iPhone: Wildfire or flameout?

So, I'm not sure I qualify as a "pundit," but Seth Godin wants to know what all us chatterboxes think will happen when the iPhone comes out.

When it was first presented, I posted a rant about what I felt were iPhone (and Apple) shortcomings.  I was, suffice to say, disappointed with a few small but, in my opinion, inexcusable gaffes.

Seth thinks it will be a blowout success. 

I can't say I quite agree.  Don't get me wrong...I think it will be a very strong product launch, and sell pretty hot for the first 6-12 months.  Beyond that, I'm not so sure. I think that there is going to be a lot of room for dissatisfaction with smudgy screens, the data network selection, limitations on application sources, and Cingular lock-in.  With it's richie-rich price tag and proliferation of lookalikes, even small beefs could become a major hurdle.

So that's my prediction. Hot launch, fairly quick fizzle.  I think it will do well by normal standards, but disappoint against the hype.

Anyone else want to take a crack at this?  What do you think?

Comments

[JTreiber]

I don't necessarily agree with your prediction Amy. I think that iPhone will be another iPod level success story for the company. In fact, I think that iPhone sales will gradually eclipse iPod sales, which are growing incredibly well since it's initial launch. It seem to me that whatever Apple touches turns to gold. Even the Apple TV, which I think is a strong addition to the home entertainment arena, will receive wide-spread adoption as Apple continues to integrate more and more apple products with their existing products.

[Dave Hunwick]

Well Amy,

you say that these shortcomings will catch up to the iPhone, wtf do u think that Apple will make one version of the device and call it a day? Do you think that it will always be EDGE? That's the dumbest shit I have heard in a while. Apple has become very nimble and will adjust if need be. This will be a home run beyond anyone's wildest dreams.

[Amy Cham]

@Jonathan- I don't see iPhone and iPod as similar cases. iPod (and iMac, for that matter) took 'techie' products and made them interesting and accessible to the non-techie mass audience. They found an unfilled position, and the world went wild. iPhone...there are a lot of players there, and the iPhone is geared toward the other end of the market spectrum. I'm not sure where the slam dunk lies. It will be interesting to see how the diffusion runs.

@Dave- I have no doubt Apple will update regularly. However, the cell phone/phone gadget market is becoming rather commodotized, and iPhone's effective points of differentiation will be fairly easy to replicate, with the exception of the brand's power. If they don't hit it out of the ballpark on the first try, I don't think this market will be very forgiving.

As I said, I do think it will have strong sales by typical standards; however, I see some obstacles to the projected long-term landslide. Maybe the brand will carry it through rough spots, but I have doubts.

[Michael]

Am I missing something here? Two million phones is not a big number. Motorola sold 66 million mobile devices last year. The global market is ~ 1 billion phones.

http://news.com.com/Motorola+cuts+view+on+cell+phone+results/2100-1039_3-6147438.html

http://www.topix.net/com/txn/2007/01/ti-sees-2007-global-cellphone-unit-sales-up-20-pct

[Amy Cham]

@Michael- You're right...the worldwide cell phone market is huge. And smartphones are growing fast.

But when I look at existing smartphones, maybe 20% are in a similar price range, and most of those take big discounts. According to an alleged internal AT&T document, they are still resisting incentive discounts. ( http://www.engadgetmobile.com/2007/04/25/iphone-qanda-for-atandt-employees/ )

I found a snip of a Gartner summary from March 2007 that projected worldwide 2007 smartphone shipments to be 93.6 million. 2mm units represents just over 2% of the full smartphone market, price sensitivity and switching costs notwithstanding.

It's absoly possible, but it's not trivial.

I can think of things that could help...Loosening up their position on discounts and making business users' transitions easier would probably help. Maybe there's some sort of positioning that could create a new category that breaks loose from assumptions about cell phones?

Or maybe the big, splashy, expensive iPhone is intended to be an aspirational reference point for a more accessible model further down the line...

[Manila Mom]

The Philippines is cellphone country. It's also iPod country. You'll see teenagers and young professionals sporting the latest and most expensive phone models and ipod models. I think this reflects a large part of Asia. Based on what I've been hearing from my teenage kids and their friends, though, the iPhone just doesn't measure up to their expectations. They have already been used to having the best cameras on phones with giga memories that can handle their music, too. And then they tote the top of the line iPod along with it. So unless the iPhone can match the top of the line iPod with top of the line cellphone features, it's not going to be their "must have."