The iPhone Effect
Now that we know an iPhone is headed our way, we should be asking ourselves how will this impact the industry and what will be the response from Microsoft and the rest of the software and hardware players in the mobile phone market.
Here are some of my thoughts. Before reading them, please be fore-warned that I am taking the success of the iPhone here to the extreme. While all of the ideas below have a foothold in reality, in practice only some of them are likely to occur and the degree of their realization may vary.
- Microsoft will have to create its own phone and will no longer be able to rely on third parties. This is just like they had to do with Zune in order to compete with the iPod, only this time it will happen a lot faster, maybe we will even get some announcements (not products though) before the end of 2007. They will not wait till the iPhone takes the market, like they did with the iPod, since they are now smarter (hopefully) and they have much more to loose. Regarding their Windows Mobile partners, well, we know already that they have no problem screwing their partners (PlayForSure anyone? Or is it SureNotPlay...).
- Microsoft's Windows Mobile partners should all dump Windows Mobile right now and switch to Access (the buyer of Palm OS and creator of a Linux based OS for phones). Since Windows Mobile will no longer be partner friendly, Palm OS may blossom again and its acquisition by Access may prove to be one of the best deals one could make. Of-course the iPhone will make them a niche player, focused mainly in enterprise applications along with Blackberry and Motorola's Good, nevertheless the enterprise market will offer enough growth to make them successful companies.
- Nokia will realize that the only Nokia device that can maybe compete with the new iPhone is the N800 Internet Tablet. They will have to integrate cellular capabilities into it, before the end of 2007 or it will be too late for them. They will also need to come up with a super cool user interface and to better leverage their touch screen. One possibility here is to fully embrace Yahoo Go and to build on it a fancier interface.
The only thing that will work for them is their open platform approach, which will stand in sharp contrast to the Apple's closed system and the new closed system from Microsoft.
- Google and Yahoo will fight over who gets to put their web applications on the iPhone. Apple will be the big winner continuing to play them both and taking the best features from each. Apple will not allow neither Google Talk nor Yahoo Messenger to run on their phones, and instead they will use iChat, making it the number one IM tool on mobile devices, leaving AOL far behind.
- Danger (the maker of Sidekick) will fight hard to avoid chapter 11, since the iPhone is targeting their market so they will unfortunately be the first casualty. In fact their 2007 sales will likely decline sharply.
- Cisco will sue Apple over iPhone but this will blow away after a while and will not become an issue.
The "Apple-ization" of Microsoft will continue and will turn into a huge weakness for Microsoft. Microsoft is essentially moving the game into Apple's home court and this will cost them. As is the case with almost any huge monopoly, their own mistakes will defeat them or in this case their attempt to beat Apple in Apple's own game.
In the same time, we the consumers will become more and more dependent on closed and well-integrated platforms that are easier to use but are also less flexible and fully controlled by this new software and hardware monopoly called Apple. This is the dark side of Apple, and we the consumers will switch to the dark side, allowing Apple to become as big as Intel and Microsoft combined.