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iPhone hype or hope?


The launch was record breaking. Within the first quarter, the company reported profit of $1.75 billion on sales of $9.42 billion. Excluding one-time items, per-share earnings were 30 cents — beating 28 cents on sales of $9.21 billion expected by analysts. From an original review on its record-breaking sales: 

“Noted by industry experts as a game-changing feat of design and engineering … The mobile handset’s radical and revolutionary design transformed consumer’s expectations for how a mobile handset should look and feel.” 

Sound familiar? Think back to 2004 when Motorola launched the ‘game-changing’ RAZR at a price tag of $600 with service and $800 without. According to Wikipedia, the phone entered the mass-market as a mid-priced phone in 2005 and by July, 2006 reached the 50 millionth shipment. It seemed (at the time) that everyone finally had access to the sleek, super-thin and sexy device.

Nearly two years later (posted recently on marketwatch)

The Ratings Game: Motorola stock sinks again on sell rating. Good news is hard to find these days for Motorola Inc., the historic but now struggling U.S. technology giant.

So what went wrong?

In the tech industry, we’re used to switching out gadgets year after year as prices drop and our devices become lighter, smaller, thinner and more functional. But the downslide of the RAZR and the impact the fall had on Motorola in such a short timeframe is baffling. Although many factors were responsible, including lack of diversification and continued innovation (although they did try with the launch of the Q which was highly anticipated as the next record-selling device, but was a disappointment to end users and did little to boost Motorola’s lagging sales.  

(from wikipedia) According to a survey by Mobile, 78% of RAZR users would not buy another Motorola handset because of poor usability.  This figure was even higher for first-time users. One company ranked it 11th out of 13 for ease-of-use, when compared to competitors’ products — the RAZR required extra steps and had poor usability, meaning that users had a 47% success rate for a given task. Also, many people dislike the interaction with it, saying that it’s “awful” and “slow”. The software user interface (UI) is regarded as clumsy and ill-designed.   

 To its credit, Motorola continues to launch handset and PDA-esque devices, most recently the linux-based Ming A1600 in China. With handwriting recognition, GPS, a 3.2 megapixel camera and a business card scanner, the device is popular as a low-cost PDA solution for the continuously expanding growth market of China.

Lesson learned: It’s not just about look and feel. It’s about the entire user experience with usability at the core. To ensure success, Apple has paid attention to diversification (rather than relying strictly on the hardware) by introducing the carrier/subsidy model as well creating a platform that allows services to be an additional component of the business model. On top of it all is a robust developer platform that allows services and software to enhance and expand utility on a customized level. And that allows control of the user experience top to bottom – and makes the iPhone the true personal device we’ve craved for some time. Apple understands that stunning hardware needs to be paired with easy-to-use (and easy to create) software, and in the end, it is this combination that fosters the kind of innovation that will allow the iPhone to stay in the lead for some time.

With today’s launch of the new 3G iPhone, it’s clear that Apple continues to pave the way for a new kind of ‘smart phone’ – one that doesn’t rely on business users with large budgets or an overly technical audience. It’s just a smart and simple device that anyone – and everyone can use. Is the iPhone just a hype that is paving the way for other devices and services to follow? Or is this the kind of success that is destined to continue for some time. The 50 million mark in sales seems inevitable.  It seems this is just the beginning of the possibilities in a 3G, location-aware, convergent world.



Posted on July 11th, 2008 in Thoughts
Tagged as , ,
Written by Kelly Goto

One Response to “iPhone hype or hope?”


  1. Petes2cents says:

    I new that this time around was going to be more of the same. Huge line, no service, no inventory, horrible customer service, etc…AT&T couldn’t get it right the first time, what makes you think they would get it right the second time around ? I think if you never had an iPhone maybe go through the trouble, but if you already have one, why go through the headache for another one. Makes no sense. Apple always launches news products with very low inventory to create excitement and demand. I did it once with the mini me, and never again. I can wait, if I really want an Apple Anything.

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