Wednesday, June 27, 2007

The hype behind the iPhone

On Friday at 6 p.m. local time, Apple will begin selling its iPhone to the public. The hype is impressive: Google shows over ninety million hits for Apple iPhone. Over ten thousand print articles have covered it. More than 48 hours ahead of the launch, customers are already lining up at some Apple stores, like the one on Fifth Avenue in New York.

Is this unusual? How often does a product like this come along?

Hype is never in short supply when it comes to new product introductions. In 1981, RCA announced that, with sales of just 52,000 units in five weeks, its VideoDisc system achieved the most successful introduction of any major electronic product in history. Right.

To reach the fifty million user benchmark it took the telephone 43 years, radio 38 years, TV 13 years, cable 10 years, and the Internet just 5 years. But some individual products blow this away: the Sony Walkman sold 300 million units in the 80s and 90s. And Apple’s iPod is on a steeper growth curve than the Walkman.

Here’s the math: when a hot new product or technology or even idea takes hold, for a certain period of time the growth is proportional to the number of units sold. For example, if 10,000 units have been sold, the growth rate is, say, 5,000. When the number of units grows to 20,000, the growth rate at that point is 10,000, and so on. The more units sold, the higher the growth rate.

Mathematicians call such growth “e to the x”. Obviously this can’t go on forever. At some point the growth rate slows, levels off, and declines as the product or idea matures and is then replaced by the next generation. But until then it’s a fun ride for the manufacturers and the customers, too.

One thing is for sure. With the introduction of the Macintosh computer in 1984, the iPod in 2001, and now the iPhone in 2007, Apple has a knack for going e to the x.

No comments: