Apple and the new frontier of iCommerce

How Apple created and continues to innovate the digital marketplace of tomorrow.

COMMENTARY: I loved my Zune 30 – a music device introduced by Microsoft in 2006. It was a great MP3 player. The first generation Zune was a 30GB model in black. I loved it so much that I ended up buying one for my wife, in white, the next year. After purchasing my Zune, I then proceeded to spend just as much on accessorizing it as I did on the device itself! As we all know, accessories alone- from gels to screen protectors- are multi-billion-dollar industries. From there, the focus shifts to power sources, because of course you need a power cord for your computer (USB) and for your car so you don’t run out of juice. Speaking of your car – where you listen to your tunes- you’ll need an adapter for the audio system (unless your car has an accessory jack and AUX input, in which case you will need yet another cord). And finally, you’ll want to be able to listen to your tunes in your office or around the house. You don’t want to be rude and walk around the house jamming to the latest download with your headphones. However, if you’re a teen, then not having a pair of headphone in your ears probably never occurred to you.

Aside from all of these “additions” that I did not consider prior to my purchase, I could not have been happier with my Zune. I liked the interface, software and storage it offered, which is appropriate because at the time I was considered a full-fledged PC guy. Until one day, when my Zune took a swim in the reservoir of my coffee pot. It was all downhill from there.

Today, as I type this on my silver Macbook Pro, I should clarify that my “full conversion” to a MAC Guy began with my iPhone. While deciding whether or not to replace my beloved Zune, I was enticed to consider the iPod. I ended up with an iPhone instead, converted to iTunes (proprietary formats and interface) and eventually purchased said Macbook. See, I told you it was a slippery slope.

I had fought getting a Mac for years. I use my laptop for more than 12 hours a day, causing me to chew through one a year, regardless of brand or price range. My experience with the longevity of my iPhone is what ultimately led me to consider the Macbook, and I will never look back. Call this my brief testimonial for Apple; a simple story of how one PC Guy became a Mac Guy and a diehard Apple fan. I attribute 80% of my Apple conversion to the iPhone. Without my iPhone, I would still not understand why everyone has become so gaga over Apple. Now, anything Apple releases, I have to contemplate adding it to my wish list, considering how it will make my work and play easier and more enjoyable.

Many ask me if I like my iTunes software compared to Zune. The answer is a resounding “NO.” While Microsoft seems to have every step of the process ironed out and has proved to be successful, iTunes remains difficult for first-timers to navigate through even simple tasks. However, once you master iTunes on your computer or iPhone, making a purchase is simple and repeat purchases are even easier with a click of a button. In my opinion, Apple still needs to fix some snags before iTunes grows into an even larger online marketplace.

So how does Apple continue to grow despite a weak application called iTunes? Simple: sexy devices that you can’t put down and great marketing. They are smooth, slick, and intuitive, impressive to almost everyone. And they are driving commerce. The iTunes software can only improve, and I have confidence that as it evolves with new downloads and digital content, purchases will increase, as will Apple’s dominance as a retailer.

Let’s take a look at a brief history on how Apple (and the iPod) revolutionized digital purchases.

The iPod came on the scene in 2001 (and was met with great skepticism regarding Apple and their business model). By 2009, the skeptics long since silenced, iPod and iTunes sales added more than $12 Billion to Apple’s revenue. What Apple accomplished helped to change the way music is bought and sold. Remember the days you could go to the mall and buy the latest cassette tape and then CD from a “record store” such as Coconuts, Strawberries, Planet Music or Tower Records? And while you can still find a few F.Y.E and Suncoast stores at some malls, I wonder for how long. With the introduction of the iPhone, physical media has been dealt the final blow and is becoming obsolete. Apple developed an empire that created a new segment of the market: highly interactive phones that included touch screens and mobile marketplaces for Music, Books and Apps.

In September 2009, Apple announced that it has sold more than 30,000,000 iPhones. Over 2 billion app downloads, with 100 million accounts with credit cards and 8.5 billion songs sold. Apple currently has 73.8 percent of the Music Device market (followed by 18 percent held by “other,” SanDisk with around 7.2 percent and Microsoft about 1.1 percent share). Apple has also shown, with its own data, that 50 percent of new iPod sales are to new customers (those who haven’t previously owned one) and the total number of iPods sold is closing in on 225 million units.

