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Open email to Steve Jobs. iPhone - 1985 all over again?

post #1 of 26
Thread Starter 
10 days ago, I sent an email to Steve Jobs, I'm not daft enough to believe he will have received it, but I feel passionate about the mistake I believe Apple is making for a second time. I've copied it below.

Discuss!



Dear Steve,

I am writing to offer feedback re the magical iPhone.

I bought an iPhone ten days ago. I believe it is arguably the greatest product Apple have ever produced. The interface is sublime. For the first time a device exists that actually manages to make all of it's function equally as easy, and fun, to access and use. People have complained about the tech spec of the phone, and to be fair it is poor, but they're missing the point. Its about the interface and the effect that has in enabling the functions for the average user.

All the above aside, today I returned my iPhone and got a refund.

The reason. It's cost of ownership is making me feel like a mug. I can comfortably afford it, but I don't enjoy being made to feel like a mug.

Apple, I can see, are about to repeat history and lose the advantage once again. Apples apparent greed will , once again, result in leading a revolution in interface design, whilst presiding over a dwindling market share.

Other manufacturers will produce poor copies of the iPhone. Touch interfaces that are not as good....but good enough. Note the new LG Viewty.

Phones that are nowhere near as elegant or intuitive to use as the iPhone, but are good enough.

Competitors will borrow ideas close enough to the iPhone to provide the 18-25 market, the market that has made the iPhone 'cool', with phones that are 'iPhone'ish' enough, and crucially, are affordable, with tariffs that are around 35% lower yet with FAR more included talktime.

I understand Apple's reasons for not wanting to give away the phone. I agree wholeheartedly. People are always willing to pay a lot more for a desirable product, but don't overestimate the iPhone Steve, it's not so much better than some of the new phones it's inspiring, that people will be willing to be made to look stupid. No one likes to be made to look an idiot.

Apple charges for the phone.
In addition it takes the fee from the network that would usually subsidise a free handset.
In addition it takes an additional iPhone 'royalty' which actually increases the cost of the tariff.

Apple makes it's customers look dumb when they buy an iPhone. Apple make us look like mugs.

I believe Apple could charge for the phone AND take the usual phone subsidy fee and make a huge amount of profit on each phone. The iPhone would retain it's cachet, Apples earns lots of money, and it's customers don't feel so dumb.

You'd also sell a whole lot more.

I don't expect you to take any notice of this message of course. I'm just one guy. But I can see Apple repeating the Mac/Windows mistake all over again. Someone has to say something!

All the very best.

A long time admirer and Apple user.

Mike Free
post #2 of 26
I wanted to stop reading after 'magical' but I went on anyway.

What you're basically saying is that Apple is being greedy and should charge less money for the iphone. Somehow I think that email will go completely unnoticed.

That would be like me standing outside the Walker's crisp factory shouting '45p for a packet of crisps?? It doesn't even look like you used a whole potato and they only cost about 5p each. Y'know if you guys would just cut down your profits and stop being so greedy, I'd actually want to buy a packet of crisps and not feel like a mug.'

To which the company director would close the window on his sauna room and get his chauffeur to run me over in his Bugatti Veron.

The way Apple gets people to buy products is by having a persona that they project through the media. That they are a caring company who want people to have a good experience with their computers. In reality, they sell very limited, niche hardware products with a locked down operating system where they have control over everything and their main interest is maximizing profits like any other company.
post #3 of 26
Thread Starter 
Well put Marvin. I think *if* Apple did read my message, and all they took from it was 'Apple is greedy..(whine, whine, whine)*, then yes, of course they'll ignore it & just enjoy another ride in the Learjet.

But that was not my point. Perhaps I made it poorly.

Apple have made three industry changing products in their history. The Mac , the iPod & the iPhone. All three have been industry changing because of their user interface. For the Mac is was introducing the concept of windows and mice. For the iPod, was it's the scroll wheel interface. For the iPhone, it's the 'magical' touchscreen interface.

