iPhone sales disappoint, despite hype

For a product dubbed the Jesus-phone, which received more pre-launch hype than any other product in history, it looks like a major miracle might be in order. Today has not been good for Apple’s iPhone, as underwhelming sales numbers hit the street with a thud and sent Apple’s stock price down sharply.

Many analysts had predicted 500,000 or more iPhones would be sold in the first few days. Yet AT&T said they activated only 146,000 iPhones in the first two days. To make matters worse, CIBC World Markets said demand for the iPhone has had a significant decline in the past 10 days and that stores are stocked with the devices.

One interesting side note to this story is that the iPhone publicity could turn out to be great news for BlackBerry. A CIBC analyst noted that the iPhone has "significantly increased awareness for email devices. And that is a positive mainly for RIM, the brand of choice for email devices."

When more consumers realize how great it is to have mobile email they will more often than not go to BlackBerry, the leader and originator of wireless email.

One of the biggest downsides for heavy email users is the lack of a real keyboard. It is the same problem for all multi-use devices; you have to sacrifice something to get everything.

The heavy email user wants a keyboard and a decent sized screen; the heavy phone user wants a much smaller device with a numerical keypad; the music user wants an ultra-small device, the internet/video user wants a large screen. And they all want ultra-long battery life. Even God can’t produce that.

There’s still a long way to go before the true fate of the iPhone is decided. But it’s fair to say, today was not a good start.

iPhone news items today: Bloomberg, CNN

Some of my previous iPhone posts: just good enough, what is driving the hype, crappy device, convergence questioned.

And let's not forget this classic Ries Report with Al's iPhone predictions filmed back in February for The Ries Report and now posted on our You Tube channel as well. The report is long so it is divided into 2 parts.

Ries Report: iPhone predictions part 1

Ries Report: iPhone predictions part 2

Comments

[SEO Csnsulting Services]

IMHO, the hype gets the early adopters to buy, then other people wait to hear from the guinea pigs whether it's any good or not. Having seen that after 500+ reviews at CNET, the iPhone had a crummy average rating (6.3? 6.7?)

I'd say it's the product that wasn't well taken care of in this marketing mix. The hype and brand message/awareness/image were there. Also, the price was apparently very high (3k+?) for the full deal.

[JohnB]

The convergence, divergence controversy is fairly simple in my mind.

You've got CEO's, inventors, tech heads that just fall too far in love with their product rather than practicality.

The only "divergence" device I have is a swiss army knife. And it absolutely compromises on quality and features.

I don't think anyone uses a swiss army knife as their primary knife, bottle opener, scissors, saw.

The iphone might do well short term, riding the wave of apple popularity, but its not going to revolutionize the world. The way the PSP was going to change the world (UMD movies flopped), or a 100 other examples.

[Stephen]

Laura, you must look like batman with all those specialized devices on your belt! Despite the fact that specialized devices could do a better job at many of the things the iPhone does, I find that very few actually do. There is surprisingly little compromise in the iPhone. I think the iPhone has been and will continue to be extremely well received by consumers that need and want just a single device (and there are quite a lot).

[yasser brohi]

My last comment about the iphone in one of Laura's earlier post's was several months prior to 'iday'. I maintain that the only sustainable impact this device will have is to bring stylus-less touch screen navigation to the mobile screen. Referring to the comments (Laura's last iphone post) of the gentleman who heads a design firm; One of the most important requirements of design is that it has to be functional. While i am also a fan of most things mac, due to their superlative technical design, i have to reiterate that design needs to be functional for its intended purpose. The purpose of the iphone is to make an all-in-one music ipod, smartphone, mobile internet device etc. While that sounds cool, and exploits the trust the corporate brand has, it does violate one of the fundamental laws of human behavior: specialization. Mr Green asked for a quantifiable way to measure a prediction. A prediction can't be quantified. However, time will tell.
Apart from the convergence problem, the iphone has one other massive problem. its exclusivity with Cingular. It would have been better to align the phone with cingular, if the phone had a slightly different focus & if cingular was still cingular. Forcing people to switch, in an era when consumer empowerment has shaken the very foundations of marketing communication, is a mistake which could potentially be viewed as arrogance. Arrogance gets brands and products into trouble. Zune exists today due to the massive ego microsoft has as a corporate entity. We all know the figures.
Mr.Jobs and co. if they want to persist, need to release a successor to the iphone (which is rumoured to be in the works already, and slated for a christmas launch). The successor, in my opinion, should either be just a phone/organizer for hip(read: yuppie) folks, with embedded cross functionality with all things apple, or worse, try to take on the smartphone category pound for pound. Either way i hope they don't try to integrate the much anticipated 6th gen ipod nano into a phone.
Currently apple stands to benefit the most from its mac sales due to the lingering effect of the ipod, the negative press vista has received, the iphone hype, the back to school season etc.
Now is when their new imac design needs to surface.

