Saturday, upon seeing the line outside my neighborhood Apple Store, I knew something must be up. The new iPhone 3G S was on sale. The Washington Post reports good news:
Evidently, a faster iPhone is enough to get consumers to reach for their wallets again. Apple announced yesterday that it sold 1 million units of its latest iPhone over the weekend.
The article celebrates the fact that apparently nothing can stand in the way of the iPhone, not even a deep recession. I have a few observations that might dampen the news a bit.
First, despite the sales numbers exceeding expectations, it's ridiculous to think that the recession had no effect on sales. With unemployment probably approaching 10% at this point in June, there's a large portion of the market that probably couldn't splurge on a luxury item like an iPhone since they were jobless. But maybe I'm wrong: can't you just see people cashing their unemployment checks and running to the Apple Store, crisp cash in hand? If we were not in such a bad recession, I would imagine that the sales would be even higher. Maybe they would have sold 2 or 3 million units.
Second, Apple has a cult following. Some consumers out there are so enamored with Apple products like the iPhone that they would practically spend the last penny in their bank account to ensure they have the latest, most beautifully designed piece of Apple technology. Maybe that's an exaggeration, but they'd certainly make a purchase in a recession. They'd also buy it as soon as possible -- like in the first weekend it's out. Subsequent sales numbers might not hold up for as long as last year's release once the non-obsessed public started buying.
Third, I wonder how the iPhone will fare without Steve Jobs. As Megan noted yesterday, Apple lovers are hoping and praying he pulls through his health problems. Yet, with such strong sales of a new model with little additional innovation, some might say that the iPhone is on cruise control. The only really significant change between this and the prior iPhone model released a year ago is speed. That's why, despite being something an unabashed iPhonophile, I didn't jump at shelling out $300 for the new model. Of course, the hand of Steve Jobs was crucial in the original concept, so I'll be surprised if investors take the good news of first weekend iPhone sales to overshadow the bad news of his health.
"But maybe I'm wrong: can't you just see people cashing their unemployment checks and running to the Apple Store, crisp cash in hand?"
I have three friends who were laid off and between tax changes, unemployment, severence, putting student loans on forbarence, and working the 15-20 hours a week you can work and still collect - they have about the same or maybe a little more than when they worked.
I'm thinking your typical iPhone users - college educated, 22-35, single or newly married, if they didn't buy too much house or car isn't really hurting that bad.
It's only 200 bucks. Visit a Home Depot garden department on a weekend and you'll see many people spending that on annual flowers for planting.
There's a big difference in buyer resistance between a 200 dollar gadget and an expensive durable like a $22,000 car.
As for monthly service charges, it seems that people don't care. Just look at how many people are constantly yapping and texting on their phone.
Who said that people don’t have money!? Lots of people, knowing that they might loose a job are piling money up in their bank accounts. People don’t want to waste their money would be more correct, but something as helpful and fun as iPhone is never a waste.
Igor Vishnevskiy
Founder of http://www.worldcheaper.com - Online Airfare Consolidator
I don't quite understand why the price of the iPhone is such a big deal. I've owned half a dozen Blackberry phones before I switched to the iPhone, and each one ran me $199 or more each time with a new contract. There are Nokia and Samsung models which run just as expensive from AT&T. Considering what you're getting with an iPhone ... phone, internet, text, camera, iPod, GPS, PDA, games, and thousands of apps you can download, it's easy to see why those lines in front of the Apple Store are so long. I'm even paying LESS now for my phone + data service than I was with my Blackberry. Recession or not, consumers aren't stupid. They know a good product that's worth investing in. And as ed put it, you can't compare buying a $200 gadget to a $22,000 car.
The iPhones aren't that expensive (relatively speaking). It is clear to me that smart phones are going to be huge for quite a while. They are so multi purpose that they are a heck of a deal. The only thing I hate is that you are locked into a network contract. That bundling sucks and is anti-competitive.
I am going to develop some software for the Google Android but I understand why iPhone dominates the market. Don't know if it exists but other vendors of smart phone software should provide interface libraries that make it easy to rebuild iPhone software applications on other smart phone operating systems.
The iPhone 3G isn't defying recession economics, it's the very definition of it. The same way people bought radios and automobiles in the 30s, or microwave ovens in the 70s.
When you compare what an iPhone can do compared to a full blown computer, or TV, or stereo, or entertainment system, it's an extraordinary value. It's not a luxury purchase, it's a value deal.