All of the mainstream media, including The Wall Street Journal and The New York Times, are ripe with stories about the number of applications for iPhone. Apple took the bold step of crossing the Atlantic and Pacific regions simultaneously, launching in over 20 countries, in one shot. Amidst the Apple iPhone application mania, the most consequential news, which seemed to miss the media’s attention, was that Apple became the new arbiter of all applications running on the iPhone. Interestingly, all of its mobile operator partners were happy (or at least appeared to be happy on camera) to not only surrender control of the iPhone application store, but also the revenue stream to Apple. This is welcoming news to all application developers, including my employer, as application developers get a healthy 70% share of the application revenue from Apple. This plan leaves mobile operators with just the data revenue and completely cuts them from the application revenue stream. Is this akin to the sin of Adam and Eve, eating the forbidden fruit, or is it more like the discovery of the force of gravity that Newton experienced with an apple falling on his head?
Remember the days when Internet Service Providers (ISPs) were all the rage? AOL was the darling, as well as UUNET and PSINet, amongst hundreds of other local ISPs. Where did they go? The only names that remain are our telephone and cable companies, like Comcast and AT&T, who have become the new ISPs. What have the ISPs been reduced to? Just commoditized data pipes on which many Internet brands, such as the real value-added players like Google and Yahoo?
Is this the beginning of the same commoditization of mobile data services? Just looking at the U.S. market, where many of us are used to buying unlimited Internet access every month for a set price, it seems very likely that we will see unlimited data plans and very little control of the mobile operator on the value-added services, unless mobile operators see the light and make the necessary changes that are required to move forward.
Research in Motion has been offering e-mail services worldwide to its network of Blackberry users. However, unlike Apple, Research in Motion didn’t manage to convince mobile operators to make them the arbiter of applications running on Blackberry. Instead, there are many sources for Blackberry applications, but mobile operator decks remain the most popular, even though BB lovers are calling for RIM to take control of its application platform. Nokia has been trying to reinvent itself as an application developer, competing with many of its application developer partners, as well as with mobile operators’ offerings. Many mobile operators have been resisting this movement, but some are giving in. Google, with its mobile OS Android, is going to try to become an application hub as well. Microsoft doesn’t want to be left behind and, while I was writing this, Microsoft announced its entry into the mobile applications world too.
Bottom line is that there is a battle brewing between handset manufacturers and mobile operators to offer applications to mobile subscribers directly. Will mobile operators give in and let every other handset vendor control it’s own destiny, like some did with Apple? Or will they retract and act against these moves? T-Mobile announced its intention to compete with the Apple store. So one would have to wonder if this is indeed a wake-up call to mobile operators: Maybe now is the time for them take this battle seriously. And more so, since mobile operators have a lot of power, given the amount of subscriber data that they're able to track.
Despite this power, the relationship between mobile operators and their subscribers can, at best, be described as a love-hate relationship that starts and ends with a monthly bill. The relationship between mobile operators and software developers is not always a great one either – marred sometimes by bureaucracy delaying the launch of applications or by greediness in taking a much larger share of the revenue.
It is time for mobile operators to take control of their application revenue streams. Otherwise the only thing they will have to contend with is a monthly bill for Internet access, just as the case is with ISPs. I am sure there are many recommendations that the industry can offer, but I thought I would add some personal suggestions to the mix:- Encourage applications that enable mobile operators to extend a relationship with subscribers beyond the monthly bill
- Refocus on application portals by rebuilding, marketing, and selling them prominently amongst the operators’ offerings
- Refuse to sell handsets that don’t offer open and well documented software development platforms
- Allow for faster and standard ways for developers to launch applications on mobile operator portalsAllow application developers to acquire a larger revenue share of the application – remember that the PC industry exists today only because of application developers. As such, applications cost more than the hardware they run on. If allowed to flourish, this will be the future of mobile applications too.
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From newspapers to magazines, from the internet to the television, all attention is on Obama – the undeclared winner of the race before it is even over. Oops! I meant the Apple iPhone. Then there is McCain struggling to get attention, despite having all the experience in the world – kind of like Nokia.
