Commentary on Jefferson Graham (USA Today) iPhone interview w/CEOs Jobs and Stephenson

Jefferson Graham's interview of Steve Jobs and AT&T CEO Randall Stephenson (USA Today, 6/30/07) is the only non-technical piece written on iPhone that's worth reading. So go read it. I intentionally pulled as little text as possible from the piece, so this is not a summary or "best of" cut of Graham's work. My thanks and kudos go out to USA Today and Jefferson Graham for an excellent interview.

Graham: The critics were effusive in praise for the iPhone, but had issues with the iPhone and the EDGE network, which they say is slower than others. How do you respond?

Stephenson: With a device like this, you need a broad based network that covers every nook and cranny of the country. That's EDGE. It does a nice job.

The AT&T 3G device I have here falls back to EDGE, so at least one 3G device qualifies for "...every nook and cranny."

Stephenson: (cont'd) It [iPhone] also has Wi-Fi, which is better than anything you'll find in any handset.

This is incorrect and unfair to other handset manufacturers. There are many handsets in iPhone's price range, some in AT&T's own catalog, that are equipped with Wi-Fi.

Jobs: [...] What we've found is that Edge is terrific for e-mail and basic Internet usage. When people need more speed, there's Wi-Fi. The nice thing about Wi-Fi is it's way faster than 3G. People are in areas with Wi-Fi much more than they think. I walk into work with the iPhone, and it instantly switches to a Wi-Fi network. If I'm walking down the street in downtown Palo Alto, the iPhone will switch from EDGE to Wi-Fi. It's very fluid.

I apologize to USA Today for pulling this long passage intact, but Graham's question drew Jobs into an answer that's his most relevant and telling statement on iPhone to date. Jobs' pitch that Wi-Fi is commonplace supports the use of iPhone as a handheld PC (like MS Windows Mobile Pocket PC Edition). A consumer who already has a phone would find iPhone well worth its cost in this capacity, but Apple has explicitly blocked that option. I believe that's bad business. I understand that its contract with AT&T makes it dicey to open iPhone to other carriers, but Apple can remove immediate AT&T activation as a requirement for making iPhone function as a handheld PC, and it must be pressured to do so.

Jobs also describes a usage scenario that positions iPhone as a mobile professional's handset, so it deserves to be judged against other devices in that category.

Graham: What about corporate e-mail? I understand that's an issue for many consumers, who may not be able to hook up to their company networks?

Great question!

Jobs: You'll be hearing more about this in the coming weeks. We have some pilots going with companies with names you'll recognize. This won't be a big issue.

Might this be the first of the third-party software developed with an unreleased software development kit? Perhaps that which will hit the fan is already in mid-flight.

Graham: When will the iPhone go on sale overseas?

Jobs: We have no announcement to make now.

I'm guessing that the deal with AT&T makes this dicey. For iPhone to be sold overseas, it has to be opened to multiple operators, including AT&T competitors that operate in the US and international operators that have roaming agreements with AT&T competitors. This would also create a gray market for re-imported iPhones.

Graham: So many analysts have suggested that with the expected success of the iPhone, Apple is about to be transformed into a different kind of company. What's your take?

Jobs: Working together with a partner like AT&T is a change for us. [...] By working together, we can come up with innovations that are exciting.

Stephenson: Voicemail is one of the least favorite products I sell. Now, with visual voice mail, it's a product I like.

Visual Voicemail is iPhone's killer professional feature. It's a significant step toward unified messaging, where all inbound communication is accessible through your inbox. I'd like to see all handset manufacturers and wireless operators jump on this. It requires a team effort, and AT&T and Apple deserve credit for bringing it together.

Graham: Do you still think you'll sell 10 million iPhones in the first calendar year — or will it be more?

Jobs: We think 10 million is a realistic goal.

If iPhone goes global, it'll hit that goal. Apple will have to open iPhone to developers to see those numbers in the US. Games alone would push iPhone over the top; VOIP over Wi-Fi, which could be done in open source, would be huge. If iPhone could be used as a handheld PC without AT&T activation and $60/month service, and if it was sold through Apple's broader iPod channel, its US sales would triple.

Graham: Except for operating system upgrades and Apple TV, the company historically announces a product and then has it for sale immediately. The build-up and hype for the iPhone has been unprecedented — will this change the way you market products?

Great question!

Jobs' response sums up to "no," and that's a good thing.

iPhone could have been done as a traditional quiet launch. It would have sold just as well, and the craze that Apple attempted to provoke wouldn't be the running joke that it is.

Copyright © 2007 IDG Communications, Inc.