MANHASSET, N.Y. As the hype over Apple's iPhone reaches its climax with Friday's (June 29) launch, an industry consultant is posing a fundamental question: Can Apple sustain iPhone's initial momentum over the next four months in areas like volume, price and profitability?
The iPhone is "one of the few products whose brand affinity is more essential than its technology" at launch, said Al Delattre, the global managing director of Accenture's electronics and high technology business practice. Indeed, "the loyal Apple community, techno-geeks and those who identify technology as fashion" will ensure that the launch succeeds.
But Delattre said there is a big difference between the proven performance of the iPod and the yet-untested promise of the iPhone.
Apple's iPod was launched when digital music downloads were still illegal, and the portable digital music player market was yet to be established. IPod's iconic product status allowed Apple to become "a market definer," explained Delattre.
With the iPhone, Apple is making "a full frontal assault" on the mobile phone market, which is "brutally competitive, very advanced, occupied and established," he said. "It's a big bet."
So far, media reviews of iPhone, based on four models pre-released by Apple, have been positive. Reviewers have praised its sleek look and feel. But Delattre cautioned that iPhone's success in the mass market still hinges on a number of mundane factors: durability of the hardware, network performance, quality of the service and how well applications run.
"I would look [out] 30 days, 60 days and 120 days after the iPhone launch," Delattre said in an interview. After one month, he said, the market will know whether the device really works. "We would find out if there are any fundamental glitches in the device." At 60 days, "We would know if iPhone is still selling well. But more importantly, we would find out how many of them are coming back to stores as 'broken'," he said.
"Portable devices can get broken," he explained. "Many consumers could return productseven in perfect conditionbecause they couldn't figure out how to use it."
At 120 days, "we would know the market price, profit margin, whether volume is still there and what strategies Apple may have in enhancing the product lineup."
Unlike the launch of the iPod, the iPhone will also endure intense scrutiny from bloggers and creative "YouTubers," Delattre said. If they find flaws, critics will spread the word far and wide.
Accenture recently completed a research report that surveyed 700 consumer electronics companies including Apple. Accenture identified two categories of companies"market definers" and "value-scaled players." Apple and Research In Motion (RIM) were the only two companies rated as "market definers."
Noting that Accenture's research covered the period between 1999 and 2006, when both Apple's iPod and RIM's Blackberry were runaway hits, Delattre added: "We haven't seen any company yet that has been able to sustain its high performance."