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July 2008



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Scott Miller

>>> Can you say convergence any better!

No. The iPhone is a platform, so it's going to support and have a lot of functionality. And like all multi-function platforms, it will not be the best in all cases. For example, laptops are not great for games. Desktop PC are not great to take on business trips. Laptops do not make great phones. The iPhone is not great for word processing. And so on.

Each platform has its unique advantages and disadvantages. The iPhone is on it's way to being the ultimate portable PC platform, and while it's on it's way to getting there it's a damn fine phone, too.

If the iPhone is a convergence device, then so is the PC. If Laura says the PC is a convergence device, then I'll concede the iPhone is one, too.


Great Comments!

Scott you said...

Why do people keep making the mistake of thinking the iPhone is a convergence device?! I've said from day one, including in my comments on this blog, that the iPhone is an Integration Device.

...a Pocket PC, a fully integrated phone, GPS, music player, game machine, sports tracker, email and web connector, and so much more.

Can you say convergence any better!

The iphone will be a mobile device, plain and simple. For music most people will still use their ipod. For games most will use a Nintendo DS or similar. The mobile device will be used for the mobile web and email. I would even bet that people will have a seperate cell phone until the battery life on mobile devices increase. Some may want to talk on their cell phone and surf the mobile web with ease, by having two devices it makes this easier.

Laura is right Apple sales are not that great and over time they will make the device more for the mobile web and add features that increase the useability of the mobile web. Eventually they will change the name of the device and the product will have moderate success. Once all mobile devices start using the Android platform most will go with a mobile device from their current carrier.

To Apple fans-Steve Jobs does make mistakes sometimes.

Dave Saunders

Thinking back to old Apple WWDC events, and keynote speeches from Don Norman, it's clear that convergence has always been the vision of Apple. Even the Newton was a bold attempt to move in that direction. Norman did also stress that convergence didn't mean there would be one single device to do all things but rather that fractured paradigms of single use devices would eventually meld into devices that did more than one function well. Early attempts from some vendors at a device that was a phone/MP3 Player/PDA resulted in a device that wasn't good at any of those things. The early Treo and the early Blackberry provide excellent examples of devices that excelled in functional mediocrity. Newer devices like the iPhone aren't actually good phones either if the standard of a phone is the old AT&T orange monstrosity that hung in your mother's kitchen or some of the early mobiles from Nokia which provided a simple and clean interface. The iPhone is so good unto itself that it has broken the model for how well a single use device must be to be functional. Not only are people willing to conform to the way the iPhone says you should do a certain thing, the evidence can be seen all around that people are nearly obsessed with doing what the iPhone tells them to do.

Scott Miller

>>> The iPhone on the one hand shouldn't have succeeded because it was a convergence device with Internet, phone, and music all-in-one... <<<

Why do people keep making the mistake of thinking the iPhone is a convergence device?! I've said from day one, including in my comments on this blog, that the iPhone is an Integration Device -- really a Pocket PC. And it includes the sexiness of a divergent, innovative interface.

The upgraded 3G iPhone is not fundamentally different than the original, it just adds new features. The Apps store, in particular, really brings home the fact that this is a Pocket PC, a fully integrated phone, GPS, music player, game machine, sports tracker, email and web connector, and so much more.

A convergence device typically adds features together that do not belong together, but should remain specialized. A PC is not such a convergence device, and neither is the Pocket PC that Apple is calling an iPhone.

Another brilliant move by Apple is that they really only have one model (coming in two memory sizes). This gives them the incredible power of focus that Nokia and everyone else misses out on.

Painting the iPhone (first or second generation) as a convergence device really shows a stunning lack of understanding about the device.


Good job, Laura. I like the way you create a blizzard of buzzwords and bullsh*t to support your 2 digit anti-Apple propaganda.

Stefano Augello

Hi Laura,

no need to state how the new Iphone is just a better and faster version of the old one, because everyone has said that already.

