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Confused Consumers at the App Store

June 3, 2009

FierceMobile seems to be on a kick these last few days indicating that consumers will be confused by all of the applications available to them. Sue Marek went suggested that carriers set up their application stores and keep their policy of only carrying applications that they have tested and approve of themselves. (Click here to read the story.) 

While there is certainly some rationale behind this thought, with 25,000 applications for the iPhone, who can tell what is good and what is garbage at first blush? However, I am a firm believer that there are very few business models and channels that are truly new – just variations of something we have seen before. This allows for us to learn from history (or other market places) and apply those lessons here. 

First, lets look at the history of mobile applications. Carriers have proven in the past that they do not have the resources or processes to foster a vibrant application ecosystem. Before the iPhone, how many mobile phone subscribers actually downloaded an application to their phone? Why? There were no really good applications to download and the price points were out of alignment to the value provided. Because of restrictive carrier policies, there was no good way to modify application pricing plans without a lot of new contracts and negotiations.

We can also look at other industries to see how they have tackled comparing products on-line before purchase. If we look at shareware, applications written by independent developers. Pricing models are either free, ask for donations to the project, or pay money for an unlock code that will unlock the application after a trial period. Hmmm, sound familiar… There, users provide ratings for applications and users can easily search for applications and sort based on user reviews and number of downloads. Good applications quickly rise to the top. I buy a lot of items from Amazon.com precisely because of the user reviews.

Sue does point out that carriers typically have the more recognized brands in the mobile space. Subscribers necessarily have the relationship with carriers and they can provide clarity for consumers on certain applications. Certainly any application that itself can access your billing or demographic information from the carrier records should be approved by the carrier. I think there is also a place for sponsored applications just as consumer products pay slotting fees in retail stores. However, they should not restrict applications as they do now.

I do agree with Andrew Seybold’s suggestion that application developers provide free trials of their software to consumers. This will help encourage trial, and if they have developed a good application, spur purchase. Applications that allow trial on a PC such as mPowerPlayer are even better and should be common for all mobile application stores.

Over time, application stores that allow for easier searching and user reviews will rise to the top and others will go away. Just like on the Internet, Amazon rules and no one remembers Buy.com…

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A New Mac vs. PC Commercial

June 2, 2009

I can see it now, the new Mac vs. PC commercial need a makeover. The new commercials will be the iPhone vs. the Berry. I’m not sure who will replace John Hodgman as the PC, but I think dipping into the Daily Show well again and selecting Aasif Mandvi would be a great choice.

The commercials would be largely scripted the same. The capable, but frumpy Blackberry would talk about the features it wished it had and the iPhone will be surprised that these features are not standard on all phones. Casts of other characters could play popular applications available for the iPhone and not available on the Berry. That could even be the name of the Blackberry character, “Berry.” Of course just like the PC commercials, the Berry would crash periodically and need to be rebooted by yanking the battery. 

These commercials, of course, are largely consumer focused, but isn’t that the point? Apple will get adoption at the grass roots level and then corporations will have to figure out how to support these phones with limited security and application management solutions. But at the end of the day, what CIO is going to tell the CEO that he can’t use the coolest phone on the block? Even the Secret Service had to bow to the wishes of President Obama to allow him to carry a PDA. (Of course, he is using a specially modified Blackberry with enhanced security software installed.)

While Blackberry still rules with about double the market share over the iPhone, their dominance is on shaky ground. A few extra features and and additional carriers and Apple can make a serious run at the dominant slot for corporate communications. Security, centralized management and true multi-tasking are key for corporations to adopt the iPhone. But these are things that can be added within a year. Now that Apple has mind-share, and the consumer market waiting for each iteration, RIM had better watch out.

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New BlackBerry OS – Will it solve the problems?

June 2, 2009

I updated my Storm yesterday with the new version of the BlackBerry OS. This takes me from 4.7.0.75 to 4.7.0.148. While I like my Storm, there were definitely a few problems that power users were experiencing. Some of the big concerns were periodically would not ring for inbound calls, would periodically require a reboot to speed things up, and on very rare occasions, the phone would crash.

To be fair, I run a number of different applications on my Storm including Google Sync and Salesforce that always run in the background. In addition to those programs, I’m a frequent user of VZ Navigator and Slacker (both of which also released major upgrades that dramatically improve performance). 

