Here’s an interesting statistic: Apple’s 2008 sales estimate for the iPhone is 10m, while the global mobile phone market as a whole is expected to shift 1bn handsets in the same period. Therefore, assuming these estimates end up being at least somewhat accurate, the iPhone will account for only 1% of mobile phone sales in 2008.
Question is; if the actual sales are relatively low (as they clearly are), how come the iPhone is pretty much far and away the most recognisable and ‘famous’ model out there?
With Apple having this week announced the details of their forthcoming updated and cheaper iPhone it seems a good time to consider this question. There is a range of possible explanations:
Hypothesis 1 - The iPhone is the market leading model in terms of features and functionality
Well… not quite - Despite the newly announced price cut (from $399 to $199) and the addition of 3G network capability (plus GPS), even the new and improved forthcoming iPhone is still a little short of the competition. The 2 megapixel camera is trumped by almost every other camera phone on the market, with smartphone rivals featuring at least 3 if not 3.5 megapixels as a minimum. In comparison the iPhone camera looks more like a limited toy at best, rather than a serious piece of photography kit.
It seems Apple is going for the value-for-money angle with their new announcements, rather than market-leading features. Here’s a list of some of the things that the iPhone still lacks: SMS forwarding, Bluetooth profiles and voice and speed dialing. Pretty much all other high-end smartphones boast all of the above.
Basically the iPhone, having been launched as a top-end smartphone, has been overtaken by more feature-rich and cheaper rivals such as the Nokia N96 and Blackberry Thunder. This has prompted a change of tact, whereby Steve Jobs has identified that the next ‘mountain to climb is to make the iPhone cheaper’, having stated that cost was the main reason iPhone sales did not do better.
He is right to a point; but there is a fundamental difference between an expensive phone, and an overpriced one - which Apple are not publicly acknowledging.
Unfortunately for Jobs and Apple, the iPhone quickly went from being the former to the latter once the competition caught up.
So what can the new changes hope to achieve? This leads us on to the next issue:
Hypothesis 2 - The iPhone is the market leader in terms of brand and design
Now we’re getting to it. It is no secret that Apple, and Steve Jobs in particular, has a special fascination for bloggers, journalists, and indeed many relevant media channels. The hype that surrounds new announcements from Apple - and the subsequent coverage - is the envy of the whole industry sector. No-one else can so effectively enrapture the media into such drooling anticipation, as Apple does on a regular basis.
This is perhaps the cleverest aspect of their approach to designing products. In a sector that often becomes overloaded with jargon, technicalities and uninteresting data, Apple’s products have something that is forever distinguishing them from the plethora of rivals. Even when competitors raise their game, Apple somehow stays ahead - and the iPhone is a perfect example, for it is literally (in an aesthetic sense) like no other.
This, combined with some creative advertising, helps to build a singular brand identity for Apple, the depth of which can rarely be matched - even by those who might offer an otherwise ‘better’ handset.
Apple’s heavy price cut, but lack of extensive new features represents a realisation of their strengths as a brand in a saturated marketplace. Unable to compete on features, Apple stands a far better chance of increasing sales by offering a decent (but not the best) phone, with excellent looks and all the connotative strengths of the brand - all for an affordable price. In addition they have the support of successful alternative products such as iTunes which provide an extra point in the ‘pros’ column for the iPhone.
Ultimately it is the iPhone’s clever use of aesthetic design, and brand image that earns it such extensive media and market presence - plus the affiliation with other Apple products. These strengths will carry over into the mid-level phone market, and this is why Apple have been so quick to move away from a field they once briefly ruled (high-end smartphones), and into one in which they have a great chance of future success (more of a mid-range affair). And before we go concluding that this is a change the company has been forced into - let’s consider this:
The iPhone has been established as a top-end smartphone in terms of image at least, if no longer actual fact - and for many customers to now suddenly see it within their price range will surely feel like a bargain. I don’t doubt that sales will dramatically increase after the July price cut. The iPhone did well for while on the strength of its features and design - now it will continue to do well on on the strength of its cost and design.
All that is left is for me to applaud the ingenious handling of the iPhone product by Apple - which, though good, is not the best, but somehow almost always manages to seem so to consumers. The new change of tact should only ensure that this continues to remain the case, and I must admit I am now seriously considering ditching my Sony Ericsson (even with its 3.2 mp camera!) for a shiney new £99 3G iPhone…
Dejan Levi