Apple Unveils iPhone 2, the Phone and The Business

The second chapter of Apple's iPhone era is almost ready to begin, and it's already clear that things will be a little different this time around.

Few people who pay even scant attention to the technology industry could claim to be shocked by the introduction of a faster iPhone earlier on Monday by Apple CEO Steve Jobs. Apple has sold 6 million iPhones since June 2007, Jobs said, and will likely sell a few more once the new model arrives on July 11 with a faster networking chip, GPS capabilities, and a software upgrade that's an IT manager's dream for a mobile device.

From a features point of view, the new model delivers on what iPhone customers want and need. Yes, you still can't do mobile messaging, and I still don't think you can do cut-and-paste, which is just bizarre. But Apple has added just about everything else people have asked for or complained about in iPhone 1.0: faster networks, secure access to corporate e-mail, precise location-based services, and third-party applications.

What's perhaps more interesting is what Apple has learned about the mobile phone business. It's not all that surprising that Apple, which has a proud legacy of product design and software development, would have created an excellent product that has the rest of the industry scrambling to overtake.

But several developments later on Monday indicate that Apple has had to learn just as many lessons about playing in the mobile phone market over the past year as it has taught the mobile phone industry about product development.

So the big question: will the iPhone 3G--and new business model--enable Apple to meet its sales target for 2008 of 10 million units? If Apple has sold 6 million units to date, as Jobs said in his keynote, that means the company has a long way to go, having sold just 2.3 million iPhones so far in 2008.

The fact that the new iPhone won't be available until July 11 was one of the most surprising things to emerge from this morning's keynote. Apple, of course, never put a finer grain on when it expected to ship iPhone 3G beyond "next year," which Jobs quoted a few times in response to questions about the issue in 2007. But few expected the company to miss the one-year anniversary of the iPhone's debut with the new model, and at the very least, Apple itself had promised the iPhone 2.0 software by the end of June.

Apple's Greg Joswiak, vice president of worldwide iPod and iPhone marketing, reiterated Apple's 10 million shipment goal in an interview after Jobs' keynote, so it's not like Apple is backing down. There are two main reasons why the company can still be confident: the combination of 3G and the cheaper price will spur potential customers who have been sitting on the sidelines in countries where the iPhone already exists, and a total of 70 countries will get official access to the iPhone, including major new destinations like Canada and Australia. In addition, Jobs hinted to CNBC later in the day that the big prize--China--could be coming sooner rather than later.

It's always interesting to watch a company try to make its way into an entirely new business; those who fail far outnumber those who succeed. The most common reason why many fail is because they forget to learn from their initial experiences, or assume they know better based on their past successes.

Apple may not proclaim it from on high in the Stevenote, but today the company showed that it's willing to learn from its mistakes, and to adjust its business model when prudent. So far in its iPhone era, Apple has wisely tackled the hard problem first--making a great product, and continuing to improve it--and is now making the kinds of changes to its business model to make sure the iPhone really does turn into the third leg of the company's business some day.