The Smartphone business has been very busy this week. One day before Verizon officially releases the Droid Incredible (I am tracking mine via Federal Express), HP scoops in and acquires Palm. Palm does have some pretty good technology and mobile handset know-how. Do they have $1.2 Billion worth? HP says yes and, anyway – that’s just a rounding error for them.
If you have seen the Web OS on Palm’s devices you have to be impressed. Why this really makes sense for HP is that it is so much more than Smart Phones. Perhaps you noticed that Apple iPad launch last month? Tablet and netbook computing are the next disruptive technologies. The Palm OS will likely make a bigger near term impact on HPs tablet and netbook devices. This is not good news for Microsoft.
The OS landscape for the sub-laptop market is rapidly fragmenting. Android from Google, Chrome OS (Google competing with itself?), Web OS from Palm, Apple OS4, Windows 7, Windows 7 mobile, RIM and Symbian (Nokia). The environments that appear limited in scope are RIM and Windows 7 mobile (just SmartPhone) and Windows7, Chrome OS (Netbooks). Android, Palm Web OS, Apple OS and Symbian all provide (in theory) a unified sub-laptop platform.
What’s a developer to do? Can an OS thrive with a single hardware vendor – Steve Jobs would certainly say yes, so why not HP?
The near term loser is likely Microsoft. By the time they have Windows Mobile 7 devices in the market, HP/Palm should have been able to iterate an upgraded device and spend significant marketing bucks attracting both consumers and developers.
All of this competition is good for innovation and good for consumer price points. It will take at least another 3-4 years for this market to shake out completely. When the dust settles you can count on Apple and Microsoft still standing – their present overall positions in OS technology are virtually unassailable. What will be interesting is their relative market strength in this very interesting sub-laptop market.
If you dominate this new market you are THE company for the next generation.
HP has placed their chips on the table. Who is next?
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.
Click for full commercial
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? Continue reading →
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With the much anticipated launch of the iPad, I stepped back from the hype and techno glitz to ask the question,”Is Apple making the same mistakes of 25 years ago?”
The macro headline for Apple of that time would be “Great Product, lack of licensing and eco-system cedes market to Microsoft” So what’s different this time and what is the same?
The differences are that Apple, under Jobs is an innovation engine that is inventing new product classes – iPod, iTouch, iPhone, iPad, etc. The new products are launched and live in a ecosystem under a benevolent dictatorship (or is it?). One architecture, One way of getting apps, ads or “tunes” through their closed garden eco-system. Everyone pays a tax to Apple to play. This works as long as there are not viable alternatives to the Apple product.
In the case of the iPod, Apple’s eco-system became so powerful that it all but squeezed out all comers. Does anyone own a Zune? The iPhone, however, will likely be a different story.
The iPhone was the techno-product equivalent of a genetic mutation, the first of a new species. It leveraged the eco-system of the IPod , then enhanced it with a vibrant app store. So what’s the problem? Apple’s problem is that Google is not the Microsoft.
The Android Platform will mutate and evolve dozens of times a year. The Apple Iphone is on pace for one major release a year. Add to this mix Nokia’s Symbian platform, Palm, Blackberry , and yes even Microsoft – and the challenge to Apple’s smartphone bonanza is formidable. The challengers permit innovation from many hardware vendors ( HTC, Samsung, Motorola and LG to just name a few). The innovation of smartphone products with a common eco-system(s) (Android, Symbian, Nokia, etc) will be more than Apple can bare. Their share will become a significant but much smaller niche. This will happen unless the iPhone OS is permitted to evolve outside of Apple. Since the history of Apple is to control their value chain, this is not likely.
But have no fear you Apple devotees. Apple’s respond is to morph new species, not new versions of an old one.
