No Soup for You!

November 4, 2009 By Leave a Comment

With all the buzz surrounding the Droid and Verizon’s counter-iPhone advertising campaign, many industry analysts are clamoring for Apple to release their iPhone on Verizon’s network. Others are reporting various rumors that Apple is ending their exclusive arrangement with AT&T or will be releasing iPhones for Verizon in 2010. Up until this point, I believed that Apple would not release an iPhone for Verizon until at least 2011. But even I was starting to be swayed by all the hype into thinking that maybe Apple would release an iPhone for Verizon in 2010. That was until I read this excellent article detailing how successful Apple has been with their single-vendor strategy.

The article is rather long and detailed, so I’ll sum up some of the main points here:

1) The technology in Verizon’s current network (CDMA) is different than what AT&T uses (GSM), so it would require designing a new iPhone, along with all the regulatory headaches, and then would require Apple to split their manufacturing, hurting their economies of scale. This would all be for a technology that will be obsolete in a few years. The next generation (4G) of Verizon’s network (LTE) will be the same as AT&T’s, but that will likely not be built out sufficiently until 2011 at earliest.

2) Comparison to Blackberry sales, which are sold on multiple carriers, shows that Apple is neck-and-neck. Apple simply doesn’t need to sell on multiple carriers at this time.

3) Apple would do better growing their global market than trying to capture the Verizon market in the US. Why should Apple spend their resources on a much more technologically challenging and expensive project like a Verizon iPhone, when they can keep their focus on getting more customers in the global GSM market?

4) One reason Apple has been successful is precisely because they followed a single-carrier strategy. This allowed them to dictate more favorable terms, simplify their product lineup, and successfully execute a focused marketing campaign. Other vendors must cede concessions to the carriers, have complicated product matrices, and fracture their marketing efforts across those carriers and products. Had Apple simply copied the more established vendors’ strategies, they would likely have been just another phone vendor. Instead, Apple chose not to follow the herd and single-handedly created an entirely new market.

The article also notes that Google’s strategy for their Android phones is reminiscent of the old, failed way. This does not bode well for success against the iPhone.

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These Aren't the Droids You're Looking For

October 26, 2009 By 1 Comment

The current Droid teaser ads assert a few points. I’d like to discuss each:

iDon’t have a real keyboard: This has been a common complaint about the iPhone since day one. Honestly, I had serious concerns about the iPhone not having a real keyboard myself when it was first released. And when I first used my iPod Touch (essentially the same thing as an iPhone for purposes of the keyboard) I had some difficulty with it. But the more I practiced, and with each update to the iPhone/iPod Touch software, I got much more efficient with the virtual keyboard. Now I feel completely comfortable with it. And I have observed users who are insanely fast typing on the iPhone – with one hand even! I believe that most people who complain about the iPhone virtual keyboard have never used it or have only given it cursory usage.

But it doesn’t really matter what technical people like myself think. As far as marketshare goes, what is important is what the mainstream user thinks. I believe most mainstream users don’t really understand the relative merits of a “real” keyboard as compared to a virtual keyboard. But if a commercial like this makes them wonder about it, they’d just ask their iPhone using friends (of which they have plenty because smartphone users tend to flock together). Those friends would mostly say that they don’t really have a problem with the iPhone’s keyboard. And that would be the end of this argument in their minds. Score: iPhone 1 – Droid 0

Another point often overlooked about the iPhone’s virtual keyboard is that it can be easily customized for each language. So the exact same iPhone hardware that is manufactured for the US market can be easily loaded, for example, with the Chinese language software. This allows Apple to take advantage of massive economies of scale and worldwide ubiquity. Android phones made by many different manufacturers will need to be custom built for each language they support. This will make it difficult for other phone manufacturers to make as much profit as Apple does from each of their iPhones.

iDon’t run simultaneous apps: There’s nobody who appreciates geeky technology better than me (my wife would say there’s no bigger geek). And I certainly appreciate the ability to run simultaneous apps. But really, in using the iPhone, I can’t honestly say that the lack of running apps simultaneously has bothered me much. While simultaneous app usage is great on a desktop, I don’t think it translates quite as well to a handheld device. Apple’s position is that simultaneous apps can drain battery life (more on that later). That argument is yet to be proven with the Palm Pre and Google Android devices, so we’ll see. But once again, what does the mainstream user think? I think that most users have little concept what “simultaneous apps” could do for them, so this argument just goes over their head – and probably turns them off in the process. iPhone 2 – Droid 0

iDon’t take night shots: This argument is pretty specific and could be pretty effective. But how many smartphone users care that their phone can take night shots? Certainly the geekier among us can appreciate this feature. But I believe most users will think, “that’s neat” and not much more. iPhone 3 – Droid 0

iDon’t do open development: Ummm … yeah. Who cares? What does this even mean? Once again, geeky types might get the warm and fuzzies over this, but the average user has no idea what open development means for them. iPhone 4.5 – Droid 0 (I give the iPhone 1.5 points on this one because this argument is just so weak).

