Switched On: iPhone 3GS is fine, young, but not a cannibal
by Ross Rubin 
posted Jun 26th 2009 at 1:03PM
Ross Rubin (@rossrubin) contributes Switched On, a column about consumer technology.
At least since the advent of the first camera phones, people have been wondering whether the cell phone would limit the opportunity for all kinds of other products, particularly portable electronics. Even the more pedestrian features of basic cell phones have been blamed for the declines in (or at least limiting the market for) pagers, Family Radio Service (FRS) radios, and even watches. And beyond portable electronics, cordless phones have also been in a state of decline for years as more consumers cut the cord.
But the iPhone 3GS has renewed the old debate for a number of reasons, including data that shows that iPhone users are disproportionately inclined to use their phone's advanced features and changes in the hardware and software that improve the digital camera, add video capture, and open the door to in-vehicle turn-by-turn navigation. TomTom, which has returned to its roots by demonstrating navigation software for the third-party hardware of the original iPhone 3G, can now offer that software through Apple's App Store. So, will the iPhone shutter Canon, run Garmin off the road, or make Flip flop? Thankfully, for the sake of all wishing to avoid reading headlines containing these atrocious puns, not for the foreseeable future, at least in the U.S.
First, there are demographic factors, including income, that are affected by the iPhone's data plan. The core function of most products that have succumbed to cell phone cannibalization can be served by even basic prepaid cell phones. In contrast, the iPhone as an in-vehicle navigation device requires the purchase of a significant data plan (plus a turn-by-turn navigation app). Dedicated PNDs, though, have traditionally featured their lack of required subscription as a selling point (one reason why high-end two-way systems have struggled). Feature trade-offs can also come into play. The easy access to YouTube uploading that the iPhone 3GS offers is not compelling to a lot of the simplicity-seeking parents and grandparents that have been an important part of the Flip customer base.
These folks aren't using Qik to livestream the next press conference at which Facebook revises its Terms of Service.
Second, there are distribution factors. While they have lost some of their holiday luster with increasing household penetration especially during the economic downturn, digital cameras, MP3 players, PNDs, and Flip digital video cameras have all enjoyed strong sales during the holiday season as popular gift categories in retail stores. The iPhone also sees a bump during the the holiday, but a much smaller one by comparison since contracts make cell phone sales less seasonal. The conflict between the iPhone's product and service was seen recently as users protested AT&T's upgrade pricing, which is designed around a two-year contract commitment and is at odds with the annual upgrade cycle that Apple has so far been on with the iPhone.
Both of these factors could well be in for disruption if Apple incorporates features such as GPS and video capture found in the iPhone in its next iPod touch, a product that reminds us that there is a good business to be had selling to customers of carriers other than AT&T. With all the doomsday talk for cheap camcorders and PNDs, the iPod touch has paradoxically avoided speculation as an endangered product even though it is the product that now has the most direct, and now widened, price-value gap with the iPhone 3G. And yet, the iPod touch has still sold very strongly. Those who think that the iPhone will simply lay waste to competitive electronics should look to Apple itself for a vote to the contrary.
Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group. Views expressed in Switched On are his own.
But the iPhone 3GS has renewed the old debate for a number of reasons, including data that shows that iPhone users are disproportionately inclined to use their phone's advanced features and changes in the hardware and software that improve the digital camera, add video capture, and open the door to in-vehicle turn-by-turn navigation. TomTom, which has returned to its roots by demonstrating navigation software for the third-party hardware of the original iPhone 3G, can now offer that software through Apple's App Store. So, will the iPhone shutter Canon, run Garmin off the road, or make Flip flop? Thankfully, for the sake of all wishing to avoid reading headlines containing these atrocious puns, not for the foreseeable future, at least in the U.S.
