Smartphone quote of the day: We will never have iPhone on Verizon

Okay, that quote is from me, not from Steve Jobs. However, in today's media event, Jobs spent a good bit of time focused on the iPod Touch -- now Apple's top-selling iPod. While showing how great the iPod Touch is and how much better it is even now, Steve Jobs, in a quick, off-the-cuff remark also described it as "iPhone without the contract." This, dear reader, is telling.

Per Dear Leader, iPod Touch is now the world's most popular portable gaming device. And now, He's made it even better. My quick thoughts on what this means...

The Smartphone Wars are about the destruction of everything. Jobs and Apple have created a device, a simple, small device, the iPod, that has ultimately led to them sucking up nearly half the entire profits in the smartphone handset market. They own the portable media player market. They have the biggest online music and video store and app store. And now, more of these iPod Touch devices are selling then GameBoys and PSPs, combined.

In the smartphone wars, the iPod (Touch) is the U-boat. It is not as big or as powerful as those grand high-end Androids or Nokias, for example. It may never have the total numbers of those devices. But, like the U-boat, can sneak into enemy territory, hidden under the water, and destroy those big fierce war ships.

As I blogged in a few weeks ago...

Jobs will continue to pour money into building a superior product. He will continue to pour money into building out the iPhone/iOS ecosystem infrastructure: think: cloud services, iTunes in the cloud, improved distribution of videos, real-time, location-based social media for iPhone gaming, battery technology, screen technology and the like. Along with services that support the interaction between the device, the user and others: such as near field communications, improved FaceTime. Aquisitions, less important and too expensive.

Today, this was all essentially confirmed.

No one, no one in about 10 years -- 10 years! -- has developed an answer for iPod. What device has wreaked more destruction on existing businesses for so long without competition! The iPod is what has allowed Apple to build out the "world's largest" online media store.  Children, with a new iPod Touch they receive on Christmas, will become a user of the entire range of Apple products. Instantly. iTunes and the App Store. A iOS device. Games and the new gaming center. FaceTime. eBooks. Music. Video. And will now play and share games and chats and social media, all on their iPod Touch.

This (un-connected) device is what first teaches us how to use (and love) its iOS interface. It is what has allowed Apple to build out services and apps and features, like the new Ping, like FaceTime, that not only enable it to maintain a *thriving* closed ecosystem, at high-margin, but which lead its products to retain their superior position.

Guess what? These children are also learning how to use the iPod Touch for Skype and video calls and, since so many places now have WiFi, location-based services and social media and social games -- all while completely bypassing the public switched telephone network. Talk about your virtuous network effect ecosystems! Those tech journalists out there who lazily, unthinkingly proclaim that the smartphone is just like the PC and that APPLE WILL FAIL FOR NOT LICENSING ITS OS JUST LIKE BEFORE should get a clue. There will not be one single standard, as there was with the Wintel PC.

The smartphone industry will be more like the auto industry, should you need a comparison. The iPhone 4 is like a top-of-the-line BMW. Everybody wants one. Somehow, however, were this metaphor to be exact, BMW also has at the same time the best minivan, best hatchback, best sedan, best hybrid -- at equally competitive price points! How did this happne? Simple. For a decade others have ignored the power of the iPod! No one, still, has an answer for this. It's your daughter's birthday? She'll love the new iPod Touch! She's entering high school? Get this sweet new iPod Nano. Your son's headed to college? Nothing compares to this iPad! Family room? Apple TV hooks up easiliy and is less than $100 and you can all stream your videos and photos to the big HDTV.

And now that iPod is optimizing for iOS, expect Apple to sell even more devices. Yes, Apple, the biggest tech company in the world is a growth story.

Yes, they will also sell more music and more video and more books and more apps and more browsers and more games -- and more accounts and data for Apple. The Android OS is still -- barely -- able to work in a tablet. There's no real answer to an iPod (though maybe Archos will finally answer this challenge). The Android Marketplace sucks -- and that's just for apps. A simple, free, embedded competitor for FaceTime? eBook sales? Music and video? The best competitor out there is Zune. Zune sucks and it is second best! The only reason this has happened is because of an ongoing dismissal of the lowly iPod.

