In the aftermath of the launch of the 3G iPhone everyone is trying to get to grips with just what Steve Jobs brought to the mobile party that was new. Most of the pundits have missed it, because there was quite a lot.
The first thing is that it is bringing the best out of all the rivals with Nokia re-iterating the availability in August of the already lauded N96, which it will position head to head with iPhone, and Samsung, on the same day, launching its own all-touch iPhone killer, the Omnia i900, a Windows phone which has many of the same features.
Pundits were split immediately into two camps. Those who love the iPhone, and those who’s first experiences with Apple have always meant they are negative about the company, who want anything but an Apple device, and who continue to point out that the 3G iPhone is finally almost as good as the promised N96, but still doesn’t have that wonderful complete Nokia look and feel.
There should be a third group though, developers, all sorts of developers. People may complain about the SDK and how limiting it is, and how you can’t get at some of the core phone functions, but that hasn’t stopped people taking a look see, primarily because Apple is going to give them a route to market through its own Application Store. Programmers everywhere are thinking, ‘What if I can get a paid App on the iPhone?’
One in particular which we saw this week is Sling Media, now part of EchoStar in the US. For those that have not tried a Sling Box or any of its derivative products, it is a device which takes your own TV outputs, be they DVD, the Sky Plus DVR or a Virgin Media service, it re-compresses the program and sends it out to wherever you are, as long as you are on a broadband line, including a Broadband wireless line, like the 3G iPhone now has. So you can watch your home TV, whatever it is, wherever you are, on a PC or a handset. Who needs mobile TV, if you have your own TV, and it’s mobile.
Apple is ambivalent about this, and is unsure whether it wants to sell lots more video from the iTunes store, or allow applications like Sling on its new device. So Sling is only showing a ‘concept’ version on the new iPhone, and is awaiting Apple’s approval. Sling makes its money selling the box for home and the application on the handset or PC, and we would expect that to be a hot pull for any device that has it, and Apple will soon realize that its new iPhone needs it.
The big thing that coverage focused on was price which has been announced in the US as $199 or $299 for the 16GB version with a long term contract. Of course that’s not what it costs. We reckon that operators are paying $499 for the device and subsidizing it the same way that rival handsets are already subsidized. This will have a huge effect on the number of devices shipped., and already shipment predictions have risen from 10 million a year to 25 million a year on the back of that alone.
Now a contract customer will be offered the device alongside the Nokia N95 or N96, or Sony Ericsson Walkmans. ‘Certainly sir, would you like that contract with an iPhone?’ will be the phrase that doubles or trebles shipments. But that’s not all that Apple needs to make this device a success, and for that we come back to its software and its rising developer community.
Apple is quietly creating a walled garden, but not the traditional one that operators have created. A Walled Garden is where an operator says which applications and which services can operate over its network. The new Walled Gardens are where handset makers decide which applications and which services can operate on its devices.
While Nokia has spent a lot of time talking about its Ovi portal, all of the applications on the portal are written or owned by Nokia. In the Application Store Apple has gone a step further, and by linking all software to an issued Digital Rights Management (DRM) License the company keeps control of which applications make it onto their device, and keep control of the revenue streams from applications . The difference is that Apple is showing its roots, which are firmly in the PC world, where developers are everything, and like Facebook, the 3G iPhone will find that applications spring up fresh every day, renewing the iPhone experience in a way that companies like Nokia can only copy, because it developer community is mostly internal. This is what Google’s Android was supposed to achieve, but somehow Apple has engineered a desire to develop for its device.
Nokia will continue to sell more handsets than any other company, and Samsung will continue to sell the next highest, but they will have to open their minds further to a vibrant developer community if they want to stop Apple carving out a hugely profitably existence at their expense with the 3G iPhone, especially when the full capabilities of the next generation software come out next month, to be thought of as the real iPhone 2.0. Because this will stimulate whole new genres of application, which will work equally well on the iPod Touch and both iPhones and will introduce major incursions into the enterprise with Exchange server compatibility for email, push email, and in gaming (Apple has already demonstrated some games from Sega), further threatening Nokia enterprise Smartphones, the Blackberry and devices like the Nintendo DS and the Sony PlayStation Portable.