the smartphone wars

I hope you enjoy this site. I am always happy to hear your thoughts on how I can make it better. It is my hope to continue to maintain the quality and quantity of content. Actually, that's not 100% true. I want to increase the quality even if the quantity of the dailiy posts is (slightly) reduced.

You can support this site in many ways. You already know what these are.

And now, one more thing.

It is my intent to write a novel, on smartphones, as I believe there are fundamental impacts of this new world, one driven by mobility and recommendation and location and real-time, that can only be fully conveyed by, counter-intuitively, the use of fiction, metaphor, hyper-reality.

You can support this effort via donations.

Whether you do or not, I intend to see this through. I have positioned myself where, for at least a year, I need not seek out any web marketing or mobile research work. I will remain open to opportunities -- for analysis, presentation, for speaking and possibly for marketing if it is for the right product or company.

One way I will support both these efforts, the blog and the novel, will be via a weekly advice post on building your own blog and blog audience. I believe I have valuable insight and can convey this better than most. These posts will be provided each weekend and ultimately compiled into an e-book, to be called, "Don't Work. Blog." (Pleaese don't steal the title.)

I hope these activities generate more readers, reader interest and improve the quality and the impact of my writing.

The worst thing about your iPhone or Nokia or Blackberry? Okay, besides the cost and carrier?

Battery life.

Near as I can tell, our most advanced personal technologies still rely on 19th century notions of chemistry and physics. And there's nothing magical and revolutionary about that.

Hydrogen doesn't work. Fuel cells haven't worked. Can we possibly extract more life out of a lithium-ion or ni-cad battery? Probably not much more. Beyond this, no one cares more about the personal smartphone experience than Apple. So I continue to believe they will acquire or financially support innovative battery technology. Maybe they should consider this dark silicon stuff:

UPDATE:

Anna Kitanaka, the writer for the Bloomberg article referenced below was kind enough to send me the list of the companies in the newly announced Credit Suisse smartphone index. They are:

• Softbank
• eAccess
• China Mobile
• Bharti Airtel
• Rogers Communications
• TeliaSonera
• Ericsson
• Agilent
• Anritsu
• Disco
• Google
• Apple
• RIM
• Wintek
• Sintek
• ELK
• E Ink Holdings
• Toshiba.

(Note: she reminds us that these are shortened versions, not the full legal name of these businesses)

It is my bedtime. I will discuss what I think of this tomorrow. Right now, it appears to be a gimmick to pull in money from clients with too much of it. Not that this will lose money, but I see nothing here that makes me believe anything other than that the biggest value here is in the free press for Credit Suisse.

_______

I may have to start my own smartphone index...If I do, my guarantee that each stock will be publicly listed and I will include how much I paid for it the day I bought it and posted within 24 hours of purchase.

Today, Credit Suisse announced the creation of its smartphone index. From the Bloomberg article:

The index, which tracks 18 smartphone-related companies, aims to highlight stocks that may benefit from a global mobile market “set to grow exponentially,” according to a report by Credit Suisse Japanese analysts including Hitoshi Hayakawa in Tokyo.

“The repercussions of growing smart-wireless-device adoption will sweep across the mobile devices, telecommunication infrastructure and digital content industries, transcending sector boundaries and sparking global investment ideas,” the analysts wrote in a report yesterday.

Of the 18 stocks tracked in the index, five are Japanese companies, four are from the U.S., three are Taiwanese, two Swedish and one each is from China, India, Canada and South Korea.

Sales expectations from China:

In preparation for China's National Day holidays in October, distributors and retailers in the country have significantly increased smartphone orders but demand for PC-related products will be comparatively weak due higher-than-normal inventory levels, according to industry sources.

Currently, the most popular smartphones in China ranges between 1,000-1,500 yuan (US$146-220), and growth for the price segment in the third quarter of 2010 is expected to improve substantially, sources from China-based channel operators said. With Chinese consumers developing preferences for larger screens and higher resolution camera features, sales of 500 yuan entry-level smartphones have slowed this year.

I am a big believer in 'social commerce.' One of the core business models I track I label 'values equal profits.' In making our purchasing decisions (and the slew of others we make every day of our hectic lives), we seek out those with similar values, similar views.

