It's almost impossible to go out and buy a plain old mobile phone anymore. We threw tons of features/capabilities on them. We changed them from utilitarian to dress accessories ... statements of who we are and our importance.

Content Insider #105 – Devices Aren’t Enough

THE Insider

Content Insider #105 – Devices Aren’t Enough
Changing the Face of Personal Communications

Author: THE Insider

It's almost impossible to go out and buy a plain old mobile phone anymore.  We threw tons of features/capabilities on them.  We changed them from utilitarian to dress accessories...statements of who we are and our importance.   But it took the guy on Infinity Circle to really change the keypad and screen.  Oh sure the iPhone is sleek and incorporates so many service capabilities (wonder why your cellphone bill got HUGE?).  But to us it's just a phone...can I make a call on it...can I reach the person...can I hear the person on the other end? 

Neat thing is that all of Steve Job's offerings -- even those that stumble -- will all work together in his version of the "open world."  It will be great not because of the cool looking hardware but because the OS, apps, HW are tuned to work together like people seem to want them to work. 


Coming Your Way – There almost seems to be no stopping mobile communications devices taking over nearly all of your away from home entertainment and more.  The hardware, software, content and provider communities are determined to get you…one way or another.  Source – C-2 Pictures  


Maybe because our kids attended the same high school as Jobs and Woz they can’t imagine things as barbaric as communications using dial-up modems. 
They laugh when they see the photos of the Motorola brick.
The idea that they would have to search out a pay phone or wait to call someone until they can use the home phone seems … ridiculous.
Especially when they have their flip and slider phone in their pocket. 
The cellphone for millions has gone beyond being trendy.  It is a necessity – a means of staying in touch with friends and family, added safety and security. 
Growth came rapidly because people could stay in touch on the go:


Figure 1 - Insatiable Demand – cellphones have become very personal communications/entertainment devices.  In nearly every household you’ll find multiple mobile devices ranging from simple cellphones for boomers and beyond to everything in one device with Gen Xers and Yers.  Source – IDC

  • 33 mln mobile phones sold in the US in Q2 2007
  • 70% of teens 12 to 14 have a cell phone
  • 34% of US households to use only mobile services by 2011
  • Mobile subscriber churn is at 2.5% a month
  • 25% of young Americans do not have a landline
  • Men spend 458 minutes a month on wireless, women - 453 minutes
  • 63% of users feel their phones are very personal to them
  • 44% say the phones have strengthened their personal relationships 


Of course a lot of folks wanted more.  Heck…they wanted it all.

Figure 2 - Beyond the Call – Digital content and communications across the lines are replacing calls as major profit centers for communications services.  Texting, IMing, games, photo exchange and similar activities are rapidly becoming a more popular way for folks to communication, sometimes in the same room.  Source – Yankee Group

Naturally a lot of companies as well as service and content providers were all too willing to give consumers what they wanted. 
Conventional wisdom engineers were determined to pack every feature, every capability and every service into the small devices …regardless of the cost to useability, financial outlay.

Figure 3 - Beyond the Phone – To some it still looks like an innocent cellphone but to device/service providers the new all-in-one devices look like big dollars.  In many instances the calling service charges are dwarfed by the “other” services.  Source – NY Times

Their research showed folks were ready for it…all:

  • 49% of 18+ owners wanted to used their phone for more than just making/receiving calls
  • Users wanted to be able to check email, search the Internet, schedule appointments, take/send photos, listen to MP3 files
  • Women are more likely than men to now use their phones to send or receive text messages (38% vs. 33%), and to take/send/receive photos (27% vs. 21%)
  • Men are more likely than women to use their phones to check email (12% vs. 7%), access the Internet for something other than search and download (11% vs. 5%), and find information using an internet search engine (9% vs. 6%)

The consumer desire was there but people looked at the units and mumbled one of Kate Brewster’s (Claire Danes) observations – “You’re a mess.” or “I hate machines.”

