Why iPhone users won’t flock to the Palm Pre come June

Palm investor Roger McNamee recently stated that when the phone contracts of the initial iPhone owners expire this summer, they’ll all be jumping ship for the Palm Pre – which should be shipping by then.

“You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later. Think about it – If you bought the first iPhone, you bought it because you wanted the coolest product on the market.  Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”

First of all, this statement belies a common misconception about Apple owners – namely that their purchasing decisions are fueled by and are a function of their desire to be “cool”.  While these customers undoubtedly exist, the iPhone has sold millions of units simply because its feature set leapfrogged all other competing smartphones in one fell swoop.  Think about it – the iPhone was unveiled more than two years ago, and competitors are still struggling to play catchup.  Apple doesn’t create hype to sell products.  Rather, the ingenuity of the products themselves create the hype.

Second, let’s assume for a second that Apple users are as ‘cool consious’ as McNamee implies.  Why, then, would they purchase a Palm Pre when the iPhone is still the yardstick for ‘cool’ in the smartphone market.  Sure, the Palm Pre has gotten rave initial reviews, and it may very well prove to be a slick device, but the majority of this hype lies solely in the domain of the geeky who actually pay attention to what happens at CES.  The reality is that the average iPhone user probably has never even heard of the Palm Pre.  Also, keep in mind that as slick as the Palm Pre appears to be, it doesn’t really offer anything that new that will impress users to the extent that they’ll drop their AT&T iPhone plans.  Sure, it has a qwerty keyboard, but if that was such an essential feature for users, then they would have presumably have already switched to another phone.  What are you left with?  Palm Cards?  MMS?  Cut and Paste?  All cool, but features like cut and paste aren’t enough to sell a phone.

The iPhone is essentially a software platform, and as users inevitably become more tied to the content it holds, whether it be games, music, or movies, it’s extremely unlikely that a significant portion of iPhone users will all of a sudden decide to jump ship and sign up for a new 2 year contract with a different service provider.  Signing up for a new phone in 2007 meant giving up your old phone.  Now it means giving up an assortment of software and media content, which is undoubtedly a harder sell for a company like Palm to make.

Quickly, there’s an old story about Boston Celtics legend Larry Bird competing in the NBA 3-point shooting contest in the mid 80’s that comes to mind.  In the locker room before the competition, Bird, ever the trash-talker, looked around and brashly asked the other competitors, “So which of you guys is playing for second place tonight?”  If you’ll indulge me and my basketball analogy for a second, the iPhone is currently the ‘Larry Bird’ of smartphones at this point.  Competitors are basically fighting over who’s going to win second place as the iPhone continues to nail shots from the corner with the multi-colored money ball.

Okay, back to reality.

Admittedly, the Palm Pre looks awesome, but implying that the Palm Pre will be an iPhone killer when it doesn’t even have a hard ship date is a bit delusional at this point.  McNamee, though, seems like a good guy and really seems to genuinely believe in the inherent quality of the Palm Pre, and that’s something you gotta respect in a time when most companies are churning out phones that are just “good enough.”  Palm, on the other hand, is actually trying to create a phone that is “better than”, and that can only be a good thing for the industry.  The Palm Pre may well prove to sell like hotcakes, but if so, it’s highly improbable that that’ll be the result of defecting iPhone users.

AT&T rolling out MicroCell support update for iPhone users

In addition to the recent firmware update for the iPhone and iPod touch, another slightly more cryptic update has shown up. This latest is not another firmware update from Apple, but instead a carrier update that is coming from AT&T.

For users who have not hooked up their iPhone in the past few days, the message simply read “an update to the carrier settings for your iPhone is available. Would you like to download it now?”

All-in-all, the update seems to be harmless enough, I have not seen any reports of trouble coming as a result, and it will not affect any jailbroken status either.

So, just what does this carrier update do? Well, this is one time where it seems that AT&T is looking out for you, well, at least for users who have reception issues in their homes — this update enables support for AT&T’s MicroCell service which is able to blanket up to 5,000 square foot of home in AT&T GSM network coverage.