The upgrade process is smooth, although it does require connecting to a PC with BB Desktop Manager running. I believe the iPhone does all OS upgrades over the air (OTA) which is much easier. The upgrade process is relatively smooth. It starts with conducting a full back up of your Blackberry and then the upgrade. This adds time but I suppose is much better than losing all of your data if the phone bricks in the middle… Most of the data came back OK. For some reason, the calendar (that I sync with Google) didn’t get reloaded and it lost all of my user data for programs such as Google and Slacker.

Out of the box, things appear to be running a bit smoother. The new versions of Slacker and VZ Navigator have much better performance, although the latter still has some additional cleanup work to do on its interface. If you have a Storm, please let me know how your upgrade process is going and if you experience any issues.

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Pre Pre Announcements

May 29, 2009

Woe is Sprint. They haven’t even launched the long awaited Palm Pre smart phone and already Verizon Wireless and AT&T are sucking all of the wind out of their sails. Verizon Wireless CEO Lowell McAdam announced in an investor web-cast that his carrier will begin selling the Palm Pre at the end of the year giving Sprint a woeful six months of exclusivity to try to woo Palm die-hards to its subscriber roles. 

Will the Pre be worth it? Hopefully Palm has spent as much effort designing and building the product as they have hyping it. Signs say that they have really thought about how the modern consumer and business person operates to have some very useful features. Highlights include:

  • Multiple calendars – This is something that I really need to learn how to use for my Blackberry Storm. With two different Google Calendars (one personal and one that a client uses) plus trying to synchronize with my desktop and notebook Outlook calendars, this is a great feature. It also automatically manages contacts in different places to synchronize and keep those contacts consistent. (Nothing worse than having two different mobile numbers for the same person…)
  • Background applications – Apple, are you listening? The ability to have multiple applications open and switch between them without having to shut down is a major feature that mimics how people actually work. (I apologize to any of you who are organized enough to completely put away one task on your desk before starting the next…)
  • Direct access to iTunes – This is a recent rumor that may or may not last but apparently the Pre will be able to purchase non-copy protected content directly from iTunes. This opens a whole host of music and podcast options.

The Pre also includes a slide-out keyboard instead of a touch screen. Personally, I think you either need to go keyboard or touch screen. I have never really felt comfortable with the slide-out keyboards. Perhaps this is because the keyboard is below the screen surface and it makes it slightly uncomfortable to hold. I will reserve judgement on this feature to actually try typing on a production model.

Will the Pre compete with the iPhone or Blackberry? My personal take is “Yes, in some circles.” If you are a die-hard Palm fan, this will likely be a great upgrade to your old Treo. If you are a die-hard Sprint customer, then this could be the smart phone for you. If you currently are an AT&T or a Verizon Wireless customer and are not a Palm user, you should likely skip this phone in favor of the iPhone or a Blackberry model… 

The bigger question is will this have a significant impact on Sprint? In six months I think we are all going to look at the number and say that defections to Sprint are negligible and that at best, it has saved them a number of subscribers from defecting away…

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Too Many App Stores?

May 27, 2009

I’ve been excited about all of the announcements of mobile application stores that will make it easier for application developers to publish their work and for consumers to download and take advantage of innovative (and sometimes stupid) software. Recently a number of articles have been published that dismisses the viability of all of the application stores announced.

To be sure, many of the application stores that have been announced will never be launched. Of those that are launched, some will even die as their corporate sponsors loose interest without significant revenue rolling in. But I do not believe that we will see a disastrous withering of the application store space and here is why.

First, for many of the corporate sponsors such as Motorola and Microsoft, application stores are really a marketing expense for their handset platforms. They recognize that in order to sell handsets, there must be innovative and useful applications available.  This is what captures the fancy of the public and will drive handset sales. These stores are here to stay. They will, however, get competitive to get unique content on their shelves. Look for one of them to undertake an aggressive pricing and revenue share strategy with developers to encourage exclusive content.

Some of the smaller handset manufacturers who can not attract large user bases, however, may find that the marketing expense is not worth the cost. They will not be able to pay to have exclusive content nor underwrite the cost of running an application store at aggressive revenue share prices.

