The iPad – how it may influence the mobile arena

Another hyped and as always well orchestrated launch by Apple. The iPad is since launch scrutinised and the comments are many. And what is really the iPad? Many views are posted on blogs like this one. All try to compare the iPad to some existing device: a laptop; a mobile device; a Kindle etc. It could be that the iPad does not really compare to any existing device but defines a new market. What need the iPad really can and will meet only the future can tell. The key difference to a laptop is probably not the lack of a real key board, missing USB ports etc. The iPad merge the large screen and usability of a laptop with the business ecosystem and the elegant UI of the iPhone/iPod touch. And as in most mergers one of the cultures may eventually be more pronounced.

Why does the iPad get all this attention? The main reason is that it is launched after the huge success of the iPhone and its app store. But is the iPad really building on the success of the iPhone? In many aspects the iPad is a lap top size iPod touch. The success factors of the iPhone/iPod are a superior UI making it very easy to find, explore, buy, access and use relevant Internet services and a working business eco-system incentivising 3rd party developers and companies to invest in the development of apps. In both these aspects the iPhone and the iPod has excelled compared to the competition and the key to the success has been a closed environment fully controlled by Apple. The competitive edge is on the other hand not so obvious anymore when doing the same for a lap top size device. A superior UI is nice to have but does not bring huge benefits and a working business eco-system is in many aspects already in place for computers.

What one may assume Apple hopes to achieve is yet another closed Apple environment where Apple guarantee the end user a superior user experience at the same time as they fully control the business eco-system within this closed environment, further driving hardware sales. The ambition is to extend the successful business model of the iPhone and its app store to more computer like devices. Many support this thinking, especially media conglomerates and publishers now see the opportunity to finally get a working business model, getting paid for digital versions of their news papers and magazines as well as new opportunities for advertising.

Sometimes we seem to forget what really made the PC and the Internet into the huge successes. And what ones almost killed the Mac in the process. It was certainly not a superior UI or a closed environment but rather the opposite. We may question the dominant position of Microsoft but getting one ubiquitous operating system, Windows, made it possible to launch services and software reaching the full market independently of device brand or ISP. The limited fragmentation and easiness by which you could address the market spurred innovation and diversity. This is unfortunately not the case within the mobile area and will not be for the foreseeable future, the mobile operating system jungle is here to stay. The success of the iPad can therefore not rely on the same criteria as the iPhone and we will most probably not accept a development where we now at this level of maturity get more closed environments within the personal computer area.

The iPad may find a niche as for instance a wireless reading device, such as the Kindle, where users are expecting a closed environment. But if the iPad becomes more of a general lap top for any media consumption the users are likely to expect more of an opened environment. Apple will, in this case, most probably be forced to open up to meet the customer expectations and not to limit the iPad to a few niche markets. With the similarities between the iPad and the iPhone it may be hard for Apple to justify a more closed environment for the iPhone. What may first have been seen as a very clever idea to expand the successful business model of the iPhone into the computer market may backfire and gradually open up the iPhone eco-system. The present willingness to pay for services in the mobile arena may be transferred to the online environment and maybe vertical approaches are a way to get there but it can’t be a general and sustainable solution.

The successes of vertical approaches such as the iPhone confirm the enormous potential of Internet services accessed through the mobile as well as the willingness to pay for useful services. To fully capitalize on this huge opportunity the answer is not to build more verticals, but rather to make services and communication platforms work across all mobile platforms unleashing the true potential. This is what the UMI concept is all about.

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Does anyone dare to say no to apps?

Most consumer brands are in the process of experimenting how to utilize the mobile channel in the best possible way. Many have a quite limited experience of the mobile and the obvious answer seems to be app stores and apps. Even being the phenomena driving the development and being the by far most massive mobile success story in years, investing in apps may turn out to be quite a disappointment. The issues are that the space is quite crowded, you have to invest over and over again to cover all different operating systems and most importantly the majority of the apps generate a rather limited usage. Most apps are unfortunately a waste of money but do you still dare to say no?

