June 8, 2007 4:00 AM PDT

Get ready for the summer of Apple

Apple is preparing for one of the most pivotal summers in its history.

On June 29, the company is expected to release the iPhone, perhaps one of the most hyped gadgets in history and a clear sign of where CEO Steve Jobs is placing his bets. At Apple--in case anyone still needed reminding after Jobs & Co. dropped "computer" from the company name--people are thinking about a lot more than laptops and desktops.

"Apple isn't just a hardware company, and they aren't just a software company," said Stephen Baker, an analyst with NPD Group. "I think that's what's enabled them to be more successful in endeavors that are away from their core business."

The touch-screen phone has been the talk of both the cellular and PC industries since Jobs unveiled it on stage at Macworld in January, and competitors are likely to respond later this year. But before it gets to the iPhone launch, Apple will pause next week to shift the spotlight back to its core Macintosh business.

On Monday, Jobs is scheduled to give the keynote at the Worldwide Developers Conference in San Francisco. Events such as WWDC are extremely important to Apple's developers, but tend to be overshadowed by the more consumer-oriented Macworld and other special product shindigs, such as last year's "showtime" event.

Indeed, WWDC is expected to be dominated by Apple's Leopard OS, just like last year's event. Developers will walk away with a near-final copy of Leopard, and Jobs is expected to provide further details on some of the features inside the new release. Apple does not plan to ship the final version until October.

While Leopard is certainly important to Apple's developers, the rest of the world is likely to be looking for any new nuggets Jobs reveals about the iPhone. The iPhone, analysts argue, is more than just a new product for Apple. It's an entirely new business that, if successful, will give the company three distinct product lines--Macintosh computers, iPods and the iPhone (not to mention a smaller fourth line, the Apple TV)--to maintain Apple's strong growth.

The attraction of the phone market to Apple is clear: mobile phone makers are shipping more than a billion units a year, and that figure keeps growing. Jobs has said he'll be satisfied if the iPhone has 1 percent of the market by the end of next year, somewhere around 10 million units.

"Wherever they go with the iPhone, Mac OS X is going to follow them."
--Stephen Baker,
NPD Group

The smart phone market, in which the iPhone will compete, however, is considerably smaller than the overall market. About 81.3 million smart phones shipped last year, according to iSuppli, which defines smart phones as "handsets with an open OS (like Windows CE, Symbian, Linux), which allow functional expansion of the device through sophisticated add-on applications such as personal information management."

The iPhone runs Mac OS X and Jobs promises it will deliver the "full Internet" to a mobile phone. Moreover, he said, at the January Macworld conference: "We have reinvented the phone."

It's a bold claim, and iPhone's success is not a slam dunk. Unlike the iPod's introduction in 2001 when other companies were shipping MP3 players but no one company had strong control of the market, the smart phone business is served by well-established, deep-pocketed players such as Nokia, Research In Motion and Samsung. And unlike the PC industry, it's also controlled by the companies that provide the pipe to the Internet, like Verizon, T-Mobile and AT&T, Apple's partner for the iPhone launch.

This is also a market where design has been essential from the beginning, potentially dulling Apple's usual competitive edge. Apple's reputation in both the MP3 and PC markets has been made on cutting-edge design, though competing on design with some of the products trotted out by the PC industry over the past five or six years hasn't exactly been like facing the 1927 New York Yankees.

Still, Jobs appears to believe the iPhone's simple user interface, with its single button and multifaceted display, is a significant improvement over the QWERTY keyboards on Samsung's Blackjack or Palm's Treo, or the numeric keypads found on other smart phones. Reviewers have yet to give the iPhone a thorough test, so it's hard to know whether concerns about typing and screen smudges--not to mention the slow EDGE network it uses--will prove to be problems for the iPhone.

Apple's main advantage in the mobile phone industry could be the same thing that has attracted computer users: the complete control of both hardware and software development that the company has over its products, said Baker.

Apple already has a leg up on the rest of the PC industry in its transition to becoming a broader consumer electronics company with the success of the iPod and the power of the iTunes store. No PC company has managed to enter another consumer category this decade with even half the success of Apple's move into digital music.

