Download - Success of the iPhone (April 2009)
Browsing as the killer app:The success of the iPhone
Joel WestSan José State University
Michael MaceRubicon Consulting
Quello Center forTelecommunication Management & Law
Michigan State UniversityApril 24, 2009
Learning from the iPhone
Observation
The iPhone has been a great success
Questions
Why?
What does it tell us about the future of mobile phones?
Outline
Assumptions pre-iPhoneIn devicesIn use casesIn value network
Apple’s iPhone strategyImpacts
Evolution ofMobile Phones
State-of-the-Art TerminalRadio & Television News, Feb. 1953, p. 32
Terminal Evolution
Firm West. Electric AT&T Nokia
TerminalModel 500Desk phone
AMPS subs. SetCar phone
N-seriesSmartphone
Date 1949-1969 1978 2007
Bill of materials
Handset, rotary dial, wire
Handset, dial,2 MHz Intel 8080
Handset, LCD,200 MHz ARM9, 0.06-4.0 gb RAM
Functions Makes callsReceive calls
Makes callsReceive calls
Phone callsInfo managerSMS/E-mailWeb browserMP3 player
Now a consumer product
1 billion phones sold in 2006vs. 240 million PCsUS: 145m cellphones, 61m PCs
Major vendors seek brand loyaltyNokia alone ad spending $375m/yr
Lots of technology pushMixed results on market driving
The Pre-iPhone“Mobile Internet”
Original conception
“Mobile Internet” vision ca. 2000:
Limited bandwidthNew mobile-specific contentNew value network
Barriers to mobile Internet
From 1996-2000, telecom industry began to plan mobile Internet
What they didn’t have:Device capabilitiesNetwork capabilities
Justified planned 3G buildoutMobile-specific content
Smartphones: then & now
1998 2008
Bandwidth CDPD, i-mode: 5-10 kbps
[GPRS: 50 kbps]
HSDPA, EVDO: 1 mbps
Screen 160x160 B&W 480x320 color
RAM 2 Mb 8 Gb
Keyboard Numeric (T-9) QWERTY : thumb, slideout or virtual
Reach vs. Richness (2001)
Source: Jeffrey L. Funk, The Mobile Internet, 2001
RichMedia
Wide Reach
US, EU: full Internet, very
expensive
Japan: limited Internet, mass
market
Early experiments
Low-bandwidth mobile web:i-mode (NTT DoCoMo)
Slow speed datacHMTLPortal, business model
WAPSpecial dialect of HTML
Both require custom content
Mobile value chain (2002)
Source: Hermant Sabat, Telecommunications Policy, Oct. 2002.
Mobile web (1996-2005)
Japan, Korea: low-bandwidth custom web portalsExport to US, Europe fails
Europe: WAP never catches on
US: walled gardensV Cast video clips, 176x132
15fps
Apple’siPhone
Concept
iPhone value proposition
Relatively large screenEase of use
“Half the people at CTIA can’t send a text message”
PC-like web browsingUnique content &
ecosystem
iPod Ecosystem (2007)
Fox, MGM,Universal,Disney …
Music
Video
Hardware
Performers
Composers
Sony BMGEMI
UniversalWarner“Indies”
Component Makers
iTunesStore
iPod
Producers
Complements Accessory Makers
iPhone Ecosystem (2008)
iPhone 3Gapplications
Video Music
Software
Hardware
iPodcontent
Component Makers
iTunesStore
iPod
Complements Accessory Makers
Success of the iPhone
iPhone 1.0 and 2.0
Network
Apps Countries
iPhone (6/2007)
EDGE, Wi-Fi
Web only 4
iPhone 3G (7/2008)
UMTS,Wi-Fi
App store,
web apps
70
SalesDaily iPhone sales (worldwide)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
2007: 3.7 million2008: 13.7 million2009: 3.8 million
June 2007 to March 2009:• 21 million iPhones• Ca. 16 million iPod Touch
Smartphone market share
Platform 2006 2007 2008
Symbian 67% 63.5% 52.4%
Windows 14% 12.2% 11.8%
Blackberry 7% 9.6% 16.6%
iPhone - 2.7% 8.2%
Source: Canalys (2007), Gartner (2009)
Plethora of “iPhone killers”
Google/HTC: G1BlackBerry StormPalm PreNokia N95, N97, 5800LG, Samsung, …
Most have 320x240 touchscreen
Mobile web via WebKit
WebKit is de facto mobile browser stdSafari (Mac): 2003Symbian S60 (Nokia): 2005Safari (iPhone): 2007Android OS (Google): 2007Chrome (Google): 2008
Open source means available to all
The iPhoneApp Store
iPhone App Store
Available apps
App downloads
July 2008 550 0Sept 2008
3,000 0.1b
Dec 2008 10,000 0.3bJan 2009 15,000 0.5bApril 23 30,000 1.0b
Top 40 apps
Top 20 free apps
Top 20 paid apps
Games 8 14
Entertainment 2 6
Internet services
8
Web 2.0 2
Utilities 2
As reported by Apple April 2009 (may be US only)
Mobile web is wired web
Among the top 20 free appsFacebook, MySpaceGoogle EarthThe Weather ChannelMovies, restaurant websites
Each downloaded by 3-6 million usersout of 37 million iPhone & iPod Touch
Rival app stores
Apple: July 2008Google: Aug. 2008/Feb. 2009Microsoft: Aug. 2008Nokia: Aug. 2008Samsung: Aug. 2008RIM: April 2009
Discussion
The “Real Internet”
“You’ve used the internet on your phone, it’s terrible! You get the baby internet, or the mobile internet — people want the real internet on their phone.
“We are going to deliver that. We’re going to take advantage of some of these investments in bandwidth.”
– Steve Jobs, May 2007
Early success (1)
“Of all the iPhone’s features, none had reviewers gushing more than its Internet browser. It was the first cellphone browser that promised something resembling the experience of surfing the Internet on a PC. …
“On Christmas [2007], traffic to Google from iPhones surged, surpassing incoming traffic from any other type of mobile device…”
— New York Times, 1/14/08
Early success (2)
Google “had seen 50 times more searches on Apple‘s iPhone than any other mobile handset, adding weight to the group’s confidence at being able to generate significant revenues from the mobile internet.
“‘We thought it was a mistake and made our engineers check the logs again…’
— Financial Times, 2/14/08
Users got the real Internet
Today they Google everythingCan use iPhone instead of PC
Data plan helps enable thisResult: ubiquitous Internet
deviceBegins shift to mobile Internet
There is no mobile Internet“Mobile Internet” value chain in USUtilizes existing Internet
Content: news, weather, etc.Services: search
Adapted & customizedForm factorEase of use (custom app)Location aware, e.g. maps
Future developments
US: iPhone is benchmarkEU: Nokia vs. iPhoneJapan, ROK: extend 2G success?Developing countries: ?
Thank you…
Joel Westhttp://www.JoelWest.org/blogs
Michael Macehttp://mobileopportunity.blogspot.com
