Responding to your cons:

1) I don't think it will hamper sales. In fact, when you can finally get it on the other carriers there will be a lot of pent up anticipation to get their hands on it. (Luckily, I'm with Cingular, baby!)

2) Cingular will only be supporting the phone coverage part of the device. Apple customer service will handle the rest (at least that's what I heard.)

3) My guess is that they're going to release a full screen ipod as well. Why do I think that? Because the iPhone is only 8gig. That's not a lot of room for us that are used to carrying 40 gig of music and video around.

4) Do you really think that price will be a factor? Part of the reason Motorola's RAZR was so big (besides the look) was that it was so expensive and not easily attainable as far as price was concerned. Those early adopters will drop the $$ to get it and others will aspire to have it. If it was a $99 deal then that would be detrimental to the "cool" factor.

Surely the carrier will supplement the price tag when a 2-year agreement is signed. Don't you think so?

Great points in your article. I'm not sure what the motivation was to sign an exclusive contract with Cingular. Seems short-sighted on its face. Apple doesn't have the same influence in the cell phone market as it had in the music download market when they launched iTunes.

i do agree with spike about the price factor.
when a product is considered cool enough, price in not an option. so it was for the ipod which do not come for few bucks but it is rather expensive. a key issue to me is the capability to close deal for movie library, too.

This is an interesting post. I do wonder if the "cool factor" or the "status factor" will override price objections on something as ground-breaking as this. I suspect Apple will sell a fair number of these, but I wonder if they will hit their projections. Even 1% of this market constitutes the sale of 10 million units, after all. This remains to be seen.

Thanks, Spike and Gianandrea for your observations. "Cool" does enter into the equation when it comes to Apple products. And let's remember that the initial iPod wasn't a product that was positioned to hit a popular price point.

Cam: another good observation. When Apple planned its launch of the iPhone, the company had to know how competitive this category is. The company had to also know that, as you put it, it has "no influence" in this market. Yet, they had to be fairly confident that with such striking new capabilities, they could build a market for this product. It will be interesting to see how the iPhone performs on its debut in June.

It's obvious that Apple has once again demonstrated that they are both innovative and forward thinking. My only pet peeve is that many folks are acting like the product will revolutionize the entire industry without weighing all the factors and maybe waiting a bit.

Ted, similar to your balanced approach—here are a couple of related readings.

http://communities-dominate.blogs.com/brands/2007/01/handicapping_th.html

http://darmano.typepad.com/logic_emotion/2007/01/sobering_though.html

The "Multi-touch" interface is the new crowned jewel for Apple, Inc. Everyone will want it on iPods, on remote controls for TVs and all appliances in the home and in the the office. That is where Apple is being revolutionary, just like it was with the mouse and the click-wheel. That is where Apple is establishing itself as the innovator of "cool" technology. The iPhone is just the beginning... the initial form factor of a wonderful new way to interface with technology. Apple, Inc. continues to THINK DIFFERENT!

I think Apple has a problem. Let's not even talk about how they're about to lose their second big lawsuit in a year over the iPhone name they don't own (the click wheel they didn't invent cost them $100 million when they lost to Creative).

Smart phones are business tools and are bought by corporations. That's who buys the expensive phones, be they Treo's or Blackberries or the others. Apple isn't going to get a nickel from this market. No CFO is buying a music device for his sales force. They're buying Blackberry (and management gets the Treo). That leaves us with a $500 phone that no business user will use.

Apple's installed base is students, graphic artists and iPod owners. Not enterprise customers.

The price point is fine, just not for their customer. The product is great, just not for the customer who can afford it. Sounds like how Sony launched the MiniDisc way back when -- a $1000 Walkman for Generation X, who had $100 in disposable income.

Every VC in Silicon Valley will buy one. They may account for 10% of the world's disposable income, but not 1% of the total phone market.

Their success depends on how fast the price point hits $199. And that's about it. My opinion, of course.

stephen, you raise a good point for the american point of view. but you should rememeber that us are not the key market for mobile phones: europe and far east are definitely bigger. and in these continents business tools policy may be not so strict as in the us. i did see a lot of top managers here around with the ultra cool and at that time very expensive motorazr.
and last, the ipod owner profile, i suppose, it's little older that we can think. ipod has a cost and has always been expensive, more than other mp3 players.

Gianandrea -- you raise a valid point. Let's keep digging deeper here.

I'm not positive about this, but my impression is that Apple's core market (forgive the pun) is the US. They certainly have no significant presence in Japan or most of Asia. Europe? Not sure, I'll take your lead here. But will a European CFO pay double for the same functionality when devices from established players meet their needs?

I love the industrial design, the human factors, the reinvention of the category. I'm a bit stunned by the arrogance of the name, especially when they knew they didn't own it. Strange, isn't it? Did Jobs just tell his team to 'get it done' and no one had the guts to tell him that they couldn't? Who knows. And I'm very skeptical that a $500 music phone is going to do well until the price drops in half.

Thanks David, Tom, Stephen and Gianandrea for your interesting points of view and comments on the iPhone. I'm keenly interested in following this story. It'll be interesting to see how this ground-breaker does when it goes on sale in June. And Stephen, I agree, new technology or not, the $500 price is steep. That will no doubt, limit the number of buyers in my opinion, cool or not.

Thanks David, Tom, Stephen and Gianandrea for your interesting points of view and comments on the iPhone. I'm keenly interested in following this story. It'll be interesting to see how this ground-breaker does when it goes on sale in June. And Stephen, I agree, new technology or not, the $500 price is steep. That will no doubt, limit the number of buyers in my opinion, cool or not.

iPhone is available with Cingular ONLY!? And what if I am stuck under contract with a carrier OTHER than Cingular but still want a iPhone?
Well, the only solution I could fine was http://www.Cellswapper.com - they get you out of any cell phone contract!

I'm just wondering how long it will take Apple to offer a more modest version of the iPhone at a much more attractive price point. My guess is a few months to a year, depending on initial sales.

After all, they took this tack with the iPod. Remember?

Hmmmm.... Stephen, I think maybe you're confusing the core Apple market for computing (students, graphic designers) with the market for iPods. Many, many more iPods have been sold than there are Apple computers out there. Apple is counting on iPod aficianados to transfer their product satisfaction feelings to what Apple probably thinks of as a brand extension.... a truly music-capable smartphone. As a business owner, I can't wait for this... I HATE the keyboards available on today's phones, I dislike the limited e-mail and web capabilties, and the iPhone's features will make that part of managing my business on the go so very much more pleasant (at least, I think it will!)

Mandy,
Thanks for making some very good points. You are right about the fact that Apple iPods have far outsold the company's Macs. Question: do you think Apple is going to move increasingly in the direction of developing products like the iPod and the iPhone in future, and perhaps get out of the computer business?

Also, just curious, but are you planning on purchasing an iPhone when it hits the marketplace, or do you plan to wait and see since Apple will surely come out with newer models at lower price points?

I don't think Apple will get out of the computer market... I think they will continue to build their brand as the "hipper, smarter, innovative" alternative to a PC. I think you WILL see Apple continue to make forays into consumer electronics (witness the Apple TV system... can an Apple-branded TV screen be far behind?).
I'm ambivalent about an early iPhone purchase. It all sounds good... but I am not a current Cingular customer, and I will want to hold one in my hands and see how it operates before I go through the hassle of changing my long-standing cell phone relationship.

Thanks, Mandy. I like hearing the thoughts of savvy people, and you certainly are. I, like you, want to see the actual iPhone before I make any decisions about its value for the price ratio.