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From WSJ

We Spend Two Weeks Using Apple’s Much-Anticipated Device
To See if It Lives Up to the Hype; In Search of the Comma Key

By WALTER S. MOSSBERG and KATHERINE BOEHRET
June 27, 2007; Page D1

One of the most important trends in personal
technology over the past few years has been the evolution of the humble
cellphone into a true handheld computer, a device able to replicate
many of the key functions of a laptop. But most of these “smart phones”
have had lousy software, confusing user interfaces and clumsy music,
video and photo playback. And their designers have struggled to balance
screen size, keyboard usability and battery life.

Now, Apple
Inc., whose digital products are hailed for their design and
innovation, is jumping into this smart-phone market with the iPhone,
which goes on sale in a few days after months of the most frenzied hype
and speculation we have ever seen for a single technology product. Even
though the phone’s minimum price is a hefty $499, people are already
lining up outside Apple stores to be among the first to snag one when
they go on sale Friday evening.

We have been testing the iPhone for two weeks, in
multiple usage scenarios, in cities across the country. Our verdict is
that, despite some flaws and feature omissions, the iPhone is, on
balance, a beautiful and breakthrough handheld computer. Its software,
especially, sets a new bar for the smart-phone industry, and its clever
finger-touch interface, which dispenses with a stylus and most buttons,
works well, though it sometimes adds steps to common functions.

The Apple phone combines intelligent voice calling,
and a full-blown iPod, with a beautiful new interface for music and
video playback. It offers the best Web browser we have seen on a smart
phone, and robust email software. And it synchronizes easily and well
with both Windows and Macintosh computers using Apple’s iTunes software.

It has the largest and highest-resolution screen of
any smart phone we’ve seen, and the most internal memory by far. Yet it
is one of the thinnest smart phones available and offers impressive
battery life, better than its key competitors claim.

It feels solid and comfortable in the hand and the way
it displays photos, videos and Web pages on its gorgeous screen makes
other smart phones look primitive.

The iPhone’s most controversial feature, the omission
of a physical keyboard in favor of a virtual keyboard on the screen,
turned out in our tests to be a nonissue, despite our deep initial
skepticism. After five days of use, Walt — who did most of the testing
for this review — was able to type on it as quickly and accurately as
he could on the Palm Treo he has used for years. This was partly
because of smart software that corrects typing errors on the fly.

But the iPhone has a major drawback: the cellphone
network it uses. It only works with AT&T (formerly Cingular), won’t
come in models that use Verizon or Sprint and can’t use the digital
cards (called SIM cards) that would allow it to run on T-Mobile’s
network. So, the phone can be a poor choice unless you are in areas
where AT&T’s coverage is good. It does work overseas, but only via
an AT&T roaming plan.

In addition, even when you have great AT&T
coverage, the iPhone can’t run on AT&T’s fastest cellular data
network. Instead, it uses a pokey network called EDGE, which is far
slower than the fastest networks from Verizon or Sprint that power many
other smart phones. And the initial iPhone model cannot be upgraded to
use the faster networks.

The iPhone compensates by being one of the few smart
phones that can also use Wi-Fi wireless networks. When you have access
to Wi-Fi, the iPhone flies on the Web. Not only that, but the iPhone
automatically switches from EDGE to known Wi-Fi networks when it finds
them, and pops up a list of new Wi-Fi networks it encounters as you
move. Walt was able to log onto paid Wi-Fi networks at Starbucks and
airports, and even used a free Wi-Fi network at Fenway Park in Boston
to email pictures taken during a Red Sox game.

But this Wi-Fi capability doesn’t fully make up for
the lack of a fast cellular data capability, because it is impractical
to keep joining and dropping short-range Wi-Fi networks while taking a
long walk, or riding in a cab through a city.

AT&T is offering special monthly calling plans for
the iPhone, all of which include unlimited Internet and email usage.
They range from $60 to $220, depending on the number of voice minutes
included. In an unusual twist, iPhone buyers won’t choose their plans
and activate their phones in the store. Instead, they will do so when
they first connect the iPhone to the iTunes software.

Despite its simple interface, with just four rows of
colorful icons on a black background, the iPhone has too many features
and functions to detail completely in this space. But here’s a rundown
of the key features, with pros and cons based on our testing.

