June 28, 2007

iPhone: How Apple created a frenzy

By Tricia Duryee and Kristi Heim

Chase Forslund wants an Apple iPhone so bad he's willing to sell his 2003 Ford Ranger to pay for it.

"If I begged my mom, maybe I could have afforded one," said the 24-year-old Capitol Hill resident, "but otherwise it would have definitely taken some saving to get up to $500 or $600. So, no, I could not have bought one if I didn't sell my car."

As he waited for a potential buyer to arrive at the downtown Seattle Greyhound bus station Tuesday, Forslund figured the $8,000 he's asking would easily cover both the pricey phone and a moped to get around on.

Forslund's eagerness to buy an iPhone is just one example of how intense the marketing machine has become for a product that may be the most anticipated cellphone ever.

The hype reaches a crescendo this week, as the sleek, black compact device goes on sale at 6 p.m. Friday.

"I just want to touch one," said Forslund, who works at The Ruins, an eccentric private restaurant on Queen Anne. "They create this whole illusion about their products by saying it's coming soon, but there's no information. They keep it all behind closed doors."

But the hype also represents something of a risky bet for Apple. With expectations set so high, any disappointment could deal a blow to the Cupertino, Calif., company's vaunted image and its business.

"They don't have a lot of room for error," said Marc Gobé, a marketing expert in New York, pointing out that Apple hasn't always succeeded with everything.

That has only increased attention on the sale of a multipurpose device that can make phone calls, play music and browse the Web.

Reflection of Apple

The iPhone was unveiled by Apple Chief Executive Steve Jobs in January at the annual Macworld conference. Since then, word of its arrival has reached the masses through thousands of newspaper and magazine articles and hundreds of rumors spread by Apple enthusiasts online. An army of devoted technophiles has spread the word even more as they salivated over the smallest details: How many will be sold during the first week? How long will the device's battery last?

With the phone's launch drawing near, there are signs that it may be living up to the hype. Lines have started to form in New York and San Francisco, and early reviews by selected journalists from national newspapers generally lauded the device, with some qualifications.

To be sure, the Apple iPhone is not that groundbreaking.

Although it has some unique features, such as a big touch-screen and keyless design, other products on the market have similar, if not better, attributes. But some experts say the iPhone is less about technology and more about branding.

Apple is selling something that oozes fun, a sense of style and excitement — in many ways a reflection of Apple itself.

Begins with a product

That image is what marketing experts point to in explaining how the company has swooped into the hypercompetitive device market so quickly and captured the limelight.

Gobé, who is chief executive of Desgrippes Gobé, a marketing agency in New York, said it starts with Jobs' stage presence.

"He has a turtleneck and his jeans and a three-day-old beard, and then he raises his hand — and it's totally post-modern — and in his hand there's a product, and he just says 'iPhone,' " Gobé said. "And everybody knows at that moment that this is something that's going to be huge and monumental and transforming."

Steve Manning, co-founder of Igor, a branding firm in San Francisco, said Apple is successful at tapping into people's emotions.

"Imagine if Motorola announced that it was going to come out with a big heavy phone with no keypad that cost a bunch of money," he said. "Everyone would say 'This is really dumb.' "

The mobile industry is just waking up to the idea that it's not about the phone's insides, Manning said, but how it represents someone's personality. He said Nokia hired him recently to rename phones from model numbers to real names. The first one — the Nokia Luna — has launched in Europe.

Regis McKenna, a longtime marketing guru in Silicon Valley who has worked with Apple, said the company's track record makes it easier to pull off. "It all begins with a product. You have to have a great product to do this," he said.

Waiting to buy

As frenzied as the buzz around the iPhone has become, it hasn't come at much cost to Apple. The company played its first 30-second iPhone commercial the night of the Academy Awards, and progressively placed more as the launch neared.

In general, Apple spends far less money on advertising than other large companies. Last year AT&T, Sony, Verizon Communications, Microsoft and eBay all spent more. Apple ranked 89th among top national advertisers, spending about $384 million, according to Advertising Age. By comparison, Sony, another company focused on digital electronics, spent about $2 billion.

The question is whether creative marketing and Apple's reputation will translate into sales. The consumer will have to decide whether it's worth $500 or $600, not to mention the accompanying AT&T phone plan, which is at least $60 a month.

"I'm going to want one," said Gary Nock, 59, who was visiting Seattle from Central Washington. "I think it's cutting edge. Eventually everything will have a touch screen. But right now it's too expensive, and based on reading advanced reviews, it's not everything it claims to be."

Mark Staats, 48, an information-technology professional from Issaquah, raves about the iPhone, but he, too, isn't buying just yet. He pointed to his silver BMW Z4 convertible in the parking lot of a Bellevue Starbucks: "I watched it the first year, jumped on it the second year."

If there's any lesson from the world of IT, he said, it's "watch to see the kinks come out first."

Scrutiny of company

Whether the iPhone is ultimately a landmark seller or not, there's no doubt the buzz has drawn enormous scrutiny of the company.

From a marketing perspective, even Apple's walls are much more porous today, with journalists, bloggers and reviewers reacting instantly to a product's flaws and successes.

"It's a much more treacherous world from the marketer's standpoint," McKenna said. "You have to keep tabs on a broader range of things. That's why companies keep things under wraps until they are sure the product works. Any glitch can be blown up into a global issue."

Still, many expect lines to snake out the doors of both Apple and AT&T stores on Friday.

"It's like people who will line up to see the next 'Star Wars.' There's no way those lines aren't going to be there," said Manning, the San Francisco marketing expert.

Will Forslund, the Capitol Hill resident who is selling his car, be in line?

"I don't think so," he said. "I can't deal with lines."

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