Even though Apple's Mac shipments are growing faster than the rest of the industry's, the PC market as a whole is expected to slow over time as PCs become more like kitchen appliances rather than tech gadgets. And in shifting to the consumer electronics world in search of faster growth, Apple will have to avoid alienating its core audience, the die-hard loyalists who have supported the company for years through a myriad changes.

Jobs' decision to delay the release of Leopard in order to get the iPhone out on time underscores a change in priorities at Apple that's been under way since the iPod exploded. Of course, if the iPhone is a hit, and Mac OS X continues to evolve, no one will care.

"To some extent, they can't lose sight of those people because OS X is central to other products that they are doing, and that connects them back into the core of Mac users," said Baker. "Wherever they go with the iPhone, Mac OS X is going to follow them."

See more CNET content tagged:
Stephen Baker, Macworld, Apple Computer, NPD Group Inc., Apple iPhone


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Add your comment
Three major product lines already exist...
One could argue that digital content (iTunes music and videos) is Apple's third product line, the fourth will be iPhone.
Posted by arotheram (2 comments )
Reply Link Flag
I think you meant 4
I don't know why the software division keeps getting overlooked: Mac OS X, iWork, Final Cut Studio/Express, iLife, Aperture, Shake, GarageBand, the list goes on. They are a major software company as well.
Posted by nmcphers (261 comments )
Link Flag
ipod was more then weak competitors
How often these articles write off the ipods success to weak
competitors or marketing factors.

I wouldn't call sony a weak competitor, whom back when the
ipod launched was making digital music players. Nor was the
offerings of many of the players back then poor or lacking style.

What has been lost in time is that Apple actually took a concept
and made it work better. They gave an mp3 player a great
design with some easy to use software and put a hard drive in it,
which no one was doing. This changed the game totally.

Suddenly I didnt have a 32 meg limit I has 5GB, thats a huge
difference and then the design of the scroll wheel came into
play. Why didnt anyone else do the scroll wheel at the time, no
one else was making 5gb mp3 players so scrolling through a
handful of songs wasnt an issue.

I think this is what Apple feels they are doing this time around
with phones, taking a market that has many different phone OSs
(whom hasn't spent a heap of time learning a new phone or
doesnt use all the features..common on)

Puting together some redesigned tech in a stylish new package,
with easy to use software and a unique combination of touch
screen and motion sensors and software in hardware.

Will the iphone work out the same as the ipod story, I don't

But how quickly realities of markets in the past are changed to
present a half picture to back up an agurement.
Posted by David Turner (114 comments )
Reply Link Flag
Beyond Apple's UI and Industrial design, the original iPod
leveraged three unique elements (then added a fourth later):
iTunes software, the new 5GB microdrive, and Firewire. Other
players used mix-and-match software, tiny flash drives or 2.5"
laptop drives, and USB 1.1. Nothing else on the market came
close. The iTunes Music Store came along to finally provide iPod
users end-to-end, instant-gratification.

Another huge advantage Apple had was its ability to release the
iPod exclusively on the Mac. In a smaller, more enclosed
environment, Apple was able to spend less time troubleshooting
the complexity of the Windows terrain, and perfect the system
on MacOSX before migrating out to Windows. They don't have
that luxury with the iPhone now, but at the time, this solution
worked perfectly for a smaller Apple and their fledgling
consumer electronics initiative.

Apple took some major risks with the iPod, and many in the
media wrote the iPod off. Now some have "deconstructed the
formula" of iPod's success and are painting a completely
different scenario with the iPhone, one in which Apple may not
do as well as they think.

We all know that smart phones could be a LOT smarter and
friendlier. As cool as many of the features on the iPhone appear
to be, I'll need to see how it all ultimately comes together, but
given Steve Jobs' track record, I'd trust him and his team more
than just about anybody else to give me what I want in a smart

You can count on Apple to either offer a better product, or to at
least shake up competitors so that they improve theirs. In the
end, everybody benefits.
Posted by cwkoller (22 comments )
Link Flag
Apple typically gets written off
For some strange reason the popular press always finds some way to gripe about Apple and its products.

As mentioned in some of the other posts, the iPod was derided initially, the computers are put down as is the OS, Apple TV is being called a failure...

