Did Apple just Osborne its iPhone Sales?

6
Posted July 31, 2012 by Patrick Kennedy in News

News recently is that Apple just announced a press event on 12 September 2012 which everyone thinks is going to be the big iPhone 5 launch among other products. I have to believe Apple just Osborned (past tense verb of Osborne for those wondering) their iPhone sales for the next month and a half (or longer.) For those wondering, Osborne Computer was a very prosperous computer firm in the early days of PCs and is known in the Silicon Valley as the example of why companies need to be careful pre-announcing their products.

First, being up-front I have a fairly negligible amount of Apple stock in the investment portfolio that I know about (you never know day to day positions of fund managers but I do know that I have a few shares.) I also use an iPod during workouts, an iPod in my car, an iPad and Macbook Air daily. Suffice to say, I like Apple products. With that being said, the Wall Street Journal’s AllThingsD reported recently that Apple is planning the September 12 event to announce, among other products, the iPhone 5. More or less, the world now knows, given Apple’s previous release cycles, that the iPhone 5 will be announced on 12 September and will be released sometime in the two weeks following that announcement.

This is nothing new for Apple, every year we have a similar pattern. The difference this year is that Apple actually has strong competition. Samsung is now #1 in the smartphone market, and the Samsung Galaxy S III has gotten rave reviews. Android phones get better every time Apple releases a new iPhone but this year may be different. I am in the market and recently looked at co-worker’s iPhone 4S and Samsung Galaxy S III models side by side along with my Motorola Atrix 4G which has a 4″ screen as the iPhone 5 is rumored to have. (For those wondering I am thinking of turning the Atrix 4G into a HTPC.) Realistically, the Samsung Galaxy S III (and specifically the screen and LTE) give it a huge advantage right now over what Apple has in the market, e.g. the iPhone 4S.

In two months, I might be able to get something competitive from Apple, then again, I like screen space. STH gets well over 15,000 spam comments monthly, and I travel a lot. My manual SPAM review occurs on my smartphone and believe me, that is much easier on a larger screen. Does that mean I would not buy another 4″ screen device even if the iPhone 5 came out with one as rumored? No way. If the iPhone 5 comes out, I will buy it off contract. Sure it is costly but I use my phone as much or more than any other device.

Osborne Logo

Here’s the catch. Up until last week I was considering getting the iPhone 4S and just selling it when I upgraded to the iPhone 5. As of today, I am ordering a Samsung Galaxy S III. If the iPhone has some jaw dropping amazing feature, I will switch, but there is no iPhone 4S in my future. What does this have to do with the Osborne Effect? Here is the Wikipedia link to the Osborne Effect which is probably a bare-minimum read to understand how pre-announcing a product can stall sales of an existing product.

Surely Apple has done this product transition several times, why is this one different? Here are a few reasons:

  1. Apple iPhone sales stalled in the previous quarter. Prior to the announcement, Apple was already seeing anticipation of the unreleased product hurting current sales. We have become so accustomed to the fall iPhone release that purchasing an iPhone in the summer is becoming less attractive, especially when Apple is set to release a major upgrade instead of a minor iPhone 4 to iPhone 4S upgrade.
  2. Apple has strong competition now. The Samsung Galaxy S III is out with whiz-bang features and a huge screen. It has already sold over 10 million units and anyone watching the 2012 Olympics has probably watched Apple commercials going after Intel branded Ultrabooks while Samsung has the Galaxy S III on-screen in a commercial or someone’s hand every 5 minutes it seems. Note: Apple is not countering with the iPhone 4S at this point.
  3. The iPhone 4S launch was a very incremental upgrade. If I look back to last year’s coverage, Siri was the hot topic and despite sitting around dozens of iPhone 4S phones regularly, I do not see folks using it because there is a high miss rate. I am sure this will be something that will get better with time, and Apple has said this will be better with iOS 6, but Apple needs to do better. On the other hand, the NFC capabilities of the Samsung Galaxy S III are highly advertised, much like Siri, but I live a decent jog from Google HQ (and a short drive from Apple HQ) and I do not see people pounding their phones in downtown Mountain View like I see in Samsung commercials. If people are tapping phones, they are probably using Bump from the Mountain View start-up.
  4. iOS 6 may be launched with the iPhone 5. iOS 6 was pegged for “this fall” and rumors have it September/ October timeframe either with or without the iPhone 5. Still, iOS 6 is not available today. We know maps are coming, but a user can get turn-by-turn navigation in Android, without an app, today. Gone are the days of Android simply trying to match iOS functionality because we are seeing clear cases where both sides attempt to maintain feature parity. Users of the Samsung Galaxy S III already know that come August or September Jelly Bean will be on their phones and Key Lime Pie is already in development.

