Daniel Eran Dilger in San Francisco
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Reality Check: the iPhone 4 launch in perspective

Daniel Eran Dilger

It’s not just the Gizmodo bloggers under investigation in the iPhone prototype case who are painting the electronic world’s biggest launch as a fair to middling failure. The mainstream media is also in on the act. How delusional are they? Here’s a look.
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Selling iPhone 4

Apple’s online pre-order system collapsed immediately after AT&T’s server for handling subsidy authorizations failed. It turned out that for most people, the only way to order a phone was to schedule a reservation at an Apple retail store, something that itself was only possible after Apple skipped the authorization step for people using the Apple Store app.

Sure, not very cool for those “gotta be first” people who wanted to have iPhone 4 delivered to their home, and even worse for those who discovered that in-store pickup would take as much as six hours to endure. It was certainly no fun for those who lined up, but they still shelled out $200-300 to get it.

The reality is Apple was under the crushing load of getting 1.7 million units to those bleeding edge users in just the first three days. That’s 70% more phones than Apple shipped in the first two and a half months when it launched the first iPhone just three years ago. It’s approaching double the record-setting launch Apple pulled off last year.

What’s a good launch? Remember when Motorola was talking about how its Verizon Droid was doing “extremely well” back in January? It took 74 days for Droid to reach 1.05 million units sold. Apple sold over 60% more iPhone 4 units in a fraction of the time. About 14,000 Droids sold per day over a month and a half during the holiday season, compared to the 567,000 iPhone 4 units sold per day over a single summer weekend. What’s “extremely well” times 40?

Now look at Google’s own highly publicized (and non-demonized) launch of the Nexus One: Flurry Analytics says that only 135,000 sold in its first 74 days. Apple sold four times as many iPhone 4s on its first day as Google sold Nexus Ones in total over the next two and a half months; Apple continued to sell four times as many over and over again over the next two days. How many iPhone 4 units will ship 74 days after launch? A lot.

The Nexus One didn’t just fail because of a lack of interest; Google insisted that all orders would happen over the web, and didn’t allow T-Mobile to stock the phone in its retail stores. That’s failure of the self imposed, bumbling sort of variety. Yet there was no highly publicized complaint about how badly Google flubbed its first, and perhaps last, launch of a consumer product.

Apple delayed the iPhone 4 launch at AT&T stores, but only because it was too difficult to manage a launch that large across multiple vendors. When AT&T began offering iPhone 4, the lines began afresh. Apple is still selling a huge number of devices, and some people are apparently still waiting for a white model. Anyone who tries to say the iPhone 4 launch went badly from a sales perspective is simply not telling the truth.

Nexus One, iPhone, Motorola Droid Sales Compared

Building iPhone 4

Sure, critics claim, Apple sold a lot of iPhone 4 units. But there are major manufacturing flaws! Spots on the screen, proximity sensors that reportedly don’t always shut the screen off properly, and manufacturing issues that delayed the availability of the white model. Turns out the screen spots were a temporary thing caused by rushing devices from the plant before the glue dried, a problem that solved itself literally overnight.

Now let’s frame some context for the word failure in terms of manufacturing. HTC’s Android phones, including the Nexus One, Droid Incredible and EVO 4G, all shipped with significant touchscreen sensor problems. The EVO’s screen has a “detachment” problem that appears to be caused by an adhesive failure of its glass screen. The phones have major battery life issues. HTC can’t source enough OLED screens so it’s having to replace them with conventional displays. Android users in general report lots of software crashes, random Bluetooth failures, and problems taking pictures (on hardware which despite high megapixel specs, is just not very good at taking photos).

What’s the acceptable failure/return rate among consumer devices? Something like 3-5%. For the 1.7 million iPhone 4 units that shipped in the first three days, that means we should see about 51,000 that don’t work. What about the rest of the industry?

