Frager Factor

Friday, October 14, 2011

Apple Pays $30 Million More on $4 Billion Name

"In 2007, Apple introduced the iPhone, which instantly became one of the most talked-about consumer products ever. Thousands of customers lined up to be the first to buy the phones, which featured computing and Wi-Fi capabilities, along with a crisp, computer-like display on an innovative touch screen. Rivals rushed phones with similar features onto the market.

In October 2011, as Apple unveiled the iPhone4S, the competitive landscape had changed significantly. Millions of people were expected to start plotting how to be among the first to buy it. But millions more may be considering an Android phone." ~~ Quote and Photo- NY Times

The first launch on the watch of Tim Cook has surpassed the distinction as Apple's most successful launch ever. Prior to launch there were over a million pre-orders for the The iPhone 4S, and last night the first person in line at the NY store who had probably camped out for days was offered $1500 for his spot. This is even more amazing since the iPhone 4S was a last minute substitution for the the iPhone 5 that the world was expecting. I imagine that some of the features of iPhone 5 were not ready for prime time, perhaps because of parts shortages, inability to meet demand or to teach a lesson to a third party provider who thought his component was so essential to the success of the launch he could inflate his price and they would have no choice but to meet it. Or it could be the legal snarl with Samsung.

It's also possible from my experience on the front lines of these technology plays, that these features already exist in the phone but are disabled. That would open the door for Apple to offer a $30 software upgrade that would be very attractive to millions of 4S users compared to $199-$399 for a whole new phone.

And there was probably a small window of opportunity where millions or contracts were up for renewal or provider switch and ATT contributed huge compensation to lock their customers in, especially with Sprint joining Verizon in making the cost of service a decision on price whereas the phone itself is priceless and people will find the money for it to spite a bad economy, a lack of credit and other phones that are offered for free.

I know from the dinner tables when people take out their phones and the Blackberry people try to understand what's different or special about the iPhone, many say that they will switch as soon as the new phone comes out. With Blackberry's problems, the demand will be huge.

There will also be a huge population of people that have never used a computer who will be coming online for the very first time. Many trading up a standard cell phone and not seeing their decision as paying more for a phone, but getting a camera, video recorder, picture phone and music player-- over a thousand dollars worth of individual purchases saved.

I was at an engagement party last weekend where a lifetime story video played on the big screen made by the groom on iMovie and sharing memories and photos many in the audience have sitting in shoe boxes. People were snapped photos and taking videos and sending them to each other. And instantly uploading to Facebook where tagging provided an incredible record of the event. There was no photographer or fees or delays. The album was created by ordinary people with a camera that makes every shot look professional. Don't think that the virgins in the audience weren't paying attention or green with envy. It is these kinds of demonstrations on a peer-to-peer manner that is driving record demand.

But whatever the reason for the delay and the urgency for millions of people to invest money they probably can't afford on a phone that you know is already obsolete is an incredible event in the Internet's 20 year struggle to be embraced by the masses.

More traffic is going to be mobile, websites need to scale to maximize the space. Steps and data entry must be minimized because of the difficulty of using full web features with a small keyboard. Those with apps and single click ordering will win the day. Voice Search or speak-in as I call it will totally change navigation and may eliminate Google from the equation. Imagine will driving asking for Citrix but being more specific and adding Zen Server and then customer testimonials or video demo or analysts review- you will be taken exactly to the page, document or video you seek without having to navigate through their whole site. I can see someone asking Chili's 333431 hours and the hours are read back. I can see someone saying Honda Civic Blue fully load 2012, 33431 and the voice search telling you where the car is and offering you a chance to reserve it and save 10% if you buy within 24 hours. Same for best price 33431 Samsung 60" LTV7899 and being offered Amazon, no tax, free shipping you can start enjoying it tomorrow. This will take the shopping out of buying, It's a game changer.

To fully understand the impact this will have on domains, take any of the names in the expanded add this menu of social media sites and call 411 and see what happens when you say the name. Ooops- there goes the value of Backflip Blinkbits Blinklist Blogmarks Blummy BuddyMarks BookmarkTracker ChangeToLink Chipmark Diigo Dogear Favoritoo Feedmarker Foxmarks FreeLink Furl GiveALink Hyperlinkomatic iKeepBookmarks Jack of All Links Lilisto LinkaGoGo Linkatopia Linkroll List Mixer Lycos iQ Mister Wong MyBookmarks MyHq Mylinkvault MyPip My Stuff (from Ask) MyVmarks Namakkal Netvouz Online Bookmark Manager OnlyWire Oyax Shadows Simpy SiteBar SiteJot Snipit Socializer StartAid Stufflinker Sync2it SyncOne Turboclip Windows Live Favorites WireFan Zurpy and Traffikd- the site these were listed on.

This is going to drive an urgent need for rebranding and names.

Which leads me back to the headline on this long post. Many people forget that Apple does not own the name iPhone. They license it from Cisco at $30 a pop which is baked into the cost of goods and paid for by the consumer. All of which means that with a million preorders, Apple paid Cisco $30 million more for a name that with 128 million phones activated in 70 countries, makes the total investment in the name $3,840,000,000- and no one even notices!

What's a name worth?
A nice review of the phone can be found here. For those anxious to upgrade, this might give you second thoughts.

About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

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