New Product Spotlight
Apple iPhone - The Apple iPhone is a multimedia/Internet-enabled phone first announced by Apple CEO Steve Jobs during the keynote address at the Macworld Conference & Expo on January 9, 2007. The iPhone has a scheduled U.S. release date of June 2007, (later outside the U.S.) and will be available from the Apple Store and from Cingular Wireless (now AT&T). iPhone has a planned launch price of US $499 for the 4 GB model and $599 for the 8 GB model, based on a two-year service contract with one service provider (AT&T). To some, the iPhone is a revolutionary concept that effortlessly fuses several existing technologies into a product of unparalleled beauty. To others, it is just another smart phone, perhaps a bit nicer looking.
iPhone has been positioned as a cellular phone that also provides Internet access and stores and plays music and videos. Interestingly, iPhone is bigger than the usual smart phones available in the market but is designed for mobile Internet, for which it is not principally positioned. iPhone is significantly bigger than iPod Nano and iPod Shuffle and is comparable to the size of iPod Video. So, you may ask yourself, why would I use the iPhone for calling people when I can buy a very sleek comparable phone at a much cheaper price, and why should I use iPhone for listening to music, when iPods do a great job already? As a listener of music “on-the-go”, why should I carry the extra baggage of voice and mobile Internet? These items leave the door open to many questions concerning the usage of the iPhone and the limitations of using only one service provider. Some consumers want to get the latest and coolest cell phones on the market. However, the final verdict on what the ultimate success and fate of the iPhone product will be is up to the consumer.
It is Markitecture’s belief that all companies should have a rigorous approach to launching new products. A disciplined new product development process together with a cumulative set of marketing research techniques can quickly and effectively optimize your new product feature set and answer the trade-offs that consumers are willing to make. The diagnostics obtained from such research can be used to help identify the ideal combination of the product features and its optimal price point to maximize a product’s margin or profitability potential.

Recently, analysts from Bank of America and Morgan Stanley proclaimed a bright future for Apple’s latest device, predicting that despite the high price, the phone was positioned to steal share from many competitors and dominant the high-end phone market.

Unsure of the analysts’ assessments of the successful launch of the iPhone, Markitecture set out to shed light on Apple's entrance into the smartphone market. We surveyed a nationally representative sample of 1,300 people who both owned their own cell phone and were responsible for the monthly payments. Almost three-quarters (73%) of respondents had some level of familiarity with the iPhone – admittedly high for a product not yet launched. However, when asked their likelihood of buying the iPhone within the next year, the average purchase intent of the respondents was 6%. In fact, two-thirds said that there was zero chance they would purchase the product.

Is there an opportunity to broaden the line with lower-price options? Could Apple have sacrificed some features in order to lower its price point yet retained the same level of trial? Did Apple make a mistake with its long exclusivity deal with Cingular/AT&T and depress trial? Only time will tell if history will repeat itself with the iPhone as what happened with the Newton, Apple’s first venture into the Smart Phone/PDA market, which largely ended in disaster.

To read the full study results and the specific details as to our assessment of the marketplace potential for the iPhone, please click here.

The good:
Looks great
480 x 320 touch screen display
Runs OSX and applications such as Safari and Google Maps
Good for web browsing
Measures 115mm x 61mm x 11.6mm
2 mega pixel camera

The not so good:
Costs $499 or $599
Tied to a Cingular contract for two years
Non-replaceable battery
Limited memory
No 3G

Takeaways:

• Explore consumer needs and wants through quantitative testing to ensure you know what product features should or should not be included
• Conduct conjoint analysis to identify the optimal product feature combinations and price point for highest potential profitability and ROI
• Utilize important feedback systems of actual customers interacting with the product (such as with in-home-use testing or ethnographic studies) to gather critical product feedback data and improvement ideas
• Leverage your consumer’s assessments, judgments and evaluations into your new product process, continually gathering and monitoring feedback as input for future product enhancement

If you would like your product suggestion to be highlighted in our next Blueprints Newsletter, send your ideas to: Internet site www.markitecture.com