Dear Steve,
As you further embark on your quest to sell a "low-cost reoccurring revenue device that surfs the web and makes money from directing people to Google" (intentional run-on) I suggest you remember the iToaster. Yes, you are bigger than we were, and yes you have vastly more experience in the consumer sector than we did, but the truth is that this model is more than difficult. Just to highlight the similarity in your business plan, especially since we spoke many times about the iToaster, I thought I'd outline some trouble spots for you:
- Your partner can make or break you. I selected Earthlink to by my conduit to the web and then when they mistreated our customers I moved to AT&T who did even worse. You started with AT&T and, based on my iPhone, it was the worst decision you could have made. Their coverage is spotty, the network is slow and *gasp* the sound of calls is awful. In short, they are making you look bad just like they did us.
- It's remarkable that your opening screen looks as similar as the one I showed you late in 1999. Forget? Ok take a look below for yourself just in case you forgot the business plan I presented. Do you remember what we discussed about the limits on the model? Needs to be extensible, too limiting in space etc? Guess not, yours is even more limiting that ours and with your history we know how tightly you will control everything.
- The product needs to be designed for the user intended and the user will not adapt. See this is where the iPod really nailed it and why this device will need to be retooled. It's simple but incomplete and although portions are magically intuitive most of it is just not connected to common sense. Your support calls will go through the roof, eroding profits because you rushed it to market without connecting the dots. It's the same mistake we made with the iToaster but I guess your deep pockets will allow updates: The question is will you poison the goodwill earned from being first to mark
et? - 4. Profitability at the expense of usability will hurt. Charging 99 cents for ringtone conversions, not including Exchange support because you want to promote email servers that are paying you and eliminating the GPS and 3G support are all things that move the product into the "great idea" space and out of the "breakthrough product" category. Again, a little common sense on knowing your user base would have helped because this isn't just a click wheel anymore Steve.
- Premature release (PUN intended) before the sales channel was built was not smart. We announced the iToaster at Microworkz before we had finished the retail sales channel (which was going to be EBGames and AOL) and the attention swamped us. We lost the opportunity to sell full high-priced machines to all those budget customers. What's that Steve? Mac's are only available in a handful of Best Buy and 185 Apple stores? Say you didn't release the iPhone only at AT&T stores and at Apple.com where folks could not touch and feel a real expensive Apple Mac? Say it ain't so...
In any event Steve I wish you the best of luck but I encourage you to study the past while you help engineer the future. Many of the mistakes you have made with the iPhone are fixable but all of us would have expected much more, especially since you and I discussed it 7 years ago. Did watching us fail not help at all? :)
Best,
Keith
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