To understand the spectacular iPhone success, and the iPhone
phenomenon, we need to start
by analyzing the cellular telephone market in the years immediately
before the launch of the first iPhone,
And the situation inside Apple.
Before the iPhone launch, infact, Apple was not a cellular telephone
and had zero experience in cellular telephones marketing.
Its only expertise was in computer hardware, computer software,
and in portable music devices (the iPod).
In 2005-2006, the cellular telephone market was considered a mature
and saturated market,
with narrow margins, dominated by Nokia and Motorola.
And by the Blackberry in the high end, especially in the business
and corporate world,
which were needing email writing, sending and receiving capability
on their cellphone,
with a suitable keyboard for texting messages.
A mature and saturated market with a fiery competition, such as
the cellphone market in 2005-2006,
was allowing narrow margins, therefore was unanimously considered
unappealing by financial and business analysts.
When rumours came out, in 2005-2006, that Apple was in the process
of developing a cellular telephone,
financial and business analysts were at best 'skeptical'.
To be true, the consensus among financial analysts was that the
'Apple cellphone' would have been a terrible flop.
Some of them were privately saying that they were suspecting Apple
executives had gone completely mad,
to enter such a saturated and non-profitable market.
Very few, among the business analysts, had the more objective
attitude to just 'wait and see'.
Then, the day came, and the iPhone was launched.
But Apple began with 3 huge, terrible mistakes. We expand on them
When the iPhone was launched, in June 2007, it made an impact.
The touch user interface and the sleek and beautiful design by
Jonathan Ive and his team made it
a masterpiece of technology and design
The iPhone was decidedly a superior product.
had a host of pluses against the competition (Nokia, Motorola,
It was a highly innovative product, a different product from the
other cellphones on the market at the time.
Moreover, it was significantly larger and bulkier than the other
cellular telephones in the market,
when the market trend, for years, had been to have smaller and
the smaller cellphone you had, the cooler you were.
The Apple iPhone went decidedly against the trend.
Today, in 2013, with 500 million iPhones sold, and with Apple
stock market capitalization at $500 billion,
it is easy to affirm that the iPhone has been a game changer.
It surely has.
Ultimately, today we can affirm that the appearance of the iPhone
on the market
caused the death of the Blackberry,
and the loss by Nokia and Motorola of their previously dominant
position in the cellular telephone market.
The reason is simple:
The iPhone is a clearly superior product.
Its touch control features, and its enticing user interface, made
the iPhone become a 'cult product'.
But in 2005-2006, before it came out, things were different.
And the perception was different when the iPhone first came out.
No-one, in 2006, would have imagined that an 'Apple cellphone'
would have sold 500 million units in 6 years..
No-one would have thought this even in June 2007, when it was
The first generation iPhone was launched - only in the US - on
June 29, 2007.
It was subsequently launched in three more markets - UK, Germany
and France - 5 months later, in November 2007.
In July 2008 the second generation iPhone, the iPhone 3G, was
launched at the same time in the US, Canada,
UK, Germany, France,Switzerland, Austria, Ireland, Denmark, Norway,
Sweden, Finland, Italy, Spain,
Netherlands, Belgium, Australia, New Zealand, Japan, Mexico and
The third generation iPhone, the iPhone 3GS, was launched in June
Each iPhone generation had more features that the previous generation,
and had longer battery life,
and rendered the previous generation iPhones obsolete.
The fourth generation iPhone, the iPhone 4, was launched in June
The iPhone 4S was launched in October 2011.
The iPhone 5 was launched in September 2012.
The iPhone 5C and 5S were launched in September 2013.
Planned Obsolescence has been a conscious marketing strategy by
Thus, any Apple costumers knows (or pretend not to know) that
he buys a product
that in 12 months will become old and obsolete.
However, examining the sales data, this 'planned obsolescence'
strategy paid off for Apple,
But which were the 3 serious marketing strategy mistakes that
when it launched the iPhone?
The 3 Mistakes that Apple made when it launched
To purchase an iPhone, you had to sign a 24 months contract with
You had to 'marry' AT&T.
And many potential costumers did not want this marriage.
you were locked on a 24 months contract with AT&T. An expensive
In the end, if you were wanting to buy an iPhone, its real cost
was more than 2000 dollars.