Apple, like almost all companies, tries to do a good to great job in creating it's products and services. It also does a very admirable job of promotion. The iPhone is hotly anticipated by almost everyone. The hype meter is off the charts and everyone is waiting for the phone to work great, fail miserably, or fall somewhere in-between.

One thing that Apple appears to be doing (who really knows though other than Steve Jobs) with the iPhone is under promise and over deliver. We've heard rumors that third-party apps will be possible, rumors that stock piles are being built to satisfy demand - we'll just have to wait for this next Apple performance to play out in front of us.

Stan Timek

Posted by Stan Timek (6 comments )
Reply Link Flag
iPhone Crazy
So much hype, but will it really live up to it? So far, I'm not convinced. I'll stick with my Treo. I already get my music wirelessly through the "M" app from Mercora, and with the other features my Treo has, I'll stick with what I've got...at least so far :-)
Posted by JimmyJackFunk21 (4 comments )
Reply Link Flag
htc touch
looks and feels better and i think it's more user friendly than iphone. dont get me wrong, i wouldnt mind owning iphone but my budget won't allow.
Posted by dondarko (261 comments )
Link Flag
Well, if the iPhone has the battery problems of past iPods, we
will all be very displeased. I am very skeptical of the battery life
Apple is claiming because historically when they give you
numbers like this, you get half that or worse. An annoyance on a
music player, but on your phone and organizer that would really,
really make the device a source of frustration.

My other worry with apple is the declining hardware quality.
Apple used to make notebooks that you could keep for years
and years, now my wife and I burn through them and they
always seem to need service that isn't covered by Apple Care
and costs as much as a new laptop.

Maybe it will be the summer Steve Jobs get indicted. The feds
are still gunning for him and his lawyers, stay tuned for more
developments as the case gets built.
Posted by wylbur (110 comments )
Reply Link Flag
What iPod battery problems?
I have had three iPods since the original. The original was lost
for about a month, and the battery drained. (Hint: it won't fully
charge up after that.) So I turned to the Internets, and bought a
replacement battery for about $50, I believe, and installed the
new one. Better than ever.

On the other iPods, which I have charged up every night, I
haven't had a moment's difficulty with the battery. If I want a
replacement, it's available from Apple or from online businesses
for a good price.

You really tip your hand when you say that this is the summer
Jobs gets indicted. You're just amalgamating rumors, not
speaking out of any personal knowledge. And in this case, the
SEC has done just about everything but hold up a sign that says,
"He's innocent!"
Posted by swift2--2008 (197 comments )
Link Flag
"Well, if the iPhone has the battery problems of past iPods, we
will all be very displeased."

Batteries are batteries. They eventually die no matter what you
do. If that displeases you, then perhaps you should invent a
better battery.

"I am very skeptical of the battery life Apple is claiming because
historically when they give you
numbers like this, you get half that or worse."

BS. If anything, Apple underestimates the battery life so that
people are not expecting something that there is no way they
will get.

"An annoyance on a
music player, but on your phone and organizer that would really,
really make the device a source of frustration."

IF the battery life was really poor, which it isn't. IF.

"My other worry with apple is the declining hardware quality."

BS. I think you are pulling this out of your rear end. Would you
care to cite anything other than run of the mill problems that
affect every hardware company"

"Apple used to make notebooks that you could keep for years
and years..."

You can still keep them for years and years.

"...now my wife and I burn through them and they
always seem to need service that isn't covered by Apple Care
and costs as much as a new laptop."

What does "burning through them" mean? Sounds like they are
out of warranty by the time you experience problems, which to
me does not sound like "burning through" anything.

"Maybe it will be the summer Steve Jobs get indicted."

I seriously doubt that.

"The feds
are still gunning for him and his lawyers, stay tuned for more
developments as the case gets built."

BS. The feds are already done with wasting their time on it.

Have a nice day.
Posted by lesfilip (496 comments )
Link Flag
Awesome but Thank you !
$499 for a 4GB ipod phone with 2 year contact only with ATT ! Thanks but I'll wait atleast for it to get cheaper and also bigger in capacity.

No denying the fact that iPhone has added a new dimension to cellphone design.
Posted by csg7 (81 comments )
Reply Link Flag
"... according to iSuppli, which defines smart phones as "handsets with an open OS (like Windows CE ..."

