Why the iPhone is a safe bet for Apple

Does Apple run a huge risk with the iPhone? It has been pointed out several times just how competitive the cellphone market is, how unfamiliar Apple is with the sector, and how hard it may be for the company to succeed.

It might appear that Apple has sunk tremendous R&D costs into developing the iPhone: it's truly a revolutionary product, with hundreds of patents and breakthrough features. In creating the iPhone, Apple even ported OS X to a different processor, and shoehorned it into a tiny handheld device! And unlike the clumsy mobile version of Windows (whose name is seemingly changed more frequently than Steve Ballmer's underwear), the iPhone OS actually seems like a product that has actually been adapted to the needs of its users.

What if the iPhone fails? Will Apple just write off all the time and money it invested into it? Will all that great technology be thrown out, and will the company sulk back to manufacturing Macs and iPods?

No. First of all, I think the iPhone is very unlikely to fail. I think people want it badly. They can hardly wait to get one. The momentum that has been building up behind the iPhone should be strong enough to guarantee exceptional sales.

But even if initial reaction proves to be less than stellar, Apple can pretty much still fix the product in software: it can add killer features, it can open it up as a development platform, and so on. The possibilities are endless, especially in light of the Cocoa frameworks that enable rapid software development.

But let's imagine the worst-case scenario, a Cube-style disaster. Let's imagine that the iPhone sells so badly that Apple needs to discontinue it. Then what?

Here's what would happen then. Apple's stock would tank. Paul Thurott, Rob Enderle, and that other idiot whose name I forget would celebrate by tap dancing and farting.

And about three seconds later, Apple would release a new generation of the iPod that would make everyone's jaw drop.

It would be the iPhone without the phone. It would play widescreen movies. It would use multi-touch. It would have your photo library on it. You could take notes with it. It would still be a PDA. It would have WiFi, it would have Safari, it would have Google Earth, it would have Skype.

It would do things that AT&T/Cingular would never let the iPhone do. It would have dozens of gigabytes of flash memory. And it would sell below $400.

And this thing would sell like nothing has sold ever before.

How do I know?

Easy. That's because such an iPod is coming anyway. Can you imagine this not happening? Will the iPod forever have a screen the size of a keyhole? Starting June, if you want the best iPod Apple has made, you will have to buy the iPhone. That's yet another way Apple wants to help the sales of the phone. But obviously, that will change eventually: shouldn't the iPod be the best iPod ever made? How long can it afford to be out-iPodded by another product?!

Obviously, Apple's releasing a higher-end product first. If it created a widescreen iPod before the iPhone, the latter would sell worse. So the new iPod will have to wait. How long it will have to wait depends largely on the success of the iPhone, I think.

But I'm convinced that the new, "iPhone without a phone" iPod is already ready, and mass production could start any moment a certain red phone rings.

And of course, now that OS X has been ported to a tiny device, Apple will never be the same company again.

And it's not an isolated phenomenon, either. Apple TV has turned out to be a stripped-down Mac, running Mac OS X, performing a dedicated function. For $300. Am I the only one who thinks that the implications of this are huge?

Apple is taking computing into completely new places. It's porting OS X left, right and center. Who knows what products Apple has in the pipeline?

The iPhone is just a beginning. Sure, it's important for Apple that it succeed. Yet even in the unlikely event that it fails, the technologies behind it are ready to power several other products, including iPods with pretty much guaranteed sales.