Thus enter the iPad – Not a netbook, not a laptop, not an iTouch…. It’s something new- and yes it leverages the vibrant iPhone eco-system, Another key aspect of the iPad strategy is cloud computing. The more your “stuff” is stored online , the less you need mass local storage. Ironically a leader in this space is Google with their Google docs. I recently purchased a Netbook for around $250. Rather than double that investment with a version of Microsoft Office, I use Google Docs. For most use cases it works great and all the docs are backed up – check that – live on the net. If the iPad is going to squeeze in between netbooks and laptops, it has to have cloud computing for email storage, simple “office-like” apps and document storage.
Is there room in this Darwinian e-volution tree for this hybrid being? Apple is betting yes – and if successful it will provide them another 5 year run before competitors really catch up. In the mean time, they invent a new product category, while the previous product hits start to get caught and even surpassed from a market share and innovation standpoint. Apple cannot afford to compete in every e-category of consumer products with 100% of the innovation – no company can compete with the entire industry.
The secret to this strategy is not to suffer from innovators dilemma. Apple seems very content to re-invent products categories, even if they diminish the position they have in a previous market. It is hard to come up with many examples that rival such a strategic culture. Rather than invest in two more iPhone iterations or faster innovation on an Ipod – they re-invent them all. This is the truly amazing aspect of Apple and can only come directly from Steve Jobs. They bet the company on continued hit products. The strategy works as long as the hits keep coming and Jobs remains at the helm. Apple would not have been able to sustain a “Vista-like” disaster and have a flagship product be a complete bomb for years.
So – now its off the Apple store to buy my iPad. Why? I don’t know – but I’m sure I’ll like it when I figure it out.
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During the past week Google made two significant splashes in the mobile arena. Their much heralded, bombing of middle America with Stealth fighters announced the landing of the “Droid” mobile device. Secondly, their acquisition of the leading U.S. mobile advertising company, Admob for $750M announced the full legitimacy of mobile advertising. When Google speaks, the rest of the industry should listen.
There was a time, not too long ago, when an entire industry seemed to get a simultaneous epiphany – that the Internet had created a legitimate “second” screen to television. When this became “conventional wisdom”, the advertising Dollars, Euros and Yen started to shift from the “spray and pray” methods of television to the increasingly targeted methodologies of the web.
The same thought process can now be safely referred to as “conventional wisdom” for mobile. The consumer is spending more time starring at their mobile screen, and less and less at their Web browsers, and even far less in front of the television. With this reality, the web advertising giant is shifting more investment to the third screen – which we should refer to as the consumers prime screen, the mobile screen.
We have transitioned from TV ad blindness (really a Pavlovian queue to go to the frig or bathroom), to web banner blindness. We now, however, have the personal medium of the smartphone to reach consumers.
We have moved from the communal family device, the television, to a shared, yet personal device, the PC to the personal and un-shared device, the smartphone.
There will be some winners and losers in this new reality. The winners will be companies that have invested ahead of the curve and have developed mobile and true multimodal next gen advertising vehicles. Advertising and promotional technologies and processes that have broken with the “spray and pray” techniques of the past and capitalize on the true personal 1-1 advertising techniques, providing consumers ads that they want to view, will be the market winners.
The Android has positioned Google to be in your pocket, not figuratively, but literally. The combined promotion with VZW and Moto, with stealth bombers creating a thinly veiled a sense of “Shock and Awe”, is a loud statement.
(Note to the Droid ad agency – Stealth bombers do not fly during the day, hence the word “stealth”)
See my other comments on the ad campaign at the end of this blog article.
VZW is a company with a great network and a lagging device lineup. Moto has raw engineering and production talent for mobile devices and has largely fallen off the radar screen in recent years. Google, the dominant player in the present generation of Internet advertising, is seeking to maintain and grow that position in the next generation.
So, Google is playing a pre-emptive attack strategy in mobile. VZW is playing catch-up to the iPhone. Moto is, perhaps, playing their last “bet the company” card on Android technology. Offense, defense and survival makes for three very motivated partners.
