It's Hard

That is my first impression of the iPhone 4S. It has a really really hard hand compared to my relic iPhone 2G. That and a great camera and external speaker set. Perhaps more when the initial sync finishes. It is amazing how much value Apple packs in a device.

Think Different

Quick Thoughts on Google/Motorola

This article by Henry Blodget for Business Insider and the below chart got me thinking about the smartphone market.

Some quick thoughts.

All the leading smartphones have been integrated software/hardware solutions. Blackberry/Treo/iPhone. The PC model does not work in the smartphone market.

That Android OS bar is going to get a lot more orange.

Apple will not be reduced to niche status.

HTC has a big problem.

Microsoft needs to make a move.

Online Lures Local

After giving eMarketer a bit of a backhanded complement yesterday on the online marketing opportunity today they are getting all out kudos.

Location based marketing has been of great interest to me for a while as evidenced by "The Mother of All Internet Wars" and "The Local Nut" articles. Well today eMarketer came out with an article entitled "Online Lures Local Ad Dollars."

This chart does a nice job of showing how local ad spending is expected to continue to shift online to move more in line with now people are spending their time.

The money quote was in the eMarketer Daily.

"The proliferation of online advertising channels over the past few years has made it easier for local businesses to transition ad dollars from pricier, traditional ad formats to cost-efficient interactive channels like social media, search and email marketing."

As online local marketing channels continue to grow and offline marketing channels contine to shrink it's a trend that is sure to continue.

Groupies & Mobs

I have been tinkering around in mobile marketing space for awhile. Really more at the intersection of mobile, flash marketing, location-based services, and social spaces. It's a big intersection. What got me going on it was a mom named Anne that came up with a rather simple solution to a couple of the problems facing flash marketing deal of the day companies like GroupOn.

GroupOn is killing it. Forbes called Chicago based GroupOn the fastest growing company ever. The way a GroupOn deal works is they offer a deal per day in a host of cities via email. It's typically 50% off. The consumer pays for the deal up front. GroupOn keeps 50% of that payment and distributes the other 50% to the retailer over a period of time. Boom, instasales. But the GroupOn concept has some problems.  

If you spend anytime talking to merchants these problems come up pretty quick. Retailers don't really like the economics of the deal, they are only getting 25% of their normal retail price. And while GroupOn sells the deal as a customer acquisition method, most retailers feel that the customers don't come back. As one merchant put it to me "people that use coupons are people that use coupons." They even have a derogatory term for them, groupies. Here is a nice little merchant horror story.

If you spend some time on these deal of the day services as a consumer you also notice a few issues. One is certain types of services companies can not keep up with demand when they run a deal. As an example I purchased $175 car detail for $59 from Atlanta based Half Off Depot on April 29. Shortly thereafter I contacted the establishment to arrange an appointment. When I called the number on the coupon I was told that I could not make an appointment via phone though that was the only contact method on the coupon. So I asked for the email address and wrote a note. When I emailed I received an auto reply saying it would be 7 - 10 days before someone got back with me. When they finally did the appointment was set on September 12. Four months after I purchased the deal. When they came out to do the job they were only there for about 45 minutes. I am not alone. These types of stories abound. And worse. Yesterday TechCrunch reported how a fraudulent GroupOn deal in Atlanta really brought the service drawbacks to light.

Anne had the solution to these problems and a couple of other issues that I will keep in my pocket for now. Regardless somebody is going to figure this out and make a lot of money. It could very well be GroupOn, they have some smart people and raised $135 million. That somebody could also be another little Atlanta deal of the day company called ScoutMob. ScoutMob is more of a mobile app than email service. They push virtual coupons to Androids and iPhones. ScoutMob's business model is a bit different. Instead of having consumers paying up front they pay when the redeem the coupon. And without reveling how the business works the economics to the retailer are much more attractive. ScoutMob has solved the issues with flash marketing outlined above. There are about a dozen other startups in Atlanta tackling the space. Currently of note beyond Half Off Depot and ScoutMob are ClipZone, Extrafeet, iCouponBook, OfficeArrow, PlacePunch, SparkSpree, and Thanks Again. There is one in stealth that could get really interesting.

