TAM Money and Finance

Like the monolith from 2001: a Space Odyssey the iPhone comes to change the world as we know it. Apple, Inc. (APPL) (they dumped “Computers” from the company name) announced the future of portable computing. And damn does it look good. The iPhone runs OSX, yes a PC operating system, and merges a phone, iTunes, camera, PDA, e-mail, and web browser into one sleek package. Earlier today I wrote, “But with Apple’s reputation we’ll all expect something special. A touchscreen? Wifi? A PDA? The ability to ease sectarian conflict in Iraq?” Three out of four isn’t bad. Steve Jobs and his merry band of geeks pulled it off again.

There’s plenty to like from what Apple’s website demos show. Visual voicemail where you don’t have to listen to each message sequentially is an idea that’s just common sense. Built-in sensors that know if the phone is horizontal or vertical makes the device intuitive.

There are downsides, there always are. How long will a charge last on a device doing so many things at the same time? How good will the phone quality be? Does the touchscreen work at easily as the demo? Since the iPhone runs OSX will it crash like Macs do? (Yes, they crash, just not as much as Windows boxes.) What about hackers? Does the wifi allow you to seemlessly move from a wifi hotspot to Cingular’s cell phone network without missing a beat? What will that luscious touchscreen look like after some use?

Then there’s the price. The 4GB phone will sell for $499, and the 8GB will sell for $599. There’s no word on what Cingular will charge for voice and data. That’s a pretty penny.

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The buzz coming from today’s Macworld is Steve Jobs will announce an Apple (APPL) cell phone. Cingular, soon to be AT&T, is supposedly to be the mobile carrier. It’s hit the Wall Street Journal so if you want a rumor from somewhere other than a blog here you go. CrunchGear doesn’t buy it. Instead, they’re going with buying iTunes over Cingular phones. Hey, you can already do that; it’s called the ROKR and the RAZR. Don’t let us down, Steve.

If it is a phone an Apple phone should have iTunes and a camera inside it at the minimum as well as it looking sleek and sexy. But with Apple’s reputation we’ll all expect something special. A touchscreen? Wifi? A PDA? The ability to ease sectarian conflict in Iraq?

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Olga Kharif sees AT&T dropping the Cingular brand as a sign of a market shift to the tried-and-true:

For several years now, analysts have talked about how wireless is going to kill off wireline. Well, that won’t happen, says Andrew Cole, president of consultancy CSMG. This year, 2007, will be a year of convergence between wireline and wireless communications. And as services convergence happens, wireline’s use and importance for carriers will start growing again.

AT&T is a prime example of what’s to come: The company plans to offer a package of broadband and cellular service.

As these services are rolled out, I believe that wireless substitution will slow down. And we will yet think of wireline services — rebranded and souped up — as new and innovative.

Consumers want the mobility of wireless but the stability of wire. They want to take their phone with them to always be connected but don’t want dropped calls and the bandwidth limitations of wireless. Simply putting wireless and broadband (with the VOIP/Skype handset connected to it) on the same bill isn’t much of a convergence and won’t cut it. Google or Apple will come up with something if the phone companies don’t. Innovation means a smart network where the user’s handset can be used as a wireline phone at home (probably using wifi) and as a mobile phone outside the home. The user should have only one phone number with the network directing the call wherever she is. Oh, and the user wants a flat-fee, all-you-can eat plan covering voice, text messaging, and data. If AT&T “delivered” something like that we’d put up with the confusing history of wireless and never miss Cingular…not that we will anyway.

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