June 28, 2007
iPhone: Where the Hype Hits the Wireless Signal
It’s probably not too much of an overstatement to say that the Apple iPod and iTunes store has revolutionized the American music retailing business. In the span of just a few short years, Apple has gone from literally no presence in the business to become the number three retailer in the country.
Now, Steve Jobs and company are promising another technological revolution with the launch of its iPhone. Early reviews of the product say it lives up to its hype. If it has one major drawback, it isn’t the product itself but the cellular service (AT&T Wireless) that Apple has chosen to partner with.
Some, including Wal Mossberg, personal technology columnist for The Wall Street Journal, pointed out challenges users may have in picking up signals in some markets and he also decried the network the iPhone uses for lacking in internet connection speed.
Still, the iPhone has many admirers.
Chris Hazleton, senior analyst for mobile devices at IDC, told Wired, “It’s several generations ahead of the market in terms of input and it will resist aging better than other phones. No phone has been as highly anticipated as this.”
Mr. Mossberg called the iPhone “the most beautiful and the most radical smart phone or hand-held computer that I have ever tested…”
The new iPhone will no doubt be pricier than consumers are used to spending to buy a cell phone, although the product is clearly much more than that. The 4GB model will retail for about $500 while an 8GB iPhone will sell for $600. Apple is looking to sell 10 million by the end of 2008.
Parks Associates said the product’s pricing could be a major impediment to purchases. Only three percent of consumers it surveyed had a “strong interest” in buying an iPhone along with the two-year contract required by AT&T.
“The underlying drivers for converging music, multimedia, and communications capabilities in a device such as an iPhone are certainly prevalent in today’s market,” said Kurt Scherf, analyst with Parks Associates, told The Journal. “However, the high price point may prevent the iPhone from achieving greater adoption over the short term.”
Discussion Questions: What will the iPhone mean for consumers and retailers in the short and long terms? What do you see as the biggest challenges the iPhone faces along with the greatest opportunities as the product rolls out?
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The iPhone will push the technology forward very quickly. Other phone manufacturers will have to offer competing products. Consumers will become frustrated by signal reliability and speed and systems will be upgraded. Additional features will be added and cost will come down for both equipment and service. Everyone will benefit – where’s the problem?
The iPhone looks really cool — and apparently it lives up to the hype. My prediction is that it’s going to sell really well, and force competitors to up their game considerably and quickly. (I am not getting one yet because I am hoping they make a deal with Verizon — the fact that only AT&T is on board so far is a major bummer.)
Anyhow, the success of the iPhone reminds us again of the diversity of options the customer has in shopping. Today, brick-and-mortar and online shopping are the predominant tools available to the consumer. Tomorrow, the mobile phone joins those ranks. Retailers must accept this fact as reality, and establish systems that work together, not separately. The retailer must become the integrated retailer — innovate or perish.
Count me among those who would buy an iPhone now were it not for the exclusive deal with AT&T. Let’s hope that will change in the next two years and that a new and even better iPhone will be on the market and compatible with other wireless networks.
The iPhone will revolutionize how marketeers connect with their consumers and accelerate the changes propelled by the BlackBerry, Treo, and other PDAs. The iPhone has all the ingredients you need — voice, visual, keypad, video, and audio. All that remains is for critical mass to be achieved and the cost to be reduced. Critical mass would be 10 – 15% of retailer customers. Apple itself will achieve this in a few months. But most retailers won’t achieve these numbers until iPhone-type devices are sold through all of the wireless carriers. Cost would have to be $200 – $300, comparable to the street value of a Treo or BlackBerry today.
Assuming these will be achieved in 12 – 24 months, retailers would be smart to devise strategies for reaching their iPhone and PDA carrying customers.
Applications might include: Store and SKU finders, Shopping Lists, Want Lists, Gift Registries, Receipt capture, Loyalty, Social Networking among fellow shoppers, Product Demonstrations, Financing, Alterations and Repair, Testimonials, and Payment. There are many promising startups that already have applications suites with many of these apps. And established companies like NCR and Fujitsu are trying to host these apps on their own equipment.
Obviously, the iPhone is becoming the “must have” technology toy of the summer. The hardware is certainly impressive and seems to live up to the Apple reputation for innovation. But I think the really interesting thing is the “crack in the dyke” of the traditional mobile phone business model US consumers have been forced to accept. By limiting the software features on their offerings, the network providers have also been able to manage the content and capabilities of the phones.
My understanding is that in many other parts of the world the phones are not bundled with the network service. Just as you buy a PC from the hardware manufacturer and subscribe to an independent network provider, the phones in other countries are sold by the hardware manufacturers.
Since the iPhone can access Wi-Fi directly, what will come next? Does this mean that once you’re connected you can use Skype for phone calls? Does this mean you can access music and videos from other sources besides AT&T? Maybe the iPhone is the first step in changing the whole business model for mobile phones.
Brilliant marketers create products and services people didn’t even imagine. It doesn’t matter if “only” 3 million people might be interested in the iPhone. Let’s see what happens when friends and celebrities start using the iPhone. Let’s see what happens when AT&T Wireless spends millions on advertising in mass media and in thousands of stores.