It's a big busy intersection.

The Boss Is Right

The hordes waiting in line for hours today to get that new iPhone 4 make it hard to believe that Apple is losing share in the smartphone market.  But as I wrote last week, they are and they will continue to do so.  Those hordes are merely trading up, not increasing iPhone share one bit. 

In the comments of that post, Stephen Fleming, my boss, noted this:

I don't disagree that Android, in its many variations, may dominate MARKET share of smartphones a few years from now. But, with all the revenue streams from iTunes, the App Store, the iBooks store, and iAds, I think Apple will continue to dominate the PROFIT share. And that's what Jobs is targeting this time around.

Stephen is right. He's right because it's not really about the phone because the phone is no longer a phone.

Tell you a story.

About eight to ten years ago I was the guy that started and ran EarthLink's mobile business.  The Internet was just beginning to move off the desktop into handhelds and there was a big rush to get there.  Companies such as AventGo and Everypath promised to get web content into the mobile environment.  There was just one problem with this plan. Well maybe two.  Back then wireless transit speeds were extremely limited. Viewing any content was painful.  Very painful, nobody had the patience.  But the bigger issue was that users did not even want content on their mobile devices.  They wanted what got them to use the Internet in the first place.  Communications.  Email.  The handheld, that is what we called them back then, needed to morph to a communications device not a content device. So we went out and built that capability, sold it to our installed customer base, and built a nice little business around it.

Fast forward to 2007.  The launch of the iPhone 2G.  Why they called the 1st generation phone a 2G when all other Apple handhelds use the numeric before the G to designate generation is beyond me.  But I digress. The iPhone was not a phone.  It was something.  A platform.  At the time what exactly it was a platform for was unclear.  But if you used one a little voice deep inside was telling you "this changes everything."

And what is becoming clear in 2010 is what it changes.  The iPhone is not a phone.  Yeah it does all that communications stuff like email, talking, texting, and more.  But it does something else, and it does it pretty darn well.  It delivers content.  Hell it creates content. The iPhone has made the jump from being a communications device to being a content device.  It's the only thing out there like it, which is why the hordes are waiting in line to upgrade.  And even more importantly, delivering content can be a very big and profitable business even if the iPhone becomes a niche player in the smart phone market.  

Seen This Movie

So yesterday, according to The New York Times, Apple took about 600k in new iPhone orders.  Rock on.  At about $200 a pop that is about $120 million in revenue plus whatever the AT&T sub happens to be.  Most likely three x that or $360 mill in total. Not bad for a day when you are unable to complete customer orders.

A big yippee ki-yay for Steve and his dedicated team from Cupertino.  Atlanta based Gerry Purdy chimed in “It shows the Apple magic is still present, it’s impressive.”

As a heavy Apple user and someone that intends to get a new iPhone my response is "perhaps." The money quote from the NYT article:

Still, analysts said, Apple is struggling to maintain the same clear-cut lead over rivals that it had in the past. In particular, the growing portfolio of Android-powered phones, which number in the dozens this year and are offered by many companies, is a significant threat.

“The reality is that in the long term, the Android market share is going to catch up to Apple,” said Charles Golvin, a wireless analyst at Forrester Research.  “When you have one device being sold to a smaller portion of the population, it’s not going to compete as well as many devices from many vendors on multiple carriers.”

We've seen this movie before.  Apple.  Microsoft.  The personal computer early market share war.  We all know how that ended.  Apple niche.  Microsoft dominance.  

The end game for the mobile OS wars has been foreshadowed.

