What the iPhone doesn't do (yet) and thoughts on why not.

There has been a lot of commentary, complaints and opinions on the iPhone. I haven't seen much discussion of its features and strategy from the perspective of the realities of product development. In my opinion, what Apple have done is the right set of strategic and tactical moves for the first product in a new family. What was announced and shown is not the final feature set for the initial device and it does not include the full vision of the product.

Lets look at the timing of the announcement. As a new entrant in the mobile phone marketplace, the correct strategy is to pre-announce. There is no existing product from Apple to cannibalize, and there is only partial overlap with the iPod market. The announcement was made after the holiday shopping season, and the timing is setup to get a volume ramp in place for the 2007 holiday shopping season. The initial launch is based on the minimum marketable features (MMF) required to address the Apple oriented consumer marketplace. Rather than wait until the full feature set is ready or create low quality solutions for a wide feature set, the Apple strategy is to develop a small number of features to an extremely high level of quality and integration, and focus on the needs of their core market of existing OSX and iPod users.

Lets look at disclosure related issues. For a phone to be released as a product it has to go through FCC testing that takes a month or two, and the FCC process is relatively open. All the new phones are scooped by Engadget Mobile before they turn up in stores. For the big splash product announcement, it needed to be scheduled before Apple turns over an iPhone to the FCC test process. In order to keep details on the product quiet for as long as possible, it is also much easier to do the initial launch before completing negotiations with key third party application developers like Adobe and Microsoft. I've heard that there is no Adobe Flash support in the device at present, and there is a clear need to support Microsoft Office at some point in the future. These omissions are easily fixed, its just a matter of time.

New models in the iPod range are announced when they are basically in stock in the stores. If you take the iPhone package, and remove the phone parts, keeping the iTunes music and video functionality, and WiFi/web connectivity, you are left with a very nice looking wide-screen networked iPod. Its main issue would be the relatively small capacity flash, so that could be increased, or a hard disk could possibly be crammed into the package. I would not expect anything like this to be announced until it is completely ready and in-stock, but if it exists, it could end up being released this summer around the same time as the iPhone actually ships. Since it isn't a phone, its outside the Cingular agreement, but adding a WiFi only VOIP client like iChat or Skype would create a product that competes with the Sony Mylo.

During the demo's no-one tried to show the iPhone's camera, this indicates to me that it isn't finished, and I hear elsewhere that they are still working on video capture. For use as a video-phone, the camera is on the wrong side, you can't see the display while you are on-camera. This makes it seem less likely that a full iChat function will be included in the initial package.

Apple is getting a lot of criticism for its locked down and controlled approach to third party software on the iPhone, and lack of a developers program. Developer support falls outside the minimum marketable features required for initial launch into the consumer marketplace. By taking full control of the product, Apple can make sure that very high quality standards are in place, and that applications integrate with the iPhone experience. The reality of product development also makes it hard to build a stable developer API until the product is finished, so I fully expect a phased developer program. The initial phase included applications like Google Maps and Cingular Visual Voicemail from development partners (and I expect some kind of GPS location service to appear in the product soon - perhaps even in the initial release). The second phase will be a closed private developer program including big partners like Microsoft and Adobe. The third phase will start to open up to the Apple developer community, with stable public APIs and developer tools. Extensibility is a MMF for the professional/consumer (prosumer) and enterprise marketplaces, along with Microsoft Office support. This may take a year or so to arrive, its inevitable, but I can see why its not a feature of the initial product launch.

There has also been a lot of grumbling about Cingular and the lack of 3G service. Apple have dropped hints that they will support 3G sooner rather than later. My guess is that 3G is considered an MMF for the European and Asian markets, so I wouldn't be surprised if the models launched in those markets in late 2007 and 2008 included 3G support, and as Cingular's own 3G network continues to roll out over the USA the timing would make sense here as well. The real alternative to Cingular for Apple would be to setup their own Mobile Virtual Network Operator (MVNO) like Helio or Virgin Mobile. This is a big complicated thing to do without any experience, so my guess is that they decided that the highest priority was to get the product launched with a big network partner like Cingular, and to decide later on whether it is worth creating an MVNO for a less compromised product. So when the exclusivity arrangement with Cingular expires, they may well focus on their own MVNO services.

So thats my opinion, as someone who has developed products and strategies in the past and understands the compromises, but with no inside information on their actual plans. My own plan is to avoid the initial release, and see what the product looks like for the Xmas 2007 shopping season.