Lots of press this week about the Nexus 1 (a.k.a. the Google phone) and whether it was as good as the iPhone. (see coverage roundup). It may be a moot point. An insightful article, on the NT Times Gadgetwise blog, describes a counterfeit phone from China, that looks and behaves very much like an iPhone but is in reality an Android-based device.
Seems as if you can the best of both worlds (albeit illegally), an iPhone on a non-proprietary platform. Sort of begs the question, why would I buy an iPhone if I can get an Android phone that can act like one (or as a regular android phone)?
This really could put the cat amongst the pigeons as it divorces the iPhone (user interface) from the Apple iPhone operating system.
Recently Merrill Lynch published a white paper on how much the iPhone means to AT&T and the potential effect of AT&T losing their monopoly (maybe as early as mid-2010). A lot depends, of course, if there is going to be a CDMA version of the iPhone.
Here is a summary of their analysis and comments.
approximately 11.5 million iPhone subscribers in the USA (3Q09)
iPhone subscribers comprise 18% of AT&T’s postpaid subscribers
the iPhone has driven an 8% uplift in gross add share for AT&T
the iPhone has taken market share away form AT&T’s base but at much higher ARPU
because there is little churn associated with the iPhone, the overall churn numbers for AT&T have decreased.
the iPhone has been the primary driver of data ARPU growth for AT&T.
The M/L’s analysis treats the iPhone as the only game in town, but with the success of Android-based phones (G1, G2 and ‘Droid) finally giving Apple a run for its money, this is not the case. While these phones have approximately 15-20% of the market share of the iPhone, they do have momentum and a catalog of applications that is beginning to rival Apple’s if not in quantity at least in quality.
With the release of the Motorola ‘Droid’ phone running the Android 2.0 operating system, there has been much talk and chatter on whether this is the long anticipated “iPhone killer”. It could well be, there are a number of impressive features on the Droid such as multi-tasking that are not available on the iPhone. That said, in the long run I think the feature that will make the most difference is the operating system itself.
For the first time, I can as a T-Mobile subscriber with a G1 phone make recommendations on ‘good applications’ to a Verizon subscriber with a Droid phone. The application catalog is no longer tethered to the mobile phone operator. It is the realization of develop once and run on multiple networks (in this case GSM and CDMA).
Came across a comprehensive presentation by Morgan Stanley on Economy & Internet Trends given at the Web 2.0 summit in San Francisco. To give credit where it is due, I came across the presentation through my participation in the TelcoSphere group on LinkedIn.
The presentation is in two parts, the state of the economy (improving but not out of the woods yet) and a section on Internet Trends.
Mobile Internet Usage Is and Will Be Bigger than Most Think.
Apple Mobile Share Should Surprise on Upside Near-Term.
Next Generation Platforms (Social Networking + Mobile) Driving Unprecedented Change in Communications + Commerce.
Mobile in Japan + Desktop Internet Provide Roadmaps for Mobile Growth + Monetization.
3G Adoption / Trends Vary By Geography.
Carriers in USA / Western Europe Face Surging Network Demand But Uncertain Economics.
Regulators Can Help Advance / Slow Mobile Internet Evolution.
Mobile-Related Share Shifts Will Create / Destroy Material Shareholder Wealth.
There are several excellent graphs that support Morgan Stanley’s position such as this on devices participating in the mobile internet.
Couple of points that I picked up from the presentation.
The collapse of carrier portals (example used is the UK where the percentage of subscribers accessing a carrier portal went from 57% in 2007 to 22% in 2008). page 46 It is critical that mobile carriers address this otherwise they will become dumb pipes.
Japan represents the future of mobile commerce. The world today (excluding Japan) looks very similar to Japan in 2000. Since then eCommerce, paid applications and advertising have grown from 14% to 33% of a much larger revenue pie. page 49 I am not so sure about this as I think culture is a big factor in adoption not just technology.
Users have a significantly greater propensity to pay when using mobile access compared to desktop (broadband). pages 51-52 True, but there a lot of free applications and more each day.
Due in great part to the iPhone AT&T has seen an almost 5,000% rise in data traffic in the three years up to 2nd Qtr 2009. Yet 42% of iPhone usage happens on Wi-Fi networks. Wi-Fi may turn out to be the answer for the carrier’s capacity issues. pages 57-58 This was quite surprising to me, I expected some Wi-Fi usage but 42% is significant.
