One of the success factors for the iPod was the fact that it emerged is the only "brand" in the MP3 player market. Despite the fact that there were many MP3 players that predated the iPod, Apple created the most user-friendly device at the time and then, when an eco-system grew up around it, the only brand in the segment.
Putting aside the third-party accessories, feature for feature there weren't so many things that were unique about the iPod vs. rivals like Creative's Zen player. But in the eyes of consumers there was really only one device: the iPod. Competing MP3 players became imitators or "wannabes" in the mind of the consumer. The iPod has about 70% of the market share for MP3 players in the US.
The iPhone appears to be heading in the same direction. A significant caveat in the U.S. is the AT&T exclusivity that could limit sales somewhat.
A BusinessWeek article this morning broadly and speculatively explores the impact of the iPhone on competing handset makers and carriers. We've already seen the market respond with various "iPhone killers," both in the market and yet to be released. On the growing list are the LG Voyager, HTC Touch (and Touch Diamond), Samung Instinct, Blackberry Thunder, Nokia Tube and so on. So far none have lived up to the promise of the label.
Sprint is running a Cinema/TV campaign in which the Instinct is favorably compared with the iPhone in quotes that appear on screen at the end: "An iPhone killer;" "Zippier download speeds than the iPhone." But that was the previous version of the iPhone they're talking about.
Recently, Walter Mossberg of the Wall Street Journal posted a mixed review of the Instinct that basically condemns it to "also-ran" status.
The more "iPhone clones" there are in the market the more the brand of the iPhone is reinforced as authentic compared with rival offerings, which become perceived as inauthentic or imitators in the same way that happened to MP3 players competing with the iPod.
There are devices in the market that feature touch screens and better cameras, browsers with flash support or other features not found on the iPhone. But nobody has yet developed the ecosystem around their phones that the iPhone has. This further differentiates the device and helps it stand out. Blackberry and Android, in particular, are very focused on creating an apps ecosystem. However, they've yet to bring them to market. The iPhone will likely have a lead of at least 6-8 months on rivals in that regard.
The only way for rival handset makers to shake off this growing "imitator" or "wannabe" perception is to actually build devices that outperform the iPhone across several key categories or present a next-level of innovation comparable to what the iPhone offered when it came into the market a year ago.
Both will prove very difficult indeed.
Related: T-Mobile to offer the iPhone for 1 Euro in Germany.
Samsung is making phones from plastics derived from corn; this could add a "green" cool factor that might appeal to certain market segments.
Nike is launching a very innovative campaign across Europe that prompts users to take photos of brightly colored images, send (MMS) them to Nike and be able to buy shoes featuring the two main colors in the image. It will be likely be a big success.
It targets the youthful audience that represents Nike's demographic and it will create tremendous buzz for the brand. Right now much of mobile advertising is about PR for the brand rather than actual results from the campaign.
Nielsen (via Ars Technica) reported Q1 2008 mobile search market share (U.S.) as follows:
Here's the Nielsen desktop search breakdown (4/08):
In several proprietary surveys we've done over the past 6 months, we've asked people about their mobile search usage and we've seen widely varying results. We've seen Google score anywhere from 47% to 80% in terms of usage. We've seen Yahoo! at 20% to 40% and Microsoft score between 10% to 25%. These are people telling us what they use, not a market share calculation per se.
Basically our data shows the hierarchy of usage breaks out in the same order as on the desktop, which reflects how search brand affinity and familiarity on the desktop is translating into mobile.
We expect to see some aggressive competition taking shape as mobile voice specialist Yap Inc. receives venture funding to fuel its application and market development efforts. It joins the likes of Nuance, Vlingo, V-Enable and Microsoft to build speech-based methods to enter information into wireless phones. Yap's funding is led by SunBridge Partners and the funders include Harbert Venture Partners and Pittco Capital Partners, as well as individual investors.
One of the things that will differentiate the various "platform" competitors in mobile are the third party applications built for the respective devices. That's why Blackberry has started its own version of the iFund and is seeking to cultivate a developer network.
The Android universe is totally open and should produce many interesting apps as well as some garbage. On the other end, Apple has to approve all the apps that show up in the Apps Store for the iPhone. Out of a reported 25,000 interested, only 4,000 were accepted by Apple.
But what's interesting is about the iPhone (and presumably this will occur with some of the other devices) is that third-party applications are extending or potentially will extend it well beyond its original, contemplated uses. Two cases in point:
While the iPhone was always conceived of as an iPod, these cases and others start to push the device even further beyond its status as a phone. Along those lines, I'm hopeful that we'll start to see many other mobile consumer devices on the market that take this evolution farther and initiative and era of true mobile computing.
Coupons.com, which recently launched coupon syndication through a new service called Brandcaster, has just done a mobile coupons distribution deal with Yahoo!. According to a piece in MediaPost (registration required) this morning:
The initiative would create a national platform for large brand advertisers to distribute mobile coupons, which so far have mostly been tested only in local markets or niche categories . . . Quick-serve restaurants and retailers are the most likely to be early adopters because they potentially offer the most direct way for people to redeem mobile coupons.
As the article points out, redemption is the big challenge and obstacle. These are not printed so would have to offer a unique code (which can easily be done) and then that code would need to be recorded or captured at the point of sale, which is somewhat more difficult. Some smartphones have good enough screen resolution to allow conventional scanners to work with an image of a bar code.
What's interesting here is that the content could be served up in a potential variety of ad forms: banners, text ads, etc., all of which would allow tracking at the point of sale.
