Following up on the massive success of the iPod, Apple has revolutionised the mobile by dumping the handset and adding a host of other features to its new iPhone, writes Karlin Lillington
'We have reinvented the phone," Apple chief executive Steve Jobs cheekily told his audience on Tuesday as he held up his company's first mobile handset, the iPhone. And he is probably right.
Even taking into consideration the charismatic Jobs' famed "reality distortion field" - his extraordinary ability to wow people and make them want to buy Apple's high-end products that often come with high-end price tags - the ultra cool iPhone looks set to rock the mobile world.
So much so that the stock market immediately genuflected in Apple's direction, adding six per cent to the value of Apple shares while stripping value from many of the established mobile handset firms.
But why? How did Jobs, who gave his keynote Tuesday morning at the relatively modest MacWorld conference in San Francisco, steal all the limelight from a stellar line-up of technology chief executives (including Microsoft's Bill Gates) at this week's Consumer Electronics Show in Las Vegas, one of the biggest and hottest events for gadgets in the world?
Simple: because Apple is so strong on design and ease of use that its products tend to revolutionise, or even create, product markets.
Consider the iPod. Five years ago, when Jobs held aloft the very first iPod at a MacWorld event, the analysts were sceptical. Who in their right mind would spend hundreds of dollars on a device to listen to music?
Existing players could play 40, 60, even 100 songs. They cost around $100 (€77) at most. Why would anyone want a device that had a computer hard drive inside? Who would possibly need to carry around 1,000 songs, much less listen to all of them?
Well, the rest is history. Far from being a device for geeks, the iPod is a device for everybody, its fans spanning the generations.
Teenagers bought them, even though some pundits scoffed that they were too costly, too high end for a mass market.
Grandmothers bought them. Digital music players went from being a tiny niche market product to a mass market craze, much as the Walkman did for portable tape players a couple of decades earlier.
Since then Apple has hammered together a digital music empire, between sales of iPods - which hold nearly 70 per cent of the music player market - and sales of music to play on them from Apple's iTunes music store (which has just sold its two billionth song).
Apple's brand has soared as a result, and the highly secretive company has made no secret of its interest in other areas of digital media: mobile phones and a TV set top box for streaming video from a computer to a TV or recording TV shows. Jobs announced both as firm products on Monday: the iPhone and Apple TV.
But the iPhone, which won't be out until June in the US and the end of the year here, has garnered all the attention. This is no doubt in part because while executives had dropped hints about an upcoming handset, Jobs had said nothing (in a rare move, he had pre-announced Apple TV last year).
That level of uncertainty always sparks interest in Apple watchers. As Jobs traditionally (and always dramatically) unveils new products in his January MacWorld keynotes, much attention was focused on the "will he or won't he" factor of the iPhone.
But that still doesn't explain the stock market giving the poor Blackberry a metaphorical boot in the behind and the hyperventilation amongst the media and analysts.
So what does? The iPhone itself. It is another wonder of Apple engineering, at least in design terms. Thinner than almost any handset on the market, it still packs a huge 3.5 inch screen. Its size follows through on an Apple trend towards astonishingly small and thin products that began with the iPod and carried through to many of their PC and laptop designs.
It is also a web-surfing tool, with an inbuilt wireless system that will let users latch on to wireless networks at the local Starbucks to check e-mail or a website. Nice.
But the key thing about the iPhone is that it is really the ultimate iPod. Many existing handsets already come with the capability to download and play music, and analysts peg this ability as a growing trend amongst consumers who like to have one device that does multiple things, rather than carting around lots of gizmos.
But existing handsets can only store about 100 songs. They don't have much inbuilt memory, and consumers generally have to fork out to buy more.
By contrast, the iPhone will come with a four or eight gigabyte hard drive memory on board, which means they are just like carrying around an iPod that also acts as a phone. And surfs the web.
But it gets cooler still. The iPhone will also store movies, TV shows and photos.
It will synchronise with your computer - Mac or PC - and update your contacts, e-mail or web bookmarks. It will be able to carry around Google or Yahoo maps. And yes, there's a camera too.
But most interesting of all is that Apple has opted to get rid of the main way we currently interact with a handset: it has dumped the keypad. This is why many feel it is going to be truly revolutionary.
It uses the same touch dial technology as the iPod, where users tap and scroll to access contacts, make a call, listen to a song. If Apple can successfully convince users that this is better than a keypad, expect much of the world's handset market to follow.
Eventually. It's a bit of the future, today.
Because that is what Apple does so well and what Jobs understands with a sixth design sense that has enabled him, many times since he returned to Apple's helm in the mid 1990s, to catch a breaking wave of consumer desire before the mass market even sees it forming.
Apple can change whole markets because of this, which is why so many will have been watching what Apple does in any new media sectors so very, very carefully.
Despite the high price tag on the phones - $499 and $599 - there will be those willing to be at the cutting edge.
And as with the iPod, prices are likely to start to fall if the iPhone hooks into a market no one really thought was there for a device no one had previously imagined.