Hardware: The iPhone is simply beautiful. It is
thinner than the skinny Samsung BlackJack, yet almost its entire
surface is covered by a huge, vivid 3.5-inch display. There’s no
physical keyboard, just a single button that takes you to the home
screen. The phone is about as long as the Treo 700, the BlackBerry 8800
or the BlackJack, but it’s slightly wider than the BlackJack or Treo,
and heavier than the BlackBerry and BlackJack.

The display is made of a sturdy glass, not plastic,
and while it did pick up smudges, it didn’t acquire a single scratch,
even though it was tossed into Walt’s pocket or briefcase, or Katie’s
purse, without any protective case or holster. No scratches appeared on
the rest of the body either.

There are only three buttons along the edges. On the
top, there’s one that puts the phone to sleep and wakes it up. And, on
the left edge, there’s a volume control and a mute switch.

One downside: Some accessories for iPods may not work
properly on the iPhone. The headphone jack, which supports both stereo
music and phone calls, is deeply recessed, so you may need an adapter
for existing headphones. And, while the iPhone uses the standard iPod
port on the bottom edge, it doesn’t recognize all car adapters for
playing music, only for charging. Apple is considering a software
update to fix this.

Touch-screen interface: To go through long lists of
emails, contacts, or songs, you just “flick” with your finger. To
select items, you tap. To enlarge photos, you “pinch” them by placing
two fingers on their corners and dragging them in or out. To zoom in on
portions of Web pages, you double-tap with your fingers. You cannot use
a stylus for any of this. In the Web browser and photo program, if you
turn the phone from a vertical to a horizontal position, the image on
the screen turns as well and resizes itself to fit.

In general, we found this interface, called
“multi-touch,” to be effective, practical and fun. But there’s no
overall search on the iPhone (except Web searching), and no quick way
to move to the top or bottom of pages (except in the Web browser). The
only aid is an alphabetical scale on the right in tiny type.

There’s also no way to cut, copy, or paste text.

And the lack of dedicated hardware buttons for
functions like phone, email and contacts means extra taps are needed to
start using features. Also, if you are playing music while doing
something else, the lack of hardware playback buttons forces you to
return to the iPod program to stop the music or change a song.

Keyboard: The virtual keys are large and get
larger as you touch them. Software tries to guess what you’re typing,
and fix errors. Overall, it works. But the error-correction system
didn’t seem as clever as the one on the BlackBerry, and you have to
switch to a different keyboard view to insert a period or comma, which
is annoying.

Web browsing: The iPhone is the first smart
phone we’ve tested with a real, computer-grade Web browser, a version
of Apple’s Safari. It displays entire Web pages, in their real layouts,
and allows you to zoom in quickly by either tapping or pinching with
your finger. Multiple pages can be open at the same time, and you can
conduct Google or Yahoo searches from a built-in search box.

Email: The iPhone can connect with most popular
consumer email services, including Yahoo, Gmail, AOL, EarthLink and
others. It can also handle corporate email using Microsoft’s Exchange
system, if your IT department cooperates by enabling a setting on the
server.

BlackBerry email services can’t be used on an iPhone,
but Yahoo Mail supplies free BlackBerry-style “push” email to iPhone
users. In our test, this worked fine.

Unlike most phone email software, the iPhone’s shows a
preview of each message, so you don’t have to open it. And, if there is
a photo attached, it shows the photo automatically, without requiring
you to click on a link to see it. It can also receive and open
Microsoft Word and Excel documents and Adobe PDF files. But it doesn’t
allow you to edit or save these files.

Memory: The $499 base model comes with four
gigabytes of memory, and the $599 model has eight gigabytes. That’s far
more than on any other smart phone, but much less than on full-size
iPods. Also, there’s no slot for memory-expansion cards. Our test $599
model held 1,325 songs; a dozen videos (including a full-length movie);
over 100 photos; and over 100 emails, including some attachments, and
still had room left over.

Battery life: Like the iPod, but unlike most
cellphones, the iPhone lacks a removable battery. So you can’t carry a
spare. But its battery life is excellent. In our tests, it got seven
hours and 18 minutes of continuous talk time, while the Wi-Fi was on
and email was constantly being fetched in the background. That’s close
to Apple’s claim of a maximum of eight hours, and far exceeds the talk
time claims of other smart phones, which usually top out at five and a
half hours.

The interface features “cover flow” technology for flipping through album covers.

For continuous music playback, again with Wi-Fi on and
email being fetched, we got over 22 hours, shy of Apple’s claim of up
to 24 hours, but still huge. For video playback, under the same
conditions, we got just under Apple’s claim of seven hours, enough to
watch four average-length movies. And, for Web browsing and other
Internet functions, including sending and receiving emails, viewing
Google maps and YouTube videos, we got over nine hours, well above
Apple’s claim of up to six hours.

