Since most of the startups that I have done are platform companies, and Apple has repeatedly defined what they are delivering as a mobile platform, a lot of my thinking around the almost two hour Apple WWDC Keynote is weighted towards the question of how compelling the iPhone is as a platform play.
Thus, I don’t look at the iPhone as simply a commodity device competing feature/price against the Nokias, Samsungs or even the Blackberrys of the world.
Rather, I look at whether the value proposition is likely to translate to a thriving developer ecosystem; whether the applications that drop out of that ecosystem will engage consumers and enterprises; whether a real economy/marketplace is destined to form around this constituency; and finally, whether what Apple is doing in other segments of its business (i.e., Macs and Music) is creating a Halo Effect that translates to unfair advantages in the iPhone arena, and vice-versa.
I am a pragmatic simpleton so since Apple announced plans to roll out the iPhone SDK late last year, I have been tracking Apple’s stated strategic and tactical plan, how well they are executing on that plan and whether the proverbial “dogs are eating the dog food.”
(If interested in burrowing deeper, see links to a few posts below, which covers application scenarios, legal considerations, business strategy analysis, etc).
First off, full props to Steve Jobs. He is the consummate showman. The entry point into the presentation began with Job talking about how it’s iPhone’s first birthday, how users love their iPhones to the tune of 90% customer satisfaction.
He even touted the fact that some wacky high percentage of iPhone owners use 10 or more features, quipping that before iPhone, most people couldn’t figure out even two features on their phone.
At the same time, it was the appropriate mix of swagger and specificity grounded in a few simple recognitions and points of focus.
The underlying message codified and compellingly argued, IMHO, is that the iPhone represents the birth of a mobile platform that has changed phones forever.
Jobs was pretty transparent, in fact. He identified the market needs checklist that Apple has identified from talking to customers, developers and partners, and then proceeded to pick each item off.
Beginning with the end, the iPhone Universe (which includes the iPod touch devices as well) feels like an absolute home run, something I say in full recognition of what my business partner and friend, Snapp Networks, CTO, Alex Mostoufi, rightly noted about the challenge of executing so many moving parts simultaneously, as Apple is trying to do.
I reach this conclusion, in part, because from watching the evolution of this thing, Apple has not changed their tune one iota, while at the same time embracing specifics and iterating as circumstances dictate.
Specifically, Jobs framed five challenges as the ‘next challenges’ for Apple to overcome for the iPhone to realize its potential:
- 3G (+GPS)
- Enterprise support
- Third party applications
- More countries
- More affordable
3G (+GPS)
The announcement of 3G iPhone was the industry’s worst kept secret. But the strong battery life, usually a negative with 3G, was a clear positive. So, too was support for GPS, and it is clear that Apple is pushing GPS-enabled location-based services as a killer app.
I am a huge believer in the goodness in local and location based services, and given Apple’s patent efforts related to this segment, I believe that they believe that it’s a strategic growth area for the platform, meaning it will be well supported within the iPhone SDK.
Enterprise support
An ongoing narrative promulgated by Apple has been that Apple is serious about penetrating the enterprise. Previously, they announced support for enhanced security and access control functions, as well as the ability for the iPhone to function as a Microsoft Exchange client, which is key in corporate environments.
Truth be told, Apple has historically talked a better game about the enterprise than focused on it and executed accordingly. Now, however, they appear in it to win it, in part because I believe that they sense a Trojan horse into enterprises, owing to Microsoft’s struggles with Vista.
Here, they did a good job of positioning the device as a safe choice, touting stability and maturity owing to the fact that it builds off of Mac OS X, and also how this gives developers leverage with the Mac platform (i.e., apps created for Mac OS are relatively easy to port to iPhone). This is part of what I think is the Halo push (a point bolstered by the sneak peek demos of Snow Leopard, their next major OS release).
On the selling front, it seems that they recognize that they can’t succeed with a pure frontal assault on the enterprise so they seem to be identifying verticals and pursuing a beachhead strategy.
Specifically they demonstrated applications and touted customer successes in Pharma, Medical, Entertainment, Higher Ed and the Military. They even had a guy from Genentech referencing iPhone as an enterprise-class mobile computing platform, for what that's worth.
There will be a lot of chatter and skepticism about Apple’s ability to penetrate the enterprise, but my guidance is to focus on both the vertical segments and workgroups that are likely to be early adopters. As these segments toggle and realize real productivity gains, more of the main of the enterprise market will start to shift in their favor.
Third party applications
This is all about the iPhone SDK, which they repeatedly touted as the ‘most feature-rich mobile platform,’ and leveraged the demos by third party developers to spotlight how easy, quick and with limited developer resources it is to create native applications.
