04 January 2007

Appletease

The astute among you may be wondering about the lack of Apple postings here lately. After all, Apple is usually involved in up to half of the posts!

First up, I've been biding my time a bit. The last major post I did on Apple was an outright criticism of many of the articles written in the Guardian around the time of the last iPod release and iTV announcement. While I did draft a riposte to comments left here by some of the Guardian writers, it was frankly becoming even more complicated. So, I decided to let actions speak louder than words. We'll revisit the Guardian's criticisms when the next financials are out, and the product strategy is a bit clearer.

However, today we're going to have a bit of fun looking into the Apple Phone, iPod Phone, or whatever it will be called (but definitely not iPhone which it has been clear for many many months it was not going to be called).

We've had some incredible postings about why the Apple Phone will fail before its been announced, let alone released. I was pleased to nominate Michael Kanellos of CNet to DaringFireball for a Jackass of the week award which he duly won for his prepostorous predictions. We've had articles at other sites such as the Register about the certainty of it's failure. The Register article was at least generally coherent about the challenges facing Apple entering into a mature industry which is massively distorted via handset subsidies from service providers to consumers and how the relationship between handset maker and service provider works (badly actually for BOTH of them). But it failed to think differently. Apple does not intend to become the number one, two or three handset maker tomorrow. Its target market is first of all restricted to the richer countries - to some extent as the Mac and the iPod are. You won't be seeing too many Apple phones in China or India which today account for a high percentage of the handset market. Apple will want to achieve strong reviews and good sales in the markets it considers it is already strong in.

But how can Apple make the iPod Phone a strong proposition that people will want to buy - even if the subsidies aren't there? Well, how about studying past form with the iPod itself? Too few commentators seem to have done this. My first prediction for the iPod Phone is that it will be small. Not unusably small, but it will compare well even with some of the slimmest, sexiest phones today. Many manufacturers have lost sight of this (Nokia - where is the successor to the cute 6100?). The problem with many of these good-looking phones today is that the UI sucks, and indeed Motorola have never figured this out, and even Nokia seem to have taken steps backward in this area. To send a text message with my Nokia "smartphone" now takes me up to 15 presses just to enter text mode and select the recipient's mobile number. I used to be able to resend the same message easily. That option does not exist now (at least not obviously). In fact my Smartphone is hobbled by a combination of service provider and manufacturer stupidity giving me a phone which needs a firmware update but by doing this voids the warranty offered by the service provider! Nokia can fix the bugs in it, but Orange won't let me!

Apple's phone will not be free of bugs out of the box, but it will employ an excellent UI that makes it a combination great music player AND a great phone. I'm not expecting it will be a smartphone crammed with features. But most people I know don't really want one of those anyway. Instead, Apple's phone will be another piece in the jigsaw of the Apple experience. Mac users may be expecting the Apple phone to work wonderfully with their Mac, but that is still too niche of a market. Instead, Apple's phone will add another dimension to the iPod ecosystem and to Apple's own broad media everywhere strategy. It will deliver its key functionality equally whether to a Windows user or a Mac user. It will do this by leveraging iTunes - the third strand in how Apple will differentiate the iPod Phone from others. Note how synchronisation and updates moved into iTunes itself with version 7. This is key for the phone strategy - where contacts, notes, photos etc arguably have more importance. It stands in sharp contrast to the mixed bag of applications in the Nokia suite for instance. Apple's phone will embrace the third party iPod add-on market to allow people to add functionality they need that is not part of the basic phone.

But these alone are not enough to make the iPod Phone a success. And, for that, Apple still has a few tricks up its sleeve. It will not just have great synchronisation features, it will bring something new. It will do this by making one assumption most phone manufacturers don't make - that the user will have a PC (the iPod does this obviously). One of the applications I love and have written about before is Salling Clicker - an application which turns many phones into a remote control. A year ago, Clicker v3 added support for PCs and also could be used over wi-fi networks (extending range compared with Bluetooth, and allowing control of multiple machines). I am going to go out on a limb and predict that the Apple phone will include remote control software built-in allowing control of a set of PC and Mac applications (obviously including iTunes but also applications such as Powerpoint, and iPhoto), and probably also working with iTV and a FrontRow style interface. It is a long shot but I wonder even if Apple have hired Jonas Salling or bought the company for while Jonas continues to support the product well via forums, fixes etc. it's been pretty quiet since the last release a year ago! In any event, expect the iPod Phone to do things with your PC and Mac that no phone has done before (at least not without a lot of add-ons and tweaking).

