Why the iPhone Matters to the Media

From Steven Levy"s recent newsweek interview with Steve Jobs (Apple Computer Is Dead; Long Live Apple):

But cynics may note that instead of Apple’s instant-messaging program iChat, there is that aforementioned SMS messaging program. On the screen, when you send and receive messages, the display resembles the way you view them on iChat, in colorful text balloons. But because each message is an SMS text message, depending on the billing plan, users may get charged a few cents each time they say "wassup." (iChat lets you gab all you want for free.) Maybe this won’t be a problem—Jobs hints that Cingular may offer different billing plans for iPhone, though for now he isn’t saying for sure. In any case, Jobs say, "There’s no reason we couldn’t have iChat on here." So bring it on.

Actually, what I would expect to see is that Apple and Cingular figure out a way to merge your iChat ids with your phone"s SMS features. You see, whether you receive a message via SMS or iChat, Cingular gets paid. Just like SMS messages come either priced a la carte and/or bundled with a certain amount of free messages, or even unlimited messaging on some plans, data is sold the exact same way and at its heart iChat is just data.

The question will be whether the price of bandwidth/equipment to generate the additional iChat data traffic is greater or lesser than that to support the SMS"s, since everything has a cost, even things that you eventually charge for. So Cingular has an incentive in a competitive market to find a way to package and incent their customers to use the service that operates not just most profitably, but also most efficiently, for if they don"t somebody else will.^* If it"s cheaper to service the iChat-ers, it might be smart to lower the prices on their existing SMS services to the lowest stomachable profit level to attract heavy text-ers, who will probably also be heavy iChat-ers, either already or nascently, since each has contexts in which it is most well-suited.

For example, SMS means "Short Messaging Service" because it has a limit on the number of characters in an individual message, so anything over 140 or 160 characters gets split into multiple messages (geek alert: for more info see wikipedia article). This is why some of my more longer-winded messages get split into multiple parts by Cingular, which are then sometimes delivered out of order to my friends and family. Generally it's just kind of a hassle that requires me to explain to the people on the other end why I seemingly have become syntactically dyslexic, but there are circumstances where the order of a short message is going to be crucial. One of those is customer support.

I personally use Apple's iChat Instant Message software to help me support my handful of clients when I happen to not be working on-site, which is most of the time. In addition to IM support being cheaper than the phone, it allows me to multi-task, letting me keep up on my email correspondence, continue coding, or whatever else it is that I may be in the middle of when someone runs into a problem that requires timely responses. Now imagine larger enterprises that have much more real and complicated challenges with customer support.

Do you remember AOL? Just kidding of course, the real question is do you remember Prodigy or Compuserv? "Back in the Day," as the saying starts, every high profile company that cared about its customers had to have support forums on both of them, in addition to the eventual champion in the closed-bubble variety of online services that dominated the landscape before the eventual triumph of the full internet and worldwide web. For that privilege those retailers paid Prodigy et al until they migrated those services off to the web, where if they are now doing live customer support they generally rely on java- or flash-based apps to manage the communications.

If you've ever used either of those technologies, or even a web browser, on the current generation of Smart Phones/PDAs you'll know exactly what an almost completely unusable nightmare that is right now for mobile users. What if the retailers could pay Cingular and Apple to make it work and work easily on the iPhone? Might they be willing to pay for the privilege of easy instant message/chat based support? It certainly would be an added benefit for Apple and Cingular to tout in the marketplace, and again if it increases the greater adoption of the more efficient usage of the digital cell network for Cingular (it takes fractions of the bandwidth to service voice for purely textual information since all you need are letters and numbers, not a reliable representation of a sound wave).

So allowing iChat on an iPhone would both drive the future's more efficient data traffic consumption instead of the past's much more limited but well understood SMS services, and a potential revenue stream for the walled gardens that all Smart PDAs currently represent. Sounds like an easy choice to me, but what do I know, right?

And what does this all mean for the media? Well, did you happen to take a look at how the Safari browser works on the iPhone? It dramatically improves the user experience here also, which is bound to drive more mobile web usage, and thus data traffic revenue to Cingular. And this also means that we will start seeing another entrant in our web server log files to be accommodated. That's the bad news. But the good news is that what we will be able to push to that new channel will be remarkably better than what we can send out to the Treos, Blackberries and Windows Mobile devices on the market.

Remember that the iPhone was originally a multimedia player, so it is already optimized for audio and video, so let the high-bandwidth mobile streaming begin!

^* Don't you think Microsoft would love to sell their Zune with integrated MSN Messenger/SMS combined with a cheaper SMS rate setup on Verizon if Cingular and Apple leave the market opportunity open to them to do so?