Drop the cynical "not another iPhone story" and take a step back for a minute to think about what you are seeing. What can you pick up from it about how marketing works in the early 21st century? I'm not going to give you any answers, just guide you along the way.

A mobile phone that is only available if you are on AT&Ts network in the US, at a premium cost starting at $2,000 (over 2 years), has managed to send shockwaves through an ancient industry. Apple's success with the iPod brand has made it all possible. Their next product would have been keenly followed simply for their historical coolness and willingness to push boundaries, but the look of the iPhone is what has added something new.

People started to queue outside stores 100 hours before the designated launch hour (6pm on payday, the last Friday of the month). Pop down to the store after work, get your iPhone, and celebrate with a glass of wine (for the Yuppies) or a cocktail (for the Wannabees). It makes for great PR and just adds to the buzz, even if the early arrivals in the queue were homeless folk paid by someone to wait in line for them. This is not a product for the people. It costs $2,000 remember, of which $600 is right here and now before you walk away with your prize.

The hype is self fulfilling. It starts with suggestions on the grapevine that there is a secret project from an established brand to revolutionise an industry. No-one except the gadget-freaks care but still, denials are issued that add to the intrigue. Then after the fuss has died down, bang: a beautiful picture of an elegant phone and an agreement with one of the most powerful players in the field. Mass coverage, "game-changing" promises...

From this point on, Apple's marketing was turned over to its fan base. Occasionally, leaks would emerge to add fuel to the fire and then in the lead up to launch, a three week crescendo. This started the week before their annual conference a few weeks back with another biggie (the YouTube deal) from which time its been a case of "an apple a day keeps the doctor away". Little snippets have been emerging, encouraging speculation about the product, the price plan, the launch, in fact anything and everything.

It reached the point where Gizmodo called it The Jesus Phone, at which point Apple, before even launching the product, knew that their project was a success. Since the initial announcement in January, there have been 6 formal press releases from Apple on their baby. Five mega-journos got an iPhone to play with and all had to promise to hold their stories until yesterday (and say nice things no doubt). The rest has slipped out, been picked up and has developed a life of its own. Those 6 releases have been turned into 565,800 articles, according to Google Blog Search. Hence the title of this piece.

Importantly, the price of the iPhone has been kept hazy for as long as possible. Clearly not wanting to put people off by telling them the $2,000 story, this hasn't been high on the agenda until now, but after all the first-day-freaks have paid their dues at the altar of St. Jobs, the real work begins.

Getting people to make a rational decision to switch, rather than an irrational decision to consume, is going to be a long slog. There is a strong base of iPod fans with a connection to the brand that might be expected to lead the second wave of sales, but these folks have a phone and an iPod already.

Maybe they will want to join the new wave revolution, but even these people will be tied to mobile contracts for a period of time which will allow them time to see through the hype and look at the reality faced by the early adopters. If your iPod works, why do you need to spend silly money on a phone to replace it? If you want to upgrade your iPod, a) is the iPhone really an upgrade with so much less capacity and b) you already have a phone.

A new feature in all this is that this is Apple first, AT&T in the shadows. We have seen handset fashions dominate the network provider's offerings in the past and rightly so. There is not much you can do to sell a network with its invisible benefits highly visible prices, but the iPhone takes this to the extreme. Apple are wearing the trousers in the deal with AT&T, they are the brand. Here buy an iPhone, (whisper) sorry but you need an one of our contracts too...

If you want to understand the slightly longer term picture, I'd strongly recommend the mini-book by Tomi Ahonen on the Communities Dominate Brands blog. He points out that the iPhone has some pretty terminal flaws in its current guise, and a massively ambitious sales target that may not be achievable. Tomi argues that actually it will be European sales that make or break the iPhone, where Apple's exclusive operator strategy and lack of 3G are significant drawbacks. Will Apple find a European carrier as desperate as AT&T in the US and willing to sacrifice their brand in exchange for exclusivity, even if the technology problems are fixed?

For all the hype, competitors have products in this "cool-phone" space already and look-a-likes are starting to appear. This is where the company gets a little touchy, not wanting to answer questions about the future. Is it because the future is a little less elegant (as Tomi suggests), or as an extension of the intrigue that has driven the plethora of guesses about what is next.