The Canadian newsstand platform service provider and publisher Mygazines announced a few days ago the launch of a Universal Mobile Interface. It may not fully be in line with the general UMI definition, nevertheless the basic thinking is the same. “We want to allow our publisher’s content to be accessible anywhere and everywhere,” says Yoav Schwartz, CEO of Mygazines, Toronto, in an interview by Chris Harnick in the Mobile Marketer. Yoav Schwartz continues: “If a person receives an email with a link to the latest issue of Relevant, then he or she can click on that link and open the magazine on whatever device they want – you can’t do that with an app.” “If I’m a publisher and sending out e-delivery to my subscribers, I want them to start engaging right away. With a traditional app, it’s up to the user to then either download or install an app or visit the app to access the content.” “Apps are great, don’t get me wrong, but they’re a closed environment.” Mygazines dares to say no.

Mygazines clearly supports the basic thinking behind the UMI concept. We can expect their approach to become quite successful within the online publishing arena and to be followed by others. This in not a battle between apps and UMIs, both will become successful on their own merits. For those that want a very efficient way to reach all mobile phone users not bothering about different mobile operating systems and high development costs the UMI approach should be carefully considered as an alternative to apps.

GSMA Mobile World Congress in Barcelona – Anything new?

So what can we then conclude from this years big European mobile event? The most striking is probably that there was not any big news or underlying trends. It seems like the main movements already spotted, are just even more pronounced.

The app mania is continuing. However, there are now a number of companies addressing the issues with the approach, offering tools for cost efficient development of apps and somewhat trying to overcome the problem with development for each individual OS. The next phase that may be seen, if you look carefully, is that the apps will decrease in importance replaced by better mobile browsers in combination with better services in the cloud.

The developing countries stand for the majority of the growth of the overall mobile penetration. According to ITU we will pass 5 billion mobile phoneusers worldwide during 2010. Even if this is a European event a strong interest and targeted products for developing countries could be seen. With the majority of the world’s mobile phone users in emerging markets this will certainly influence the industry focus and hopefully also drive innovation globally.

And then we have the Microsoft launch of Windows Phone 7 Series which seems to have been recognised more in the media compared to at the congress itself in Barcelona, where few did seem to care so much. Microsoft certainly knows how run the PR. It’s a bit early to judge Windows Phone 7 Series but it looks like we get just another OS, further fragmenting the market. It looks nice but may follow the general rule: the nicer the UI the more of a closed environment.  

The number of phones running on Android is growing but to announce Andriod as a clear winner that will solve the OS enigma is not only premature but will probably not happen. We have for instance the announcement of the Nokia and Intel cooperation regarding MeeGo. The operating system war will continue and those that hoped for common standards etc. will just have to wait a bit longer, quite a bit longer. The operating system jungle is here to stay.

There’s a lot of tension in the market and it is clear that there’s not room for all. It will be quite interesting to follow the development in a market where all are so dependant on each other and cooperate at the same time as all are competing. This time we had announcements like the one from the Vodafone CEO Vittorio Colao warning about Google and other companies dominating parts of the mobile value chain and even suggesting that the regulator should interfere. When did Vodafone all of a sudden become so pro regulation?

In conclusion, there was not a lot of news or surprises this time. It’s however clear that the industry has gained some momentum compared to last year. There will be a lot happening in the market but presently the established players seem to think that everything will continue more or less as today not recognizing that the mobile is just another Internet access point.

Avoiding app stores turning into app graveyards – Part 2: Any solution?

The app stores grow in size and it becomes very hard to gain visibility and sufficient usage for the majority of the services offered. What was first a market place for small developers has now become an important marketing and sales channel for well established brands.  Less known services and brands, that initially may have gained some attraction, now find it harder and harder to succeed. The app stores have turned into huge warehouses where the consumer may find what she’s already familiar with and is looking for, but with quite limited or low precision support to encourage exploration of new services. Increasingly the most successful and used apps rely on a brand with an existing user base from other media such as the online web, television, and print. There are exceptions but they become more and more rare.

Why have the very promising phenomena of the app store resulted in a very limited usage for most services offered? There is fundamentally nothing wrong with the app stores but the expectations are far too high. Why?  This is due to a number of reasons:

