New iPhones are hard to get

The blogosphere is full of speculation about whether or not Apple deliberately made the iPhone scarce on opening day and since then.  Most assume that this is deliberate on Apple’s part for a variety of reasons, mostly to attract more attention, increase demand, etc.  I assume most of these rants are from bloggers who want their new iPhones but haven’t overcome the barriers to obtain one yet.

But if Apple’s goal was purely to meter out their distribution, why not sell them online?  To get a phone you need to place an order for one, wait a week or two, and then you can get it.  This seems reasonable in conditions of scarcity.  But to get an iPhone 3G, you need to walk into an at&t store to place your order, and then walk into the store again to pick it up.  Think about this.  If the limitation was purely lack of supply then there are several ways this could be easier for customers:

1. You could order a phone online to be delivered to your house.
2. You could order a phone to be delivered to your nearest at&t store.
3. You could call the nearest at&t store to place your order, but still have to walk in to pick it up.

Try asking them why you can’t do any of these things and they will answer with one word: policy.  Clearly Apple & at&t have gone out of their way to make it difficult for people to get their hands on a phone.   This goes above and beyond just preserving a limited supply.  You have to work to get an iPhone 3G.

New iPhones have Issues

From all the reports I’ve read, the problems with the new iPhone are in the software not the hardware.  I conclude this because my friends with first generation iPhones are experiencing the same problems as those with the new 3G iPhones.  Moreover everybody seems to agree that these problems only showed up after they upgraded their iPhone software.  Problems include:

• Frequent crashes of applications, especially Safari
• Increased lag in common operations
• Significant problems with large contact lists (>200 contacts)
• Extended delays before placing a call

Apple is legendary for their high quality software.  People buy Macs because they "just work."  It’s really not like Apple to release a buggy piece of software.  But it sure seems that they did in this case.  Why?  Obvious answers of fierce competition for high-end smartphones.  The more interesting question for me is "How did they get away with it?"  Which it sure seems they are.

Escalation of Commitment: The Hush-factor

There’s a well-document psychological principal at play which prevents people from objectively critiquing things that they are personally invested in.  Sometimes called escalation of commitment, or irrational escalation, the idea is the same.  If somebody works really hard to obtain something, they will blind themselves to its faults.  Imagine this conversation:

"Dude, I can’t believe you waited in line for hours to get that phone.  What do you think of it?"

"Actually, it’s just okay.  The applications crash a lot.  And it’s not nearly as fast as I’d hoped it would be — sometimes it just hangs for like 10 seconds.  But at least it’s pretty."

Very few people have the objectivity to imply that their personal sacrifice was not worth while.  This effect is commonly observed in people who buy high-end items. 

The flip side of this effect is buyer’s remorse.  But since the phone itself is not actually at all expensive (when compared to the monthly fees), that’s unlikely.  Also, it has become a positional good, whereby it has value simply because other people don’t have one.  That fact remains regardless of how unreliable it is.

Speculative Conclusion

I posit that Apple knew about the software problems with the iPhone 3G before launch.  They did manage to iron out all the performance and stability problems they encountered before launch.  They felt they needed to launch it this summer to get ahead of other notable smartphones like the Blackberry Bold, HTC Touch, and Android which are hot on their heels.  So they rushed it out the door at sub-standard quality.

In order to partially cover for this mistake, they have made this device especially hard to get.  This covers their tracks in two ways: people make even more noise about scarcity.  And those who do jump through the whoops to obtain one are far less likely to complain about it.

The conference is small and invitation only, and pretty much everybody there was happy to be invited to spend a weekend with such a carefully chosen group of thought-leaders.  I was personally quite honored and surprised to be invited back this year because last year it was made quite clear that we shouldn’t expect to be invited back since keeping fresh opinions around is important for the function of the event.

This year I met far more people than last year, and felt much more comfortable striking up a conversation with whomever happened to be standing next to me.  Part of that is of course my own attitude, but based on others’ comments it sounded like a lot of people had similar experiences.  Several people remarked publicly at how uncharacteristically social they felt.

I suspect that a big contributor to this effect was a comment that Tim made on the first day during introductions.  Tim said to not just talk to your existing friends, and that we were all more likely to get invited back if we were more social with strangers.  He said that we were all invited for a reason, and so we all had interesting ideas to share.  This concept helped me break down shyness and intimidation barriers.  Later Tim made an analogy to making new synapses in the global brain.  (I rather like the idea of being a neuron in some huge hive mind.  I’m excited to read Toby Segaran’s upcoming book on collective intelligence, and really enjoyed meeting him this weekend.)

If the causal relationship I’m hypothesizing here is real, I see it as a great example of the economic principal that incentives effect behavior, and more specifically how small incentives can shift social dynamics.  I didn’t get a chance to ask Tim how deliberate or off-hand that comment was, but I’ll encourage him to repeat it next year.