February 14, 2007   

I-Phone: Category killer or niche product?


José Ignacio Gafo Gómez-Zamalloa

Right now the 3GSM is taking place in Barcelona. The 3GSM is annual telecom event where new technologies and products are advanced, and the telecom gurus discuss about new trends. Many new technologies and products have been announced. However, ins spite of not being officially invited, one of the key guests have been the I-Phone. Everybody speaks about it!

Steve Jobs is a very interesting marketer to me. I recall a conversation I had with one of my colleagues where she pointed out that this man has repeteadly broken many well-known marketing rules. She commented for instance the marketing stategy followed with the i-pod and i-tunes. What you usually do is to sell the hardware very cheap (even under cost) and then make money with the consumables (where you charge a big margin). But Mr Jobs is taking a diiferent apporach and making money both with the i-pod and the i-tunes. Marketing rule broken!

In my opinion, one of the key things that define Apple and Mr Jobs is what their logo claims "Think different!". Even if you have to break some marketing rules.

In the last forum I held with my Global MBA stuedents, we discussed about this. I asked them if Mr jobs had done the right thing announcing six months in advance the launching of the i-phone at the Mac World. Have they broken another markeiting rule by creating expectations they are not going to be up to? No clear conclusion came from our forum.

On the one hand, we admitted the publicity they got with the announcement and how the product was all the sudden known across the World. Millions of dollars for free in advertising, a demand generation for the product (in countries like Japan some people has put orders whenever the product is ready), and even some fake i-phones already available in China. Moreover, the price of Apple´s shares increased.

So far so good. But, was it the right decision? Only time will tell. Sure they got positive things, but cons have to be considered. The main ones to me are the expectations it has created and the coming reaction from competitors. Mr Jobs bluntly said he had created a new product category. However, if you analyse carefully the product you will realize that it has some strong technical limitations (at least if we take what has been announced), and not so many differences with announced products from LG and Samsung. And regarding competition, be sure that the big players will be preparing a welcome pack for the time it is launched.

Price will not help even if it is subsidized by telecoms, so my guess is that it will become a very successful niche product but not the category killer it is supposed to be.

Let´s see what happens during this year . The branding, customer loyalty and annouced innovations might turn me wrong!

Ignacio Gafo



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Posted on 14 February 2007 in International Marketing

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