iPhone as a Business Adventure

Here we have another surprise from Apple. On Wednesday, Steve Jobs announced that the company was cutting the price of the 8GB model by 33%, which makes a whopping $200. Thus, Apple's miracle device 10 weeks after its launch costs only $399.

Customers are angry and so are company's investors. How can this move be explained? The first idea that comes to mind is that Apple is not able to meet the forecasts and has taken more aggressive marketing action.

However, I see a different picture here. I strongly believe that in business succeed not the best products but those products which are accompanied by the the biggest buzz and hype. In our complicated world, marketing is something almost a mystical thing. Little marketing details can make dramatic difference. Let's notice a couple of things.

Have you noticed how many blogs, websites and shows are devoted to iPhone? I can't remember any other product with such a huge buzz as Apple's iPhone. I must say that Steve Jobs did the most marvelous job in this respect.

The deal was made with AT&T only. Boom, the phone is locked for any other carrier. Want an iPhone? You are welcome to grab one, come and subscribe to AT&T. Want to use the device with other carriers? No problem, do some hardware tweaking and the phone is unlocked. Don't want to deal with soldering? Oh, there are already at least a couple of different alternatives to unlock the phone at the software level. Had it be possible to use the phone with other carriers, that lucky guy would not have got a brand new car for his unlocking software and gazillion of bloggers would not have been able to write nice posts about this fact. How many blog posts, news articles and rumour has arisen about unlocking iPhone? Countless!!!

The phone doesn't have support for Java. Is it good or bad? After all Java game development industry is estimated to be a billion-dollar industry. But let's sacrifice ability to use Java software on iPhone to the hype and buzzword and as a side effect to stability of the device.

No, no and again no. We are still not able to sell as many iPhones as we would love to. What do we do next? Yes sure, let's cut the price by $200. Wait, you can buy many different cell phones under $200 and this guy is reducing the price by $200. What about those people who have paid original price? Good news for them, if they have not opened the phone they can take advantage of the Apple's refund policy.

But how did the investors react? They did exactly as expected. Apple's share prices dropped by more than 5% just overnight. That's bad but the action (price cut) leads the company to even more aggressive marketing campaign. At the same moment Apple introduces an array of new digital products.

All in all, I see that Apple is playing a risky but well thought out marketing game. Where will it lead? Oh, we only have to wait and see.

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