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The Answers Just Keep Coming!

A recent survey found that of current Verizon smartphone users, 66% of BlackBerry and 44% of Android owners plan to switch to the iPhone. Given that Verizon has the largest subscriber base in the US, that’s a LOT of smartphone defections. Is this a devastating body blow or a knockout punch to those respective smartphone platforms? Only time will tell, but I must say I was shocked when I read the article reporting the survey.

Almost as impressive (at least for Verizon) is that the same research firm also concluded that 26% of current AT&T iPhone users will switch to Verizon. That’s a non-trivial number of subscribers jumping ship for Verizon. I expect that percentage to be higher in the areas most notorious for poor AT&T iPhone service, such as New York and San Francisco. I myself don’t plan on switching because I’m happy with AT&T’s service in my area and the ability to talk and use the data features of the phone at the same time is important to me. I wonder how many AT&T users realize that Verizon’s network does not support this ability? AT&T sure is trying to make sure people are aware of this with their latest series of commercials.

Regarding the respective wireless networks, the article does touch upon the question of whether Verizon’s network will be able to handle the crushing load all those shiny new iPhones will place upon it. Either Verizon will be able to boast about its superior network, or AT&T will be vindicated for its perceived service issues. Also interesting to watch will be if AT&T’s network will improve if a quarter of iPhone users switch to Verizon.

A thought just came to my mind. I wonder which provider Apple executives will use for their iPhones? Does anyone have any insight to Apple’s corporate cell phone policies?

The Answers Will Be Forthcoming

Verizon and Apple have been running some interesting commercials lately. They are basically celebrating that the iPhone will finally be available on Verizon’s network starting February 10th and giving thanks to Verizon customers for waiting so long. Current Verizon customers will be able to pre-order the iPhone starting February 3rd (at 3 AM Eastern time!) and new Verizon customers will be able to buy starting February 10th. This turn of events will finally bring the answers to many questions, some of which have been around practically since the iPhone was originally released.

– How many Verizon iPhones will be sold?
– Will these sales cut into AT&T iPhone sales?
– How many AT&T customers will defect to Verizon?
– Will these sales cut into Android, Palm Pre, and Windows 7 phone sales on Verizon?
– In other words, will Verizon iPhone sales kill the other smartphone platforms?
– Will Verizon customers wait until the summer to buy an iPhone, since Apple generally releases new iPhones in June?
– Will those Verizon customers who buy now wish they had waited until the summer?
– Will Verizon’s network be able to handle the load, or will it buckle like AT&T’s network did in places?
– Will the fact that Verizon’s 3G network can’t support voice calls at the same time as data transmission (as AT&T’s network can do) affect sales?

The answers to these questions will very likely determine the future of the smartphone market, so keep an eye out on this developing story over the next few months.

You Wouldn’t Like Me When I’m Angry

What follows is a simple example of why, in my experience, most people who own Apple iOS devices (iPhone, iPod Touch, iPad) claim they “love” them, while most owners of Android devices are ambivalent at best about their devices.

Let’s say you wanted to play the super popular game Angry Birds. If you own an iOS device, *any* iOS device including the first iPhone or iPod Touch, you can download and play Angry Birds from the Apple App Store. You do need to make sure your device is running version 3.0 or higher of the iOS software. But you likely are already running version 3.0 or higher because the upgrade process is suggested to users when they sync their iOS device with iTunes. The upgrade process, including a backup, is pretty automated and generally users just need to click OK a few times. However, if you need help with this process, you can call Apple’s AppleCare line, generally considered one of the best support services by any technology company.

However, if you own an Android device, buy a hat and get ready to hold on to it. First, you need to make sure that you don’t own one of the 17 devices that is not supported by Angry Birds, including some very popular devices such as the Droid Eris, T-Mobile G1, and HTC MyTouch 3G. Because there are so many different types of Android phones, developers have a hard time writing their software to work properly on all of them.

Also, you need to make sure you are running Android version 1.6 or higher. If you aren’t running version 1.6 or higher, you just need to follow a few “easy” steps (completely depending on which device you have) such as making sure you have all the vendor and carrier updates for your phone first, manually backing up all the data on your phone, making sure you have enough space on an SD card on your phone (you do have an SD card in your phone, right?) and making sure your phone is on a good Wi-Fi network. Oh and just so you know, depending on your device and carrier, you might be updating to the latest version of Android, 2.2, but not all phones and/or carriers support it, so you might be updating to version 2.0 or 2.1.

