Tuesday, May 1, 2007


Seth Godin has challenged pundits to pull out their Ouija boards and put themselves on the record:

Predicting the future of the iPhone is perfect bait for marketing pundits everywhere. How about a pool and we'll see who's as smart as they pretend to be? … I invite you to make a prediction, trackback it here and a year from now, we'll take a look.
On the one hand, Godin is pretty optimistic, predicting 2 million units in 2007. In the other camp is Laura Ries, who predicts


Early iPhone sales are likely to be brisk. Apple's amazing ability to generate PR will no doubt attract many Apple fans and early adopters to purchase an iPhone. Just like they bought a Newton back in the day.

But I stand by my prediction that the iPhone will not be a long-term success. What we will see instead is further divergence not convergence. Remember Apple's brilliant iPod is a divergence device.
While Ries refuses to be committed to a number, another skeptic, analyst Shaw Wu, predicted 3.5 million phones from October 2007 to September 2008.

Ries’ skepticism seems rooted in the belief that the iPhone will die with all other convergence devices:
[T]he iPhone will end up in the convergence scrap heap along with the ROKR, N-Gage, WebTv and many others.
I agree with my (iPhone research paper co-author) Mike Mace that the iPhone will succeed because it is primarily an entertainment device, avoiding the convergence zone of death that Ries alludes to.

Also among the iPhone cynics is Steve Ballmer, as interviewed by USA Today:
Q: People get passionate when Apple comes out with something new — the iPhone; of course, the iPod. Is that something that you'd want them to feel about Microsoft?

Ballmer: It's sort of a funny question. Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody. ...

There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.
I see a couple of problems with Ballmer’s claims. First, despite Ballmer’s innuendo about the small Mac market share, it’s Microsoft that’s the niche vendor in MP3 players.

Second, Microsoft will never get 70% of the mobile phone market — Nokia and the Chinese won’t let them. Right now MacNN notes that Windows Mobile has less than 5% of the smartphone market (or about 0.35% of the overall market), so if Apple hits its targets, within two years it will have passed Microsoft.

My prediction: the iPhone ramp-up is going to be slow, due to manufacturing problems and the Cingular exclusive, and thus only sell about 1.5 million phones in 2007. Over time, they will solve this with model proliferation beyond Cingular and eventually tap overseas markets. Therefore, I believe Apple will beat its (deliberately understated) prediction of 10 million phones sold for June 2007 - December 2008. If so, Apple’s role in mobile phones would be dwarfed by the big four (Nokia, Motorola, Samsung, Sony Ericsson) but more influential than Microsoft.

Footnote: Laura Ries is a branding expert who is the ultimate brand extension — an attempt by famed marketing expert Al Ries to extend his brand to the next generation. Al Ries is the co-author of two of the most influential marketing books of the 1980s: the 1986 Marketing Warfare (which defined the concept of guerilla marketing) and the 1981 Positioning (which introduced the term to most readers for the first time). The latter ideas have been elaborated by others, but the former remains a classic (up there with Sun Tzu and von Clausewitz).

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