Yesterday’s Blackberry outage was eye-opening. There are mixed reports all over the web about the extent of this outage and what caused it, but I lost email, PIN messaging, Blackberry messenger, and had intermittent problems across all other apps on my device.
I was traveling with a Blackberry-wielding colleague. Usually this would make us feel like business Samurai, ready for anything. Yesterday, this overconfidence caught up with us.
Emails to my travel agent never made it through, and there was no rental car waiting for me in DC. Even at Hertz, I had one of those “not exactly” moments, and it took an interminable half hour to get a car. In transit from the airport to meet people for dinner, neither of us could get wireless data connectivity. No ability to search for the hotel and restaurant by name. No ability to use Google Maps to get directions.
Also, we kept dropping calls. Even calling to get directions was not as smooth as usual, but eventually this is the “old fashioned” way we found our destination.
Me: “I can see the mall on my left, and the XYZ company on my right. No, I don’t know what street I’m on.”
Friend/colleague on other end: “I think I know where you are; go 1 mile, then turn left.” (Not so long ago, this would have seemed miraculously cool – like in the Matrix: “I need an exit!” – now it seems pretty pedestrian and painful.)
This sort of event brings home how much we depend on technology on a daily basis. And how quickly we’ve become spoiled by technological capabilities that are relatively new. It reminds me of a sort of post-apocalyptic Stephen King novel, where the protagonist needs to find their way through the world using their feet and their wits, but they are suddenly bereft of all modern technology and convenience.
Without Google Maps (and frequent United flights!) I’m not sure I’d make it to Denver in The Stand. I’d probably jog right past. Would you make it?
Perhaps more importantly, this has me seriously questioning my loyalty to Blackberry. From a competitive analysis perspective, this is a disaster for RIM. Two major outages in a week. A general degradation in service over the past year. Meanwhile, my partner is having great fun with his iPhone, and my wife’s Droid Eris seems pretty darn cool.
There’s a great (albeit lengthy) post on Gizmodo about Android, although the title may be a little overstated:
[Android] 2.0 is more than that: it’s proof that Android is finally going to take over the world
As a digression, it’s fascinating to see how a technological innovation can re-shape language: the former meaning of android is now relegated off the first page of search results on Google, which led me to try ‘androids‘ as an alternative:
The article from Scientific American about this date with a robot can be downloaded here; I find it intriguing partly because I began my career as a roboticist and cyberneticist.
Although it may overstate the case, because we are just in the earliest stages of a fierce contest amongst at least five credible competing app phone platforms, the post from Gizmodo does summarize well much of what provides the impetus for Android and why Android 2.0 is so important:
it’s “the first truly open and comprehensive platform for mobile devices.“
Android 2.0 means the handsets aren’t just interesting anymore; they’re truly buyable
In addition to everything else Android has going on, timing is on its side. Windows Mobile is limping along with two broken legs…
…as far as most consumers are concerned, anything Windows Mobile can do, Android can do better
The Palm Pre, polished and beautiful as it is, can’t keep up with Android’s exploding app inventory, multiplying hardware partners and rock-star ability to draw talent
Android 2.0, along with Palm’s WebOS and Apple’s iPhone OS, are the main reasons the BlackBerry OS feels so clunky and old
Let’s take a quick look at each of the other major contenders:
the iPhone is the current leader, and critically works well across not just app phones, but through iTunes across other platforms such as personal computers and TV
although RIM’s BlackBerry has been the long-time leader in the enterprise, it is not doing as well in the consumer marketplace, particularly outside North America, and its software platform (RTE, APIs and SDK) looks increasingly clunky in comparison to iPhone and Android
Nokia is investing heavily in the transition to Qt and Maemo – the big question is really can it get there fast enough
Microsoft’s most recent release of 6.5 was late and lacked usability, and despite some good things being said about it 7 is still some way off, eroding support for it
while WebOS is technically elegant, the Pre’s implementation is slow, Palm lacks distribution and was really late with its SDK – it will be extraordinarily difficult for Palm to overcome these handicaps and establish itself as a credible competitor in the face of the likes of Apple, Google, Nokia, Microsoft and RIM
Android’s a strong contender, but it’s by no means yet certain that it will rule the world. In fact, one of the real possibilities is that rather than reaching a tipping point, a few of these will co-exist over the medium- or even long-term.