I hope your hold on your hat hasn’t loosened, because if you need help with all of this, you are the the mercy of “your friendly, neighborhood” tech support from your network provider (who doesn’t love calling their cell phone company!). If they run into any problems, they just might blame the phone vendor because the cell phone company doesn’t make the phone, they run the network. You might get lucky and get help from your phone vendor, but again they don’t make the software that runs on the phone, Google does. Of course, Google doesn’t provide support to end-users – that is the responsibility of the phone vendors or the network carriers.

Having fun yet? Or maybe you feel like one of the Angry Birds – smashing your head against a brick wall?

Something is Rotten in the State of Washington

In case you didn’t know – which really it appears most people didn’t know or cared – Microsoft killed their Kin phones after 6 weeks of shipping. And no that’s not a typo, it was in fact only 6 WEEKS after releasing the Kin that they cancelled these phones. Rumors abound that they only sold 500 Kin phones. Again, that’s not a typo – only five HUNDRED phones sold. At first that rumor seemed fantasy. But for Microsoft to kill this product so quickly makes that rumor seem credible. Wow. In today’s hot and heavy world of smartphones, this is a failure of unprecedented proportions. And the fallout may spread far and wide beyond the walls of the Kin team at Microsoft, as this article points out.

It seems that some of the leadership team responsible for the Kin debacle was either already on the Microsoft Windows Mobile team (recently renamed “Windows Phone”) or has been moved to that team now that the Kin team has been disbanded. Microsoft’s mobile strategy will live or die based on how well their completely redesigned Windows Phone 7 Series (yes, that’s a mouthful) does in the marketplace. Already they are behind the 8-ball as Microsoft has floundered under the iPhone assault and is now losing ground to Google Android devices. To make matters worse, the rumored release dates for Windows Phone 7 devices are in the fall or winter of this year. Because Windows Phone 7 is basically a “reboot” on Microsoft’s mobile devices, it is truly as if they are entering the smartphone market from scratch. This obviously has given Apple and Google a long headstart. If Microsoft fumbles Windows Phone 7 at all, this could completely kill their mobile business. And if they have no mobile business, one must start to seriously question if Microsoft has much of a future at all.

If it seems unplausible that a giant like Microsoft could fall, one only needs to look at history and see how giants like IBM fell before them. The disaster that was the Kin, similar to the disaster that was Vista, may be another symptom of a company that is in a state of complete disfunction. Again, history has shown that all great “empires” fall from within. This anonymous comment on the above linked article from an apparent Microsoft employee really sums it up well:

My morale has never been lower.

A billion dollars wasted on Kin, 500 phones sold and a huge amount of ground lost in the mobile space. Everything I hear about Windows Phone is negative. Leadership is shrugging its shoulders like this disaster is no big deal.

Enterprise Agreement renewals continue to trend downward, and at an alarming rate. Even major DoD deals can’t be landed. We position Microsoft for selling solutions and compensate the field for moving product. The disconnect is frustrating.

Windows 7 is a solid product, that we are marketing ineffectively. Office 2010 has launched with a quiet whimper. The CMG is as dysfunctional as a Cold War era gulag, and I can’t see any value from Mitch Matthews leadership.

I have no faith in our senior leadership (Ballmer, Turner, Ozzie, Brummel), but I don’t see any apparently leader that could step in and make the hard choices and forge a new, urgently needed direction, unless Bill Gates returns. Even then, I don’t know if the company can be steered off of the painful path it is now headed on.

The stock price is going in the wrong direction and poorly positioned if we move into a double dip recession. Our leadership team also shrugs this off as if it isn’t a major issue.

I remember Steve Ballmer promising to all at a company meeting four or five years ago, in response to an e-mail from an employee that complained about the stock price. The employee wrote to Ballmer that because of the languishing stock value he/she could not build an addition to their home. Steve B boomed that in two years he/she would be able to build a new home, never mind an addition, with where the stock price was going, and the crowd roared with thunderous applause. Where is the increased equity? What other company on the planet would have a flat lined stock price for a decade despite solid growth and not have the shareholders and board calling for the leadership heads on a platter?

Haven’t seen a promo in 3 years, got an E/110 last year and hear nothing but excuses (well promos are thin, budgets are tight). I don’t think anyone on my team has gotten a promo in two or three years.

Our budgets have been cut to the point that we can even support our commitments. When I follow the dollars I feel very insecure about my role and future. I’ve seen the overall organization get increasingly dysfunctional with each passing year.

