Tuesday, 10 September 2013

iPhone 5S / 5C: Winners and Losers from Apple's announcements today

Apple today announced not one but two new iPhone 5 devices (as pretty much everyone in the blogosphere had been anticipating given recent leaks).  Their basic strategy was to continue to improve on their existing line of high end, premium iPhone devices by introducing notable improvements in the 5S while also fending off low competition in the sub $100 part of the market from the likes of ZTE, Hauweii, Xiaomi and others who have recently been taking a noticeable amount of market share particularly in China.

Did they succeed?  who does this affect?

On the high end part of the market the 5S improvements are mostly on the inside.  The biggest improvement is the new Apple-built ARM A7 chip which they claim is 2x faster than the A6 chip present in the iPhone 5. There's also a 40% improvement in CPU speed but what really matters here is that this chip will allow 64-bit apps to run on the phone.  From a game developers perspective this has the potential to set a new standard in gaming as the live demo of Infinity Blade III showed today.  If you couple this with Apple's announcement of it's motion sensing M7 chip that sits along the A7 then not only are we talking about richer games but also about a whole new range of motion related possibilities that open themselves up for both gaming and fitness apps.

winners:  consumers, game developers, ad networks that help developers promote games
losers: traditional console OEM's (Microsoft, Sony, Nintendo) as these devices loose their performance / graphics edge; Android, Windows Phone, Blackberry (as developers continue to prioritize iOS first for games due to the perception of it being a better gaming platform)

Other improvements included a much better camera with Apple focusing on the "active sensor area" as opposed to the actual number of mega pixels present in each shot.  This is an interesting marketing ploy as they attempt to move the conversation away from the race for more Mega Pixels (which Nokia currently dominates with the Lumia 1020).  The risk though is that apart from camera aficionados, many consumers may simply not understand the jargon.

winners: consumers, possibly OEM's selling printers for consumers interested in printing their photos
losers: Nokia (since the main marketing message around the 1020 is its 41mp camera) if Apple is really able to communicate this in a consumer friendly, compelling way; traditional point-and-shoot cameras from the likes of Canon and others since the difference in resolution is becoming smaller and smaller.

One cool thing Apple introduced today was a Fingerprint ID which is now embedded into the Home button. This had been a bit anticipated since the release of iOS 7 but provides a nice extra level of security for consumers worried about having their phones stolen (my mother in law would really have appreciated this last week!).  The sensor basically scans your finger or thumb to provide heightened levels of security compared to 4 digit passwords or face recognition.  Though this seems like a gimic, it could actually prove pivotal if Apple goes down the route of pushing its own payments platform (it currently is one of the largest holders of credit card information globally through iTunes).

winners:  consumers, app developers, credit card companies (through reduced fraud)
losers: Should Apple couple this with some form of NFC at a later date, companies like Square could be in trouble.

Colors.  More colors!  Apple finally introduced new colors for the the iPhone. The iPhone 5S now comes in Gold, Black and Silver.  Though a minor change, clearly this allows consumers to have a slightly more personal style to their phones aside from cases (though I don't see the diamond-laden or Angry Birds cases going away anytime soon).

winners: consumers
losers:   OEM's offering multi-colored devices.  Nokia and HTC are the main ones that come to mind.  HTC just introduced the HTC One in blue while Nokia has touted its blue, red and yellow Lumias since launch. The shame here is really for Nokia since they were really never able to capitalize on this small design distinction in the US market. Other loosers could be the providers of personalized cases for Apple like Otterbox, Speck and others

Ok what about the "cheap" iPhone?

Yes, Apple introduced the 5C today.  I'm not going to go into the details of what the 5C is or it's specs.  The folks at Techcrunch have already done a great job of that and you can get the details here.  Suffice to say that at $99 on a two year contract (for the 16GB model) it will sway some users that have opted for new, cheaper Android devices in the past. However, sporting an 8mp camera, 16gb of storage, retina display and multiple colors using a plastic case, I'd say that they are targeting a young, sub 25 demographic not only in Asia but in South America and even in the US.  Though $99 Apple devices have existed for a while in the US this is really the latest tech targeting the youth demographic.  The strategy follows the same thinking they used to develop the iPod line of products and makes a lot of sense.  The only concern I see here is margins. If the 5C is a run away success it could cannibalize sales of the 5S or weaken carriers abilities to get rid of iPhone 4S stock (though this device will now be free on a 2 year contract).

winners:  sub 25 year old consumers, consumers in emerging markets, app developers (as this will broaden the IOS base)
losers: Hauwei, ZTE, Xiaomi and other Asian OEM's targeting the low end of the market; Android overall as the 5C may blunt Android's rise in emerging markets; Qualcom, Nvidia and other providers of chips for Android devices as iOS takes more market share.  The other big potential loser here could be Nokia if Apple is able to use the 5C to make inroads into India and South East Asia.  At this price point the 5C will definitively compete with Nokia's Asha line of devices.  Also Apple shareholders could be the losers here if the 5C margins are less than the 5S and end up cannibalizing it.

