Can 17 million iPhone users be crazy?

June 3, 2009


Can 17 million iPhone users be crazy? Probably not. Was I wrong? Probably so.

The iPhone has developed a loyal, vocal and proselytizing fan base. But
17 iPhone users are not jumping for joy over convergence. Because as it
turns out, convergence is not what the iPhone is really about.

Initially, convergence is what Apple touted as the main benefit of the
device. Convergence is what drives me crazy. And if the iPhone was
selling convergence then I had serious doubts about its universal
appeal. That was the argument I had during the launch.

The much-hyped convergence of the tv/pc, car/plane, and many other
convergence pipe dreams have all been dismal failures. Apple's might
have been cooler, but convergence in the end still means a device that
is a jack of all trades but master of none.

And in the end, consumers want a huge television, a small laptop
computer, an iPod, a Wii, a cellphone, a BlackBerry, a Nintendo DS, a
Garmin GPS, a Sirius XM radio, a TiVo, a digital SLR camera etc. Not
one device that can do it all because no device can ever be the best at

The iPhone initially took off because of Steve Job and his brilliant
ability to drum up hype. After his success with the iPod, the world was
waiting for Steve's next masterpiece. (Luckily few remember his follow
up to the Mac, the NeXT computer.)

But here is what really changed the game for iPhone and moved it from
convergence to something else. Apple, which initially refused to allow
users to install 3rd-party software on the device, changed its mind.

Then Apple launched the 3G iPhone which took better advantage of the
internet with faster speeds and included GPS. This was the spark that
ignited App mania.


Today, iPhone users are hooked on applications not convergence. Apps
are where all the excitement is. There are over 40,000 applications
available with thousands of new ones flooding into the store each
month. iPhone owners have downloaded over 1 billion applications. An
impressive and staggering number.

What the iPhone represents is a whole new interactive mobile Internet
experience. The experience is fueled by mobile applications built for
this new medium called the mobile web.

As a result, the iPhone has become a device which is desired not so
much for its inherent traits of phone+camera+music+email but for its
ability to download and run these little programs which give the phone
magical powers.

The rise of the mobile internet has created a great new opportunity to build new brands.

Of course, most companies are just trying to expand their brands on to
the mobile net, they way they did with the Internet. And as a result,
few will be successful.

But for smart marketers now is the time to launch new focused brands
and make a fortune. It wasn't old brands like Microsoft, Time Warner or
Barnes & Noble that succeeded on the Internet, it was new brands
like Google, Yahoo and Amazon.

I still have doubts about the iPhone taking over the world and crushing everything in its path. They are as follows:

1. Apple hasn't taken over the world yet.

While Apple experienced amazing growth last year of 248 percent, they are still third place in world-wide smart phone sales
, according to Gartner.
Apple has a 9 percent market share while BlackBerry has a 17 percent
share and Nokia a 44 percent share. And let's not forget that while
cool and trending upwards, smart phones still only represent 14 percent
of cellphone sales. Regular cellphones outsell smartphones by more than
seven to one.

2. BlackBerry is still strong.

There is never going to be one device for everybody. And corporate and
heavy email users are sticking to the brand that focuses on mobile
email. BlackBerry still is selling strong and growing. In 2008,
BlackBerry grew 97 percent worldwide and sold 23 million phones. They
may not talk as much about their phone, but CrackBerry addicts like
Obama can't be without them.

3. The Netbooks are coming.

The real threat to the future of the iPhone is the netbook. Because the
real excitement of the iPhone is that it is a mobile PC always
connected to the internet. And netbooks are just that, but in a
slightly larger form but with many more benefits like a larger screen
and keyboard.

If consumers get a netbook will they also need an iPhone? And if they
get the iPhone will they be willing to pay the Internet access fees for
both devices? Maybe yes, maybe no.

4. Apple needs to stick to simple.
The next generation iPhone is rumored to have 3.2 megapixel
auto-focus camera, FM radio, digital compass and more. What the iPhone
needs to do is narrow the focus to just a few things that it does best.
Focus on these and keep making them better. Forever adding additional
functions could complicate and weight down the device. It is what Sony
did to the PlayStation 3. Doing too much even of a cool thing is not
good. Sticking to simple is best and it is how the Nintendo Wii killed
the PlayStation.

5.  Applications are not the next new advertising medium.
spite of the excitement, applications are not going to be a new
advertising medium. Consumers don't like advertising.

Sure an application for a virtual Zippo lighter has been downloaded 3 million
times. But gimmicks like this have a short shelf life.
Gimmicks don't represent the future of applications.

When anything is new, whether a new mass medium or boyfriend,
everything is exciting. But as time goes on the excitement and novelty
wears off.

Hearing "You Got Mail" used to be the highlight of the day
for people. Now email represents the drudgery of the day for most.

We now filter and delete as much of the email advertising as quickly as possible.
Email advertising is not the future. If it was we would all have sent
our money to Nigeria, met lots of new "friends" who are lonely and
taken a lot of pills we shouldn't.

Applications will follow the same pattern. Initially people will
download and try almost anything. But eventually what will be left
standing are the real brands and the real applications with value. The
brands that are first in the mind with a new idea, in a new category
and generate PR and word-of-mouth.

Of course, it will make sense for many existing brands to jump on the
mobile applications bandwagon, especially when it adds value not

Like Nationwide insurance offering an application to help you if you
get into a car wreck. What a brilliant idea. The first companies to
launch these applications will benefit from breaking new ground. But
eventually all the major companies will have applications and it won't
be a game changer. (Eventually all companies launched a website for

Nobody knows exactly what the future will be. Not you and not me. But
what I do know for sure is that the future will always bring new
categories and new opportunities to launch new brands.