You Can Buy an iPhone
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News Commentary: What's with all the talk about iPhones being in short supply? I found plenty. |
But first, I've got to tell the back story. A friend of mine has pined for an iPhone, and literally counted down the days until his Verizon contract expired. The contract ended on Saturday, and he moved his family of three to AT&T yesterday.
About an hour ago, I called to see if he got his iPhone and if it met his expectations. He had planned to buy the phone at one of the two local San Diego Apple stores. "Yeah, I called but they didn't have any," he said. "The AT&T Store in Mission Valley had plenty. They switched us over in about 45 minutes. Can you believe that?"
I got to wondering if other AT&T company stores had iPhones for sale. So, I called AT&T stores in a dozen states. Every one had iPhones in stock. "We've got 8[GB] and 16GB phones," the sales rep in a Portland, Maine, store told me.
I then randomly called seven Apple stores in seven states. One store in Colorado had iPhones in stock but none of the others did. An Apple sales person from a store located in the Southwest, whose store was also sold out of iPhones, asked "Have you tried any AT&T stores?"
Now how is it possible that Apple stores come up short but AT&T has plenty of phones to sell? There could be lots of reasons. Maybe Apple has better managed its inventory ahead of an imminent new model release, or perhaps it has poorly managed its inventory during a period of high demand. (A new phone is one way to spend that tax refund.) Maybe AT&T has better managed its inventory than Apple has or perhaps it managed it more inefficiently, depending on when that 3G iPhone goes on sale.
Another, perhaps more plausible, reason comes to mind: The power of marketing. It is called the iPhone. Doesn't it make sense for someone to buy a phone at a—how do I say this—phone store? My friend first thought of buying the iPhone from Apple, which would have been my recommendation, too. Neither of us even thought about making the purchase at AT&T. I wonder how many other people think the same way. Given the shortages at the Apple stores, it's a fair assumption that AT&T isn't top of mind.
Apple advertises the iPhone like there is no other mobile sold anywhere else. Apple's brand is prominent in the iPhone TV commercials, even with AT&T brand placement. But direct marketing is only one influencer. Apple has more than 200 stores in five countries and in 37 U.S. states. The stores offer plenty of iPhone accessories and they specialize in just one mobile. The AT&T stores carry plenty of other mobiles, and iPhones are rarely on display to touch and feel. Should it be surprising that a potential buyer would think to buy an iPhone at Apple rather than at AT&T?
Presumably, some readers started asking five paragraphs ago, what does the iPhone sales channel have to do with Microsoft? Branding and marketing is the answer. Microsoft and its channel partners can learn loads from Apple's iPhone execution. The lesson could be better channel management on AT&T's part. But I'd guess better brand management on Apple's part is the bigger lesson.
BrandChannel.com's 2008 Brandjunkie Survey made headlines last week, in part because of Microsoft's brand decline. Apple joined Google, Coca-Cola, Nike and Virgin as the top brands. Surely, it must irk Microsoft executives that Apple and Google ranked in the top five.
When the following questions was posed, "If you could rebrand any brand, what brand would it be," Microsoft was ranked the number company in need of a rebrand. One respondent referred to the "Windows" brand as "your father's Oldsmobile to the millennials."
Good branding requires good execution in multiple areas, such as the products meeting customer expectations, doing what they're supposed to do very well and making people's lives better (or at least making people think their lives are better). Most importantly, there must be advertising—and lots of it. I've started seeing two Apple commercials during some TV shows. Two! I rarely see one from Microsoft.
Even weak ads would be better than none. Microsoft needs to generate some good brand association for products like Windows Vista. Some advice: Spend less time researching and planning and more time doing. Get the brand out there, by any means.
Just for fun and fairness, I called stores in four states to see if they have Windows Vista in stock. There were no shortages. One guy from a Midwestern computer store chain quipped "You're a week late for April Fools, bud." He then hung up.
