Appvertainment from Jobs-Apple and the iAd

The announcement of iPhone OS4 changes the Smartphone  world – yet again.  As Steve Jobs described the 7 tent poles of the new iPhone/iTouch/Ipad OS, it was clear that the tent was not quite large enough for everyone. The center pole of this tent is clearly– iAds.

The raison-d’etre  for the much heralded multi-tasking feature is Appvertainment.  (e.g. iAds).    Do not be distracted by the fact that he introduced multi-tasking first and iAds last.  They are intimately linked.

Apple is pursuing their app centric  vs. search (Apple vs. Google) strategy for smartphones  through the introduction of their own OS integrated  ad serving technology.  Multi-tasking is the key component in this ad strategy to permit a user to return to an app after an ADHD moment is fulfilled by playing with a cool appvertainment.  Without multitasking you lose your application state/status and have to start over again.  Jobs is trying to change user behavior and reward users for clicking on an ad with an engaging experience, instead of punishing them by having them have to re-start their app.

Appvertainment targeting was not discussed. The social  and geolocation information that the host apps maintain on users will most likely be used for targeting purposes.  The Apple social game network API will no doubt  be used for providing this targeting information for game hosted appvertainments .    Apple is betting that App hosted ads will be valuable than Internet style search ads.

Jobs boosted that the Apple platforms would be capable of serving 1 billion app-ads per day by the summer of 2010.  Even if we cut that number in half and apply a modest $10/CPM ad rate – that represents daily gross appvertainment revenue of  $5M.  Apple’s vig on the ad revenue is 40%.  This is easily approaching a $1B+ annual revenue opportunity for Apple.

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Another interesting aspect of this strategy is that Apple is clearly focusing on large brands and advertising agencies – in other words, the folks with the largest budgets.   This clearly makes sense.  The cost of an appvertainment production can easily be in excess of $250K+.  The inclusion of integrated and compelling video with engaging interactivity is not the domain of amateurs, but rather professional digital agencies.  The examples that Jobs demonstrated during his presentation (Nike, Disney and Target) are all major national brands with large budgets and big Madison Avenue agencies.

As I watched the presentation another thought came to mind –  “Is this legal?”  What would happen if Microsoft integrated a proprietary ad serving system in their OS and demanded 40% of the revenue of every ad served on a Windows machine?  This topic will clearly be discussed in the blogosphere and perhaps courtrooms in the future.

Did anyone hear a mention of sharing ad revenue with Mobile Carriers?

Another  “pole” of significance is the enhanced suite of enterprise features. Corporate CIOs have had a set of killer issues that prohibited the iPhone from significant corporate sanctioned and supported utilization.  Apple is trying to remove these roadblocks with OS4.  In addition to the enhanced  security and email capabilities is device management.  Device management includes the feature of permitting corporations to load their own private apps on the iPhone.    The execs at RIM should be concerned about their Blackberry franchise.

Apple would not be investing in enterprise features while maintaining an exclusive relationship with AT&T.  OS4 changes Apple from the Trojan Horse of a sexy consumer device on AT&T to a machine poised for world domination.

The competition between Google and their Android platform and Apple will only get fiercer.  Nokia is the only other global player who can play at this level.   Palm, RIM and even Microsoft will fight for the leftover niches.  It is a battle of the controlled and planed eco-system of Apple vs. the Open-Source world of Android.

The Apple tent has room for enterprise applications, has a new revenue source for app developers, and embraces big brands, ad agencies and publishers.  Adobe (no Flash support) and Google are outside the tent of OS4.  Microsoft got the biggest slight in this announcement as their mobile efforts were ignored as though not relevant.  And what about the mobile carriers?  Do they exist in the Apple world?

The Perishable Opportunity of Managing for Success in a Down Economy

The Dow drops another 300 points, unemployment rises, spending decreases.  This hardly sounds like the environment for setting up your business for success, and yet this is exactly what your competitors are hoping for.

Let me explain.

Downturns in an industry or the economy have a necessary cleansing impact on our competitive capitalist environment.  In times of rapid growth, bad practices, poor process, and wasted resources accumulate like straws on a camel’s back.  The organizations usually do not notice the problems or choose to ignore them in light of the overall good growth in their products.

Then the music stops.  And the question is now what?

The knee jerk reaction is to pull back on everything-reduce headcount, reduce expenditures, conserve capital and just slow everything down and wait out the storm.  If this is all you do, you will, at best, not improve your market positioning, and very likely lag the recovery.

The downturn provides a unique, and yes, perishable opportunity.

Having managed through the dot.com bust, up-close and personal, I can definitely appreciate this position.  Let me explain.

In a down turn you get to catch your operational breath.  For example, you can kill those projects that were marginal and perhaps politically difficult to kill, and now you can kill them.  Priorities can become crystal clear.

You can really examine company processes and quality.  Fix those nagging product management and realization issues, get the quality tools in place that you never had time for, fix the old accounting system…

On the staff side, this should not just be a time for cutting headcount, and eliminating raises and bonuses.

This is the best time to upgrade your staff!  Every organization has a range of talent.  In a hot market you might be more inclined to hold on to mediocre team members, rather than invest the time and effort in finding someone new.  In a down market, there are more highly qualified people on the market.  Recruiting will never be easier than it is now.

If you upgrade your processes, products, quality and team in this environment, the cost to your bottom line is negligible!!  If the market is not growing anyway you have the time to make this investment.

If you do this, you will thrive at the front end of the recovery and leave your competitors in the dust.

If you stay with the status quo you miss this perishable opportunity.

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