Apple's iPhone - Tool or Toy?

I have been tracking the iPhone for some time because it promised to be the next generation of technology which would allow business people to be more mobile (the true road warrior). It has been interesting watching how the phones were being used and why these phones were being purchased. While the phones were loaded with great features that was touted as the beginning of a true hand held office most of the purchasers used them for little more than their iPod and phone functions. With a minimum data contract of $30 per month that was a hefty price to pay for an add on that was never used. It appeared from industry reports that at least half were purchasing simply to have the latest gadget.

While the first iPhone only resulted in a minor impact financially on the entire industry, it did raise the feature bar and competitors clamored for similar or better functionality as the large carriers worried that the next generation of these gadgets could or would result in a huge impact in their business. There is no question that we are not far away from having all of the features and functionality we need to stay connected, give presentations, take orders and generally do business right from the palm of our hand.

Why was the first iPhone not the hit Apple predicted?

While the first iPhones release did ok selling 22 million¹ units worldwide between September 30, 2007 and December 29, 2007 according to their website, it did not create the industry buzz that Apple had hoped for and at the time there were no out of inventory issues. It was a large disappointment for those who waited hours in line worried that they would not be able to get their hands on the highly publicized gadget, only to find a few others waiting in line with them and the initial boom over and done within one hour in most retail locations and plenty of iPhones left to go around. No one really pointed their finger at why. It could have been the single carrier AT&T who was already battling for market share held by Sprint and Verizon, the cost of the service, or the high initial release price of the actual device. The fact that Apple dropped the price within the first six months was a clear indication that price was an issue with consumers, but even at this new price point iPhone's were not flying off the shelf.

Apple iPhone 3G is creating the buzz, but maybe not the buzz Apple hoped for...

The recent release of the iPhone 3G was a different story. With Apple reporting over 1 million units² sold the first day and an almost instant out of stock situation which is creating industry buzz. This time however there is a different buzz and that is the buzz associated with release problems. This next generation iPhone allows users to purchase and download compatible applications expanding the capabilities of the original iPhone offering. But is this a good thing? As we discussed earlier this could bring the device closer to being the holly grail of business tools everyone dreams of but this new flexibility seems to come with a high price tag - dead iPhones. Yes, you guessed it, not all of this software works as planned on the new iPhones and worse some of these releases seem to overwrite the basic phone functions and users are complaining that a software install is leaving the phone inoperable.

The buzz I am finding on message boards, follow me sites like Twitter.com, and personal blogs is more about dissatisfaction with customer support for both companies, AT&T and Apple. People reporting extended wait times for service, complaining about the speed and functionality vs. expense of the data service, and reporting less than positive comments about downloaded applications that either do not work, are not as functional as advertised, or damaged the phone.

It will be interesting over the next couple of months how this will turn out.

So now you decide, is the iPhone a tool or toy? With over 50% of these devices being used for music and gaming I say high tech Toy. Please take my readers poll on this page and let me know how you feel.

¹ Source http://www.apple.com/pr/library/2008/01/22results.html
² Source http://www.apple.com/pr/pr/library/2008/07/14iphone.html