I also have to agree with the “Watch Out for the iPhone" message of Adrian Slywotzky’s Business Week article. For a long time I thought that the iPhone would prove a crucial test of Jack Trout's mantra that line extension eventually kills brands. By extending Apple's lines beyond the Mac to the iPod, Jobs already tested the limit of brand extension. I felt that the iPhone would be a product too far. I have changed my mind.

Steve Job’s genius is to redefine markets in line with his vision. Colleagues who try to argue with him famously end up being totally overcome in the “reality distortion field” he generates. That field seems to extend to markets, too. What marks Jobs out is his instinct for what customers want. The original iMac offers a perfect example. Uniquely for a personal computer at the time, and against all expert opinion, it had no floppy drive. Jobs insisted the customer wanted an intuitive product that read CDs and could dial the Internet. Floppies were complicated. He was right.

The iPod fitted in perfectly - both Mac and iPod were cool, intuitive, Internet-connected, entertainment-providing, mutually communicating devices. But how does any of this apply to a cell phone?
The killer app of the cellphone has always been the phone call, something way outside Apple's existing functionality. What Jobs is betting the company on – and make no mistake, if the iPhone flops, regardless of Jobs’ low market share forecast, that will badly affect the brand – is not so much a phone-plus-everything else as a phone that is not primarily a phone. One of the iPhone's main selling points is that it is “the best iPod ever”. That is quite a strong consumer argument – the price starts to look much more reasonable as a video iPod replacement-plus-phone. The old “Your Life – To Go” slogan is also supported by the ease at which the phone syncs with the PC via the iTunes app. Loading music, video, contacts, email, calendar etc, looks completely intuitive – especially to existing iTunes users.

The iPhone needs to be taken seriously as a business phone, too. Here the Blackberry and Treo have already established that phoning can be the secondary function. The iPhone promises serious competition to these devices based on its slick integration of web, e-mail, organizer and even map functions. The video presentation of these functions on Apple’s site is genuinely impressive.

The challenge for other cell phone manufacturers now is that, almost regardless of functionality, their product will be seen as primarily a telephone with Internet, multimedia and organizer added on, a complex proposition compared with Apple's "complete mobile life accessory you can also call your friends on". Once again, Jobs looks to have defined a new market. By leveraging both its iTunes app and the Mac OSX operating system, Apple has also put up high market entry barriers. That will probably buy Apple enough time to create the vision that Slywotzky outlines.