What I disagree with is your explanation for Iphone sales: "Early iPhone sales have been brisker than I predicted mainly because I underestimated the complete void in the consumer phone market."

The reason for brisker sales is that:

1) there's tons of Apple fans that would buy anything out of Cupertino

2) there's tons of Apple fans-wannabes who are irrationaly attracted by the brand, and overestimate the difference between an Apple product and its competitors

3) the I-phone introduced a new user interface that proved to be a killer application, that saved what would have otherwise been a somewhat flawed phone (slow internet connection, no videos...)

Oh, by the way... apparently one of the key drivers for the growing success of X-Box is that it is used as a convergence device, even more that Microsoft itself had expected. Or isn't it?


Wow! This is one of the worst cases of back pedaling I have ever seen.

Last year you predict that iPhone will have a tough time succeeding due to it being a prime example of a pesky "convergence" device. This year it actually adds another "blade" (a la Swiss Army Knife) with it's GPS chip. In my book that only makes it 'more' convergent. The nerve of Apple! Didn't they know that "Garmin is a "better" mapping device. iPod is a "better" music device." ? Your words. Not mine.

So what's happened in the last year? Apple sells over 6 million 1st gen iPhones in just a handful of countries, and then sells 1 million 3Gs in a few days. Most people would have to agree that, grabbing a quarter of the US smart phone market, outselling all Palm Treo models combined, posting sales figures that compare favorably with competitors with larger ranges (Rim, Nokia) .... and much larger ranges (WinMo) .... and then then topping it off with one of the fastest selling products in CE history....... well most people would say that makes for a pretty good start.

So maybe this iPhone thing is going to be successful. Hey maybe it already is successful. How can that be? It's a convergence device.

Well no apparently it's not. In order to fit into your philosophy, Laura, the iPhone has magically turned into a "divergence" product. Yep the 'Jack of all trades - master of none' has added another trade. And now with the App store, it will add even more.

Laura, you say: "The second generation is not just better and faster; it is different."
Guess what? Actually it's not that different. It IS just faster and better. Pretty much every review says so.

The 3G iPhone is going to sell much better than its predecessor. Not because of your simplistic theories but because the world outside the US needed the 3G speeds (just to compete) and it's cheaper. Please don't try and claim that any success the iPhone may achieve is due to this convergence mumbo-jumbo .

That's it. Perhaps others might want to comment on......

Why you couldn't have just told us last year that GPS was the missing link?
Why nobody told us about the killing of the Playstation 3.?
Why the BlackBerry (which apparently is about divergence) is not a mass market product?
Why the mp3 player market (which is reaching a plateaux ) is deemed more important than the cellphone market which is massive and growing?
Or the smart phone market which is growing even faster.
Or explaining the relevance of comparing the sales figures of $30.00 phones to $400.00 smart phones
Or discusing the meaning of "subsidised".
Why postponing the iPhone launch (and losing out on 6 million sales) would have been a better plan for Apple?
Why 38% of 3G buyers were upgrading is considered a negative?
And the 62% that were new to the iPhone (a more important figure) is not mentioned


nathan williams

The iPhone a mobile computer / platform (that can make phone calls).

It is not a new class of device 'a mobi-phone' and it's certainly not the first of it's kind (see e.g. Nokia n95, Blackberry Pearl) both of which were doing GPS and Internet browsing well before the iPhone. And if we are talking mobile computing platforms, well those have been around for ages.

The comparison of iPhone to iPod is not really relevant.... They serve different purposes and are entirely different classes of device (excluding the Touch as the thing that differentiates that is something that resembles an OS and it has connectivity albeit wi-fi)

The iPhone is a good device, and so what if it's a little niche and aimed at Type A's? There are and will be other devices to suit other market segments. Google's Android is the biggest threat as it can run theoretically on any phone.... where the money will be made is advertising. Where Apple will succeed is by shifting the market, which it has done, it's produced a device that is head and shoulders (as a whole) above the competition, sure the n95 has a better camera, but it's clunky compared to the iPhone. Secondly, by doing what Apple does practically better than anyone else, is integrating it's product set to deliver and ownership experience that is seamless. It did it between Mac > iTunes > iPod, this time it's Mac > iTunes (Apss, music movies etc) > iPhone. The ownership experience of integrated devices, services & content is where Apple will succeed, retain customers, and grow market share (as it's doing).