Cellfire has been the leader in mobile coupons to date, but Yahoo!'s distribution is so much greater that Yahoo! could quickly obscure it.
Google has had iGoogle (its personal start page) availability in mobile for some time. However the company has recently made it easier to configure and use iGoogle in mobile and is tying the mobile experience more closely to the desktop.
Changes in iGoogle on the desktop are automatically reflected on the mobile version when users are signed in. The Google.com WAP page now also looks more like Google on the desktop. These changes are intended to leverage the desktop-mobile connection and translate Google loyalty there into mobile.
It's also philosophically reflective of Google's assumption that eventually the mobile Internet and the desktop will be more similar than they are different.
In an interview this week with Ken Auletta of the New Yorker (reported by Reuters), Google CEO Eric Schmidt said a few things about mobile in the context of a broad discussion on a range of topics:
Schmidt said the vast majority of Google searches on mobile phones were done on Apple Inc's year-old iPhones, which prominently feature a Web browser.
"Mobile looks like it will ultimately be the highest of ad rates," because ads can be targeted by user location, he said.
Similarly, DoubleClick's Rob Victor (now part of Google) spoke at the MMA show about mobile being a "premium product," at the moment, which may keep many advertisers away until rates come down. Fifty dollar CPMs are not uncommon.
Mozilla has been working for some time on a mobile browser. How will it be different from Safari, Opera, Skyfire and some future hypothetical "full HTML" IE browser?
Here's a video demo from Mozilla reflecting the current thinking and current state of experience on its mobile browser. One of the potential competitive advantages for the company might be the ability to preserve the customization I've done on the desktop in mobile in some fashion. In other words, I set up bookmarkets, etc. on the desktop and I can automatically access those in mobile.
It appears that Mozilla is being pretty thoughtful about the user experience in mobile, especially around navigation with limited keypad entry.
While these browsers provide a richer experience than on WAP sites they create problems, generally speaking, for advertising, which is harder to see on the small screen.
Most people developing these browsers aren't thinking about those issues at this point; they're just thinking about improving the user experience and getting more people onto the mobile Internet.
Ideally, local search results in discovery of the goods, services or merchants with whom a searcher wants to carry out business. It culminates in a purchase and payment transaction enabled by mobile phones. That's why it's reassuring to see a press release quoting research from Nielsen Mobile (formerly Telephia) showing that 9 million wireless subscribers have used their mobile phones to make purchases.
Here's the coverage:
- As of Q1 2008, 3.6 percent (9.2 million) of US mobile subscribers use their phone to pay for goods or services
- Men are more likely than women to use their phone for commerce: 4.5 percent (4.9 million) of men and 3.0 percent (4.3 million) of women say they have made a purchase using their phone
- Adults ages 25-34 are the most likely to have made a purchase using their phone: 5.4 percent (3 million) of adults ages 25-34 have made a purchase, compared to 3.6 percent of all mobile subscribers
- 49 percent of mobile data users, those subscribers who have used one or more data features on their phone such as text messaging or the mobile internet within the past 30 days, say that it is likely they will conduct mobile commerce in the future
Mobile websites are one popular way consumers make purchases over the mobile phone. Of the 40 million active US users of the mobile web in April 2008, 5 million accessed mobile shopping and auction websites -- up 73% from April 2007, when just 2.9 million mobile users did so. Auction site eBay.com is the most popular shopping or auction destination on the mobile web, with 3.4 million unique visitors in April.
Purchasing items via text messaging is another growing form of mobile commerce. Some services allow consumers to send text messages to a phone number or mobile shortcode in order to be charged for goods or services directly on their mobile phone bills. Already, 6.5 million US mobile consumers say they've used text messaging to purchase an item.
"For many of the millions of consumers who are already shopping online or over landline phones, mobile commerce is an obvious and useful extension of that opportunity," said Nic Covey, director of insights at Nielsen Mobile who presented the data at the Internet Retailer Conference and Exhibition today. "As more mobile commerce services become available and consumers develop a greater trust for phone-based transactions, we expect commerce to be an increasingly important part of the mobile experience next year and beyond."
The findings come from Nielsen Mobile's monthly Mobile Insights survey of more than 30,000 US wireless subscribers, with similar data available internationally.
Nielsen's study reveals that security is the number one concern among those mobile data users not yet participating in m-commerce:
- 41 percent of data users who do not participate in mobile commerce say security is their biggest concern
- 23 percent say they worry about being charged for the airtime
- 21 percent say they don't trust that the transaction will be completed
"As with other forms of electronic commerce, US consumers need proof that mobile transactions will be a safe, affordable and efficient complement to other modes of shopping," said Covey. "As long as retailers continue to meet those expectations, more consumers will come to view mobile shopping as a compelling and viable option."
At the Mobile Marketing Association show that just ended yesterday, Motricity was polling people (n=129) in the exhibit area about mobile advertising and marketing. The audience/respondents were vendors, agencies and others.
Here's what the company found:
Additional key findings include:
This is a small survey but probably fairly representative of attitudes throughout the industry. The bottom line here is that people need more education and the industry needs to mature in terms of standards and best practices. Mobile "marketing" is established and growing but mobile "advertising" needs to develop greater reach (consumer adoption) for agencies to take notice.
The mobile marketplace, though numerous, is highly fragmented in ways that the Internet is not. Aggregating large audiences or very specialized, desirable audiences are keys to gaining adoption by marketers.
It's all coming of course and many of the agency attendees talked about how mobile ad spends/budgets were rapidly increasing -- and increasing at rates much faster than the historical ramp up of online advertising.