Comments (9)
None of us that follow Apple iPhone sales has yet to comprehend why the Apple stores ran out of stock yet the AT&T stores had plenty. Most likely the Apple stores sell them faster due to the greater crowds. AT&T stores just don't get as much business. Even when the iPhone was introduced, everyone seemed to want to hang out at the Apple stores and wait on line for T-shirts and stuff and be seen, Any of them could have gone to an AT&T store down the block, got their iPhones without waiting and head back home. Nah, that's no fun.
Still, why was all of Apple store iPhone supply chain depleted. I doubt if it was a trick to pump up demand by shorting the supply. I believe things will return to normal in a week so we can all forget about rumors of upgraded iPhones before June/July. What will we do for two whole months without buzz and hype?
As for Vista running out, forget it. Maybe Windows XP will be in short supply after users find out their marginal PCs are getting bogged down from lack of resources. They'd better head out and pick up good ol' WinXP Pro if they can find it.
Posted by Constable Odo | April 7, 2008 9:29 PM
There are thousand of Microsoft' events and products to write
But you choose to write Apple iphone
Posted by PETER | April 7, 2008 9:34 PM
i have a mate in the US who has to buy the phones from apple stores so he can then ship them down to new zealand.
at&t won't sell them to him if he doesn't set up a contract or already have one.
doesn't take a rocket scientist to work this one out.
Posted by steve | April 7, 2008 9:47 PM
Joe, I think your first guess is right -- new model on the way. The timing is just about right on the year to start trying to sell out of the old model.
Apple is the kind of company that needs something new and expensive to sell every Christmas. They're not in the business that Motorola is in, making bazillion RAZRs over 5 years and driving the price to zero. Apple intends to sell a bazillion iPhones, but they're not going to let the price of the first model go to $99 without having something that costs $599 available and highly desirable to uber-geeks. Flash RAM upgrades can only take you so far. And I wouldn't be surprised if Apple never drops the price of the old model, they just stop making it (also unlike Motorola).
Posted by Nada | April 7, 2008 10:39 PM
Demand for iPhones outside the United States, particularly in emerging markets, is out of control and has reached the point where it has started to impact Apple’s normalized supply chain projections. It’s okay to have a delta of, say, 100,000 units or so per year between actual and forecast. International demand is driving that delta upwards of 1 million. That’s a whole different ball game for component sourcing, quality control and production ramp-up and some things are starting to come unstuck, even for a finely managed company like Apple.
What’s driving this?
1. Free, out-of the box -ready, GUI-based network unlock solutions like Ziphone and iLiberty. Confidence in these unlock systems has grown significantly over time as technical expertise required to use them has fallen.
2. A large, very organized procurement mechanism for iPhones, particularly into Russia, Eastern Europe, India and China. There are people who go from store to store buying iPhones and aggregating them for export to “resellers” overseas.
3. Proliferation of Wi-Fi penetration and the recognition that in GSM countries, iPhone works simply and well enough. Wi-Fi hotspot usage is growing significantly around the world and the iPhone’s superior web browser is taking full advantage to maximize customer experience. It’s the right product at the right time for the macro-trend.
4. The iPhone is relatively cheap to emerging market customers used to paying $500 for a BlackBerry and a cheap US Dollar makes it an even better deal. For example in Russia, at $499, a16GB iPhone translates to around 12,000 Rubles. An 8GB Nokia N95 costs $815 or 20,000 Rubles. The value-for-money perception with iPhone is absolutely huge.
5. Zero or minimal compatibility issues on GSM Networks. I have used my iPhone with SIM cards from 32 different networks in Europe and developing countries. It works seamlessly. The iPhone is a quad-band GSM phone, meaning that it supports all four major GSM frequency bands, 850 and 1900 MHz bands which are used in the Americas, and 900 / 1800 MHz bands used in most other parts of the world, making it compatible with all major GSM networks worldwide. 2 billion people around the world use GSM phones.
