03/29/2007, 10:40am, EDT
Thursday, March 29th
Dvorak: Apple should abandon iPhone
"This is not an emerging business. In fact it's gone so far that it's in the process of consolidation with probably two players dominating everything, Nokia and Motorola."
Such a late phase in the market offers extremely thin margins, which force smaller competitors and newcomers to lose lots of money.
"There is no likelihood that Apple can be successful in a business this competitive," Dvorak writes. "Even in the business where it is a clear pioneer, the personal computer, it had to compete with Microsoft and can only sustain a 5 percent market share."
The advertising and pricey marketing required of companies in the handset business is nothing like what Apple has experienced, according to the columnist: "It's a buzz saw waiting to chop up newbies."
"The problem here is that while Apple can play the fashion game as well as any company, there is no evidence that it can play it fast enough. These phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months."
Apple survives in the computer business due to high margins, but those margins cannot exist in the mobile phone business for "more than 15 minutes," according to Dvorak.
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If he were actually serious, he should get checked into the psych ward for all the crazy stories he writes.
Dvorak is more of a fiction/fantacy writer than tech journalist.
What a goob.
Q: How can you tell that John Dvorak is about to make a fool of himself again? A: When his mouth is moving.
So not only can they be profitable in the higher end phone space, but that is not all. Unlike any manufacturer before it, Apple is in the business of shifting the phone paradigm to where it is in control of the whole experience.
I mean, how well would landlines and internet have worked had everything you could do w/ the internet had been provided by your ISP, not very well. Verizon/Spring/Cingular/T-Mobile have controlled everything as the wireless networks. But I think Apple is in the midst of resigning the wireless carriers into the wireless ISPs and phone companies they should be, where they provide the bandwidth, and the consumer is left to do whatever they want, and download songs/ringtones/msging from where ever they want.
So far Moto/Nokia have been willing to play the wireless carriers game, but Apple is not willing to go that route. So while they are entering a crowded market, they are changing the market, thus making them a pioneer again, and where the stalwarts are at risk of being left behind in their own market.
To say nothing of Apple needing to get in and defend their iPod position against the encroachment of music playing phones, which must be done, if only to give an alternative w/in the Apple camp.
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Besides, I keep looking at the iPhone and keep thnking: just a few changes and Apple has an Einstein ( my name for the successor to the Newton)
Witness the razr, lg chocolate, etc. They were initially hot fashion phones and commanded a high price. Once the buzz died down, the price started dropping and the masses kept buying more. The razr was on the market for how many years before it was even revised?
I think Apple priced the iphone at a good point. It allows for some exclusivity at the outset and once the buzz dies down (if it ever does) it gives some leeway for price drops to keep demand up.
One thing to worry about though is that Apple doesn't drop pricepoints. They increase functionality but keep the same price.