Apple blew it's chance of making the Mac the world's default computer interface because it refused to license it's OS. Microsoft said thank you very much and built a OS that was nowhere near as good, but crucially, was good enough. The rest is history.

The above theme is now being repeated with the iPhone.

In both cases, the public were/are being asked to pay a very high premium for a better (I'm only talking interface) product.

Interestingly, the iPod is the only product that Apple has ever made whereby it's cost of ownership is about the same as that of it's competition. There's no 'penalty' for owning an iPod, and it benefits from, unquestionably, the easiest user interface. This has resulted in a home run for Apple.

So my point to Apple is simply this. Remove the penalty or be happy with a 1-3% market share.

At present they are heading for 1-3%, and I'm not talking about in the first year, I mean full stop!.

The industry will (and is already starting to) learn from Apple's innovation and mimic it. Their products won't need to be as good as an iPhone because they'll have no ownership penalties, they just need to be good enough. The Viewty is a good example of this.

If you were to offer people the Viewty v the iPhone, on the same contract, with the same choice of networks (ie any), I would bet that from my experience of people's reaction to actually handling the Phone, 90% would go for the iPhone despite the Viewty's far superior technical spec.

I have a lad who works for me, he's 20, on a decent wage with very high disposable income (lives at home). He LOVES the iPhone, but refused to live with the penalties that come with it, ie O2 with a poor yet expensive contract, so he went a got a free Viewty. He knows it's not as good, but he's delighted because it's good enough.

Enough said.







Quote:
Originally Posted by Marvin View Post

I wanted to stop reading after 'magical' but I went on anyway.

What you're basically saying is that Apple is being greedy and should charge less money for the iphone. Somehow I think that email will go completely unnoticed.

That would be like me standing outside the Walker's crisp factory shouting '45p for a packet of crisps?? It doesn't even look like you used a whole potato and they only cost about 5p each. Y'know if you guys would just cut down your profits and stop being so greedy, I'd actually want to buy a packet of crisps and not feel like a mug.'

To which the company director would close the window on his sauna room and get his chauffeur to run me over in his Bugatti Veron.

The way Apple gets people to buy products is by having a persona that they project through the media. That they are a caring company who want people to have a good experience with their computers. In reality, they sell very limited, niche hardware products with a locked down operating system where they have control over everything and their main interest is maximizing profits like any other company.
post #4 of 26
Apple have pitched the iPhone at the price they want. Apple is not going mass market, never has, but is attempting to maximize profitability.

So, while I think the iPhone is brilliant as a device, the total cost of ownership is too expensive for me, and it lacks the performance and some basic phone/SMS functionality that I want/need that all other phones support.

Apple doesnt want my business, probably never has, and so isnt worried about catering to my whims about functional deficiencies in SMS, MMS, email etc. so I could rid myself of a Blackberry or Nokia. Nor is it concerned about my budget. It's a bit like complaining that Porche doesn't make a car at VW Golf prices. But, there are many others who will buy iPhones.

So while I wont be buying an iPhone, I really can't expect Jobs to give a dog's bollox. What makes you think that Jobs would care about losing you as a customer?

Nokia gives me all the functionality I need at a much lower price point and will address UI and prosumer phones more agressively going forward. It's the marketplace.
post #5 of 26
Quote:
Originally Posted by MikeFree View Post

Interestingly, the iPod is the only product that Apple has ever made whereby it's cost of ownership is about the same as that of it's competition. There's no 'penalty' for owning an iPod, and it benefits from, unquestionably, the easiest user interface. This has resulted in a home run for Apple.

So my point to Apple is simply this. Remove the penalty or be happy with a 1-3% market share.

I think you've hit the nail on the head there. I actually agree with you and I think Apple would do well to go mass market however as you say, the other option is to be happy with the low market share. Jobs actually almost said this on stage at one of the keynotes. He said that they are happy if their market share goes up by a point, which suggests it's not the most important thing to them.