• The app stores are not really built as stores. Let’s just compare to the ordinary grocery store. The most frequently bought items, such as the milk, is far into the store and on the way there you are bombarded with promotions and offers. The business is carefully managed to: promote products in cooperation with the suppliers; align with other marketing channels; make us buy specific products by intelligent shelf management; improve loyalty by cards and programmes resulting in increase revenue and decreased customer acquisition cost etc. For the app stores to really become stores there is a long way to go.
• Most of the services offered are actually not good enough. The services are actually not meeting a demand from a big enough market segment. Many developers are prepared to take a chance developing and launching a new service, but many times with limited knowledge about the market need or how to reach a specific target group. Most services should never have been developed and are just a waste of resources. Trial and error may many times be a quite costly way to determine if there is a true market need or not.
• There are very limited means to reach a specific target group. Many apps would probably be quite appreciated by a specific and limited group but there are not good enough support to make this happen. The logic is now mainly based on that the end user knows what she’s looking for or that she’s regarded as an average user offered the same as anyone else. There needs to be ways for the suppliers to target specific groups is a cost efficient way.
• Most services are not marketed at all. With the exception of established brands with existing marketing channels, the services are hardly marketed at all. You can hope for that you get some free PR, being mentioned in a popular blog or similar, but what are really the chances of getting attention among 100.000 apps without a know brand or a substantial marketing budget? I would say that they are quite slim.
• Recommendation is underdeveloped. As the number of apps grow to very high numbers it starts to become much harder to find what you are looking for. Search will help you to find what you know exist, while recommendations will help you find what you did not know existed or that you were looking for. The recommendation tools are today quite limited and recommendations are mainly found on online web sites. Seems like quite a detour.
• The app stores have a too wide scope. As the stores grow and the end users become more advanced there is a growing need for niche app stores or sites focusing on specific interests. You need to put the services in some kind of context which will also improve the marketing and PR possibilities significantly.
• Most apps are bad business. The business cases for most apps are rather optimistic. Far too little resources, if any, are allocated to marketing and with limited revenues further development and promotion of the service become quite a challenge. Even a very good app may be buried under piles of other less attractive services and with very limited possibility avoiding a slow death.

Is there a solution to the problem? From the app store owner perspective they need first to figure out what they want to achieve running a store. With the limited competition a warehouse approach may be ok for the time being. However, eventually the present app stores have to decide if they should stay as “app warehouses”, if they should develop into real managed niche stores or shopping malls. One may also question the sustainability of the business models and if there’s really a need for the app stores further down the road. If staying with the present strategy they need to strengthen the recommendation functionality and possibilities to involve the end user. There need also to be better possibilities for suppliers of apps to directly target specific customer segments.

As the app store owners presently are quite happy, advice given to the developing community may be more worthwhile:

• Add the chapter Marketing to your business plan. As we all know, no product will sell itself. Don’t rely on that the app store will market and sell your service. Partner up with known brands, market through existing channels and allocate resources and money for this.
• Address specific needs of a defined segment that you have the possibility to target. Do the homework. Is the market really big enough?
• See to that the service is good enough. Depending on addressed market you have to see to that you really fulfil the needs of that target group. Services giving a close to good enough experience for many but not really good enough for any, will hardly gain usage or loyalty.
• Enable viral marketing. Make sure a happy user can act as an ambassador for the service and recommend this within her network.
• Keep costs down and have a realistic view on the revenue potential. Make sure you have enough to develop a good enough product and to market it. Go for general platforms, such as UMIs, to avoid high additional costs redoing the same service in different versions for all different devices. Consider a browser based approach as opposed to the more costly and harder to manage app/client approach.
• Minimize your risk. Have a portfolio approach as it is very hard to predict what services that will really become successful. Calculate and prepare for that the majority of the services will fail.

Avoiding app stores turning into app graveyards – Part 1: So what’s the issue?

The development of app stores has been beyond anyone’s expectation. The key driver for the development the last 18 months has been the iPhone app store but similar concepts have been around for many years with services, such as Handango and GetJar, as well as many operator portals. The overall numbers are really impressive. There is today about 115,000 iPhone apps and more than 100 million downloads a month (incl. iPod Touch), while the second largest app store Get Jar, serving all types of mobile phones, has about 60,000 apps and 50 million downloads a month.

With close to 40 million iPhones sold the number of apps downloaded per user is on average quite high. Some claim that the number is as high as 11 apps per month and user, but I’m not really sure they got the math right. Anyhow, is this a gold mine for the developing community? We do have success stories but the app stores are now quite crowded. On average each app is downloaded about 1000 times a month. But looking at the usage patterns for free apps presented by Pinch Media only about 20 % return to the app a second time, only 5% return to the app after 25 days and after 90 days only 1% still use the app. Keep in mind that these numbers are all averages. Also taking into account that the top 1% of the apps in the larger app stores probably account for 90% of all downloads, then the numbers become quite disappointing for the majority of the apps not making it to the top. Most apps do probably not have more regular users than, well, those involved in developing them. Sad but probably true. The numerous launches of app stores by device manufacturers and mobile operators do expand the market but it also becomes quite fragmented. All different operating systems and specific demands result in that each app have to be made in many different versions, driving cost even further.