High bills for traveling iPhone users

Not long after I returned from a recent trip to Canada, I was surprised to find a $400 cell phone bill in the mailbox. This seemed odd because I’d made only two phone calls when I was there, the longer one for 15 minutes.

But when I looked closer at the breakdown, I saw what was going on. It wasn’t I who’d been making dozens of long-distance calls back to the States – it was the phone itself. While I thought my iPhone was sitting “unused” in my jacket, it had been constantly checking my e-mail for 72 consecutive hours.

You see, using a data-enabled cell phone in a foreign land has become a little like falling asleep on a train in Naples – if you’re not careful, you could end up with empty pockets. If you ever have, you know the feeling.

“Shock, fear, panic,” said Mike Cottmeyer, a software consultant in Suwanee, Ga., referring to an $800 iPhone data bill he’d been hit with after visiting Toronto for a few days last year. “It kind of makes you sick to your stomach.”

The roaming rip-off stems from a sad new kind of Catch-22: With all the contracts, agreements and stipulations we’ve signed on for, there’s more fine print than ever and less time to read it. And like a high-schooler’s nightmare, if you fail to memorize everything, you could be in big trouble.

The iPhone is more laptoplike than most other phones, so its users are more likely to use them for big graphical Web pages. But the price of roaming data isn’t unique to the iPhone, so anyone with a Web-enabled phone who is unsure about roaming costs should do a little homework before they go out of the country.

For an idea of how easy it is for travelers to rack up a nauseating data bill, consider that most phone companies charge roaming customers about 2 cents per kilobyte. How much is that? Well, your average e-mail message might be 10 kb. So that’s about 20 cents per e-mail. Not instantly fatal.

Well, what if someone sends you a message with a snapshot in it – that might run a megabyte or two (about 2,000 kb). So while the picture of your nephew in his first snowstorm might be priceless in one sense, in another it just cost you 40 bucks.

But even that is child’s play. The real action comes when travelers use their phones to surf the Web or watch videos – both of which can consume thousands of times more data than checking e-mail. The blogosphere is littered with ghastly tales of “bill shock” over such unanticipated fees, like the American who visited London for two weeks, bringing his Web-enabled iPhone, not a laptop, for all computing needs. The price tag on that bit of light traveling? $3,000.

Then there was the Briton who, while vacationing in Portugal, decided to download an episode of Prison Break to his cell phone. The guy ended up owing close to $60,000. Most of the really galactic fees end up being partially refunded. When I complained, mine was, too – but it took me 20 minutes of arguing with the customer service rep, more than most people would likely bother with.

“You get this false-positive feeling of comfort,” said Gerry Purdy, an Atlanta-based mobile communications analyst for the consulting firm Frost & Sullivan. “You get off the airplane and say, ‘Hey, the phone works? And my e-mail’s coming? That’s great.’”

But unwitting consumers and Web columnists don’t realize they’ve been silently shifted to a new set of much more expensive “roaming” rates that are, as Purdy put it, “almost insane.”

You might wonder if sending all this data around the world costs the telecoms that much money. But consider your home broadband connection, a kind of all-you-can-eat buffet that allows you to scarf down as many Web pages, photos, songs and movies as you can in one month. All for about $40 – about the same as what you were charged for that pic of your nephew in the snow.

If you had to pay that kind of price for every byte of your monthlong smorgasbord of home broadband, you’d probably be paying tens or hundreds of thousands of dollars. So wherefore the discrepancy?

AT&T, the only telecom that offers the data-hungry iPhone, won’t say whether the roaming rates reflect the real cost of keeping users connected internationally. A spokesman wrote only that “roaming fees are established by the carriers whose networks are available to our customers while traveling abroad” and that “AT&T must pay these fees to the carrier per the agreement.”

This response sidesteps the rather obvious fact that AT&T is itself an international service provider – charging roaming fees to visiting foreigners – and therefore knows precisely how much or rather how little data transfer costs.

For a hint at the real answer, we can look to the European Union, which recently agreed to caps on both the price of text messages – about 14 cents U.S. – and the price of data: 1 euro, or about $1.50, per megabyte, more than 10 times less than what AT&T and other U.S. telecoms charge for roaming.