I'm a founder's club member of OpenSky, the leader in social/relationship commerce. No surprise, I'm a big fan of Ping, the new social commerce and recommendation engine embedded into Apple's iTunes. Here's a good overview of Ping:

Ping may function like a cross between Facebook and Twitter for iTunes by allowing you to follow celebrities, create social cliques and get artist updates, via an activity stream. I think it could have tremendous impact on social sharing and commerce.

From a content perspective, there are three different types of media we love to talk about – movies we see, music we listen to and books we are reading. These are accepted social norms. In fact, many relationships are made on the basis of collective love of a movie and many friendships have started with mixed tapes. It makes perfect sense for a music service to be social.

Here's my problem with Ping. It doesn't share the wealth. God love Apple, they do play by their rules, their reality, with their toys. And like a spoiled first-born male child, they do not share well. I have followers. I have people who value my opinion. I have members of my 'clique' that will rent a movie and buy a music track and read an e-Book, via iTunes, based solely on my recommendation.

You know what my cut of all these Ping-like commercial transactions is?

Zero.

As always, Silicon Valley, Apple leaves a door wide open. Don't wait til it's too late.

I only thought of this now, while reviewing some of the Game Center announcements from today's Apple media event and multitasking by phoning in my Thai food order. The iOS devices in combination with iTunes and the App Store are destroying traditional media delivery modes and generating unprecedented wealth for Apple:

• games
• apps/software
• music
• video

iTunes is, as Jobs said earlier today, the world's largest digital media store.

So why does the lowly Kindle continue to beat Apple at the eBook/digital content game?

(This is a question for you, readers. I'm not setting myself up to deliver the answer but will offer some thoughts in true Socratic form)

1. Is it because possibly the only superior payments/purchase/delivery platform to iTunes is Amazon? Amazon focused, historically, on books, and made the process as simple and intuitive and reliable as possible. Netflix, also an able competitor of Apple's, focused on movies, and achieved the same effect as Amazon -- simple, intuitive, reliable. Both also incorporated a strong recommendation engine into the mix. iTunes did the same with music. iTunes retains it leadership in music, is a challenge to Netflix and is using iPad as a battering ram against Amazon. Nonetheless, it proves again that we want to consume media, will pay for media, but want it now, want it fairly priced and want it as easy and pain-free and intuitive as possible. With my two degrees, I have still failed to master Google Checkout, for example.
2. With the Kindle, Amazon has optimized a device for media. Only, in this case, books. For all the complaints about the iPhone 4 antenna or the Safari browser, for example, or that Android offers more processing power (not true), Apple created a line-up of iOS devices (iPod, iPad, iPhone) that are *optimized* for media. That is, media review, media discovery, media purchase, media download, media management and, within DRM, media sharing. So simple, even a grandparent can use it. Was Zune, for example, ever optimized for this -- or for Windows Media, which is the ass-backwards way of doing things? The Android Marketplace is managed by Google -- who before they went over to the dark side were supposed to be organizing the world's information for our benefit -- and yet they can't even optimize their site for their customers just to buy an app! Go on, try it. I dare you.
3. With respect to books, Amazon has a brand and a history -- and a platform -- for sales. Likewise, Apple has this, though more so for music and videos and apps and games than e-books. No other competitor to iOS can say the same. (Which still shocks me. How long has Sony made smartphones? PSPs? And still no PSP smartphone that anyone on the planet might actually like? And only today have they even *announced* e-Readers that offer wireless book sales!) The smartphone wars may be a battle of platforms -- Android, Windows, Symbian, iOS. Or, perhaps we have it all wrong and it's a platform for the creation, discovery, purchase, playing and sharing of media. If so, Apple may remain King for a generation.
4. Might it be because we've all been using Amazon for so long? If so, consider how many tens of millions of children (and grandparents) use iTunes and iOS devices, more and more, to purchase and use media. Day after day, year after year. Just this weekend, my son forked over his allowance in exchange for an iTunes card. Again, this puts Apple and Amazon way out in front. As I always say, "information wants to be monetized." Why are Apple competitors making this hard!

Other reasons? Better reasons?

As of today's Apple media event, iTunes is confirmed as the world's largest digital media store.  Steve Jobs announced these aggregate iTunes download numbers:

• 450 million TV episodes
• 11.7 billion songs
• 100 million movies
• 35 million books

Added to my SMARTPHONE NUMBERS page.

