Whether you’re enamored with it, indifferent to it or deeply unimpressed, it’s hard to deny that the iPhone has spawned a revolution. This weekend’s extraordinary 3G iPhone debut is just another milestone on what has become an increasingly intriguing journey. But, where does it lead?

What’s the big deal?

Apple has its share of iPhone detractors, so before I declare that the revolution has begun (it is Bastille Day today) let’s take the position of the negs and the naysayers. Apple has undoubtedly made a whole series of “errors” with the iPhone. Here’s a list of the major foul-ups:

1. The initial iPhone price was absurdly high. Certainly the initial gotta-getta type customers must have felt a little gouged. Apple dropped the price by $200 in a few months, in response to the falling off of sales. The phone rental deals were also high cost. Despite an incredibly successful marketing launch,  awash with free publicity (it made the news everywhere), the iPhone never made the hoped-for numbers.
2. The iPhone made a bigger impact in the US than elsewhere, primarily because the mobile phone market here is so last-year-or-some-time-earlier. In truth the US was almost a third world mobile country until the iPhone arrived. The carriers even had to advertise to encourage users to send text messages. Aside from the finger-touch interface, the iPhone was nothing more than a mobile phone as far as Europe and the Far East were concerned. Cute and clever, but also unremarkable in many ways.
3. Apple tried to re-form the whole industry around its product - as if that were possible. It wasn’t. Apple started off holding out for exclusive deals and ended up pushing non-exclusive deals as hard as it could. The 5-year exclusive deal with AT&T will be history when it expires. And having exclusive deals that prevent you from selling to a whole swathe of customers is a pretty dumb idea, all-in-all. To attract the carriers you have to drop the price, which is why the iPhone now costs $199.
4. In the midst of all this, Apple has acted shabbily to the iPhone development community. First of all there wasn’t going to be a development community and then there was, but it was going to be organized along the lines of the Soviet Union and then suddenly, Apple loves iPhone developers. Now there’s a devoted route to market for them.
5. The initial iPhone never had 3G. As far as mobile data users as were concerned, that was like a top-of-the-range BMW with a 1 liter engine. So Apple came to market with the product it originally should have made - a fully 3G enabled iPhone, a year late, making all existing iPhones obsolete as it did so. And to add insult to injury it was $200 cheaper.
6. Technical Problems. When Apple did finally release the product that should have been, at the price that could have been, its servers collapse and the customers were left stranded unable to use the product they just bought. It was hard not to be unimpressed.

That’s the negative view and it makes some fair points. The loyalty of Apple customers is legendary and it has a thriving software development community on the Mac, but neither have been treated well in Apple’s attempt to invent a whole new market.

The Whole New Market

And that’s the point. It really is a completely new market. Apple has taken its customers on a bumpy ride so far, but I now believe that it’s been a bumpy ride to a highly profitable destination.

Take a step back. Have you noticed that pretty much all the new top-end mobile phone models are now  iPhone wannabes. They are also iPhone neverbes. That’s not because they can’t match Apple’s design excellence. They could go way past it and then some, and it would make no difference. This is not about the device any longer.

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