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Could The iPhone Destroy Apple's Reputation?

MarketWatch columnist John Dvorak argues that Apple should just make the iPhone a reference design and move on. Why, you may ask, would Apple want to walk away from the hottest mobile device in years? Because it isn't equipped to handle the demands of the nonstop mobile phone market, that's why.

Dvorak lays out Apple's slim chance in the handset business:

The problem here is that while Apple can play the fashion game as well as any company, there's no evidence that it can play it fast enough. These phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months.

There is no likelihood that Apple can be successful in a business this competitive. Even in the business where it's a clear pioneer, the personal computer, it had to compete with Microsoft and can only sustain a 5% market share.

And its survival in the computer business relies on good margins. Those margins cannot exist in the mobile handset business for more than 15 minutes.

And note that the Microsoft versus Apple battles are laughable compared with the frenzied marketing mania in the handset business. Even Microsoft has troubles with its attempts to get into a small sub-segment of the handset business with its operating system.

Dvorak warns Apple that its very reputation is on the line and that if the iPhone flops, it could be disastrous for the company's public image.

I don't know I would go that far or not, but I do find Dvorak's skepticism refreshing. The iPhone is by no means a guaranteed success and its good to see that others out there are finally waking up to this.

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