Looking around a the current marketplace for communications tools on the eve of the release of the iPhone 3G I can’t help but thinking about just how incredibly disruptive this device will be.
GPS
The iPhone’s integrated GPS offers a truly viable solution as it’s coupled with a screen the size of most commercial standalone GPS units in a pocket sized device. In its current incarnation it’s not the GPS interface that we’ve become accustomed to with the vocal turn by turn directions and the 3D bird’s eye view, but it’s certainly a very functional interface integrated with Google Maps.
Personally, I’ve been putting off the purchase of a GPS for a while since I don’t really need one on a daily basis, but there have been a number of times that it certainly would have come in handy. I’ll be upgrading my current iPhone to the new model just in order to have the GPS capability.
The current crop of standalone GPS devices have been holding their own in this new marketplace of GPS enabled phones because up until now the competition has been lukewarm, mostly due to the issues of screen size and readability of most less-stupid phones. (I can’t bring myself to call them smart phones)
Unit cost
If you take apart a standard pocket-sized, autonomous GPS, it’s got practically all the same component requirements as an iPhone, albeit less powerful and cheaper since it’s only got one task to accomplish.
I suspect that GPS makers are going to be taking a massive beating in 2009 since they simply don’t have the economies of scale that will be available to Apple producing a multipurpose device that pulls in customers for a variety of reasons and potential use cases. All of the on-the-fence GPS purchasers who opt for the iPhone for other reasons will be even less likely to make the additional investment in another device.
Will their software save them?
The one thing that GPS makers have in their camp as a potentially appreciating asset is their software. TomTom has already stated that they’ve ported their software to the iPhone as a technical exercise, but there remain a number of outstanding questions regarding whether or not Apple will permit them to sell the software in the App Store, mostly I suspect due to Apple carefully eyeing the liability issues regarding idiots who drive into trains, lakes and trees while blindly following the instructions from their GPS. Or perhaps Apple is considering offering their own product in this space. For the moment this remains a very big question mark.
But you have to wonder if that asset is going to be enough. The combination of the GPS enabled iPhone with the Google Maps may be the “good enough” solution for an awful lot of people. I’ll be the first one to state that I have a preference for best of breed solutions, but as I examine a lot of my choices, I’ve noticed that this requirement can be stretched a little bit when the choice is something that I don’t have a lot invested in. My GPS use could be defined as casual and from what I’ve seen, the built-in options on the latest generation of the iPhone seem easily up to my usage requirements.
Then there’s the price. I have discounted the impact of the service plan since I know that I’ll be paying for an all you can eat data plan since mobile internet access is a must have for me. So I get a GPS for 200€, but it’s also my phone, my mail, my web, my RSS, my games, my music, my films, my podcasts…
When I see ads like this in the metro I really have to wonder how I could justify the additional cost of this kind of one trick pony. Now I realize that there are cheaper models that do less but if they don’t do significantly more than the iPhone, what’s the point?
The additional hiccup that we’re seeing here with the iPhone is that it’s an always on internet enabled device, and this goes directly for the heart of the current GPS business model of selling you maps and updates to maps, ideally on a subscription basis. If I can get the same information direct from Google for free with updates being filled in by Google on the back-end, why in the world would I pay for an additional subscription service? This could offset some of the cost of the data plan when factored against other costs that will go away.
The one thing I think that Apple got wrong here (although this may still be coming) is a bluetooth GPS profile so you could use a first generation iPhone with a bluetooth GPS dongle.
Casual gaming
Another product that will be impacted is the Nintendo DS. They’ve been doing a lot of advertising recently and it appears to be working as I notice a fair number of people in the metro with them, clearly outside of the young gamer demographic. My only personal complaint with the DS is that it’s relatively bulky and it’s yet another thing to carry around. Interestingly, I notice that the market that is the most forgiving of these aspects is the female market. If you have a purse, you have a lot more options on how you manage all of the peripherals of life. This lessens the priority of a converged device that you can put into a suit, jean or jacket pocket.
But if I already have an iPhone, and I can purchase casual games and utilities over the air for reasonable prices, why would I buy yet another device?
The way I see it now, almost every pocket-sized technology purchase will be held up against the iPhone. If it costs in the same range as the iPhone it needs to be significantly better at what it does since you’ll be getting so much more multipurpose value out of the iPhone.
Serious gaming
I still see a niche for items like the PSP since part of the interest is that the controllers are adapted for it’s use, while the iPhone’s lack of hardware buttons will be problematic for a lot of complex gaming interfaces. But that also opens up the door for a hardware gaming wrapper which plugs into the iPod interface and offers external controls.
Other approaches
At the end of the day, I think that the one other company that has correctly identified the market direction is Amazon. While every other company does everything in the power to design a business model around subscriptions to ensure a long term cash flow, Amazon went and integrated lifetime wireless service in the Kindle. They’re betting that the utility of the offering will be able to encourage people to buy enough to subsidize the cost of the wireless service. That’s smart. The average consumer has a lot of expenses to worry about and subscriptions are generally reviewed more carefully than outright purchases.
Apple’s betting that mobile telephony will be ubiquitous and will move from a luxury expense to a utility expense. It’s integrated into the basic cost of living and in many cases will replace the fixed telephony expense.