First, there are demographic factors, including income, that are affected by the iPhone's data plan. The core function of most products that have succumbed to cell phone cannibalization can be served by even basic prepaid cell phones. In contrast, the iPhone as an in-vehicle navigation device requires the purchase of a significant data plan (plus a turn-by-turn navigation app). Dedicated PNDs, though, have traditionally featured their lack of required subscription as a selling point (one reason why high-end two-way systems have struggled). Feature trade-offs can also come into play. The easy access to YouTube uploading that the iPhone 3GS offers is not compelling to a lot of the simplicity-seeking parents and grandparents that have been an important part of the Flip customer base.
"The easy access to YouTube uploading that the iPhone 3GS offers is not compelling to a lot of the simplicity-seeking parents and grandparents that have been an important part of the Flip customer base." |
Second, there are distribution factors. While they have lost some of their holiday luster with increasing household penetration especially during the economic downturn, digital cameras, MP3 players, PNDs, and Flip digital video cameras have all enjoyed strong sales during the holiday season as popular gift categories in retail stores. The iPhone also sees a bump during the the holiday, but a much smaller one by comparison since contracts make cell phone sales less seasonal. The conflict between the iPhone's product and service was seen recently as users protested AT&T's upgrade pricing, which is designed around a two-year contract commitment and is at odds with the annual upgrade cycle that Apple has so far been on with the iPhone.
Both of these factors could well be in for disruption if Apple incorporates features such as GPS and video capture found in the iPhone in its next iPod touch, a product that reminds us that there is a good business to be had selling to customers of carriers other than AT&T. With all the doomsday talk for cheap camcorders and PNDs, the iPod touch has paradoxically avoided speculation as an endangered product even though it is the product that now has the most direct, and now widened, price-value gap with the iPhone 3G. And yet, the iPod touch has still sold very strongly. Those who think that the iPhone will simply lay waste to competitive electronics should look to Apple itself for a vote to the contrary.
Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group. Views expressed in Switched On are his own.
Reader Comments (Page 1 of 3)
Jake @ Jun 26th 2009 2:17PM
Engadget is hardly even truly a blog. It's more of a link aggregate with snarky opinions attached to the link. Sometimes they get their own content, but it's a small percentage.
This article however is the most similar to the common modern meaning of the word blog. Although even that doesn't follow the original meaning of term, being they're not really logging anything (maybe they are in some meta way).
A news site however is the least applicable title for Engadget (not that I think that's a bad thing).
Mike @ Jun 26th 2009 1:10PM
BORING, STOP advertising the phone.
Mahesh @ Jun 26th 2009 1:16PM
becoz theres no better one to advertise
tyler @ Jun 26th 2009 1:16PM
STOP your rambling..
if you don't want to read, move along..
Paul @ Jun 26th 2009 1:26PM
I agree, this article seems to be a blatant advertisement for the iPhone. Other smartphones have had these same features for years and just now, after the release of the iPhone 3GS you decide to run an article dedicated how the iPhone is just so awesome it might cause major camera and GPS manufacturers to go out of business.
At the very least you could have made it a generic smartphone article.
Oh well, I don't run the blog, I just read it and while Engadget does seem to have a serious preference for Apple products their other articles remain at the high quality we have all come to expect and I can just skim over the numerous, repetitive articles praising the Cult of Jobs.
murmermer @ Jun 26th 2009 1:35PM
this isn't a news site its a blog... why do we have to keep telling you people that? its called the 1st amendment, you can wine and cry all day long but in the end Engadget can post all the stuff it wants, and I will read EVERY iPhone related article they post(good and bad)!
CharlieX @ Jun 26th 2009 1:36PM
ya know, as far as a "gadget" the iPhone is pretty much king. that's why enGADGET fawns over it.
danny @ Jun 26th 2009 2:16PM
I KNOW! I mean I only pay 10.00 a month to read engadget and in the contract it clearly stated that there would be a limit to iPhone related stories...
...oh wait.
Eyhk @ Jun 26th 2009 2:38PM
The question "Why is everybody making such a fuss about the iPhone when they didn't for other phones with similar features" seems almost like an oxymoron. It's almost like asking "Why is a headline making phone dominating the headlines when all of the boring regular phones that didn't make headlines, not make headlines?" I say go make a headline worthy phone and it will make headlines.
