Filed under: Apple Corporate, Apple Financial, Apple, iPhone
Why the iPhone should tank
Doctor Macenstein has a very good commentary up: even though he's a happy iPhone owner, he wants the iPhone to fail. Fail miserably. In fact, he was cheering on the news during the earnings announcement yesterday that Apple completely missed Or is he? He makes good points-- lower-than-expected iPhone sales might make Apple nervous enough to get in gear on pushing new software features and updates out, and get that price point dropping for the rest of us. And on the price point Doc's especially got a point-- when Apple was asked if there was going to be a lowered price point, they actually cited customer satisfaction as the reason not to drop it. In other words, if people are happy with the iPhone (and Apple is convinced that they are), there's no reason to change it.
With AAPL doing so well, Apple has a chance to sit back on their laurels and let the AT&T payments roll in. But any self-respecting iPhone user shouldn't let them take it. With a happy customer base, Apple has less incentive to fix those "little" problems like copy and paste and a missing iChat Mobile.
Update: My good colleagues point out that the iPhone missed analysts' goals, not Apple's.
![TUAW [Cafepress]](http://www.blogsmithmedia.com/www.tuaw.com/media/tuaw-cafepress-promo.png)
Reader Comments (Page 1 of 2)
Skeuomorph said 10:11AM on 7-27-2007
Look, stop asking for IM.
1. There are several great IM options, not just JiveTalk at iphone.beejive.com.
2. When your phone is accessing EDGE, you won't receive calls. You really sure you want IM running all the time?
3. The built-in SMS conversation threading is fantastic, and doesn't interfere with ability to receive calls.
What you actually want is an IM (desktops) to SMS (mobile devices) gateway. Ask Apple to add that to .Mac along with wireless .Mac sync.
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David Chartier said 10:34AM on 7-27-2007
It's only been a month people, c'mon. I know we're all obsessed little Apple fans but we really need to take a step back, take a deep breath and chill out. The features will be coming, the bug fixes will be coming, we don't need to wish for something silly like the iPhone to *not* do well.
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AaronS said 10:35AM on 7-27-2007
You say, "...yesterday that Apple completely missed their goal for iPhone sales. "
Show me where Apple publicly stated how many phones they wanted to sell in the first 30 hours of them being on sale? Sure, they might have missed the numbers analysts pulled out of thin air, but those weren't Apple's estimates.
Jeepers, 270,000 phones in 30 hours isn't too shabby. Besides, 30 hours of a products life cycle is pretty insignificant.
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dan workman said 10:43AM on 7-27-2007
The iPhone has been a brilliant success in that cell phones (especially cell phones released for the US market) will never be the same--no matter how the sales figures shake out. The iPhone opened pandora's box and has broken down the barriers between PDAs, cellphones, and computers.
Remember the Lisa? http://en.wikipedia.org/wiki/Apple_Lisa
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Leonard Nimrod said 10:46AM on 7-27-2007
Mike Schramm wtote "...that Apple completely missed their goal for iPhone sales."
This is why i hate TUAW at times. Exactly what goal did Apple set for the first 30 hours?
270,000 for 300 Apple B&M stores and "some" AT&T stores seems pretty f@#king good to me. Those numbers do not include any online purchases either. They also don't include Sunday or the following weeks.
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Michael Rose said 10:50AM on 7-27-2007
What Macenstein said in the post was:
"I let out a small cheer when I heard that Apple had still missed iPhone sales predictions by a factor of 2 or more."
Note that these were not APPLE's predictions. They were analyst numbers pulled out of a hat. Apple did not predict any sales numbers for the 30 hour window of the quarter where iPhones were on sale.
Mike, I think you may want to change "Apple completely missed their goal for iPhone sales" to "Apple missed the fevered prediction-dreams of Gene Munster" to clarify where the crazy is coming from.
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Matt Young said 11:07AM on 7-27-2007
If I could roll my eyes any harder they would pop right out of my head. This post is so inane had to read it twice to make sure it wasn't parody. I'm sure Apple put all the money, time and effort into this whole cell phone initiative just to then "sit back on their laurels". That would be sooo very Steve Jobs. After the earnings call he probably circulated a memo- "Nice job everybody! Now let's get drunk and play ski-ball! Don't bother coming in next week, we've got laurels to sit on! WOOO!"
And as others have very reasonably asked- how in the hell do you figure Apple missed their iPhone sales goals again? If you can explain that to us in some convincing manner using reliable sources and statistics it would be great because we're not in the mood for the smell of jackass today. It's NO-JACKASS FRIDAY. That was in a memo I just wrote and you just read.
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Klaus said 11:08AM on 7-27-2007
"2. When your phone is accessing EDGE, you won't receive calls. You really sure you want IM running all the time?"
Are you 100% sure about that? I'm not having any problems with GPRS/3G on my mobile phones (not iPhone, though).
Or is it simply something in iPhone that does it?
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John Kirk said 11:43AM on 7-27-2007
Look, get one thing out of your head. Apple is NOT going to drop the price of the iPhone any time too soon. Price communicates value and Apple wants the iPHone to be perceived as the most valuable smartphone in the market. People assume that dropping their price will gain Apple market share like market share is the be all and end all. It's not market share, it's PROFIT that counts. Apple sells one-tenth the number of computers that HP sells but makes more net profit on the computers it sells. But Apple can have it all. The iPod was always considered to be overpriced and now it has over 70% market share. Apple will not sacrifice for market share. Their status as the elite phone is paramount.