David Pogue has a review today of Motorola’s Droid which includes some discussion à propos how to categorize and name devices of this type.
Motorola Droid
He promotes the noun ‘app phone‘ for them, attributing it to @mentalworkout.
[Cool app, BTW, for those who have fear of flying. I took the Virgin Atlantic flight to London earlier this week; if you're lucky enough to fly in Upper Class, it's such an extraordinarily soothing experience that you probably don't need the app.]
I really like ‘app phone‘ , and suggest that we all adopt it for this class of devices:
Nokia’s N97 and N97 Mini running the latest version of Symbian
This post re-surfaced for me, however, one of the key topics that we have found ourselves debating frequently over the last many months; what is a ’smart phone’, and what should we call it?
This is a common challenge in high-tech; how do you think about new phenomena? How do you build robust mental models? We believe that having the specialist expertise to do this, and the relevant experience of having done this, is one of the key things that differentiates Endeavour Partners.
First, what are the key criteria:
downloadable applications – in which case do BREW and Java devices qualify?
user interface, such as (responsive) touch screen or QWERTY+touch pad/trackball interface to allow easy navigation for the web and similar applications
running multiple applications – which disqualifies the iPhone?
great at browsing – typically with a full WebKit browser
third party applications have to be available, affordable and accessible
what about size – is there some constraint here, because otherwise a laptop could qualify?
And what about the additional capabilities that are now part of the competitive benchmark:
fast graphics – for video, browsing and gaming
accelerometers
GPS – for location services
WiFi
There are several specific devices or types of devices that illustrate this challenge, and the grey areas involved:
older BlackBerrys with thumbwheels but without trackballs – great at e-mail web but suck at browsing
the Nokia E71, a great (particularly when it launched) device handicapped by its click-pad for navigation (which on one occasion proved enormously frustrating as the cursor moved in clicks that circumnavigated a small target without ever being able to actually click on it, on a site that should have been designed with mobile devices in mind – Handango)
Nokia E71
many of Nokia’s myriad Symbian S60 devices that have 12-key keypads, lacking either a touch screen or a viable navigation method for browsing
and what of the forthcoming Nokia N900 – is this a smartphone, or not?
and given how unresponsive the touch screen on the N97 and N97 mini can be, and some of the usability challenges that remain with Symbian, do the N97 and N97 Mini qualify?
almost all Windows Mobile devices, that lack a touch pad, requiring a stylus or arrow keys for what is enormously painful navigation (Sony Ericsson’s Experia X1 is one of the few devices that overcomes this challenge)
On purely pragmatic grounds, and notwithstanding flame wars from some purists and Verizon’s new advertising campaign, clearly any definition that excludes the iPhone on the technically focused grounds that it does not run multiple applications at once, except for some built-in apps such as Mail and Phone, does not make much sense. Although this may be an important consideration, it clearly does not deter users, and the ease of switching amongst applications mitigates this significantly.
The related question was what to call these things? We tried the term ‘smart device‘, to emphasize the that the capabilities went way beyond making a call. Unfortunately that promotes confusion as it embraces some very devices that do not have ‘phone capability at all.
So, let’s endorse the term ‘app phone‘ for these high end devices, and use the term ’smart phone’ for the broader group of which these are a subset.
He demonstrated the difference between an iPhone’s performance using AT&T’s 3G network and an iPhone using WiFi to connect to Clearwire’s 4G WiMax network. The difference was impressive: Clearwire’s network performed beautifully for both streaming video and Google Earth, while AT&T’s network was sluggish.
