Steve Jobs held a keynote and announced the iPhone. One site even did a quick look and feel of the phone. Apple surged by 8% and others like Nokia and RIMM dropped. Though RIMM dropped more than Nokia.

What I think: Sell Apple at its peak (it should climb a bit more) and buy on the weakness of the other players.

The remaining part of this blog will explain why I am skeptical of the iPhone. Some may view this as being overly critical, but others will wonder. You will wonder who is right me or Steve Jobs. Since Steve is much richer and has built a big company (unlike myself) you will be biased towards Steve.

I am critical, and I think what happened with the iPhone is Silicon Valley blinders! I am also skeptical when an analyst gushes like the following comment. 

Tim Bajarin, principal analyst with Creative Strategies, said the iPhone appears poised to revolutionize the way cell phones are designed and sold.

“This goes beyond smart phones and should be given its own category called `brilliant’ phones,” he said.

Oh give me a freaken break! These are the same analysts and people who in late 2000 said that the Segway would revolutionize how we would move about in cities. What impact has the Segway had? Zip, nada, zero! In fact Holland recently banned them.

So let’s say the iPhone is revolutionary, why distribute only on the Cingular network?

The phones, which will operate exclusively on AT&T Inc.’s Cingular Wireless network, will start shipping in June. The 4-gigabyte model will cost $499, while an 8-gigabyte iPhone will be $599.

I am going to be smug. America is a wonderful nation that has many innovative and creative products. But if you want to storm the world with your new design in cellphone technologies, then launching solely in the US is a REALLY BAD idea!

What this does is give the other cellphone makers who happen to be mostly non-American corporations (Nokia, RIM, Samsung, Sony-Ericsson, and Motorola) ammo to see where the iPhone succeeds and fails.

Even if iPhone succeeds in the US, the others will have plenty of time to squash the iPhone in the rest of world.

Steve thinks his iPhone is designed perfectly. Ok I could buy that, but I am skeptical about the ergonomics. Ergonomics plays a much more important role with cellphones and I think the iPhone is missing ergonomics.

“Keyboard: The softkey, on screen buttons are small. Think index finger, not thumb. Maybe I wasn’t doing it right. The keys pop up when I put my finger down on the keys, but do you think the proximity sensor knows when I get close (but before I touch), and if I hover with my digit, it’ll blow up the keys so they’re easier to hit? (Am I making sense?)”

Steve in his keynote thought that the keyboard in its current incarnation was dumb and limited. Yet Steve in his quest for design is missing an ergonomic issue, a cellphone is a single hand device.

In all of the keynote pictures and the mentioned comment people talked about using the phone with two hands and a finger. Bad idea! From the pictures I have seen there does not even seem to be side buttons. Side buttons are useful so that you can do single hand operations, with the RIM thumb wheel being the classic example.

This is the reason why the stylus failed with smartphones. People are used to thumbing with their cellphones and that is not going to change.

The following comment shows that the iPhone is putting the cart in front of the horse.

“Now I want to show you somethign incredible, I want to show you Safari running on a mobile device. I’m going to load in the NYT, rather than just give you the WAP version, we’re showing you the WHOLE NYT web site. I can put this into landscape mode and there it is, I can scroll up and down here…”

I have an Origami device and let me tell you I struggle to read HTML pages. The iPhone is not going to make this any simpler. The problem is not the screen or the DPI, but the content providers. The content providers create content for devices that have 1024×768 screen resolution. The HTML pages are littered with advertisements and thus loading the content on smaller screens is down right painful.

The idea behind WAP was to force content providers to make slimmed down readable content. Obviously WAP failed.

IPhone is less than a half-inch thin — slimmer than almost every other phone on the market. It comes with a built-in, 2-megapixel digital camera, as well as a slot for headphones and a SIM card.

Slimness is not the issue, overall size is the issue. I like to stick my cellphone in my pocket. If I can’t do that, I don’t always carry my phone. Many other people think like this, and it is absolutely critical with women. I am not trying to be sexist, but my wife who is a manager buys the smallest phone available. Often her suits have no pockets, and if they do she does not want the phone bulging out of her pocket.

Many seem to love the screen and I am not going to naysay the screen, but my cell phone has been dropped, sat on, crunched, scratched, etc. Very often I have had to replace the casing because I managed to crack it. This iPhone is screaming to be cracked and scratched.

This slimness could be a double whammy in that people will stick the phone in their pocket. Then as they sit, or move around the phone goes snap. If this does happen I would drop Apple stock like rock!

Moving from the design to the technology. The idea that the phone will do everything is a bad idea. Consider the Nokia N Series. The entire series is focused on specific topics like film, video, music, look, etc. Look at the newly introduced N800, which is their second generation Internet tablet. The idea is that you have specialized devices that connect to each other using wireless technologies like Bluetooth. 

I have a Nokia 6131 which has a built-in camera and 2 GB MP3 player. It is small enough to fit into my pocket alongside my keys. If I step into my car my phone connects to my TomTom GPS. The TomTom is a hands free device and lets me receive or make calls.

When I need to drive a longer route after having entered the route TomTom will automatically use the Internet capabilities of my phone to download the latest weather and traffic conditions. If traffic jams are ahead then I will be rerouted.

Having reached my destination when I open my laptop my phone and laptop connect to give me broadband speeds.

The point is that the best GPS device is a dedicated GPS device, or the best notebook is a dedicated notebook. Devices that try to be everything to everybody have weaknesses! 

If I read it correctly I am even questioning the technology used in the phone.

“iPhone is a quad-band GSM + EDGE phone.” No 3G! “We have WiFi and Bluetooth 2.0”

Ok Steve are you saying that if I want 3G I need to get a phone and hook the iPhone to the 3G phone? I will admit that 3G is not a big issue, but if I am going to buy a phone that needs to last for the next 3-4 years it better have 3G and all of the latest cell phone standards (eg 3G or MaxWiFi). 

Summarizing, I find this phone would attract those that buy brand name devices so that they have the device. This will get Apple some marketshare, but I am skeptical that they can keep the marketshare.

Additionally as witnessed at the CES this week vendors are making an assault of the iPod market. Apple does not have the monies nor the leverage to battle multiple fronts like other corporations. This is why I am skeptical about Apple and will at the peak (probably in the next couple of months) buy year end PUT options.

Disclaimer: You can loose money if you were to follow my advice so always always be skeptical about what I say!