With the expected proliferation of Droids and other smartphones, Google’s purchase of ADMob is both stunning and obvious. Another winner in this market shift will be, as I have written about in the past, the major social networks.
So who are the losers this past week?
On the Wireless Carrier side of the equation, Sprint and T-Mobile have to be concerned. The gap between them and the leaders (AT&T and VZW) is widening. I expect one less mobile service company in the U.S. in the next 12 months.
The emergence of Android platforms is likely the end of Palm as a mobile platform. The Palm Pre never got the consumers attention and thus critical market share.
Too little, too late.
Palm will not be able to compete with Google and Apple in this round. Their demise is written on the wall (in Graffiti).
RIM also has to be very concerned. The launch of their touch screen device, the Storm was, well, stormy. Blackberry has a strong market position and is well entrenched. It has made significant growth in the consumer segment in recent years. Will that growth reverse with maturing Android devices? While Blackberry is in a much stronger position than Palm, the combined investment potential and application resources of Apple and Google will be a major challenge to RIM’s Blackberry.
All that said, RIM still commands over 20% global share in smartphones
Application developers will have to start to prioritize their porting and promotion of new applications between four major global platforms – Symbian, Blackberry, Apple and Android.
It will be interesting to watch the global leader in the smartphone category – Nokia and their Symbian Operating System. This platform is relatively unknown in the U.S. market, but is dominate in the rest of the world.
The next obvious question is how do these moves motivate other players in the industry to react? Microsoft is desperately playing catch-up to Google in present generation search engines and advertising. Their own version of a mobile operating system has made, at best, niche inroads. Microsoft has suffered from execution issues and seems to be the biggest example of true “innovators dilemma” in the last 20 years.
Yahoo has some mobile applications but seems to be a company unable to focus the attention necessary on any one initiative. Perhaps some Corporate Ritalin is in order?
My conclusion is that both Microsoft and Yahoo will likely go shopping for a focused next gen advertising company.
Ad Agencies that have largely focused on managing creative production and bulk television ad buying are increasingly on the wrong side of the technology curve. They are, however, in a good position with the depth of their industry relationships, to be a major force in the next wave of Internet/Mobile advertising,. The question is are they willing to move from their existing business models and develop the expertise in the methodologies, either in-house or through acquisition that can maintain their market positions in the value chain for the next generation.
The technology of smartphones, advertising and applications has now combined to make the next generation of consumer services and commerce a break from the past. At least that’s what I hear from all of the “Conventional Wisdom”.
Notes on Droid Ad Campaign:
The more I thought about the Android “Stealth Fighter” ads the more I realized that that imagery was quite familiar. I have added four additional videos for your viewing. Theses video are the trailers for the 1953 and 2005 versions of “War of the Worlds” , the trailer for Armageddon and CNN footage of the bombing of Baghdad.
With these videos you can draw your own conclusions. Please let me know what you think.
In my opinion, these images all have some resemblance to the Droid commercial. In each of these cases the situation did not end well for the “entrenched” establishment. Mass destruction was the result. In one case a virus saved mankind. This is hardly the message that a smartphone operating system might want to promote. The droid-like figures eventually emerge to destroy everything in sight –they really do – you can Google it. In the CNN footage a nation watched mesmerized by the imagery, only to learn that perhaps the wrong war was fought.
All interesting imagery for the first shot in a new generation of smartphones.
For me, Sunday at the Meadowlands usually means a Jets game. This past Sunday “Gang Green”, as they are affectionately known, snatched victory from the jaws of defeat.
With just two minutes left in the game, Buffalo was leading by 3 points. At this point they inexplicitly called a pass play that resulted in a sack, and fumble, with an eventual lucky bounce into the cement-like hands of Jets Lineman Shaun Ellis. To copy a quote from “Analyze This”, Sean Ellis is so large he creates his own gravitational field, which is the only explanation for the ball finding his hands and him rumbling 9 yards into the end zone. The Jets held on to win 31-27.