So that's a wrap for today!  I'm not going to cover Apple's software related announcements in this post. Plenty of other folks covered that.  A last parting note is that I didn't see any mention of NFC coming to Apple's latest devices which spells trouble for NFC in general.  This is a bit suprising to say the least but maybe the folks in Cupertino figure that sharing through Airplay between Apple devices is enough. Consumers really seem to be the losers on this one since sharing between iOS and other devices could be much easier than it currently is.

Mad Mork.

Monday, 9 September 2013

Why Google's Play Store will eventually trump the App Store - Ads

A lot has been written this past year about how Android's Google Play store is catching up to the App store.  Certainly, a lot of the numbers seem to bolster this claim.  The Google play store boasts in excess of 1 million apps to date which is slightly ahead or an par with Apple (though the number of tablet based apps is far less than IOS and continues to present a challenge).  In addition, Play has launched music, movies, books, magazines across a number of major markets in the past year and matched IOS in games with the launch of its Play games service (though no numbers have been disclosed to give us an idea of how many games have integrated the service nor the current number of users).  More importantly, Google has been smart to capitalize on its digital content platform beyond simply consumer facing content.  At Google IO they announced the launch of Google Play for Education which will allow educators and IT administrators to essentially use a version of the play store built for education to provision students using Android tablets with apps, books and other materials.  More recently they also released Textbooks to allows students to buy their textbooks online (the backs and shoulders of many will be thankful)

But I believe more is yet to come...

The biggest challenge for content owners / creators continues to be discovery.   Though services like Play Games will help developers find new ways to promote their content to a more targeted audience while search and better merchandising help users find new content, the truth remains that as more content becomes available it necessarily becomes more and more challenging for consumers to find what they want.  Let me use my own situation this morning as an example.

Here's a screenshot of what I saw today on the home page of Apps when I opened Play on my laptop.

So what's wrong with this picture?  Well for starters, I don't really give much of a damn about Fantasy Football and don't, no matter how many companies they buy, ever use Yahoo! services so right off the batt 1/4th of the recommended list doesn't really interest to me.  Last I checked I also haven't been in school for about 13 years so the entire row of "Back to School" apps goes down the drain as far as I'm concerned.  Scrolling down the page I was also presented with a "Keep in Touch" section which, though cool, presented 4 apps I had already installed.  I'm not sure the value of reminding me about stuff I already have to be honest but understand the challenges around merchandising content for a mass market audience.

The problem here: relevance and lack of customization.  Luckily, Google has both the tools and brains to fix this and in my opinion (yes, obviously I'm biased) in a better way than Apple.

When I was a GetJar, our whole reason for being was to offer developers the chance to better reach consumers by allowing them to bid for targeted placement across our app store.  Developers could bid for placement to get heightened visibility and depending on their bid and the relevance of the ad and level of interest they would get featured in premium placements across the store which helped drive downloads of their apps (sounds familiar?)

So it would seem that Google could easily solve the discovery problem in part by introducing an Adwords style system directly into Google play. Introducing ads into Google play would:

1.  Enable developers to have some control over the effectiveness of their ad dollars by bidding for placement directly where consumers happen to be.
2.  Provide a level playing field where developers would compete / bid against each other for placement.  Successful placement would depend not just on the level of the bid but also on relevance and also consumer interest (as measured by the click through rate the developers app has received to date).
3.  Better monetize the play store with a product (ads) which is far more profitable for Google than content. (I can see Google's CFO +Patrick Pichette smiling already)
4.  Provide Google play with a unique differentiator against the Apple App store by giving developers much more control over their ability to market their content to consumers
5.  Provide Google's ad sales team with a unique, highly differentiated product targeting a highly prized audience of Android users (minus those in China of course...(sigh)).  +Jason Spero rejoice!

So it would seem like a no brainer coming from the company that pioneered online ads that this would solve a lot of problems both for consumers, developers and the folks on the Play team.  So when will we see ads in Google play?  

who knows...but surely the obviousness of the opportunity hasn't been lost of the folks in Mountain View.  Stay tuned ;)