Yesterday the Wizard of Cupertino, Steve Jobs, reset the chess board with a series of announcements related to iPhone. By the end of his talk, and then the end of the follow-on Squawk Box we recorded, I was exhausted. There was simply too much to think through.
So, how did the landscape in mobile change yesterday?
To recap, this is what was announced:
- Enterprise support. Since the day that iPhone 1.0 launched, IT has been asking for the tools to make the iPhone a true enterprise telephony device – integration with Exchange, security, and remote management tools. Yesterday, Apple delivered.
- Applications and the App Store. 200,000 developer SDK downloads, 25,000 beta applications, 4,000 admitted to the formal beta program. There will be scores of applications at the launch of the App Store.
- Mobile me. .mac is gone. mobileMe is “exchange for the rest of us”, plus a photo gallery and file storage. With clients that synch on Mac, PC, and iPhone, plus web apps, it allows users to be un-tethered and access their files anywhere.
- Pricing. 56% of individuals who wanted to purchase iPhone but didn’t cited price as the reason. Yesterday, Jobs announced a steep price drop, and a reversion to the old carrier subsidy model. iPhone will be $199 in the US for the 8G version, on a two year contract with AT&T, and $299 for the 16G version. In Europe, O2 has announced the 8GB iPhone 3G will cost €49 on the €100 monthly iPhone tariff, €99 on the €65 tariff and €169 on the €45 tariff.
Some of this expected, and some of it unexpectedly bold. So who are the winners and who are the losers?
Developers. Applications developers are huge winners out of this. Developers get:
- the benefits of a stable and modern platform. Developer after developer got up on stage yesterday, showed amazing looking applications, and then talked about the mere weeks it had taken for them to get the software running on iPhone.
- the App Store. In the world of mobile, developers have had to contend with different network topologies, device configurations, and complex and unfavourable negotiations with carriers. The promise of App Store is that none of that will matter anymore. Put your applications in the App Store, pay Apple just 30% of your revenue, and Apple will take care of the details.
- enterprise support. The dirty secret of the software industry is this: consumer applications are the sex and sizzle, but enterprise applications are where the money is. iPhone has grown up. No longer just a consumer device, developers can now target the lucrative and rich enterprise market place with eye-popping applications that can take full advantage of the iPhone feature set.
Carriers. Carriers are winners as well. Carriers will generate more revenue because of:
- price subsidies. Previously, carriers and Apple shared carriage revenue. Yesterday, AT&T revealed that it would subsidize the iPhone and that as a result it would take an 11% earnings dilution this year. Why would they do this? As AT&T has said previously and reiterated yesterday, iPhone is a game changing device that causes users to use more data. iPhone users are fundamentally more valuable, and AT&T is betting that with lower prices there will be more of them. By agreeing to a more traditional carrier purchase / subsidize / contract model, Apple has made it possible to dramatically enlarge the iPhone user base.
- an application model. This is a mixed bag for carriers. They have dithered over applications, how to offer them, and what to charge users for them. Apple has stepped in with a unified application model, but apparently cut them out of the revenue stream. Short term this will drive data revenue. Long term, unless they can negotiate a share of revenue with the App Store, carriers risk becoming a commodity bit carriage utility.
Microsoft. This announcement is a mixed bag for Microsoft. With one hand Steve gives, and with the other he takes away.
- Exchange Integration. Not a win for Microsoft, but not a lose either. Microsoft isn’t going to gain any sales of Exchange or Outlook from Apple’s support. However, Apple’s addition of Exchange support to the iPhone puts Microsoft on equal footing with iMap providers.
- MobileMe. MobileMe is a net win for Microsoft. Small business server, already under pressure from hosted services, is going to feel even more pressure from MobileMe. However, by offering “exchange for the rest of us”, Apple is giving a boost to Outlook and Office sales in the small business arena, without the risk that the customer will simply adopt Google apps lock stock and barrel. Unfortunately for Microsoft, if MobileMe takes off, LiveMesh could very well end up being a historical footnote and nothing more.
- Windows Mobile. Despite the best efforts of the Windows mobile team and partners like HTC and Samsung cranking out iPhone look-a-likes, Apple has momentum. Apple addresses both enterprise and consumer, with sex appeal and a price point that will be hard to beat. Windows Mobile is Microsoft’s biggest loser in this announcement.
Google. In the Web 2.0 world, Google reigns dominant. Apple, however, has chosen to go their own way, eschewing Google’s vision. Google is a net loser, niched to search in the iPhone world.
- Google applications. The native formats supported on iPhone are Microsoft Office, and Macintosh applications. Calendar, address book, and email are integrated with either Exchange or MobileMe. Not a Google format in sight, anywhere. Moreover, Apple has repudiated Google’s vision of the world as a world of mobile devices by choosing data synchronization as their model, rather than on-demand download.
- Android. Android is a competitor to iPhone. A competitor without 200,000 SDK downloads, without 4,000 beta developers, without the iPhone toolset, without a store to deliver the applications, and without a single carrier relationship… that won’t deliver handsets until next year. Is there room in the handset market for another OS? Not anymore. Apple just sucked the oxygen out of the market.
RIM. The current king of enterprise mobile software, RIM is in for a world of hurt. Every element of RIM’s business model is now under attack by Apple. Outgunned and outrun by Apple, and now attacked from both consumer and enterprise flanks, RIM is the biggest loser in this announcement.
- The BES tax. In Apple’s world, you don’t need BES to integrate with Exchange. ActiveSync does the job natively.
- Applications Store. In RIM’s world, their carrier sales group walks hand picked developers into carriers, exploiting the relationships they have with carriers for the developers benefit. That’s how you get an application “on deck”. It’s a long slow process, and the carriers typically take the lions share of the revenue. Apple’s model? “Screw the carriers!” Sell your application in our store, and we’ll give you a greater revenue share, plus instant distribution on 70 networks.
- The BlackBerry tax. Carriers, like AT&T, are choosing to price iPhone service and Blackberry service identically. The message is loud and clear. The premium that customers were happy to pay for the special BlackBerry service is no longer warranted. Blackberry service or a raw pipe… it’s the same price. This is a direct assault on RIM’s share revenue model with the carrier. Apple can afford to give up the carrier revenue share, because they’ll make it up through the Application Store.
- MobileMe. In the Blackberry world, group calendaring has been a glaring omission on handsets not connected to BES. Yes, they’ve addressed the need partly with Google Calendar integration, but Apple fully addresses it with MobileMe. And at $99/year, MobileMe is one more source of revenue to Apple… that they’re not sharing with the carrier.
Nokia. My take is that Nokia will come under pressure from this announcement, but they’ve got the breathing room to respond. Not loser now, but potentially a future loser if they’re slow to respond.
- Enterprise integration. Nokia hasn’t done especially well here. Apple’s announcements increase the need, but Nokia has time to respond. They might reconsider their partnership with RIM however.
- Feature set. Apple has staked out the mobile Internet space, while Nokia has focused on content creation, with high end cameras. Expect Apple to take at least a year to deliver a device with a high end camera. And expect Nokia to deliver a radically simpler experience with a touch screen. Perhaps next February at Mobile World Congress.
- Web Services. Nokia’s OVI offers gaming, maps, and media sharing. Apple’s MobileMe offers email, calendar, and contact synchronization plus photo and file sharing. Nobody knows what the right mix of web services is at this point, and there’s still time to figure it out. And how about an application store, Nokia?
Who do you think the winners and losers are?
