Unknown to most North American country consumers, a top quality mobile data and Internet service in Japan called i-Mode has been highly successful and impressive in that country for the past decade. Unfortunately, mobile data services in North America lag behind those in many European and Asian countries. However, the situation changed rapidly with the iPhone company mobile phone launched in the United States of America (USA) in June 2007. Consumers lined up for days for the chance to buy one, and over 500,000 units were sold in the first weekend. Since that time, over 42 million iPhones have been sold, making it arguably one of the most successful mobile phone products ever launched. What is it that makes the iPhone so successful? In this paper we define a set of success criteria to examine the success of the iPhone and propose a comprehensive success model. Success models can be used by both academics and practitioners to understand the reasons why, and ways to ensure, mobile data and commerce services are successful.
Introduction
When the Apple iPhone mobile company was announced in January 2007, the response was overwhelming. Within two months of the announcement, the search term ‘iPhone’ received more than 60 million web page references in Google. When the iPhone finally launched in June 2007, consumers lined up for days for the chance to buy another 500,000 units sold in the first weekend. Since that time, millions of iPhones company mobile phones have been sold, making it arguably one of the most successful mobile phone products ever launched in whole world. Why has the iPhone been so successful? The main purpose of this paper is to provide all total types of evidences showing the factors that have contributed to the success and the lessons that can be learned from the iPhone company mobile phone. The remaining work, purpose of this paper is organized as follows. Section II provides the criteria used to determine the success of the iPhone, as well as support for the claim that the iPhone can be considered a success. Section III details the success models that have been identified as contributing to the iPhone’s successes. Section IV provides lessons learned from the iPhone company mobile phones launch and subsequent strategies and tactics. Section V outlines the contributions of this research to academics and practitioners as well as research limitations and future research directions.
Evaluation and verification of success
To determine whether the iPhone is successful, a set of ‘success’ criteria was developed. These success criteria are based on an extensive literature review as well as Internet searches. Success criteria are market size, share and growth rates, average revenue per user (ARPU) and churn rates and content/services, as well as consumer satisfaction and mobile usage.
A. Market size, share and growth rate
In the 30 months from its launch in July 2007 to December 2009, Apple sold more than 42 million iPhone units. This translates into a compound annual growth rate (CAGR) of approximately 48%. Analysts had predicted anywhere between 10 to 45 million iPhone sales in 2009, a number that Apple met when they sold about 25 million iPhones that year. The iPhone mobile phone company has gained most of strong market share since its launch, from 4% market share in July 2007 to 30% in September 2009. This represents a market share CAGR of 145% over a 27-month period compared to 2% for Research in Motion (RIM). Perhaps the greater indicator of iPhone success is consumer intent to purchase. While the strategies and intent to buy is cyclical (based on expected new phone releases), a recent September 2009 survey shows that 36% of people in whole world planning to buy a smartphone in the next 90 days plan to buy an iPhone versus 27% for RIM. Were making plans. Additionally, the iPhone is making gains among business users. Based on an August 2008 survey of technology professionals, 17% indicated intentions to purchase iPhones, up from 13% in May 2008. For businesses with fewer than 500 employees, 34% reported using iPhones compared to 38% using RIM, indicating that the iPhone is making inroads among business users. Finally, it is important to look at market shares and intentions to switch to AT&T, the wireless carrier that provides iPhone services in the US. From July 2007 (the launch of the iPhone) to December 2008, AT&T’s market share increased from 28% to 31%, while Verizon gained only 1% over the same time period. Since the iPhone’s announcement in January 2007, AT&T has ranked as the carrier that the most consumers indicated they planned to switch to the iPhone, a trend with 33% of survey respondents choosing AT&T. Indicated a jump of only 24% for&T vs. Verizon. Thus iPhone can be considered successful from the point of view of market size, share and growth.
B. ARPU and Churn Rates
By the way, the ARPU (Average Revenue Per User) allows tracking the revenue gained per license or user by companies and thus seeing the different-revenue sources and growth. It is the way that enterprises can evaluate their outcomes, fine-tune their pricing models, and find out the money-spinning customer segments, hence, to be able to make clear-cut strategic decisions that would ultimately result in increased profits and clients’ retention. Churn rate refers to the proportion of contractual customers or subscribers (commonly called postpaid) who leave a supplier during a certain time period. Both are most and commonly used success indicators in the wireless telecommunications industry in whole world. AT&T reported wireless fourth quarter (4Q) 2009 postpaid ARPU of $61.13, an increase of 2.6% over 4Q 2008. Postpaid data ARPU was $19.16, up 17.5% over the same period, most of which can be attributed to iPhone customers. AT&T reported that iPhone subscriber ARPU was approximately 60% higher than the average subscriber, with a significantly lower churn rate than the total AT&T subscriber base. Postpaid churn fell to 1.19%, marking AT&T’s sixth consecutive quarterly period of low churn, a trend most likely attributable to the iPhone. From an ARPU and churn perspective, the iPhone can be considered a success.
C. Content/Services
The iPhone is not just a phone, as is evident from the vast amount of content and services available. Apple opened its App Store (distributing applications for the iPhone) in July 2008. It was estimated that Apple sold approximately $1 million each day during its first month of operation. By December 2008, it was estimated that 300 million software applications had been downloaded, with Apple revenues totaling $45 million. As of January 2010, Apple reported that more than 3 billion applications had been downloaded from the App Store. This volume of applications was achieved in just 18 months. The Apple App Store is also recognized by analysts as a top mobile application source. In recent rankings, the Apple App Store scored 90% in time-to-market, attracting developers, device adoption/rollout, interface/user experience, number/diversity and appeal of apps. This can be compared to other mobile marketplaces that only score between 30% to 70%. The main success of the App Store is clearly part of the success of the iPhone mobile company.
D. Consumer Satisfaction
Consumer satisfaction is rated very high among early buyers of the iPhone. A September 2009 survey indicated that 74% of iPhone buyers are “very satisfied” (compared to 43% of RIM buyers). Given that iPhone wireless services are provided by AT&T, it is also important to look at consumer satisfaction statistics for AT&T. While only 31% of AT&T customers gave a “very satisfied” rating (50% for Verizon), more indicate they would switch to AT&T. It can be speculated that the iPhone compensates for the low AT&T customer satisfaction figures, thus indicating the success of the iPhone.
E. Mobile Usage
The sales, market share, growth, and other data provided are useful for determining the success of the iPhone, but what about actual usage of the iPhone? If it is being used only for games, music and voice communication, can it be considered successful from a mobile data point of view? iPhone users are far more likely than other smartphone users to use mobile data services, according to data from mobile research organization M:Metrics. Additionally, Metrics cited data that showed that 85.9% of iPhone customers in the US had used the device to go online in its first three months of use. This data shows that the iPhone mobile company phone is successful as a mobile data interaction device, more so than other smartphone products in whole world.
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