Why forcing your costumers to sign a contract with a service provider?
And why a single provider, not giving any other choice?
Why not letting your costumers simply buy an iPhone, and let them
to arrange a contract as they please?
Infact, there were numerous complaints by iPhone costumers and
potential costumers, on this issue.
Even, a widespread hacking practice took place, significantly
on several websites appeared step by step instructions on how
to hack the iPhone software
to let it operate with a different service provider.
Infact, 3.3 million iPhones were sold in the US between June andl
but only 2 million contracts were signed with AT&T.
Were did the remaining 1.3 million iPhones go?
It has to be remarked that the iPhone jailbreak practice infurated
Apple executives, who, instead
of recognized their marketing strategy mistake, criminalized the
to the point of blackmailing costumers doing the jailbraking.
On June 29, 2007 the iPhone was launched in the US.
It was put on sale only in the US, and in no other nation in the
Only in November 2007, 5 months later, the iPhone was launched in
a few other countries.
To be precise, it was launched in just 3 other countries: UK, Germany
In each of these countries with the same silly formula that Apple
used in the US,
forcing the costumer to sign a 24 months contract with a service
and in each country with a different provider: O2 in the UK, T-Mobile
in Germany, Orange in France.
This was a bad marketing choice by Apple.
There were millions of potential costumers all around the world
who were wanting to buy an iPhone, but couldn't,
because in their own country it was not on sale.
Many of them went to such length to ask to their friends in the
US - or traveling to the US - to buy one for them.
Finally, only on July 11, 2008, one full year after the initial
launch in the US, the iPhone was put on sale
in other countries, in Europe: Italy, Spain, Switzerland, Austria,
Denmark, Norway, Sweden, Finland, Netherlands, Belgium;
and in Australia, New Zealand, Canada, Japan, Mexico, Brasil.
It was already the 3rd generation iPhone, the iPhone 3G and 3GS.
Why so late?
Besides, it is interesting to verify the jam and confusion of
different prices, terms and monthly fees
charged by the service providers in the European countries:
O2 in the UK, T-Mobile in Germany, Austria and Netherlands, Orange
Swisscom in Switzerland, Vodafone in Italy, Telia Sonera in Denmark,
Norway, Sweden, Finland.
It was the perfect formula to confuse potential iPhone costumers
and push them away.
A self-hammering marketing strategy by Apple.
In our opinion, this was a totally wrong marketing strategy by
Infact, numbers do not lie:
from July 2008 until the end of 2013, Apple sold a total of 500
From June 2007 until December 2007 - when the iPhone was available
only in US - only 3.3 million iPhones had been sold.
Mistake #3 - iPhone Pricing.
On June 29, 2007, when the iPhone was launched in the US, its
retail price was.$599.
Just 3 months after, Apple reduce the iPhone price to $399 - a
33% rebate - .
This was an unelegant way to betray and exploit the iPhone early
adopters - Apple most faithful costumers.
And infact, many of them complained with Apple.
A smart and attentive company must not indulge in such serious
betraying their most faithful customer base.
Apple had other 3 better options:
- Apple could have waited 1 year before reducing the price
of the iPhone, or:
- Apple could have delayed the iPhone launch for 3 months,
- Apple could have set the iPhone retail price at $399, since
the initial launch.
Besides, in July 2008, the iPhone 3G was sold at $199,
66% less than the launch price of just one year earlier.
This is not a serious pricing policy.
Each of these 3 mistakes constituted a bottleneck factor which
and seriously hampered the iPhone sales potential in the first
year and a half.
However, in the following years Apple corrected and amended these
mistakes, and things went
smoothly and successfully for the company.
Infact, from 2008 until 2013, Apple sold 500 million units.
in 2012 alone, Apple sold 120 million iPhones,
in 2013 Apple sold 120 million iPhones.
The iPhone was also a precursor product of the iPad.
The iPad, infact, has numerous features and technologies which
derive from the iPhone,
the main one being the touch control system and the user interface.
The iPad, infact, is a sort of 'big brother' of the iPhone.
The iPhone certainly has been the key product of the spectacular
growth of Apple revenues
- today at $156 billion in 1 year -, of Apple profits, and stock
- today at $500 billion, making Apple the #1 company in Wall St.
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