Leak Culture: Profitable Marketing or Cause for Worry

With an easily excitable stock market, it is regular for leaks — most of which prove to be baseless — to take precedence over factual…

With an easily excitable stock market, it is regular for leaks — most of which prove to be baseless — to take precedence over factual information and drive the market wild. With the release of the iPhone 5, it seems that the actual product was only half of the story. Speculation as to the upcoming iPhone model began almost immediately after the release of the iPhone 4S and managed to keep the Internet abuzz for almost a year, as an endless source of photos and videos claimed to truly disclose Apple’s newest oeuvre. The rumors were so pervasive that Apple’s third quarter earnings were below analyst’s predictions, as many customers chose to forego the purchase of an iPhone 4S and holdout until the release of the newest iPhone model.

High Risk, High Reward

How effective are leaks when speculation does not match reality? Often, customer satisfaction is diminished by products that fail to live up to expectations. When a company like Apple announces the release date of its new iPhone, speculations abound as to its future character, some so wild that they question the very definition of a phone. And, though many were impressed over the new release, very few were surprised by the new features, as they had been part of the public discourse for months.

While some of the eerily accurate predictions for the iPhone 5 can be worrying, we should take into account that leaks, even for a highly secretive company like Apple, can be extremely desirable, as it shapes the image and even projected sales for a products. As part of a business strategy, leaks build momentum for products, creating an atmosphere of excitement and activity that, as seen with the latest reports of Apple’s iPhone 5 record 24-hour sales, can be incredibly profitable. Social network sharing has further shaped the reach of leaks, as the dissemination of leaks is ever reaching. It thus seems that we are now living in a leak culture, one in which leaks are expected by customers and delivered by companies, creating a system in which innovation is only as good as the word of mouth around it.

Keeping Up With the Competition

With Apple’s continued success, competitors have continued to push new products in an effort to overtake the iPhone’s wide success. After a heated battle over patent infringement, Samsung is attempting to shift the focus from the iPhone 5 to its own Samsung Galaxy S4. Scheduled for a release date just nine months after the release of the Galaxy SIII, Samsung might even try to push the release date in order to try to immediately compete with the iPhone 5, especially over the holiday season. Samsung’s new model is rumored to have a 12-megapixel rear camera with a 1080p recording and more stable sound.

Yet, with the rise of a leak culture, companies not only have to keep up with competitors but also with themselves. With the iPhone 5 finally out, Apple is shifting gears, appearing to leak photos of the new iPad Mini in order to detract attention from its competitors. The iPad Mini, which is said to have a 7.8 inch screen and feature AU Optronics and LG Display screens, will rival’s Kindle Fire and Microsoft’s upcoming Surface tablet. With a series of leaks, companies can thus galvanize the market and increase their potential client base.

Take Extreme Measures

Perhaps more damaging than a product flop is a leak flop, one that proves to be fabricated by the very parent company. Nokia experienced the backlash of leaking photographs allegedly taken with its new Lumia 920, whose OIS camera professed to take the clearest, most well-lit night shots, proved to be faked. An admittedly well-developed product became undermined by the negative press around the leak, shaping customer perception even before the release of the actual product.

Furthermore, in the same fashion in which WikiLeaks proved highly damaging and threatening to US security, leaks can also expose a company’s products and incite plagiarism. By exposing a product’s blueprint, leaks allow competitors to come out with new versions of their own products that incorporate novel features seen in leaks or in extreme cases outright copy them. Though Apple’s recently won lawsuit against Samsung for patent infringement sent a shockwave across the technology field as to the repercussions of forgery, it is unlikely that leaks will stop being released (the fact that Samsung payed its $1 billion dollar sanction in nickels did not quite stress the importance of the ruling either). It thus seems that leaks are far too valuable for a company’s products to do without, even if it means giving competitors the opportunity to replicate new inventions.

Shaping the Future, One Leak at a Time

Because of leaked iPhone 5 images, many people—normally uninterested in technology—considered and are making the big jump to smartphones and other forms of mobile technology. Leaks offer a glimpse into the future, yet their fickle nature can either drive up sales and set the web abuzz, or tarnish the reputation of a product even before its release. While the pros and cons of leaks are often regarded under a company-specific perspective—seen as beneficial or deleterious only to the parties at stake—they also shape the entire field of technology. With leaks coming out on a regular basis, companies push for innovative products and methods to stay ahead of the competition. This drive to be at the forefront fuels the tech field and leaks serve as catalysts for creative development.

More Articles By Isaac

Recent Articles

Previous post How to Upgrade to iOS 6 September 19, 2012
Next post Quick Fix: Connecting Passbook to the App Store September 21, 2012