Network Effect

Taking a Bite from SIRI's Apple Connection Enthusiasm

Hmmm, interesting perspective. You could be right, but that's not what Sony said for monkey ball. Didn't they make $3+M in the 1st 20 days? And doesn't that go straight to the bottom line for Sony since it's a download? iPhone will be a massive profit generator for an entire ecosystem of businesses because the transaction is digital in nature and does not incur many variable costs. Sellers are flocking to the iPhone because anticipated sales and margins are off the charts. Generating sales and profits these days is hard for many businesses in this economy, and the iPhone represents a massively growing distribution network so it taps you into a huge, and growing customer base. The whole key is that this is a network that they are building, the phone, or hardware, is just the gateway; we have all seen from Ma Bell, Microsoft, eBay, PayPal, Google etc etc etc that the first to scale in this business model owns the space. With 60 million downloads in the 1st 30 days, Apple is on pace to scale significantly. And with lines out the door at Apple and AT&T stores waiting to reserve a phone 7-10 days later one month after the phone has launched, my guess is that number is growing along with the number of customers on the network. Apple will own the next generation platform, mobile commerce and social networking, because they will sell the hardware that is the gateway to the ecosystem, and the software that runs behind the network.