The iPhone Surviving Consumer Spending Fears

Implications: With weak consumer spending, Apple is trying to draw traffic to its own stores with iPhone offers such as registering online for store pickup and selling an unlocked version in Hong Kong.

Analysis:

In response to market conditions, Apple has to evaluate the sales forecasts from deals with carrier operators.  Gartner’s research projects a slowdown of smartphone growth from 55% to 16% due to the economy and consumer demand.  As AT&T showed last year, mobile operators can introduce the iPhone in a marketplace with strong results.  Customers reacted quickly to relating the Apple brand to wireless connectivity.  And the App Store differentiates the iPhone from just being a music device.  But it is questionable if mobile operators can increase Apple’s core computer business.

Apple has announced two initiatives that might enable the iPhone to cross-sell Macs in its stores.  Firstly, Apple is offering the capability to sign up and register online and pick up the iPhone at an Apple Store.  And the online offer reassures the customer that the store will assist in setting up the iPhone.  Secondly, for the Hong Kong market, the Apple stores are selling an unlocked iPhone.  Apple is extending its outreach to a larger mass market than operator’s customers, and drawing traffic to its own stores for other product sales.  Best Buy acquiring Napster is an example that Apple cannot depend on major retailers to sell the full Apple product line.  Apple has to promote the iPhone for holiday shopping at Apple-operated Stores before other touchscreen models roll out like Nokia’s Tube, Google’s HTC Android, and RIM’s Storm.