Brad Baldwin

Laura, today computing is more about communicating than it is about hard core number crunching. The phone may be the most recognized communications tool/device ever delivered to consumers. The iPhone is the one device that allows you communicate via voice, text, email, images, and even web pages. As I'm reminded by my kids, email is what "old" people who work do, but it's communication all the same (this is why BlackBerry will only be the "email" tool for business). The camera is also about communication--a picture is worth a thousand words. Video, or moving pictures, is about communicating. And voice recordings--also communicating. Should Apple have used a different name to create a new category for a mobile communicator? Perhaps. But convergence of all means of communication in a mobile package is what the iPhone is all about. To me, it's less about a mobile "computer" and all about communications.

Tom Frazier

Hi Laura. I don't think you nailed this one. I disagreed with your convergence stand point on the 1st gen. It is a portable computer not a bunch of different things in one device. The underlying difference is that IT IS a full feature computer. More importantly the difference between the 1st and 2nd generation doesn't change its standpoint from convergent to divergent... it is the same phone with a GPS.

More importantly is the issue you brought up about the number of units sold. If we dive into WHY some many cellphones are sold it is largely because the current standard for a phone is a mindset of disposable. Sign a new agreement... get a new phone. Blackberry (and now Apple) have started something far more significant here. The lifespan of these higher build quality devices will outlive a 1 year contract. Stevie J is currently snapping up existing Nokia, Motorola and other customers (and their providers). Starting with the 2nd gen iPhone and the announcement of the massive international expansion, it is clear that he is also trying to capture the new mobile customers.

I have had at least 10+ cellphones in my lifetime. It isn't likely that I will keep that current pace of swapping phones in and out. Long live the iPhone... long live the BB. Reliable mobile phone technology is now here to stay.

Gordon Whitehead

Great article. I do agree with you, but there are good arguements whether this is divergence or convergence.

David McElroy

Khalid, Amazon launched its MP3 store last September, so it's been in business for close to a year. It hasn't exactly damaged the iTunes store so far.

john moore (from Brand Autopsy)

Laura ... you know I respect ya ... however, sounds to me like you are reversing course and changing your stance to fit the story that is being played out. That story being Apple is finding success with a convergent device.


The iPhone is not and never was a convergence device. It's a portable computer that is doing the exact same thing that the original personal computer did. It enables divergence in software.

Instead of separate devices like a typewriter and calculator we have separate *applications*, word processors and calculator apps. The big advantage of working in software is that innovation happens much faster. Developing and deploying a new version of Microsoft Word was much easier than building a new typewriter.

The phone part of the iPhone is an application. The music player is a new software version of an iPod. The Safari browser is an app. And now there is a method for other developers to create applications for this computer. Everything points to the iPhone as a new class of ultra portable computer.

So why bill it as a phone? Because most consumers don't think in terms of computer classifications. They're more likely to think about what they do and don't want to carry - and almost all are willing to carry a phone.

Convergence marketing does not a convergence product make. The iPhone is a new class of product that enables new classes of sofware applications. And whether you have the 2G or the 3G, you can take full advantage of the platform.

As an aside, comparing iPhone sales to general Nokia sales is uttertly pointless. A more apt comparison would be to the smartphone market.

This was a confusing article. You ask how they make money with the lower price and ignore the carrier subsidies which show that it's still very profitable. You dismiss the 2G version and exalt the 3G as some new mobi-phone (???) while ignoring that the 2G can do the same tasks just with less location precision.

It all smacks of an attempt to find failure in a product that you have, in my opinion, incorrectly labeled as convergent when by all reasonable standards it is a success


If you think Apple have headaches now, wait 'till Amazon unleash their own MP3 download store.


