Business news from the Fredericksburg region.
Can iPhone 5 hype save the economic world?
CAN THE iPHONE 5 save the economic world, even though it’s boring, low on innovation and almost entirely driven by hype?
Yes, it can.
Bloomberg’s Timothy Lavin puckishly compared the importance of Apple’s unveiling of the iPhone 5 to the introduction of “the wheel, the steam engine, God’s revelation to Moses.”
The hype is that good.
Jimmy Kimmel proved how effective it is. He did “man in the street” interviews passing off the iPhone 4S as the iPhone 5 and asking people what they thought. They raved. One guy was even holding his own iPhone 4S while he drooled over an identical iPhone 4S he thought was an iPhone 5. He moped about how lame it made his phone seem.
This should provide us a glimmer of hope. If there’s one thing America remains good at, it’s hype. We’re No. 1 when it comes to hype. And hype sells, baby.
One definition of “consumer confidence” is feeling good enough about the future to make a big purchase. The kind of consumer confidence we’re talking about here involves being willing to pay $200 and sign a two-year service contract for any cardboard box with an Apple logo on it, no matter what’s inside. The heck with the future.
Apple’s first stash of pre-order iPhone 5s sold out online in less than an hour when it went on sale online at 12 a.m. Friday. Some stores, such as Best Buy, still had their own pre-order stocks, but they were also expected to go fast. And there will be long lines when it goes on sale in stores Sept. 21. Some analysts are predicting that Apple will sell 10 million iPhone 5s by the end of September. In macroeconomic parlance, that’s a lot.
Anyone who had any doubt about the selling power of the iPhone should have been convinced this week when CNN Money reported that from June 2011 to June 2012, the score was iPhone $74.3 billion, all Microsoft products $73 billion. It wasn’t that Apple was outselling Microsoft by that much: The iPhone alone was.
J.P. Morgan chief economist Michael Feroli reportedly told clients that iPhone sales could add between 0.25 and 0.5 percentage point to U.S. GDP growth for the fourth quarter.
Of course, the impact on the economy depends on whether we take money we already planned to spend on something else—like food for the kids—and spend it on the iPhone 5. That would not really help the economy much, even though the kids could stand to lose a few pounds.
The economy will do better if we instead dip into money we weren’t planning to spend for a while to buy an iPhone 5. Like maybe the kids’ college fund.
Michael Zitz: 540/846-5163