The iPhone is blazing a trail in next generation mobile. It’s that unique combination of ease of use, an ecosystem to empower and benefit 3rd parties, great functionality and clear marketing. The consumer reaction to the iPhone reminds me of the internet in 1997 when “always on, high speed” internet was getting adopted. Usage was and commerce were 3x’ing because the experience “didn’t suck”. It didn’t take an advanced degree to see what broadband’s ultimate penetration would look like. The iPhone and the app store are foretelling the mass market future of mobile. iPhone adoption is exploding at a massive and unprecedented rate of 10s of millions per year in spite of the global economic meltdown. Apple has slightly over a 1% share of the global market at the end of ‘08 (iPhone installed base at 13.7 mm units), Nokia (38% share), Motorola (8% share), RIM , HTC, Samsung, Palm and others are aggressively pursuing this market. Note that RIM’s Blackberry maintains market share leadership over the iPhone under most definitions of the smart phone market; however, from a mobile Internet or app usage perspective Apple is way ahead. On a recent trip to Greenwich, CT I learned that the teens there are gravitating to Blackberry’s BBM (a private messaging product for those on the Blackberry network) and keyboard.
Some more stats:
- Time to sell 1st million iPhones: 11 weeks
- Run rate: 5.2mm iPhones in Q2 09, up 6x over Q2 08
- Total iPhones sold: 22mm through Q209 (10mm+ more if include iPhone touch).
- Total apps downloaded: more than 1.5 billion in first year (app store recently turned 1).
- Run rate for app sales: $1mm per day according to Steve Jobs in this WSJ article
- Consumer intent to purchase a smartphone with data plan as next phone: 41% report from Yankee group here showing overwhelming majority of intent is for RIM and Apple)
These iPhone type devices are not just phones, but mobile, connected computers, and possessing a myriad of exciting functionality including GPS, accelerometer, sensitive microphones for sound/voice input, touch screens, Wi-Fi, local storage, easy connection to cars and stereos. The iPhone has become a legitimate game and entertainment platform benefitting Electronic Arts, Glu Mobile, Game Loft, Digital Chocolate, Tapulous (Tap Tap Revenge is amazing), among many.
So what is the iPhone Effect?
- Consumers can easily find and install 3rd party apps through the coherent app store. Seems like it would have been simple already, but this is the first time it's just easy. Early attempts to replicate it have been very problematic. Just ask Nokia about the challenges of their Ovi Store.
- Publishers can bring their wares to market without carrier negotiations (talk about a company killer - dozens of companies have died at the doorstep of carriers waiting for that big deal to close). Getting out of that sales loop is a big deal. Apple takes a 30% cut.
- Carriers get to sell data plans, watch data usage soar and unwind dreams of controlling a mythical walled garden.
This is truly a golden age for mobile innovation. Welcome to one of the great mega-trends for the next major venture cycle.
