The iChallengers Aren't Just Phones!
Way back in the early days, Jeff Hawkins called his brainchild the Treo - it was heralded for doing three things well: email, phone and being a Palm PDA. A rudimentary browser and compatibility with existing Palm apps gave users the first taste of personalizing the device, but really, it was about as far from today's crop of smartphones as it was from the original, unconnected Palm PDA's that came before it.
Fast forward to today, and we have the iPhone leading a crop of smartphones that are truly integrated with the Internet, (the iPhone had a 51% majority share of smartphone requests in the United States as of February) and offers dramatic options to personalize themselves to fit users' precise needs. Here's the thing about those precise needs: as the variety of apps available increases, people are voting for variety with their dollars. Not just the popular apps at the top of the list, interestingly enough, but apps from all over the App store ranking are sought out to personalize people's iPhones.
End result? This is not your father's smartphone. It's your father's Treo on steroids, with a Nintendo DS duct taped on back...a GPS on the bottom... and a top of the line MP3 player on top. And I haven't even gotten to the personalization options yet!
I wasn't joking when I said iPhone was leading the smartphone market. For the second year in a row, a JD Power survey found the iphone the most popular smartphone by consumers (they won in every category but battery life, where BlackBerry took the lead).
What's more interesting is the November 2008 TNS Compete survey which showed that users actually used more of iphone's functionality than that offered by any other smartphone. You can't argue with numbers like a 20% increase in the use of maps and GPS for iPhone owners over all other smartphone users. Like almost twice as many iPhone owners than smartphone users completing at least one financial transaction on their mobile device each month.
Like 93% of iPhone owners adding apps compared to only 66% of all other smartphone owners.
These numbers say users find the iPhone more usable than other smartphones. They say that iPhone users have been more empowered than any other handheld owner to maximize use of their existing features, and to personalize the phone with a wider variety of apps, both popular and obscure.
The Compete survey shows that users are digging for apps, not just taking what's offered in the rankings. The top app-related findings on the list are interesting: 25% of users have downloaded facebook, 20% have downloaded a game and 10%-plus downloaded a music-related app. However the fourth most popular app choice was split by more than a HUNDRED titles, none cited by more than 2% of survey responders.
That survey response means a fantastic success for a vast number of apps that don't hit the 'featured' page in the App store but still offer true personalization, remaking the iPhone for each of the the masses that choose it.
So what lesson can we -and the iChallengers eager to cash in on iPHone's success- take from this rabid success? The long tail, the adoption of niche electronic interests, is a big part of iPhone's success. Warehousing a million different kinds of lamps might be enough to gag even IKEA, but electrons and disk space are near enough to free that it only makes sense to offer every kind of app developers can think of--it's like ebay: put it up, and you can bet someone will buy it.
Which iChallenger do I think will beat iPhone's long tail success first? Right now I look no further than Jeff Bezos and Amazon's Kindle. Steve Jobs famously said there weren't enough readers for Apple to cater to ebooks, and the Kindle app is now available free of charge via iTunes. In the short run, that's great news for iPhone users, but in the long run?
I think we're going to find that in the long run, iPhone outlasts the Nintendo DS's and Sony PSP's because they can throw more games out and give casual gamers one more reason to buy iPhone even when the dedicated gamer market is saturated. The same with GPS buyers: when every car in the USA has one, iPhones will still be selling while standalone GPS's languish on shelves. And as far as MP3 players? I don't see anything close to the 1-2 punch of the iPod-iTunes sync/online store functionality. The real key is that the iPhone is ALL of the above: in this economic climate disposable cash is now as tight as room on your waist for gadgets, and even the most dedicated gadget lover has twice the incentive to buy a converged device.
Back to the Kindle: What does all this have to do with a dedicated eBook reader, you ask? While eBooks is still a niche market that doesn't represent near the kind of online buying power of music or movies -at least not yet- the fact that Amazon exists at all is due to the power of distributing books online. I'm betting they'll make it work. Sorry Steve, I really think you underestimated the reading habits of the US and the world.
But hold on: this is where things get complex: the real strength and the real threat the Kindle represents is hidden behind it's single purpose as an eBook reader. Peel back the skin of this mono-purpose device and you see that it can still appeal to readers of all flavors of words -- that makes for a long tail strength within its singular purpose. Kind of like a music player, maybe?
Now let's peel back another layer, and compare Amazon with Apple: both are devising devices -and more importantly delivery systems- which completely cut out traditional middle men (publishing houses for Amazon, the Record companies for Apple). Respectively, they are becoming the central homes of reading and music on the internet.
What does that mean? For one, it means captive audiences already plugged into their delivery model, and now increasingly each are plugged into delivery devices: Kindle vs. the iPhone.
Don't look now, but Amazon is experimenting with newspaper subscription services, text to speech conversion, internet browsing and mp3 playback. Looks to me like Amazon is slowly sculpting what could become the most potent iChallenger, a few years from now.
I don't see anyone creating a better phone than Apple has any day soon... but who will win the next platform battle? With its resources and reach, Amazon sure looks like a candidate, for which Kindle as we know it may just be the first salvo.
