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Apple iPhone 5 pre-orders ahead of Friday's launch are virtually sold out leading some Apple faithful and marketing experts to question whether the sell-outs are deliberately engineered by Apple for marketing reasons.
Those looking to get their hands on an iPhone 5 as soon as possible should prepare to queue at an Apple store as Apple's online shipping times have blown out to two-three weeks while carriers have mostly run out of stock.
Telstra and Virgin Mobile both confirmed this morning that their pre-order stock had run out, while Optus and Vodafone still have units but expect these to run out shortly. Analysts expect Apple to sell 6 million or more units by the end of its first weekend and 58 million by the end of the year.
Some features will not be available to Australians at launch including turn-by-turn navigation and Siri-provided directions, restaurant reservations and movie show times.
Apple said turn-by-turn navigation and Siri directions be would switched on for Australia in October. The full list of features that will be available to Australians at launch, including Siri sports scores and traffic information, is on Apple's website.
Cynical marketing ploy?
Australian journalist Matthew Powell, who has covered Apple for decades, said Apple CEO Tim Cook was known as one of the smartest operations guys in the business so "would have known exactly how many units were required and where they needed to be allocated".
He said he would never pre-order again after he ordered an iPad 2 that was supposed to be delivered on launch day but took three weeks to arrive even though Powell ordered the device within seconds of pre-orders opening.
"By doing the allocations this way, Apple gets two stories - 'pre-orders sellout' and 'queues around the block on launch day'," said Powell. "If it isn't deliberate it's awfully fortuitous."
Iain McDonald, founder of digital marketing agency Amnesia, previously owned by Microsoft, agreed. "Absolutely. It's all part of the spectacle that Apple loves to create around its products and it's in a good position to amplify this because Apple has its own stores making it a very visible specacle," he said.
McDonald said marketers had been using the strategy for years, including nightclub owners who make people queue up outside even though the club inside is half empty. "The irony is that Apple are probably in a position where they can't afford not to have the queues outside at launch," he said. "It has become part of their brand and if there were no lines, that could be considered a failure to launch and may have a huge impact on subsequent sales."
But Anthony Agius, founder of MacTalk.com.au, said there was "more risk in pissing people off with no stock" than the "vague benefits [derived by] creating some fake demand". "They don't need to generate false perceptions of demand, there is legit demand," he said, adding the sell outs were more to do with Apple's inability to make the products fast enoguh.
Pre-orders off the charts
Orders via Apple's site opened at 5pm on Friday, around the same time telcos including Telstra, Optus, Virgin and Vodafone released details of their pricing plans.
Telstra said “pre-orders launched on Friday evening and were sold out by Saturday morning making it our fastest pre-order to date”.
Online comparison service WhistleOut, which has a partnership with Fairfax, publisher of this website, said the plans were “very much the same as” the telco plans for iPhone 4S.
The iPhone 5 goes on sale this Friday in Apple Stores and the first people to order online will also get their devices on that day. But within hours of orders opening on Apple's website, shipping times increased to 2-3 weeks.
Apple Australia confirmed that regardless of online demand there will be separate stock in stores on Friday and carriers also have their own stock. Sites such as Airtasker.com are offering to hold your place in the line for $50.
Even Vodafone, the only carrier that will not offer the iPhone 5 on a 4G network, said it was experiencing heavy demand.
“If the hours following the opening of pre-order sales in-store and by phone are anything to go by - where we had to open online pre-orders five hours early due to significant call volumes to customer care - I wouldn't be surprised if we sold out in coming days!,” a Vodafone Australia spokeswoman said.
Virgin Mobile, Optus and Vodafone all offer low-end users iPhone 5 plans for under $50 a month, with Virgin's coming in the cheapest at $47 a month for the 16GB model (including handset repayments).
Telstra's entry-level plan starts at $67 a month, but those who spend $80 a month or more will get a bonus 1GB of data for the first year of their two-year contract.
For no upfront handset cost for the iPhone 5 16GB, Optus, Telstra and Vodafone plans start at $80 a month, while Virgin's equivalent is $89 a month. There are some, but fewer, $0 upfront options for the 64GB model.
WhistleOut's Cameron Craig said Telstra could justify its higher prices because it offered the best 4G coverage and network speed. He said it remained to be seen how the 4G networks in Australia would withstand the iPhone 5 load once people began switching them on.
“Telstra's 4G network is already supporting over 350,000 customers, but the Optus 4G network has only just been unwrapped,” said Craig.
Those who do not want to go on a two-year contract can buy the iPhone 5 outright from $799 for the 16GB model to $999 for the 64GB model.
Re-sale market running hot
Australian services that buy used gadgets such as Mazuma Mobile and ReGadget have been doing a roaring trade ahead of the iPhone 5's debut. ReGadget founder Owen McCrink said he had traded in “hundreds”
of iPhones - mostly iPhone 4/4S - in the past few weeks.
“Last year [with the launch of the iPhone 4S] not as many people were willing to break contracts to upgrade, while this year as it is a totally new phone, there is a lot more willingness to upgrade,” said McCrink, adding he was offering up to $243 for iPhone 4 and $383 for iPhone 4S.
Eager punters, keen for their 15 minutes of fame, have already begun lining up outside Apple Stores in London and the New York from Friday. There did not appear to be anyone lining up outside Sydney Apple Stores this morning.
Independent telecommunications analyst Horace Dediu, who specialises in Apple analysis, estimated the company would sell 6 million units by the end of the first weekend of sales. Analysts surveyed by Bloomberg said, on average, that they expected 58 million iPhone 5s to be sold by the end of the year, which could generate as much as $US36.2 billion in sales for Apple.
Analyst firm UBM Tech Insights crunched the numbers for the iPhone 5 and found that the components that make up the 16GB model, which sells outright for $799, cost $US167.50.
The iPhone 5 will debut in nine countries on Friday followed by 22 more on September 28. By December it will be available in 100 countries.
Some developers are worried they may not get their apps sufficiently optimised for the new longer screen in time, The Next Web reported. Apps that aren't modified for the iPhone 5 will appear like they do on an iPhone 4 but with black strips along the top and bottom.
The iPhone is Apple's best-selling product and makes up about two-thirds of its profit. Apple has sold 244 million iPhones since its debut in 2007.
The new iPhone is thinner (7.6mm), has a bigger 10-centimetre screen, supports 4G networks and includes an eight-megapixel camera with software that can take large panoramic shots. The new iOS6 comes with several software enhancements such as Apple's new maps app, an upgraded Siri and Passbook for storing tickets, boarding passes, offers and loyalty cards.
Samsung was quick to launch a US advertising campaign mocking the iPhone 5. It released a feature comparison heavily weighted in the Galaxy S III's favour above a tagline “the next big thing is already here”. Apple faithful have already doctored the ad to sling some mud back at Samsung.
Apple said in a statement to some US publications that iPhone 5 orders were “incredible” and the company had been “completely blown away by the consumer response”.