I was hoping you'd revisit the iPhone. I still get the impression that you've decided the marketplace is governed by rules of convergence that you've articulated. The problem is that your application completely fails here.

Innovation trumps predictable rules (just like a purple cow). Apple has less revenue than Microsoft, but also much, much fewer employees. This in turn boosts their stock value as well as their profit margins, which are arguably much more valuable than sheer revenue. The 2G and 3G phones are very similar because the software update applies to both. Most of the applications that depend on GPS will also work with the original's 'find me' technology.

The problem with setting rules and then deciding whether Apple has a success based on which side they fall is that ignores the question that few companies ask. Do my customers love using my product?

I appreciate many of your insights, however, the number of phones that continue to be sold, the rise in Apple's stock since you first expressed concern for their well-being, and the incredibly high user satisfaction of iPhone owners don't support your evaluation. Paint me skeptical of this new prediction. I'm really happy I ignored advice to avoid or delay purchasing an iPhone; it is an outstanding product and the first phone/BlackBerry/whatnot I've owned that is worth every penny.


Apple has been a company that focuses on innovation during the last few years. And I would say, apple was also focusing on developing its own software systems ever since, in order to develop complete ownership on its products. I would rather say, that even though it builds up the brand, collaborating with companies who are in their best for developing software ( that has become popular) would have been better to stay in business. Even in the case of streaming videos, if they had been collaborating with Paramount, Sony, Columbia and others, it would have been better!.
Apple iPhone is comparatively cheap, wrt Nokia high end phones in India, but the software ( req apple's license) which is costly and servicing the phone is also difficult!

Technology is good!..People use phone for their own customised needs! Even though phones must converge, we can keep customised needs in mind!

But " My opinions are certainly my own opinions" :)

Hope you are doing fine!


so I just made a piczo site and it looks so awesome but it seemed that something was missing. Than I realized I should add some music so my friend recommended a really cool site.www.hypster.com. It's so quick and easy,anyone could do it! In a matter of minuets I had made a account and uploaded the music onto my music player,not only that but You can also edit your music player to match your site colours! and if you don't want to upload your own music,you can search on other users playlists and take any songs you want! It works for piczo,myspace,facebook,bebo etc. check it out! www.hypster.com

Laura Ries

Ben you are so right and I am such a loser. I didn't attend very many Fish or Greatful Dead shows. :)


the band is Phish not Fish

Jay Godse

Hi Laura.

There is one aspect of the argument that you may have missed.

iPhone is neither a convergence product nor a divergence product. It is a platform product. They have created a hardware product with a great user interface (touch screen, audio, etc), gobs of computing power (using a powerful processor and MacOSX), communication power (3G and GPS), and storage.

Their first product on that platform happens to be the iPhone (convergence). The second product was the iPod touch (divergence). The third product was the iPhone 3G (convergence). But they have also opened up the programming environment and platform software interfaces for 3rd party developers to add applications. That makes it a platform.

Why are platforms powerful? Let's look at the PC as an example. The PC has a "standard" operating environment (e.g. Windows, Linux, or Mac OS), and a standard set of applications for authoring (e.g MS-Office) and communication (Firefox, Instant Messenger, Outlook, ...). But what makes them really valuable to a wide array of individual users is that there is a wide variety of applications you can install on this platform that turn it into a divergence device for a particular kind of user. For example, many places use the PC with only a web browser pointing to a very limited set of web sites. A lot of other people use the PC just for email, web, and photo-organizing. Many use the PC just for web, email, and video-gaming. In every case, the divergence device (for that user) was created by the user by installing particular applications onto the platform.

The iPhone is poised to do the same. For example, I could see sales people using it for phone, web, and a mobile CRM tool (e.g. Salesforce.com). I could see teenagers using it for phone, instant messaging, photography, and integrating it all with an iPhone Facebook widget. The list goes on and on.

