The Tsunami Halo Effect

On January 18, 2007, in Opinion, by Mazen Al-Angary


Unless you have joined some scientific experiment, and been frozen for the past two and a half years, you might have heard about the iPhone, and I am not talking about Cisco’s iPhone I am talking about Apple’s iPhone.

What surprised me the most about the Apple iPhone’s announcement is how hard the news hit us here in Saudi Arabia. It created an enormous buzz, a shock. People were going to corporate meetings and talking about the iPhone instead of business. The iPhone showed its beautiful face on the front-page of almost every leading newspaper in Saudi Arabia. It eclipsed all the bloodshed news we have been used to reading the last half century.

People who have never used Macs are now thinking of buying their first Macs with the iPhone, so let me give you a scoop on how things works on this side of the globe, by looking at iPod sales.

If any store gets a new iPod, of any variety, it will sell-out in a week max, and in some cases you have to reserve one or more before it reaches Saudi Arabia’s shores. With most stores selling out in a matter of hours, remember what happened with the PlayStation 3 in the US minus the long queues and you’ll get the picture.

Now let’s get back to the iPhone. As in the US no one is really likes their current phone, be it a so called smart or dumb phone, but no one has had a real alternative. You either get a Symbian OS based phone or Microsoft mobile, while Linux phones aren’t popular yet. When Microsoft’s “so called” smart phones came out selling at over US$ 1200 people gobbled them up. Someone even asked for my advice to get one for that price. I told him to get a laptop which was cheaper. In one case I saw the SonyEricsson P990i selling for US $1350, and people were pulling all the strings of connections they had to get their hands on one.

After seeing Apple’s iPhone I got calls, emails, and SMSs from everyone I know asking me to reserve one for them, as if I was the Apple dealer here. I told them to wait till it ships then we will know how to get them, but people asked me about Macs to buy with the iPhone. So we are looking at the beginning of another halo effect, and I can safely call this one a tsunami halo effect.

Now let us look at the business side of the whole issue. People think that this is a tough market, and Apple will have a hard time selling this product, so let’s hop on a time machine and head back to October 2001 when the iPod first debut. Back then selling something like the iPod was hard, it wasn’t easy to come out and tell people back in 2001 that you should drop all your Disc Jockeys and use this MP3 player, but they did that and it worked for them, big time.

Selling the whole concept of the iPod was a difficult stunt to pull off. Other companies have and still are trying, but nothing worked like the iPod. I saw a salesman at a store in Jeddah, Saudi Arabia trying to convince a kid with his dad to buy a Zune. While I thought the kid would object, I noticed that the father who seemed in this late fifties, told the sales rep that the iPod looked much nicer and easier to use, and I heard the kid say, “I want an iPod, this is not an iPod” pointing at the Zune. I stood on the side thinking “if it’s brown, flush it!”.

If Apple isn’t focusing on the Middle-east market, I will try to bring the situation into focus for them. When the iPhone hits our market, it will sell-out in less then a day. I would even bet it will sell before it appears in any showroom. Already one store is getting backorders on the night the Macworld Expo keynote took place.

What about the price? Well everyone here sees that it is so cheap for what it delivers, so price is not an issue. People even mentioned their willingness to pay four times what Apple quoted for the device just to get their hands on it.

Let me take you deeper into the rabbit hole: what about the other cell phone manufacturers, what will happen to them?

The consumer doesn’t give a rat’s ass about them, and Apple “touch nuked” any product that is quoted over US$ 499, and off course anything a little under that, so what happened really.

I should point out how Nokia reacted to the iPhone announcement. They sounded confident and cool, but if you think about it, Nokia is in hot waters already. Although they managed to keep their cool-head at least in front of the press, and stressed that by saying “it is a surprise that the iPhone is not 3G”. Now I wouldn’t emphasize on that since GSM Association isn’t excited about 3G to begin with, and they are working hard enough to brush it under the carpet and bring 4G to the market before any one can even begin to get used to 3G GSM networks.

Here’s my advice to all the other cell phone manufactures, and it will be harsh to hear, but this is the truth.

You don’t stand a chance, you have been (and I mean all of you) outsmarted and beaten by a company that wasn’t in your sector of the market to begin with. This is not a situation where SonyEricsson would come out with something to kill-off Nokia, Motorola, LG, Samsung, Palm, Microsoft, or RIM. This is one company coming out of the blue to take all the cell manufacturers out in one swift shot. And to rub my point even further I will remind you of the mighty Sony being kicked around with their Walkman brand (including their cellphone line) over and over and over by a cute white iPod. (Or look to Wii sales compared to PS3 sales. Wii’s are still sold out in the US, while PS3′s are everywhere.)

So what mobile devices manufacturers should do is drop their prices, or if not then discontinue any so called “smart phone”, because everyone now knows they’re not, and live under the US$ 499 roof that Apple built for them (till Apple pushes them under that line by dropping prices), and go back literally to their drawing boards. And when I say drawing board I mean go invent something new that no one has ever seen before, simply because whatever gimmicks cellphone manufacturers bring to the market will not work any more.

Today’s Joe or Jane are smarter, and the real problem is that they are fed up and won’t tolerate mobile manufacturers perplexing products any more, since they saw the light of Apple.

Now will Apple succeed? The short answer is Yes, hands down, you will see the whole iPod dominance scenario repeated all over again. This market is easier then the MP3′ market back in 2001, because this market exists and people have been holding their breaths and waiting for something like the iPhone to happen. But they have learned over the years that none of the cell manufactures will deliver, but they know and trust the iPod, and they know it works, period.

If you are still feeling drowsy after that body freezing experiment, wake up and smell a fresh cup of coffee, you can use your iPhone to order one from Starbucks.

Copyright (c) 2007 Mazen Al-Angary. All rights reserved.

 

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