Apple's Dangerous Contempt

Jobs seems to have gone out of his way to demonstrate his contempt toward mobile operators and their acute concern for 3G revenue generation. And he did this with a $700 platinum turkey of a phone. Without heavy subsidies to push the price below $400, its chances of success in Europe and Asia are slim indeed.

California Dreamers

There's a certain type of Northern Californian tech expert who has never seen a successful high-end consumer technology product that failed to hit it big in America, and he can't grasp that the rest of the world is a very different market. This affliction seems to plague Apple executives.

Smart phones have not taken off in North America in a big way. That is partly because local devices such as those from Research In Motion's (RIMM Quote) and Palm (PALM Quote) have created successful corporate niches, and the operators never pushed the smart-phone concept strongly to consumers.

But globally, the success of the smart-phone market is nothing short of stunning. Using the leading operating system, Symbian, smart phones will likely sell more than 20 million units per quarter by the end of 2007.

The new Apple phone will compete in a mature, high-volume business where thousands of applications exist for the leading operating systems. Yet Apple is pricing its product about 100% to 200% above much of the smart-phone market, while yanking basic features -- such as 3G, keypads and open access for third-party software developers -- that existing customers are used to. This is the haughty attitude Apple had when it launched the iPod against the notoriously weak MP3-player competition in 2001.

What is the common theme regarding the key specification decisions made for the Apple phone? California. There is no decent W-CDMA network coverage in California, so 3G support may seem superfluous from a regional point of view. Plus, the lack of a keypad may not be a problem for people who have never used a smart phone and may not be heavy text-messagers. Instead, many Americans have BlackBerrys, email-oriented devices not in direct competition with a music phone.