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Six Questions (So Far) About the New iPhone

Posted by: Rob Hof on June 9, 2008

Now that I’m out of Steve Jobs’ famous reality distortion field, I have a few questions about the iPhone 3G announcement. But please add your own as well, since you know more than I what you want but didn’t get in the newest iPhone. Many other people have questions too, it appears.

1) Who’s subsidizing that $199 price? No doubt it’s the carriers, but Jobs didn’t say anything about that. UPDATE: In a brief interview, Apple COO Tim Cook told me carriers are indeed subsidizing the iPhone, though he wouldn’t detail how much.

2) Why no cheaper 2G or 2.5G version, as some had expected? Coverage with that technology is still much broader, right? Then again, this is the company that did away with standard floppy disks and even optical disk drives before anyone else, so it may be par for Apple’s course. UPDATE: Cook reminds me that phones revert to 2.5G if there’s no 3G network, so there isn’t really a big need for continuing to field a non-3G iPhone.

3) Why no overt comparison to the Blackberry? Seems like Apple’s aiming high, at the business hipster, more than the Crackberry corporate drones. UPDATE: Cook says Apple isn’t just aiming for the prosumer, noting that a third of the Fortune 500 are developing internal applications.

4) What about real business apps, like (a natural) or even Oracle and SAP? Now, those are enterprise. UPDATE: Cook says Salesforce is working on an iPhone version of its applications, and he says he expects many more.

5) What happened to the improved camera, and even videocam capability, that had been widely rumored? UPDATE: Cook just smiles when I ask if video capability will be coming in the future.

6) Why are investors so unhappy? The stock’s down 5% so far today. OK, it’s another month before it ships, but I can’t see other huge downsides here. Maybe investors think the profit margins won’t be as high on an iPhone at half the current price? UPDATE: Henry Blodget at Silicon Alley Insider figures it’s that the new iPhone won’t be available until July 11, which creates more than a monthlong gap in iPhone sales, since Apple stopped selling the old ones weeks ago. Also, AT&T won’t be sharing revenue with Apple, which is of course the reason it can afford to subsidize the new iPhone. So that’s a good chunk of revenue Apple won’t get. Clearly, it’s hoping to make it up on volume.

Reader Comments


June 9, 2008 10:02 PM

Is the battery life affected in anyway since the phone is smaller?


June 9, 2008 10:06 PM

What about multimedia messaging? I've had the iPhone since the release, and I love it, but it's extremely irritating to me that this important feature which I had in 3 previous phones for the past 3 years had picture messaging, and the iPhone still doesn't.


June 9, 2008 10:12 PM

Analysts like Blodget can't seem to add. Before AT&T was paying Apple $10 a month over 24 months, now they are basically paying Apple $200? $300 a month upfront (as the subsidy) ... basically it's the EXACT same amount, just that Apple gets it upfront now - that's really a traegdy? Oh, yea, and about 70 more carriers - before it was 10 million phones x $10 over 2 years now it's 45 million phones x $250 per sale ... Guess Blodget can't figure out what is the better deal.

jerry w

June 9, 2008 10:16 PM

When I can buy a legally sold iPhone in the U.S. that doesn't force me to use ATT as my service provider, I'll be first in line. Until then, I'll (sob) try to make do with my regular old phone that works most everywhere, and has a long battery life.

SH Foo

June 9, 2008 10:25 PM

The more iPhone Apple sells, the more potential customers it has for all the applications currently being developed. At 10% to 30% per application .. that would represent a huge potential profits down long term.

Further, as ipod does for the consumer, iphone would do the same for enterprise , to have more enterprise to consider Mac as a persoanl productivity tool of choice ..

Brian Addington

June 9, 2008 11:42 PM

When can we receive photos via text messaging?

Rolf Bork

June 10, 2008 2:50 AM

"Cook just smiles when I ask if video capability will be coming in the future."...what would stop Apple from taking the digital guts of iphone2 to create a low cost/high volume platform for many form factors.Basically a replay of ipod product family evolution? If so, when will we see Apples sub-notebook with iphone2 inside ? Natural Xmas 2008 present for all Apple lovers and the mobile platform for etc....and the platform for ehealth services.
Rolf Bork, BOD &


June 10, 2008 8:05 AM

From what I've heard the lack of media messages has to do with At&T rather than Apple. This could be wrong though. As far as using it on another carrier t-Mobile US doesn't have a very good 3G system and Verizon uses a different system not widely deployed world wide.


June 10, 2008 12:12 PM

No picture MMS, no productivity apps comparable to MS mobile. The disappointment continues. If they don't fix this soon, I am going back to my Palm Treo


June 10, 2008 5:15 PM

Note that the Treo 700p on Sprint also lacks picture MMS capability -- crippled.


June 12, 2008 3:29 PM

Why would you even ask about 2G or 2.5G?? Have you ever even looked at the AT&T website, or been in AT&T store??? They're hyping 3G right now, not 2G.


June 16, 2008 11:47 AM

is it possible for you to use the new iphone on any other network besides at&t?...cuz that would be awesome!!!!...


June 21, 2008 10:14 PM

How much will the iphone cost without a rebate?

Rob Hof

June 21, 2008 11:49 PM

@DanielWolfe0422: My understanding is that you can't buy the iPhone (at least in an authorized way) without activating it, and that entails the discount.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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