So how does this story about my Zune and iPhone continue as we begin this new decade?

With the launch date of the Apple iPad upon us, the same company that dominates the music device category is looking to do the same with tablet or slate devices. Their digital sales will continue to propel their business, as others like Amazon and Microsoft (don’t count them out….yet) work to overthrow the Apple empire. The battle is really not about music, books or movies. For Apple, it’s all about iCommerce.

So what’s on the horizon? High definition investments in each home have significantly driven the bottom line for companies like Best Buy and WalMart. And it hasn’t escaped the attention of those who deliver content to your home, such as cable companies and even Verizon (with their FIOS service).

Xfinity (Comcast) is working on new technology to further exploit their relationships with subscribers (a brilliant subscription model). They are actively working on new ways to provide an even better experience for those people adding new devices to their televisions, ranging from networked Blu-ray players to computers running Windows 7 Media Center equipped with a cable card. Verizon’s FIOS now sports Facebook and Twitter integrated into their service so you can multi-task and tweet or post a status update. And don’t forget leveraging TV content through online and device distribution.

A recent DirectTV commercial that showed a bank hold-up with a guy on the floor using his phone to tell his TV to record a show is a great example of the power of mobile access. That’s one example of building a ubiquitous network. What about activating each device the cable subscriber uses in and outside the home from the computer to mobile phone to their new iPad? Now that’s bringing it all together. It’s quickly moving into the “cloud” and a device like the iPad is helping to make that push and thrust for the industry with Touch, Social Connections, Location-based, Tablet, Wireless and Commerce.

The battle now is brewing over devices and distribution of all kinds from advertising to content. And yes, including video – even your TV will soon reclaim center stage appearances again as it becomes more interactive and connected. You will see that the new frontier will be centered around connected devices. And who can we count on to be right in the middle of the commerce war? Why Apple, of course.

And may the best one win – the consumer!

THIS ARTICLE WAS PUBLISHED IN MOBILE MARKETER. Read it here.

About the Author:
David Geipel is COO & Founder of QWASI (http://www.qwasi.com). You can reach him at dgeipel at qwasi.com or chat with him - text DAVE to 79274 (QWASI).

NOTE: This is not an endorsement for Apple. We consider them to be the leading innovator today for consumer adoption of interactive commerce. The iPad debuts at Apple stores on April 3, 2010. Start standing in line now.

April 1, 2010 in Blog   |   No Comments

SMS Preferred Mode of Communication on Mobile

New research continues to point to huge increases in preference for SMS over other forms of mobile communication.

According to a survey conducted by Tekelec (a messaging company powering telecom operator applications), 60% of 45 year olds were found to be just as likely to use SMS as they were to make voice calls from their mobile device. The survey of 500 people in North American and Europe also found that text messaging is gaining on email as the preferred means of daily international communication, with 32% of responses across all ages preferring SMS, compared to 33% for email. And nearly a third of respondents said their use of SMS would increase in 2010.

In addition, more than 80 percent of respondents across all age groups thought they would get a quicker response from a text than from an email or voice message. Women preferred to let their fingers do the talking, with 40% describing themselves as ‘mainly texter’, compared to 30% of men.

One more difference between the sexes: women were more likely to engage in TV voting via text, with 25% versus just 14% of men engaging in such behavior.

But those under 35 were the most likely age group to vote via text, with 16% of them saying they do so, followed by 9% of 35-44 year olds, and 7% of those 45 and older. However, 35-44 year olds are the largest consumers of news and sports by text at 18% compared to 17% for those under 35, and only 8% for those over 45.

SMS - A look ahead at growth for M2M (machine-to-machine)

AT&T and Verizon Wireless nearly doubled their text message traffic from third-quarter 2008 to third-quarter 2009, showing that SMS continues to become even more pervasive.

While person-to-person (P2P) messages will keep increasing, the next major growth area is in fact machine-to-machine (M2M) SMS.