For the record, i agree completely today, as i have in the past, with Laura.

I realize this is a senstive topic which everyone has something to say about. Civilzed comments, constructive criticism and feedback are welcome via email: yasser.brohi@gmail.com

Best.

YB

[Justin]

More than what AT&T said they activated, I'm interested in what Apple actually sold. After all, the title of your post is "iPhone sales disappoint" not "AT&T activations disappoint." Job's quote from Apple's June Quarter report is as follows: "iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales."

One million phones is still in line with Apple's goal to sell 10 million by the end of 2008, with the fair assumption that they continue to advertise, improve, and diversify iPhone during that time. At what point does iPhone move from the dismal-failure-because-it's-a-convergent-device column to the success-because-it-redefined-the-market column?

That said, I'm am earnestly interested in your personal experience with the iPhone. I personally get substantially more email productivity out of it than any Windows Mobile or Blackberry I've had previously.

[Cam Beck]

"which received more pre-launch hype than any other product in history"

I dunno... I'd consider The Simpsons Movie in the running for that title, if you count movies as products.

[Ben Bacon]

@ John Moore: First of all, I love your blog! Keep the good stuff coming. Your "Spring Drops Demon Customers" post was quite a wonderful read.

That said, I want to respond to your very valid question about Laura using the iPhone. I think Laura's use of the iPhone is not what is important. Branding is not a battle of products, but of perceptions. An all-things-to-all-people product will not dominate in the long run. Can the iPhone out-Blackberry a Blackberry? Can it out-iPod an iPod? No, and no.

Laura mentioned that Apple's iPhone has brought a lot of attention to Blackberry. Does this sound familiar? Does anybody remember when Ford tried to usurp "safety" from Volvo? What happened? Volvo got the extra boost from Ford.

Everybody approaches an iPhone differently. I look at it and long for an iPod that does what it does. Another person may look at it and long for a phone with its features. Another for its Internet usage.

The truth of it all is that the iPhone does a lot of things, but none of them to perfection. An iPod plays music. A Blackberry gets email. A Nokia takes calls. And, as far as I'm concerned, the "mobile Internet" is not a favorite–I'll link into a Wi-Fi hotspot with my Mactop.

Convergence? Divergence. Thanks for the inspiring post, Laura.

[greg gillispie]

From CMG's blog...

"This is nothing short of extraordinary! Last month, I co-presented a webinar touting the iPhone launch as far and away the most buzz-worthy marketing event of the year, but it looks as though Harry Potter CGM is nearly three times that level. Just think about it: over 4% of all new blog posts reference or mention Harry Potter in some way, shape, or form. Must be magic!"

[David Armano]

To John Moore's point—I have used the iPhone and was skeptical before I got my hands on one. Much of that skepticism faded after using one. The whole experience is amazing—even delightful, however Laura's post brings up a valid point. Heavy e-mail users (or typing users) like a useful keyboard that allows for rapid input.

I went as far as to mock up my own "dream phone" which retains all of the great multi touch screen goodness with a functional keyboard which allows you to view the whole screen.

http://darmano.typepad.com/logic_emotion/2007/07/introducing-the.html

Apple would never do this because it would take away from the elegance of the iPhone design. But mark my words—in the next 2-3 years, someone will produce a device that looks something like this. And I'll be the first to buy it. Maybe it will be the Google phone? :)

[Hui]

iphone is way to complex, most people won't like that. people love simple stuff, that make the market for iphone in the long run a very tiny market.

[johnmoore (from Brand Autopsy)]

Laura ... what are your impressions after not reading about the iPhone but rather, using the iPhone?