Why the iPhone will be successful (as will the PS3).

If you read blogs as often as I do (and I know a lot of you do), then I am sure by now you’ve all gotten sick of the iPhone and NextGen Console talks. Personally, I am not a big fan of any of these devices, as I think they are all crazily overpriced. But let me just chime in on the craze for a bit.

Steve Jobby Jobs’ iPhone is well designed. There is no doubt that The Phone is one of the most feature-rich and best designed products of the year. I am not an Apple fan and even I think it’s cool. But real question isn’t whether or not it’s cool, but “is it $500 cool?”

To me, Sony’s PS3 presents the same market value proposition. Best hardware, BD player included. Just like the iPhone, the thing completely trumps its competitors on a competitive matrix (from a tech spec perspective). Its only problem? Price. Again, the product is cool, but “is it $500 cool?”

Well, I guess that all depends on how cool $500 is to the potential consumers. I don’t know about you all, but $500 is a lot of $$$ to me, and I won’t spend that kind of money just to be cool.

I bought 2 Nokia E62‘s last december with $50 rebates each, so Cingular and Nokia essentially paid me to take a pair of these phones. These may not be cool (in fact, Cingular stopped carrying these, but that’s another story altogether), but feature wise, it compares well with the iPhone. EDGE? Check. Bluetooth? Check. Webkit based browser? Check. Youtube? Check. So how is Apple able to convince others that “Teh Phone” is worth $550 more?

This is where the marketing teams at Apple do their Jobs well (pun intended). They are very good at separating money away from Apple’s loyal fan base. How do they achieve this? By attracting the “cool” crowd. In other words, people who think a week’s worth of discretionary income is justifiable in exchange for the coolest Phone on the market.

Sony’s marketing team, along the same vein, will need to convince its audience of the same thing. Why did it not succeed to the same degree as the iPhone? (Same amount of discretionary income spent on a device that takes substantial amount more to design and manufacture, yet in two days, iPhone outsold the PS3’s monthly volume.) Because the PS3 has a competitor that’s deemed cooler, AND cheaper at the same time– the Wii.

The thing is, PS3 will probably end up winning the console war, if the only reason being Sony has the deep pocket to throw at the lagging sales by slashing prices. It may not be $600 cool, but it certainly is $500 cool, especially for the crowd that is weaning on Wii’s novelty.

For me, ~$600 sounds cooler sitting in 4 shares of Apple right now. The iPhone is barely ramping up is its practicality, and PS3 doesn’t even have must-have titles ready for it, yet there are plenty of suckers out there who are willing to spend the $ to be cool. Obviously people haven’t learned that it’s foolish to be the early beta testers. After spending $400 the the 1st gen iPod (now sitting on the shelf), the $300 Playstation 1(with 3 games that are all sitting in a box), a Dell Axim X5, and numerous other tech toys that sounded really cool to have at the time, but are now sitting around gathering dust, I’ve learned my lesson– Gadget Coolness fades waaay too fast and I’d still be broke if I were to pursue coolness that way.

In such a hotly contested commodity market as cell phones, Apple’s ability to create such a high value is astounding. However, compared to the much longer product release cycle of consoles, iPhone must retain its high value proposition against spades of new models being released on a weekly basis. Will the iPhone be able to hold its cool factor long enough to convince users to shell out $500 a year from now? That’s going to be something this much talked about slimmed down version of iPhone will bring to the table.

What other coolness can you get for $500 – $600? I guess there are plenty of others out there that can’t think of a better way to spend their dough. Perhaps everyone else just make more $ than I do, or maybe I am just not as much of a tech freak as I thought I was.

Maybe it’s because of my cheap ass that makes me uncool? 🙂

iPhone success update #1:  “ Consumers snapped up 270,000 iPhones in the first 30 hours of sales, beginning June 29, Apple said Wednesday in a conference call announcing earnings for the quarter ending in June. AT&T sold more iPhones in the first weekend of sales than it sold any other wireless device in the first month of sales.”

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