What does Apple's iPhone have in common with the failed Apple Newton of more than a decade ago? Nothing. Yet.
But I was reminded of the Newton lately and how, despite its current hot streak, Apple doesn't have an unblemished record when it comes to introducing innovative new devices. And the company may well be making some of the same mistakes now as it made in 1993 when it introduced Newton.
Newton was the first serious attempt in the industry at a PDA. I took my old Newton out of the box recently and, while it's very large by today's standards, it also remains very powerful -- by today's standards. It was an excellent device.
One reason it failed was that the first iteration of its handwriting recognition wasn't very accurate and, since handwriting recognition was a new technology, it was ridiculed mercilessly by comedians and the press. But at least as big a problem was its price: $700 when it was launched.
Apple seems to be repeating the cycle again with iPhone, developing what is undoubtedly an advanced product with a remarkable interface and overcharging for it. A recent survey found that a minuscule number of consumers would pay $500 for a 4 GB iPhone. It's a good reminder that, for all their noise, Apple fanatics truly are a small percentage of the overall technology marketplace.
Besides overcharging for iPhone, Apple faces significant competition, something it didn't face in 1993 when it launched Newton. And you can bet that competition from the likes of Samsung and LG will both be good (although probably not as good as iPhone) and most assuredly cheaper.
It's also becoming clear that Apple may be suffering from excessive hubris. That is evident by its strong demands on its partner in the U.S., Cingular/AT&T. The demands, including a slice of the cellular revenues and control of the sales channel, were so strong that Verizon Wireless turned the deal down.
I'm more convinced than ever that, after an initial frenzy of publicity and sales to early adopters, iPhone sales will be unspectacular. If Apple doesn't respond quickly by lowering the price and making nice to AT&T, which surely will be ticked off, iPhone may well become Apple's next Newton. Remember that two years after Newton was introduced, a smaller, cheaper PDA appeared -- the Palm Pilot -- which truly did rock the world.
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