Imagine a phone that when you walk in the door, switches your iTunes on, or tells you how many email messages you have? Or, a step further, downloads your new podcasts to the phone? Synchronisation and control are two areas where the iPod Phone will make a leap over any other device today.

If I'm wrong about this direction, then the other direction Apple will take the phone will be in data. I'm not sure in the first version of the phone we'll see a lot here because of the need to support multiple network types and to work out arrangements with service providers. But it may well have a few things up its sleeve - perhaps in limited markets. Safari's underpinnings are already the basis for Nokia's latest browser. One obvious area is mobile iTunes - especially for instance for almost realtime podcast downloads. But I'm not convinced Apple will jump into this area immediately (partly because many of the data features being talked about would require 3G speeds, and potentially expensive contracts). Apple could build some mobile features into its .mac service, but again I believe this is too mac-platform centric. Instead, Apple might leverage it's burgeoning relationship with Google to come out with optimised pages for accessing mobile services - GoogleMaps, search etc. I've mentioned the possibility of location-based services before, and I think this is area of great potential (perhaps with an add-in GPS receiver). Another area Apple could build on brilliantly would be in bridging the gap between SMS and IM. A mobile version of iChat could be excellent here - especially if it also has wi-fi capabilities. As far as I'm concerned even just text features here would be valuable. Obviously, it would need to make sure this was interoperable with the AIM network, and ideally with others (GTalk?). If Apple can introduce data features that people will use, then it will start to win the support of mobile service providers. Maybe not the dominant ones who believe (wrongly) they will be the source of content, but those who realise that the best thing they can do is to get the masses using data. SMS took off in spite of the service providers - and certainly because it was not controlled by them. It could well be a company such as Apple who shows the service providers the way for data by giving users features that they want and - most importantly - find easy to use.

If Apple can demonstrate a game-changing device, then it has the potential to cause a sea-change in the relationship between handset maker and service provider. The ludicrous subsidy system which ends up hiding the true cost of calls, and results in massive environmental waste due to 12 month phone replacement cycles, could come to an end. Handset makers could once again compete on features and appeal directly to end users, and service providers could compete on the actual services they offer.

I think the biggest challenge Apple has is that with one or even two models, it will not be able to please even a majority of critics out there whose ideal phone ranges from ultimate Blackberry/Treo down through 3G smartphones, through music/camera-oriented devices, down to the slimmest and sexiest small devices. Apple's success - in the same way it initially targeted only hard disk MP3 players, ignoring the larger flash market will need to be judged at least initially on how it does next to similar types of devices.

To recap, I believe that while Apple has some significant challenges to enter this market and its success is by no means assured, it will bring a device that is sufficiently differentiated from the competition to offer the discerning user a proposition worth paying for. It will do this through design, UI, synchronisation and control, and perhaps new applications. If the first device is priced reasonably (therefore it will not likely be a high-end, feature-laden device), it can become popular, and lead to a family of devices which service providers will warmly embrace, or risk losing customers. It can also become the catalyst for the widespread adoption of data services that the service providers actually crave but have been unable to kick-start. How will we judge it's success? Microsoft has said it will be happy to sell 1m Zune's by June. I think if Apple can sell 1m iPod Phones in a similar period, it should be considered a success. What do you think?

Look out for a few more Apple articles over the next week or two covering MacWorld, financials and the challenges ahead.

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1 comment:

Charles said...

You know, there's a publication called "Guardian Technology" which deals with precisely this, and more, in its latest issue:
http://technology.guardian.co.uk/weekly/story/0,,1981815,00.html

And that piece is written by a former Apple manager.. about a meeting where Steve Jobs talked about tablets and converged phones. And .Mac.