The IP Development Network Blog

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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# posted by Jeremy Penston @ 6/27/2007 06:57:00 PM 0 Comments

I recommend that you read this excellent argument that "the iPhone is not the next iPod" on fastcompany.com. While I disagree with my interpretation of the headline - I believe that mobile phones, including the iPhone will eventually render your standalone iPod surplus to requirements - that is not in fact what the article argues.

The conclusion of this excellent, balanced analysis is that "The iPod set an impossibly high bar, one that the iPhone will not match or even come close to. But the new device could still be very successful, particularly in the long term." Like I say, well worth the read.

In the piece, Steve Jobs is quoted as saying "we are all born with the ultimate pointing device - our fingers" which links well to something else you should make 10 minutes to think about. Jobs may be right about our fingers being good for pointing at things, but we are also (hopefully) born with the ultimate browsing device - our eyes. I saw this link on The Register which for me at least, certainly had the wow factor. Seadragon, Photosynth... Microsoft. Remember those names.

The application reminds me of the old fashioned micro-fiches that you used to find in libraries. There is also a bit of James Bond about it, but most of all it's Dirk Gently's fundamental interconnectedness of things. I won't say any more - have a look for yourself!

Labels: iPhone, Photosynth, recommended reading, Seadragon

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# posted by Jeremy Penston @ 6/12/2007 11:53:00 AM 0 Comments

Wednesday, 27 June 2007

Article 565,801 on the iPhone

Tuesday, 12 June 2007

Make time for this