CES 2007: Apple's iPhone Trumps CES For Tech Glitz And Buzz

2007 International Consumer Electronic Show

The buzz surrounding Apple's new iPhone reverberated throughout the halls of the massive show because of its potential to shake up the mobile device market by combining phone, Web access and the traditional iPod music player into one sleek product.

Slide Show: The iPhone And Apple TV

"(Apple CEO Steve) Jobs did a beautiful job," said Kip Kokinakis, CEO of MicroOptical, which was showcasing at CES its myVu personal media viewer that allows consumers to watch their iPod with a headset that provides a large TV viewing experience. "Everybody was at CES calling each other on the cell phone to see what Jobs did at MacWorld. That's pretty cool. Let's face it. Jobs is an icon. He's clever. The stuff he does is brilliant and his products are pretty good."

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Kokinakis said the new iPhone has a bigger high-tech glitz quotient than anything at CES, but he did give plaudits to SanDisk for its USBTV, a new, industrywide initiative unveiled at CES aimed at allowing consumers to move digital content from their PCs to their televisions for viewing on a big screen. He also liked Verizon's new V CAST Mobile TV Service from Verizon Wireless.

Kokinakis said mobile handheld device market is moving rapidly to video broadcast capabilities. He said iPhone could accelerate that video-on-the-go revolution by as much as two years in the United States. "This is dramatic in the sense that it is Apple. Apple adds validation," he said. "Apple realizes they could lose their MP3 business to the phone. That's why it's a powerful statement."

The biggest in-person iPhone bang at the show came at a packed press conference Wednesday at which Cingular touted its multiyear exclusive agreement to provide wireless service for the iPhone.

"It really did put a buzz throughout all of CES," said Glenn Lurie, president of national distribution for Cingular. "It's hard to argue that it isn't one of the coolest things that people have seen. That reaction tells you that it is pretty incredible."

Lurie said the new iPhone is yet another testament to Apple's software prowess. "Look at the software Apple built in this device. It is unbelievable," he said. "The thing that blows my mind is just the (Internet) browsing experience," he said. "I have never seen anything like that."

NEXT: Where To Buy An iPhone For the cellular market, iPhone has the ability to provide the same game changing effect Apple had in the music download business with iPod. "This is such a leap past other things out there," Lurie said. "I think it is going to make everybody innovate and when everybody innovates it's great for customers. I really believe it is going to grow the (cellular business) in a big way."

The ease of use of some of the phone and Web access capabilities is revolutionary, said Lurie. "An example that even shocked me is the ability to do a conference call," he said. "Apple made it so simple that everybody is going to do it. Look at the wireless device in your hand today and ask how easy is it to do conference calls today?"

Cingular, by the way, did not have an actual iPhone to show off at the CES press event. Cingular actually entered into the agreement with Apple, a move greenlighted by its board of directors, some two years ago without even seeing the iPhone. And only three Cingular executives (Lurie, CEO Stan Sigman and Chief Operating Officer Ralph de la Vega) actually saw the iPhone in the last 120 days before the big MacWorld unveiling on Tuesday.

Lurie says Apple "totally exceeded" all Cingular's expectations with the product's capabilities. "People were literally off their chairs (at MacWorld) excited about this product," he said. "That reaction and others have been phenomenal."

Lurie said the iPhone has a great potential to dramatically increase iPod aftermarket. "Now all of a sudden you are tapping into all the wireless customers," he said. "Obviously Apple has been wildly successful with iPod and iTunes. This just takes it to another level."

Telecom VARs, master agents, solution providers and even the big box retailers who like to throw their weight around will not have the ability to sell the product out of the gate when it starts shipping in June. iPhone will be sold in the United States through Apple's retail and online stores and through Cingular's retail and online stores. Apple is dictating the distribution strategy for the iPhone, not Cingular, he noted, adding that this is the first time Cingular has actually entered into such an agreement that does not include its indirect partners. "My message is that they pick up the phone and call Apple," he said. "I respect Apple's distribution strategies."

Dan Schwab, vice president of marketing for D and H Distributing, which had a booth at CES and was meeting with partners, said Apple is great at public relations and positioning, but ultimately "everything going on at CES is a much bigger long-term opportunity" for solution providers than iPhone. "You're talking at CES about HD TVs, wireless networking and the entire gamut of technology, not just an MP3 player in a phone," he said.

Schwab said there was not one big-bang product that captured the imagination of showgoers at CES, but rather the big story this year is that almost "every product in every category is going through an evolution." For example he said both Blu-ray and HD DVD are moving forward with advances, and there is significant opportunities for spreading HDTV content throughout the home.

"There is no ground-breaking new technology this year [at CES]," he said. "That has really occurred over the last three years. This year the technology is being advanced to make it more of a mass opportunity. "What Apple did well with iPhone is not just look at a product and say how can we tweak it," said Schwab. "They take a step back and say if I was starting from scratch what would I do? They do that really well."

The iPhone buzz came after Nokia President and CEO Olli-Pekka Kallasvuo gave his industry insider address on Monday morning. But a Nokia spokesperson at the company's booth said the Apple announcement is a validation of Nokia's strategy to provide internet and cellular technology in a single device. "We welcome them to the party," he said.