It may well not make it.
1. Customers will wait for the 3G model. Tech lovers want the most advanced products and service. A phone running on a 2.5G system may be a great handset, but it is pulled down by the network.
2. People will wait for the next version. This is the "don’t buy the first model of a new car" syndrome. But, ti’s true. A lot of consumers won’t buy the first version of anything.
3. It’s too expensive for people 16 to 22 years old. Young adults usually don’t have the money it would take to buy a $500 phone plus a service plan. Teenagers have to rely on their parents. A 45-year old adult with a $49 Nokia is not going to spring for an ultra-expensive phone.
4. Nokia (NOK), Motorola (MOT), Samsung, and Sony-Ericsson will defend their turf. None of these companies will come up with an "iPhone killer", but the largest handset companies in aggregate will come out with some impressive handsets of their own.
5. Customer service is more important for $500. Reports of complaints about activation problems with the iPhone are already surfacing. AT&T (T) is not in a position to give concierge service for these customers.
Douglas A. McIntyre can be reached at email@example.com.