May 20, 2009, 3:33 PM — One of the genius moves that Apple pulled with the iPod was, once the gadget had been established in everyone's mind as the be-all MP3 player, to create lots of different iPods, at different prices and sizes, to blanket the market. This more or less is what all the analysts have been expecting to happen with the iPhone, which is why there's been constant rumors about "iPhone nanos" and the like, which rumors have singularly failed to come true.
There's a fundamental problem with the iPhone-iPod analogy, though. The pre-Touch iPods had extremely minimalist operating systems -- well designed, to be sure, but they weren't what attracted you to the device. From the user perspective, the software magic of the iPod wasn't on the iPod at all; it was in iTunes, and how iTunes allowed you to seamlessly link your music to your gadget, and to quickly buy more music for said gadget. The fact that all the iPods worked with iTunes in the same way masked the fact that, at a hardware level, the Classic and the nano and the Shuffle are very different devices.
But here's the thing: the magic of the iPhone and the iPod Touch (you'll notice that there's only one of the latter) lies in the system software. The iPhone and iPod Touch are awesome because of all the different apps, most of them Internet-enabled, that you can run on them. And therein lies the dilemma for the market segmenter: pare down the iPhone and it won't be able to support the OS and apps that are its real appeal. Essentially, the modern-day iPhone is as nano as it can get.
Most observers have assumed that, in the future segmented iPhone market, an iPhone at more or less the current specs will be a cheaper base model, while the current price point will be filled by an incrementally better hardware platform, with the improvements in storage and processor speeds that two years in the electronics industry can provide. But according to analysts from Oppenheimer who heard it from nameless Apple execs, Apple's plans are very different: they'll have essentially a single hardware platform, but different software bundles on different models, tailored to different markets.
While this sort of makes sense if you realize that the iPhone software is the real secret sauce, it also reminds me of Microsoft's attempt to promote more or less ordinary PCs as "Media Centers" because they came installed with a music-and-video-oriented version of Windows. And I don't think Windows marketing strategies are really what Apple wants to emulate, do you? If the appeal of the iPhone is "there's an app for that" -- the fact it's a flexible platform that can do anything -- why would you pay for one that's been laser-beam focused on one thing, especially if the hardware can do more? I see lots of grumbling about "crippled" phones in the future, as well as a renewed interest in jailbreaking.
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