Let's be a bit provocative after this week's announcement from Apple letting us know that they had sold 7,4M iPhones during the last quarter (+7% yoy). Apple's stock valuation was even higher than that of Google (as of October 20, 2009): $179 bn vs $173 bn. I am not a financial analyst so I won't comment the results from a profitability perspective, but would just like to throw out a couple of ideas to discuss whether this trend will last in 2010. Let's add a pinch of salt without taking into account the fact that Apple could (and certainly will) surprise us with new products.
Beyond the terrific iPhone user-experience, the power of Apple's marketing and the AppStore's ecosystem, part of the success is due to Apple's new business model introduced in July 08. When launching the 3GS, they also announced lots of international (and non-exclusive) deals with operators worldwide and finally accepted to let operators subsidize the device. No doubt there is a huge consumer demand for the iPhone but operators will have to solve a complex equation. It is a little dirty industry secret that many carriers are analyzing the profitability of the iPhone model:
There are numerous reports that Google is about to launch a music service. Whether the rumours have foundation or not I think it is worth reflecting on what role Google could play in digital music and their various assets. Here are some initial thoughts:
Google is already a major player in the online music space via YouTube (in Europe, the home of Spotify, more people watch music video online than listen to streaming music)
Google shouldn’t (and probably won’t) try to be an ‘iTunes killer’. The bottom line is that the iTunes / iPod / iPhone ecosystem is successful within that niche, but it is just that, a niche. The 99 cents download model isn’t a mass market proposition
Google has its Android asset to leverage, potentially ensuring it is a truly cross platform music play
Google is in a unique position to target music demand at the earliest possible stage i.e. when consumers start searching for music
The last point is where I think Google’s core value proposition for the music industry comes in. Apple can do little about iPod owners downloading from BitTorrent (and our survey data shows they are very likely to do so). But Google on the other hand can.Just imagine if when a consumer searches for a song, alongside all of those Torrent results is a heavily integrated Google music offering.
As I referenced at the end of my previous post, Spotify – the European streaming music service – has struck a deal with UK mobile operator 3, bundling the cost of their premium subscription into the phone tariff.I’ve done a few press calls on the story today and the recurring question has been “where does this leave Nokia’s Comes With Music”.
Although the business model and value proposition are very different in many respects (thus suggesting risk of direct competition is low), there are also many similarities. Both offer unlimited music free to the end consumer, and now both are mobile. The distinctions between streaming and downloading is becoming increasingly irrelevant to end users (though rights bodies will continue to obsess about the distinction). The differences the consumer feels are of course what matters.Given that CWM and Spotify have comparable catalogue, the key differences between fully subsidized mobile offerings will be:
My answer to this question was, "never" until a couple of years ago. Sure, I was more likely to make a phone call on my cell phone than on my computer, but that is to be expected - it has traditionally been designed to be a voice communication device.
Opting for my cell phone rather than my laptop first started for me a couple of years ago. I began using SMS as a substitute for email. Then I started using email on my Blackberry because it would boot faster than my computer. Next came Google SMS - for me it was soooo much faster to get a phone number for a business through Google's SMS service than to call (ok, which costs money) or look online. Then, I got an iPhone and started downloading all kinds of applications. Some I barely use, but .... there are quite a few that I use rather than comparable experiences on the PC. These include Facebook (I'm more likely to be doing something interesting when I'm out and about), Scrabble (tallies the score for you), and maps (stopped printing all those maps out) among others.
For all of these services whereby I opt for my phone rather than my PC, I do so because the experience on the cell phone is more convenient. That means the benefits outweigh the inhibitors to use. When it comes to mobile services, there is convenience when there is value to the immediacy of the information or service, tasks are simple to execute and there is context - like my location.
We lay out this framework in our newly released report, "The Convenience Quotient of Mobile Services: A Facebook Case Study."
Many innovative start-ups have pioneered mobile social networking in the last few years: BuzzCity, Peperoni, Fring, Nimbuzz, eBuddy, Zyb, Plazes, Loopt, Foursquare and many others demonstrated the potential of the market.
In the last few months, a bunch of announcements clearly showed that the convergence between mobile and social computing is gaining traction and attracting the largest stakeholders:
Big promotion in the centre of the front page of Amazon sites in the UK, France, Germany and Japan.
Only for sale on Amazon.com and priced in USD at $279 (i.e. a $20 mark-up over existing Kindle2). Promotions above have links to Amazon's US site to buy.
Books are also for sale only via Amazon.com and are also priced in USD (at least for now).
This is the first Kindle that uses a GSM-standard mobile phone radio -- rather than CDMA -- for wireless downloading of books, sync of reading position with other Kindles and the iPhone Kindle app (i.e. to drive Amazon's Whispersync consumer cloud service).
Uses AT&T's mobile network and AT&T's global mobile roaming partners for Whispersync.
When outside the US, Kindle owners pay an additional charge for each book downloaded, currently USD1.99 per download. I imagine this also includes downloading PDFs via the email to Kindle conversion process and downloading small items like blogs or newspapers.
I'm frankly astonished that Amazon is marketing the above product internationally so strongly. Instead, it looks like a great fit for US residents who want to own a Kindle that works both in the US and when they travel abroad. Or, Amazon could have chosen a much softer and lower key international promotion on their various global sites.