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rob walch said 11:23AM on 7-27-2007
Actually I do not think bad sales are needed to push out new software updates. Steve Jobs has already put in place a plan to make sure updates come quickly and often and elliminate all of the “Paper Cut” issues with the iPhone (no copy/paste, no video and audio recording, no…)
What is that plan - He is giving an iPhone to every employee.
Once they all have to live with each of these little issues day in and day out, they will either make the changes - or they will make those that work for them make the changes.
Bad Sales - and 270,000 units in 30 hours is not bad FYI - are not going to move the changes along nearly as fast as knowing the guy doing your yearly review hates there is no copy and paste.
Rob W
Host - Today in iPhone - The First Podcast on the iPhone
http://www.todayiniphone.com
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Matt said 11:35AM on 7-27-2007
The idea that Apple needs poor sales to improve the iPhone is ludicrous. Look at the iPod, which shortly after its inception become the most dominant music player on the market. Apple didn't sit back and just count their money. They released the Mini which became their most popular model and then they killed that with the Nano? Name any other company that literally destroys their own best selling product.
And for the record selling 270,000 of anything that costs over $500 in 30 hours in phenomenal. Just because some whacked out wall street guy claims they sold 800,000 doesn't mean the reality is a disappointment.
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andy said 11:44AM on 7-27-2007
judging from the initial sales and the interest the iphone gets from its users friends, id say apple have surpassed their sept goal of a million iphones already, plus the story of how they already have 1% of the smartphone business (microsoft has about 5%) id say a success, and all this for a luxury priced item on 1 network (in one country)
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Azn G said 11:52AM on 7-27-2007
"Doctor Macenstein has a very good commentary up"
Uh .. not really. It's a ridiculous commentary reflecting the impatient "I want it ALL, NOW!" mindset of today's consumer, premised on Apple somehow being concerned that the first 30 hours' sales fell short of the prediction of "deranged" analysts (the author's word).
More like a waste-of-time commentary.
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James Donevan said 12:03PM on 7-27-2007
This is undoubtedly one of the most far fetched premises imaginable...
"He makes good points-- lower-than-expected iPhone sales might make Apple nervous enough to get in gear on pushing new software features and updates out, and get that price point dropping for the rest of us."
Apple will do one thing if the iPhone does not meet expectations: they will kill the whole project. Anyone who thinks otherwise needs to look at history and better understand Jobs' methodology. Success will breed more features and lower prices as the market expands. Failure will bring a quick end of the iPhone.
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dayhill said 12:27PM on 7-27-2007
270,000 represents 1.5 days worth of sales. Extrapolate this number with the days remaining in the month for sales to occur and the result is phenomenal - far exceeding sales goals for the month. I am not naive enough to think that sales rates for the remainder of the month will match the first 30 hours of sales, but even considering a slow down in sales over the remaining month would still match or exceed Apple's expectations.
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Donald Burr said 12:27PM on 7-27-2007
It is true that you cannot use voice calls and EDGE (or even 3G for that matter) at the same time. Most phones I've seen give priority to voice calls, meaning that your data transfer is temporarily suspended while you're yakking on the phone. I'm pretty sure the iPhone works the same way, tho I haven't yet had the opportunity to test this.
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tug said 12:35PM on 7-27-2007
Great idea! Maybe if they make the next-gen iMacs really bad, they'll lower the price on those too! How about a 12 pound macBook - that'd bring down the price. Using this logic, the only way to have consistently lower prices is to produce consistently disappointing products.
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Mike Schramm said 12:37PM on 7-27-2007
I'm glad this encouraged such good discussion. I think you all make good points-- you're right that traditionally, Apple is not a company that sits back and collects checks when they've succeeded.
But just the same, this is a bigger risk than I think Apple has ever taken before. Making an mp3 player is one thing, but jumping in bed with AT&T to try and take over the cell phone business? They risked a lot on this, and so when they cite "customer satisfaction" as a reason for not changing things, that looks a lot like a bit of laurel sitting.
I don't for a second think that Apple won't drop a very nice software update to the iPhone that will answer a lot of naysayers, and fix a lot of problems. But I do think that if they don't meet that September goal (which I'm guessing they will anyway), they would be a little more inclined to get the update ready sooner rather than later.
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Todd said 12:43PM on 7-27-2007
That was some pretty poor commentary. Apple's track record is one of pretty steady improvement, especially if we take the iPod's record as the benchmark. The product is like a month old and he wants more, like a child, yesterday.
The idea that failure will spur herculean development efforts to extend the feature set and will make Apple rethink the price point is so far off as to be parody.
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jOe said 1:15PM on 7-27-2007
Some how I don't think Mike or this mysterious Doc mac have ever worked on software. It's not like you just wait around until you feel like the time is right then crank out a few lines of code. They have probably been working on an update sense before the iPhone even shipped.
Good sales means they are not likely to lower the price any time soon. People are obviously willing to buy the $600 phone, why would they charge less. But Apple knows very well that they are going to have to make these "free software updates" a reality if they are going to keep using it as a selling point, and stay one step ahead of the very competitive mobile phone market.
And that's just scratching the surface of why Doc Mac has made a ludicrous argument.
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