Global myopia on iPhone features

Tomi T Ahonen – Author, Consultant and Motivational Speaker – Author of six bestselling hardcover books on mobile and the former Nokia executive who now lectures at short courses at Oxford University, is a most widely respected expert in high tech, already referenced in over 40 books by other authors. Tomi has been quoted in over 300 press articles in a dozen languages, seen on TV and has presented at over 200 conferences on six continents.

So says his profile. Few writers cover the global cellphone scene as extensively and consistently as Ahonen. When it comes to the American market and specifically Apple, however, he’s about as tone deaf as any Wall Street analyst can get. His case is instructional not simply because he’s widely read but more so because his take on technology represents a certain antiquated bean-counting approach shared by many European and Asian technology companies.

Handicapping the iPhone

In June 2007, just prior to the introduction of the original iPhone, Ahonen wrote in Crunching numbers for iPhone: benchmarks, regional and quarterly, to reach 10 Million:

But the iPhone, as a smartphone, is severely flawed.

And its competitors are far ahead. Consider Nokia’s N-95, a smartphone in the same price class. It is hideously bulky yes, compared to the iPhone. But the N-95 has a five megapixel camera, with flash and Carl Zeiss optics. Shoots not only video, but DVD quality video. Has not only EDGE cellular and WiFi connectivity like the iPhone, the N-95 adds full 3G cellular and the even faster 3.5G, HSDPA, and most of all, the N-95 adds GPS satellite positioning.

The iPhone will not grow sales like the iPod did, starting from zero and growing in very dramatic fashion. That is true of a new market for a new product, could be so when cellphones first were introduced, but not today when it is a replacement market in the industrialized world. This is a market of totally saturated cellphone ownership in this high-price market segment. It is strictly a game of replacement cycles.

I think also that Apple’s profitability will be severely hit as it fights to get to these targets [1% market share…My gut says Apple has to release a slider/folder/clamshell/candybar phone with a keypad to get SMS texting users onboard…But I would not be surprised to see a keypad iPhone by next year.

Americans are different and backwards

A year later, he again visited iPhone’s prospects in his Apple iPhone 3G, what gives – great price but still.. in Communities Dominate Brands, “an engagement marketing blog around his [eponymous] book.” It’s an awfully long and meandering piece published a couple of days after the introduction of iPhone 3G last year.

And then – I am very sad to point out – the Apple top management is of course based in America, the backwaters of mobile telecoms, so they tend to hold outdated views on many things, which means that the “stubborn” view of “we know better at Apple what end-users want” may indeed be relevant to the US market, but grossly misunderstand the opportunities in the more advanced markets, starting with Japan and South Korea and Scandinavia etc.

In this near-book length tome, plenty of small-minded details on MMS, video calling, replaceable batteries, etc., but no mention of what was the most important aspect of the new iPhone 3G introduction: App Store.

It’s the software, stupid!

What Ahonen, his old company Nokia and Asian handset makers never really understood and certainly are not good at is software. That eight-letter word is what makes the iPhone a more compelling smartphone than any other. 20,000 apps downloaded half a billion times is what no other cellphone company has.

European and Asian companies are hopelessly stuck in a device world where it takes Ahonen literally 16,281 words to get lost in an endless features war. Today, after Windows and Macintosh, the iPhone is the third most important development platform. Within a year or two, it’s highly likely that it will also become the hottest mobile game platform. Apple has never been interested in devices, it goes after integrated platforms. And while device-centric European and Asian industry pundits were moaning about iPhone’s missing features, with the App Store, Apple has erected a “first-mover advantage” moat the size of California around the iPhone.

Chasing Silicon Valley

The rush is on. Every handset maker is in a death race to introduce its own mobile OS and app store, which divides the non-iPhone market into ever-smaller fiefdoms. The mature, stable and profitable alternative to that chaos, just as it was with the iPod/iTunes platform, is the iPhone. Not because it has an 8 megapixel camera or MMS or a chiclet keyboard, but because of superior software: the best SDK and the easiest app distribution platform in the industry. Developers notice, and so do users in turn.