The big branding problem here is that "iPhone" conjures up images and expectations of a phone. That may hinder their ability to promote the real brand which is the "iMobile" platform. (I know, I know...it's a lame name...).

Time will tell...

Bob G

I've been waiting for you to revisit the iPhone for some time. I'm no iPhone or Apple-lover, but I felt that you were far too sure of its demise. And you were very defensive of criticism here.

I appreciate that you admitted being incorrect on some things, as it makes your central premise more believable.

At the end of the day, your theory on product divergence makes sense "on average." I believe marketers and investors would be wise to follow your guidance most of the time. But I think it's OK for you to admit that it doesn't work 100% of the time.

Heck, by admitting that your previous theory has exceptions, you might find fodder for a sequel or entirely new concept. For example, you may find that at some point, convergence DOES happen when technology is cheap enough. For example, we expect every phone to have a camera by now because it is so cheap to include.

David Knaggs

Hi Laura.

I think that you and Al are 100% correct with your divergence theory.

And you are correct in that the ORIGINAL iPhone concept was as a convergence product. "Hey, how can we improve the iPod?" "I know! Let's make it a phone as well"

And the original iPhone was just that. A convergence product. If you look at the hard statistics, it didn't really set the world on fire, did it?

However, iPhone 3G has actually created a new category.

The pocket computer.

They might not be the first. But, as Al says, "They only have to become first in the mind." After all, the iPod wasn't the first MP3 player, was it?

What's the big difference between the original iPhone and iPhone 3G?

The Apps store.

What has Steve Jobs been working on feverishly for the past several months?

Getting developers to make applications for this NEW COMPUTING PLATFORM!

Desktop computer, laptop computer, pocket computer.

The pocket computer has to be "all screen". If you had a physical keyboard on a computer that fit in your pocket, the screen would have to be so tiny you might need a magnifying glass to see anything on it! Hence the touchscreen on iPhone 3G.

Steve Jobs has installed a version of Mac's famous Operating System, OSX, on the iPhone. It gives a FULLY featured web browser - just like on your desktop and laptop computers. Fully featured email. Sure, it makes phone calls. But I can also call somebody from my desktop Mac using iChat (video conferencing).

It's a pocket computer. And it's the applications made for and sold at the Apps Store that will determine the success of the iPhone 3G as a pocket computer in this new category (divergence).

And I think this new pocket computer category might just tie in beautifully with what Al was talking about with the emerging dotmobi category.

But make no mistake, Steve Jobs has changed the course of the good ship iPhone from convergence (iPod meets mobile phone) to divergence (new "pocket computer" category).

Not everybody has realized that yet.


To me, the original launch of the iPhone directly pitted your idea of convergence against Seth Godin's idea of the Purple Cow. The iPhone on the one hand shouldn't have succeeded because it was a convergence device with Internet, phone, and music all-in-one, and on the other hand, it should have succeeded because it was an entirely new and innovative way to interact with my phone (You mean I can use my finger to surf the web!).

In round 1, even though people didn't buy the iPhone for its convergence capability of playing music, I think sales were strong because of the unique cellular experience the iPhone offered. Apple created a new category of phone - the touchscreen smartphone - and they were the first into the consumer's mind with it. The Verizon Voyager has since tried to copycat, but you know how that goes. The uniqueness of touchscreen experience really resonated with consumers and it really reminded me of the launch of the Wii, which was a whole new experience for playing video games. That new experience was what drove sales.

Believe it or not, I actually think the iPhone is positioned well for the next generation of the mobile Internet. Surveys on eMarketer show that iPhone users actually use the mobile Internet more than other smartphone users. Additionally, BlackBerry has been positioned as mobile email, leaving the space wide open for a mobile Internet device. With the addition of 3G and GPS and a drop in price, I think the iPhone is going the right way toward dominating the mobile Internet market.

Also, I think the comparison of Apple's iPhone to all of Nokia isn't exactly fair, but comparing it to the sales of one Nokia smartphone might be the apples-to-apples comparison.

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