To give you an idea of international demand; There are Nigerians shipping more than 500 phones a week from New York to Lagos and Nigeria is a third world country.... If you define a potential user as someone who can afford (or is used to) paying twice as much for an iPhone and double what an AT&T subscriber pays per month, there are at least 7 million potential iPhone users in Nigeria, 9 Million in South Africa, 80 Million in India, 25 Million in Russia, 25 Million in Brazil, 8 Million in Indonesia and 100 Million in China. Not all of them will be users but just 5% of this number is way more than 10 million. Considering mobile phones are some of the most universally adopted products on the planet, a good GSM phone reaches Iran and Iraq much faster than people on Wall Street can ever imagine. I predict iPhones will be available to elites in Cuba (which has both GSM and TDMA) within the next 30 days.
From research I’m conducting. we have conservative numbers of grey market as follows:
Russia 2000-4000 phones/week
China 4000 -6000 phones/ week
Demand from Western Europe is substantially slower but still significant, averaging anything from 2000 -3000 units/week from New York and other big cities with international airports. Now, not all the phones shipped from New York are bought in NYC but the export pattern is clear and very strong. I have completely ignored the cash-flush Middle East where Dubai has always been a world-leading port in grey market clearing and forwarding for consumer electronics.
Conservatively speaking, something is sucking 15,000-20,000 iPhones/week out of the United States. If this phenomenon is coinciding with steadily growing adoption among US customers, suddenly the slack Apple had is drying up.
Many of the millions of visitors coming to the United States every month are going back with a packed iPhone in their luggage. It’s one of the things people are expected to buy when they come.
Foreign nationals are not very likely to buy iPhones at an AT&T store because the requirements are inconsistent (some stores requiring SSNs, existing phone numbers and/ or activation), queues are long (non-starter for people with a limited window to get back to the airport), lack of other Apple products (iPods etc) and accessories and simply, AT&T stores are not landmarks.
Finally, the reason why used iPhones will begin to show up on eBay and other consumer-to-consumer sites in Western Europe is because individuals who speculatively buy an iPhone to resell are up against “organized unofficial” suppliers and 3G is a big deal there. In emerging markets, you’re much more likely to buy a phone from an “expert hacker supplier” if you worry about fixes and other things. And yes, the parallel market is showing budding signs of getting sophisticated at providing some of the support Apple won't provide....
Bottom line: Apple has produced a product that is promising but short of the mark in 3G Western Europe, reasonably good for the US but a smash hit in emerging markets.
— Posted by Tantrum
Posted by Tantrum | April 8, 2008 7:47 AM
I can't believe you compare a $400 phone to an operating system that is on over a 100 million computers? Also, the fact that Vista and iPhone are two different product categories that are in separate categories of computing. If you had compared Windows Mobile based devices vs the iPhone now it would make a lot of sense.
Posted by Andre Da Costa | April 8, 2008 1:06 PM
Hey, Andre. The "computer" is going to fade over the coming years and give way to computer services available over things like phones.
That's why the phone conversation is more relevant than the computer conversation.
If you and the rest of the Microsoft cult would begin reading some recent industry views, you would be ready to make that kind of transition. But, as you depend on the OS monopoly for a security blanket, you continue to think the "100 million" computer number is the way the future will play out.
That monopoly number simply means there are 100 million user footprints begging to be liberated and mobilized from the hardware ball and chain.
Posted by portuno | April 8, 2008 3:14 PM
And what does that have to do with Microsoft watch? Absolutely zilch. Nada. Nothing. So start writing about Microsoft. Thank you.
Posted by Brad Freeman | April 10, 2008 8:58 AM
Really, I don't think I've ever seen a Microsoft or Windows commercial. I've never even seen a Zune commercial. Apple advertises a lot but I've noticed that Apple ads are slightly alienating. Microsoft bashing, little use of minority actors, and Justin Long. Seems to aim for a very specific audience though I don't know what that is.
Posted by Jim | April 12, 2008 4:28 PM