Now there's an oxymoron if there ever were one: Open OS Windows CE.
Posted by shadowself (202 comments )
Reply Link Flag
not really
It meets the criteria defined for handsets with an open OS. The author said open OS, not open source. Please note the difference.
Posted by Seaspray0 (9714 comments )
Link Flag
Avoid Apple lockin with iPhone get iTunes on existing phones
You don't need to spend $500 dollars to get your iTunes on the iPhone. I just read about new Melodeo music service called "nuTsie" that gives you access to your iTunes playlist on many newer existing mobile phones.
Posted by robertgreenlee (7 comments )
Reply Link Flag
Dream on
As nice as iTunes is, it's a small part of the iPhone. Visual voice
mail, real internet browsing and email, real OS X, and multitouch,
are all killer apps by themselves. There's no way you can cobble
together an equivalent from one of the also rans.
Posted by Macsaresafer (802 comments )
Link Flag
3G Broadcom Chip Issues
You never know, but with the ruling against Broadcom, maybe Apple did some research beforehand. If Apple had gone with a 3G chipset from Broadcom, they would be sunk right now with the millions of iPhones but nowhere to ship them...
Posted by jypeterson (181 comments )
Reply Link Flag
Obviously not well informed...
Windows CE is now open. Microsoft is sharing CE source code.

<a class="jive-link-external" href="http://www.windowsfordevices.com/news/NS2632317407.html" target="_newWindow">http://www.windowsfordevices.com/news/NS2632317407.html</a>
Posted by jase1125 (18 comments )
Reply Link Flag
Kernel only, in that sense OS X is "open" in Darwin
Kernel code is a dime a dozen these days.

(And if you want the best, Linux has been optimized to razor

It's what sits on top that makes it special. And that isn't open.

Not for Microsoft, not for Apple. It's both companies'
competitive advantage.
Posted by dotmike (154 comments )
Link Flag
Who gives a crap?
Win CE was still-born. Wince.

The reason it is open is because no one cares about it any more,
much like the reimplementation of DOS.

We're talking about future devices and systems here, and you're
clinging to the lowest misses of the early 90s.
Posted by tedk7 (66 comments )
Link Flag
Somehow the writer seems to think that current phones are well
designed. Did he listen to anything Jobs said last week at the All
Things Digital conference? He had a very good point that one of
the things that makes the iPod such a success is it's software. In
a pretty box, but it's the software. And that's what makes
Microsoft and Apple so much more innovative than hardware
companies like Motorola (horrid software!), Nokia, Sony/Ericsson
and LG. They are hardware companies who have no clue how to
design software. And that's where the iPhone will blow them

The other handset companies think they can give us cool
hardware designs with mediocre to horrid software (and
intentioally cripple technologies like Verizon does with
Bluetooth) and we won't notice what utter crap their junk is
compared to an iPhone that has vastly better designed software.

This is what clueless iPod naysayers said on the website
MacCentral the day Steve introduced the first iPod in 2001:

- "I still can't believe this! All this hype for something so
ridiculous! Who cares about an MP3 player?"

- "All that hype for an MP3 player? Break-thru digital device? The
Reality Distiortion Field is starting to warp Steve's mind if he
thinks for one second that this thing is gonna take off."

- "Better bring that price down or you wont sell any of these

Comments from clueless readers after the 2001 iPod

Indeed, they were truly clueless. The iPhone naysayers are
writing the next batch of quotes I'll be keeping.
Posted by ewelch (767 comments )
Reply Link Flag
Do you mean QualComm?
I may be wrong... but I thought QualComm was being sued by BroadComm for infringing on its patent... Not the other way around.

Either way - this is really god news for Apple Inc.
Posted by kelvin535846 (1 comment )
Reply Link Flag
Usability and Sexiness -- iPhone has both -- Slam dunk
Minority Report in your pocket and a sleek metal housing...

Anyone who still doesn't "get" the iPod's appeal will be surprised
(deja vu) by the iPhone's success.
Posted by Mark Greene (163 comments )
Reply Link Flag
Durability and Productivity -- iPhone has none -- flop
Windows Mobile 6 with a sensitive touch screen in your pocket.