Unfortunately, it is exactly this need of 4G smartphones for data capacity that will likely spell the downfall of WiMax. By our estimates, smartphones will be responsible for roughly 50% of mobile data traffic within the next five years. But the iPhone is not available with WiMax – and neither are any other mainstream smartphones.
WiMAX is a great technology, but the window of opportunity is short. Ultimately, the availability of leading smartphones, apps, and content will determine 4G winners and losers.
Mobile Entertainment has spotted a fascinating development: the Apple’s App Store now apparently has a ‘top grossing’ ranking.
Why is this so important? One of the things that we think is critical is a ruthless, relentless focus on the data; what do the facts tell us? One of the most common metrics used is market share, but here’s the very first question you should ask yourself:
volume (units)?
or value (revenue)?
In mobile phones, for example, these can mean very different things: Apple has ranked as high as #3 by value (and #1 or #2 by profit), despite having only a small share by volume. Whenever you see market share data, ask yourself if it’s market share of volume, or market share of value.
In mobile applications, where many are free, it’s not enough to just know ‘Top Free’ or ‘Top Paid’, you really need to know revenues to understand the economics well.
Moreover, if rankings on this chart at least, correspond to market share of value, rather than market share of volume for paid apps, it enables developers to re-price to maximize revenues. Compare, for example, Top Paid versus Top Grossing for today; Madden NFL is #2 on Top Paid at $7.99, but #1 on Top Grossing, as AppBox Pro only costs $0.99. Moreover, TomTom at ~$100 was always going to find it hard going to make it into the Top Paid (it’s not there now, at least down to #50), is #5 amongst Top Grossing.
Top Paid
Top Grossing
This may help stall the rush to the bottom which has been the cause of so much unhappiness amongst developers.
It seems that Sony Ericsson’s adoption of the make.believe tag line has prompted at least some commentators to call again for it to release a PSP Phone:
But Sony Ericsson’s only real hope for the long-term may be a PSP-branded phone that leverages Sony’s traction in the video game space. While the market for gaming-centric phones is questionable — see Nokia’s history with the Ngage — such a device could prove popular with a young, data-hungry mobile set. And it would be a better investment than a branding facelift.
The potential for a PSP phone is clear when we compare the iPhone & iPod Touch’s growth with early sales of the PSP
Global growth of the iPhone, iPod Touch and PSP
Calling the iPod Touch a comparable, if less gaming centric, match to the PSP we see that their early growth is quite similar. What is interesting though, is the gap between iPod Touch and iPhone + iPod Touch sales, which represents sales of iPhones. Since the iPhone is essentially a Touch with phone capabilities, this gap is the oppotunity that Sony may be missing out by having a PSP, without having a PSP phone.
One of the key trends that we’ve been trackingclosely is the emergence of the smartphone as a handheld gaming platform:
the threat it poses to specialized handheld gaming platforms, such as the PSP and Ninetendo DS, which it rivals or surpasses in performance
how significant an opportunity this may become
Gameloft announced today that it has sold over 6 million paid games:
Gameloft(R), a leading publisher and developer of downloadable video games, today announced that it
has sold over 6 million [paid] games on the App Store.
From the distribution model to the types of games available, the App Store has completely revolutionized the way handheld games are played, perceived and received
The iPhone OS continues to be Gameloft’s number one platform
Clearly, as competition amongst smartphone platforms and smartphone vendors intensifies, one of the key factors that determines the outcome will be how good they are as gaming platforms, how attractive they are to games developers and the strength of their business ecosystem.
One of the keys to strategic success in high-tech is to anticipate how technological innovation, customer demand and the business ecosystem will co-evolve. When looking at high-tech, we tend to focus on significant shifts in value creation and value capture, as these are the source of the key threats and opportunities for our clients.
