Apple Without the 'Computer:' Life with iPhone

On Tuesday morning in San Francisco, Apple did something it had never done before. In 1976, it basically created the personal computer industry; if it had ever come into fruition without Apple, the computer today would probably be unrecognizable, and maybe even unlikable. In 2001, the company essentially invented the portable digital music industry, even though MP3 players existed prior to 2001, and personal computers of some sort existed prior to 1976.

But this time, Apple jumped into an already burgeoning industry like a diver into a raging river. Its collective mind was clearly set on reinventing the wireless phone, and indeed, it may have done so. With its now-typical flourish, Apple shed from its corporate image some historical baggage, in a move whose significance may only be understood clearly, if not ironically, in a few years' time: It let go of the "Computer" from its name, trimming it down to "Apple, Inc." And even while its new Apple iPhone embraces a surprising chunk of the Macintosh methodology and technology that helped get the company this far, when introducing the device at a conference called "Macworld," Steve Jobs and the slides that accompanied him omitted the "Mac" from the name "OS X."

It's not the Macintosh company any more. Even though Macs have marched right back into the public consciousness, with a marketing campaign that cannot be ignored, in a sense, Apple may be making new Macs the way Volkswagen makes new Beetles. They're quite nice to have in the product line, though if it had to stop making them, it wouldn't suffer all that much.

"Apple is no longer a computer company," declared Carmi Levy, Senior Research Analyst for Info-Tech Research. "That was proven five years ago when the iPod stormed onto the scene, basically eclipsing the Mac as its iconic, internal brand. So this will only continue. Apple will move into markets where it makes the most sense to dominate the consumer/end-user experience. If it happens to be on a computer, so be it. If it happens to be on a converged device that you hold in your hand and take with you, then so be it. If ultimately Apple stops making desktop computers because that's what the market dictates it to do, then that's what it will do."

It's not that Macintosh is dwindling away; if anything, it's made a major comeback, helped to some extent by the surging popularity of the Apple brand...which is as a result of iPod, the 21st century's first, and thus far most successful, great consumer electronics product line. But Apple customers are a force unto themselves, and to a degree that is underappreciated, Levy believes, Apple doesn't really lead those customers as much as it is being led by them. It's the customers, both in the iPod and Mac realms, who led Apple to its iPhone.

"The market is moving away from PCs as hunks of technology, and it is moving toward rich services that we use every day, on whatever device makes the most sense to us," remarked Levy. "Does the Mac resonate with the buying public as it did 20 years ago? No, it does not. IPod does because iPod is a new millennium lifestyle icon, whereas the Mac is a 1980s technology icon that never really moved into the mainstream. So of course it makes sense to dump it."

By "dump it," of course, Levy meant as an emblem for the company, as a marketing symbol, as the thing implied by the references in its former corporate title and former operating system title. The base of Mac users, he points out, will continue in the near term to provide that wellspring of support and even adoration for any new device to appear from Steve Jobs' jeans pocket. "But certainly over time, the Macintosh's overall role in the hierarchical culture of Apple will continue to wane," he added, "as cultural icons like iPod and iPhone establish themselves in society's lexicon."

Today's smartphones are associated with their operating systems, in a way reminiscent of the days when a personal computer and its operating system were inseparable. Windows Mobile has fast become a major player in smartphone technology, in a way Windows CE failed to do. While Palm OS catalyzed the process of small devices being associated with their operating systems more than their manufacturers, Microsoft eventually seized that strategy and assimilated it unto itself, the way Microsoft is known to do.

But that opened a door for Apple, a company known for innovating the functionality first, then supplementing it with the device. Conceivably, the Apple iPhone (which is what we'll call it for now while its trademark is being disputed by Cisco) could have chosen to introduce itself to consumers as the small device that finally puts Macintosh functionality into their hip pockets. But it didn't, because consumers at large don't want Macs, perhaps unfortunately.

This could yet be a problem, especially since the Apple iPhone will need developers, many of them from the Mac realm, to help supply it with the continuing stream of new functionality the device will need to stay competitive.

As Dr. Gerry Purdy, the veteran MobileTrax analyst, now vice president of Frost & Sullivan, points out, the Apple iPhone's software will be the key element that makes or breaks its success long-term. "In Apple's case," Dr. Purdy told BetaNews, "it always comes down to the software, user interface, and how they leverage that in the marketplace. I would hope that they'll build an ecosystem that embraces and supports third-party developers to allow the platform to be extended. Whether they'll actually get partners to build iPhones, we already saw that happen and being considered in the Mac days. That may not happen [here], but I think [Apple iPhone] certainly has the opportunity to be an ecosystem that allows third-party developers to build applications."

An opportunity which Ross Rubin, director of industry analysis for NPD, firmly believes Apple will not avail itself of this time, based on the information he's seen. "Apple is not going to extend that functionality as of now. They have no plans, they're not planning to allow other applications or improvements to the phone, and new functionality for the phone will come from them [Apple]."

While OS X has made the journey to the Apple iPhone, many of the applications which characterize life and work on the Mac stayed behind, Rubin noted. Among them is iChat, the Mac's instant messaging application. Although Jobs repeatedly used the phrase "breakthrough Internet communications device" to describe one of the three "devices" that comprise the Apple iPhone, instant messaging is not among these breakthrough tools. "Texting," however, is among them, as a common feature of modern cell phones, as well as a revenue source for which could be circumvented if someone were to implement an instant messaging application.

Of course, several such applications already exist for the Mac, iChat among them. If iPhone ends up compatibly running OS X applications - including, as Jobs promised, widgets - then it would be an academic matter for a Mac developer to scale down an IM program's resources to fit comfortably on an Apple iPhone, and perhaps implement its revolutionary touch-screen controls along the way.

But where's the revenue in that? Perhaps Apple had another reason for not emphasizing the relationship between its iPhone and the Mac: to protect the relationship between Apple and Cingular.

"Not only is it not a 3G phone," Rubin added, "while [Apple iPhone's] core data focus seems to be very strong in terms of Web access, it's not really using a lot of over-the-air kinds of services, whether that be purchasing music, or things like push-to-talk and other premium features, or support for Java standards, or even instant messaging at this point. Apple is supporting [texting] through SMS, even though they have the iChat application on the Mac which is compatible with AOL's instant messenger."

The strong selling point of the device thus far, Rubin continued, derives from Apple's existing strength with the Mac desktop metaphor, but it doesn't play on the Mac's strength in applications, concentrating instead on voice as the critical application - the real reason mainstream consumers (albeit those willing to spend $500) want to purchase a mobile phone.

But although up until Tuesday morning, Apple has been heralded for its genius in having tied the iPod concept to the iTunes service, and thus delivering the entire package, Jobs presented the Apple iPhone as containing an 8 GB iPod, but not as containing iTunes - even though Cingular at one time had the first iTunes phone.

Ross Rubin took notice: "The ability to sync your music to iTunes competes with another potential revenue stream for Cingular; the ability to manage your photos using the iPhone's built-in software means that you probably won't buy, for the near term, a photo management or photo album applet like you would for many other phones. So a lot of the appeal of this handset is the sleek design, the branding, the novel user interaction, presumably the usability, and that could translate into customer acquisition for, and retention for, Cingular since it's going to be a multi-year exclusive."

Next: Can Apple's next little computer survive without developers?

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