European and Asian technology companies have long attempted to break into software: Nokia in phones and Sony in computers, for example. The results have been disappointing. If the company can sustain its success with the iPhone, the question is this: Can Apple teach the rest of the world that it’s not features but balanced design built on the bedrock of software is what liberates technology from the confines of device-thinking?

23 thoughts on “Global myopia on iPhone features

  1. Kontra
    I am becoming sleep deprived because I can’t stop doing catch-up reading on your blog.
    Help!
    You should attach a health warning here along the lines of:

    WARNING: This site is addictive reading for sentient beings.

    or words to that effect.

    Best

    Chandra

  2. Awesome! Awesome! Awesome!

    I’ve read about 5 of your articles in the past 2 hours….

    Excellent perspectives you’ve got!

    Cheers mate.

  3. Pingback: myiphones.co.cc » Blog Archive » Global myopia on iPhone features « counternotions

  4. Intosh: “App stores will be THE important battleground of smartphones in the next year or two but right now, it is not a decisive factor.”

    20,000 apps, nearly a billion downloads later iPhone users beg to differ, so too every other smartphone manufacturer trampling over each other to mimic the Apple App Store. You really think the world is waiting for Nokia’s or Samsung’s app store to open?

    “…the iPhone is lacking and this explains why it’s not selling in countries with sophisticated users, such as Japan.”

    So you’ve reduced this all to a “cultural” bias, since these “sophisticated” Japanese smartphones don’t sell well at all in the U.S. What’s next, some Scandinavian person claiming that Americans are not “sophisticated” enough to appreciate Nokia smartphones?

  5. Sure the App Store is important and more so in the future. But it is not the main reason why people bought the iPhone in the first place. App stores will be THE important battleground of smartphones in the next year or two but right now, it is not a decisive factor. Besides, most of the features/apps you are likely to use the most (emails, IM, SMS, web browsing, multimedia, etc) on your smartphone are supposed to be built-in. In fact, a recent report that came out revealed that most users (I don’t remember the numbers) stopped using the apps they bough or downloaded from the iPhone App Store.

    Currently, people still consider what the phone can do out-of-the-box (whether it’s features, usability, UI, etc.) as the main factor in their smartphone purchasing decision. And when it comes to built-in features, the iPhone is lacking and this explains why it’s not selling in countries with sophisticated users, such as Japan.

    Why the Japanese Hate the iPhone:
    http://blog.wired.com/gadgets/2009/02/why-the-iphone.html

  6. JDT – note that the iPhone uses the same European/worldwide RF standard GSM with the 3G upgrades. So, in some sense they are competing on European terms, not just being American interlopers.

  7. “And then – I am very sad to point out – the Apple top management is of course based in America, the backwaters of mobile telecoms, so they tend to hold outdated views on many things, which means that the “stubborn” view of “we know better at Apple what end-users want” may indeed be relevant to the US market, but grossly misunderstand the opportunities in the more advanced markets, starting with Japan and South Korea and Scandinavia et”

    That quote made me laugh! Ahonen needs to look in the mirror, because his 16,000 word diatribe sounds like it is basically telling Apple that he knows better. Do you think he wrote an article critical of Nokia now that it is pulling out of the advanced market of Japan? How can its advanced superduper swiss army knife of a phone the N9x series fail there?!?

  8. Roberto Mandrioli: “Where he’s got it wrong again is the appearance”

    It’s impossible to not get some things right when you write 16K+ words. :-) What Ahonen misses is the integration between looks and brain, hardware and software. It’s not that Apple is good in both, but that, unlike any other manufacturer, it’s uniquely good at integrating them at a level where it goes beyond being merely a gadget and transcends into seduction.

  9. @Gazoobee: right on

    @AC:

    1. Apps.

    iPhone is already THE mobile device application standard. Just as desktop software developers seeking to maximize the size of their audience would be silly not to release a version of their software on Windows, the iPhone is already the dominant portable platform and developers ignore it at their economic peril.

