Can 17 million iPhone users be crazy?

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 everything.

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.
In 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 novelty.

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 example.)


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.

Comments

[cheap iphone]

Great article! I don't think the netbook will have much effect on the iPhone. It's bigger to carry around comparing to iPhone. With a lot of apps, features and its sleek design, iPhone makes people want to get one for themself because people like to be cool. I think iPhone has any competition anytime soon.

[Heather Torres]

Great post! Apple is not the be all to end all. There is still very healthy competition in the market. And competition is GOOD! I agree that this fad will eventually wear out. People love technology and all of the gizmos and gadgets that come with it.

[iphone insurance]

Cover get your iphone insurance against theft, loss, accidental, water damage. Free Fraudulent Call Cover and also International cover.

[Jordan]

Most people get the iphone for the name. you do have those apple lovers, but for the most part your 13-25 yr old person gets it for the name, just like when they bought their ipod 4 yrs ago, because it was the "cool" thing to do. Then they get on at&t's network and realize a phone isnt much of a phone on a poor network. there are plenty of phones that have as many or more features than the iphone. Don't buy a name.

[Christina Viering]

I agree with jason. Netbooks aren't as portable as iphones.

[wow gold]

I agree, they can't have it all. What they can do is to develop more cool applications that would encourage customers to choose them instead of netbooks. One good example is to create a game like world of warcraft that would give excitement and some kind of connection with Iphone.

[Chip]

Is it shrinkage or convergence or both? I think users are making decisions based on two dimensions:
1) Desktop/laptop functionality moving down to a smartphone. (Do we hear much anymore about lousy browser experiences on an iPhone?)
2) Convergence of handheld format functionality. (Do I really want to carry a GPS device, a point and shoot and a phone?)

Once Moore’s law enables reasonably performing hardware for a specific function (such as GPS or digital camera) to fit into a converged hardware platform, it just become a simple matter of programming. The iPhone’s evolution is the case in point. And, once a converged hardware platform is available, software-oriented thinkers start to get really creative (such as the Nationwide ap).

[David Taylor (brandgym)]

I wonder if you have spent any time with iPhone users. If you had, you would know that most of them do not carry round an iPhone, and a Blackberry, and an iPod and and and...

We've ditched all these devices and use the iPhone. With the new 3GS model I can even ditch my mobile broadband modem, thanks to the "tethering" facility.

The app store is pure genius. But means that the device is even MORE multi-functional, and so even more converged.

When will you own up that you just got it wrong, 17 million times over?

[Tom]

Maybe the other 16,999,983 are though? ;)

Convergence - overlap - things coming closer

Convergence is in part what the iPhone is about. Sure, it might drive you crazy, but it doesn't me it stops others being driven ecstatic about it.

"There's an app for that" is a converger's call to arms.

Look at the stats - users use more of the features on the iPhone than other smartphones, and they also use more features. Email, camera, SMS, email, games, apps.

Look around the corner. Look at the processing power about to kick the non-convergent white good boxes into touch.

"convergence in the end still means a device that is a jack of all trades but master of none." It's a pretty easy statement to disprove.

There are many devices (radio, mobile, satnav, PMP, remote) that can be rolled into one.

How is a TomTom app not convergence? It converts your iPhone into a SatNav (and there are free alternatives if you jailbreak).

The "ability to download and run these little programs which give the phone magical powers" *is* what people classify convergence...

Stepping aside from the straw man arguments, there are some people who can have a better stab at the future than the rest - it's those making it.

[Dr Wright]

I think applications can be a great way to connect with customers your already have, not just try to advertise to them.

Dr Wright
www.wrightplacetv.com

[Roman]

you may also consider admitting that for iPhone convergence is what exactly draw users. It shouldn't have worked and it didn't in many other cases but for iPhone the balance was really well set. You're saying that becoming a platform was the winner reason. Probably. But it became a platform quite later since its inception. Also, you don't have to have iPhone to enjoy the platform - iPod Touch will work just fine. The reason that BB grew its sales is not directly correlated to potential iPhone users. I haven't seen a person owning iPhone and BB at the same time but many (if not all my friends owning iPhone) enjoy the fact that you have one device for listening calls and listening music so when the phone rings you don't have to turn off your iPod, switch or pull off your speakers, and make many different clicks. iPhone carries out that job brilliantly and attracts users because of this convergence. Sure, typing emails on BB is more convenient but is it worth it to have another box in the pocket to speed up typing? For many people it is not. I'm sure once AT&T's monopoly is over we'll see iPhone adoption climbing the ranks and conquering market share.

[Craig Johnson]

It's interesting how what really got the iPod and iPhone really going was not the iPod and iPhone in and of themselves.

It was when Apple launched the iTunes store that the iPod really took off.

In the same way it was when Apple launched the AppStore that the iPhone really took off.

So what does that say about their focus?