Much of our work recently has been focused on smartphones and on applications, because of our belief that a significant shift is underway in which smartphones and their related services will both represent a very large opportunity, and have a major impact on adjacent arenas as convergence plays out:
smartphones will first become the majority of mobile phone sales by value, then by volume, and soon thereafter represent most of the installed base and the majority of the margin opportunity
this shift is already reflected in the disproportionate share that Apple and RIM are capturing of the value created in mobile phones
the shift to smartphones is changing user’s behaviours and economics in some very significant ways
Deutsche Bank's analysis of value captured by mobile phone vendors
We believe that a key part of this shift from both and economic and behavioral perspective is the adoption and usage of applications on smartphones.
As a result, the recent analysis by AdMob, reported by for example GigaOM is particularly interesting:
If I were to tell you that Apple’s app economy was worth more than $2.5$2.4 billion a year, you would laugh hysterically, shake your head and walk out of the room, yes? Surf on over to some other web site? But here I am telling you exactly that! According to mobile advertising startup AdMob, there are some $200 million worth of applications sold in Apple’s iPhone store every month, or about $2.4 billion a year (their emphasis).
There are two key numbers upon which this estimate is based:
what % of (all) users download one or more paid applications each month
how much does each user spend on average
% of users who download paid applications
For the iPhone ecosystem, AdMob estimates on the basis of its survey that it’s about 45%.
Average spend per user on paid applications
Put these two together, and if AdMob’s numbers are right, the average spend per user who buys paid apps is somewhere between ~$7 and ~$12. They provide an estimate on page 6 for the iPhone that it’s ~$9.50.
For the iPhone ecosystem, with about 45% buying paid apps, that implies average spending per month of ~$3 to ~$5 on applications; call it $4.
With about 45 million users in the ecosystem, that’s $180 million per month, of which Apple is taking ~30%, or ~$50 million per month.
Apple has said in its recent response to the FCC that there are ~40 people reviewing applications; on this basis that’s >$1 million per reviewer per month.
The key question here is sample bias: how representative is AdMob’s sample set?
Respondents were sourced through mobile ads on AdMob’s global network
Mobile ads linking to the mobile survey were shown across AdMob’s iPhone and Android networks of over 7,000 mobile Web sites and 3,000 iPhone and Android apps
This may bias the sample towards more active users. We are digging deeper into the numbers, and will report what we find. In particular, we’re focusing on how these estimates from AdMob compare to hard numbers that can be externally verified.
“This may sound a little weird, but can I take a picture of that?”
A point of sale terminal at a Jiffy Lube with an apparently disappointing user interface
I was in a Jiffy Lube, of all places, paying for an oil change, and I saw a powerful example of something that we’ve been discussing with clients over the past few months: Great user experiences in one product area can drive user expectations across a wide variety of other products, services and use cases.
In this case, the touch screens on iPhones and other leading mobile devices are changing people’s expectations about how things should work on everything from televisions to digital cameras to point of sale terminals like this one. Apparently, Jiffy Lube customers and employees keep trying to use this as a touch screen even though it isn’t one!
A similar example comes from the TiVo and DVR experiences many of us have become used to. Haven’t you often wished you could pause or rewind your car stereo? Or listen to the usual 8:00AM broadcast team even if you were on your way in to the office earlier or later than usual?
People are now coming to expect an incredibly rich, interactive, and easy to use experience from all the technology in their lives. The benchmarks are products like the iPhone, the iPod, TiVo, and Blackberry, and you will be judged against these standards regardless of what price point you are trying to hit or product category you think you are in.
Does your product have a touch screen? Tens or hundreds of Gigabytes of storage capacity? The ability to stop, pause, rewind, time and place shift content? The ability to move instantly and seamlessly between applications or functions? WiFi or wide-area cellular connectivity – or, better yet, both? Perhaps it should.
Posted by Moe Kelley 
Michael A M Davies
Brad W Hagedorn
Moe Kelley
Amy Bullard Davies
