Why iPhone users should WANT the iPhone to tank
Posted by Dr. Macenstein
During today’s Q3 financial conference call, Jobs and Co. painted a slightly more optimistic picture of iPhone sales than AT&T had alluded to yesterday. While still shy of the 700,000 some demented analysts had predicted, 275,000 was a far cry better then the 146,000 figure AT&T had thrown about and which had sent Apple’s stock tumbling in after hours trading. And while as an Apple stockholder I was happy to see this news (coupled with record profits) has today caused Apple to more than regain any losses the AT&T news may have caused, I let out a small cheer when I heard that Apple had still missed iPhone sales predictions by a factor of 2 or more.
Why?
Well, I am an iPhone user. I love my iPhone. I love everything it does. The problem? I want it to do more. And I want it to do it yesterday. And apparently, so do a lot of people who are holding off buying one.
Bad sales are good
I look at poor initial iPhone sales as a good thing. While a couple hundred thousand phones sold in 30 hours is still an amazing feat, the iPhone would have set unbreakable sales records if Apple had been able to deliver the iPhone with all of the “must-have” features most $600 phone buyers are looking for.
By seeing that media hype and faithful Mac allegiance alone is not enough to move product, Apple will now (hopefully) be forced to do 2 of 3 things:
A) Add new features quickly via a software update,
B) Increase advertising, and
C) Lower the price of the iPhone about $100.
I have no delusions about “C” happening in the next 6 months, but “A” and “B” are both likely to happen, and happen soon. Apple needs to quickly begin the process of updating the iPhone with new functionality in order to prove to folks who may be intrigued by the gadget’s sleek design, but are worried about giving up current functionality, that the iPhone’s potential is limitless. Apple needs to assure the public (and perhaps more importantly, the media) that it is not only committed to adding requested features/functionality, but that it can do so on a regular basis. Prove to them that the iPhone is not the locked down, “read the features on the back of the box before buying” mobile phone they are used to purchasing. It is an expandable platform capable of doing almost anything a full-fledged computer can.
The solution
While the news of AT&T’s lower-than-expected iPhone activations may have sent Apple’s stock plummeting last night, I found the news sent my spirit soaring. I have no doubts that Apple’s programmers were already hard at work adding new features and ironing out the iPhone’s current set of bugs before the news, but I do think that disappointing iPhone sales may be the eye-opener for Apple that all current iPhone users have been waiting for. Showing Apple that they can’t hype a perfect product and then deliver a 90% perfect product without a backlash is a good thing for us early adopters.
I would like to see Apple begin releasing the first round of iPhone bugs fixes/feature requests this week, and then continue to do so on a monthly basis from there on out. It is almost as important for Apple to release frequent updates as it is to release feature-packed ones. If all they have ready so far is “copy and paste” and “a widescreen keyboard throughout all apps”, then release that update TODAY. We can wait a month for iChat if we know you guys are going to be releasing steady updates.
Why is a set monthly update schedule important?
Apple is traditionally a very secretive company, and with the exception of big events such as Macworld and WWDC, one rarely knows when to expect a product refresh or software update. However, I argue that setting a known monthly iPhone update cycle is one of the smartest things Apple can do.
In addition to keeping current iPhone users happy, a steady stream of monthly updates will help take care of option “B” above, to a degree. There will not be nearly as pressing a need for Apple to start shelling out big bucks for a media campaign if every month it makes the front page by releasing a new iPhone update. In between updates, the tech rumor blogosphere will be a veritable Apple publicity machine (even more so than it already is, if that’s possible). In the days and weeks leading up to each month’s update, speculation on what that month’s features might be will keep a steady buzz going, and keep drawing in new users as each new feature appears.
I have no real delusions that Apple would ever hold itself to a set update schedule, but as an iPhone user, this is what I want to see. The reality is, no matter how large a list of iPhone feature requests we compile, or how much feedback we send to Apple, there is somewhat of a feeling amongst the tech world that Apple has become as successful as it has by actually ignoring user input – that the reason Apple is looked at as such an innovative company is that they decide what features they think people need. Unfortunately, when it comes to entering an established market, such as the cellular phone/smart phone market, there is certain basic functionality you cannot just leave out of a current device and expect it to sell. And the iPhone is supposed to be more than current. Leaving out “copy and paste” is not going to be looked back at by tech historians as as innovative and forward-thinking a move as when Apple killed off the floppy drive.
