360 Degrees on iPhone

Apple Tries to Spawn New iConsumer
By Tero Kuittinen
6/25/2007 1:34 p.m. EDT

As iPhone testers get increasingly leaky, a new picture of the device is coming into focus -- and it is defined by an almost perverse hostility toward mobile operators.

Apple has apparently rejected both picture-messaging and mobile instant messaging, and data transfer speeds over the mobile network seem to be just as slow as its use of last-generation hardware implied.

The iPhone will thus be actively pushing consumers away from using mobile infrastructure and value-added services; it looks like a device largely driven by Wi-Fi. How this plays out is going to be fascinating, as the number of U.S. consumers using Wi-Fi on their phones is currently far below 1%.

Sneering Elitism

Over the past two years, mobile operators have carefully nurtured two major themes in messaging: MMS and mobile instant messaging. MMS enables phone users to snap photos and send them instantly to friends and family. Even people with relatively low-end phones without cameras can receive these photos.

This service was designed to be a sequel to the massively popular text-messaging service that swept the mobile world a decade ago. Its early uptake was slow, and when the iPhone was being planned two years ago, negative buzz about MMS dominated industry discussion.

But over the past 18 months, MMS has started to take off. As the global pool of consumers equipped with at least 1.3-megapixel cameras in their phones has expanded to hundreds of millions, photo-messaging has increasingly turned into a mass-market phenomenon among 15- to 30-year-old consumers.

The key to MMS is its universality. It is supported by all major operators from Verizon (VZ Quote) to AT&T (T Quote) and all major phone vendors from Samsung to Nokia (NOK Quote). Its current momentum is built on its democratic appeal. You may need a 2-megapixel camera phone to take decent pictures, but your mom or schoolmates can receive them with their cheapie phones.

With the iPhone, you can email photos, but most people don't have email in their phones. The absence of MMS cuts off 90% of U.S. mobile subscribers; low-end and midrange phone users will not be able to swap photos with the iPhone elite.

The underlying philosophy of both text-messaging and photo-messaging has always been to make the experience as universal as possible. Apple's philosophy is fundamentally exclusive: Buy our product and lock out the losers from your mobile photo loop. Implementing MMS would have been trivially easy; dropping it sends a message.

Back in 2001, this kind of exclusivity worked wonders in the music-player business, where no established market existed when the iPod launched. Apple built its own garden and walled it up well, resulting in phenomenal success. But there already is a global mobile handset market with well-established road maps and feature profiles. The iPhone will be willfully out of step with the billion-unit phone market.