Yesterday, I wrote a column saying that a key component to Apple’s price drop and change in business model for the iPhone 3G centers around the App Store, where Apple will earn 30% of the revenue generated from selling third party apps for the iPhone and iPod touch. I still haven’t seen anyone else cottoning on this, which doesn’t surprise me, but I was a little surprised by a couple of things coming from the world of analysis and punditry.

Most notably is a piece from Dow Jones saying there’s no innovation in the iPhone 3G. "Where’s the innovation?" Dow Jones quoted Global Equities Securities analyst Trip Chowdhry as saying. The piece quoted other unnamed analysts who were focusing on the wrong thing, IMNHO, saying, "The big news here is the price cut."

Honestly, that’s just daft. Just plain daft. The price cut is merely a small component to everything the iPhone 3G represents.

Let’s add in something from Gartner analyst Ken Dulaney, who noted: "Putting something like global positioning systems inside the iPhone is no big deal. The difference is going to be what Apple does with it. Think of Nokia, Motorola, Samsung, they pretty much are putting in lots of features just to increase the features list."

Right. No big deal. It’s no big deal adding in a working GPS system into a smartphone that offers everything the iPhone does for US$199. It’s no big deal.

With all due respect to Mr. Dulaney, that reminds me of the sort of drivel I might expect from Rob Enderle, and the interesting thing is that Mr. Dulaney’s second idea suggests he should know better. He talks about handset manufacturers who add features just to add features while completely ignoring the fact that Apple has specifically and decidedly not done that.

So far, Apple has shown that it can offer us features in the iPhone that just work, and just work like they should. From my perspective, that makes the iPhone the anti-cell phone, the precise opposite of what Nokia, Motorola, and Samsung have been doing for years. From what I saw at the WWDC keynote, this will be true of the GPS in the iPhone 3G, too (note that none of us have seen it in use in the wild).

The iPhone 2.0 software addresses what few issues remained in the original iPhone, and the App Store is going to make the iPhone platform into something that’s even more important, a viable mobile computing platform. And that brings me back to the first couple of daft comments: The innovation in iPhone 3G is Apple allowing third party developers to unlock its potential, something I also mentioned in yesterday’s column.

That’s the big news. That’s the important bit. That’s what it’s all about.

Make no mistake about it: iPhone 3G/iPhone 2.0 is going to be a monster hit. It’s going to continue to redefine the smartphone market, and for those who use it, it will change the way they think about and use their so called "cell phones." That is the essence of innovation, is it not?

On the reasonable side of the analyst world, Dow Jones did find a chap that seems to get it. Rory Altman, a partner at telecom consultancy Altman Vilandrie & Co., told the news service that, "[Apple doesn’t] need to take a dramatic step forward because their form factor, software and ecosystem are so far ahead of everything else."

He’s got it mostly right, Apple’s doesn’t need to take a dramatic step forward, etc., but again I’ll stress that the App Store is a dramatic step forward. It’s going to be a seriously big deal.

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Bryan Chaffin began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko’s guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).
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