Wednesday, September 12, 2007

Think different? Not this time.

I've been thinking lately about the Apple move to rebate the IPhone cost, all the discussion and the comments. Than I read today this interesting analysis by Ruth Sherman in Fast Company.

In all the comments, and in this one too, I feel that there is a missing link: Apple acted as the major mobile phone device producers do.
They launch a cutting edge model at high price, after three months reduce the price and after six/nine months sell a mssive quantity to the phone carriers to give it for free to their subscribers.
This is the rule except for the top seeling product like the Motorola Rzrs, which remained at very high price longer than usual.
IPhone was not seeling good and Apple followed the industry track.

If the commenters do not get this point, any analysis, even the smarter one, is based on wrong assumption.

The real mistake was that Apple does not probably felt comfortable in this new industry and the business model does reflect it clearly.
To enter in such a market for the first time ever and sign an exclusive deal with one carrier is a stupid move. IPhone should have been sold in the Apple store without any obligation to subscribe a plan with given carrier.

The Apple mistake was not to act as Apple is expected to do.
They were not confident enough to challenge the market and changed as it was for IPod and ITunes.

Apple did not think different and now pay the price for the betrayal of the core brand philosophy.


John said...

IPhone should have been sold in the Apple store without any obligation to subscribe a plan with given carrier.

I agree, but one has to remember that in the US mobile phone market, this is absolutely unheard of. All phones are sold primarily by the providers, and all phones come with software locks to prevent you from using them with another provider - even if you use a prepaid plan!

You can get your phone unlocked (as I did so I could use in mine in France) but it takes some work.

So while that approach would have been better, I suspect that no carrier would have worked with Apple to support the phone if they had insisted on that. Which is too bad, it would be a better model.

gianandrea said...

John, thanks for your comment. I understand that the US market is different from the Italian one. But so it was the music market. Apple was a disrupting element in that market and they should have pursued that approach in the mobile phone market. too.
Risky, indeed, as well as dangerous but that's the way Apple tackled all the market they get into until today.

Iron Mauro said...

Although Apple mismanaged the cutprice and had to face a PR debacle, I don't think their brand will suffer too much from this. But it's still a long way before they will make a mark in this market. I believe you're right: they do not felt comfortable in this new industry.

gianandrea said...

Iron Mauro, thanks for commenting. To enter in such a mature and competitive market is proving a tough task to Apple. I agree that they should not suffer much for this first debacle, but it's a lesson to be learnt.