PepsiCo10

Here in the heart of the New South folks don't talk about Pepsi much.  When I first moved to Atlanta from the NYC area I walked into Stone Soup and much to my surprise they did not even stock the stuff.  Over on North Ave our KO friends will not mention the company by name.  But the good folks from Purchase have put together a program called PepsiCo10 that is worth talking about.

PepsiCo10 is an opportunity for startups to share ideas and gain access to PepsiCo brand experts, media specialists, and venture capital mentors.  The program is focused on businesses in one of four subject categories: social media & marketing; mobile marketing; place-based and retail experiential marketing and digital video and gaming.  The PepsiCo10 is open to small media and technology companies with product in market.  Startups may have already publicly launched a solution or may have a beta ready for launch, but the product has to have been in market for less than two years.  Applicants must have minimum annual revenue of $250,000 or total funding ranging from $250,000 to $10 million.  They will make exceptions companies that have participated in accelerator or incubator programs (like ATDC).

Out of the field of applicants up to 40 companies will be invited to present a formal RFP and five minute introduction video to PepsiCo and its partners.  From there, up to 20 companies will be selected to present at a two day PepsiCo10 Summit on July 27 and 28 in Purchase, New York. Following the PepsiCo10 Summit, up to 10 companies will be chosen to pursue a pilot project with a PepsiCo brand team.  So if this sounds pretty interesting the first step is to fill out the online application by June 24.

AT&T's Pricing Moves

Last week, in advance of the unveiling of the new iPhone 4G and the iPhone OS4 operating system a little bit later today by Steve Jobs at Apple's World Wide Developer Conference, AT&T announced that it is dropping it's unlimited data plans for iPhones.  Of course they did not spin it this way but instead of its current $30 unlimited plan, AT&T is moving to a $15 200MB plan and a $25 2GB plan.  The unlimited plan is going away.  Buh bye.

Oh the irony.  This is AT&T, the company that made $19.95 unlimited Internet pricing the market standard.  That $19.95 all you can eat pricing exploded the use of the Internet and was the first shot to the body of AOL which at the time had metered pricing.

Let me tell you something.  I was hanging out in the Internet industry back then.  Consumers hate, absolutely hate metered Internet plans.  They don't understand metered data pricing models.  They don't understand data use pricing models because they are complicated.  Go try and calculate how much you consume.  

I have conducted a good deal of research on this subject.  Consumers will pay significantly more per month for a flat rate plan in lieu of having to monitor their usage or getting the big bill one month.  Most will pay a 25% premium for a flat rate plan and many will pay a 50% premium.  And if you are a smart access provider, you price your services so that the flat rate non use breakage of the lighter users makes up for the heavier user behavior.  This enables you to make money by rapidly growing your user base.  You have to have the flat rate to remove consumer uncertainty which creates purchase hesitation.  

AT&T knows this.  They are looking to stop data consumption by heavier prospects/users by getting them to move to other networks, and get lighter data consumers to buy the $25 plan to remove billing uncertainty.  The former is the quickest path to improve the overall performance of the AT&T network while the latter will help with margins.  And once AT&T spends a little time actually building out a more robust network I expect that AT&T will return with an unlimited plan.  And the price will be more than $30 a month.

Nokia Venture Challenge

Nokia's Calling All Innovators competition is trying to find the best big ideas for mobile applications.  And this year they are taking the contest to a new level by offering up a $1 million venture investment to the winning proposal that could change the way people use Nokia devices.

The winning proposal will meet the following criteria:

• It must include a clear mission statement; and provide a product or service plan that will undeniably raise the standard of living, and/or enhance the lives of people living in emerging market countries today.
• The initial target market must be located in a region with per capita income significantly lower than what is found in industrialized nations today (e.g., sub-$5 per day).
• It must include a viable business model that has a high likelihood of providing a strong return on investment for the venture funding provided.

In addition to the Venture Challenge Nokia is offering over $350,000 in cash prizes across a host of categories.  The Nokia competition is open to all mobile and web application developers worldwide.  Submissions are due 12:00 am EDT on June 10, 2010.