The New York Times ran a small story last week titled “What Do All These Phone Apps Do? Mostly Marketing” It makes the point that there are a number of iPhone apps whose primary purpose is advertising and/or brand building with the actual function of the application being almost secondary.
A good example cited is a ‘spirit level’ application from Stanley Works. While I don’t expect my local contractor to whip out his iPhone to make sure that the wall he is building is nice and level. It does a nice job of getting the Stanley name out there and build brand reinforcement as an innovative tool company. There are 400,000 downloads claimed for this application, which seems quite high (my guesstimate is that there are about 10 million at&t iPhone customers in the US) – which points to an amazing retention rate for an advertisement. No wonder, nearly every business is clamoring to get on the iPhone app bandwagon.
From what I have been able to tell, the same phenomenon is not as pronounced with Android, Windows Mobile, or Palm phones.
Just came across two other posts – from the attention digital blog a spreadsheet of ‘branded apps’ – it has been populated with iPhone apps (over 200) so far but there are tabs for Android, Blackberry and Palm. The second is a piece of analysis done by ComScore on the % of US Internet users who click on internet ads. Contrasting the 2007 and 2009 figures for all US internet users
It appears that the percentage of the internet user population that is ‘clicking’ through on Ads is declining significantly. 84% are not reached by the ad at all. As the mobile internet becomes more prevalent, maybe the dominant advertising model will become ‘sponsored apps’ and not click through advertising.
Finally got around to reading the WIRED September issue. In an article titled “Betting on the Store” Steven Levy makes the argument that the iPhone’s success is primarily due to their immense application portfolio (according to the latest Apple TV ads 75,000 or more)
While I would be the first to agree that the applications are impressive (same goes of course for applications on the PRE, Android, Windows Mobile and Symbian phones) but I think the days of the quantity of applications being the key success factor are about to disappear. There are just too many of them and managing your personal application catalog is becoming onerous at best.
Now in the spirit of full disclosure, I have an Android G1 phone not an iPhone. But I think the same arguments apply – there are just so many applications (15,000 plus for the G1) and there are very few applications that are inherently exclusive to a platform – for example the Hey Where Are You application (iPhone exclusive) provides the same functionality as Google’s Latitude which is multi-platform). Plus looking across the mass of applications, there are a select group that get used regularly (e-mail), some occasionally (travel sites), some as needed (a dice throwing app anyone?). I would contend, that all platforms are well served by their application catalogs for regular use and even occasional use applications.
The implication is that Apple’s Application Catalog is the de facto ‘walled garden” and as such every mobile platform needs to have thousand and thousands of apps to succeed is just plain wrong.
There are lots of reasons for the iPhone’s success, the App Store is but a small part of it.
In 1968, the FCC allowed the CarterPhone to attach to the AT&T phone network. The CarterPhone was a non-AT&T approved device linking a two-way radio network to the phone network. This decision was made over the stringent objections of AT&T, the telephone monopoly at that time in the US, who argued that foreign devices would by their very nature cause a breakdown of the telephone network.
Fast forward to 2009, and we see history possibly repeating itself with AT&T replaced by Apple, the network with the iPhone platform and the CarterPhone with Google, Palm, etc. and the FCC examining the merits of Apple’s policies.
Recently there has been a lot written on Apple’s decision to not permit either Google Voice or Latitude to be added to the iPhone Apps Store. ( see NY Times, Business Week, and InformationWeek). In particular, the Information week article describes how Apple is using thirty year old arguments, “Apple Fears Jailbroken iPhones Could Kill Phone Networks” in defense of its only Apple approved applications on iPhones policy.
The question is of course should Apple have absolute say over what runs on an iPhone ( a kind of benign dictatorship as it were). It is not totally clear what criteria Apple uses but one of the criteria seems to be is the application a competitive threat to either Apple or at&t. There have been a number of missteps so far (see sample rejected iPhone apps).
Looking back at the CarterPhone decision and seeing the innovation that resulted (think cordless phones, fax machines etc.), I would argue that while Apple should be able to have an “approved” applications list, it should also provide a mechanism for other non-approved apps to be available on the iPhone. This ruling should of course apply to all other app store platforms, like Microsoft, Android, Pre etc.