Speeding up the evolutionary process
So yes, I view poor initial iPhones sales as actually the best thing that could happen to a device as hyped up as the iPhone. I’m not saying if Apple had sold 700,000 iPhones that first day they would have been content to sit back and let the iPhone platform stagnate. However, I do think that poor sales might cause Apple to hire a few more programmers to the iPhone division, and help speed up process of the iPhone becoming the iPhone we all want it to be.
Agreed. I think the iPhone feels a little rushed, despite the coolness of the interface. There are just too many small things that are odd about it that imply to me there was not a lot of field testing done before the launch. There’s really not many features missing from the iPhone that can’t be addressed via software updates. If a version 2 iPhone suddenly has MMS messaging, Apple will have to release it for the V1 iPhone as well. Looking forward to the first round of updates!
Bad sales are not good. Apple released a product with a feature set that it fully disclosed. So if you bought the product with that feature set, you really should have no grounds for complaint. Apple also has already told you that it will be updating features. That is not going to happen over night.
Apple will do the smart thing. It will listen to customer feedback, as it always does, and incorporate that feedback into its already planned updates. I suspect some of this functionality will show its face before Leopard is released, and some more shortly after Leopard is released. Apple also has to test the improvements. This takes time. Apple wants to win over iPhone customers, so you can bet it is rushing to implement improvements.
Initial bad sales are hard to recover from because those numbers are spread throughout the media. Potential customers pick up on those figures and do not buy. The subsequent improvements will not erase the bad press. If sales were bad enough, Apple would likely be forced to abandon the product all together.
iPhone sales were anything but bad; as AT&T said, two days of sales beat any other phone in a month. The projections made by “analysts” were absurd, and the fact that they weren’t reached is a reflection of those “analysts” and the people who believed them, not a reflection of Apple or the iPhone.
You are thinking Microsoft. Name one product that started off slow, until Apple improved it. Name one product that started off slow, that Apple improved.
Microsoft did that with Windows, with Internet Explorer, &c. They may even do it with Zune. That’s not what happened with the Newton, the Cube, the Quicktake, …. If it happens to AppleTV, it will be a first. Apple is not rich enough to throw good money after bad. Apple uses its devleopor bucks to make good products better.
If the iPhone is not a success, there won’t be an iPhone 2
I disagree, Steve. Apple actually is plenty rich enough to pursue developing the iPhone platform, and the potential rewards if they get it right are amazing. Maybe 5 or 6 years ago I would have agreed, but Apple is now PRINTING money. They can afford to hire 4 more guys and get the iPhone where it should have been at launch.
Let’s remember several things:
1. Apple made no predictions about initial iPhone sales other than saying they wanted to sell 1% of all phones sold in 2008.
2. The 270,000 iPhones that Apple sold in Q2 represent Friday & Saturday sales of the initial sales weekend only. Even if you want to compare the actual sales vs. Analysts estimates (that were given AFTER the seemingly insanely successful launch) you still need to add in actual numbers for Sunday. For example, let’s say Apple sold another 130,000 on Sunday. That’s 400,000 iPhones sold in the first weekend / first 54 hours. How can not be considered an unbelievable success??
3. Let’s not confuse stock market reaction with consumer reaction. The feedback from iPhone owners has been fantastic. The price of Apple’s stock is not going to determine whether John & Jane Q. Public decide to buy an iPhone. The public is curious – they ask iPhone owners, “what do you think?” The answer to this question will help determine the true success of the iPhone.
4. I agree with # 2, bad sales are bad.
5. Apple has publicly stated that they plan on making many upgrades / improvements over time. The plan is already in place to improve the iPhone.
No you’re way off.
270,00 units sold in the first 30 hours is amazing by any metric. They had a 1 per customer limit at AT&T and 2 per at Apple that whole time. Most buyers never saw an iPhone in person until they unboxed their own.
