The iPhone revolution… has not begun?

This article in Slate is spot-on regarding the iPhone. It’s a beautiful little device, but I won’t be buying one anytime soon.

Mr. Wu points out that as a portable device, the iPhone is far from revolutionary. Sure, it’s probably the hottest phone available, but in the context of what it really is — a miniature Mac — it’s pretty lackluster. If the iPhone were truly revolutionary it would need to break some paradigms. Imagine, for instance, a phone that dynamically switches networks: Using AT&T in Alaska, and Sprint around those spots of western California where AT&T coverage is weak. Imagine a phone that could use Verizon’s superior 3G network for data while effortlessly transitioning to the best regional carrier for voice service.

Tim Wu goes on to write that Apple seems to be out of character, turning into “Little Brother” to AT&T’s “Big Brother” market approach. Certainly the iPhone’s marketing model is in stark contrast to Apple’s days of yore, when it was the “original hippie computer company, a child of the 1970s, not the 1870s.” Are those days gone forever, or is this merely a ploy — a trojan horse, if you will, to gain Apple entry into the big boy’s playground? I suppose time will tell.

The hype is certainly getting a little bit out of control. The Wall Street Journal noted that Apple’s market cap has increased by $34 billion riding on the iPhone announcement. In contrast, Nokia sells 55 phones for every one the Apple hopes to sell by the end of 2008 and yet is valued at only $108 billion:

Or look at it another way. Apple and Nokia both had operating margins of 13% last year. If Apple sells seven million phones next year of the 10 million it expects to sell by 2009, and earns similar margins, operating profit for the phone business should be somewhere around $350 million. So the phone business is valued at close to 100 times estimated 2008 operating profits. Nokia trades at 10 times. Even if one assumes the iPhone snatches some of Nokia’s market share, this gap looks excessive.

In the meantime, I’ll wait. I’m pretty happy with my Sprint Razr and the network coverage I get at home. In fact, I’m skeptical that AT&T has equal coverage — and I’d hate to spend $500 on the phone, commit to a $1,400 contract with AT&T, and then find out that I can’t make phone calls from my home office.