It's the same with their computer hardware. They can and should go mass market with products that people are actually buying from competitors in droves albeit with lower profit margins. Some companies will go so far as to make losses on products to gain market share, especially games consoles as it pays off in other ways (software and music sales etc). From the launch of the iphone, it was clear that Apple had no intention of making a loss even if it flopped by coming in with a $600 starting point.

One question I have is whether the contract pricing is Apple's fault. It's the same when it comes to itunes content. Because it goes under an Apple brand, it seems like it's them who control the pricing but surely it's more the content/service providers who are being greedy. The carrier lock-in is definitely a part of this though as it removes competition and means prices stay high.

Mobile phone companies have always been greedy and on the iphone, they've clearly pushed it right to the edge of acceptability. I know people who were already on £35 a month contracts who got an iphone so my guess is it was aimed at them. I imagine that this cost will come down over the next few years but by then the idea will be old so Apple are likely cashing in while the concept is new and they are the market leader in touch phones.

This propagates their reputation as the innovators.
post #6 of 26
You could just have said:

Steve,
Please stop ripping us off with the cost of the iPhone, or you'll let your' famously-large (and annoying) ego get in the way of this great product from selling in the numbers it really should.

Take your head out of your arse man.

Long time Apple fan, but now I hate the ground you walk on,
Mike Free

Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #7 of 26
Quote:
There's no 'penalty' for owning an iPod, and it benefits from, unquestionably, the easiest user interface. This has resulted in a home run for Apple.

Actually this is not entirely true. If you search through the web people complained about the iPod much the same as they are complaining about the iPhone.

People complained the iPod needed an FM tuner, people complained that it did not play windows media files or real media files. People complained that songs bought from iTunes with FairlPlay DRM could not play on other devices. Apple was criticized for being too closed and it was predicted that competitors would catch up and defeat the iPod because of these limitations.

Apple continued with its plan and so far none of the detractors of the iPod have been right.
post #8 of 26
Steve today is not Steve circa 1985. I think it's safe to say that he has learned a few lessons between then and now, as has Apple as a whole.

Stop worrying about Apple. They'll be fine.
Cat: the other white meat
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Cat: the other white meat
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post #9 of 26
Considering Jobs was stripped of his powers early 1985 and left Apple by September (?) 1985, I don't think he is envisioning 2008 being a repeat of 1985, no matter what happens.

You're thinking that Apple will not release a mid-range cell phone? By mid-range, I mean $150 to $250 and sometime in mid-2008 or 2009.

The free with contract phone? Probably not. But a mid-range phone? Um, yes, I think they will do it.
post #10 of 26
Thread Starter 
Quote:
Originally Posted by TenoBell View Post

People complained the iPod needed an FM tuner, people complained that it did not play windows media files or real media files. People complained that songs bought from iTunes with FairlPlay DRM could not play on other devices. Apple was criticized for being too closed and it was predicted that competitors would catch up and defeat the iPod because of these limitations.

You're talking about 'spec features' again. Apple has never built any product that has led on 'spec features', everyone always get's hung up on tech features and are missing the point. It's about the interface!

Mac - Mac OS
iPod - Scrollwheel + iTunes
iPhone - Multi-Touch

The interface is so important to the iPhone because 'most' people just want an mp3 player to play their music collection. You can keep adding all the features you want, the point is most people aren't that bothered. They just want to play their music collection & the iPod makes that job easier than any competitor because of it's interface. The iPhone won out because it's does it's core job better than any other product (thanks to it's interface) and ( re it's core job) there are no disadvantages to having one.
People who wanted a radio, bought a competitors product. Which kinda shows you what % of people are bothered by the radio thing.
post #11 of 26
Thread Starter 
Quote:
Originally Posted by Splinemodel View Post

Steve today is not Steve circa 1985. I think it's safe to say that he has learned a few lessons between then and now, as has Apple as a whole.

Stop worrying about Apple. They'll be fine.


