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O2, a carrier in Europe, has begun to show off the Cocoon. It is a simple clamshell phone that was designed by a team of trend spotters and a custom manufacturer instead of by a large phone company or ODM. And even though it is just a clamshell phone, it is not a clamshell phone like all the rest. It looks more like something that came out of AU’s design series than yet another RAZR knockoff.

The Cocoon looks like a curved white bundle of ribbon with flat black plastic sides. On one side is external playback controls, on the other is a scroll wheel. And hidden under the curved white front is a huge OLED matrix that can display the time, incoming callers or track names.

Instead of O2 going to a manufacturer with a laundry list of new technologies they wanted, they contacted a firm who asked cool people they know. and what sort of features did these people come up with? It’s not video streaming or a laptop replacement or anything bleeding edge. It’s simple stuff that would enhance how most people use their phones day to day. The Cocoon comes with 2 GB of memory in addition to a MicroSD card slot, so there’s plenty of room for music and pictures even before users purchase a memory card. It comes with software that lets it sync music from Window Media Player or iTunes.

But memory is just the start. The designers looked at how these users wanted to make the most of their phone and took this into account. With full playback controls and an external display users don’t need to open the phone to use it as a music player. They took advantage of this to create a charging dock that holds the Cocool sideways so the controls are exposed on top. When in the stand, the phone displays the time in a large font and can be used as an alarm clock or mini stereo thanks to a 3.5mm speaker jack in the back of the dock. The camera is only 2 megapixels, but is auto-focus and has an automatic flash as well, so it is still capabble of taking decent features. And of course the Cocoon has a custom designed OS with lots of rich graphics.

Nothing about the Cocoon is high tech. It doesn’t have any newer features than the Sony EricssonĀ  W800 launched 18 months ago except for 3G calling. But it still feels new and exciting, simply because they listened to people and not companies when designing it.

We have made every effort to keep a rational distance from the iPhone hype – the daily news bits, the predictions of its success or failure, and the complaints about lack of certain features or how the features it has work.

We’re not here to repeat any of that. You’ve read it enough times already. Instead, let’s talk about who we believe Apple is building the iPhone for, because it seems many analysts have not come to the same conclusion as we here at Phone Scoop.

Since its unveiling, the majority of analysts and pundits have compared the iPhone to smartphones like those from Palm, HTC and Nokia. Part of this is due to the fact that like those phones, the iPhone runs a known operating system – in this case OS X – and it was believed programmers could write applications in the OS’s native language instead of using Java, BREW or some other sandbox environment. These folks, along with many hopeful Mac developers were disappointed to learn the iPhone would not run third party applications at launch.

The iPhone’s price of $500 or 600 is also more in line with that of smartphones that the average mass market phone. It is true that most high-end feature phones launch at a lower price when sold with a contract. However some phones such as the Black Motorola RAZR launched at over $400.

Recently some people have begun comparing the iPhone to corporate-centric email devices like the Blackberry (as well as Windows Mobile and Palm smartphones) because like those devices, the iPhone is capable of sending and receiving email as well as browsing the desktop web. These people tend to be surprised that a $500 phone wouldn’t have native support for Microsoft Exchange.

I don’t believe that the iPhone is designed for smartphone users – at least not smartphone users who pour over the huge libraries of software available for their device and customize it. These people represent a fraction of the cell phone subscribers in the US and abroad. They do represent a larger percentage of people willing to spend lots of money on devices and software, however, which is why so many companies pay attention to them. But other manufacturers are devoting plenty of attention to these users.

I don’t believe that the iPhone is designed for corporate email addicts either. The number of people who use Exchange is far outpaced by the number of people who have “standard” email accounts. Even most corporate users have their own personal email accounts with Gmail, Hotmail or some other POP or IMAP service. However, as with the smartphone crowd, corporate users often spend more money on devices and calling plans than others, so great deal of attention is devoted to them.

But what about everyone else – all those people who comprise the vast “mass market”? These people usually just get a free or inexpensive phone, but they have been convinced to get something more expensive and / or more advanced in a few cases. Often they will spend more if a phone has an impressive design – one that is well beyond the ordinary. Other times they will spend more for features that they use all the time and want in their mobile phone.

When mass market users upgrade to one of these more expensive devices, they aren’t looking for every feature under sun, or the option of every feature under the sun. They are looking for a good, solid, friendly version of the feature(s) they want.

The SideKick’s success among IM addicts is an excellent example. It appealed to people who used the internet and all of its common communication channels (im, email, web) every day. It had a unique form factor and a unique set of features. And even though it hasn’t been a huge success, the SideKick has gotten many subscribers to switch from a simple feature phone to a more advanced handset. In many ways, it paved the way for the iPhone.

The iPhone’s target audience is not smartphone “geeks,” nor corporate “suits;” it is every man, woman and child who doesn’t want to spend a dime on a phone because there’s no reason to. Learning to use a phone, especially an advanced feature phone or smartphone is difficult. Most high end phones are usually packed with features that nobody except the carriers want. And most phones are not designed with any real sense of style – they are either derivative or just plain ugly. And so with the iPhone, Apple is giving all of these users who normally don’t want to spend a dime on a phone a reason to spend 5000 of them.