What cannot be avoided for long is the price of the units, which are out of line with their 10m volume prediction by the end of 2008. Am I the only person who is astonished that the smallest rate plan is for 450 minutes, which to me is huge - no wonder it is so damned expensive? There is a small niche being targeted here...

They have to get to people who never thought they needed a smartphone to go out and get one, and this is not going to happen at these prices. They have two crucial Christmas sales periods but do you really want a present that comes with a bill for $60 a month? Mums and Dads aren't going to fall for this expensive gimmick, so you'll need a nice girlfirend if this is how you plan to get one... Will it be a quick dose of ecstasy when you open the box followed by the realisation that you are hooked into an expensive monthly commitment?

It seems that Apple's past is going to gift it an entry into this new market, much as the Virgin brand allowed that company to cross over into new markets. Clearly, the launch is going to be a success and sales figures are going to be thrown around like confetti by proud Apple execs. But the real work starts now for them if they are to avoid the post launch slump that followed the similarly hyped launch of the PS3 earlier this year. That was a product which sounded great but is turning out to be a little too pricey for most. Is the same going to happen to Apple?

Labels: Apple, AT+T, iPhone, recommended reading

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It's easy to be jealous of Apple. They are in your face and they are successful. You see their little white earphones on fellow commuters in the morning, you hear them brashly disparaging competing products, and you read about them. Not just here, but all over the web. iPhone Mania is here and all for a product only available on AT&T's network in the US.

Blogger generated content, most of it too. The PR department doesn't have to do a lot - just a few tidbits to the gadget freak bloggers out there and they're away. Sit back and watch the hype build. Unlike many gadgets though, their products break into the mainstream because Apple has that intangible - coolness.

The company was born on April Fools day in 1976... A child-prodigy, they took on the bullies in the playground with the Apple Lisa and got a whipping. Undeterred, they bravely came back for more, stronger and better looking with the Mac. Suddenly they were the teenager everyone wanted to be friends with (and more).

Whether it was hormones, or just being a stroppy teenager, the company went off the rails in their late teens until they hit a golden streak in their 20s with a change of tack, the iPod. Now, having just turned 31 and backed by AT&T and Google, the company is ready to take on the world (starting with a small corner of the United States).

The ups and downs of the Apple story, together with the visual brilliance of their product design make people want what they have to offer. Their exclusive with AT&T is for two years during which time expect to see significant iPhone driven switching.

What is happening is that the US mobile phone market is, perhaps for the first time, becoming style concious. Things have always been thus in some markets... I remember sitting in a cafe in Milan one evening in 1998 watching as the Italians strolled past, Nokia held casually in position as they stalked up and down the strip. Phones have always been a fashion accessory in Italy, but in the US, they evolved from pagers and were for years worn on belt-clips like an old fashioned gunslinger. At least the iPhone puts that to bed.

For sure, the AT&T launch will be a success in the US. Pre-orders and waiting lists show that to be a slam dunk as long as the yet-to-be-announced pricing plans don't get in the way. Are they hiding something by not publishing them yet? Of course they are. They don't want the details to get in the way of a good story.

Then there is the question of where next for the iPhone. Feature-wise, the application side has been thrown out to the open source world with the announcement of support for web 2.0. This will undoubtedly work for an aggregator like Apple who can keep the best and leave the rest by low cost trial and error. Oh yes, and there's also the tie up with YouTube on the iPhone.

This whole piece is a touch peculiar to me. On the one side you have a service that needs high bandwidth and on the other a network that is increasingly using 3G, and yet the iPhone device stitching them together is boasting EDGE, with 40 - 200kbps connectivity when the network is capable of so much more...? Of course the iPhone has a WiFi connection, so YouTube clips can still be downloaded over broadband, but its not ideal. Who's not ready? Apple or AT&T?

The irony of the Google -> Apple -> AT&T link up is surely not lost on those who watched the Network Neutrality debates. Has Google vs AT&T become Google + AT&T? Do you think that YouTube is going to get the same best efforts wireless connection to the iPhone or will we see QoS used to make sure that Google gets to its public "best on AT&T"? Google using priority routes..? Never.

Which brings me onto the other piece of "where next for the iPhone?" Starting with a small corner of the United States is a strategically good move. It gives the perception of scarcity, adding to the coolness of it all for those on other networks and in other countries. It also gives Apple a controlled ramp up minimising the impact of any critical post launch issues faced. It may also have been a strategically necessary move for both parties too. It is understood that the AT&T network integration required was not trivial but was driven by AT&T's desperation for an icon to drive its rebirth.

