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.
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.
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.
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.
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'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.
I'll be darned of I know. But I am going to make my way out to the Ashford Club on Thursday night to hear Fred Sturgis of HIG, Mike Elliott of Noro-Moseley, Nelson Chu of Kinetic Ventures, David Sung of ATDC, Tuff Yen of Seraph Group, and Said Mohammadioun of Tech Operators discuss where the investment opportunities lie at the Wireless Technology Forum meeting. This panel pretty much includes every VC firm in Atlanta. Come on out and learn directly from the guys that are writing checks.
This past Friday ATDC was the host sponsor for mobicamp, a new unconference centered around mobile technology and its impact on the day to day life of average users. About 70 or so mostly mobile devs descended on the incubator to talk about iPhone development (a bit too much) and more. While the production put together by Return 7 was described by some as "lightly attended", it was a great first effort for a growing group interested in mobile media on a beautiful Atlanta summer night. My favorite session of the night was put on by Jerry Rocha of Nielsen. Great research on the burgeoning smart phone space.
Here are some links from folks that covered mobicamp better then me as I wade back into the world of blogging.
The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person on entity. All postings adhere to my personal values.
5
