Great Prophets of our Time: iPhone sucks, hold on to your Nokia stock
In the past week there has been a disinterring of much informed comment from January 2007 when the iPhone was introduced. Nobody, apart from Steve Jobs and a few Apple fanboys thought it would succeed. Most, like Bloomberg’s prescient Matthew Lynn, were dismissive:
The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. In terms of its impact on the industry, the iPhone is less relevant.
There are three reasons that Apple is unlikely to make much of an impact on this market — and why it is too early to start dumping your Nokia shares.
First, Apple is late to this party. The company didn’t invent the personal computer or MP3 player, but it was among the pioneers of both products. Yet there is no shortage of phones out there. There are already big companies that dominate the space, all of whom will defend their turf. That means Apple will have to fight hard for every sale.
Next, the mobile-phone industry depends on cooperation with the big networks. Phones — the high-end ones in particular —are usually sold with a network contract. The provider subsidizes the handset in the U.K. and hopes to recoup its money with ridiculously expensive charges for calls and data. Yet Apple has never been good at working with other companies. If it knew how to do that, it would be Microsoft Corp.
Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.