A source within Microsoft told me that Verizon was suffering from a 25% return rate on Windows Mobile phones due to user dissatisfaction. Of course, part of that might be because of the software, but recall that HTC built 80% of the Windows Mobile phones. It now builds most Android phones. That’s why they’re suffering so many problems, even if the tech media is completely silent about it all. Readers don’t know what an “HTC” is, so it doesn’t make for a lurid headline the way writing about the iPhone does.

Recall that Palm also suffered poor build quality with its Treo line, which was also assembled by HTC. Despite finding a new supplier for the Palm Pre, that company continued to experience 10% failure rates for its webOS phone, more than three times the acceptable failure/return rate.

Remember too that Microsoft’s Xbox has suffered a failure rate greater than 50%. Some sources say the failure rate is approaching 100%, making service returns not a matter of if but when. Other game console makers report failure rates of 6.8% (Nintendo Wii) to 10.6% (Sony PlayStation 3). If Apple had that bad of hardware manufacturing problems on its state-of-the-art iPhone 4, it would be handling returns on between 115,000 to 180,000 new iPhones just from its first three days of sales. That’s not happening.

The iPhone 4 launch was exceptionally smooth; it was just covered by axe grinding bloggers with a fine toothed comb looking for minor flaws to turn into fanboy fodder.

Survey: Xbox 360 failure rate is 54.2%
Microsoft: HTC has made 80% of all Windows Mobile phones

Designing iPhone 4

Keep in mind too that iPhone 4 uses all sorts of new parts (including that Retina Display with an entirely new screen fusion process, a new gyroscope, and Apple’s new A4 chip), an entirely new industrial design, and packs it all into a tiny, battery operated device you hold in your hand. The only real complaint users can find is that it obeys the laws of physics, making it susceptible to breaking if you drop it without a protective cover. And you can attenuate the antenna’s signal with your hands (just not as seriously as the Nexus One).

Now let’s calibrate design failure by looking at recent competitors to the iPhone. The Palm Pre appeared last year with terrible hardware and an atrocious keyboard. It also didn’t help the SDK wasn’t ready, the software was still green, and the company’s cloud services were failing.

Motorola’s Droid keyboard is also terrible. The design of Android software, including the UI layers that radically change from vendor to vendor, is notoriously bad. Phones don’t get software updates until months after the updates are available. The Android Market is a mess. The array of buttons in the Android spec is also awful, and Microsoft is copying it in Windows Phone 7.

Microsoft’s first leg of Windows Phone 7, the now aborted KIN (previously known as Pink), started out as the fairly popular Danger platform. After acquiring Danger, Microsoft insisted on using a Windows CE kernel rather than Danger’s already functional Java-based system. In order to make the device profitable, Microsoft skimped on local storage and forced users to store all their data on the cloud (even photos they take with its camera). To keep service cheap, Microsoft limited message updates to once every 15 minutes.

It then launched the once cheap, kid-oriented platform on Verizon’s network, which tried to charge users $70 a month for voice and data service, despite the device lacking any support for basic smartphone services such as calendar sync, instant messages, or even any email accounts other than Microsoft’s own.

Microsoft then tried to sell users another $15 per month a Zune Pass music subscription, hoping to salvage its Zune business by tying it to smartphones. Unsurprisingly, after two years of development, KIN was pulled off the market in just 48 days after only selling a reported 500 units.

Clearly, there’s a lot of hyperbole begin directed at Apple’s iPhone 4 launch by the company’s naysaying enemies. Meanwhile, JP Morgan has revised its estimates to indicate an expectation that Apple will sell ten million iPhones in the third calendar quarter ending in September, a milestone it did not expect Apple to cross until the first calendar quarter of 2011. Considering that just three years ago, critics doubted that Apple could sell ten million phones in year, that indicates a well oiled machine is in operation.

29 comments

1 E. Wetzell { 07.01.10 at 4:09 am }

Daniel,

Love your writing and this blog, but I need to call out a couple of things.

