What I hear you saying is...

There's been a lot of hand-wringing the last few weeks as Apple plans to release the iPhone. The rub lies in the $600 price-point, and that 77% of those polled in this marketing study think it's too expensive, while another 30% of folks claim they won't switch carriers. Seems like bad news...

However, I predict that the iPhone will be a huge success by year's end. Here's why:

What's in a name?
Apple probably did themselves a disservice by calling it the "iPhone" (although they did get some yummy PR in their scuffle with Cisco over the name). Even today, the word 'phone' connotes something that harkens back to bakelite handsets and rotary dials. Pull the handset out of your pocket. Unless it's a Blackberry or Treo (god help you), note that its primary function is still a phone, and that the rest of the features are dumbed-down WAP-lets or crash-prone Java apps.

Unlike most failures at convergence, however, Apple seems to have created a new class of device. From what I've seen, the iPhone is as much a music player as it is a phone, as it is an email device, as it is a photo album, as it is a movie player. It is a swiss-army-knife of gadgetry, and from its PR promises to extend the same level of quality and utility. Ultimately it's an "iThing" that defies description and comparison with existing products.

Price is relative
So if it's neither fish nor fowl, how do you price it? Price is a red-herring. When someone says it's too expensive, it's because their frame-of-reference is a phone: If I'm not willing to pay even $5 for the Nokia handset I get for free from joining Cingular, why would I be willing to shell out $600 for a "phone"? People will need to be introduced to this product in person. After the initial flurry of first-adopters and bugginess, I suspect there will be an alarming lull in sales through the Summer. People will need to see the device -- touch it and hold it -- watch their friends do something like this. Then they will have to have one, too. Just in time for Christmas...

Carrier Loyalty
What about the 30% that claim carrier loyalty? It's a non-starter. Here's a little secret you probably already know: All wireless carriers suck. Some may be worse than others, but I don't know anyone that doesn't have problems with their phone and/or carrier in some spot, location, situation. And the grass is always greener -- Users just need a compelling reason to flee. The iPhone will be tempting to anyone that would be willing to shell out for a Blackberry or Treo.

"It's not the shoes, Mars"
There are phones already on the market that have most of the iPhone's features, and none of them have really taken off. Why not? Because convergence products generally don't work very well. Any sort of cohesive branding message disintegrates against a wall of mediocre features and schizophrenic UIs. People are then forced to make rational decisions about how a lifestyle-product will solve some basic set of problems for them, and rationalization is ultimately *not* the friend of the gadget Marketeer.

But Apple has refined the packaging of lifestyle products to an art. Just look at the video and shuffle versions of the iPod. Neither of these products make any sense: Paying for a TV show and watching it on a 2-inch screen? Or an MP3 player that has no navigation? Yet they sell spectacularly well because they carry the slick ease and urban good-looks of the Apple branding baggage, and because Apple simply owns this category.

In the end, it won't matter that we end up using the device primarily as an iPod or a phone or a video player. We'll all be sold on the Dick Tracy, dreamy potential of watching Pirates of the Carribbean, suddenly deciding on calamari, and then finding the closest seafood restaurant and calling for reservations... all with less than ten finger taps on the same device.

Disclosure: I own Apple stock. :-)