In real life, of course, you will do a mix of these
things, so the best gauge might be that, in our two-week test, the
iPhone generally lasted all day with a typical mix of tasks.

Phone calls: The phone interface is clean and
simple, but takes more taps to reach than on many other smart phones,
because there are no dedicated hardware phone buttons. You also cannot
just start typing a name or number, but must scroll through a list of
favorites, through your recent call list, or your entire contact list.
You can also use a virtual keypad.

One great phone feature is called “visual voice mail.”
It shows you the names or at least the phone numbers of people who have
left you voicemail, so you can quickly listen to those you want. It’s
also very easy to turn the speakerphone on and off, or to establish
conference calls.

Voice call quality was good, but not great. In some
places, especially in weak coverage areas, there was some muffling or
garbling. But most calls were perfectly audible. The iPhone can use
Bluetooth wireless headsets and it comes with wired iPod-style earbuds
that include a microphone.

Google maps on the iPhone.

A downside — there’s no easy way to transfer phone
numbers, via AT&T, directly from an existing phone. The iPhone is
meant to sync with an address book (and calendar) on a PC.

Contacts and calendars: These are pretty
straightforward and work well. The calendar lacks a week view, though a
list view helps fill that gap. Contacts can be gathered into groups,
but the groups can’t be used as email distribution lists.

Syncing: The iPhone syncs with both Macs and
Windows PCs using iTunes, which handles not only the transfer of music
and video, but also photos, contacts, calendar items and browser
bookmarks. In our tests, this worked well, even on a Windows Vista
machine using the latest version of Outlook as the source for contacts
and appointments.

iPod: The built-in iPod handles music and video
perfectly, and has all the features of a regular iPod. But the
interface is entirely new. The famed scroll wheel is gone, and instead
finger taps and flicking move you through your collection and virtual
controls appear on the screen. There’s also a version of the “cover
flow” interface which allows you to select music by flipping through
album covers.

Other features: There are widgets, or small
programs, for accessing weather, stock prices and Google Maps, which
includes route directions, but no real-time navigation. Another widget
allows you to stream videos from YouTube, and yet another serves as a
notepad. There’s a photo program that displays individual pictures or
slideshows.

The only add-on software Apple is allowing will be
Web-based programs that must be accessed through the on-board Web
browser. The company says these can be made to look just like built-in
programs, but the few we tried weren’t impressive.

Missing features: The iPhone is missing some
features common on some competitors. There’s no instant messaging, only
standard text messaging. While its two-megapixel camera took excellent
pictures in our tests, it can’t record video. Its otherwise excellent
Web browser can’t fully utilize some Web sites, because it doesn’t yet
support Adobe’s Flash technology. Although the phone contains a
complete iPod, you can’t use your songs as ringtones. There aren’t any
games, nor is there any way to directly access Apple’s iTunes Music
Store.

Apple says it plans to add features to the phone over
time, via free downloads, and hints that some of these holes may be
filled.

Expectations for the iPhone have been so high that it
can’t possibly meet them all. It isn’t for the average person who just
wants a cheap, small phone for calling and texting. But, despite its
network limitations, the iPhone is a whole new experience and a
pleasure to use.

*

WSJ: Steve, on the eve of the iPhone launch, we
wonder if you might compare it to others you’ve been involved in — the
introduction of the Macintosh, for instance — both in terms of the
consumer anticipation and your own feelings about the impact the
product will have in the market?

Steve Jobs: One of the things we feel is this
is the biggest breakthrough in user interfaces in 23 years. Since the
Mac in 1984 brought us the mouse and bit map displays and folders and
icons, there really hasn’t been much except for the evolution of that
in the last 23 years. This is a revolutionary user interface [on the
iPhone] — multi-touch, direct action. It’s pretty remarkable. I’m very
excited.

I remember the week before we introduced the Mac. We
knew every computer would work this way once we had the Mac. You
couldn’t talk about ‘If,’ you could debate about ‘When.’ That’s how I
feel about this. I feel this is the direction mobile devices are going
to have to go. I don’t think it’s a matter of if, it’s a matter of
when. The first and most breakthrough one of them is going to be on the
market tomorrow.