The likelihood that a new app after some initial attraction ends up in a close to zero down load frequency and that those initially downloading it stop using is, despite the over all success of the app stores, quite high. The app stores are turning into app graveyards for most new apps, buried under piles of more attractive apps and with very little possibility to gain visibility. Gaining visibility is a marketing issue but the limited stickiness of the services may indicate that most of the apps should never have been made as they do not meet a specific customer demand. Services with a limited but loyal segment are fine but with false expectations on future take up and revenues the cost levels are usually far too high for the development.

The term app graveyard has been used for clusters of apps that were not approved and never made it into the so attractive looking gated communities of the app stores. The question is if they actually have a better chance of succeeding outside the fence. The app stores may be fantastic and one of the most disruptive elements seen for quite a while within the mobile sphere, but please remember that they still can’t sell services that are not really marketed, nor sell services that actually do not meet a customer need.

Microsoft moves into the Universal Mobile Interface space launching OneApp

Microsoft announced a few days ago their launch of OneApp. OneApp is “a new software application that enables feature phones — commonly found in emerging markets — to access mobile apps such as Facebook, Twitter, Windows Live Messenger, and other popular apps and games.” Microsoft thereby aligns with the basic horizontal operating system independent structure of a UMI. The primary focus is on less smart phone penetrated emerging markets and the distribution will be through operator partnerships. First out is Blue Label Telecoms in South Africa.

It is very positive that Microsoft moves into this space and it will be really interesting to follow the progress. The trend that mobiles will rely more and more on cloud computing is clear and clients will be the tool to make this happen, even if they are quite complex to manage. It’s not really clear how Microsoft intend to play this game mid to long term but so far this UMI approach seems to miss some key elements of which the most important are that the services need to be operator independent to reach the full potential and that it has to be very simple and cost efficient to create applications for true long-tail content and services to become available. The business model would be interesting to know more about to evaluate the service fully. OneApp is part of Microsofts Unlimited Potential initiative aiming to “enable social and economic opportunity for everyone”. This is of course a good cause, but what is really the strategic agenda behind OneApp? Given the history, there will always be the suspicion that Microsoft this way try to create a virtual mobile operating system.

The launch of OneApp by Microsoft clearly shows that the UMI approach now gain acceptance and will be one very important way forward overcoming the present limitations of the mobile phones. We’ll follow this development with excitement.

Key considerations when choosing mobile marketing platform

Most retail chains and brand owners today investigate mobile marketing as a new way to improve customer interaction. A number of players offer different platforms for different elements of mobile marketing. It is not easy to understand pros and cons of the different options and what’s best for one company may be quite wrong for the other. There are some key questions to be answered before it’s possible to know what may be the best solution in a specific case. These questions are:

• What do we want to achieve on the market?
• Where are we now and what’s missing to be able to reach the marketing targets?
• How mature is my company and the targeted customer segment regarding digital marketing and mobile devices?
• How glossy and rich does the mobile experience need to be?
• How much can I allow this to cost per impression/interaction etc?
• How flexible should the chosen solution be, would I like to add new features and services?

The table compares different solutions for Internet based mobile market communication. The solutions compared are: web – just let customers brows the existing web site over the mobile; WAP – mobile format site based on WAP; own client – separate java client to be downloaded as any java client; app – application for an app store; UMI – integration of existing web services to a UMI platform. The properties listed are: user experience; no need for a client to be down loaded; look and feel; own development needed; initial cost; operational cost; flexible and can easily be upgraded with new functionality; time to market; addressable market; distribution efficiency – how easy is it to get customer to get started using the service.

As can be seen in the table there are some key considerations to make depending on the ambition level and the expected value of mobile marketing. My key point is of course to illustrate the strength of UMI compared to other alternatives. Whether UMI is the best option does however depend on what you would like to achieve. I feel that many companies rush into exploring the possibilities with mobile marketing without first really analysing what it is there to accomplish and how it supports the overall marketing strategy. I strongly recommend all to view mobile marketing as one out of many components in the marketing communication mix and also that all options are carefully considered to avoid unnecessary costs and getting stuck in a solution that is impossible develop further to meet future needs.

