Will Apple?s iPhone pass the acid test? By Al Ries for Ad Age.com : 6/2007

In the gold rush of 1849, prospectors checked their finds with Aqua Regia, a mixture of hydrochloric and nitric acids.

If a sample passed the acid test, it was the real thing.

When Apple introduces its iPhone this month, will it pass the acid test?

In my opinion, no.


Prediction No. 1: The iPhone will be a major disappointment.

The hype has been enormous. Apple says its iPhone is ?literally five years ahead of any other mobile phone.? A stock-market analyst says ?The iPhone has the potential to be even bigger than the iPod.?

I think not. An iPod is a divergence device; an iPhone is a convergence device. There?s a big difference between the two.

In the high-tech world, divergence devices have been spectacular successes. But convergence devices, for the most part, have been spectacular failures.

The first MP3 players (the Diamond Rio, for example) were flash-memory units capable of holding only 20 or 30 songs. The first iPod, on the other hand, had a hard drive and could hold thousands of songs. Now there were two types of MP3 players, a classic example of divergence at work.

Every high-tech device has followed a similar pattern. The first computer was a mainframe computer, followed by the minicomputer, the desktop computer, the laptop computer, the handheld computer, the server and other specialty computers. The computer didn?t converge with another device. It diverged.

When the videocassette recorder was introduced, you might have thought it would eventually converge with television, since you can?t play a VCR tape without a TV set.

It did not. Instead it diverged and now we have DVD players as well as VCR players.

Divergence never ends. Now we also have HD-DVD and Blu-ray players.
When the videogame console was introduced, you might have thought it would eventually converge with television, since you can?t play a videogame without a TV set. It did not. Instead it diverged and now we have portable video-game players like Game Boy which has sold 130 million units. Also the dual-screen portable, the Nintendo DS.

When the cellphone was first introduced, it was called a ?car phone? because it was too big and heavy to lug around. You might have thought it would eventually converge with the automobile. It did not. Instead it diverged and today we have many types of cellphones.

Every Best Buy or Circuit City is filled with a host of other divergence devices that have been enormously successful: the digital camera, the plasma television set, the wireless email device, the personal video recorder, the GPS navigation device.

What convergence device has been a big success? Not many, although there have been a lot of convergence failures.

? The computer/phone. AT&T, Motorola and others introduced
a combination product. Few were ever purchased.

? The computer/TV. Apple, Gateway, Toshiba, Philips and others tried
to market a combination product with little success.

? Interactive TV. Microsoft spent $425 million to buy WebTV and then poured more than half a billion dollars into the venture. That didn?t work so they moved on to Ultimate TV which didn?t work either.

? Cellevision. Everybody is talking about the third screen, watching TV on your cellphone, but relatively few people do. (The real action in television is the booming market for divergence products like big-screen plasma and LCD sets.)

? Media center PCs. Everybody was going to run everything in their homes from a personal computer. It never happened.

? Media players. The kiss of death for any electronic device is the word ?media,? which invariably connotes a convergence product. To consumers, media is an industry not a product. No media player has ever become a big brand.

The last hope of the convergence crowd is the smartphone, a combination cellphone/computer, which many industry experts already consider a big success. Certainly the media consider the smartphone a winner.

In spite of the publicity and a raft of advertisements, the smartphone
accounted for only 8 percent of the U.S. cellphone market last year.
Instead of everybody surfing the web with their smartphones, what?s far more likely is divergence in the Internet itself. The first inkling of this development is the new ?dot-mobi? suffix for Internet sites designed specially for cellphones.

In the future, the Net is likely to diverge into two networks: one for computers and another for cellphones, a classic example of divergence at work.


Prediction No. 2: The media will blame the execution, not the concept.

Suppose the iPhone is a major disappointment. Will another convergence
failure convince the high-tech industry of its folly? Highly unlikely.
Once a concept like convergence grips the imagination, it seldom dies.
A convergence failure is never seen as a ?conceptual? failure; it?s always seen as an ?execution? failure. ?The concept was sound; they just didn?t do it right.?

Take the Time Warner/ AOL merger in January 2001. As America Online
CEO Steve Case explained at the time, ?My motivation is to capitalize on the era of convergence.?

The following year AOL Time Warner had a record loss of $98.7 billion,
forcing out both Steve Case, chairman and Gerald Levin, CEO.

Three years later, Richard Parsons, the new CEO of Time Warner, told a gathering of media mavens that although he could not make the merger work,
he still feels the convergence of traditional media and the Internet is inevitable.

Hope springs eternal.