WSJ: One of the interesting things for people
about the iPhone is the bundling of data and voice into one service
plan. We’ve talked to some other smartphone manufacturers in the last
couple days who say that would be great if that were extended to other
devices because it seems like it would ensure that out-of-the-box
people aren’t getting an experience where they’re pressing a button and
something doesn’t work. Is that something that you are looking at
extending to other phones in the AT&T lineup over time?

Randall Stephenson: It depends on the handset
itself. With this particular device, to not have an inclusive data
package with a voice package would be almost irrelevant, right? This is
a data and a voice product. It’s nonsensical to sell a rate plan
separate. As you see devices migrate towards this type of device, I
fully expect you’ll see rate plans migrate towards that as well.

WSJ: What do you both envision being added over
time to the iPhone, in terms of access to ringtones through Cingular’s
(now rebranded AT&T) platform and maybe through some other manner,
like turning your iTunes songs into ringtones?

Mr. Jobs: As you may know, iTunes is now the
number three distributor of music in the U.S., ahead of Amazon and
Target and behind Best Buy and Wal-Mart, and obviously the largest
online distributor of music in the world. Of course, you can play that
music now on your iPhone. One might imagine a lot of things down the
road.

WSJ: Is one of those things offering music purchases and video purchases directly from the phone?

Mr. Jobs: There’s a lot of things you can imagine down the road.

WSJ: Steve, how are you feeling now about how
this device will impact your iPod business? Will it cannibalize iPod
sales in any meaningful way?

Mr. Jobs: We can report to you that it hasn’t
so far. We announced this in January, and we’ve had a very healthy iPod
business since then. This is a more expensive device and one that
carries a service requirement with it, unlike any iPod does. I’m not
too worried about that, but we’ll certainly report to you what happens
as it happens.

WSJ: A lot of attention has been focused in
some of the initial reviews of the iPhone on the EDGE network that this
phone is going to be on. Steve, we saw somewhere that your concern in
putting a 3G chip in the first edition of the iPhone was that the
current generation of that technology would drain the battery a lot,
and that there were also some issues of coverage of the AT&T 3G
network at the time you did this deal. Is that correct and have those
issues been resolved over time as we’ve seen the technology evolve?

broadband networks, EDGE is the only ubiquitous nationwide broadband
network deployed today. It’s a 300-plus kilobit type service. We’re
selling in the tens of thousands every single month of smart phones
that operate on nothing but EDGE. The service experience is really,
really good and what you’re going to see with the iPhone is the caching
technology that Steve and the Apple guys have developed here makes the
EDGE experience even better. Between the Wi-Fi and the EDGE coverage,
this is a really good experience.

We put right south of $16 billion of capital into this
network over the last two years. I feel real good about the coverage
and the performance. We put tens of thousands of hours of testing this
device on this network and it’s performing at the top of any device we
have out there.

Mr. Jobs: You know every (AT&T) Blackberry
gets its mail over EDGE. It turns out EDGE is great for mail, and it
works well for maps and a whole bunch of other stuff. Where you wish
you had faster speed is…on a Web browser. It’s good enough, but you
wish it was a little faster. That’s where sandwiching EDGE with Wi-Fi
really makes sense because Wi-Fi is much faster than any 3G network.

What we’ve done with the iPhone is we’ve made it so
that it will automatically switch to a known Wi-Fi network whenever it
finds it. So you don’t have to go hunting around, resetting the phone,
flipping a switch or doing anything. Most of us have Wi-Fi networks
around us most of the time at home and at work. There’s often times a
Wi-Fi network that you can join whether you’re sitting in a coffee shop
or even walking along the street piggybacking on somebody’s home Wi-Fi
network. What we found is the combination is working really well.

When we looked at 3G, the chipsets are not quite
mature, in the sense that they’re not low-enough power for what we were
looking for. They were not integrated enough, so they took up too much
physical space. We cared a lot about battery life and we cared a lot
about physical size. Down the road, I’m sure some of those tradeoffs
will become more favorable towards 3G but as of now we think we made a
pretty good doggone decision.

WSJ: Can you say whether 3G technology has
evolved to the point where you’re already working on including that in
the next edition of the iPhone?

Mr. Jobs: No, we just don’t comment on future stuff.

WSJ: Can you discuss any applications you’d
like to see third-party developers create for the iPhone, specifically
things like Skype and other voice over Internet protocol software?

