Does Apple Bite?
So now let’s leave Handset X, and go back to talking about the iPhone 3G, specifically the applications side of the iPhone. Apple will continue to improve its developer processes, get over the hump of immature apps trying to get through their system, and continue to improve the overall software platform of the iPhone 3G. That’s a given. In my view however, another challenge will be cropping up at the same time. One consistent theme of mine is the tremendous complexity of mobile networks, both any individual network, as well as the totality of networks around the globe. This is not a value judgment; it's a reality.
With the 2G iPhone, Apple was able to work with a limited set of applications with a limited set of operators. As it expands globally, and broadens its application set to a wider array of services and operators, things will get trickier.
As I mentioned in "Open Part I," when you have different platforms, billing systems, GPS systems, messaging gateways, roaming systems etc., the way applications function within a given operator or across operators gets tricky. Although all the networks are standards based, there is enough leeway for interpretation of those standards, especially across a complex vendor landscape, that an application that is approved by Apple for one operator, might have trouble on another network, even in the same country.
The more complex and "multi-functional" an application may be (and thus the more useful the app may be), the more challenge in making it work across various operator’s internal configurations. And I’m not even going to touch the roaming issues that are going to arise (cost, compatibility, etc.) as folks start to roam with their devices. This stuff is never easy. I'm sure they will be solvable over time, but only after much pain from Apple, the operators launching the iPhone 3G, and their customers. Plus, the Apps Store side of Apple is still very much a work in process. Go to the site, and read some of the description of apps and revisions. A lot of this stuff is clearly not ready for prime time, and clearly not on par with the expectations of mobile users. I am not going to download an app that has a description discussing the types of crashes that the developer is trying to fix.
Apple and Android reality check
The upcoming Android platform and the Apple 3G iPhone are the dramatic two sides of the coin, ying/yang, the opposite side of the spectrum, so to speak. Both are necessary; both are needed by the mobile industry. Neither “open” nor “closed” is a panacea. Both have flaws, and both have a lot to learn about wireless. But from my perspective, as much as folks might flame me for some of the stances I’ve taken in my Part I and Part II, the industry needs to do a deep bow to both. Both are driving their own world view of innovation, and at the same time continuing to light a fire under the "traditional" mobile ecosystem. Don’t count out these folks. As much as pundits, bloggers, and early adopters focus on the stuff we focus on, don’t lose sight of the fact that there will be about 1.2 BILLION mobile devices sold in 2008. Apple has sold 6 million iPhones in its first year -- the Android folks have yet to ship a device. There have been articles written that Apple may sell tens of millions of iPhones globally, but that still gives them single digit market share.
Don’t be too quick to say "game over" for Nokia, Samsung, LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , or to a Motorola (especially with Sanjay Jha now over there from his old role at Qualcomm). Or to the likes of HTC and RIM (which just hit 10 percent of U.S. handset sales) or all the folks coming out with mobile-broadband-enabled “shrunken laptops” euphemistically called MIDs (mobile Internet devices) that are being introduced and are mutating at an incredible rate.
And don't say "game over" to the thousands of mobile app developers that will be too busy making rational choices between various devices, operators, and platforms, to maximize their ability to grow their companies. Also, remember that the U.S. is not the center of this universe. Visit the Websites of the likes of KDDI, DoCoMo, SK Telecom, Singtel, and some of the top European innovators (who have been driving mobile broadband uptake). In fact, there was an article last week on how Japanese handset folks will be looking to export devices and apps that have been used for years, but have yet to show up on U.S. shores.
The next Apple blockbuster?
The rumor mill has Apple introducing a new set of laptops in the near future, potentially in time for the fall selling season. I’m gonna make a hopeful bet.
Apple has talked about the fact that there is the potential for reduced margins in their future. Lots of folks have prognosticated that this means lower prices for Apple products. But I’m going to go a step further. Apple, bless them, loves driving the boat. The iPod Touch and the iPhone have basically the same functionality -- the difference being that the iPhone has wireless wide area network connectivity, in addition to WiFi. One hundred percent of iPhones leave the store connected to the WWAN (wireless wide area network) when they are activated, even as 0 percent of Apple laptops are connected to WWAN “out of the box” today.
If I were Apple, and wanted to make a ballsy breakout move, I’d come out with a Safari-based MID, solid-state memory based, with embedded 3G HSDPA and/or EVDO -- like several cool HTC devices have today. I’d even come out with a laptop model with embedded 3G tied to groundbreaking pricing on mobile broadband service offerings.
What would this do? Including a mobile broadband radio would raise Apple’s cost-per-unit and reduce its margins, but if Apple can drive adoption of subscriptions by their users in conjunction with the operators, my guess is that they could make up that margin and then some on the back end "commission" deals they could wrangle on activation. All that I know is that it just can’t be at $60 per month for the 3G Data Service.
So, I’m out on a limb with a prediction here: If I’m right, OK, but if I’m wrong, I hope I’m right in the near future, as an Apple move along these lines would have the same catalytic effect on devices and services as the 2G iPhone had. Which as an Apple fan and shareholder, would continue to make me happy.
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