I was one of those that waited on line for hours at the Apple store that day in July of 2008 when the iPhone 3G first went on sale. It was an interesting and friendly set of hours with a nice mix of Boomers and kids… with very little ‘in-betweens.’
I consider myself primarily a Windows guy, yet love great gadgetry when I see it. I purchased the first iPhone for my wife when it originally came out and with the launch of 3G and the app store – it was time to give up my clunky Windows Smartphone as the iPhone was a must have. I was convinced this was the catalyst of mobile content ubiquity… high-speed data access, great user interface, business class secure feature set (email, contacts), quality web experience and a funnel of applications marketed to folks with disposable income. The launch was a game changer for Apple (just like the iPod) and a real win for consumers.
Coming from years in the mobile media space on both the vendor side (technology services to media companies) and the media company side (running the mobile business) the iPhone symbolizes that mobile is now a key media distribution channel. This statement may come across rather controversial and some of my colleagues will challenge me here, yet the data will confirm my POV as mobile revenues are growing exponentially since its launch.
Why now? Why the iPhone? Below are four reasons to chew on…
1) Real consumers (not only geeks) are actually able to do things faster and more efficient on good mobile devices (like the iPhone) aside from just talk, email (for BB users,) or navigate through several clicks on a carriers deck. I know my fellow iPhone users are nodding their heads with a smile. Yes, it is flat-out faster to get your email, update your Facebook status, check the weather, Tweet, search eBay, etc. on your iPhone – rather than on your computer. Whether the kudos should actually go to the carriers or Cisco for delivering faster and more accurate packets over the network, or more likely Apple for bringing this all together for consumers – mobile is finally here. The faster media companies figure out how to create and deliver their valuable content to users outside of the traditional core website, the better poised they are to survive in these crazy times.
2) The traditional focus on acquiring and retaining traffic to a core website destination (ex. www.menshealth.com) by users sitting in front of their computers is yesterdays interactive media growth strategy. This does not mean media companies should stop all activities focused on building traffic to a core site, rather it means diversify the strategic focus to distribute content where and when your target consumers want it. We are already seeing this with the sizable growth of the social web (Facebook, LinkedIn, Twitter, etc.) – consumers are consuming content in different ways and in different places. More noticeable is that valuable content is being consumed based upon recommendations from ‘enablers’ – trusted friends. At the same time new interactive media sites and brands are stealing traffic and revenue from established media brands in key content verticals. The moral of this story is that mobile will continue to play a more important role in what and how content is consumed. More importantly, you may not want to put your mobile strategy lower on the priority list as you may find, over time, it will hurt your overall growth metrics.
3) The iPhone/iTunes application store (this includes other app stores… Google, Palm, Nokia, Blackberry.) Some may say application and content stores (powered by carrier decks… Verizon, AT&T, etc.) have been around and very successful for years – what is so new and impressive about Apple’s store? Apple has over 15,000 applications launched over the past seven months (many of which are actually really good and useful) making for a very different experience from scrolling through menu screens on a traditional cell phone. Whether you are playing Checkers or Connect Four with your kids or using your iPhone to make sure a picture frame is level before affixing to a wall- the apps work well, they are visually appealing, and most importantly usable by your typical “Joe Consumer.” Did you ever wonder why historically mobile applications were only marketed to teens? Clearly teens were the only ones producing revenue for carriers and media companies from the sale of mobile ringtones, screen savers, etc. There had to be such a compelling mobile application for a media or young technology company to invest in before getting funded. Even mobile music applications struggled to get funding. Not until the iPhone and the app store had mainstream consumers (with disposable income) been the target for mobile applications. The iPhone app store is a game changer for all stakeholders in the media ecosystem, from content owners/developers all the way through to consumers. Apple has successfully created a model that works and that others will capitalize on as well.
4) Business Model. Unfortunately we will see some media companies turn off their lights over the next few years. Advertising revenue will suffer and this is the primary revenue source for most in the interactive media business. If you follow the news religiously there is lots of extreme commentary on the “downturn of advertising” and the “glut of inventory” spelling doomsday for the media business – I don’t buy it. I do, however, agree there will be a decent market correction and its effects will be far reaching. At the same time there is a renewed emphasis from media companies to explore paid business models (subscription services, a-la-cart pricing, etc.) I know this as I am involved in a consulting project with a large media company to to do just this. Apple’s app store is all about paid content – compensating media companies for the creation and distribution of their valuable IP with real $$$, rather than future advertising. Yes, there are many free applications in the iTunes app store – some powered by an advertising model. However, the business model I believe will prevail in the current economy for mobile applications is a (low cost… $1.99, $4.99) paid one. For that reason, many Media companies are evaluating what Apple (and others) are doing with their application stores (and the revenue generated) to generate their own strategies on how they can capitalize on the revenue opportunity there. We urge media companies to do the research and contemplate their business model strategies carefully as consumers are hurting in the pockets too and not accustom to paying for content. However, in the spirit of revenue diversification, paid models are effective. And, with the launch of the iPhone 3G and the app store, Apple has created a solid model for success with its critical mass.
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