Oh, and iTunes sales are about to surpass CDs.

Okay, that quote is from me, not from Steve Jobs. However, in today's media event, Jobs spent a good bit of time focused on the iPod Touch -- now Apple's top-selling iPod. While showing how great the iPod Touch is and how much better it is even now, Steve Jobs, in a quick, off-the-cuff remark also described it as "iPhone without the contract." This, dear reader, is telling.

Per Dear Leader, iPod Touch is now the world's most popular portable gaming device. And now, He's made it even better. My quick thoughts on what this means...

The Smartphone Wars are about the destruction of everything. Jobs and Apple have created a device, a simple, small device, the iPod, that has ultimately led to them sucking up nearly half the entire profits in the smartphone handset market. They own the portable media player market. They have the biggest online music and video store and app store. And now, more of these iPod Touch devices are selling then GameBoys and PSPs, combined.

In the smartphone wars, the iPod (Touch) is the U-boat. It is not as big or as powerful as those grand high-end Androids or Nokias, for example. It may never have the total numbers of those devices. But, like the U-boat, can sneak into enemy territory, hidden under the water, and destroy those big fierce war ships.

As I blogged in a few weeks ago...

Jobs will continue to pour money into building a superior product. He will continue to pour money into building out the iPhone/iOS ecosystem infrastructure: think: cloud services, iTunes in the cloud, improved distribution of videos, real-time, location-based social media for iPhone gaming, battery technology, screen technology and the like. Along with services that support the interaction between the device, the user and others: such as near field communications, improved FaceTime. Aquisitions, less important and too expensive.

Today, this was all essentially confirmed.

No one, no one in about 10 years -- 10 years! -- has developed an answer for iPod. What device has wreaked more destruction on existing businesses for so long without competition! The iPod is what has allowed Apple to build out the "world's largest" online media store.  Children, with a new iPod Touch they receive on Christmas, will become a user of the entire range of Apple products. Instantly. iTunes and the App Store. A iOS device. Games and the new gaming center. FaceTime. eBooks. Music. Video. And will now play and share games and chats and social media, all on their iPod Touch.

This (un-connected) device is what first teaches us how to use (and love) its iOS interface. It is what has allowed Apple to build out services and apps and features, like the new Ping, like FaceTime, that not only enable it to maintain a *thriving* closed ecosystem, at high-margin, but which lead its products to retain their superior position.

Guess what? These children are also learning how to use the iPod Touch for Skype and video calls and, since so many places now have WiFi, location-based services and social media and social games -- all while completely bypassing the public switched telephone network. Talk about your virtuous network effect ecosystems! Those tech journalists out there who lazily, unthinkingly proclaim that the smartphone is just like the PC and that APPLE WILL FAIL FOR NOT LICENSING ITS OS JUST LIKE BEFORE should get a clue. There will not be one single standard, as there was with the Wintel PC.

The smartphone industry will be more like the auto industry, should you need a comparison. The iPhone 4 is like a top-of-the-line BMW. Everybody wants one. Somehow, however, were this metaphor to be exact, BMW also has at the same time the best minivan, best hatchback, best sedan, best hybrid -- at equally competitive price points! How did this happne? Simple. For a decade others have ignored the power of the iPod! No one, still, has an answer for this. It's your daughter's birthday? She'll love the new iPod Touch! She's entering high school? Get this sweet new iPod Nano. Your son's headed to college? Nothing compares to this iPad! Family room? Apple TV hooks up easiliy and is less than $100 and you can all stream your videos and photos to the big HDTV.

And now that iPod is optimizing for iOS, expect Apple to sell even more devices. Yes, Apple, the biggest tech company in the world is a growth story.

Yes, they will also sell more music and more video and more books and more apps and more browsers and more games -- and more accounts and data for Apple. The Android OS is still -- barely -- able to work in a tablet. There's no real answer to an iPod (though maybe Archos will finally answer this challenge). The Android Marketplace sucks -- and that's just for apps. A simple, free, embedded competitor for FaceTime? eBook sales? Music and video? The best competitor out there is Zune. Zune sucks and it is second best! The only reason this has happened is because of an ongoing dismissal of the lowly iPod.