The right timing for mobile marketing

I just come from yet another meeting with a major consumer retail brand that would like to explore the potential of the mobile as a new channel to communicate with their customer base. I remember an executive in one of the leading European mobile operators stating: “Within two years all major brands will have mobile presence – or they will not exist”. This was about three years ago but seems today as a rather relevant statement.

There is today a general enthusiasm over mobile marketing combined with a healthy awareness regarding the limitations. The initial a bit naïve view that just doing an app will solve my needs as a brand to reach the technically advanced customers, have now matured into understanding what can be achieved but also that this is not just about doing an app.

Looking at mobile marketing successes in the past, they are mainly sms-based campaigns. But this is not a scalable approach. If we should redirect marketing spending to this type of activities then each consumer will be spammed far beyond what anyone can accept, eventually totally killing the opportunities. Will then moving from the sms-approach to the app solve the issue?

Moving into an app-approach is mainly to extend the present web marketing with a mobile extension but with some pros and cons. You then get the same issues as on the web like: how do I become visible and searchable; how to incentivise customers to return frequently to my digital shop; the need to log in to get there personal offers; etc. The mobile do except for its given limitations also bring some additional values like: the mobile is always accompanying the consumer, all offers can be reachable from the mobile when on the move as well as club memberships; you get a strong tool for viral marketing campaigns; etc. Mobile marketing has a fantastic potential but sms-campaigns and apps are not the complete solution. We need to find ways to extend the present web into the mobile and taking advantage of the unique benefits of the mobile, but without ending up in an app jungle.

Coming back to the consumer retail brand and their ambitions. What do they ask for? They want to explore the mobile as a new communication and marketing channel for their key customers. They want to be able to reach all customers irrespectively of what phones and what operator they have. They want to have simple solutions based on existing web services and functionality and that they can manage real time themselves without involving it-departments or consultants. This all sound very reasonable and is essential to get this to work. What they ask for is a Universal Mobile Interface.

Finally some general advice to those that plan to utilise mobile marketing:

• The mobile channel will not replace print and web but will act as a complement to the existing channels.
• Mobile marketing will initially attract a limited but growing segment of the customer base.
• Base the mobile solution on the present web services and do not build a separate mobile system.
• Incentivise and educate the customer base to gradually move from print to digital channels.
• The content on the site needs to be updated even more frequently on a mobile site. A “dead site” will immediately loose the attention of the consumer.
• Build in viral elements such as mobile to mobile coupon distribution.
• Choose scalable solutions that have the potential to reach and be used by the majority of the customer base.
• Start with limited pilots gaining experience and avoiding disappointing customers with immature services.

App Stores – Unleashing the mobile potential or building yet more barriers

At 3GSM World Congress in Barcelona last week a number of initiatives were announced to meet or copy the success of the iPhone.
There are new fantastic UIs, big touch screens and each device with an app store. Looking at the agendas of operators, device manufacturers and games providers etc., I can conclude that many would like to capitalise on their position and now see the app stores as an interesting way to be part of the new mobile trend.
But don’t they miss part of the point here? Is it just to set up an app store and dress the old phone in a new nice UI/touch screen rapping?

If we extrapolate the present trend we end up in a situation with a lot of app stores but does this really meet the needs of the end user and the content providers?
Do we expect end users to accept that whatever apps I buy and install they are lost when I change device manufacturer?
And what about the content providers, do we expect them to make one version of there application for each different operating system?
Even a player like Facebook, (see the clip from Davos) complain about the situation and can’t accept this situation. The new app store hysteria will thereby build yet another barrier for really getting the true potential out of the mobile.

Only few players will have the incentive to be on all these app store and to do what’s necessary to manage this. Then we miss one key element to make the new mobile services valuable to the end user, being that I want to choose my content and applications independently of device brand or operator.
As all these app stores will be based on a number of operating systems, this will for sure limit the application and content richness.
To really get the true value out of the mobile more or less the full long-tail of content has to be available and to make that happen it has to be easy and efficient for content providers to get their stuff out on all mobile platforms.
There is a need for device and operator independent solutions to really unleashing the potential, but unfortunately the present development seems quite the opposite.