Secondly, big box stores come to the phone. It is possible that we will see stores such as Best Buy and potentially even a player such as Wal Mart come to the small screen. These stores are starting to realize that all software sales are going to head the way of the application store, even desktop software. The barriers to the consumer to visit the store to see a package are shrinking. Already “subscription” services prevalent in the anti-virus space and is really defacto in the personal finance arena as well. (Is Quicken 2009 really that much different than 2008?) Of course, Apple is already the first all digital big-box store…

Lastly, niche stores can make a play. Just as offline retailers have recognized the way to compete with big box stores is to provide deep expertise in a specific area. Look for niche focused application stores to come to the market. I can see some based around games, exercise, location-based services (LBS) as some of the first niche stores. These stores will provide expert advice and support that the larger stores can not offer. At least until the larger stores purchase their brands…

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What is Steve Up To?

May 20, 2009

Steve Jobs is on medical leave. Can anyone honestly picture this guy taking a break? My guess is that on day two of his medical leave he was puttering around the mansion wishing he had a better thing-a-ma-bob. What is that thing-a-ma-bob? Many people think the money is on a device that is between an iPhone and a netbook and I like that bet.

Think about it, when do you need such a device? When you are stuck at home or in a hospital and don’t want to crack out the notebook. Rumors have it that the device will not have a keyboard but will have a larger screen than the iPhone so that it will be suitable for reading newspapers and magazines.

Not that my idea was original, but it this does sound like my Star Trek data pad. But here is where I think that Steve will do me one (or a few hundred) better. My concept was to have the data pad attached to a smaller, more traditional mobile phone. Steve will likely realize that he can drive any deal with any carrier and the big reason to have a limitation like this is because of a crazy price plan driven by a carrier. Instead of requiring the device to have a traditional phone line plus a huge per month data charge, he will force the carriers to accept a much lower data charge on the order of $30 a month or unlimited usage. This will be even lower if you have an existing contract with the carrier. There is precedent for this as carriers are looking to sell other devices from Internet Phone Hubs (huh) to switches that make your cell phone work on your home phones. Carriers are also rushing headlong into the netbook space such as Verizon Wireless launching the HP Mini 1151 this month. (Although the price point is still too high at $40 for 250 MB a month.)

Apple could really clean up in this space as they have all the components necessary to make this a smash:

  • Experience with touch screen, WiFi and a cellular modems – solved with iPhone 
  • Good email client – solved this with the iPhone or leverage one on the Apple
  • Good web browser – solved with the MacBook
  • Good developer program for custom applications
  • Positive consumer oriented brand – few people beat Apple
  • Retail presence

I also think that this is not necessarily a replacement for a netbook. Perhaps the netbook is first but I hope to see my data pad not too far behind. Once the device is on the market, look for better remote control over other home gadgets such as TV’s, iTunes, lights, dishwashers, etc…

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Life After the App Store – Billing System Integration

May 13, 2009

Here is a great under the radar development . . . Direct access to a carrier billing systems by developers. Sounds like a snoozer but here is why it is a major deal.

Application stores offer two great things for application developers – access to consumers and an easy vehicle for consumers to pay for their purchases. This is great for one time or subscription services that have a single price point but does limit the ability for innovative new services with different business models.

Now comes Vodafone. Yes, Vodafone. They are doing something that wireless carriers should have done about five years ago. Vodafone is releasing an API to provide developers with direct access to their billing systems. (Click here to read more.) Developers can now create applications with just about any business model. Want to get Slacker charged to your phone, no problem. Want a mid-subscription that allows you to listen to a limited selection of songs for half price, no big deal. Want to purchase a customized Ashton Kutcher designed radio station, click on a button within the app and it will be charged to your phone bill.

Clearly there will be billing reconciliation and privacy issues that Vodafone will need to deal with. For example, will devlopers be able to access demographic information from the billing system? Does Vodafone have the processes in place to approve developer access?

The opportunities, however, are enormous. I can’t tell you the number of stories I have heard from carrier sales reps who want to sell applications that their clients want to buy but that they could not get on the list for the billing system group to add a code. This could be the beginning of true micro payments using your mobile phone.

Vodafone’s announcement has global impact because of another under the radar partnership that was announced a few months ago. Verizon Wireless, Vodafone and China Mobile have developed a partnership to create a single developer platform with common widgets to facilitate application development and deployment across all of the carriers. While all billing systems are essentially unique, even if they are from the same vendor, there must be a way to get a common API working across all carriers. (Although companies such as Amdocs have made a living of making billing systems needlessly more complicated than brain surgery …)

What do we owe this carrier mindshift to? Of course Apple and the iPhone. Carriers are now tripping over themselves trying to compete with Apple’s iPhone and iTunes store. Long live competition and Steve – please get well soon!