[Christian]

Geoff Moore has already analyzed this phenomenon. What he says is that 'platform innovation' is the direction to take in mature markets (existing technologies sold to existing markets). That's what the App Store is all about. The same way Microsoft became the platform with Windows when they started offering Software Dev Kits to everybody. Or salesforce.com, with their AppExchange, became the de-facto standard for business application developpers.

You don't have to be first, nor have a catchy name (salesforce, Windows, etc.), you just need to become the platform other people/companies rely on for their livelihood.

[Roger L. Cauvin]

I think "phone" doesn't just mean "voice communication device" anymore in the mind of the consumer. "Phone" now implies "portable". Thus when Apple sells the iPhone as a "phone" it's really a subtle but powerful way of highlighting the handheld, portable nature of the device.

I do agree wholeheartedly, nevertheless, that "iPhone" was a poor name for the product, due to its genericity.

Also, if you go back and look at how Apple initially marketed the phone, it was as a phone, music player, and Internet device, and thus a convergence product. However, Apple very quickly changed its tune, and consumers adopted a different position (stylish, easy-to-use handheld computer).

[Laura Ries]

Exactly Scott. I think the "phone" part of the iPhone is the biggest problem and issue.

And with "phone" in the name it is hard to get away from it. And with a phone service contract necessary for use it is even more difficult to get away from.

Apple might have been better off selling internet service only on a Touch-like device. And like you said gave the device a new, unique "iPod" like name.

Using the line extension "i" and "phone" name makes it a phone convergence device more than a whole new mobile computing device which is has really become. Names are important. And can lock you into a category in the mind.

It's funny because the one App that I don’t think is necessary on the iPhone is the phone. That phone contract is very costly. Minimum $70 monthly contract!

It is not better but convenient to do many things with an iPhone, sure. People take photos, watch movies, listen to radio. And right now it is cool to try them all.

Application makers have not even begun to really think outside of the box. I think many cool applications have yet to come and will not have be just about replacing other devices.

The internet is not great because I can watch TV or listen to radio on it. It is cool because Amazon can recommend a book I want to read.

This is only the beginning. Having mobile internet will be a game change for sure. We’ll see if the iPhone is just the appetizer for a main course that is yet to come.

The more Apple adds on to it, the more I fear for it getting stuck in the mushy middle between the phone and the netbook.

Of course Apple could also launch a new and better brand that stands for cool netbook. But that would mean competition against its own iPhone. Something most companies refuse to do.

[Scott Miller]

>>> But iPhone still is sold as mainly a phone...

The ads I see for it sell it as a mobile computer now. Apple is selling apps, which, btw, is a brilliant word for them to use because is short for applications, and apple.

As I said from day one on your blog, the iPhone is not a convergence device, but an integration device, just like a PC is an integration device. Often, the two are difficult to distinguish, and your rightly bias against convergence wrongly swayed you against seeing the real purpose of the iPhone.

Apple's biggest mistake was with the name, iPhone. They should have picked a name like iPod, that isn't so generic, and could have become a brand without built in baggage (because, the iPhone is SO MUCH MORE than a phone). For example, a name like iCom, for "communicator," of something else that's short and non-generic (exactly like iPod).

[Shawn Morton]

Thanks for mentioning our Nationwide Mobile app for iPhone. We appreciate it.

[Dave J.]

Thanks for coming back to your original position about the iPhone, and pointing out what you didn't see at the time.

I have an iPod Touch, and separate phones and cameras. The Touch is the mobile internet on the cheap, for folks like me normally near wi-fi. I carry it everywhere with me.

Netbooks are neat, but they are too much in the mushy middle. Its bigger than a mobile device, and not as functional as a larger PC. And they don't do anything new...they run on XP after all. They say that's why Apple hasn't entered this category...yet.

[Laura Ries]

The iPhone might not be a phone to you Jason. And I agree it is best at being a cool mobile computer.

But iPhone still is sold as mainly a phone and one that you need to buy a costly monthly phone contract to use! If you could get just a cheap internet plan that would be one thing but no way AT&T is doing that.

[Roger L. Cauvin]

I don't think the apps are what defines the iPhone in the mind of the consumer. As I essentially wrote in a blog entry last year ( http://cauvin.blogspot.com/2008/07/iphone-predictions-post-mortem.html ), the iPhone established itself as the world's first stylish, easy-to-use handheld computer. The apps reinforced and leveraged this position (and even took it to a whole other level), but the perception was already there.

Technologies are converging to create new (and diverging) product categories ( http://cauvin.blogspot.com/2005/07/convergence-of-technology.html ).

[Jason Karpf]

Per my earlier comments, the iPhone is not a phone; it is a cool, little computer. The Apps are the epitome of one of today's favorite oxymorons: mass customization. That's Apple's ace-in-the-hole: a bulletproof brand that can be reconfigured a zillion different ways. Overloading the iPhone with features is a danger...netbooks not so much, unless you can put one in your pocket. Wait, that's called an iPhone!

[Charles Jolley]

Thanks for writing this Laura. Very thoughtful analysis. I think you're right about the netbook