I'm really not so sure he has. I can't help suspecting that the success of the iPod kinda took Steve by surprise in a way. It was not a core product to him when he launched it. As a result, he didn't bother adding any financial penalties to it in the way he always does when he believes he has a 'revolutionary' product. To be honest, I think it's success took Steve initially by surprise.

With the iPhone, Steve is behaving exactly as he did with the original Mac. He utterly believes he has a revolutionary, industry changing product. I happen to think he's right. Unfortunately though, with the Mac, this belief led him to overestimate, by a very large margin, the value of his revolutionary product to the market.

I think he's doing exactly the same with the iPhone.
post #12 of 26
Quote:
Originally Posted by MikeFree View Post

I'm really not so sure he has. . . .

I'm glad you know so much about this guy. Secondly, Steve is not as all-powerful as you might thing: there are other people in the equation, and a short glance at the past five years of Apple's marketing indicates they are indeed impactful.

Again, stop worrying. Why is it such a big deal? Have you sunken your child's trust fund into Apple stock?
Cat: the other white meat
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Cat: the other white meat
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post #13 of 26
Thread Starter 
Quote:
Originally Posted by Splinemodel View Post

I'm glad you know so much about this guy. Secondly, Steve is not as all-powerful as you might thing: there are other people in the equation, and a short glance at the past five years of Apple's marketing indicates they are indeed impactful.

Again, stop worrying. Why is it such a big deal? Have you sunken your child's trust fund into Apple stock?

LOL, no, but I wish I had four years ago!!! I just want Apple to win with iPhone like they have with iPod.
post #14 of 26
Quote:
You're talking about 'spec features' again. Apple has never built any product that has led on 'spec features', everyone always get's hung up on tech features and are missing the point. It's about the interface!

I'm pointing out that what you've said in your open letter about the iPhone, those same things were said about the iPod year ago.

There were things wrong with the iPod, competitors would copy it and do better, that Apple was being closed. No one knew the iPod was going to be what it has turned out to be.
post #15 of 26
Quote:
Originally Posted by MikeFree View Post

just enjoy another ride in the Learjet.
.

Steve has a Gulfstream
post #16 of 26
Quote:
Originally Posted by MikeFree View Post

I'm really not so sure he has. I can't help suspecting that the success of the iPod kinda took Steve by surprise in a way. It was not a core product to him when he launched it. As a result, he didn't bother adding any financial penalties to it in the way he always does when he believes he has a 'revolutionary' product. To be honest, I think it's success took Steve initially by surprise.

With the iPhone, Steve is behaving exactly as he did with the original Mac. He utterly believes he has a revolutionary, industry changing product. I happen to think he's right. Unfortunately though, with the Mac, this belief led him to overestimate, by a very large margin, the value of his revolutionary product to the market.

I think he's doing exactly the same with the iPhone.

You know, I get a kick out of people saying things like this in regards to a figure like Jobs or Bill Gates or Steve Ballmer.

Think about it. Do you realize what you are saying? In regards to an individual who has been in the business of making and selling computers for 30+ years? One who was there from the beginning, when there was no computer market, and was able to survive and be relevant for all of those 30+ years. That's freaking hard. Jobs turned a garage business into a billion dollar business. Nearly every step of the way, he's turned disparate, research-like technology into usable product. He also turned a $10m investment from an ILM castaway to selling specialty graphics computers to a multi-billion dollar company; and as far as I can tell, that was his hobby. When he came back to Apple, he turned it from a 6 billion dollar company to a 20 billion dollar per year company. He's had grand failures, like NeXT, but even that was resurrected into Mac OS X. In a way, the iPhone is a NeXT computer.

He probably understands marketing really well. And discussions of the iPhone's market approach I'm sure was a long and wearying battle of opinions from people who have been in the business of marketing (and the economics of the business) for a very long time. And dollars to donuts, it isn't as simple as you think, nor do I think you even have a remote inkling of what is going through his mind.

