iPhone buzz down as iPhone disinformation runs rampant

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iPhone stories are slightly lower today, tipping the scales at 19,346, down about 300 stories since yesterday. As we noted yesterday, most reporters seem to be taking a "We're got to take down this hype a few notches" approach now as they look for new angles to write about. This trend was most evident in an article on CNN Money written by Ben Charny of Dow Jones titled, Apple Must Act To Maintain iPhone Sales Momentum. This piece takes a "glass is half-empty approach" and decides that despite all the good press, Apple must be only one or two steps away from disaster:

Many consider the iPhone debut a success. However, with the early adapters and Apple enthusiasts among the early buyers, and concerns bubbling about the phone's network limitations, high price and potentially short battery life, some are wondering if Apple can maintain the momentum needed to achieve its ambitious sales goals.

Already, speculation is increasing about overseas models and next-generation iPhones. While such interest is generally good for Apple, too much focus on future versions could limit current sales. And maintaining sales momentum is important because, for every million iPhones sold, Apple profit is said to jump 2 cents per share.

"The iPhone had a great first weekend, but now the question is what is its staying power," said Bill Hughes, an analyst with In-Stat. "Its staying power is due to how many features they get right.

The article has a clear prescription to solve this theoretical problem: make the iPhone run on 3G networks, dramatically cut the price, and change the battery.

Even before the combination cellphone, digital entertainment player and Web surfing device went on sale June 29, Apple was facing pressure to create an iPhone that uses the fastest of cellular phone networks, thus creating a Web experience that is near the speed of a wired connection.

Citing unnamed sources, several news outlets have been reporting that Apple has already signed a pact to sell a faster version of the phone in Europe.

Also, the device's price tags of $500 and $600, depending on configuration, also must come down in order to attract more mainstream customers, and non-Apple computer users unfamiliar with the price premium attached to Apple products.

Analysts at Gartner Inc. say a lower-priced device is needed within nine months to keep the momentum going.

Here, too, Apple appears to be taking steps. The company filed a patent early last week for a version of the iPhone that could sell for under $300, and Goldman Sachs analysts said the device may be out by year's end.

To be sure, there are doubters out there. In-Stat's Hughes believes that, despite the changes Apple has made to the device, disappointments over battery life may be a key momentum killer.

"Battery life may be one of those momentum killing clinkers," he said.

Now let's get this straight. Assuming sales figures are what we and other financial analysts say they are, Apple just successfully presided over the largest and most successful consumer electronics launch in history as measured by dollars, pulling in somewhere north of $300 million the first weekend. Given what we know about Apple's costs, particularly their lack of advertising cost, it may also turn out to have been one of the most profitable launches in history as well. And so what's the prescription? Add power-sucking 3G service, cut the price so Apple doesn't make as much profit, and make the device more bulky to beef up the battery. I'm glad these guys aren't running Apple -- if they were, it would be Motorola.

Of course, anyone who has followed the iPhone saga knows that most of the reporters and analysts writing stories like this have never actually used or seen an iPhone (or for that matter actually tested how long the battery runs) and 2) are usually completely wrong because they just don't want to figure out something new. Need proof? Take a look at these stories that ran before the iPhone launch:

• Bloomberg.com: Why The iPhone Will Fail, written by Matthew Lynn on January 15.


• John Dvorak, who has written a number of articles claiming the iPhone would flop, going from Apple should pull the plug on the iPhone in March to Rethinking the iPhone in April to Shut Up About the iPhone, Already! in June.


• David Platt: Apple iPhone Debut to Flop, Product to Crash in Flames. This one was actually written just a week before the iPhone launch.


• Expensing the Enterprise iPhone and Why Generation One Products Generally Suck. This one came out just after the iPhone launch, and in a fit of non-sequiturism, analyst Rob Enderle slams the iPhone for the poor soft keyboard on his HTC Touch phone (which, unlike the iPhone, he claims to be "enterprise-ready").

Given how wrong all these pundits were about the iPhone before its launch, why should any of us believe them now?


Full disclosure: the author owns Apple stock at the time of writing.

Technorati Tags: Apple, Battery life, Gartner, iPhone, iPhone Buzz Index, John Dvorak, Rob Enderle, Suckbusters