The iPhone Killer Lands at 3GSM

By Rob Enderle February 15, 2007

Boy, is the market for phones different than the market for MP3 players. I was there at the launch of the iPod, and I immediately saw it was a game changer. But it had a massive exposure; there were three other firms in the space — S3, Creative Labs, and Sony — and the iPod only worked on Macs. It took these competitors at least a year to understand what Apple had done and to come out with similar or better offerings. Now, over 5 years later, S3/RIO has exited the market, Creative Labs still doesn’t get it, and Sony seems to be doing its level best to commit suicide by overuse of DRM.

But, with still nearly 5 months before the iPhone hits the market, we have already had several challengers that are better than anything the initial MP3 companies were able to come out with 2 or 3 years after the iPod was released.

A few weeks ago, there was one phone that really stood out as potentially better (for the target audience of those that wanted a phone to do music and movies) than the iPhone, and that is the Neonode.

Making a Better iPhone

Now, to make a better anything you have to be different. A phone that is the same as the iPhone, but from a company other than Apple, would simply be a poor copy. This little puppy isn’t the same. To beat the iPhone, you’d need to be significantly less expensive, significantly smaller, have significantly longer battery life, and still do what the iPhone is primarily supposed to do.

The Neonode hits on almost all points. Costing about $530 unlocked (the iPhone is $500 to $600 with a 2-year commitment), the product is between $200 and $300 less expensive if you value the subsidy at the typical $200. The reason you can do this is because the memory in the device is upgradeable. This gives it headroom up to 32GB (which isn’t available yet in a mini-SD card; at launch, maximum is 8GB). Of course, you can have multiple flash cards, giving it nearly unlimited capacity for movies or music.

The Neonode’s size is substantially smaller than the iPhone, and it is substantially lighter as a result. It is about the size of a credit card (a little smaller, and clearly much thicker). Still, it fits easily in the palm of your hand and you don’t look like a dork when you hold it up to your head.

The Neonnode
The Neonode N2

The included (iTunes-like) music client will auto-record music off internet radio to fill your music library with free, legal content. It has a built-in loudspeaker, so you can listen to music in areas where headphones might be a problem. It will initially come in three colors — gold, silver, and black — and it will run on any GSM service in the U.S. or Europe, not just Cingular.

It is designed for one-handed entry and, when you touch the screen, the phone pulses to emulate the pushing of a keyboard. The screen itself is highly innovative. It isn’t a touch screen; light is projected across the face of the screen to triangulate where your finger is. In addition, the UI, which is based on Windows CE (meaning it integrates naturally with Windows), is custom-designed for the product, giving it an Apple-like look and feel. They have also made it a gesture-based interface, allowing you to do complex things by swiping your finger in a unique way. (Granted, you’ll need to learn this.)

The iPhone does have a bigger screen, Wi-Fi, iTunes, and a faster EDGE radio. In addition, the iPhone has the Apple brand behind it. None of these facts are trivial.

However, the Neonode is an open platform, so, unlike the iPhone, third parties can develop applications for it or modify already existing Windows CE applications to work on it.

The Neonode will show 16 hours worth of videos on a battery charge and has a removable battery. The iPhone, on the other hand, has only 5 hours of talk time, and it would have substantially less than that for video-watching time due to the power the iPhone screen light requires to stay lit.

If there was an iPhone Nano (and there is supposed to be one coming), it would be hard pressed to compete with the Neonode on feature. Even scarier is that the Neonode’s initial product run is limited, which means the price for the phone is initially much higher than it needs to be because it is exclusive. Once volume takes off, the unlocked price for this phone could drop to close to $200 or nearly free with subsidy, and that will be much harder for the iPhone to compete with.

With the free music, the smaller, sexier size, the lower price, and the fact that it will be made available months before the iPhone even hits the market (initially in Europe and eventually in the U.S.), ask yourself, has anyone on the iPod side ever had any competitor this good, let alone before the Apple product initially launched in stores?

I had a chance to play with the Neonode and immediately wanted one. Take a look at the pictures, and let us know whether you would prefer the Neonode over the iPhone.

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