The Cult of iPhone

Wednesday, June 6, 2007

AT&T wireless President Stan Sigman doesn't just think the iPhone will be the biggest commercial product launch his company has ever had a hand in. He thinks it'll be the biggest product launch in the history of electronics. Such is the power of Apple to create buzz. The mere mention of a ship date can bump its stock two and a half percent.

Can it turn water to wine?

Can it predict Lotto results?

Can it separate "good" carbs from "bad" and leave your skin radiant?

OK, maybe not all of that.

However, the Apple (Nasdaq: AAPL) iPhone can do a lot -- for a phone. Besides making calls, it can surf the Internet while also playing music and videos -- all with a snazzy touch screen and no buttons.

The Cupertino, Calif.-based technology giant hopes the iPhone will turn the cellular phone industry inside out, much like the iPod did for the music industry. If you have US$499 for a basic iPhone and $599 for an upgraded version, you can buy one starting June 29, the company confirmed Sunday night after broadcasting the release date in television commercials.

To commemorate it, we offer this guide to the one electronic device that's setting all-time records for cultlike hype and prerelease buzz. That buzz has helped boost Apple stock by more than a third since it was first unveiled in January -- a sign Wall Street is eager for the iPhone as well.

"I have never seen as much anticipation for a new product," said Michael Cai, an analyst with Dallas-based Parks Associates.

The Hype

If the iPhone sets any records, the first might be for prerelease hype.

An example: AT&T (NYSE: T) will provide the wireless access for iPhone. In May, AT&T wireless President Stan Sigman said the iPhone would be "the largest commercial product launch in the history of electronics."

Three weeks ago, the Federal Communications Commission granted the iPhone a wireless certification -- a prosaic, albeit important step. Yet, that one event triggered a cascade of hard-breathing alerts across the blogosphere and financial news wires.

There are now dozens of iPhone blogs scouring the planet for clues and news about the launch. Here's a selection:

• www.myiPhone.com
• www.talkiphone.com
• www.appleinsider.com
• www.iphone2die4.com
• www.iphonefreak.com
• For fun, see the fictional "Secret Diary of Steve Jobs" at fakesteve.blogspot.com

The Demand

Forget the hype. How many iPhones could Apple sell?

Apple's official forecast is 10 million through 2008, or about 1 percent of the mobile phone market in just 18 months. Depending on the combination of basic and upgraded versions, achieving such a goal could add several billion dollars of annual revenue to Apple's bottom line.

AT&T officials say a million people have put in requests for an iPhone -- and AT&T doesn't even maintain an official waiting list. Financial powerhouse Morgan Stanley recently raised its iPhone sales forecast 33 percent to 8 million units in just the last six months of 2007.

The Secrecy

Apple chief Steve Jobs relishes a level of secrecy that the CIA would admire. Unlike other electronics companies that spread new gizmo prototypes around like candy, Apple guards its prototype iPhones like weapons-grade plutonium.

An example: At this year's big cellular phone industry trade show, Apple had an employee personally fly an iPhone to Randal Stephenson, the chief operating officer of AT&T, which will provide wireless service to the iPhone. Stephenson got to show off the phone for a few minutes.

However, even he confessed that was the first time he ever held an iPhone -- and he runs the company. The anonymous Apple courier in blue jeans then whisked the phone back to California.

The Launch

June is Official Launch Month -- and on Sunday, Apple divulged the magic day: June 29. In one display of how important that is, AT&T is already overhauling thousands of its (formerly Cingular) retail stores to cope with the launch. Each retail staffer is getting special Apple training, and the company is prepping for rock concert-style lines of customers waiting outside the stores.

On Monday, Apple stock jumped $2.93, or 2.5 percent, to close at $121.33 per share -- just on the announcement of the official launch date.

The Fakes

All the hype has precipitated some odd fake documents appearing online.

Stock in Apple abruptly fell about 2.2 percent in mid May after what looked like an official Apple e-mail appeared on blogs warning that the iPhone would be delayed until autumn. The typically closed-lipped Apple leaped into action and issued a statement essentially reiterating "JUNE PEOPLE!!" and the stock recovered quickly.

Other fake iPhone-related documents are appearing online too, including one that looks like an AT&T memo telling all retail store employees to cancel vacation during May. Not true, said AT&T public relations officials.

The Job

Want more quality time with an iPhone? Apple is hiring "Personal Trainers," to staff company stores and personally teach people how to navigate an iPhone.

"Do you want to be the product expert for the company that turned the wireless industry on its ear?" the online job description says. "You will get to work at the intersection where imagination meets reality." Qualifications include "strong self-management skills," college degree preferred. Pay or benefits not disclosed.

The Reality Check

To be sure, many products have their fair share of hype and don't turn out so well. Apple, too, has seen some less-than-stellar launches. Remember the Newton personal digital assistant? The Sony PlayStation 3 mesmerized the gaming world before its launch last year, and it hasn't sold nearly as well as the Nintendo Wii , notes Cai of Parks Associates.

"Wii is outselling the PS3 four-to-one now," Cai says.

Still, the real verdict on iPhone may not come until a year after the launch. It's worth remembering that the now ubiquitous iPod received a less than rapturous response when it launched in 2001. Since then, Apple has sold 100 million iPods.