The Pre certainly caused quite a commotion, although not quite as the iPhone. If the Pre had come out before the iPhone, I'm pretty sure we would be looking at the iPhone as the Pre breaker. Unfortunately, it's the Pre trying to steal iPhone thunder, not the other way around. Blackberry has done wonderful things in the business world, but never really targeted mainstream until after the iPhone.
Although there might have been some innovators that lead the way, it was the iPhone which brought the innovation squarely into mainstream, and did a very good job of it. In mainstream’s eyes, it’s the iPhone that is the trend setter, and any other product is just following in its footsteps. All of the major players knew the importance of the cell phone and next-gen personal computing. It was Apple who took that leap AND helped mainstream consumers take the leap with them.
john @ Jun 26th 2009 2:50PM
So here is the thing about you idiots that say don't read it, if you don't like it
1. It is front and center when I come back to the site.
2. I start to read it...I am interested.
3. I have an opinion about the article, the number of iPhone articles etc and entitled to state (same way you state yours)
4. It is their site, I know, but they need us to continue to exist.
5. If they want to write about one friggin' phone all the time, then change the name to "Egadget, but with an emphasis on all thing s Apple and iPhone"
6. Tell TUAW that they are out of business
7. Expectations are set for everyone
8. No more bitching from anyone because you know what you are getting into when you come to the site
I feel better now...thank you
OneLove @ Jun 26th 2009 2:57PM
"Hey! Jerkface! Give me back my phone!"
OneLove @ Jun 26th 2009 3:10PM
Whiny, spoilt people, always complaining that free shit should be better.
boolean22 @ Jun 26th 2009 4:40PM
I should add that the HTC Touch Diamond had these features A LONG time before the iPhone. It's been doing it just those things the article says (replacing my shooter and making me more Facebook-centric and YouTube-centric). The photos taken with it take the 3GS for a spin or two, as far as tests go. Auto-focus? Check, W/Balance? Check, Zooming? Check.
And a plethora of other features other phones already have.
Let's face it, the only device apt to take such a place, should be an Nseries Nokia... with their large pixels, great frame rates, high quality and easy to share videos and photos. Samsung is getting there too, with Pixon. Those are cameras with phones attached. You couldn't get an almost-DSLR quality with the iPhone, not even with all your willpower. Gosh, you can't even take a photo indoors without having noise and stuff... let's stop here, right?
I mean: the feature phone it's been around here a lot already. The iPhone is a nice implementation of an already-knew paradigm. It's a trend setter, but only because of its mainstream focus. If you were a power user... that is a 1337 one, you would already noticed that, and would be aware that the catch-up game is played both sides at once. The iPhone is getting upgraded to be able to compete with already better products that are around. The rest of the market is reacting accordingly and setting new standards in imaging, and sharing experiences.
As always, when it comes to tastes, you can't argue. So I won't. But I wish there were less worshipping to some product that is flawed on purpose to keep you buying the upgrade, even when you don't actually need it. It sounds like another software company I know.
nikster @ Jun 26th 2009 11:41PM
Some of you people are truly hopeless. The iPhone isn't about features. It's about features that are actually being used day to day.
There is one thing that I am 100% sure about: No-one, not a SINGLE PERSON owning and using an iPhone would say that other phones had these features for years. You'd only say that if you never had an iPhone and you compared the features list with some other phone.
ChillyCat @ Jun 26th 2009 1:11PM
I'm gonna PUKE
murmermer @ Jun 26th 2009 1:30PM
Why? you are the one that read the article, by you reading it you added to the total amount of people that read the article giving them more cause to put more iPhone related articles on the site.