Not to say that mistakes can't happen. PowerMac G4 cube, anyone? iMac sunflower? But attributing mistakes to some habitual weakness from a person who's been in the business for such a lone time is pretty far out in left field.
post #17 of 26
Well said, THT.

For what its worth, MikeFree, all youre saying is that, point blank you want the iPhone to be successful but you dont agree with how theyre selling it because it gives the impression they're being greedy, which makes you feel stupid. You say the iPhone has an awesome interface and competitors are trying to copy it with their own phones. You believe Steve should do something to make sure his interface wins, such as lowering the cost of the phone, how much they get from cellular services, etc..

I have an iPhone and Im very pleased with it. If that gives anyone the appearance that Im dumb or a mug, as you call it, then by all means Im fine with that. Ive personally demonstrated the iPhone to those who later went out and bought one. At present that stands at 28 people, which is impressive since I dont work for Apple or AT&T. All of them enjoy their iPhone and with each new software update theyre even happier.

My point, MikeFree, is that whatever marketing tactics Apple has decided to use are, in fact, working. Apple has already sold over a million iPhones and that was during its highest price point. Steve set a goal to capture 1% of the cellular market, which is 10 million iPhones, by the end of 2008. He is certainly off to an amazing start.

According to several websites (including this one) Apple has already filed several patents regarding their multi touch interface and extending ways in which it is used and across devices other than the iPhone. In short, they are introducing a new platform, not just a new product.

So if you really want the company to be successful and Steve not to make a big mistake, then you shouldnt worry. He wont. If he does, it wont matter.
post #18 of 26
Quote:
Originally Posted by MikeFree View Post

Apple, I can see, are about to repeat history and lose the advantage once again.

What past history event are you referring to?

If you are referring to the Mac having revolutionized the Personal Computer yet having lost that advantage because Apple didn't license the Mac OS as some argue. You are then leaving something very important out of the equation.

Windows prevailed for one reason and one reason only, IBM hired Microsoft to develop software for their existing business market. That was a huge established customer base that did business with no one but IBM. In essence, Microsoft was given an already established market and eventually tock control of.

Apple on the other hand created a market from nothing while Microsoft with its advantage stole ideas from.

What could have Apple done different at that time?
post #19 of 26
Interesting letter.

The cost of the iPhone itself isn't the deal breaker for me. Its AT&T. I don't want to be forced to using and paying for their service. This should have been the point of your letter. Not the cost of the phone itself (it will come down in price).

Dave
post #20 of 26
Quote:
Originally Posted by MikeFree View Post

As a result, he didn't bother adding any financial penalties.


Ok 2nd time this is posted. It's showing me you weren't paying attention to Apple back in 2001. The iPod cost twice what a similar "hardware spec'd" player cost. Yes twice means double or 100% more than any other player at the time. You know why Apple does this? It's called manufacturing. They're not gonna pull a microsoft and dip into profits or cash reserves to subsidize the iphone for market share. Companies don't stay in business with market share. But since it's a new product that means production lines, R&D, new component pricing in smaller quantities, new marketing, new packaging. That means they will sell it for a profit now and as the costs to make it go down so do the prices but profits continue. So if it costs too much now wait till it comes down.

My first iPod was 40gig and cost me 500$. My first iPhone does a whole lot more and cost 400$. How many iPods cost 500$ now? Apple can't just ramp up and be able to sell 100 million at 100$. That takes lots of time. So if you can't afford it, wait. In time price will come down.

By the way in the US. after 2 years of contract the iphone is cheaper than any other smartphone you can buy by at least 200$ or more.

Apple just in the last few years was able to lower the ipod price in line with competitors but while they are making a profit no one else is.


Also please visit http://Roughlydrafted.com and brush up on why Apple failed in 1985.
post #21 of 26
Thread Starter 
Quote:
Originally Posted by Dave K. View Post

Interesting letter.

