What’s made the iPhone successful?
The short answer is Ease of Use. The user interface is second to none not only in the mobile phone market but I would venture to say it’s better than almost any other portable electronic device. But this really is a multi-faceted question that deserves more than a simple answer.
The adoption rate has been very successful because “it just works”. My luddite-mother-in-law was able to use the phone without much more than an introduction on how the multi-touch system works. Being a true geek, I usually get bored with new devices after a month or two. But that’s not the case with the iPhone because there are so many cool apps. The fact that Apple opened its platform to 3rd party developers has proven to be a real boon as developers have built and customers have adopted custom software designed to do anything and everything. As Apple says, “there’s an app for that”.
That being said, I don’t think consumer adoption rate should be the only factor when considering its success. Apple didn’t make the iPhone just to make people happy, they made it to make money. There are a few things that have led to significant profits from Apple. The first is the total integration between iTunes and the iPhone. I can be on the road and buy a song, an application, or an audio book to keep me entertained. This represents millions of dollars in ongoing revenue.
The second was the structure of the relationship with AT&T. Apple has been able to keep the price high as a result of the exclusive contract even though AT&T's service level is TERRIBLE. AT&T gives a portion of the monthly service revenue to Apple which is higher than it would have been in a non-exclusive agreement. In addition, had it been available to other networks, there would have been considerable pricing pressure on the device itself to compete for subscribers. I believe that when the exclusive contract expires, Apple will come out with a newer, cooler version of the iPhone (maybe one that does video conferencing) that will be the envy of all current iPhone users and non-iphone users alike. I would expect Apple to sell the new device through a single exclusive carrier with a significant premium attached to it while allowing all carriers to offer the 3G iPhone.
