Another great story in the ongoing saga of unlocked iPhones. Really speaks to one of my "5 Secrets of Apple Marketing" that I speak about in my free eBook. On one hand, Apple truly does want to empower early adopters of the iPhone, using them to spread the Apple gospel. It is important to get the early adopters to show their friends, family and business contacts just how amazing this phone really is. (After all, there isn’t an Apple or AT&T store everwhere) By a large margin, that strategy is working as the iPhone is setting sales records for a new consumer electronics device. But Apple is also losing out on service revenue it assumed it would generate from the AT&T network every time some uses an unlocked iPhone.
You can see how urgent it is to prevent people from unlocking the phone (lost revenue) but at the same time you can sense how important it is for Apple to generate marketing lift to stimulate sales (they still have about 6 million iPhones to sell before the end of the year to hit their targets.)
What do you think? Is Apple’s strategy working?
Traditional Apple works alone. They haven’t had to work with another company like AT&T when they made their Mac OS or their iPods or iTunes. Compromise was a must with iPhones because they needed a carrier. And when you compromise, you can’t have everything…at least until the contract runs out. The fact that the iPhone is selling like hot cakes means it’s working, even though it may not be exactly as planned.
Even if Apple doesn’t care if the iPhone is unlocked for use outside of the AT&T network they have to at least give the impression that they do. After all there is some sort of contract the iPhone is exclusive to a single cell service provider.
As to installing software on the iPhone. Suppose some jerk writes some malware disguised as something benign, but “must have” for iPhone users. The iPhone gets a bad rap for being a security problem. Installing Apple sanctioned software via iTunes at least gives some control over the problem of the malware.
Anyway, I think that Apple knows exactly what they are doing, you can’t buy publicity like this.
The 10 million phones sold plan was for phones sold in 2008 calendar year. As of January 1, 2008 Apple needs to sell 10 million iPhones (only phones sold during the 2008 calendar year count towards Steve Jobs prediction / goal).
Check out the keynote if you don’t believe me.
I wonder why Apple which had only the possibility of developing web applications by third party and no resident application development capabilities for the iPhone. This was when iPhone was launched and we very well know that the iPhone SDK release is now around the corner. This SDK should help other write applications to iPhone. Not sure if this SDK move is well within their strategy or it is a move to combat the hiccups created through unlocked phones.
In either case, I think phones without plans will help propel more sales but the flip side will be the cut that Apple gets from every 2 year AT&T contract that people enroll in. If they feel that probably they have made what they intended to make and open up the phones to other service providers, it will be good. The other side is not sure how AT&T will look at this change of hearts.
I paid a $200 premium on Apple’s US retail price for a pre-11/11 1.1.1 phone that could be unlocked easily (I live in a small European country). I would happily have given the extra $200 to Apple (which would have covered the company’s revenues from a two-year contract with a service provider), and I’m sure that everyone else buying gray-market iPhones feels the same way. Given even higher premiums being paid for unlocked iPhones, I’m also fairly certain that demand is relatively price-insensitive, though many potential buyers are put off by the high transaction cost of unlocking the phone. In other words, Apple could have made more money had it maintained its original $600 price and offered it unlocked.
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