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Disposable Mobile Phones

May 11, 2009

Prices keep falling for wireless service. AT&T has announced a few price cuts over the last few weeks including a $10 price cut on iPhone data plans. Today they announce an unlimited pay as you go plan for $3 a day. If you only call AT&T wireless customers, this price drops to $1 a day.

At this price, an old phone becomes a disposable backup phone. I could take it to the amusement park or even give it to the kids if they want to run off and not worry if it gets lost or damaged. Even if I had to purchase a new phone, AT&T has a refurbished Nokia 2610 for $10 on their website. With the rollover program all I need to do is refill it with $1 every 90 days to keep the number active. If I never use it, it essentially costs me $4 a year to keep the phone active according to the AT&T representative I just spoke with.

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We Use Short Shorts…

May 8, 2009

Lots of people think of text messages as something their kids send to each other instead of talking. But Short Message Service (SMS) text messages are growing exponentially as companies realize the commercial opportunities available. By using short codes, five or six digit numbers simlar to a domain name on the web, companies can easily move their brand to the mobile platform in a powerful and interactive way. Over 3100 short codes were licensed in Q4 ’08.

How are brands using these codes? Here are a few examples:

  • Of course one of the largest and best known text campaigns was the Obama Presidential campaign. Neilson estimated that 2.9MM people subscribed to their list that sent messages from the candidate about events and major news. The announcement of Joe Biden as the Vice Presidential candidate was also widely publicized. It was also a two way program allowing people to text back their address, for example, to get a free bumper sticker.
  • MyCoke – The MyCoke rewards is fantastic example of using mobile to interact with your customers. The MyCoke Rewards program provides frequent drinker points based on purchase and consumption of Coke products. Each product has a twelve character code on the package that when entered on the MyCoke Rewards website, provides points that can be redeemed for products or sweepstakes entries. Coke extended this to the mobile platform by allowing you to register your mobile phone with the web site. From that point forward, you simply text the code to COKE and the points are deposited into your account. They will also periodically send special offers or announcements of special rewards available. This approach allows consumers to enter the points at the point of consumption rather than having to take a bottle cap back to their computer. Neilson estimates that over 1.1 MM Verizon and AT&T customers interacted with the MyCoke short code in Q3 ’08.
  • Google – Text a search question to GOOGL and you will receive a response back within a few seconds. For example, text “PIZZA 22314″ and get a listing of top four or five Pizza parlors, including addresses and phone
  • numbers back to your computer. This handy information tool is great for the majority of Americans who do not have mobile web yet but need to get a phone number or address for a shop.
  • Text2Give – Text messaging can also be used to donate to cause. After the Asian Tsunami, the carriers and the industry association that runs the short code program got together and within a few days launched a program where wireless consumers can text to a special short code and have a five dollar donation placed on their cell phone bill. As part of this campaign, carriers agreed to pass 100% of the proceeds to the charities.

These services above are free, with the exception of the charges for text messaging, but represent three different use cases but all revolving around engaging your customers where and when they would like to be engaged. These can be powerful when used correctly. They can also be damaging when used incorrectly. One of the biggest mistakes is not asking for customer permission before sending messages or not being clear on what messages will be sent.

While the rise in smart phones with Internet access and easy application deployment will limit the uptake of short codes, they will continue to achieve strong growth in use over the next several years. Text messaging is often the best and easiest approach as there is one interface that works on all phones and almost all phones have text capability. Text messaging can work in conjunction with applications (e.g., ESPN Mobile, or SquareLoop‘s Mobile Alert Network to enhance push messaging.

For my non-mobile readers – it does take about six weeks to get a short code provisioned and much of this time is having each carrier ensure that mobile campaigns comply with the Mobile Marketing Association guidelines as well as carrier specific rules. For example, T-Mobile has a rule for any subscription campaigns that a reminder message must be sent each month with the estimated number of messages and instructions on how to opt-out. Other carriers require other types of information to be sent to subscribers. Fortunately, most of the instructions are consistent and compatible. Drop me an email if you want to know more.

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