The Second Coming of the iPhone

To commemorate the launch of the second version of Apple’s iPhone, I’d like to revisit my original iPhone article from one year ago. In that article I theorized why the iPhone would not succeed, at least not in its first incarnation, and why it would not be until its third version that it would be a runaway success.

So, one year on I still believe that it will be the third version that will cement the iPhone’s position in the same way that the third version of the iPod led to the iPod becoming pervasive. The iPhone definitely has the potential to become as pervasive as the iPod, but it is still not ready.

When I look back at the specs I predicted would lead to ultimate success, Apple has only moved part of the way there with its second iPhone. If Apple is truly honest with people, this new iPhone really only serves to take the iPhone global (through the addition of 3G) and to enable more accurate location-enabled applications.

Those are really the only two new features of note on the phone. This new iPhone is really only a minor tweak, a repackaging of the existing iPhone so they can drop the price and have it better accepted globally, not the revolution that is truly necessary to finish the job of making the iPhone the number one mobile phone in the same that the iPod became the number one digital music player.

And what about the price drop?

Here is my theory on that. The price drop serves two purposes. The first is to hopefully increase sales outside of the USA where people looked at the original iPhone as an over-priced, under-powered toy (no 5MP video camera, no 3G, etc.). This offering fixes the 3G and price problems, but does not address the camera issue. This leads to the second purpose of the price drop. This “new” iPhone is to be the entry-level phone in a new expanded lineup that will come at Macworld in January, if not before. My leading thought is that the new iPhone Pro is likely to launch in October – just in time for the holiday shopping season.

The iPhone Pro will likely come with the specifications I listed in last year’s article. Apple’s strategy is brilliant really. By “launching” the low end phone before the high end phone, it is an easier sell, and in that October-January timeframe the carriers will be able to drop the price of the low end phone even more (to either $99 or even to FREE) and spread it even farther. The other reason to launch the low-end phone first is to give developers an incentive sooner to develop applications for the iPhone/iPod Touch platform sooner, which will serve to enhance the value of the iPhone Pro when it launches.

At the launch event for the iPhone Pro in October or January, Apple will be able to make a lot of noise about all of the applications that the new iPhone Pro will be able to take advantage of and they will be able to highlight a few new ones that take advantage of the capabilities unique to the iPhone Pro. The main new features of course will be a 5MP swivel video camera (or a front/rear facing camera combo) and a video iChat application for the iPhone Pro. This capability will then be introduced into a new low-end phone this time next year at the WWDC.

As a recap, here are the features that I predicted one year ago for the third version of the iPhone (noting those achieved), which I now believe will be the iPhone Pro that will launch in the October-January timeframe:

1. 5-megapixel swivel camera (or paired with a 2-megapixel screen-side video-enabled lens)
2. Video iChat capability (iChat AV)
3. Next generation Bluetooth
• DONE – I think – Bluetooth 2.0 + EDR
4. A slightly bigger screen (every millimeter counts) – if the bevel can be reduced
• UPDATE – Phone might get smaller instead
5. 16gb or 32gb of flash memory
6. Hopefully a faster 3G or WiMax network connection
• DONE with 2nd version
7. 802.11n WiFi
8. Faster processor with lower power needs
9. Improved battery life
10. Lower price – $299 or less
• 2nd version hit $199-299 – iPhone Pro will also be priced at $199-299 and v2 will drop in price to FREE-$99

So, who thinks I’m right?

Note: These are purely my opinions based on my understanding of technology and of strategy and are not based on any inside knowledge.