What happened to the iPhone, and what comes next...

After the launch event last January, there was a lot of repetitive and shortsighted commentary about the iPhone, and I wrote a blog post about the way I thought Apple's strategy made sense and what the next few moves would be.

I think I got it broadly right, their strategy did make sense, and still makes sense to me. The iPhone was launched with features designed for the consumer marketplace, and redefined the smartphone category, ignoring the pundits who said it couldn't succeed as a smartphone without a business oriented feature set, it outsold all the other smartphones by an order of magnitude, and the competition is now scrambling to come up with products that bear any kind of comparison with the iPhone features and ease of use. The hardware is relatively easy to duplicate, but the software is years ahead of anything else.

One prediction I made was that Apple would release an iPod version this summer, and that just came true, with the iPod Touch. The hardware omits the phone features, adds more flash memory and uses a slightly smaller form factor, but it completely leverages the software investment which is the most important part of the iPhone. This WiFi based iPod is also completely internationalized, which is its primary software advance on the iPhone. It's also clear to me why the software updates for the iPhone haven't delivered much yet, the team was working hard on the iPod Touch, and it takes a lot more work than you may expect to internationalize and test a worldwide product. This foundation also sets up the iPhone for its own worldwide rollout. The iPod Touch will create clear consumer demand for the iPhone around the world that will get better deals for Apple as it works its way around the world's Telcos.

The iPod Touch omits Google Maps, Stock Quotes etc, which are USA market specific. I expect that when you sync an iPod Touch in a specific country Apple will install whatever unique applications are available in that country, so US consumers could get a quick upgrade to match the iPhone application set. The Mail application is also missing, while it could be provided in a generic form, the iPhone version is setup to make it easy to connect to US based mail providers, so it could be part of a localized application bundle.

Another prediction I made was that a 3G iPhone would follow for the European market. The cut in price of the original iPhone creates an empty price-point at $599, which could be filled by a 3G capable iPhone with 16GB of flash and possibly GPS. Some commentators have suggested that this could be announced at Apple Expo in Paris on Sept 25th, and I think that makes sense. The 3G phone could be thicker to accommodate a larger battery, in the same way that the iPod models vary thickness in the product range.

The iPhone is a *platform* which is in its infancy. I'm looking forward to a lot of software upgrades which will broaden its market appeal. As an unfinished product, it also makes complete sense to me that there is no encouragement for developers. For many platform based products (from Windows to eBay) the developers go into business to extend the feature set, but the platform vendor ends up competing with their developer community as they bundle more features into the platform. It makes sense for Apple to release the bulk of the applications that they are working on in-house and do deals behind closed doors with major vendors such as Google (and I suspect Adobe and even Microsoft), where they can build a coherent set of features into a roadmap that completes the basic platform. *Then* open up the platform to the developer community to innovate from a much richer baseline.

The current hacker based developer community knows it is living on the edge, so expects to be disrupted each time Apple releases something. I'm sure they will hack the iPod Touch within a few days, but the key for Apple is to carry this initial enthusiasm into a real developer program, while keeping the number of hacked systems to a minimum. One way that Apple could make life difficult for the hackers would be to release software updates very frequently.

Some more predictions - what would a completed product look like?

1) Flash and Silverlight - I'm sure that Adobe has come under intense pressure from all sides to get Flash onto the iPhone. It's a matter of time. We are also seeing Microsoft take on Adobe with Silverlight, and if Microsoft could establish Silverlight as a viable platform on the iPhone, then they would also be in a better position for Windows Mobile platforms and any future Zune based iPhone competitors. Either way, this would provide a much more open way (compared to the bundled YouTube application) to stream animation and video to the iPhone and iPod Touch from any web site.

2) Camera - the current iPhone camera looks barely finished. The viewfinder ripples if you move, has few features and takes a long time to grab a picture. Its clearly a software based camera, and the ARM based hardware used in the iPhone usually contains a lot of accelerators for image and video capture and compression which do not appear to be in use in the current version. My guess is that a future software upgrade will move to a hardware accelerated camera with video capture support and features like digital zoom.

3) Instant Messaging/VOIP/Video - current solutions use a web page or hacked application to do call-back to the iPhone over the regular phone network. This requires centralized hardware resources that cost real money. The free way to do chat, voice and video over the network is on a true peer to peer basis, and I expect Apple to produce iChat for the iPhone, and eventually perhaps iChat AV to include video. A call from an Apple laptop or desktop system with a camera could show up as video on any iPhone, but a new iPhone model with a forward facing camera would be needed to act as a true portable two-way video phone. I also suspect that a faster CPU would be needed so this is likely to be a longer term prospect. It should also be possible for developers to port other messaging applications such as Skype.

4) Business Applications - the most requested being Microsoft OutLook/Exchange support at the same level as we have come to expect from RIM Blackberry's. I don't think full integration will come directly from Apple, but there is likely to be a food fight amongst third party developers to win this market. Business orientated smartphones are going to suffer. The main casualty will likely be the Palm Treo in the short term, and the RIM Blackberry and the Windows Mobile based systems in the longer term. I doubt that any of these players will be able to get their platform software into the same space as Apple fast enough to hold onto this market. If RIM is smart, they will do an iPhone port of their application and hold onto their dominant position with the backend infrastructure for corporate messaging, while gradually losing ground to iPhones in the handheld device space.

In January I said I would wait before I got an iPhone, but it was too good, I wanted one, and my wife bought me one when they first came out. It redefines the market, and the US based phone market was ripe for a serious upgrade. I also have a work-provided Verizon based Blackberry and I carry both. When better business oriented email and calendar integration arrives, I'll return the Blackberry.

Some of you may be wondering about my homebrew phone. Its still a work in progress, and I expect to have it up and running shortly. It took a few turns to get everything on the Gumstx Goliath board working properly.