The demos that they showed in the keynote impressively showcased the capabilities of the iPhone platform. A couple of the gaming apps simply rocked (check out ‘Cro-Mag Rally’ and ‘Kroll’ – see YouTube video). The different medical apps were akin to something out of Star Trek (check out ‘MIMvista,’ a multi-modality medical imaging application); and ‘Band,’ a music studio app for the iPhone, spoke to the earnestness and fun spirit of the platform.
Part of what makes this all work is Apple’s bear-like embrace of ‘the Cloud,’ the premise of always-on, service aware connectivity, and their efforts to ensure that everything works over the air wirelessly, such that cellular or Wi-Fi, it doesn’t matter. Having bought many a song via the iTunes wireless store, I can tell you that this will overnight open the door to micro-transactions of all kinds.
In parallel, their thinking on AppStore continues to evolve and get better. It is a HUGE opportunity for Apple as well as developers in the sense that it enables developers to reach every iPhone/iPod touch user on the planet.
In addition, Apple has now added support so that enterprises can use AppStore for their internal apps, sort of a roll-your-own marketplace, and they introduced an AdHoc model for developers to informally roll out applications to very small groups (i.e., <100 downloaders).
Very slick, and with Apple keeping 30 cents on the dollar that these apps generate, it can realistically grow into a multi-billion dollar market in its own right.
In addition to the earlier mentioned support for the iPhone to operate as an Exchange client, Apple announced MobileMe, a push-based contacts, email, calendar, photos and files synchronization service that replaces .Mac, and dynamically (and over the air) syncs Macs, PCs, iPhones and iPod touch devices, all of which is also accessible via a really nice Web front end located at Me.com so users can access their online information anywhere, anytime and always be sync’d up.
MobileMe is positioned as ‘Exchange for the rest of us’ since you don’t need an Exchange server or an IT department for the service to work. Here is a link to detailed demo of the service.
Noteworthy here is the strategic tie-in between Microsoft and Apple. On the one hand, the ‘Exchange for the rest of us’ positioning seems like an assault on Microsoft but in reality, it formally recognizes Microsoft’s dominance and brand, and is complementary to direct Exchange support within iPhone.
Plus, it is an app that will work equally well with Microsoft Outlook on the PC and Apple Mail on the Mac. It is suggestive of growing maturity within Apple and Microsoft, and an alignment of interests in an age where Google has looked increasingly like the de facto organizer of all online information.
Given the richness of functionality and how the demos showed MobileMe as seamlessly integrated into different iPhone and Mac/PC services, if I’m Google, I see this as a clear assault on Gmail, Google Maps support, notwithstanding. The dynamics between Google and Apple are a topic which I have blogged about extensively (see links below, if interested).
One final note is that Apple announced a unified push notification service that will be rolled into the iPhone SDK in the Fall. This is Apple’s answer to the need for event-handling services that can remain persistent even when the event-aware application that it serves, such as an IM application, is not running.
This is somewhat of a technical topic, but basically it reconciles the paradox between real-time/always-on and the need to maximize battery and performance by limiting the iPhone to one application running at a time.
The service, which works over the air, is unified in that sense that all developers will have to have to use it for asynchronous, persistent event handling. Incorporated into the SDK will be customization options for Badges, Alert sounds and Textual Alerts.
More countries
Jobs lead this topic off somewhat humorously noting that while they only have six countries officially launched so far, the unlocked iPhone data suggests very potent global demand (something like 15% of all iPhones have been 'unlocked,' a term that means they have been activated in a way that allows them to run in carrier networks and countries not sanctioned or supported by Apple).
From here, he talked about the need to get the iPhone launched in more countries and how they had set a goal of 12 countries by end of year, and a stretch goal of 25, prompting the audience with a “So how’d we do?”
Then a global map popped up onscreen with ‘It’s a Small World After All’ playing in the background, as 70 countries (but not mainland China) showed up on the map. They are well on their way here.
More affordable
Jobs closed with $199 as the maximum price of the iPhone 3G (they will now allow carrier subsidies to take the price even lower), touting it as, “Twice as fast for half the price.”
Experience suggests that $199 is a magic number for mass consumer adoption so I think that they hit their mark here.
Netting it out
I think of the WWDC Keynote as Apple's moment when they announced to their constituency base that they are committed to swinging for the global fence.
I have little doubt that carriers will sign up en masse now that some of the business model restrictions are gone, customers will see $199 as a relatively easy impulse buy, and once a couple 'have to have' iPhone apps start flooding into the market, Apple is going to do some crazy, game-changing volume.
Related Links:
- Jobs and iPhone: The (second) greatest unintentional head-fake in tech history?
- iPhone SDK: Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
- iPod touch: the first mainstream Wi-Fi mobile platform?
- Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
- The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
- Upward Mobility, Land Grabs and the iPhone Universe: on Apple's mobile patent strategy.