The fans started a cheer of “Holy Sh**, Holy Sh**” We just could not believe that a miracle would happen for our team. By now you might be asking yourself, “so, what’s the wireless angle on all this?”
My wireless football experience began with the tailgate ritual. I cooked steak and shrimp and had to send an MMS of this delicacy to a friend of mine who is a Buffalo Bills fan. In complete disclosure, this friend is also a Boston Red Sox fan, so being a Bills fan is the least of his offenses. I exchanged several SMS messages with him while engaged in the macho tradition of cooking in a frozen, dusty parking lot with 75,000 other men and about 20 women.
Inside the stadium my wireless game experience continued with two shortcode invitations from the Jets. The first is a shortcode to send a message if I feel there is a problem with my seat of my section. Just text your section and seat to “NJSEA” and what the problem is and, in theory, something will happen other than getting sent an offer to subscribe to ringtones. This service is provided by a company called Guestassist. I did send a text during the game. I mentioned that from my seat I had determined that the Jets defense was not pass rushing enough and should start to blitz more. Maybe this text message got through to the Jets coaching staff and resulted in the sack and fumble that won the game?
Another texting offer was to subscribe to “Jets News“. I send the keyword “Go Green” to the shortcode and got a response that included an advertisement for AllState insurance. Besides the advertisement, I got no other alerts or news during the most exciting game in recent Jet memory. This service gets flagged for “Why bother?”
I had previously subscribed to the ESPN sports alert service for the Jets (and the Rangers, btw). This service sends me an alert every time there is a change of score in a game. The alerts are timely, usually arriving a minute after the score. I needed this service, because after Shaun Ellis scored I was still in disbelief until my ESPN SMS confirmed the event.
Uploaded to my Facebook
Arriving concurrently with my ESPN confirmation,, I got an email that my wife sent to me via her I-Touch. She was at my son’s Lacrosse game and the facility has free Wi-Fi, and televisions that were tuned to the game. This was my second confirmation that this play that I had witnessed with my eyes, had indeed occurred and that the Jets had taken the lead. I now, thanks to mobile technology, could stop pinching myself.
Once the event was independently confirmed by mobile sources, I sent the Buffalo Bills fans another MMS picture with the fans going crazy, along with some gloating comment. I would only have done this after dual independent confirmation, via mobile of the play. After all, I am a Jets fan, and seeing the miracle happen in person is a necessary, but not sufficient criteria for actually believing that it happened!
Lastly, I have become a big fan of the Facebook application for my Blackberry. I took several pictures during the game and with one click, posted them directly to my Facebook page via my Blackberry. This capability opens up the realm of “Face-casting” a sporting event.
Seeing a miracle happen at a Jets Game is good, getting it really confirmed by wireless- Priceless!
Miracle at the Meadowlands
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market to shake out completely. When the dust settles you can count on Apple and Microsoft still standing – their present overall positions in OS technology are virtually unassailable. What will be interesting is their relative market strength in this very interesting sub-laptop market.
During the past week Google made two significant splashes in the mobile arena. Their much heralded, bombing of middle America with Stealth fighters announced the landing of the “Droid” mobile device. Secondly, their acquisition of the leading U.S. mobile advertising company, 
aks, the rest of the industry should listen.
RIM also has to be very concerned. The launch of their touch screen device, the Storm was, well, stormy. Blackberry has a strong market position and is well entrenched. It has made significant growth in the consumer segment in recent years. Will that growth reverse with maturing Android devices? While Blackberry is in a much stronger position than Palm, the combined investment potential and application resources of Apple and Google will be a major challenge to RIM’s Blackberry.
For me, Sunday at the Meadowlands usually means a Jets game. This past Sunday “Gang Green”, as they are affectionately known, snatched victory from the jaws of defeat.
ll this?”
Mobileman 