Yes, the iPhone is “expensive” compared to other phones, but there’s a huge aspirational market for personal electronics and entertainment devices. And that market wants only the latest, best, most cool device. Anything from Apple is a good candidate.
The Early Adopters in this area have specific demands in terms of technology and will not be purchasing this product as a replacement phone. Other phones have the functionality of being a phone, playing music, and taking pictures. The iPhone is competing on another level that is not likely to be attractive to the average cell phone user.
However, those consumers whose lives center around the use of technology as their tool for connectivity will be very attracted to the iPhone as a device to access and manage all their technology, which is central to the way they manage their lives.
Certainly adequacy of the network to facilitate all the iPhone capabilities will be an issue. The biggest liability I see is managing to keep the screen clean and clear when having to use it as a phone. However, that will not keep those interested in the iPhone from purchasing it.
Many consumers will be interested and will visit the Apple stores to see the iPhone. Consumers wanting to have one device to manage the technology that is central to their lives will want to try the iPhone. How large that groups of consumers is remains to be seen.
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The iPhone will push the technology forward very quickly. Other phone manufacturers will have to offer competing products. Consumers will become frustrated by signal reliability and speed and systems will be upgraded. Additional features will be added and cost will come down for both equipment and service. Everyone will benefit – where’s the problem?
The iPhone looks really cool — and apparently it lives up to the hype. My prediction is that it’s going to sell really well, and force competitors to up their game considerably and quickly. (I am not getting one yet because I am hoping they make a deal with Verizon — the fact that only AT&T is on board so far is a major bummer.)
Anyhow, the success of the iPhone reminds us again of the diversity of options the customer has in shopping. Today, brick-and-mortar and online shopping are the predominant tools available to the consumer. Tomorrow, the mobile phone joins those ranks. Retailers must accept this fact as reality, and establish systems that work together, not separately. The retailer must become the integrated retailer — innovate or perish.
Count me among those who would buy an iPhone now were it not for the exclusive deal with AT&T. Let’s hope that will change in the next two years and that a new and even better iPhone will be on the market and compatible with other wireless networks.
The iPhone will revolutionize how marketeers connect with their consumers and accelerate the changes propelled by the BlackBerry, Treo, and other PDAs. The iPhone has all the ingredients you need — voice, visual, keypad, video, and audio. All that remains is for critical mass to be achieved and the cost to be reduced. Critical mass would be 10 – 15% of retailer customers. Apple itself will achieve this in a few months. But most retailers won’t achieve these numbers until iPhone-type devices are sold through all of the wireless carriers. Cost would have to be $200 – $300, comparable to the street value of a Treo or BlackBerry today.
Assuming these will be achieved in 12 – 24 months, retailers would be smart to devise strategies for reaching their iPhone and PDA carrying customers.
Applications might include: Store and SKU finders, Shopping Lists, Want Lists, Gift Registries, Receipt capture, Loyalty, Social Networking among fellow shoppers, Product Demonstrations, Financing, Alterations and Repair, Testimonials, and Payment. There are many promising startups that already have applications suites with many of these apps. And established companies like NCR and Fujitsu are trying to host these apps on their own equipment.
Obviously, the iPhone is becoming the “must have” technology toy of the summer. The hardware is certainly impressive and seems to live up to the Apple reputation for innovation. But I think the really interesting thing is the “crack in the dyke” of the traditional mobile phone business model US consumers have been forced to accept. By limiting the software features on their offerings, the network providers have also been able to manage the content and capabilities of the phones.
My understanding is that in many other parts of the world the phones are not bundled with the network service. Just as you buy a PC from the hardware manufacturer and subscribe to an independent network provider, the phones in other countries are sold by the hardware manufacturers.
Since the iPhone can access Wi-Fi directly, what will come next? Does this mean that once you’re connected you can use Skype for phone calls? Does this mean you can access music and videos from other sources besides AT&T? Maybe the iPhone is the first step in changing the whole business model for mobile phones.
Brilliant marketers create products and services people didn’t even imagine. It doesn’t matter if “only” 3 million people might be interested in the iPhone. Let’s see what happens when friends and celebrities start using the iPhone. Let’s see what happens when AT&T Wireless spends millions on advertising in mass media and in thousands of stores.
Yes, the iPhone is “expensive” compared to other phones, but there’s a huge aspirational market for personal electronics and entertainment devices. And that market wants only the latest, best, most cool device. Anything from Apple is a good candidate.
The Early Adopters in this area have specific demands in terms of technology and will not be purchasing this product as a replacement phone. Other phones have the functionality of being a phone, playing music, and taking pictures. The iPhone is competing on another level that is not likely to be attractive to the average cell phone user.
However, those consumers whose lives center around the use of technology as their tool for connectivity will be very attracted to the iPhone as a device to access and manage all their technology, which is central to the way they manage their lives.
Certainly adequacy of the network to facilitate all the iPhone capabilities will be an issue. The biggest liability I see is managing to keep the screen clean and clear when having to use it as a phone. However, that will not keep those interested in the iPhone from purchasing it.
Many consumers will be interested and will visit the Apple stores to see the iPhone. Consumers wanting to have one device to manage the technology that is central to their lives will want to try the iPhone. How large that groups of consumers is remains to be seen.