    If you are creating a website, service, game or anything remotely software related and you expect to have a mobile/portable presence (Google’s services, Facebook, EA games, twitter, you name it) you would be nuts not to target the iPhone FIRST, considering other secondary platforms (Symbian, Android, Palm’s new webOS, MS Windows Mobile, Blackberry, etc.) when you have additional resources and time.

    Remember, all these stores already have one thing in common: they need to get iPhone developers to port their 15,000 apps to their platform and sell them on their stores, across multiple devices, if that is even possible (cf. the iPhone SDK kicking major butt; all iPhones have baseline graphics, multitouch, and accelerometers standard).

    Just as there is only a small handful of full time Mac OS X-only software developers (Panic, Delicious Monster, etc.) that can afford to completely ignore Windows, I predict that there will only be a few non-iPhone mobile software developers going forward (and those have/will continue to have very niche user bases).

    Apple hit it out of the park with the iPhone. As the article says, the five other stores I mentioned will only serve to divide up developer attention (especially since all but Palm are targeting a swath of multifarious devices even within their own ecosystems!).

    The eweek/Joe Wilcox link is dead on.

    2. iTunes

    None of the competitors have iTunes/iTMS/iPod legacy/simplicity. How many of my friends and family have phones that ostensibly play music/media? Most. How many use this feature? None that I know. Most would rather carry an additional device: an iPod, for this. Most do.

    If I’m looking to buy a phone that can play my iTunes music library, I have only a few choices: iPhone or iPod touch.

    3. iPod touch.

    AC: “You also fail to mention the iPhone’s biggest shortcoming — that it’s locked to a specific carrier.”

    I agree that this is annoying but it was a necessary concession to give AT&T an incentive to sacrifice tons of control to make a better platform.

    You fail to mention that every single phone made by every phone manufacturer is dependent on some carrier somewhere. Yet again Apple has a huge upper hand here.

    The iPhone/App Store platform/iTunes dynasty is so powerful and established that Apple can sell a smartphone so smart that is not in fact a phone at all: the iPod touch. Name a competitor with a platform/store that will ever match that feat: selling a phoneless phone? The touch is so good it can sell with no carrier whatsoever.

    Apple negotiated iPhone exclusivity with AT&T but somehow was still allowed to sell an “unlocked” (obviously non-phone but still WiFi) device to extend the reach of its uniform platform. The major advantage of the iPod touch is that monthly data charges are $0. (Everypne has broadband WiFi at home and work already, right?)

    The iPhone/touch are so good as devices that they merely disappear. The device no longer matters since for almost everything, There’s an App For That.

  10. I was going to make a long reply to “AC” but it’s kind of like the proverbial fish in a barrel shoot, so I will just make a short comment.

    This blog post, as I understand it, argues that the iPhone is a challenge to the industry in that it is an integrated platform as opposed to a simple device. One sub-argument is that Apple, by focusing on the end user, “gets the software right.” Another is that the analyst is losing sight of what is, or could be driving the market by merely focussing on the details of a particular device instead of the overall experience .

    AC’s contention that the future inclusion of an app store by Riim or Nokia would equate with all of that is ludicrous on the face of it and shows that he just doesn’t understand the argument being made.

    It almost appears that he simply focussed on the most contentious statement in the post (the bold header “It’s the Software Stupid!”) to the exclusion of actually reading and processing everything else that was written.

    In thinking of that, and in reading his response, I can’t help but think that he is more of an advocate of the pugilistic approach to journalism. On visiting his website “BATTLE OF THE SET-TOP BOXES… FIGHT!”, (all in Caps no less), I think it’s a sure thing.

  11. Elsewhere, Ahonen does say that looks matter. In fact, he says its a fashion industry (at least in Asia) where people buy new phones not once every two years, but twice a year. Then he says Apple will lose because they won’t intro new phones often enough. I assert that Apple will change this as people will personalize their phones more frequently through Apps and less often through new hardware.

    He says that the handset mfrs rely on driving this upgrade frequency so as to create profits through volume sales, since most new models are primarily cosmetic upgrades not requiring significant technological development. (Technology itself doesn’t change fast enough for quarterly model upgrades.) If that’s the case, and if Apple changes this profit-by-volume model, these handset mfrs are in for a world of hurt.