Our own Federal Communications Commission declined to comment on the issue, noting only that if consumers have a problem with roaming charges, they should send complaints.

Frustrated with “unbelievable” roaming costs, Howard Thaw of Nova Scotia has found ways to scrimp when traveling with his iPhone. For one: Make sure you use it near a wireless connection point – at a Starbucks, say, so you can access the Web without always hearing a cash register. But as Thaw said, that sort of “defeats the purpose of what the phone was designed to do” – i.e., work anywhere.

Thaw speculated on the mentality behind the pricing: “If you can afford an iPhone,” he said, “why shouldn’t you be able to afford the data charges, especially if you’re traveling on business and you have a company paying?”

Cottmeyer, the software consultant from Georgia, did exactly that. Admitting he should have read the fine print, he gritted his teeth and expensed the $800 charge. “Did I feel like it was fair? Absolutely not. But I didn’t feel like I had a leg to stand on.”

Cottmeyer’s boss told him not to let it happen again and asked him to write a warning memo about it for his colleagues. The post is online at Cottmeyer’s blog, LeadingAgile.com, if anyone, including the FCC, would like to read it.

iphone recommendations

•Turn the “Data Roaming” slide switch to “off.” This switch is located under Settings->General->Network. That will prevent the phone from making any data transactions while abroad.

•Use Wi-Fi whenever possible. By connecting at wireless (Wi-Fi) hot spots, like coffee shops, hotels and airports, you are bypassing international cellular networks and associated mega-charges. You still have to be cautious when going the Wi-Fi route, however, especially in public spaces.

Use manual data downloading. If you prefer not to turn off data altogether, you can at least prevent the iPhone from automatically checking e-mails by first switching off the “Push” setting. This is under Settings->Fetch New Data. Then change the Fetch setting below to “Manually” so the phone only checks when you ask it to. But beware: What AT&T fails to note is that you will still be charged for any data you download manually, so there may be no real cost savings to this method.

•Buy an international roaming plan. You can pay AT&T to purchase a package that gives you a limited amount of data access while you travel. These plans are not cheap, however, and if you burn through your allocated data (the cheapest plan only gives you 20 megabytes, which is very little), you have to start paying the exorbitant base rates again.

Editorial note: As helpful as AT&T may seem for offering these tips, what they amount to are work-arounds for the underlying problem of very high, consumer-unfriendly roaming fees.

Notice the three kinds of solutions AT&T gives you:

1) Deactivate or selectively disable your phone’s functionality.

2) Only use your phone in certain situations.

3) Pay money to the phone company so that you don’t have to pay more money to the phone company.

There is no option that permits consumers to fully use their phones without incurring huge bills. And that’s because that option would require the U.S. telecom industry to work with international providers to lower roaming rates for consumers – a move that would force the U.S. telephone companies to lower the high rates they charge foreign travelers. Because they probably won’t do that, the FCC should intervene on behalf of consumers, as the European Union did for its citizens.

Mobispine intends to deliver MMS to iPhone users

With the new iPhone firmware 2.2 release we expect a lot of changes to be made, one thing Apple will not be giving us is the ability to send MMS. Mobispine has set out to give the iPhone the “world’s first true Multimedia Messaging for iPhone.”

We already know there are third party “hacks” out there like Swirly MMS that kind of provide a fix for some. All of these methods require the users to jailbreak their handset in order for it to even work. Mobispine believes that the ability to send and receive MMS from any iPhone will give mobile operators the ability to drive sales and improve subscriber retention.

“Mobispine continues its strong track record of innovation and is proud to unveil the first true MMS service for iPhones. We are confident that global operators will find Mobispine’s MMS service for iPhone easy-to-use and profitable,” said Dusyant Patel, CEO, Mobispine. “This new offering will help operators generate revenue and differentiate their offerings in a highly competitive market.”

The big hang-up that Mobispine faces is the need to brand the application to fit each carrier and then convince Apple to allow it in the App Store. There have been plenty of MMS applications that have been turned away in the past. Only time will tell if Mobispine will succeed in bringing much needed MMS to iPhone.