But it is only a start. It is this ability to start big and get bigger that gives Apple much of its kudos. They have set expectations high in the past and have exceeded them. For different reasons, regardless of whether you are a new entrant or an established network operator you have a decision to make about how to approach Apple. They don't need you, but you might need them...

Of course, there are new entrants in many markets that would bite Apple's hand off for the chance of an exclusive in their territories, and that is the threat to all established operators worldwide. Here is a device, which in your competitors exclusive hands, could suck you dry if you let it. You'll no doubt see an emphasis targeting the not so unique touch screen USP with devices like the latest UTC or Prada phones. There are plenty of other devices which work the same way, and for them, the iPhone is a probably good thing because of the knock on impact. For the operator however, having the real thing on your books might be precious.

Its a dog eat dog world, right? Will operators stick to the "lower subsidy" policy, or will they go for broke and launch another device subsidy price war, either to sell or beat whoever is selling the iPhone? Apple don't care, they still get paid, as will the makers of other smart(er) touch screen phones. Will operators never learn...?

Or is it that they have no choice. Your money or your life? Certainly, in order to prevent an iPhone led exodus onto a competitor's network some pretty drastic sacrifices might be required.

We have seen device led markets, but have we seen anything "game changing" as AT&Ts CEO would have us believe the iPhone is? Has a handset manufacturer ever sailed so close to the wind with its lock in to an exclusive network? Probably not.

But does Apple not also need the operator? They are clearly getting a lot from AT&T!

Will Apple be blown off course as it tries to cross the Atlantic and Pacific Oceans to negotiate the countless treaties it needs to extend its reach? Will it be able to get its network rolled out before the rest of the market catches up? This is Apple's biggest weakness, and crucially is not something it faced with the iPod.

The iPod worked with a USB connection into any internet enabled PC, for anybody who bought one or was given one for a present. The iPhone is not the same. The iPhone is part of a system that requires elements in the network to make it operate as it should. Apple needs to work with the system. Can it do that or does it's coolness genetically predispose Apple to fight the establishment? Will it be coolness or jealously that wins? YouChoose.

Labels: Apple, AT+T, Google, iPhone

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Talk of a tie up between Apple and Google has been reaching a crescendo over the last week or so. We should not be surprised, Google's CEO did join the Apple board at the end of August last year, and the companies complement each other well. And, of course, and they both hate Microsoft...

It may be easy to think of this as the companies "getting into bed" with each other, but if that's what is happening, it's likely to be a hedonistic no-strings affair rather than an engagement. Lust, not love in my view.

The .Mac story on Wired looks like a semi-educated guess. It says, basically, that Google's cloud (it's storage space) will be hooked into the .Mac offering allowing Google to offer SaaS services to Apple's customers. Perhaps, but so what?

The story in the FT looks like having a much greater impact. They state that Apple is going to use its TV platform to enable the controlled rental of DVDs online. Just as music is made DRM free, so DRM reappears in online movies - this time from the beginning(ish).

The FT and the WSJ (who also run the same line), do not make stuff up. They do not guess. They do not even make educated guesses. They don't need to because they get fed previews (leaks) by the parties themselves in the run up to a major announcement (it's Jobs' keynote at the Apple Developer Conference today).

The tie back to Google may have already been announced. Last week, Apple and Google said that YouTube would be available on Apple TV. Immediately we thought of user generated content, but perhaps this wasn't about UGC at all? Perhaps this was about a publishing platform... The same GB storage in the Wired was the basis for the .Mac speculation.

Why does Apple need Google for this? They already have the iTunes store, so they already have a customer facing offering much more refined than anything Google or YouTube can offer.

What Apple doesn't have, and would find it a huge stretch to develop, is the delivery network needed to get so many large files down to the Apple TV boxes. Joost's new CEO made a public pitch to fill that gap through him GigaOM interview last week. Maybe Google has already got the gig...?

If I were Joost, vying for Apple's love, I would not be unduly concerned. Joost is younger and prettier than YouTube and Apple may find Google to be a bit overweight for its long term tastes. In the mean time though, the gossip mags can fill their boots with shots of California's latest celebrity couple...

Labels: Apple, Google

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