I for one like reading about the iPhone, in most cases they solidify the fact that trolls like yourself are wrong, I am happy with that.
slamEVIL @ Jun 26th 2009 2:20PM
@murmermer:
you're replying to just about every comment on this article, looking for an argument and you're calling this dude (and others) the troll? why don't you stop YOUR whining? try to say something productive. it's just so irritating to look at your comments.
p.s.
wine is a beverage
wHine is what you and other five year olds do.
ChillyCat @ Jun 26th 2009 3:48PM
When a "cell-phone" is the center of attention in ones "life" .......then you have none
Sporkinum @ Jun 26th 2009 1:12PM
Moss: It turns out he didn't want to teach me how to cook. He wanted to cook me.
Jen: What?
Moss: He wanted to eat me. I know, egg and my face were in alignment.
murmermer @ Jun 26th 2009 1:37PM
keep your stupid british comedy where it belongs, an ocean away!!!!
Mike @ Jun 26th 2009 1:13PM
Since this was just a minor update, and the competition is quickly catching up - I'm hoping it won't be another year until we see a new iPhone.
Corey @ Jun 26th 2009 1:17PM
The 3Gs combined with the 3.0 update is a very fine update to me.....I wont be getting it because I have a 3G but its still a humungous update for anyone with a 1st gen or lookin to purchase their first iphone
Ray @ Jun 26th 2009 1:14PM
I agree with article, but its not limited to the iPhone. Cell phones have become the all in ones we've always dreamed of and they only will get better.
murmermer @ Jun 26th 2009 1:40PM
ya, but i know alot of people with the N95, k850 and other devices like that, that still own iPods and use laptops for their emails, i have no need for an iPod since i have the iPhone and have all my emails forwarded to the iphone since its so much easier!
iDavey @ Jun 26th 2009 1:16PM
No matter how nice a phone (and that is ANY phone) gets...it will never replace the dedicated counterparts. Point being...it's "dedicated"
Only thing that phones have truly replaced is anything dealing with telephony.
Why keep a house phone when you can constantly have a phone with you and get unlimited minutes and such?
I haven't used a house phone since 2004.
But as far as camera, laptop, desktop, etc. It's not going to happen...
Not here, not anywhere.
There will always be a need for dedicated items.
murmermer @ Jun 26th 2009 1:41PM
so what you are saying is the iPhone wont cut into PMP sales? I'll take that bet
deetsnai @ Jun 26th 2009 1:48PM
Your lack of vision is disturbing
Verblist @ Jun 26th 2009 2:06PM
I agree with your comments.
I feel its true at the end of the day the Iphones is a phone, its main purpose is to communicate you with others. All of the added features that come along are used to make the phone more attractive. I always say if you want a phone go to a phone company same goes with a camera, if you want the both in one something will have to give.
- verblist
Ray @ Jun 26th 2009 2:17PM
@Verblist
"if you want the both in one something will have to give."
I agree, BUT, we all know that dedicated electronics will always out perform none dedicated... but its to the point that a lot of the features are unnecessary. By cutting some of the fat, you'll get a device that can do more than just that one attribute, which in my opinion, makes it a much more valuable device.
This was the point of bringing up garmin and tom tom. We all know that the features in these devices are awesome, but for what its worth, im much happier with google maps on my winmo phone w/gps than buying the hardware to run either. These companies better find a way to 'navigate' this new market or their days will be limited.
BTate @ Jun 26th 2009 1:19PM
I want to know where i can get that pic you guys are always using as a background. I love it!
K Benjamin @ Jun 26th 2009 1:52PM
Me too. I love this background and was wondering the same thing. Please engadget, make it available to me!
daaper @ Jun 26th 2009 2:38PM
search for "pixel art". You'll find many similar and maybe that exact one.
Luke Matthews @ Jun 28th 2009 11:58AM
http://www.armyoftrolls.co.uk
Enjoy!
Mark @ Jun 26th 2009 1:49PM
Wait so all the previous camera phones with net access have no influence over this change. It's for some reason a phone that is doing what every other phone has done for a long time that is the game changer just cause the group that use it are loud ego strokers that need everyone to know that they have "IPHONE!!!!!!!!!!". Considering that most phones are years ahead of this phone why would you think they could even challenge a real camera or video camera? There are phones with 8 megapixel sensors out right now and HD Video. Unless the Iphone somehow jumps the game I doubt they will be the one's to blame for killing Canon.
