June 28, 2007

· Economics · Internet · IT

I was able to pick up an iPhone early through a local contact at Apple, and I have to say it’s really something. No of course I wasn’t able to do that—who do you think I am? Besides, I already have a phone on a relatively new contract. But I was in the Campus Bookstore here at the U of A and, while briefly down in the computer section, I heard store employees field two calls from people asking whether it would be possible to buy an iPhone there tomorrow, and whether there would be an educational discount on them. The guy in the store replied with more than a trace of sadness that they weren’t carrying the phone because it was only available at Apple Stores and AT&T outlets. He didn’t know about the educational discount. I was only there for about five minutes and clearly these weren’t the first two calls they’d had about this today.

I won’t be buying one anytime soon but, like I said before, it seems to me that the iPhone is going to be a success for Apple, and will probably provide a large kick in the ass to other cellphone manufacturers in the process. Criticism of the iPhone—and general backlash against the widespred interest amongst consumers—has been brewing for some time now. John Gruber has been keeping track of some examples.

Having read a bunch of the iPhone Naysayers, I’m struck by how much they miss the point of what Apple is trying to do with the device (in addition, I find myself wondering what the qualifications for becoming an IT Industry Analyst are, exactly).

Skepticism about the phone is perfectly reasonable. It’s being marketed as a revolutionary device, and they don’t come along that often. What about the battery? What about the stupid AT&T network? Will it scratch? Will I be able to type on it? Is it way too expensive? Is it really all that different from my current phone? All reasonable questions. But much of the criticism I’ve seen seems driven by little more than sour grapes at the possibility that Apple could make something like this work as advertised, and deep irritation that a large group of consumers might be willing to pay for it if they did.

The tone and content of the criticism is much the same as it was for the introduction of the iPod, and before that (to a lesser degree) the iMac. It’s odd to see it persist, though, because the runaway success of the iPod kicked the legs out from under the standard Apple narrative. In this story, Apple made overpriced products that a small segment of the market was willing to pay for and to which they became cultishly devoted. Regular folks shied away from Apple’s higher prices and were indifferent to matters of design and usability. That stuff was for the effete, latte-drinking crowd. If Apple had gone under in 1995 or so, that would have been that. But the trouble with this story is that, just as you can now get a latte in every town in America, everyone in line at the coffeehouse has an iPod.

If Apple’s products are selling in huge quantities, the effete-elite line isn’t plausible anymore. This leaves the critics in an awkward place. A fallback position is that because there are other products on the market that do more (in functional terms) or are cheaper, consumers must just be too stupid to realize that they shouldn’t want what Apple is selling. But consumers never had any trouble not buying Apple products in the past when they didn’t want them. This leaves the argument that Apple’s success must be the effect of the Steve Jobs RDF on consumers. Explaining why this magic force has become so much stronger in recent years and yet only works for some of Apple’s products (e.g., the iPod) but not others (e.g., the Cube) is presumably left as an exercise for the reader. The idea that, just like the iPod, the iPhone may hit a sweet-spot of functionality, good industrial design and ease of use does not arise. This is odd, because clearly Apple have repeatedly being trying to hit this spot for years with different products—with mixed success—and to capture the most profitable end of the market when doing so. It’s not a difficult strategy to understand in the abstract, it’s just really hard to execute in practice. But even grasping it in principle seems beyond many of the “industry analysts” I keep seeing quoted in the papers.

Bonus Competitor Pushback Update: Sprint has just launched a “whyPhone” counter-publicity campaign emphasizing the iPhone’s limitations, as you might expect. The best line from the article: “Sprint spokesman Aaron Radelet … said Sprint has plenty of phones, and customers ‘do not need to wait in line to get them,’ apparently referring to the lines already forming outside Apple stores, although the device won’t be for sale until 6 p.m. Friday local time.” Or, to put it another way, Sprint has plenty of phones, and no-one is waiting in line to get them.

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I am Associate Professor of Sociology at Duke University. I’m affiliated with the Kenan Institute for Ethics, the Markets and Management Studies program, and the Duke Network Analysis Center.



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