They bought the devices and signed up for the services but they weren’t happy!
So Jobs looked around his Cupertino office and saw more than array of pretty good (proprietary but pretty good) computer software.  What did he have:

  • Mac OS – like his 1984 commercial the changed the look, feel of computing but then how tough does that have to be when you look at CPM and DOS?
  • OS X – a slick OS users really love that many emulate, few get better than close
  • Newton (not really on Steve’s watch because John was there but…) – the PDA died a painful death but software was cool
  • iLife – Ok it’s a good walled garden that creative people like but are always asking about options
  • iTunes/iPod – Rather than just another music bit bucket, it was again about an elegant, managed, tightly meshed end-to-end experience

He also had something every CEO and head of marketing would give almost anything for…a growing band of happy followers. 
Followers who sometimes seem to believe Arnold’s robotic statement when he said “…the leader of the worldwide resistance and last hope for mankind.”
The iPhone set the stage for usage.

Like No Other – In pretty typical fashion, Apple and Jobs didn’t do much market testing in the design/development of the iPhone.  They just wanted something different.  The result – darn it – was another solid hit for a company that integrates a walled garden OS with applications they are only now opening to more providers/suppliers…we’ll see.  Source – Apple

Either with the iPhone or a much cheaper also ran, people started giving up the calls (hard to believe it when you drive down the road but…) and began making use of their mobile devices and demanding more…just more!

Figure 4 - Form, Function – Apple and its first partner, AT&T, were quick to show consumers all the slick, easy added things they could do with their iPhone.  Things like surfing, music player, email searching and more … oh yes and call.  Even with the hefty initial price, people bought into the program.  They are still practicing it.  Source – iSuppli

Suddenly mobile phone penetration caught and in some areas surpassed Internet access.  For example:

  • 80% of Americans own mobile phones compared to 78% with Internet access
  • 50% of Gen Yers will upgrade for the latest, greatest devices
  • 51% Gen Yers have mobile Internet on their phones
  • Boomers aren’t far behind Gen Y in mobile Internet access
  • 51% of mobile users are interested in mobile TV

And the application demand ($$$) just seems to keep expanding:

Figure 5 - Growing Sales – Smartphones and multimedia phones open the door for volume added sales/service opportunities, including very targeted ads.  The potential just seems to grow.  Source – Nokia

  • 250 mln GPS-enabled phones will be sold by 2010
  • 43 mln US and European users will download mobile maps in 2012
  • Mobile fund transfers will generate $8 bln for operators by 2012
  • Mobile gaming in Asia-Pacific will reach $18.8 bln by 2011
  • Mobile video telephony will generate $1 bln in 2007
  • Premium mobile content will generate $44 bln in 2011
  • $36 bln in contactless payments by 2011
  • 13 mobile TV broadcast networks in 2007
  • 134 mln mobile gamers by 2010
  • Mobile content and services will generate $150 bln by 2011
  • Mobile games will generate $9.6 bln by 2011
  • Mobile marketing and ads will reach $3 bln in 2007

There are a lot of iPhone clones being introduced by virtually every device manufacturer. 
Consumers like the new attention.  The new awareness from the suppliers.
Content owners, service providers and device manufacturers want alternatives from Microsoft, Symbian, heck they’re even looking at Google’s gPhone initiative.
The key consumer iPhone purchasing motivation is that it is lot like T3’s Skynet…“It was software; in cyberspace. There was no system core; it could not be shutdown.”
Of course for all of Steve’s sleek work, 33% of iPhone owners carry another phone…to make a call! 
Folks will simply have to upgrade to the next gen 3G iPhone to make calls.
The iPhone seems to be used more as a PDA/computing/entertainment device. 
Owners like it for reading email, surfing the web, listening to music, connecting to the Internet, checking calendars.

Video is still a work in progress.


Perpetual Underdog – You’re not certain if you’re supposed to congratulate or feel sorry for Jobs and Apple.  They are determined to buck the Microsoft tide and pick the battles they are pretty sure they can win.  They take chances and most of the time…they win.  Other times, they have a few battle scars.  Source – C-2 Pictures 



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