Joe @ Jun 26th 2009 1:25PM
"Mark @ Jun 26th 2009 1:17PM
Wait so all the previous camera phones with net access have no influence over this change. It's for some reason a phone that is doing what every other phone has done for a long time that is the game changer just cause the group that use it are loud ego strokers that need everyone to know that they have "IPHONE!!!!!!!!!!". Considering that most phones are years ahead of this phone why would you think they could even challenge a real camera or video camera? There are phones with 8 megapixel sensors out right now and HD Video. Unless the Iphone somehow jumps the game I doubt they will be the one's to blame for killing Canon."
Oh please, we've also been able to make phone calls for years but you don't still use a brick cell phone right? It's not THAT you could do it but HOW. Show me ANY capacitive multitouch phone from YEARS ago. Show me phones that don't have tiny screens besides blackberrys and new HTCs..OMG 8 WHOLE MEGAPIXELS? Too bad megapixels count doesn't equal quality and can you then edit the vids on those phones. Killing Canon? WTF are you talking about...please show me a Canon phone....nice way to argue cameras vs phones there. It's a game changer because enough people liked it's feature set so it took off. Sorry that the other phones you speak of don't exist(Canon) or just aren't up to par enough to snag the majority of the market. Go whine to your mommy. Call a Wambulance you friggin baby.
Greg @ Jun 26th 2009 1:32PM
You know, Apple didn't invent the MP3 player, either. Nor were they the first to offer legalized digital music purchases. They have a way of taking a technology, making it user friendly (and culturally desirable) and bringing it mainstream. Respect that. It makes the competition stronger, so haters like you have better non-Apple choices as well.
Mark @ Jun 26th 2009 1:49PM
So the Iphone was the first skinny phone when we only had bricks?
"Show me phones that don't have tiny screens besides blackberrys and new HTCs"
Samsung and LG have had touch screens for awhile now.
"can you then edit the vids on those phones"
Uh yes duh. Don't you think the community that typically support these phones would write a program to do so?
"It's a game changer because enough people liked it's feature set so it took off"
So by your standards Symbian OS is the best operating system on phones and Windows is the best operating system period? Just cause many people have bought it doesn't mean it's a superior phone. People sadly don't know much about phones so they are easily lead by TV ad's and news reports and peer influence. This is not the best choice if you really looked at the features.
"Sorry that the other phones you speak of don't exist(Canon) or just aren't up to par enough to snag the majority of the market"
Uh the article posted says it has the potential to kill Canon. And if you ever used a phone with 5 megapixels you would know there is a difference.
"Go whine to your mommy. Call a Wambulance you friggin baby."
Wow, the sign of true intelligence. You really got me there sir your skills at breaking people down is at a stature well above any normal prick. I applaud you for I know it probably took you years of practice and schooling to get to the level your at.
Mark @ Jun 26th 2009 1:51PM
How did they make it "User Friendly"? I have used many programs before Itunes the Ipod that were a lot more user friendly then what Apple brought to the table. Ipod is the only "MP3 Player" I have had problems with playing back my own L.A.M.E encoded MP3's with. I also know that I am not the only one who ran into this cause I have talked to a few people who commented on this problem (The countdown timer will skip seconds thus at the end the song will cut out about 10 seconds early.) Itunes is a pain to deal with in comparison to any other media manager. So tell me how is it user friendly?
Greg @ Jun 26th 2009 3:34PM
Mark -
You and the other 14 people who use LAME are exactly the 2% of users Apple is willing to piss off with things like built-in batteries. Yet, you 2%'ers are the ones who make the most noise. Noise is not equal to general public opinion. 98% of the world has embraced the iPod, and we're watching the iPhone have the same effect on smartphones. You 2%'ers will never be happy with an Apple product, and that's fine.