ABI Research recently released data showing that M2M SMS and MMS message volume will have a compound annual growth rate of 40.06 percent from 2008 to 2014 (“Mobile Messaging Services: SMS, MMS, Mobile Email, and Mobile IM,” 4Q 2009).

Brands can capitalize on SMS M2M to more rapidly meet their customers’ needs. For example, vending machines located anywhere with cellular reception can send texts when inventory is low, rapidly and affordably assuring that goods remain in stock. M2M will open up an entirely new growth area as new solutions focused on cost savings emerge.

Bottom Line: SMS & M2M will bring huge growth in mobile over the next decade as consumer prefer SMS for their mobile communication.

January 12, 2010 in Blog   |   1 Comment

Apple sells 7.4M iPhones. Posts best quarter ever

Welcome back Steve Jobs. It was with great anticipation today we waited to hear the report from Apple. According to Apple, the company shipped 7.4 million iPhones in its fiscal fourth quarter, the most it has ever sold, besting the 6.9 million it shipped in the quarter following the launch of the iPhone 3G last year. The iPhone figures pushed it to a new record: helping Apple post it’s most profitable quarter ever.

WHAT’S HOT
Apple’s iPhone shipments include its 3G device, launched last year with AT&T for $99 and the new 3GS iPhone introduced July and priced from $199. Apple said it sold over 1 million units of the iPhone 3GS, which added video and MMS capabilities, in its first weekend of availability.

Further, Apple executives indicated that the company struggled to meet demand throughout the quarter, implying the company could have sold more iPhones than it reported, had it been able to meet a demanding consumers’ smartphone appetite.

“I would have liked to have had more, honestly, because we were still short in some countries at quarter end. As I indicated, it was early October before we were able to get supply and demand balanced in some countries,” said Apple executive Timothy Cook in the company’s conference call with analysts, according to a transcript from Seeking Alpha.

FINANCIAL DATE
The company had a net profit of $1.67 billion, up 47 percent from the $1.14 billion profit it had in the year-ago quarter. The smartphone and computer maker also booked $9.87 billion in revenue, up 25 percent from $7.9 billion in the year-ago quarter. Apple’s gross margin was 36.6 percent, up from 34.7 percent in the same period last year.

And research firms appear to be backing up that claim. According to market research outfit According to researcher iSuppli, the iPhone is “dramatically outperforming” the overall smartphone market. The firm said worldwide smartphone unit shipments are set to rise by 11.6 percent this year over the previous year, while shipments of Apple’s iPhones are set to soar by 37 percent during the same period.

Apple CEO Steve Jobs noted that “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

Finally, Apple execs had some choice words for competitors scrambling to cash in on smartphones such as Pre maker Palm, BlackBerry maker Research In Motion, Windows Mobile vendor Microsoft and Google via its Android platform. “Frankly I think that people are really just trying to catch up with the first iPhone that was announced two years ago, and we’ve long since moved beyond that,” Cook boasted.

In addition, last month Apple announced that it sold over 2 Billion iPhone Apps.

October 20, 2009 in Blog   |   1 Comment

Text Message Statistics - October 2009

Text messaging continues to be enormously popular in the US reaching new levels every month.

More than 740 billion text messages carried on carriers’ networks during the first half of 2009. That’s an average of 4.1 BILLION text messages sent/received each day. That’s nearly double the number from last year, when only 385 billion text messages were reported for the first half of 2008.

Wireless subscribers are also sending more pictures and other multi-media messages with their mobile devices—more than 10.3 billion MMS messages were reported for the first half of 2009, up from 4.7 billion in mid-year 2008. MMS stands for MMS stands for Multimedia Messaging Service and more commonly referred to as ‘Picture Messaging’ to subscribers. iPhone users in the US recently received access to MMS through AT&T last month (read our post: iPhone finally gets MMS). For more information on MMS, see What is MMS post.

Just last year, Nielson Mobile released important trends showing how Texting outpaces Voice as the number one activity on a cell phone.

For the latest CTIA Wireless Carrier Survey, click here.

