The Press, July 2007

Technology genius Steve Jobs of Apple looks to have another hit on his hands with the recent announcement of the iPhone. Success seems almost assured.

However, some marketers have questioned whether it will dominate mobile telephony the way the iPod has triumphed in the music player market.

People queued up for five days just to get the chance to buy an iPhone when it was released in New York, and 700,000 units were reportedly sold in the first week.

Apple's stock has risen on the launch and analysts estimate it could deliver profit margins of more than 55 per cent for the company. All this for a fancy case, a few wires and clever circuit boards?

"Much like the Western calendar marks time from before and after Jesus Christ, ... I am certain that the mobile telecoms world will count its time in two Eras. The Era BI: time Before the iPhone, and the ERA AI: time After the iPhone," mobile telephony expert Tomi Ahonen was quoted as saying on gadget website

The claim is often made about new developments, especially in the technology area, that they will render all before them obsolete. But how often does that stand up to scrutiny?

An interesting example is the cinema. People have been going to movies for more than 100 years, although its certain disappearance has been forecast a number of times.

When television became commercially available in the 1950s, many thought the movies would decline. I still remember clearly the hand wringing in 1970s over the introduction of video players and video stores, and how the cinema industry would suffer and probably wither and die.

Cinema had to change and adapt, but it has continued to grow, even while video players (now replaced by DVD players) have become ubiquitous.

Why do these seemingly plausible predictions often not come true? Why do new technologies or sexy convergence products like the iPhone not always gain the market share expected?

It helps to look at these developments from a marketing perspective - from the customers' perspective.

Video was going to destroy cinema because it was a replacement - they are both methods of presenting content in the form of a film. They do the same thing. However, from the customer's point of view the purpose of each is quite different.

While getting a video (or more likely a DVD) might be a way of filling in a quiet night at home, the cinema is a communal experience that you share with friends and others. It is a richer, more intense way of experiencing a movie. A DVD is a cheaper and more convenient alternative.

Those different purposes are what drives adoptions of products, and why many replacement products aren't that at all. From the customers' perspective the VCR wasn't a replacement product for viewing movies, it was just an expansion of choice.

There are hundreds of examples such as computers, cars or home theatre where new products have not replaced the existing ones, but added a new category to the consumer's experience.

This newspaper is an example. At the advent of the internet many confident predictions were made that it would put newspapers out of business. Having your news delivered over the internet was faster, cheaper, more flexible and had less advertising. It was a no-brainer.

However, as far as I can see The Press subscriber base continues to grow, even while more and more consumers gather their news from the internet. From the customers' perspective the internet offers a complementary choice - it is a quick and easy way to be updated, but it doesn't provide the same experience as sitting down with a cup of coffee and reading your newspaper in the morning sun.

So will the iPhone change the world? Marketing writer and consultant Laura Ries is not sold on the iPhone, according to an article on her blog.

"It is not really the 'Jesus' phone, the iPhone is just another smartphone. With the iPhone, Apple has definitely produced the best, most fantastic smartphone ever. But will the iPhone dominate the telecom market the way the iPod has dominated the music market? I doubt it ... because I believe consumers prefer 'better'. A convergence product like the iPhone can only offer up 'good enough.'"

Ries argues strongly against conventional wisdom that "convergence products" like the Apple iPhone that combine or replace the functions of other products, are destined for success. Too often they are a compromise - not the best at anything.

Of course the iPhone will be successful to some degree, but will it change the face of mobile telephony like the iPod has changed the way people listen to music?

It is not enough that it is new technology, it must also fill a customer's need in a better way.

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