The cost of the iPhone itself isn't the deal breaker for me. Its AT&T. I don't want to be forced to using and paying for their service. This should have been the point of your letter. Not the cost of the phone itself (it will come down in price).

Dave

It's the total cost that bothers me, not the cost of the unit, which i actually think is very reasonable, but you're right, the network restriction thing is the REAL sales killer. As for the guys shouting about what a huge success it is, time will tell, but it ain't the case in Europe I can tell you right now. US has, in European terms, a very backward mobile telecommunications market, both in terms of it's phones & it's network. The iPhone simply does not impress as much over here as I'm sure it does in the states. Early indications are the sales are slow, very slow.

But I'm sure Steve planned that, right?
post #22 of 26
MikeFree, sarcasm aside, either youre ignoring the obvious or Ill be the first one to let you in on this little secret : The entire world doesnt have to own something before it is officially called a successful product.

The success of the iPhone is not defined by you, me, or anyone else here. Steve and Apple define what conditions make the iPhone a success, and theyve already defined that as selling 10 million iPhones by December 2008. Most companies would be proud (and profitable) to sell a million of anything, let alone in its first six months. The iPhone has already done that, which Im saying once again, at its highest price point.

Like movies, some make more money overseas than they do domestically others dont, and some do great everywhere. Since I own an iPhone its already a great success because it works great for me.

If it makes you happy, MikeFree, go ahead and send your email. The reality is that its going to be extremely difficult to convince Steve that he should listen to your marketing advice when hes already sold a million iPhones - without it.
post #23 of 26
Seems clear to me that Apple is exploiting OS X Mobile while it's still new and the coolest mobile OS out there.

We've already seen the cost of owning a OS X Mobile device drop from $500 (4GB iPhone) to $300 (8GB iPod Touch) in just two months.

They claim they're aiming at 1% of the cell phone market (10M iPhones), but that's a cover, really - they're just being (as always) cagey, understated, and highly conservative with their forecasts. They're aiming for 1% with their current model - which is a smartphone.

Over the next year Apple will edge the price down further as they release more minimal, somewhat more feature-limited iPhone models at lower price points.

And the SDK due in February + 3G version due mid-next-year will address the current model's worst limitations.

They know the market they're competing in. There's very little parallel between the mistakes that 80's-era Apple made and the Apple of today.
post #24 of 26
Oh, and re choosing an exclusive carrier in each country - I agree that it will be a somewhat limiting factor on the iPhone's availability and success, but you have to consider that (a) it's not clear whether they'd be able to roll out features like Visual Voicemail without working with one carrier directly, and (b) Apple has been able to negotiate unprecedented revenue-sharing deals, so seems to me it'd kind of foolish *not* to.
post #25 of 26
Everyone wants cheaper stuff Mike.

With Apple you sometimes just have to wait a bit before you can afford "Apple Mainstream"

There "will" be a $199 Apple phone someday. It'll be elegant and won't have as many features as the LG or Sammy of the month but it'll be Apple style.

I don't agree with the references to 1985. The iPhone hasn't been out a year it has never held a commanding lead in marketshare. Apple has gone from "no phone" to market player/leader in less than a year. What you've just witnessed is a company executing so deftly they will teach about Apple's prowess in MBA programs.

I remember when Apple was at $12. I remember selling Macs where every other question was "Is Apple going out of business?" . I think your opinion is valid but it's just a bit hard to believe given the success that Jobs has had at the helm.

No one can make you feel like a mug but you. I don't give ANYONE permission to make me feel like that. If I spend my money foolishly it's because I wanted to. I dont' care if my friends have the crappy LG knockoffs. I do what is best for me.

All I need is for better Exchange support that won't freak out my company and the cost of the iPhone means nothing because my company allows me to expense %100 of the monthly fees so long as I can get corporate email. Ca'ching...the first iPhone with solid Exchange support is mine.
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post #26 of 26
Yeah, wouldn't it be nice if everything was cheap?
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