Why Apple Can Sell 600,000 iPhones In One Day

Wednesday Jun 16th 2010 by Mike Elgan
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A few basic truths that seem to elude the other big smartphone vendors.

The Apple iPhone 4 became available for pre-order yesterday. Apple sold 600,000 of them in one day.

The buying frenzy was so intense that AT&T servers crashed repeatedly, and the company was forced to stop taking orders. At this writing, pre-orders are available only via Best Buy.

In Japan, long lines formed in the pouring rain outside Softbank carrier stores for in-person iPhone 4 pre-orders. The company's Web site was overwhelmed by orders, and at press time accessibility to the site was limited. Softbank president Masayoshi Son apologized on Twitter for the glitches.

Let's pause for a moment and consider what that means. People ordered the iPhone 4 without having ever even seen it.

How does Apple do it? And why can't any other handset vendor boast of such incredibly high pre-orders for new devices?

After all, there are many other great phones and great companies with loyal fan bases.

The reason: There is only one iPhone.

Sure, there's a black one and a white one, a big-storage one and a small-storage one, a new one and an old one. It feels like there's a little choice there.

But we're talking about consumer confidence. We pre-order new iPhones because we feel familiarity. How does Apple make us feel familiar with something we've never seen?

We don't expect the new iPhone to be fundamentally different from the old one, only qualitatively better. Sure, there are new features in the iPhone 4, such as a front-facing camera and chat software.

But for the most part, it's the same approach, but improved. It's the same screen, but higher resolution. The icons and apps are familiar. The accelerometer has been replaced by a gyroscope, but from a user point of view motion detection is still there but higher quality.

The new iPhone is still an iPhone. And everybody knows that the iPhone is the only phone Apple makes.

By contrast, RIM offers six distinct lines, with multiple models per line.

HTC offers 29 handset models on its web site.

Microsoft showcases 54 Windows Mobile or Windows Phone handsets.

How many Android phones are there? I'm not sure, but LG alone says they plan to launch 20 Android handsets this year alone. There are probably more than 60 Android phones available.

The way Apple approaches handset design, and the way nearly all its competitors do, are opposites.

Apple proceeds as if there is one perfect handset, and they're constantly working toward that perfection as available technologies allow.

They don't appear to believe that different kinds of people need different kinds of phones. Businesspeople, teenagers, soccer moms, gadget freaks -- everybody has the same needs when it comes to a cell phone.

The other handset vendors proceed as if they have no idea what the ideal handset is -- or believe there is no one ideal. Their whole approach is to target each market segment narrowly. Here's a business phone. Here's a business phone for power users. Here's a consumer phone. Here's a phone for bonehead consumers.

There's something to be said for choice. But a scattershot approach to handset design comes with the following seven disadvantages:

1. Shelf space.

When you walk in to the AT&T store, you notice the iPhone displays above all else. One reason is that Apple is devoting all allotted space on a single phone. Competitors have a lot of shelf space, too, but divided among many phones, which get lost in the visual noise.

2. Name recognition.

Everybody's heard of the iPhone. It gets mentioned in movies, TV shows, late-night talk shows and radio programs. Because Apple has just one model name, that name seeps into the culture and stays there. It's a safe cultural reference. (What, you're not going to pre-order the Samsung Corby? Of course not -- nobody's ever heard of it.)

3. Hardware compatibility.

Until the iPhone 4, iPhones were all very similar in form factor. That fact encourages an enormous market in third-party cases, dongles, microphones, and other peripherals and accessories, which improves the user experience.

Many smaller makers of such products have to choose which platform to focus limited resources on. Supporting iPhone is the safest bet because there's only one of them, and it sells in massively high numbers.

Next Page: iPhone software and design...

4. Software compatibility.

Apple's singular approach to handset design is extraordinarily encouraging to software developers. They know that one app will be compatible with millions of devices.

On Android, on the other hand, there is such a massive proliferation of versions, screen sizes and underlying technologies that enormous effort is required to take advantage of Android's huge user numbers.

5. Manufacturing efficiency.

Multiple models requires multiple factory re-toolings, multiple packaging sets, multiple user manuals, multiple everything. The end result is that iPhones tend to be more profitable than other phones, because once everything is set up, Apple's manufacturing partners just churn them out. Economies of scale lowers costs.

6. Designer focus.

Handset companies all have designer teams tasked with conjuring up new models. At the big Asian giants like Samsung, LG and HTC, the energies of these teams are scattered and fragmented across dozens of lines, and wildly varying approaches to creating great handsets.

At Apple, there is always only one next phone for all designers to focus on. That may contribute to Apple's superior design.

7. Consumer clarity.

And finally, it's a well-understood phenomenon that most consumers feel some degree of purchase paralysis when confronted by overwhelming choice. Should I get this one or that one? What if I get the wrong one? What if I buy the latest awesome Android phone, and a better one is announced next week?

Apple's single current iPhone model and fairly predictable upgrade cycle eliminates choice-induced purchase paralysis.

Whether Apple's approach -- or Apple's one phone -- is right for you individually is your own judgment to make. And, no, I don't expect Apple's competitors to suddenly achieve enlightenment and focus all energies on a single handset design.

But I also don't expect any company other than Apple to sell 600,000 handsets in a single day, sight-unseen.

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