The US economy is in recession, and it will take 5~8 years before we have another economy booming. It is a tough time for any technology movement. The gas price will go up to $7 per gallon by the end of this year, and the US dollar keeps devaluating. This is definitely not as good time as that when iPod came to the world. In addition, the following ten challenges will stay hard in the way of 3G iPhone movement:
1. The service cost is the most critical issue for the mobile users. While Jobs promoted the 3G speed as similar to the WiFi (which is FREE in many cities), he forgot an important issue for the not-rich people, the cost of 3G service! I do not believe AT&T can offer a cheap package for this 3G service, and in fact, most American people can not afford pay the expensive 3G services. While almost everything becomes expensive, people need to cut budget to save dollars for more milk, gas and food, the 3G is most probably in the budget cut list because it is not a must.
2. More iPhone technologies are uncovered which makes copy much easy. In Taiwan and Shenzhen, you can pay $5000 to buy a complete hardware and software package for iPhone systems. Though may not be updated with newest version, it is enough for a 15 years' senior engineer to redo the system again. Touch screen technology, Visual rotating technology and Push technology, claimed as Apple's core technologies, now become a public know-how in many countries. Patents are only applied to gentlemen, not to copyguy especially there is no enforcement in many countries.
3. More and more iPhones will be unlocked across the global. Though Jobs claims more secured technology in locking the phone, but as long as it is locked by engineer, another engineer will be able to unlock it eventually which is the EE law. I witnessed some Ph.Ds and engineers were very smart to be able to reverse engineering of a very complex 128K ATM Swicthing Matrix within a month, so whatelse can not be decoded. The reverse engineering market in Asia is a tens of billion dollars' business, and over ten million professionals are working on this industry every single day. In China, thousands of Ph.D candidates are working on analyzing iPhone as their Ph.D thesis, and their results are amazing.
4. Apple is not a mobile wireless company, and most iPhone technologies are borrowed or leased. iPhone is different from iPod as it is a phone. The mobile industry is already full of fires and wars. Without so much wireless technologies and influence, how can Apple survive in long term strategy is a big question. 3G was a ten year's ago old technology, and had been struggling for long time, and I do not believe it is going to success (like ISDN in old days). People are working on LTE (long term evolution) and possible 4G on open wireless architecture (OWA) of wireless convergence, but Apple just started 3G which is really funny. The AT&T so-called 3G, who knows how many peole really uses it and how long it can survive, is a very risky business as well. In case this so-called 3G is successful, the next question is how to deal with the handover between WiFi and 3G, how to avoid AT&T forcing users to use 3G networks even in the free WiFi networks because AT&T wants to charge users more to its 3G networks. The iPhone is locked by AT&T, and therefore AT&T determines users' payments based on AT&T's interests, and everyone is hostaged. In case all these issues are solved, then Apple will be sued by lots of companies with different patents in wireless fields, and Apple do not have so many IPs to fight back. Remembered before 1996, Qualcomm did not have many lawsuits, but after its CDMA products started to make much money, lawsuits became falling snows. Nevertherless, Qualcomm is an wireless technology leader. But Apple does not have wireless IPs, most relying on Interdigital and its partners. Personally, I listed around 80 patents which are threat to iPhone's 3G business. Let's see!
5. 3G iPhone is not going to make much money. In my 09/06/2007 Blog, I told everyone that 8G iPhone's BOM cost is $137.62, so I predicted the price should be less than $199. Considering large volume and high-cost of 3G version, the 3G iPhone's BOM cost is around $149. So Apple does not make much money from the 3G iPhone products. Of course, with the volume increases, the BOM can be low as $100, but takes a while. Meanwhile, the fake iPhone will continue to reduce price which generates high pressure to iPhone sale price. Further, please remember, 3G iPhone RF provider - Infineon has a project with Huawei, etc to deliver a very cheap UMTS chipsets which may help fake iPhone (or called other names) to be very cheap. Also, many samll 3G companies such as Sandbridge, etc may offer much cheap chipsets and make "iPhone" even more cheap in "Water" markets.
6. More fake iPhones than legal iPhones soon. With the increasingly popularity of iPhone, more and more peoples are investing and developing fake iPhones. Without marketing costs (thanks to Apple for global marketing), these small companies are easy to survive at the moment. The iPhone hardware and software are available in many countries, and the key chip vendors are open for anyone, so it is easy for copy and assembling. Though some functions do not work well, but many people may never use it in life time. Because it is cheap and not locked, there are always markets. Currently there are over one million fake iPhones in the market.
7. Apple needs more R&D in wireless. iPhone is so polular, but Apple never has a R&D in wireless. If you search in the IEEE Xplore, there is no wireless/mobile paper from Apple. Relying on partnership is just a short-time strategy only. For long-term success, you need your own R&D. I never heard a company can survive long time without its own R&D. Qualcomm, Nokia, Samsung, etc have tens of thousands of R&D papers every year, and Apple needs to think about it seriously. When Jobs is enjoying its 3G baby now, the world almost left 3G era to step into the 4G era, no matter how to define 4G, it is a big movement towards future.
8. 3G iPhone's architecture needs big improvement. While 3G iPhone has lots of applications much beyond a iPod, it forgets it is a wireless and mobile phone. The transmission and spectrum efficieny is mission critical for a multimedia mobilephone. The current design architecture does not allow the phone to transmit data and video so effective over the air, and the transceiver was originally not designed for iPod-like traffics. When the capacity increases, all the problem comes out.
9. 3G iPhone network optimization will take long time. Qualcomm took ten years to increase the CDMA capacity from 20% to 60%. Though AT&T started 3G deployment years ago, but it takes long time to increase the capacity. When the capacity is low, everything becomes easy and high-speed. When the capacity increases, lots of problems with mobility and broadband transmission will come out, and especially CDMA is not optimized for high-speed tranmission. It will challenge the user experience with iPhone. Anway, it is a wireless phone with seamless mobility.
10. 3G iPhone is not so secured. The current 3G version hardware and software architecure do not have good security measures with implementation in the MAC and PHY layer, meaning the system is still exposed for attack, though there are some developments in the high-layers. In wireline networks, high-layer protection is enough because the transmission medium (cable, fibre optic) is stable and not expose to the public. But in commercial mobile communications, unless secured means in MAC and PHY layers, everything transmitted is open to the others, and "experts" can easily park their cars outside of your house, and get hold of your tranmitted data to their equipments for further analysis. VPN in this 3G networks is not so secured, unless improvement in MAC/PHY is done. Unfortunately, the Infienon S-Gold chipstes and other suppotrting chipstes do not support such security features in this 3G iPhone version.
Anyway, we need more work on this new "old" baby, and let's help it to move the business forward.
Prof. Willie W. LU
Former Senior Principal Wireless Architect
Infineon Technologies AG
Wireless Solution Provider of 3G iPhone