The iPhone Effect

Initial response to Apple's iPhone has not been at the level the company expected. Forecasts called for initial sales between 500,000 and 750,000 units. Actual sales have been stated to be around 270,000 units, a figure which includes phones and accessories. Price may be one factor limiting sales as well as Apple's exclusive distribution arrangement with AT&T. The remainder of 2007 will be a critical sales period as opportunities to sell iPhones in conjunction with back-to-school and Christmas could boost sales performance.

Regardless of whether the iPhone reaches sales forecasts (remember sales forecasts are only predictions and just like the weather forecast is often wrong, so are sales forecasts!), the launch of the iPhone is noteworthy in terms of product development. The combination of multiple functions and incorporation of control via touch screen represent innovations in the consumer electronics category. Also, it enourages innovation efforts by suppliers that design components for the iPhone, accessories that can be purchased to complement the iPhone, and future generation products that build on technologies appearing in the iPhone. So, even if you do not buy an iPhone it is possible that products you encounter in the near future have their roots in innovations related to the iPhone. Thus, the "iPhone Effect" is likely to extend beyond the number of units in use and will show itself in the product development process. Link