October 7, 2009 in Blog   |   No Comments

Publishers Add Mobile to their Publications

Survey: Print Publishers Ready to Capitalize on Mobile Market

According to the Audit Bureau of Circulations, The digital advertising and publishing market is poised for growth, supported by new mobile devices and advances in applications and technology. Today, print publishers are focusing on the market as a prime opportunity to expand their brand, reach new audiences and generate additional revenue while offering advertisers the chance to reach locally targeted, engaged audiences who are on-the-go.

“The results of ABC’s survey demonstrate that publishers recognize the growing importance of mobile devices in consumers’ daily lives and are actively embracing mobile as a new way to extend their brands,” said Michael Lavery, ABC president and managing director. “We continue to hear from newspapers and magazines as they integrate mobile into their digital publishing plans. And interest in ABC’s multimedia reporting options is very high, with mobile poised to be one of the next distribution channels included on those reports.”

Publishers Formatting Web Sites for Mobile Viewing
Publication Type	Percent Formatted for Mobile
Consumer magazines	42.2%
Business publications	44.7
Newspapers	57.5
Source: Audit Bureau of Circulations, September 200

Some Highlighed the Survey Revealed:
* More than 80 percent of newspaper and magazine respondents believe people will rely more heavily on mobile devices as a primary information source in the next three years.

* Nearly 70 percent of respondents agree that mobile is receiving more attention at their publication this year than last. More than a third believe their publication already has a well-developed plan for attacking and conquering the mobile market.

* Forty-four percent of respondents who track mobile’s impact on their Web site traffic said the devices increased visits by up to 10 percent today. Half believe mobile traffic to their Web sites will increase by five to 25 percent in the next two years.

* Among senior executive respondents, 56 percent said their publication has plans to develop a smartphone application in the next 24 months, in addition to the 17 percent of respondents who already have an app in production.

* Regardless of mobile’s anticipated rise, ABC publisher members do not plan to abandon their print publications in favor of a digital-only product in the near term. While 55 percent believe that digital delivery of their publication is important to their strategic future, three-fourths believe that their publication will be available in a print form five years from now.

* More than half of the survey respondents believe that the future business model of mobile content will be supported by both advertising and subscriptions.

* Nearly a third believe that mobile will have a significant impact on their publication’s revenue in just three years.

“Although the mobile market is in its early stages, it offers tremendous opportunities for marketers to reach and interact with audiences,” said Edward Montes, executive vice president and managing director of Havas Digital North America. “With text and multimedia messaging, branded mobile apps, content sponsorships, display advertising, paid search, and location-based targeting, the platform becomes an integral component of the overall marketing strategy. It has enormous potential for clients, in my view, so it’s great to see newspapers and magazines embracing digital publishing.”

Survey Conclusions
* It’s early, but there are positive signs. The mobile market is definitely receiving more attention than ever before. For some respondents, planning is still in the beginning stages and publishers are wading through the information and technology, trying to decide on the right strategy. For other newspapers and magazines, many mobile initiatives are well under way, supported by advertising and sponsorships.

* Mobile will drive Web traffic. Most respondents believe that mobile will be responsible for a five to 50 percent increase in Web site traffic in the next three years.

* Publishers are betting on both smartphones and e-readers and are actively exploring the vitality of both as a new distribution channel. Both devices are in the early-adoption phase but are quickly gaining momentum with large daily newspapers and leading consumer magazines.

* Early business models will be based on a combination of advertising and subscriptions. Publishers agree that the mobile market will be both ad- and subscription-supported and many anticipate that mobile will contribute to the bottom line in just three years. Publishers believe there are many opportunities for paid mobile advertising, including sponsorship, search, video, and banner ads.

* Advertiser demand for accountability will grow as ad spend grows. Respondents agree that independent third-party auditing would increase mobile’s credibility and is likely to be demanded by advertisers as ad spending increases in this area. Data should be reported on ABC statements.

About the Survey
More information, including an executive summary of the survey findings is available on ABC’s Web site. The research for “Going Mobile: How Publishers Are Preparing for the Burgeoning Digital Market” was conducted via a voluntary Web-based survey held between June 25 and July 10, 2009. To learn more, visit http://www.accessabc.com.

October 2, 2009 in Uncategorized   |   No Comments