Saturday, April 17, 2010

Hindsight is Money Money for Apple

There was a time when Palm was king of the PDA market and Apple had only its history with a highly advanced PDA called a Newton. It could boast that it was better in many ways except in mass acceptability. Of course it cost more than any Palm ever did, but it did not reign as champ. Palm did. Palm would move into the Smartphone business, abandoning the PDA market for this vast and new market.

Apple sat back and watched the Palm folk build their market share. They sat back, seemly defeated, but it was an ambush that they developed. See Apple was learning from the market. People wanted to be mobile. Many rumored that Apple would come out with the Palm killer, and it did. It was called the Apple iPhone. Apple was not the first to market a Smartphone, but it created a good one because of Hindsight. In short time, they would surpass Palm and all of its competitors.

Apple has sold over 50 million iPhones (End of March 2010). This was accomplished at a price higher than most of the competition and during one of the worse economic downturns in history. Unlike Palm, Apple saw that the PDA market was NOT dead but that it simply needed some adjustments. People just wanted to carry some additional types of data like music, movies and thus required larger capacity than what a PDA’s 8MB storage could contain. Apple made some changes to their iPod to include some PDA type functionality and developed an iPod Touch which was PDA & multimedia capable. Apple has sold 35 million iPod Touch devices (End of March 2010).

Regarding the hardware, Hindsight was money-money for Apple.

What Apple had also learned was that software was king, NOT the platform nor the operating system (OS). The OS and the hardware is simply the necessary vehicle for the software. They learned that you must close some parts of the operation system to protect the stability of the device. Many rogue programmers had developed applications on the Palm devices that caused some of them to freeze up, require constant reboots or even to lose users’ settings. As a result of learning from other, Apple has created a very stable environment for the developers to create incredible application. Apple had also learned from Palm that the stock applications do not have to do everything; they simply need to do the basic necessities. The developers will fill in the blanks. As of March 2010, there are about 185,000 apps that can be loaded on an iPhone, iPod Touch or iPad.

Regarding the software, Hindsight was money-money for Apple.

Software that the users can not get may as well be unavailable. Apple learned that people didn't want to search web or browse tons of sites for software. Users didn’t want to rely on fan sties to educate them as to what they could download on their devices.  Users didn’t want to think about how the software would get on the device; they just wanted to use the apps. Developer used to complain that sites like Plamgear.com was robbing developers because they took a share of software sale. Apple learned that their complaints were made because their software was available, but not everyone knew it existed or how to access it for purchase. Palm created a software site after many years to house their software apps and make to money from the sale of said software. Apple learned that the application store must exist on the device.  It must be easily downloaded, easily paid for and quickly accessed. The apps can be a spontaneous decision or impulse purchase. If many steps are required then people get confused and confused people do nothing.

Obviously, Palm realized this too, it just came very late in the game. Apple wasn’t first to learn this, but they perfected it. The real credit for the app store came from the efforts of the Jailbreak community. The Jailbreak guys are developers that create apps and functions that do things that Apple won't allow to be done or created in their tightly controlled environment. These guys are the folk that really created the app store which they used to distribute their apps and patches, but Apple borrowed the concept and ran with it. As a result of this hindsight, Apple's app store has been vastly successful and profitable for Apple. As of March 2010, 4 billion apps have been downloaded from the app store.

Let us not forget iTunes. There was a time when Sony was king of the mobile music. Anyone remember the Walkman? Way back when mobile music meant cassette tapes. Sony fought the digital music was with proprietary formats and non-standard media. They resisted the movement for personal reasons like record or CD sells; however, they miss the real boat. Music is too personal to people, they have to have it. Apple came in with their iPods and store the show. They created their iTunes system which gave them a single point of distribution. With the Apple iPad they are now they begin their push into ebook distribution and Amazon and Borders will soon be on this list with Sony (who has an ebook device and content system).

Regarding the music and software distribution, Hindsight was money-money for Apple.

So Apple is getting paid on the hardware, on the operating system (iPod Touch users have to pay for OS upgrades), and on the software. So they are getting paid on every aspect of the device, right? Wrong! There is another area to get paid from: the eye balls. See with all of those devices out there, and they just added about 550,000+ iPads to that mix, there are millions of eyeballs looking at those screen several times a day. Those eyeballs can generate billions of dollars that Apple has not capitalized on. That will soon change. Apple announced their advertising vehicle called iAd.

Apple’s site reads this way “iAd is a breakthrough mobile advertising platform from Apple. With it, apps can feature rich media ads that combine the emotion of TV with the interactivity of the web. For developers, it means a new, easy-to-implement source of revenue. For advertisers, it creates a new media outlet that offers consumers highly targeted information.”

So Apple has learned a little from Google too. Google has made a ton of cash from the eyeballs on the desktop and are working to grab the eyeballs on the mobile devices. Apple realizes that the revenue from search has been huge for years, but the time spent inside the apps is much longer than the time spent in search. Apple basically will have millions of voluntary captive eyeballs and fingers to interact with their iAds. People spend much more time inside the apps then they do doing anything else on the device so Apple is positioning them to make a whole lot of money from people using these devices. Not just Apple, but their developers will make much more money from these iAds. Apple will split the revenues with the developers of apps for the iPhones, iPod Touches and iPads.

So in the near future, the hindsight of advertising will making money-money for Apple too!



Let's talk about the Apple iPad, which is available in 16GB, 32GB and 64GB models with WiFi. The models with the AT&T 3G radio will be available by the end of April or May 2010. As I have mentioned before, the iPad us NOT perfect. If Apple's iPhone history repeats with the iPad then we can expect some great things with it. The iPhone did not have the app store when it launched or for about a year afterward. It did not have a software developer kit (SDK) when it launched. Both these are available with the iPad so we can expect to see some incredible apps in a much quicker time frame as developer have the device in their hands.

The hardware is nice, but lacks some necessary hardware features. Now people are complaining that it lacks a camera, but the camera is not required to make it functional. It should have a camera, but is more important is that it should mount as a flash drive so that you can put your preexisting files onto the device. Apple would argue that it is a security issue, but it is more of a control issue. Their thinking is that the people that want it bad enough will get it from the Jailbreakers. Just because this is a new category (because tablet PCs have never caught on for the masses) does not mean that people don't have preexisting documents that they want to move to and from the device.

The device is still a wonderful device even without this one things. With it, the device would be more usable for a much wider group of people. The one thing that has to happen is that the device has to drop in price. It will in time. Apple will release a new device with the features it should have had the first time and the price of the old and new will fall. I can't wait to get my very own 2nd or 3rd generation of the iPad.

With this, Apple will do an incredible job with the hardware, software, distribution of app and content to display to my eyeballs - all on a huge and brilliant screen. Hopefully the device is a little lighter too in time.

Carl W. Brooks is an entrepreneur that specializes in new technology. Mr. Brooks has been an online publisher since 1999 and has numerous sites and blogs that educate everyday people on how to either use, save money on or make money from the technology around us. He enjoys sharing with the world his unique take on technology and how to use it best in your life

No comments:

Post a Comment