 2008, or about one percent of the market. About 957 million cellular phones were sold in 2006.
Apple TV, which a price tag of $300, has a 40-gigabyte hard drive and stores up to 50 hours of videos, 9,000 songs or 25,000 photos. It will be available this month.
Phil Schiller, Apple’s senior vice president for worldwide marketing, said Apple isn’t getting out of the computer business, despite the name change. It’s simply broadening its business. “We sell Macintoshes and will continue to do so and are very happy with that business,” he said.
The phones, which will operate exclusively on AT&T Inc.’s Cingular Wireless network, will start shipping in June. The 4-gigabyte model will cost $499, while an 8-gigabyte iPhone will be $599.
Cingular would not disclose details of its financial arrangement with Apple. But Glenn Lurie, president of national distribution for Atlanta-based Cingular Wireless, said Cingular’s board agreed to the collaboration without even seeing a prototype, based on Apple’s reputation for innovation.
“We looked at this and said, `Apple is so good at what they do,’” he said. | 