Mr. Jobs: We obviously thought about VoIP. You
still need a cellular phone because you’re not always going to be in a
Wi-Fi hotspot. One you have a cellular phone plan, it costs you zero
incremental dollars to use it when you’re making the next phone call.
VoIP, while an interesting technology, didn’t seem to be a big
breakthrough to us. But others might feel differently, and others may
make Web-based VoIP clients available for the iPhone – I think
someone’s already working on that.

But I think the majority of applications people are
going to write for the iPhone are going to be things that corporations
like.  Salesforce.com CEO] Mark Benioff has announced he’s going to be
doing some exciting stuff with the iPhone… I think people are going to
surprise us over the next six or nine months with some pretty creative
stuff.

WSJ: T-Mobile launched a service this week that
allows cellphone calls to roam onto Wi-Fi networks when a user is in a
hotspot. The technology is geared at helping people get better coverage
indoors and save on their monthly cellular minutes. Is that technology
impressive and something either of you have looked at?

Mr. Stephenson: At AT&T we fully expect
that. We’re working on the technology ourselves. The iPhone is really
our first entrée into a dual-mode handset utilizing Wi-Fi and
traditional wireless technologies. That’s the interesting part about
the iPhone. It’s causing everybody to stop and reflect on what’s
possible.

WSJ: There was a halo effect on the Mac as a
result of the iPod. Are you envisioning anything similar with iPhone?
Will it have synergistic effects on other parts of your business?

Mr. Jobs: The iPod halo effect has been real. A
lot of people who’ve never owned an Apple product are buying their
first one in an iPod. They’re having a great experience with it and
they’re saying, Wow, what else does Apple make? They’re more receptive
to looking at the other products we might make. I would certainly hope
that happens with the iPhone. I hope the iPhone will be the first Apple
product that some, maybe many, people buy.

WSJ: What about the fact that the iPhone and
other Apple products share the same underlying technology or operating
system. Could people who write applications for the iPhone now be more
attracted to becoming Mac developers?

Mr. Jobs: We have lots of people writing
applications for our computers. We have almost one million people in
our developer program. I don’t think that’s what matters to customers.
What matters to customers is the experience they have using the product.

WSJ: Have you learned anything about partnering through the AT&T experience? How has it changed Apple?

Mr. Jobs: We first chatted with AT&T
two-and-a-half years ago. We’re from different industries, different
parts of the country. And yet it’s been a great relationship so far.

We started off thinking we should do an MVNO (mobile
virtual network operator) and in talking that through with AT&T,
both of us came to the realization that would just be a big waste of
energy. We’d be trying to duplicate a lot of things they were already
doing at a much greater scale. And we came to this….simple partnership:
Let AT&T be AT&T. They’ve forgotten more about running a
network than we’ll ever know. And let Apple be Apple. We think we know
how to design a great phone.

WSJ: Is Apple pursuing other global partnerships for the international iPhone launch?

Mr. Jobs: When we have something to talk about we’ll give you a holler, but nothing today.

WSJ: To clarify on your comments about Wi-Fi
handsets: Were you saying, Randall, that this phone will eventually
evolve into that kind of device that does seamless roaming on Wi-Fi and
cellular, or are you just saying there will be many more Wi-Fi devices?

Mr. Stephenson: This phone is the first device
that truly kind of breaches that gap. You have a device they gets you
true six-megabit broadband speeds on Wi-Fi connectivity. You get the
mobility aspects of traditional cellular-type technologies. It begins
to let your mind wonder. Once you have those kinds of speeds of a
wireless handset … it just opens up a whole new world to what can be
done on these wireless devices.

Mr. Jobs: A few years ago, the perception was
that the large operators viewed Wi-Fi as potentially an enemy. And I
think quite the opposite is now the case. Wi-Fi is viewed as a friend.

Mr. Stephenson: Absolutely — in fact Wi-Fi is
just an enhancement to your existing wireless capability. I have this
perspective that the more wireless we become, the more wireline we
become. The deeper you push these wireless capabilities the more you’re
relying on the underlying wired transport which is a much faster,
high-capacity transport. And Wi-Fi just takes that to the nth degree.
You could not have thought of VoIP on a wireless handset until you
start thinking about Wi-Fi capabilities on these handsets. That doesn’t
intimidate us at all. I think it’s a very nice enhancement to an
existing service.

WSJ: Did you make enough of these to meet demand?

Mr. Jobs: We’re building a fair number of them,
but we may not. We had to make our best guess as to what the demand was
going to be and what supply we were going to put in place many, many
months ago. We built factories to build these things and everything.
We’ve taken our best guess but it wouldn’t surprise me at all if it
ain’t enough.

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