Why I Won't Be Getting an iPhone This Year

Apple's forthcoming iPhone is an exciting product - it has been called the biggest product release in consumer electronics history. Clearly, Apple and AT&T (formerly Cingular) are investing huge amounts of resources into its development and release.

It will be very good for Apple. Like the iPod and Apple TV, the iPhone will draw a lot of positive attention to Apple and, more importantly, to Macs. Just as some who have been introduced to Apple's efficient simplicity through the iPod (and more recently Apple TV) have considered Macs more seriously, iPhone will likewise cause others to give Macs a good look - probably more so because iPhone sports a version of OS X.

In support of Apple, I hope they reach and exceed their goal of 8-million-plus iPhones sold in the first year.

Further, the iPhone fills a much-needed niche for mobile devices: a true all-in-one (phone, PDA, iPod) device that is (presumably) easy to use and "just works". Regular Efficient Mac User readers will recognize that it has been on my wish list for two years in a row (see Five Things I Hope to See in 2006 and 2007 Wish List: iPhone, iTV, Leopard, and More Independent Software Development). I've been wanting an iPhone for a few years. I even switched my mobile carrier to AT&T (nee Cingular) a year ago in anticipation, since the ROKR was available only though Cingular. (A lucky guess or a futurist's intuition? You decide....)

Why, then, am I announcing that I won't be getting one? Why won't I be one of those first eight million?

I have my reasons. They may not fit you, but they make good sense to me.

Remember the 1st Generation iPod?

I didn't buy an iPod in 2001. In fact, I wasn't aware of the announcement until months later. But I've seen (and used) one of those "first-gen" iPods, and I'm glad I didn't shell out the $500 back then.

I'm a Low End kind of guy - I don't need the best and latest to be satisfied in my computing. But I've also found that the "lowest end" doesn't suit me. While the Blue & White G3 Yosemite that I owned could run OS X 10.4 "Tiger", I much prefer the G4 Quicksilver that I now have. Similarly, I don't need a 5.5G, full-color, 80 GB video iPod; my 4G monochrome 20 GB iPod is just fine for my needs. But I do like the click-wheel and unified buttons - which weren't available in the first generation.

Likewise, I anticipate that the second generation iPhone - which I expect to see around Christmas 2007 or Macworld 2008 - will offer a number of improvements on the hardware, capacity, and expandability. It may also bring 3G communications, which is apparently a big deal to those who know the ins and outs of mobile telecommunications.

And, of course, there will be bugs in both hardware and software that another generation will work out. (Remember the too-hot batteries in the first-gen MacBooks?) I'm happy to wait a while and let my first investment be for version 2, with all its refinements.

Need It?

I can see the day when constant access to the 'Net will be very useful to me. Whether it is to check email, connect to Web apps like 37Signals' BackPack or Highrise, or access and sync files on my desktop computer via VNC and FTP, this will be very helpful in my future. Unsurprisingly, the iPhone will do the Internet very well and will be a great tool when the need comes.

But for now, I don't need an increase in Web/Internet access. What I really need is to use them more efficiently when I'm at a computer - which means continuing to scale down my blog reading, further improvements in my email efficiency, and better workflows for the things I do most.

Until those mobile functions become a necessity for my work and life - and while I continue to refine my Internet efficiency - I can (and should) refrain from investing the money and time into the luxury of more ways to access the Internet. This means I don't need an iPhone for now.

My Wife Won't Let Me Spend the Money

Okay, it's not really fair to blame this on my wife. Really, this is a practical concern for me as well. The cost of the iPhone is $499 for a 4 GB model, $599 for an 8 GB model. That's a lot of money for anyone.

The interesting thing is, the original iPod cost $399 for 5 GB and $499 for 10 GB when it was first available too. Now the top-of-the-line iPod - with 80 GB of storage - costs only $349. An 8 GB iPod nano, the model closest in capacity to the first generation 10 GB, costs just $249 (a 4 GB nano is just $199). In other words, the same sizes in today's models cost half what they did at the iPod's introduction in 2001, while the top model, with eight times the storage, costs $150 less than the original.

My guess is that the iPhone's prices will do the same thing over time. With NAND flash prices dropping steadily - and once production ramps up to rates similar to the iPod - the hard costs of iPhone production will plummet.

Meanwhile, the cost of mobile phone service is also dropping, including the Internet access packages, and will also represent ways to make the iPhone more affordable in time. A service package that costs $75-90 per month now (including both voice and Internet service) may cost less than $50 a year from now.

In short, those of us who must be cost-cautious when approaching the iPhone may find that waiting 12-18 months is a must: Even if the actual cost of the iPhone itself doesn't drop (the iPod's cost didn't drop for the first three years, although capacity did increase), service provider costs likely will. And the money spent on the iPhone in the future will represent a greater return on investment, as it will probably have higher capacity, improved features, and even greater reliability.

Bargains To Be Had

Here's my educated guess: Once the iPhone is released, the whole market will experience a boom. Why? Because in competition with the iPhone, longtime smartphone makers like Research in Motion (maker of the Blackberry line) and Palm, as well as mainstream mobile phone makers like Nokia and Samsung, who also make smartphones, will drop their prices and make them ultra-competitive. You can already find a Samsung Blackjack and a Nokia E62 for less than $100 with a 2-year service plan through Cingular. Higher-end smartphones like RIM's Blackberry Pearl, Blackberry 8700, and Blackberry 8800, and Palm's Treo 680 and Treo 750, can be had in the $149-$299 range. In short, current smartphones are already $200 less than the iPhone.

My bet is that new models and reduced prices will be offered en masse in June, making the options for a smartphone shopper wide-open. No, none of these are anything close to the iPhone in capabilities - which is why the iPhone is sure to be the clear winner in the long run. But for the short term, someone who needs or wants a smartphone (but can't or won't spend $499 for an iPhone) will find that, come June, the options for real bargains will be easily found.

I might just invest $30 in a refurbished Nokia E62 to tide me over while I wait for the iPhone to mature. Yeah, I can afford that.

Service Plan Snags

It turns out I couldn't get the iPhone in June if I wanted to. When I signed up with Cingular, I agreed to a two-year contract at that point. That was one year ago last month - so I still have 11 months to go with my current contract.

However, Cingular/AT&T's policies forbid renewing of contracts before a certain point in an existing contract; in other words, I can't renew for another several months. But the purchase of an iPhone requires a new 2-year contract with Cingular/AT&T. The actual number of months varies for each contract holder, based on a factors like how long you have been a Cingular/AT&T customer and if your account has ever been past due.

For me, the limit is 21 months, so I'll be eligible to renew in January 2008. (Of course, I could buy an iPhone and sign up with a completely new contract - which would run parallel to my existing contract. But let me refer you back to point #3....)

This snag may end up making a lot of would-be iPhone buyers angry, unless Cingular/AT&T comes up with a workaround exception for them. If not, it may be that most initial buyers of the iPhone in June and July will be service provider switchers.

Concluding Thoughts

I'm sure I will eventually get an iPhone. Who knows? Circumstances may allow for me to get one a lot sooner than I think. For now, though, my plan is to find a stopgap measure, then wait until the time is right for the iPhone for me - when the cost is lower, the features and capacity are higher, and the need is greater.

Oh, and when my Cingular/AT&T contract allows it!