The stand-off between Apple and Google continues to twist and turn. Apple made some concessions last week, opening up its voice API to allow the web version of Google Voice to function on the iPhone. But it looks set to be aggressive in mobile advertising, where it recently acquired Quattro Wireless to enhance its activities in this area.
As Google and Nokia point to location targeted ads as a key growth area in 2010, Apple has warned iPhone and iPad developers that it will reject apps that incorporate location to deliver personalized adverts. Apps built with location aware features ‘ using the Core Location framework – must provide “beneficial information’, it says, according to a post on the iPhone Dev Center web site. “If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store,” the post says.
Despite this aggressive stance, in other areas the iPhone model is showing small signs of defensiveness, under attack from Android and the open web approach of Google. Last week Apple opened up the VoIP API (application programming interface) to allow previously banned internet voice services on its devices. Now it has introduced a feature that enables users to access App Store offerings via the browser, and in a further concession to the open software brigade, AT&T has reversed its policy on allowing the SlingPlayer app to run over its 3G network.
The vertically integrated model, where users are confined to downloadable applications that are governed by Apple, has been very successful, but as mobile browsers and high speed connectivity improves, interest is rising in Google’s preferred model ‘ accessing most services via the browser. The two companies’ clash over mobile paradigms has been most clearly seen in the row over allowing Google Voice into the App Store, which even reached the US antitrust authorities ‘ the app remains excluded, but with the VoIP interface opened up, users can now opt for Google voice services via the web.
Other key voice players are rushing to take advantage of the new API, including Cisco and Skype. The latter says a 3G VoIP app for the iPhone and iPod Touch (and new iPad) will be available ‘soon’, once it has improved audio quality to its satisfaction. Previously users could only use VoIP applications over the iPhone’s Wi-Fi connection. Now VoIP providers fring and iCall have also adapted their Apple offerings to run in 3G mode on AT&T’s network.
As for Cisco, the IP giant also plans to add voice over Wi-Fi capabilities to its existing iPhone Cisco Mobile application, which works with the Cisco Unified Mobility Advantage server. The client offers quick access to features such as visual voicemail and Mobile Connect call routing. The upcoming WLan version, to be called Cisco Mobile Voice, will be free and should ship in April.
Another app that will now be usable over 3G as well as Wi-Fi is the SlingPlayer Mobile place shifting function, which redirects TV signals over the internet so programs can be viewed on a mobile device.
AT&T Mobility’s CEO Ralph de la Vega said the carrier had worked closely with Sling Media to adapt the application to work more efficiently on the 3G network. “The key for us is Sling Media was willing to work with us to revise the app to make it more bandwidth sensitive,’ he said in a statement (though Sling said it had made those changes months ago).
Of course, one reason for the new openness to allowing disruptive apps onto AT&T’s 3G network is that the carrier has been improving the coverage and quality of its HSPA system, which has struggled under the weight of iPhone data traffic. Unfettered web use worsens the problem because it is so unpredictable, and both Apple and its carrier friends have also resisted allowing apps that disrupt key cellco revenue streams. Now they are having to take a more flexible approach. Three months after quietly introducing iTunes Preview – a browser based feature for viewing music in the iTunes store without installing or launching the media player – Apple is now extending the service to the App Store.
This is a small but significant shift of focus, but many expect a more dramatic change of direction in the US soon, if Apple ends its exclusive with AT&T, one of the only ones remaining in the world. But one analyst thinks Verizon may have to wait at least another year for an Apple phone. Jonathan Chaplin of Credit Suisse said in a client note that there was ‘a 75% probability that AT&T keeps exclusivity in 2010’. This conflicted with a prediction by Piper Jaffray’s Chris Larsen that there was a 70% chance of the iPhone coming to Verizon’s CDMA network this year. Chaplin writes that he “couldn’t find compelling evidence” that AT&T’s contract with Apple ends this year, though he says the probability of this is 50% – but then adds another 25% likelihood that, even if it does expire, the cellco could negotiate with Apple to extend its deal for at least another year.
However, the returns for AT&T are diminishing. Apple accounts for two-thirds of its smartphone base and so the room for growth is shrinking, as is margin on the already heavily subsidized device. If the exclusive lasts until 2011, the analyst thinks Apple’s north American smartphone share will fall from 26% to 23% or 13.3m units, and also impact its global share, which is about 17%.
Google will be hoping to make Android the platform that achieves this sidelining of the iPhone, and deliver location aware and other advertising revenue back to Google. But its attempts to create its own-branded devices and distribution channel are not going smoothly either. The Nexus One, after a much-hyped launch, has disappointed in terms of user and developer experience, and early sales. In its first month, it certainly did not give Apple any sleepless nights, according to mobile analytics firm Flurry. This company found that Google sold about 80,000 Nexus One handsets in its first month on the market, only about 13% of the number the original iPhone sold in its debut month (600,000 units).
Apple it sold one million iPhones after just 76 days on sale in the US, while another Android big hitter in north America, Motorola Droid, reportedly shifted 525,000 in its first month.