First, the Nexus One launch hardly escaped unscathed as it crashed and burned. This was widely covered and reported by the tech media. Likewise with the various other Android phone issues, such as the EVO screen issue. I’m not sure about you, but my RSS feed is filled with the various failure reports and issues people are having in the field.

The tech industry reports failures, and the larger the target, the more appealing the story. This is not a conspiracy, this is the way the media works.

Second, Apple is not exactly helping themselves with some of the issues. To quote FSJ regarding the antenna issues:

” …we’ve sent out the following messages about iPhone 4 and the antenna issues:

1. All mobile phones have this problem.

2. Our mobile phone does not have this problem.

You see how this works? These two statements cannot both be true.”

Either there is an isue to be addressed or there is not. One can put that in the context of other companies or products, but that does not negate an issue if there is one. I can say the same thing about HTC-it’s either broken or it’s not.

Finally, the whole IOS vs. Android thing. There are technical and subjective advantages to both systems and both devices (personally, I own a Droid and an iPod Touch, use both every day, and appreciate them for different things). There are strengths and weaknesses to each. Do we really need to keep beating this drum? I have a long list of advantages of IOS over Android-BUT I’ve got an equally long list of advantages of Android over IOS. Some of that is technical, but some of it is how I use the device, like to work with the GUI and how the system operates in the context of my workflow.

2 ShabbaRanks { 07.01.10 at 4:25 am }

No matter which way you look at it the iPhone 4 launch has been an unequivocal success. Lines as long as the eye can see and no sign of an end to peoples thirst for this machine. Makes me wish I was a shareholder.
But…
Its not 100% wine and roses. No launch this big ever could be. This is one of the rare cases where a certain Mr Jobs hasn’t helped matters. “You’re holding it wrong” is a bullshit answer and doesn’t instill confidence in the company. He needs to be careful that celebrity doesn’t go to his head. Maybe, ” we’re working on it” or something would have been more appropriate from a CEO.

3 MarkyMark { 07.01.10 at 4:33 am }

If Microsoft was as well-run, well-organized, and well-staffed as these expertly-crafted anti-Apple smear campaigns, they could actually produce a phone that people would want to purchase. Meanwhile Apple is, literally, laughing all the way to the bank.

4 gplawhorn { 07.01.10 at 5:36 am }

I think the criticism is an indication of Apple’s reputation. It’s rare for there to be widespread problems with an Apple product, so when they occur, it’s news. And these really aren’t problems at all. Get a case; big deal. Wait a few days and the lines will ease a bit.

5 studiodave { 07.01.10 at 5:47 am }

I bought the bumper without even a question as I would not even consider using the iPhone without a case. The bumper is actually quite nice as it protects the phone and still shows off the front and back.

6 davebarnes { 07.01.10 at 6:11 am }

@Dan,
Your comment about HTC and publicity is spot on.
Did we read: “Suicides at Apple contractor factory” or “Suicides at Hon Hai Precision Industry’s factory” ?

7 TheMacAdvocate { 07.01.10 at 7:27 am }

Apple is *the* success story in consumer electronics. Being an Apple guy for almost 20 years and seeing some of the worst of it, it’s almost too good to be true.

The only thing going on here is the death of real journalism. The more successful the company, the harder the bottom feeders suck at any shred of opportunity to whore a couple of hits at the company’s expense. As Daniel points out, this is one of the many things you have to thank Google for.

8 Mike { 07.01.10 at 7:37 am }

It’s true that Apple has had a rough launch because they’ve been so successful. Actually, I haven’t heard anyone else saying that the iPhone is somehow different than other phones in terms of defects, when in fact many of its defects are fairly minor (except the antenna attenuation problem). So yes, great job on pointing that out Dan. But like the poster said above me, media is responsible for giving readers the most popular news they want to read about. They don’t publicize HTC’s failure heavily because it wouldn’t be popular. Not many people buy HTC phones as much as pundits would like to believe. I’d have to say that Google simply entrenched the trend of popularizing certain news, rather than creating it though (@TheMacAdvocate).

