Apple Releases Second-Generation iPhone for $199

Rumors around the much-anticipated second-generation iPhone release have been swirling for months. On Monday Apple finally gave the public what they’ve been asking for: a faster iPhone with more business-user functionality & some way-cool apps, all at half the price ($199, w/2-year contract). Analysts are already claiming victory for Apple, predicting they will beat their goal of 10million devices sold by the end of the year. But is there any precedent for "device 2.0" success in the mobile phone world? The answer is yes, but the outlook isn’t very bright.

Below are two graphs showing consumer interest in each phone, indexed to the week of its launch. Both the Motorola RAZR and LG Chocolate were considered breakthrough devices at the time of their launches. The RAZR2 and Chocolate — Black Cherry didn’t fare nearly as well.

  • By week 4, interest was about equal between these two devices. This is the peak of RAZR2 interest, while interest in the RAZR peaks later in week 9. This is likely due to inventory shortages as more and more people became aware of the RAZR (at the time it had a revolutionary form factor).
  • The original Chocolate had a truly blockbuster device launch, capturing 30% interest at its peak. Conversely, the Chocolate — Black Cherry only captured about 5% interest at its peak.

To be fair, the 2nd generation models of these products both came out into more crowded market places because there have been more devices available over the past few years. Also, both the RAZR2 and the Chocolate — Black Cherry launched as part of a set of 4-6 colors, so there was more competition within the series for consumers’ eyeballs.

Still, the original iPhone launch captured 50% interest at AT&T, and Apple has yet to play by the traditional rules of the handset market. That’s likely a good thing for them. Second generation devices historically have more closely resembled Caddyshack II rather than Godfather II. But this time around, Apple may have just given consumers an offer they can’t refuse"¦

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