The story of Osborne Computer Corporation is sad. The high-flying company that had plans for an IPO instead ended up closing its doors all while becoming synonymous with pre-announcing a next-gen device. The good news is that Apple is not going the way of Osborne anytime soon and taking a longer term view, Apple will likely surprise us despite all of the leaks and the iPhone will outsell the Samsung Galaxy S III several times over by year end. Still, I would not be surprised if iPhone 4S sales just started to asymptotically approach a standstill with pre-announcing the announcement.


About the Author

Patrick Kennedy

Patrick has been running ServeTheHome since 2009 and covers a wide variety of home and small business IT topics. For his day job, Patrick is a management consultant focused in the technology industry and has worked with numerous large hardware and storage vendors in the Silicon Valley. The goal of STH is simply to help users find some information about basic server building blocks. If you have any helpful information please feel free to post on the forums.

6 Comments


  1.  
    dba

    Osborne – nice analogy.

    I have to preface my other comments with this: I know nothing at all about the consumer electronics industry and should not be taken seriously when I talk about sales or marketing strategy for cellphones.

    That said, I wonder if they aren’t “Osborning” themselves on purpose. Here is the train of thought: Your phone is getting long in the tooth and Samsung is starting to snack on what should be your profits. In response, you decide to launch your new version early (as Apple is the iPhone5). Manufacturing says that with the new schedule they won’t have the time to build up the required inventory to support a big launch so expect shortages and frustration. You then decide to pre-announce, which does two things: Prevents some customers from running to Samsung in the next two months and instead waiting for the iPhone5, and reduces demand for the iPhone4 enough to let you divert workers to making the new version.




  2.  
    Paul

    Why do you say iOS 6 won’t be released with the iPhone 5? (maybe I missed some news)

    Patrick, have you considered Twitter/Facebook/OpenID integration to post comments?




    •  

      iOS 6 has only been slated for “this fall” good chance it will be with the iPhone 5 but Apple has left wiggle room.

      On the OpenID I have looked at it and may implement Disqus or something like that one of these days.




  3.  
    Sal08109

    dba: I think it only hurts sales if people think the new product will be far better than what is out in the market place. iPhone 4S is so far behind that the iPhone 5 is just catching up to Samsung.




  4.  
    odditory

    SGS III is going to decimate iPhone4/5 sales for calendar year 2012 based on current trajectory.

    Interesting also that the iPAD mini FUD became more pronounced immediately after Google Tablet announcement – not from apple but it was asian co’s in apple’s supply chain with a vested interest in apple’s success making the most noise. So yes to dba’s point there’s something to be said about pre-announcing to try to take some of the wind out of the competition’s sales.

    Apple innovation has been more or less stagnant for a few years. Android partners are not sitting still. When I look at analyst numbers for the smartphone & tablet markets, android has all the momentum and is already outstripping iphone. The Nexus 7 is the leading edge of what will inevitably be android tablets outstripping ipad’s, the worldwide numbers don’t lie – its only a matter of time.




  5.  
    SozaJuan

    good read. I am getting a SGS3 because my iPhone 4 don’t work and no replacing battery easy.

    I don’t spend muchos on apps.





Leave a Response

(required)


Newly Reviewed
 
  • Pliant SanDisk Lightning SLC SAS Drives
  • Intel Fortville Controller Page
  • Google SPDY
  • Linux-Bench Site
  • ASUS Z9NA-D6 USB PCIe Spacing
  • 9.5
    Thecus N7710-G Front Three Quarter