In any case, great article… it did miss the part where ANandTech quantified the antenna situation, and the iPhone 4 came out worse in almost every aspect, except when it had a case. The interesting result is though, that the iPhone 4 baseband is more sensitive, so it can make better use of signal than previous phones.

As an Apple shareholder, I’m glad they have supply issues with overflowing demand :)

9 ChuckO { 07.01.10 at 7:57 am }

Did any of the other devices with similar problems generate class-action suits? Already Apple’s getting hit over this.

10 JPTJr { 07.01.10 at 8:42 am }

I do agree that Apple needs to be extra straightforward about the “reception issue” from here on out. No obfuscating press releases, no cryptic e-mails from Steve. The best explanation I’ve seen on the whole thing is the Anandtech review: http://www.anandtech.com/show/3794/the-iphone-4-review.

Apple can and should treat their customers as intelligent and discrimnating consumers who have a choice of smartphones. They should use info along the lines presented in the ananddtech review. Open and honest communication is always the best policy.

11 md5sum { 07.01.10 at 8:50 am }

Ok, I’ll agree that most launches have issues, and early adopters face the brunt of the issues before they get ironed out. But what happened to Apple “making superior products”? This article basically shows them as just another company that makes a product whose launch has just as many problems as any other product launch.

[No it doesn't. Read the article again. - Dan]

The media wouldn’t be eating this up in the same manner if Apple simply came to the front (in the same manner that most other companies do) and admitted that there are some problems with the device, and that they’re going to fix them and replace the defective devices. Instead, people are being fed BS that there’s not a problem or that they’re holding their phone wrong. And that’s not even starting on the countless broken screens and backs.

[No, you are being informed by histrionic blogs. Read the article again. - Dan]

12 alansky { 07.01.10 at 8:56 am }

Reality checks are for people who are sane enough and smart enough to get the message. As far as I can see, the high-tech press is getting far too much enjoyment out of demonizing Apple to care about “reality” at all. Morons with a grudge, that’s what journalists are morphing into in the age of the internet.

13 edinburghmac { 07.01.10 at 9:15 am }

Perhaps I’m one of a lucky few or a silent majority but I personally can not replicate the supposed reception problems which people keep harping on about. Perhaps for future reference if anyone wants to mention this issue they might like to state if this issue has personally affected them, rather than just parroting what certain sections of the media is saying.

I’d also be interested to know how many people were planning on using the phone without a case or bumper. Again personally I bought a case straight away before I’d heard of ‘reception issues’ as I like to keep my gear ‘as new’ for as long as possible – seems a simple solution for whatever % actually have any kind of problem.

14 Josh { 07.01.10 at 9:16 am }

In all fairness, Apple sets themselves up for this type of criticism. That doesn’t mean the Apple haters are justified, it just means that you can’t simultaneously market your products as “revolutionary” and “magic” without drawing a few raised eyebrows when that same product has glaring flaws, even if those flaws are common on similar products. Everyone knows HTC phones are mediocre, thus we expect mediocrity. Apple products set the bar much higher, thus the criticism.

15 edinburghmac { 07.01.10 at 9:17 am }

Perhaps I’m one of a lucky few or a silent majority but I personally can not replicate the supposed reception problems which people keep harping on about. Perhaps for future reference if anyone wants to mention this issue they might like to state if this issue has personally affected them, rather than just parroting what certain sections of the media are saying.

I’d also be interested to know how many people were planning on using the phone without a case or bumper. Again personally I bought a case straight away before I’d heard of ‘reception issues’ as I like to keep my gear ‘as new’ for as long as possible – seems a simple solution for whatever % actually have any kind of problem.

16 JohnWatkins { 07.01.10 at 10:58 am }

@ E. Wetzell,
It’s true that Apple has not communicated clearly on this issue, but it’s also true that people have been taking their communications out of context and sensationalizing the issue.