The review process is completely broken. Calibration and compensation has already happened before employees even writes one word on how they felt they performed. How can I have any faith in the review process, where I’m told I have a voice, that peer feedback has impact, when none of it is even considered by the leadership team as they horse trade for compensation. It is a favoritism system that is riddled with inequity. I have seen incompetence rewarded and success punished. The process does a tremendous job of angering employees, who then quit and go to work for competitors with the single purpose of proving Microsoft wrong. Either that or they go to work as a vendor and get a 2X to 3X pay increase in the process.

I love Microsoft. Microsoft has clothed and fed my family, directly or indirectly for almost twenty years. I owe so much to this company. I come in, I give 110%, but I see no direction, I see no recognition, I see no future, I see no leadership.

Microsoft has become its own worst enemy, the leadership team is ineffective, and there is a huge need for house cleaning from the 64 to 68 level. I wish Bill Gates would come back. I wish a lot of bad decisions were never made. I feel that there is no way to change the negative course we are on, and Microsoft is incurably on a path to be only a shell of the company it once was.

Layoffs? Mercy killings comes more to mind.

Ya Think?

An article on states that if Apple starts selling the iPhone on Verizon, it could damage the momentum Google has built up for the Android devices.

I’ve said in the past (here and here) that even just a rumor that an iPhone would be available on a particular network could be enough to damage or short-circuit any momentum competing smartphones generate. Obviously, if the iPhone were to be released on a particular network, it would likely dominate that carrier’s smartphone sales while pent-up demand was filled. But the real proof in the pudding would be head-to-head sales after the initial sales surge. Given the power of Apple’s marketing machine right now, it would be hard to predict any outcome other than Apple coming out on top.

Speaking of Strikeouts …

As I mentioned in part 3 of my iPad series of articles, many commentators were downplaying the iPhone prior to its introduction. I stumbled upon this article from 2007, titled “Apple should pull the plug on the iPhone“. It is a classic example of the type of old world thinking that still predominates the technology industry today. After the runaway success of the iPhone this article reads like a parody. It includes such gems as:

“It’s the loyalists who keep promoting this device as if it is going to be anything other than another phone in a crowded market.”

“…the mobile handset business. This is not an emerging business. In fact it’s gone so far that it’s in the process of consolidation with probably two players dominating everything,”

“During this phase of a market margins are incredibly thin so that the small fry cannot compete without losing a lot of money.”

“As for advertising and expensive marketing this is nothing like Apple has ever stepped into. It’s a buzz saw waiting to chop up newbies.”

“… phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months.”

“…its survival in the computer business relies on good margins. Those margins cannot exist in the mobile handset business for more than 15 minutes.”

“If it’s smart it will call the iPhone a “reference design” and pass it to some suckers to build with someone else’s marketing budget.”

(This last comment is very interesting in light of what Google is trying to do with the Android.)

Apple’s track record since the return of Steve Jobs has been to introduce revolutionary devices into stagnant markets. This author assumed that the iPhone was just going to be another me-too phone. He failed to have the foresight that the iPhone was going to change the rules of the how the game was played. The iPhone was such a breakthrough device that it completely transformed the cell phone market. Now, this same author is writing articles such as “Apple’s iPad is far from revolutionary“, with the same type of logic that he used with the iPhone article referenced above. I guess some people will never learn.

No Soup for You!

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.

These Aren't the Droids You're Looking For

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.

You Can Pick Your Friends …

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.

But Sir, Nobody Worries About Upsetting a Droid

A couple of weeks ago, Google and Verizon announced a partnership to co-develop a series of phones based on Google’s Android platform. Just this weekend, a marketing campaign attacking the Apple iPhone was launched promoting the Verizon “Droid”. Thus, many are prognosticating, the opening salvos been fired in the first serious competitive threat to the iPhone.

There are many, many articles on the web that talk about nearly every angle of this topic ad nauseum. So I won’t rehash any of those articles. For me, what this “battle” will come down to is which business model resonates with the market better. The iPhone model: where Apple has tight control over the entire platform from hardware to software. Or the Android model: in which Google develops the software platform and leaves it up to other vendors to implement the hardware.

Up to this point, the iPhone has succeeded exactly because Apple was able to develop a device they had total control over, resulting in a very easy to use product that brought smartphone features to the average user. It will be interesting to see if Google’s model of more open development will result in devices that are as slick or polished, are as easy to use, and that will create the type of affection among its users that the iPhone has. It will be this, not tech specs or marketing campaigns, that will determine which smartphone will be the dominant player for the next several years.

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