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Issue: June 2010 ApplianceMagazine.com

Apple Fashions Another Consumer Product Frenzy

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by Tim Somheil, Editor

Apple continues to create consumer products with the celebrity status of rock stars.

Even lacking the unique product profile of the iPad, the June 24, 2010, launch of Apple's iPhone 4 garnered huge international attention from eager buyers and the media.

Early reviews of the device were good, some were great, and more than a few called it the best smartphone on the market.

Crowds began gathering in front of North American Apple stores 12 hours or more before sales were to begin. Media reported 1200 people in line when the Ft. Lauderdale, FL Apple store opened. Even longer lines formed outside of stores in New York City, San Francisco, and others across the United States.

Little of the attention from Apple fans and TV crews was on the other retail chains, like Radio Shack, Walmart, and Best Buy. These chains reportedly received only enough of the new phones to satisfy the pre-orders made through their stores. Even AT&T, the only U.S. carrier serving the iPhone, couldn't get enough of the units to sell in its own retail stores on launch-day.

The first customers to actually buy the phones at retail were not, in fact, within the United States. June 24, 2010 was iPhone 4 launch-day in Japan, Germany, France, and the UK. Some Japanese customers waited in line three days. Media reports had 320 people waiting in line at an Apple store in Paris, with similar crowds reported at stores in the UK and Germany.

Apple and AT&T said 600,000 units had been pre-ordered. AT&T's online retail system crashed under the load on June 15, when the first orders were taken. AT&T said demand was ten times that of the iPhone 3, which went on sale a year ago.

First Day Sales: 1 Million Units

Businessweek estimated a cool million iPhone 4 units will be sold by the end of Day 1.

Not bad for a product that comes with few hardware options. You can choose 16 GB of storage or 32 GB. Like the Ford Model T of 90 years ago, consumers can get their iPhone 4 in any color they want, so long as it is black. A white version won't be available until July.

It's Good. It's Great. It's The Best.

Almost every review said the new smartphone was at least very good and some said great. CNET's Kent German wrote that, "We won't say that the iPhone 4 is the best smartphone on the market today," but he implied that it came close. The New York Times' David Pogue wrote that the new phone, "had better be pretty amazing to compete" in the increasingly crowded smartphone market, but, he added, "It is."

In fact, early reviews in the United States focus most of their criticism on phone carrier AT&T. Technology watchers have claimed, almost since the 2007 introduction of the first iPhone, that Apple was hurting itself by not offering a choice of carriers.

If that's true, it means Apple could have sold more smartphones and generated more excitement than it already has. That's difficult to imagine.

But now the iPhone has a serious competitor in the cross-carrier, Google-backed, Android phone operating system. Android gives users a more open system. Not only are there more carrier choices, there are more phone hardware choices. Motorola, LG, and Samsung are among the phone makers offering Android models.

Android's growth, in the market and in consumer awareness, has surely not gone unnoticed by the brains at Apple, and industry watchers believe those brains are eager to give iPhone users more carrier options as well.

I Heard a Rumor

The rumor mill says that a new iPhone carrier option will come soon. Unnamed sources have told the Wall Street Journal and Taiwanese media outlet DigiTimes that an iPhone compatible with a CDMA cellular phone network will be produced by Taiwanese contract manufacturer Pegatron in September of 2010. In the United States, the reports say, phone carrier Verizon will launch the iPhone 4G in December.

The Verizon iPhone rumor has been around for some time. If true it means that Apple has strong-armed AT&T into giving up the exclusivity that the carrier was supposed to have until 2012, per the terms of the original 2007 agreement between the two companies. It's not unlikely that AT&T's less-than-stellar operational performance has put it on an unsteady footing in negotiations with Apple.

Excitement Strategy

What's notable about the explosive launch of the iPhone 4 is that it comes just 82 days after the launch of the iPad tablet computer—and just 2 days after Apple announced it had already sold 3 million iPads. Despite their functional similarities (the iPad can run nearly all the 225,000 apps made for the iPod and iPhone) and the close proximity of their high-profile retail introduction, it would seem that the iPad did not cannibalize iPhone 4 sales.

What's the Apple formula for making consumer products exciting? The company's strategy has been analyzed and dissected, but I think it boils down to a mixture of good choices, fantastic design, and tight control of the products under its brand. Apple releases few products, so every generation must delight and surprise the buyer, leaving every user happy with their current product but eager to see what's coming next. Apple design teams have clearly made some very pleasing choices.

Keeping other branded technologies out of its products has been labeled anticompetitive by others in the industry (usually by the excluded stakeholders), but it has also enhanced the distinctiveness of Apple products.

Apple has a unique ability to create excitement like no other consumer product company can. Innovative technology and pleasing industrial design are thrilling to users and are a huge factor in the equation, but also it is the inimitability of the customer experience. The product, and the experience of using it, is special, in large part because of the very limitations Apple has engineered. That helps create a stronger community of users and to foster unparalleled brand devotion.

And it helps Apple move a million units in one day.

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