When Apple says,”All mobile phones have this problem.”
they are referring to the fact that users water filled hands definitely shield the signal the phone receives depending on where and how the phone is held. Overblown concerns about radiation have exacerbated this phenomenon by encouraging designers to put the antennas low in the body of the phone, presumably away from the most likely positions of the users’ brains.
They are also referring to the fact that the nominal “signal strength display” on any cell phone cannot convey much useful information to the user, other than whether or not they have a signal. The physics and logistics of cell communications cannot provide more information than that. The phone cannot sense, nor convey any information on the reliability of the connection or congestion at the tower or on the network. Therefor the display is not even remotely a reliable indicator of signal usefulness.

When Apple says, “Our mobile phone does not have this problem.”
The are referring to the overblown conclusions about “malfunctioning” iPhones that hysterical users, tech journalists, competitors, and class action lawyers are jumping to based on simplistic, ignorant “analysis” of the the perceived “problem.”

Apple does need to get on this, but they never do anything hastily, and they always do the right thing when there is a an actual problem. They just don’t wring their hands, pretend to do something, or do things that don’t get at the problem.

17 gus2000 { 07.01.10 at 11:36 am }

Thanks for adding a little perspective, Dan. Good to a get a new article.

With all the batshit crazy criticism of Apple and the iPhone lately, and without nary a peep from you, I was concerned that you were lying in a ditch somewhere with a bike on top of you.

18 Maniac { 07.01.10 at 11:46 am }

@ daniel – “Yet there was no highly publicized complaint about how badly Google flubbed its first, and perhaps last, launch of a consumer product.”

I seem to recall being amused at all kinds of complaints about Google’s terrible tech support.

“it was just covered by axe grinding bloggers”…

Some of whom just might be heading to jail. Jason Chen could be getting at least 2 new kinds of FaceTime.

“KIN was pulled off the market in just 48 days after only selling a reported 500 units.”

Sucker born every 2.304 hours.

19 Maniac { 07.01.10 at 11:52 am }

@ShabbaRanks – ‘“You’re holding it wrong” is a bullshit answer and doesn’t instill confidence in the company.’

Agree. The customer is always right, especially for companies like Apple that need to attract and keep users. Apple pulls customers in with quality and ease of use as opposed to pushing upgrades and OEM deals on users and IT departments who are locked in. Steve needs to shoot from the hip less.

20 stormj { 07.01.10 at 12:20 pm }

@ShabbaRanks – This article isn’t apologizing for Apple’s mistakes. It’s criticizing the hyperventilating coverage of the latest Apple “failure” each of which are the reverse of a Pyrrhic victory. Many more of these failure and they will win it all!

@Daniel – The reason that you are grasping at behind all of this Apple hating coverage is simply that Apple’s mission always has been to take technology away from the geeks. Whether or not they have this in the forefront of their consciousness, they act it. In other words, making consumer devices (or the GUI) so that average people can use it deprives many in the tech industry of their professional and psychological raison d’etre.

Google on the other hand is about making more and more geeky things. Some are incredibly powerful, but I can’t think of a single Google product that isn’t designed for “power users” first, and, well, if it just happens to be usable by others (like gmail) then that’s fine.

So, tech writers, many of whom have frustrations of never quite cutting it as a programmer or an engineer, maintain their I’m-so-smart attitude by contempt for the users they have to help out. And when Apple lets their grandma make movies on a cell phone, it starts an ego collapse.

It was the same with all the kool kidz calling the Mac a “toy” because it didn’t have a command line. It’s the same with iPhone because you can’t edit dot files to be super 3l33t.

21 E. Wetzell { 07.01.10 at 1:23 pm }

@JohnWatkins

I am well aware of the oddities of RF-I deal with it on a regular basis. My gripe isn’t with the technological limitation, which IS a real phenomenon in all RF devices, but rather the poor articulation of the actual issue and the solution.