  12. I am taking the time to read the entire original Ahonen’s article. And to be fair, at some point he acknowledges:

    “I don’t think the outwardly appearance and technical specs of the iPhone are that noteworthy. But I am totally convinced that the Apple iPhone user experience is the revolution for the industry. That all phones will be measured in two Eras of time, the Era Bi (Before iPhone) and the Era Ai (After iPhone). Its that big a change. Exactly like the personal computer industry pre 1984 when the Macintosh was released. Exactly like the music pre 2001 when the iPod was released. For this revolution to occur in the mobile telecoms industry, it is totally irrelevant whether Apple sells its stated 10 million handsets, or only 1 million or even 100 million. The fact that Apple is about to unveil its radical user interface, that will utterly change the mobile handset competition forever. It is a paradigm shift in the very true sense of that oft-abused phrase.”

    And I think that he got this mostly right. When you buy an iPhone, it’s not for the specs, it’s for the user interface, its beauty, its ease of use.
    Where he’s got it wrong again is the appearance: looks DO matter, they matter a lot. I bought my iPhone ALSO for the beautiful look.

    Roberto

  13. Most Europeans confuse competition/regulation (which created CDMA/TDMA/GSM networks in the US vs. one GSM standard by fiat) with technology. In fact CDMA was far advanced in capacity and data signaling to GPRS. Of course portability was not an option in the US, in fact even operators sharing the same radio technology and frequencies (Sprint and VZW) would not share phones as the application layer was different (J2ME vs. BREW). So the telecom landscape is simply a reflection of the amount of regulation and not one of myopic or backwater or whatever other creative word one came come up with.

    The real breakthrough, IMHO, was Apple’s radical idea to break the lock of the operator on the firmware management and settings for the browser. Most device manufacturers were resigned to operator specified buttons, WAP home pages as well as the payment gateway (charge to phone) if they hoped to sell any phones through the operator channel (the bulk even today in the US, much less in EU/Asia). AT&T really broke all their own rules and is really astonishing.

    It may well be the case of several technologies converging (iTunes payment, Webkit, high pixel touch screens)which gave Apple the strategic opening. The perfect storm in some ways, but I still think it took someone like Steve Jobs (insert adjective) to get this done.

  14. Also, as far as an App store goes, remember what Jobs said about the original iTunes Store? This is not as easy as it looks, MS is not going to be able come in and copy this in six months.

    That statement is doubly true of an app store. Apple is the first company to put together a cheap and easy, end-to-end, development, delivery, advertisement, e-commerce system that anyone can take part in. The fact that they only have to essentially develop for one device is just the icing on the cake.

    I think it’s going to be a few years before we hear of anybody making anything nearly as good as the App Store experience.

  15. I’ve commented on Ahonen’s blog but have not been able to convince him that the software platform is the game-changer. And that it allows Apple to release new hardware models much less frequently. He’s a nice guy who has lots of data that he’s willing to share but he’s locked into his particular view.

    Based on that and other observations, I think the answer to your closing question is NO because their worldview/mental model prevents them from seeing what Apple is really teaching. Rather, they cling to superficial or twist it to fit into their pre-existing mental model.

    As for AC’s shortcoming comment, in Asia and Australia, Apple has teamed up with multiple carriers in many countries. In some, such as Hong Kong, iPhone is sold unlocked. But in some nations, Apple believes the single carrier model is better strategically and financially than the others for this period of initial startup. In any case, Apple isn’t using just one model, and it’s clear that Apple is open to changing models. (Cook and Jobs have said so, too.)

    On the other point, even Joe Wilcox, who is generally a bit biased for Microsoft, notes that the Apple AppStore’s biggest advantage is that the iPhone software platform is not fragmented across many different incompatible units. Nokia’s Symbian and RIM’s Blackberry platform will be and will continue to be. Also, by definition, WinMo and Android will be fragmented. (See http://blogs.eweek.com/applewatch/content/app_store/theres_an_app_for_that.html )

  16. “Most mobile users in Europe and Asia wouldn’t buy a locked handset any more than they would buy a desktop computer locked to a particular ISP.”
    Well, there certainly have been iPhone sales in both continents even though in most countries, the handsets are locked to a specific carrier.
    Besides, the comparison is not a really good one because I don’t need an ISP for my computer to work; I need an ISP for my computer to be connected to the Internet. A cell phone is a very different case because you are not going to buy a cell phone unless you can be connected. The whole point of the device is its connectivity; carriers then have a much stronger control over cell phones than ISP’s do over computers. I would like to see the iPhone not tied to a single carrier though, just like everyone else (but the carrier of course).