iDon’t customize: Really? I think the iPhone is pretty customizable. But hey, I’m just an average user (well, not really, but close enough). I think the mainstream user would find this confusing. What exactly is customizable? “Oh well, I guess I’m just not smart enough to know what that means so I’ll just ignore the Droid”. iPhone 5.5 – Droid 0

iDon’t have widgets: Honestly, I had to look this up. I wasn’t quite sure what Android widgets were (they weren’t part of the first Android release). And yes, I’m a super-geek as my wife would attest. So if I wasn’t clear on the whole widget concept, how is the average user going to know? Basically, once again, this goes over users heads and possibly turns them off to the whole Droid concept. iPhone 6.5 – Droid 0. Ironically, one of the concerns about widgets is that they may drain battery life, which leads to the next point.

iDon’t have interchangeable batteries: Yet another argument that has been around since day one of the iPhone. So far it hasn’t seemed to hinder iPhone adoption. I theorize that this is because the iPhone’s battery life is more than adequate for most users. Other users can fairly easily charge their phones at least once during the day (the iPhone seems to charge quite quickly). And for those who really need more battery life, there are third party products that can augment the iPhone battery. I believe that most users who own phones that have interchangeable batteries never purchase another battery.

Apple has proven with their MacBook laptops that by designing a battery that isn’t user interchangeable, they can increase the runtime as well as the lifetime of the battery. This is often overlooked by those that argue against the iPhone battery. Sufficient runtime and lifetime of a battery can negate the need for interchangeability. On the counter, if the software is not efficient (simultaneous apps and widgets?), it can increase the likelihood of needing an extra battery.

So far I’ve been fairly harsh on this ad, but let me state what I do like about it. It is clear and concise and plays on the perceived strengths of the Android platform. It isn’t the “100% You” blather that T-Mobile is putting out there, and it isn’t the touchy-feely existentialism that the Palm Pre phone ads portray. Combined with the “pick your network” ad campaign, this looks good for Verizon. The question is just how good?

Overall, I think this ad suffers from the same problem as the Palm Pre ads – they seem to be written by geeks for geeks. Sure the iPhone has a lot of geek appeal, but Apple knows they don’t need to sell to that market. The iPhone has been successful precisely because it targets the mainstream in features, ease of use, and marketing. It seems the other guys haven’t yet figured this out. Until they do, I don’t believe they’ll have much success.

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You Can Pick Your Friends …

October 24, 2009 By 2 Comments

I’ve observed that Verizon has been running an ad campaign for a couple of weeks subtly attacking the iPhone. The campaign basically claims that Verizon’s network is superior to AT&T’s network by such a large margin that you should forget about any phone that doesn’t run on Verizon’s network. As they claim, “before you pick a phone, pick a network”. Obviously, the underlying message is “forget the iPhone – it doesn’t run on Verizon”.

I think this is actually a very good campaign because the message is clear and Verizon is playing on the perceived strength of its network. It can definitely make people think twice about buying an iPhone if they have any qualms about AT&T’s network. The question will be if the message resonates with enough people to put a dent in iPhone sales. I believe it boils down to whether or not people are more swayed by the marketing of a network or the marketing of devices. Personally, I think it is pretty clear that the mainstream is more apt to gravitate to an exciting, fun device than the relatively boring technology of a wireless network.

I think Verizon realizes this, however. What should not be missed is that Verizon has recently started the Droid campaign. It seems that Verizon is attempting a one-two punch at the iPhone. 1) our network is much better, and 2) we have devices that are better than the iPhone. I’ll write more on the Droid campaign in another article. The question for now is whether Verizon actually believes that Google Android phones are better than the iPhone, or if they are using this campaign to pressure Apple into releasing an iPhone on their network. Likely, Verizon knows that this strategy is their best chance of success either way.

If Verizon grows its customer base large enough with this campaign, they are in a much stronger position to negotiate with Apple, if they feel they even need the iPhone anymore. If enough customers switch away from AT&T (and the iPhone) because of their network, or if Google Android phones start to develop a significant enough following on Verizon’s network for Apple to notice, then it puts pressure on Apple to develop iPhones for Verizon’s network. The risk to Verizon is if this campaign isn’t very successful, it cements the iPhone’s dominance in the market and puts Apple solidly in the driver’s seat in any negotiations.

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