There is simply no way to call that disappointing. It isn’t like sales have dropped off either. It’s quite likely we’ll find out they sold the millionth iPhone within a month. It is selling faster than the iPod and the Razr.
For comparison, the Zune was hyped for many months and was sold as a Windows accessory to an installed base of hundred of millions and it took a year to sell 1 million through many more stores.
What bullshit. iPhone satisfaction rates are stratospheric. “but I do think that disappointing iPhone sales may be the eye-opener for Apple that all current iPhone users have been waiting for”
Most iPhone users can’t put down their iPhones long enough to notice that iPhone sales (the best ever for a cell phone and way way way more then ipods or ipod nanos ever had in 30 hours) are “disappointing”
Only disappointing to the idiots who sold their stock after att released those numbers. And we know they are idiots because the stock recovered already.
Actually I do not think bad sales are needed to push out new software updates. Steve Jobs has already put in place a plan to make sure updates come quickly and often and elliminate all of the “Paper Cut” issues with the iPhone (no copy/paste, no video and audio recording, no…)
What is that plan – He is giving an iPhone to every employee.
Once they all have to live with each of these little issues day in and day out, they will either make the changes – or they will make those that work for them make the changes.
Bad Sales – and 270,000 units in 30 hours is not bad FYI – are not going to move the changes along nearly as fast as knowing the guy doing your yearly review hates there is no copy and paste.
Rob W
Host – Today in iPhone – The First Podcast on the iPhone
http://www.todayiniphone.com
Ridiculous. Although you call those analysts who predicted sales of 700k “demented”, you base the entire premise of this article on the benefits of Apple missing predictions “by a factor of 2 or more.” 270k units sold in 30 hours is impressive. Earnings for the quarter set a record. User satisfaction ratings with the iPhone is off the charts. I think they’ll have no problems with proceeding on their own timeline, regardless how the inevitable group of “I want it all, NOW” customers feel.
Dr. Macenstein wrote: “If all they have ready so far is “copy and paste†and “a widescreen keyboard throughout all appsâ€, then release that update TODAY.”
You’re making the assumption that Jobs thinks the iPhone should have cut and past in the first place.
In many cases, Apple has anticipated situations where you would want to use cut and paste and has provided alternatives that are more user friendly. It’s possible that future releases of the iPhone OS will expand this strategy, instead of littering the iPhone UI with menus or gestures required to select text and perform a copy / paste actions.
The iPhone isn’t the Newton. Nor does Apple have to position the iPhone as a traditional smartphone.
dead on! As I’m typing this comment using my iPhone, I couldn’t agree more! Apple needs to start rolling the updates and bug fixes or early adopters as fanboy as they can be will start talking abt the bad things instead of the cool things.
We needed this yesterday!!
I think Dr. Macenstein’s readers should WANT this blog to tank.
Think about it, if it tanks, he’ll spend much more time working his ass off to write even better. Even if you like him now, imagine how much better he’ll be if he thinks everyone hates him!
Sorry, Dr., but the premise behind this article seems ignorant to me, both of the facts (most iPhone users are extremely satisfied; initial sales were fantastic), and the market realities of the tech sector.
I think most people would agree that Microsoft’s Zune had a horrible rollout. So where are the $150 Zunes with new and improved features? The Zune is old news, still playing catch up to iPods of several years ago.
Meanwhile, Apple is the company that voluntarily killed the best-selling MP3 player on the market (the iPod Mini), solely so they could introduce something they felt was better (the iPod Nano). History has shown that Apple doesn’t need failure to spur it on to bigger and better things.
I really really really want an iPhone, but I’m NOT switching to AT&T. I think that Apple would have had phenomenal sales, had they not had this restriction. I’ve talked to friends who didn’t buy or switch for this reason.
$600 out for a phone and $200 for a contract termination. It isn’t worth it… especially, if my contract is paid for by a company plan.
Apple have always made wannabe products. Having owned 3 different apple machines over the last 20 years I can safely say the best decision I ever made was to abandon them for the PC. People that like Apple are faux elitists who don’t know what to spend their next paycheck on (because they don’t have any kids).