The parallels don’t stop here. Message of change with not much talk of substance is what defines Obama and the iPhone. Of course, Obama’s message is sexy and attracts a lot of attention from the youth market and many foreigners – even the ones that can’t vote. It’s the same story with the iPhone, a riveting sex appeal and deafening attention from the world over, including from the ones that can neither buy nor afford it. McCain, on the other hand, keeps talking of his experience, like Nokia, vocalizing their extensive knowledge and experience of the mobile industry.
Let’s now turn our attention to the mobile industry and look beyond the hype at an attempt to uncover the real deal behind the Nokia/iPhone war. Nokia makes phones for the masses and so, for comparison purposes, Nokia’s higher-end ‘N series’ phones, like the N82, N95, should be compared with the iPhone.
What is the basic purpose of a phone? To make calls anywhere, anyplace. If you call someone from your address book, probably both phones provide a similar experience. However, my test of a phone is to make calls with one hand while driving and when I put both of these phones to test, the iPhone failed me while most phones with keypads like Nokia worked well. Having a standard RCA phone jack gives us the flexibility to buy headphones of any type – Apple does a good job by equipping the iPhone with the jack, and finally Nokia is learning and standardizing on it. Wearing headphones in both ears has been deemed illegal in many states before the current cell phone laws came into effect. In the case of the iPhone, the way in which headsets are packaged, most users tend to wear headphones in both ears which may be illegal in many states. Nokia, and many others, who had this advantage are giving it up by packaging stereo headsets. Voice quality, although subjective, is surely somewhat better with Nokia’s headset than with the iPhone. Now, on to using the iPhone away from your home network – Yes, you can use AT&T and pay as much as two dollars per minute, but if you want to unlock your iPhone and use the local SIM of the country that you are visiting, don’t expect help from AT&T, which it seems to provide for other phones.
Web browsing is a new purpose introduced by iPhone, with all previous attempts being sub-optimal. There is no doubt that Apple wins here, hands down from every other vendor. Needless to say, with iTunes and iPod’s success, the iPhone offers a much superior experience. Unfortunately, with the limited memory on the iPhone, I wouldn’t use the iPhone any more than I’d use my iPod Shuffle.
Email is another function that the Blackberry streamlined, and just like the iPhone excelled at Web browsing. Needless to say, the Blackberry is the king of the email functionality hill, and the iPhone has a long way to go to catch up. In addition, the absence of a real keypad ensures the sad fact that the iPhone may never be able to catch up on email functionality. Nokia did well on its E Series, although its N Series experience can only be termed sub-optimal.
Five mega pixel cameras and great branded lenses are the hallmark of Nokia’s new phones, including the N95. The iPhone, however, has a long way to get there, but more pictures are being taken per phone by iPhone users because of the bigger screen size and the pictures just look better on the iPhone screen. However, don’t try shooting a video with the iPhone yet, since it doesn’t support that feature, while many low end phones already come equipped with that capability.
The part that really surprised me was the attention that the Apple developer kit and other third party software got from the media. Hello! Symbian (and hence Nokia) has had one of the best developer kits in the industry for a long time and have applications in the thousands available. True, Nokia and Symbian failed in hyping it up, but the fact is that Apple came fashionably late to this party and simply stole the show. Apple has created a revenue model for its software developers, and Nokia needs to learn while it fruitlessly tries to be Google rather than making money for its developers, and hence, for itself.
Extensibility is another area where the iPhone gets zero marks. I’m shocked at how little has been written about it in the press. You can’t replace the battery yourself and the memory is not extendable either since that’s how Apple chose to differentiate its models. On the other hand, most other phones come with a removable battery that you can buy anywhere. Memory is also pretty much standardized in the form of MicroSD cards for most phones. Oh yes, if you want to charge your iPhone without a PC/Mac, be ready to shell out another $20 for the charger, since Apple chose not to supply one.
R. Paul Singh
President & CEO
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