Mark @ Jun 26th 2009 3:38PM
You didn't answer my question. I asked how are they more user friendly then everyone else?
Tsing Tao @ Jun 26th 2009 11:38PM
It doesn’t matter how many times we tell you clueless people this, but all that BS about what your 200 year old phone could do since jesus was born is just that BS. Just do a google search for smartphone data usage, do it ill wait here. You see that is why the iPhone matters, because people HAVE them and are USING them and not wanting to throw them on the ground and stomp them into tiny little POS blackberry bits.
This is what you MUST understand about everything apple, ITS NOT JUST ABOUT SPECS, specs are all BS. Its about usability, getting stuff done and getting out. Its not about installing hacked roms, its not about soldering on your own wireless cards. Its about the stuff working, and people really actually wanting to use it.
Ive used all of these phones you guys are championing and i used to be a huge MS guy and very very anti apple. I build my own gaming rigs, i write UNIX and OSX programs on my mac, im no simpleton hipster. In fact i wanted nothing to do with the iphone when it came out, until i put my hands on it and it did what i wanted. It was the kind of gadget i dreamed about as a kid. This hooked me on apple stuff and ill probably never turn back, which i imagine is the same response you are getting from most iphone purchasers.
So like a previous poster said, it’s the little itty bitty 2% that’s still stuck in the past. Its all about software man, hardware is cheap and plentiful to make all kinds of computers but if the software sucks then the greatest specs list in the world is worth nothing.
Wii60 @ Jun 26th 2009 1:17PM
I think this article is pretty fair. It's a good phone, and I had one on T-Mobile for about a year and a half. Sadly they don't hold up well long term, and the contract terms on AT&T are unreasonable.
I played with a 3GS and while it's not the best phone out there, but it's still in the upper tier. The only thing that it's "best" at is as a music player. Even though it doesn't play as many formats, it's the most intuitive. For AT&T users, it may be the best option, but when I jumped to Android on T-Mobile I couldn't look back to mobile OS X.
murmermer @ Jun 26th 2009 1:42PM
what phone has a better internet experience?
Wii60 @ Jun 26th 2009 1:50PM
Well, I have to say my G1 does. Don't get me wrong, my iPhone was great too and until I got multitouch on my G1's browser, I might've agreed that the iPhone was better, but the truth is when Google makes an OS it will obviously be tied into internet very well. What does it for me is the notification bar on Android, it is much more useful than the blue boxes on OSX.
dbw @ Jun 26th 2009 1:18PM
This may have been a minor update for iPhone 3G users, but I'm coming from a 1st gen iPhone. I suspect a lot of 3GS owners are former 1st gen users are their contracts expire convientently about the time the 3GS came out. Big update for me.
JUST GIVE ME MMS!!!!!!!
iDavey @ Jun 26th 2009 1:23PM
I kind of suspect alot of 3GS buyers were upgrading from 1G iPhone
I guess the market share of this year will tell the tale.
I'm still waiting for AT&T numbers of upgrades (from both 2G and 3G) vs number of new customers.
Monkey with glasses @ Jun 26th 2009 1:18PM
After reading this post, i find myself wondering? What's the point? No new features, i mean not saying this is not worth reading, but what happened to Kirf's or anything that has to do with a new gadget or tech? Unless it's something new about the Iphone, psp, xbox360, etc...there has to be something no? Just asking?
damiaking @ Jun 26th 2009 1:19PM
i dont like it i want change it looks just like the 3g (i know is faster and has video :0)if the iphone had a keyboard that would be really cool
joe23521 @ Jun 26th 2009 1:47PM
There's a new little phone out called the Pre. It's got a keyboard, among other things you may be interested in.
Sax25 @ Jun 26th 2009 1:19PM
CASIO were right when they said that watch sales have declined because of mobile phones. Ever since I've had a phone in my pocket, i've never worn my wrist watches when I am out and about.