    “I would argue that we North Americans are the myopic ones…”
    Hmm. I’ve noticed what I consider to be a little bit of arrogance from Europeans posting about the difference in markets between the US and Europe/Asia in the cell phone world (not that you necessarily are European/Asian). But it’s always like “you Americans don’t have a choice in carrier” and “we would not allow our carrier to dictate what mobile phone we can have” and stuff like that. It probably is the case that the European/Asian markets are far more advanced technologically and marketwise than the US. But if “North Americans are the myopic ones”, then how come it took a North American company to completely whip the crap out of every cell phone worldwide and turn conventional wisdom inside out in every market they compete? How come worldwide it is Apple’s iPhone they want to copy? How come a rookie in the business has up to date not seen a single competitor from Europe and Asia that even comes close to their product and service? Granted, North Americans in general may be “myopic”, but then so is the rest of the world by not demanding the innovation Apple put out.

  17. @AC: You say “So by following this argument to its logical conclusion, once Nokia and BlackBerry get their own app stores they will once again be ahead of Apple in hardware *and* software.”

    However, I think the article makes two very defensible points that undermine your “argument/conclusion”:
    (1) Apple is much better at software than other handset makers (that’s definitely true when compared to Nokia, and I think it’s also true when compared to RIM).
    (2) Apple has grabbed so much developer mind-share, that other players have to start with leftovers, and those leftovers are now being aggressively fought for by multiple players, which in turn makes getting a toehold all that harder.

    When I say “Apple is much better at software” I mean that in a broad sense. E.g., Apple has a model where all end-users have access to the latest OS (and most have installed it), whereas other OS makers tend to be gatewayed by the carriers (e.g., when I develop for Blackberry, I’m hesitant to use the latest OS capabilities, because many of my potential customers don’t have ready access to that). Apple’s APIs are also far more programmer friendly (Android is close) and the availability of the POSIX layer makes available all sorts of existing useful libraries. There are several other aspects of the software situation that make Apple’s mobile platform just that much better for both developers and end-users.

  18. So by following this argument to its logical conclusion, once Nokia and BlackBerry get their own app stores they will once again be ahead of Apple in hardware *and* software. Looks like that’s set to happen this year.

    You also fail to mention the iPhone’s biggest shortcoming — that it’s locked to a specific carrier.

    Most mobile users in Europe and Asia wouldn’t buy a locked handset any more than they would buy a desktop computer locked to a particular ISP.

    I would argue that we North Americans are the myopic ones…

    • “Most mobile users in Europe and Asia wouldn’t buy a locked handset any more…”

      Nope, if you look to Germany.

      Cheers.

  19. “But the iPhone, as a smartphone, is severely flawed. And its competitors are far ahead.”

    “… it is a replacement market in the industrialized world.”

    OMG ROFL all through this article! Great article Kontra!

    Words of wisdom here:

    “Every handset maker is in a death race to introduce its own mobile OS and app store, which divides the non-iPhone market into ever-smaller fiefdoms.”

    Android may help here. It’s the only hope for Motorola.

    Symbian needs some serious work before it can compete in the brave, new world of software.

    I had given up Palm for dead, but initial reports from developers indicate that it’s WebOS operating system is in the same league as Android’s. Palm will attract a sizable following of software developers and may be able to garner enough press to raise its visibility — the last piece of the puzzle, imho.

  20. “Can Apple teach the rest of the world that it’s not features but balanced design built on the bedrock of software is what liberates technology from the confines of device-thinking?”

    Yes, Apple has been doing so for several years but the ‘Rest of The World’ paid no heed.

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