If analyst reports are correct, Apple had trouble finding an American carrier for the phone, and are having even more trouble finding a European partner. Many are chalking this up to rumors to that Apple is driving a hard financial bargain, however i believe they are overlooking the fact that the iPhone does not have any advanced features that the carriers want. Instead it has advanced features that users – regular mass market subscribers – want.

The day the iPhone was unveiled at MacWorld, a number of my friends – most of whom are free-phone users – immediately contacted me asking when it was coming out and telling me they were starting to save their pennies. They were getting one. While geeks were disappointed with the lack of 3G support, these free-phone users were enamored with the simple access to features they use, be it on their phone or on their PC. Normally these folks get frustrated with even the most basic functions like 3 way calling or texting. They loved the fact that they could easily sync their own music and videos onto the iPhone and not have to struggle or wind up at the carriers’ mercy. And applications like Safari and Google Maps appealed to them – they use a browser and Google maps all the time.

Today’s announcement that the iPhone will also ship with a stand-alone YouTube application sealed its place as a mass market device. With brands like Google, YouTube (which, yes, we know is also Google), and iPod Apple knows exactly who it’s aiming this phone at – every 18-35 year old out there. These brands, and the features they represent, are what many mass market consumers are looking for in a “smart” phone.

Apple is not taking any chances communicating its message and attempting to educate its target market. Instead of talking about specs and technology, Apple is showing off software and interface. These are the things that matter to regular users. They are showing off every day scenarios that your typical web surfer and cell phone user might find himself in. Surfing the web, playing music on an iPod, deciding what to eat, calling friends and sharing YouTube videos and showing how the iPhone works while doing all this.

And these users who care about YouTube videos and think threaded SMS that looks just like iChat is the cutest thing since Hello Kitty do not care about 3G or Exchange support or whether the iPhone can run 3rd party OS X applications. They care about being able to figure out their phone’s interface, about battery life, and about the phone’s style. And this is what the iPhone is trying to nail.

We cannot say if Apple really really did nail what matters yet. After all the iPhone hasn’t launched. All we can say is those are the type of features that Apple has expended its efforts on. The iPhone still could fall short of the mass market’s expectations. But that won’t be because it doesn’t support Exchange. I promise you that.

Many phones, either because of their manufacturer or their software, offer features that other models don’t. And for today’s example, it’s not because of patents. I’m talking about software. For instance, the Sidekick offers an unparalleled IM experience, the Blackberry offers one of the most hassle-free email experiences, and the Treos – both Palm and Windows Mobile – are the only phones that offer well implemented threaded SMS. (The Blackberry displays threaded SMS too, however it is a bit inconsistent, and since the SMS are not label with the author, reading them can be confusing.)

It’s unclear who decided that SMS, like email, should be displayed in a flat list organized by how recently they were received. At some point in time I’m sure this made sense – either because it was the only known paradigm or because developers had not figured out any other ways to display it.

However unlike emails, which are usually long and content heavy, SMS are short and typically involve a number of exchanges between the two (or more) participants. Rarely does one SMS get sent off and that is the end of the conversation.

This is especially true outside the US and Korea, where text messaging often supplants voice conversations altogether. Though initially people adopted using SMS instead of voice because of cost, now in many places it is simply how things are done, regardless of cost. In the US an unlimited messaging plan can be had cheap on most carriers, while voice seems to be getting more expensive. Even without this new cost advantage, people here are switching to SMS-centric communication.

This trend has been growing long enough (for years, actually) that companies have had plenty of time to catch up with it. And yet none of them have changed their SMS applications from the email inbox style to the IM chat style. Yet the only three companies that have an SMS style text application developed it that way from the very start. Blackberries, Treos and now the iPhone have all had threaded SMS since early in their history, if not since their beginning.

Manufacturers and OS designers have had years to observe the positive reactions to this method of SMS display. In the mean time, even email applications have caught up. Gmail displays mails back and forth on a single subject in a unified, threaded view. Both Apple Mail and now Outlook make attempts to thread messages as well. So despite the fact that email applications are larger, have more overhead and have been around longer, their designers have realized the value of the conversation and adapted. But the designers of mobile phone software, where the primary purpose of the device is conversation, still refuse to acknowledge this.

After using threaded SMS on a number of review phones, I firmly believe that any phone that doesn’t have is less usable, and thus less desirable than any phone that does. This could be one of the reasons many mass market trend setters are turning from Sidekicks and the like to Blackberries and Treos. It isn’t because they’re sexy or stylish, it’s because they display SMS right (and do email well).

Although Apple is by no means the first manufacturer to have threaded SMS, they may be the ones to put it on the map, simply because everyone – most of all every manufacturer – is paying attention to the iPhone. We can only hope that they don’t spend all their time focusing on the hardware technology, but also investigate the software. Manufacturers need to make this change.

Personally, I have decided I can’t wait another generation or two for threaded SMS. I investigated all the third party options for threaded SMS on S60 devices and was disappointed by all 3. But there are better options for Windows Mobile devices, and both the iPhone and Blackberry Curve have native threaded support and are sexy and interesting. My next handset will be selected from this group of options.