Iphone – Chaper One – Crash and Burn
by mobileman (09/07/2007 – 20:37)
In June and July I gave my view of the then newly released Iphone. In summary, I thought it was a great Ipod and a poor phone. Lousey keyboard, no MMS, no ringtones (until recently) , lower speed data, etc.
The introduction of the Iphone-less Ipod (aka the ITouch) is a great addition the the Ipod line. It’s introduction also undercuts the techno sex appeal of the Iphone.
Then, we have the biggest news of the week – the $200 price cut in the Iphone – Wow! Not only was there a price cut, but Steve Jobs (whom I really do respect) tried to spin it as a success story!
If you are selling the hottest gizmo on the block and they are flying of the retail shelves, you do not cut the price.
When demand falls, you cut price 5-10%, not 33%. You cut prices by that amount when you have a potential disaster on your hands. With a user base revolt on their hands, Apple then agrees to rebate all Iphone users $100 worth of Apple credit.
There is a problem in Iphone-land. The stock market also agreed , punishing Apple’s stock with a drop of 12 points in the last two days , a 8% drop in value and a loss of around $10 Billion (with a B!) in market value.
The early adapters gobbled up the hype and the product. The strategy of having the techno elite show off their shiny toys to envious friends who would also rush to buy them did not work. The Iphone marketing virus stopped. Why?
As I predicted the, the phone features on the the Iphone have been panned by pundits and consumers alike. With the bulk of the value in a “cool” Ipod, paying the $50-$60/month to AT&T seems prohibitive.
The mobile phone market was not invented by Apple. The competition is fierce and the price pressure is immense. With the sale of nearly 1 Million Iphones, Apple is a small blip on the marketscape of mobile devices. The Research in Motion Blackberry has over 8 Million consumers. Nokia sells over 100M every three months!
Apple will learn, adapt and come back. The genetic mutation of IPods, mobile phones and online commerce has created the first model of a new species. Like DNA based species, this one will have a learning curve, some painful near death experiences and many natural predators. This is just chapter one of a long novel, enjoy it.