iPhone: The coolest design on the planet

The iPhone, like so many things, Mac defies logic. Apple products, pulled out
of Steve Jobs' jeans at Macworld expos, tend to get fans screaming and queuing
up, cash in hand, a day before launch. Experts point out missing features and
flaws, but they don't care. They must have one.

At over Rs 31,000, the iPhone will sell in India at over three times its US
price of $199. If you list the features, you can get them at less than half the
price. My little old Nokia, for instance, has the same 2MP camera and 3G
support, and even BlackBerry service and video recording (the iPhone has
neither). But that's missing the point. You'll pay for the uber-sexy design and
interface, the brand, and the hype. And if you've been waiting for it two years,
you'll shell out the 31k.

And you'll ignore the gaps, because it's so cool to flaunt an iPhone and its
amazing multi-touch interface and outstanding display and music-hey, it is a
video iPod at heart. Sure, you can't change the battery if it dies. You can't
record video. You can't use an SD card to add more memory. You can't use most
enterprise apps.

So why will Apple and the carriers price this phone so absurdly high in
India? I don't know, but I expect it's for ultra-premium positioning, skimming
the market, and allowing a whopping margin to the carriers-so that they agree to
do all the marketing for Apple.

The only other such deal done by Airtel and the other carriers was with
BlackBerry. The handsets were priced sanely there. But the telcos then had the
promise of a higher monthly revenue, around Rs 1,000 for the BlackBerry service.
There's no such special service requirement for the iPhone, until 3G comes in
(2009). And though they've created different tariff plans for the iPhone, the
additional monthly revenue isn't comparable to Blackberry service.

I'm hoping the higher charge will also cover better service, but I don't
really believe that for a minute. We're used to poor service and support. For
instance try getting a spare battery or service for an expensive BlackBerry
handset, and you'll know what I mean. But in India, people do expect to service
phones and keep them running indefinitely, and a whole cottage industry usually
fills the gaps. I expect the corner shops will change iPhone batteries too, at a
price.

While Apple's skimming strategy will work for a few months, it will also ramp
up a thriving gray market, where the phone will be available-unlocked-at less
than half the price. And I have colleagues already calling dealers to find out
when they'll stock 'cracked' gray-market models for Rs 15,000, and those who've
already placed orders with visitors to and from the US, after hearing the India
price.

Nokia is countering the iPhone with the N96, priced at Rs 35,000 for 16GB,
but with features to beat the iPhone: from a 5MP, Carl Zeiss equipped camera and
video recording to DVB reception (not yet available in India) and, of course,
flexible storage and a swappable battery, as with most smartphones today. But
the N96 is not an iPhone, and that's where Apple scores and hopes it will skim
the cream, the thousands patiently waiting for two years for the world's coolest
gadget. The pricing will drop-maybe by year end, perhaps even at the Fall
festive season-but well before then, you'll see iPhones in a lot of hands, young
and old.