EDITORIAL: Why Gizmodo is wrong
When the iPhone 3GS was announced, there was much rejoicing in the land of AppleFanboy. This was quickly followed by cries of agony and despair when the denizens of AppleFanboy discovered how much it would cost them to experience the joys and wonders of the new hotness. There was much gnashing of teeth and bemoaning of fates and whoas of me’s. To which Gizmodo posted an excellent rebuttal:
Have you read this yet? If not, please click the link and do so, then come back and read my rebuttal.
I agree that we all signed up for the two year contract. I also agree that we knew that the price we paid at the time was the price with subsidy, and that it would lock us into the Death Star network for two years. I also agree that this is how things have been in the cell phone industry since I don’t even remember when (and I’m old enough to remember when cell phones were roughly the size of a literal brick). What I have a real problem with is how much this is in direct conflict with how Apple has built their little multimedia empire.
Apple has created a brand cachet around its products that are unequaled by any other consumer products company. At the end of the day, an iPod/iPhone is no different than a RAZR or a Samsung MP3 player or a VCR – it’s a piece of spec equipment that has been subcontracted out to a Chinese manufacturer to piece together at the lowest possible price. Apple has been able to use superior software and design as the basis of their entire existence. That worked fine when software and design for every other manufacturer were done by the last remaining clan of Neanderthal Man left in the world, but the consumer electronics world is finally waking up to the fact that design and software matter, and are starting to focus attention appropriately.
The first shot across Apple’s bow was Android. Granted, it was a weak shot, because Google can’t decide if it wants to be a competitor or partner, but that schism is going to go away at some point when the Android market actually has more than one model. But where Apple really has to worry is the WebOS of the Palm Pre. For the first time there is a credible competitor to the ease of use claim that Apple has been touting. Sure it’s got its flaws, but so did the first iPhone. And unlike Apple, Palm is a Vegas hooker. It’ll put its models on any network that will have it. At some point, Palm is going to be free of the Sprint anchor, and then Verizon or even AT&T will get a Pre-like device. If Palm can continue to evolve its handset design and incorporate various form factors, then all of a sudden the iPhone isn’t all that special. I know for a fact that if I can get a Pre-like device on Verizon’s network I’ll drop my iPhone without missing a beat.
I bring all this up because the one thing that Apple had over every other brand was its base of ravening fanboys/fangirls. It was a guaranteed universe of slavish believers who would clamor to buy the latest/greatest Apple device just because it had a bitten piece of fruit as its logo. It is this group of people that made each product a success – they would buy it and show it off to friends and family and act as unofficial FREE brand ambassadors. You can’t buy that kind of loyalty. But you can screw it over.
Let’s face it – the iPhone 3GS taken in and of itself isn’t all that spectacular an advance. OK so now I get a video camera and 3MP still camera and Voice Command and Nike+ integration and faster speed, both network and processor-wise. Big deal. Are these things so amazing that any normal person would rush out to upgrade their existing iPhone 3G? No. In fact I would wager that a lot more iPhone 3G’s are going to be sold at the $99 price point than iPhone 3GS’s will be at the 199/299 price point because a lot of the people that really want an iPhone already have them. And outside of the fanboy universe, people are pretty price sensitive. If I’m getting an iPhone for $99, I will make do without the video camera. And how the heck am I going to know what “faster processor” really means in day-to-day use, especially since Apple doesn’t allow multitasking?
This long discussion brings us back to why Gizmodo, despite its excellent article, is wrong. Apple, by shortchanging its fanbase, has limited the number of people who will automatically upgrade. Sure AT&T pays Apple for each phone sold, but surely Apple could have taken a little less kickback to allow its existing 3G base to upgrade at a more reasonable price point. If they follow this approach for future models, they pretty much guarantee that people will skip every other iPhone generation. And every year that goes by means one more year where Palm or Google can refine their OS’s and catch up with (or surpass) the almighty house that Jobs built. At some point, these pocket computers (as Giz rightly points out) will be so powerful that the need to upgrade will not be compelling. Yes techies will want the latest and greatest and fastest. But how many techies are there? How many techies do you know that build or buy a new PC every year? How many people have computers that are two, three, five plus years old and don’t miss a beat? Not everyone NEEDS to upgrade. But those fans who upgraded for love of the brand will no longer do so because they can’t afford to, and once pricing becomes a big factor in upgrade decisions, then you better put some compelling stuff into each iteration, or people won’t buy it. And once Apple starts on that merry-go-round, it’s going to be awfully hard to get off.