The iPod + iPhone Year in Review 2007
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As we noted last year, it was all but a given that Apple would release a device called “iPhone” in 2007, and that it would either be a nano-like music player and cell phone, or an iPod-sized phone, PDA, and video player—the only questions were whether Apple would fall into an overpricing trap, or leave out some big, important feature. Thankfully, Apple did almost everything right with the first iPhone, blending a truly solid cell phone with e-mail, web browsing, camera, audio and video features that appealed on design and features to millions of people, and the results have been impressive: the company’s first ever cell phone has suddenly become a hot commodity, selling a million units in the first three months of availability and generating worldwide demand despite far more limited supply. Apple’s masterful handling of a massive media campaign built global awareness and interest for a hitherto unknown and untested product; had it been available worldwide on the same date, it would unquestionably have been even more successful than it was.
The iPhone’s January, 2007 announcement and late June, 2007 launch had their consequences, though. Having broken with past—and well-founded—announcement/release strategies, Apple’s six-months-early revelation of iPhone gave competitors plenty of opportunities to parrot many of the device’s new aesthetic and marketing angles, and allowed potential buyers to fret for extended periods over the too-high $499 and $599 prices, expensive cell phone contracts, and other concerns that would ultimately delay or prevent their purchases. Consequently, the company quickly sold its first 300,000 some units to die-hard fans, but found a major, rapid price adjustment necessary to spur further U.S. sales. A $200 price drop had the desired effect, but also put off the iPhone’s earliest adopters, leading many to wonder aloud whether they’d line up again to be first for Apple’s subsequent product launches. Somewhat ironically, however, fans outside the United States have been willing to pay much higher prices for the iPhone, particularly if it’s unlocked for compatibility with any carriers; Apple’s decision to partner with AT&T, O2, Orange, and T-Mobile for specific territories has brought the Cupertino company additional revenues, but also limited the hardware’s proliferation. Hackers became fixated on unlocking the iPhone immediately upon its release, succeeded quickly, and worked on new applications without Apple’s permission. Apple felt compelled to break the unlock hacks and unsanctioned applications, leading to a cyclical software updating and “jailbreaking” process that the company has termed a cat and mouse game; it has promised to provide a true software development kit in early 2008.
Another serious consequence of the six-month iPhone launch was a surprising lull in other Apple product releases. Unlike past years, no new iPods or Apple-developed accessories appeared during the first half of 2007—iPod shuffle colors were the only exception—and the company was even forced to delay the release of its Leopard operating system while its engineers worked on finishing up the iPhone’s software. Simultaneously, questions were raised over whether iPhones would work properly with iPod accessories, and Apple provided little information to clue developers in. Consequently, while sales of late 2006 iPod hardware continued, users and vendors alike became concerned about whether it was a smart time to buy or even continue manufacturing add-ons, and accessory sales began to slow down.
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