Now here's the part I especially love. Apple is destroying the existing food chain of books and music and video and software and games. At the same time, they are using this fairly low-cost device, the iPod Touch, to disintermedia the carriers. Texting, chatting, video calls, social gaming, location-based services; all available on the iPod Touch without a 3G/4G contract. All we need is (someone's) big dumb pipe. In fact, what other companies are doing actually further enable Apple/iPod/iOS growth. Cisco is everywhere. They buy Skype and within two short years, Skype will be everywhere; not a product, not a program, but a very component of the Internet. And low cost, mobile (video) calling becomes a reality, decimating carrier mobile/voice revenues. Does this hurt FaceTime? Possibly. But it sure as hell hurts carriers more while providing yet another great reason to have a cheap, highly functional iPod. Or, by then, a crappy Android media player.

Forget the U-boat metaphor. iPod is the power of flight. The smartphone war has just begun and everyone else is focused on building a better gun. iPod is dropping bombs and preventing them from leaving the dock.

"Whoosh. There goes another 200."

What's more, by placing iOS inside the iPod, this increases the virtuous network effect. This enables FaceTime, radically superior (mobile) gaming, the potential for social media and location-based services. But it goes beyond this. We now can have -- and freed from all contracts and all carriers except for the provider of our dumb pipe, full and true and reliable:

• person to person communication (voice, video, text)
• person to group
• person to device
• device to device (e.g. iPod Touch to new Apple TV)

In our living rooms and around the world. From house to house, dorm to coffee shop, my car to your office; on my son's iPod, the wife's Apple TV, my iPhone, my parents' iPad.

Admittedly, we are not freed from the clutches of Verizon or AT&T just yet. But we are getting there. And, after the gaming industry, this is Jobs' next big target. More and more options for low-cost, no-contract 3G/4G/WiFi services are popping up everyday. I communicate using FaceTime with my parents. True, I set up their WiFi network. But FaceTime calls between me and them, or rather, between them and their grandchild, is instant, easy, reliable -- a joy.

Apple is not slowing down. Their iOS is superior to Android, to Symbian, to Blackberry, to Windows. Full stop. They do not need to acquire. They do not need to play catch-up. They just need to continue incremental improvements and cost reductions -- leading to still more sales, more devices, a larger 'closed' network and even more media gateway dollars.

The one place they have not conquered, fully, is the large corporate market. That is not because of security or email. Rather, it is because businesses still require computers or laptops and these remain on the Wintel standard. However, given their new patents that show them essentially embedding iOs into a Mac and creating a laptop and tablet, they may be able to finally breech this front. Take your iPad home and enjoy it. Take it to work and show off your presentation at the next meeting. Plug it in the dock and file your report.

Until this happens, they continue to use the lethal combination of iPod and iOS to link up more people and more devices and more media and more services and more apps. Think the grand HP-Palm strategy -- only five years out in front. Think the big, multi-billion-dollar Microsoft-WP7 integrated play, only with passionate customers ready and willing to spend money. Think Android + Google TV, only it works, for everyone, always, instantly and we actually pay for our Hollywood blockbusters. That's how far ahead Apple is thanks to the iPod. The iPod begat the iPhone which begat iTunes which begat iPhone which begat App Store which begat iPad. 500 million iOS devices in two years would absolutely not surprise me.

Do I believe that when Jobs and company debuted the iPod all those many years ago that he envisioned a world where all our music and video and 'apps' would all connect with each other, seamlessly, beautifully, across devices, across people, across generation, nations? Absolutely. Do I believe he thought the iPod would be what launched this assault on all things digital -- and all things are digital? Possibly. Do I believe he imagined that even the fiercest competitors would ignore this 'music player' for so long, would be so weak in their response, year after year after year until the entire media market collapsed inward upon this low-cost device we buy for each of our children? No way.

Jobs must love the iPod. Years ago, when Yahoo mattered, they talked about it as a 'portal'. In fact, it is the iPod that is the portal. To Apple products and services and content and media. Unless Nokia has a couple dutiful hobbits stowed away somewhere, clutching a magical ring, no one will touch Apple at least for another few more years. Even if there are more Android smartphone sales than iPhone, for example, doesn't matter. Apple has a lock on our wallets. And we are happy to give it to them.