Analyst Angle: Why you shouldn’t buy the 2.0 iPhone

[706VZWUser]

By Rob Enderle, Principal Analyst, Enderle Group

Story posted: May 19, 2008 - 5:59 am EDT

With the recent announcement from RIM and the rumor of an entire new line from that company, coupled with some amazing new phones from companies like Asus, you may want to wait until later in the year to buy an iPhone. However, I know it is hard to avoid the Apple marketing juggernaut and the rabid rush to the stores when a new cool Apple offering comes out. I figured it would be wise to remind you about the initial release of the iPhone and the pain associated with the early adopters.

We learned a few things about the first iPhone. We learned where it worked well, we learned where it worked marginally, and we learned where it sucked. The 2.0 version of the iPhone is expected to be released in the first ten days of next month, and is also expected to be a vastly improved product, but one other thing we learned was that the timing of your purchase is important because a large number of the folks who lined up for days to buy the first iPhone got screwed.

Timing

I’m seeing increasing noise in the industry suggesting that Apple may be working on multiple phones but that some may not show up for a number of months. It is likely Apple will respond to known threats by competitors like Samsung, LG, Asus and RIM in any case and one of these phone designs may be a better choice for you.

Recall that with the first iPhone folks waited in line for hours only to find the phones readily available a few short days later. In addition, also recall that there were so many switching from other carriers to AT&T that the people who did the switching got overwhelmed, and a lot of people had to do without their phones for extended periods of time. It is even possible Apple will reduce prices again a couple months after the launch as they did the first time to accelerate demand into the back-to-school buying season. But this is probably unlikely.

Also realize that this 2.0 version represents a significant software change, which introduces third-party software onto the platform. This is likely to cause some initial breakage as the bugs are worked out. On this last, the process that Apple has put in place to apparently assure quality goes beyond anything I’ve ever seen on a platform available to third-party developers, and I think you can conclude that the breakage window will probably be relatively short.

This suggests your best bet is probably to not buy the iPhone on the initial launch weekend and instead wait until volume catches up with demand and the facilities to switch the phone, if you are switching from another service, catch up. I doubt you’ll need to wait a month but it probably would be prudent, given what happened with the first generation, to at least wait a week or two while following any breakage reports to ensure your experience will go seamlessly.

With any new product there is a period of time when initial problems need to be worked out and that, particularly with a phone you depend on, any breakage is probably not worth having the device early. Reviewers will probably have the phones around the end of this month but they’ll be personally serviced by Apple to ensure positive reviews so those initial reviews should be taken with a grain of salt.

Independent reviewers should have reviews up the day of the launch and these will likely be more reliable and give us a better sense where the new phone’s shortcomings are. (It is most likely to have battery issues given this is a common problem with first generation 3G phones).

Who won’t like the iPhone?

I’ve just become aware that RIM is planning on bringing out a new line of cellphones starting with the announced Blackberry Bold, and following with both clamshell and touch-screen products. This will allow IT to point to offerings they can approve and will fund over iPhones which, to them, appear to be more entertainment based. We are walking into a recessionary year and IT is very likely to want to contain any support costs. Trying to get approvals for exceptions when budgets undoubtedly will be very tight anyway might be a fast path to not getting the company to pay for any part of your phone service so be aware of the risks.

While the iPhone’s improvements will dramatically improve Web experiences and the device will interface much better with corporate e-mail systems, it still lacks the thumb keyboard that BlackBerry and Windows Mobile users have become addicted to. And until the device addresses this, it will probably not be acceptable to most who currently are addicted to a Blackberry-like device.

Some short iPhone advice

Oh, if you have a tendency to leave your phone in public places or drop your phone a lot you won’t have it long. These things are clear targets for thieves and I can’t tell you the number of them I’ve seen with broken screens so, if you get one, make sure you get a protective cover. It seems that mostly these are dropped when folks are rushing to pull it out of their pocket or purse or when they share them with others and the other folks drop them. Trust me when I say there are few things sadder than a brand new iPhone with a broken screen.

In addition, if you like to watch a lot of videos on the device you may want to pick up the extended battery made by Mophie and called the “Juice Pack.” It costs $100 but can add substantially to the battery life of the phone.

Wrapping up

I think we are moving to a time when our cellphones begin to aggressively encroach on the space normally occupied by laptop computers. Products like the Cellio Redfly which expand a Windows Mobile 6.1 cellphone into the capability of a full laptop are coming rapidly to market and will change dramatically how we use devices like this. I’m particularly impressed with the potential for an offering like the Redfly which may eventually work with the iPhone now that Apple has opened the platform up.

In addition, there are clear alternatives this round that might make a better choice. The new Samsung Glyde might be better for those that are power e-mail users and the coming Asus 3.5G M536 and Lamborghini phones may be worth waiting for.

Still, with what is expected to be a sharp price drop for the iPhone allowing it to sell in the $200 range you may not care. In any case, take your time, and buy smart as you’ll be living with this decision for the next two years of your phone contract.

[Janice]

This is a really good article! Lots of helpful tips toward the end of how to be careful with your iPhone. Thanks for sharing.