Anyone who still doesn't "get" the iPhone is a Windows Mobile 6 device without the productivity tools will be surprised (deja vu) by the iPhone crashed by Windows Mobile 6.
Posted by Fil0403 (1303 comments )
Link Flag
Be realistic
"Minority Report in your pocket and a sleek metal housing..."

...with scratches and skin oils all over the screen.

Touch screens on PDA phones have been tried before and those have been always the biggest complaints. The iPods have scratchprone screens. I imagine one of the first accessories that a third party company will come up with will be protective covers.
Posted by Vegaman_Dan (6683 comments )
Link Flag
ipod appeal?
The ipod had functionality along with appeal.

The iphone has appeal but lacking functionality in an already competitive smartphone market.

After the 1st million are sold.. its a slam dunk for failure! The facade has been copied along with some of the shiny features for smartphones what is Apple offering aside from a new facade?

Nothing that I can see!
Posted by jabberwolf (858 comments )
Link Flag
Get ready for the summer of hype
"perhaps one of the most hyped gadgets in history"

That's what Apple is and always was about: get a product that exists for years already, reduce compatibility, make it look good, increase price by 50% and hype hype hype so weak-minded Apple fanboys rush to buy a $500 brick with an Apple logo.

"Wherever they go with the iPhone, Mac OS X is going to follow them."

Interesting: when Microsoft does that, it's called anti-competitive attitude; when Apple does it, it seems to be a smart and wise decision.
Posted by Fil0403 (1303 comments )
Reply Link Flag
Apple is all about marketing
Apple has a fantastic marketing department. Unfortunately they often are at odds with the actual product, but that's not limited to Apple.

There's a lot of products out there that quietly disappear. Apple's had them before. Remember the Cube? That was a neat bit of engineering hardware that was really cool and popular with hackers. Unfortunately there wasn't much of a market beyond that group.

The market will eventually be the ones to decide what succeeds or fails. I think the iPhone will be adopted and gobbled up by the same religious zealots that have to have all things Apple for nothing other than the logo itself. That's fine. They exist in all fields. People are brand loyal to cars for the same reason regardless how good or bad the vehicle is. (Love your Mustang? Remember Ford also made the Pinto.) I think the iPhone will have a big splash, then be largely forgotten by the cell phone market. People will want to have one to be seen with it, but when in actual numbers in the marketplace will be quite small.

The real test will be to see if it is still around five years from now or if it will meet the same demise as other cool Apple products that are now forgotten (Like the neat Newton. I loved scribbling out notes on that- POOF!).

Let it sink or swim on its own.
Posted by Vegaman_Dan (6683 comments )
Link Flag
"very helpful advice, thx a lot."

<a class="jive-link-external" href="http://www.freedownloadscenter.com/Multimedia_and_Graphics/Video_and_Animation_Tools/Fruit_iPhone_Ripper_Suite.html" target="_newWindow">http://www.freedownloadscenter.com/Multimedia_and_Graphics/Video_and_Animation_Tools/Fruit_iPhone_Ripper_Suite.html</a>
Posted by shark12er (10 comments )
Reply Link Flag
No new iPods?
I think this summer would have been a good moment to announce if there is going to be any new iPods to go on sale later on. I've heard (and read) rumors that the new iPod's screen will be the whole size of the device itself, and that it would be touch screen. (Hmm, makes you think of the iPhone, right?)
Posted by DMBoricua (217 comments )
Reply Link Flag
What about Itunes Mobile?!
Why isn't the Iphone upon its release going to have Itunes Mobile?! What gives??!! Several phones before it have Itunes, so why doesn't the Iphone?! If this was supposed to be the new Ipod, it would have Itunes Mobile! And what's with the the lack of 3G?! They can't have high-speed applications without 3G! Idiots! Go ahead and hype the Iphone all you want! It's going to flop within the first month if these things aren't fixed, I guarantee you!
Posted by siestaboy (25 comments )
Reply Link Flag
One more thing...
This phone is EXPENSIVE! The price alone will drive away most the customers that don't have big wallets. I would NEVER pay $500-$600 for a phone. I don't care what it does! Pretty outragous if you ask me! And if Apple wants to gain some market share, they HAVE TO HAVE MORE CARRIERS! Only Cingular just doesn't cut it!
Posted by siestaboy (25 comments )
Link Flag

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