Yes, people have a microscope on Apple right now and are prepared to blow things out of proportion if taken out of context. You know it, I know it, Dan knows it-so why doesn’t Apple? When you are watched closely, you better prepare your remarks the more carefully. Granted, it was an off the cuff remark from Steve Jobs, but “you’re holding it wrong” plays right into the hands of those who are willing to decry Apple as seeing themselves as infalable and treating their customers as idiots (not that I agree with that, mind you).

Others have made the point about how Apple represents a superior design and superior products. I totally agree-I love my Macs and other Apple products. However, others have made the comment about how they fully expected to buy a bumper or case and who in their right minds wouldn’t. I would counter that by asking who would design a product that required an extra, seperately purchased piece of equipment for the device to function properly? Is that superior design? Or is that more fodder for the people who have an axe to grind? And when that “axe is ground”, then who’s fault is that?

22 gus2000 { 07.01.10 at 1:41 pm }

“You’re quoting it wrong.” – Gus

Did SJ ever ACTUALLY say “you’re holding it wrong”?? Because that’s what everyone here is quoting. In my recollection, he said “don’t hold it that way”. That’s very different.

Besides, if you want more than a curt quip, you should probably talk to a Customer Service rep rather than emailing the CEO. Anyone ever gotten an email response from a Forture-500 company CEO before, at all? Anyone? Bueller? Anyone? Anyone?

23 FlyersNY81 { 07.01.10 at 2:09 pm }

Reading all these stories about how the iPhone 4 has so many flaws and SJ is being an ass about addressing them I was beginning to lose some confidence I had in my new phone
After reading this article… Confidence restored!!

24 berult { 07.01.10 at 2:54 pm }

Survival of the ‘unfittest’.

Nature’s reversal of evolutionary ‘purpose vying’ to degenerative ‘remorse selling’. Let’s make mediocrity a value added commodity, a serendipitous public utility, a supply driven and demand stricken meritocracy…

…and free ride the waning, fading glory of those good old evolutionary days!

Why not ‘black mass’ the wind out of Progress’es sail, …for a regress buying celebration could unsuspectingly half-life the head out of the grieving nail!

25 komodomac { 07.01.10 at 3:57 pm }

Hey Daniel,
Your spellcheck is inserting a wrong word in a few of your articles: BEGIN, instead of BEING.

BTW, very insightful articles and well grounded perspectives.

26 John E { 07.01.10 at 6:09 pm }

First, anything Apple is hot news these days, so the echo-chamber media is going to make mountains out of molehills about any problems real or imagined just to have sh*t to publish that people want to read. right up there with celebrity gossip.

Second, all the professional whiners and Apple-bashers on the web have orgasms writing that kind of stuff. and oh god there are so many whiners. the web is turning into Crybaby City.

Third, who remembers the similar wailing and weeping at the launch of the 2G three years ago? a few months later, nobody cares.

But the Kin, ah, that epic fail will go down in history like the Ford Edsel, not to be forgotten. buy one now for 50 cents from some bargain bin and hang on to it for 40 years. it will be a very rare collectible by then, finally worth more than an iPhone the same age!

27 UNLK A6 { 07.01.10 at 7:09 pm }

Always look forward to berult’s posts. What does he or she mean–or do for a living for that matter? Do tell.
Another sane post Daniel, good work. Shoulda’ mentioned the launch of the JooJoo. I don’t think it brought any server’s down, did it.

28 enzos { 07.01.10 at 8:17 pm }

berult n. a word dinosaur, sp. Thesaurus vex

29 kdaeseok { 07.02.10 at 12:11 am }

Checked my friends’ newly bought ones and I think it’s pretty fair to say iPhone 4 is unstable for the time being. Two of them have the proximity sensor problems which activated loudspeaker during a phone call, and ALL of them had the ‘death grip’ antenna issue.

You may want to wait for the iOS update or better, wait for the next version.

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