Now here's the part I especially love. Apple is destroying the existing food chain of books and music and video and software and games. At the same time, they are using this fairly low-cost device, the iPod Touch, to disintermedia the carriers. Texting, chatting, video calls, social gaming, location-based services; all available on the iPod Touch without a 3G/4G contract. All we need is (someone's) big dumb pipe. In fact, what other companies are doing actually further enable Apple/iPod/iOS growth. Cisco is everywhere. They buy Skype and within two short years, Skype will be everywhere; not a product, not a program, but a very component of the Internet. And low cost, mobile (video) calling becomes a reality, decimating carrier mobile/voice revenues. Does this hurt FaceTime? Possibly. But it sure as hell hurts carriers more while providing yet another great reason to have a cheap, highly functional iPod. Or, by then, a crappy Android media player.

Forget the U-boat metaphor. iPod is the power of flight. The smartphone war has just begun and everyone else is focused on building a better gun. iPod is dropping bombs and preventing them from leaving the dock.

"Whoosh. There goes another 200."

What's more, by placing iOS inside the iPod, this increases the virtuous network effect. This enables FaceTime, radically superior (mobile) gaming, the potential for social media and location-based services. But it goes beyond this. We now can have -- and freed from all contracts and all carriers except for the provider of our dumb pipe, full and true and reliable:

• person to person communication (voice, video, text)
• person to group
• person to device
• device to device (e.g. iPod Touch to new Apple TV)

In our living rooms and around the world. From house to house, dorm to coffee shop, my car to your office; on my son's iPod, the wife's Apple TV, my iPhone, my parents' iPad.

Admittedly, we are not freed from the clutches of Verizon or AT&T just yet. But we are getting there. And, after the gaming industry, this is Jobs' next big target. More and more options for low-cost, no-contract 3G/4G/WiFi services are popping up everyday. I communicate using FaceTime with my parents. True, I set up their WiFi network. But FaceTime calls between me and them, or rather, between them and their grandchild, is instant, easy, reliable -- a joy.

Apple is not slowing down. Their iOS is superior to Android, to Symbian, to Blackberry, to Windows. Full stop. They do not need to acquire. They do not need to play catch-up. They just need to continue incremental improvements and cost reductions -- leading to still more sales, more devices, a larger 'closed' network and even more media gateway dollars.

The one place they have not conquered, fully, is the large corporate market. That is not because of security or email. Rather, it is because businesses still require computers or laptops and these remain on the Wintel standard. However, given their new patents that show them essentially embedding iOs into a Mac and creating a laptop and tablet, they may be able to finally breech this front. Take your iPad home and enjoy it. Take it to work and show off your presentation at the next meeting. Plug it in the dock and file your report.

Until this happens, they continue to use the lethal combination of iPod and iOS to link up more people and more devices and more media and more services and more apps. Think the grand HP-Palm strategy -- only five years out in front. Think the big, multi-billion-dollar Microsoft-WP7 integrated play, only with passionate customers ready and willing to spend money. Think Android + Google TV, only it works, for everyone, always, instantly and we actually pay for our Hollywood blockbusters. That's how far ahead Apple is thanks to the iPod. The iPod begat the iPhone which begat iTunes which begat iPhone which begat App Store which begat iPad. 500 million iOS devices in two years would absolutely not surprise me.

Do I believe that when Jobs and company debuted the iPod all those many years ago that he envisioned a world where all our music and video and 'apps' would all connect with each other, seamlessly, beautifully, across devices, across people, across generation, nations? Absolutely. Do I believe he thought the iPod would be what launched this assault on all things digital -- and all things are digital? Possibly. Do I believe he imagined that even the fiercest competitors would ignore this 'music player' for so long, would be so weak in their response, year after year after year until the entire media market collapsed inward upon this low-cost device we buy for each of our children? No way.

Jobs must love the iPod. Years ago, when Yahoo mattered, they talked about it as a 'portal'. In fact, it is the iPod that is the portal. To Apple products and services and content and media. Unless Nokia has a couple dutiful hobbits stowed away somewhere, clutching a magical ring, no one will touch Apple at least for another few more years. Even if there are more Android smartphone sales than iPhone, for example, doesn't matter. Apple has a lock on our wallets. And we are happy to give it to them.