Threat to the iPhone Discovered!

The release of Pixar's Ratatouille is one of the few things with any hope of stealing the iPhone's thunder this weekend.

Over the next three days, roughly the same number of Americans will see Ratatouille as will buy the iPhone, placing Steve Jobs at ground zero of American popular culture. It will be over soon enough, but for now, it's good to be the Steve.

Friday morning, Fake Steve at The Secret Diary of Steve Jobs posted the memorable, 29 June 2007: The Day the World Changed. Later updates revealed that Washington politicians even came out today with iPhone position statements:

Edwards: "iPhone will eradicate poverty"; Clinton: "iPhone will transform health care"; Guliani: "If you don't buy an iPhone, then the terrorists have won"; Gore: "by combining 3 devices, the iPhone reduces greenhouse gas emissions"; Brownback: "Discovery of iPhone is as profound as evolution, and I don't even believe in evolution"; Cheney: "Fuck the iPhone".

Muckdog at the The Learning Curve showed his considerable mettle as an economist on Friday. He pointed out that the iPhone could prove disinflationary to the US economy, as consumers reduce discretionary spending to support the rapid iPhone upgrade path. Furthermore, as money chases the latest iPhone releases, the product could actually act like a tax hike on consumers.

----------

All joking aside, this type of product phenomenon also generates enormous criticism. However, don't let either the overblown hype -- or the vicious backlash -- distract you from understanding the true significance of this product. In recent articles, Barry Ritholtz at The Big Picture and Paul Kedrosky at The Wall Street Journal come closest to identifying its biggest significance. As a creative professional, I can tell you first-hand that their observations are dead-on.

Here's what all companies can learn from the iPhone:

1. Every da Vinci-caliber idea springs from the imagination of a single person. Corporations rely on committees to solve problems. However, groups are genetically incapable of this level of innovation. It's counterintuitive and cuts against our democratic instincts, but companies should empower their best individuals (not just committees) to find solutions to their biggest problems.

2. Consumer interfaces suck. 100+ million mobile phones have been developed and sold, but they're as clumsy and difficult to use as ever. So are remotes, software, dashboards, kiosks and countless other interfaces. This was an accident waiting to happen, and other interfaces are vulnerable to change as well. Think about the Wii. I assure you, Sony does every day.

3. Ignore the consumer experience at your own peril. US cellphone carriers -- especially the uber-crappy AT&T -- are about to learn this the hard way. The US auto industry and broadcast media already have, and the airlines are at great risk of an uprising. The IRS got nicer, and collections improved. Imagine that.

4. Before you buy back stock, expand your R&D.

5. See #2.

--------------

At a lunch recently, I sat next to a very high-level executive at Sprint. I asked him why -- in this day and age -- we still have dropped cellphone calls. He said the answer was simple: consumers don't care. Research shows that all people really care about is a cheap phone and cheap monthly rates. They don't care about the service.

Oh really?

This is an accident waiting to happen, and what if something came along to change the status quo?

best

dk