iStrategy

The name “iPhone” is a misnomer. It is not a phone. It is pocket sized computer that, among other features, also happens to include a phone. The Apple iPod-Touch is sometimes portrayed as a crippled cousin of the iPhone— an iPhone somehow lacking its primary function. A more accurate analogy would be that the iPod-Touch is a portable pocket computer, and the iPhone is a premium version of the iPod-Touch that happens to have one extra feature. This is not entirely semantic. The iPod-Touch can do everything the iPhone can do, including connected functions like browsing the web via a wifi connection. Even for iPhone users, a wifi connection is preferred for internet activity beyond a basic search. Most people that have an iPod-Touch have a home wifi, and wifi at the office is now pretty well standard. It is standard campus-wide at every university. In every internet cafe. Every coffee shop. Many parks. Shopping malls… Wifi connectivity is on it’s way to becoming ubiquitous throughout many urban areas.

But the iPod Touch doesn’t have a microphone… yet. At least not for, oh, another month or so. Leaks abound that, like the iPhone 3Gs, the new iPod-Touch will feature video, including both a camera and microphone. The first iPod-Touch with a microphone. Forget video, this opens the door to Skype style IP telephony— internet calls over wifi.

A reasonable long-term strategy for Apple would be the elimination of the “phone” all together. It is conceivable that the iPhone was merely the stop-gap all along. Use the carriers to gain market share, have two models— one with a phone, one without. Then when the phone version reaches critical mass, and wifi penetration meets critical mass, who needs the carrier anymore? At least in urban areas (where Apple sells the majority of their phones anyway). Need it for the wide spaces in between or simply en route? There’s a solution for that. Thank you AT&T for subsidizing the cost until economies of scale could bring the price down to earth (don’t complain, you made a good run of it).

Some may scoff at the idea that Apple would drop the phone version entirely. True, probably not anytime soon. But don’t be surprised if an iPod Touch with a microphone quickly begins to cannibalize iPhone sales. Recall that it wasn’t long ago that most scoffed at the idea of completely ditching landlines for mobile.