Mobile Entertainment

Now, it’s not entirely fair to compare the two totals. Apple achieved its sales via a handful of operatorss and one device. But, then, that was a deliberate strategy. And what a controversial one, especially when it emerged that Apple was sharing voice revenues with operators. That set an interesting precedent for both handset vendors and carriers.

As for the new iPhone 3G and the longer-term, let’s add to the conversation with some comments from the Mobile Entertainment magazine editorial board…

Q. Has the iPhone been a good thing for the mobile content business?

Hugh Griffiths (MSN Mobile): Generally yes. It has made browsing much easier and in doing so introduced new users to the mobile internet, while extending the usage of existing users.

Dave Evans (SurfKitchen): Not really for sellers of ringtones, wallpapers and games. They’re not particularly relevant to the iPhone. However, it has shown how to achieve high service usage through flat rate data.

Ray de Silva (Vodafone): The positive impact on the content industry may be even further away given that to date apps have been offered by Apple for free, which means that only browsing revenues are created – all of which is shared between the MNO and Apple.

Dave Moreau (Fonestarz): It has set the benchmark for functionality but has been limited in its ability to download content from anywhere else other than iTunes.

Andrew Bud (mBlox): Undoubtedly. It has focused attention on the phone as an entertainment device, and shown how much good UI matters.

Anil Malhotra (Bango): It’s made no difference. Mobile content doesn’t work on the iPhone because it can’t use the features of the mobile web to identify users. Some companies think they may not need a mobile site and that their web site will work fine on iPhone. It doesn’t. It doesn’t look good on screen and the site will support features (Flash, print commands, etc.) that don’t make sense on mobile.

Q. What’s iPhone’s best feature?

Andrew Bud: The wonderful ‘pinch and stretch’ web page scale changer.

Anil Malhotra: The graphical quality. The UI is very Apple – nice to play with and look at, but like a Bang and Olufsen hi-fi system it’s a victory of style over substance.

Dave Evans: From an end-user point of view it’s the coherence of the package – browsing, email, SMS, YouTube, etc all just work as you would expect them to.

Q. And its worst?

Dave Moreau: There are better devices in terms of phone functionality and keyboards. Actually, the iPod Touch gives me everything I need from such a device.

Hugh Griffiths: The screen constantly requires wiping as it gets dirty unless it’s kept in a case.

Andrew Bud: The appalling SMS application.

Dave Evans: Restrictive licensing for third party applications. This restricts choice to the end-user or forces them to jailbreak their phone to get their hands on that content.

Anil Malhotra: It’s a locked phone.

Q. How has iPhone impacted the other handset companies?

Hugh Griffiths: It will raise the bar in UI and accessibility/discoverability.

Ray de Silva: They’re all looking at the $384 million that Apple pocketed in the last full financial year from operator payments as a big motivator for change.

Andrew Bud: It has given them much needed stimulus in terms of user interface. The fact that Apple was able to extract revenue share on voice calls must have been truly shocking to even the biggest vendors.

Anil Malhotra: They will have to think about usability. The features on Nokia handsets are better but the UI isn’t great and needs to improve. Expect a robust response from the Asian manufacturers especially.

Q. What strategy do you expect Apple to pursue going forward?

Hugh Griffiths: I would expect it to continue the high prices and exclusivity angle.

Andrew Bud: A great deal of its value must be the glory reflected onto the iPod Touch, and I expect to see vigour applied to that product.

Dave Moreau: It will be interesting to see if Apple continues to insist on iTunes-only OTA content downloads via wi-fi.

Anil Malhotra: It’ll do what it usually does, which is variations on one design, repurposed for different budgets. iPhone will be a niche product with a loyal customer base willing to pay the premium. Expect it to be popular with designers and gay people, like other Apple products.

Dave Evans: The usual strategy of incremental improvement, and further segmentation. I would expect to see lower end devices becoming available.

Ray de Silva: It has to (and now is) widening its distribution model. Hence Vodafone’s announcement last month.

Q. Will iTunes become a viable storefront for OTA mobile content, rather than just sideloaded music?

Anil Malhotra: Probably not, because Apple only has rights to distribute music through the iTunes model in a number of cases. If the iPhone footprint gets big enough, maybe.

Hugh Griffiths: I think downloadable music is a niche and that sideloading will be the ‘norm’. I don’t see the iPhone really changing that model.

Ray de Silva: The reality is that Apple’s model drives sideloading. I don’t see this changing in the near future even with the introduction of a 3G device.

Dave Evans: I can see opportunities for over-the-air mobile content as part of an on-device portal on the iPhone from, from either operators or dedicated off-deck providers. For example, the iPhone would be an ideal platform for an on-demand movie rental company.

Dave Moreau: Over-the-air downloading via wi-fi rather than over the mobile internet will strangle the proposition.

Andrew Bud: Apple’s discontent with traditional operator revenue share models is well-known. But the iPhone is still too small a phenomenon to have a material impact on the business model of the big D2C players, and the issue of data charging models may bear on iPhone in future.

Roundtable participants:
Anil Malhotra, SVP of marketing and alliances, Bango
Hugh Griffiths, director of mobile, Online Services Group, Microsoft UK
Dave Moreau, CEO, Fonestarz
Andrew Bud, chairman, mBlox
Dave Evans, CTO, Surfkitchen
Ray de Silva, principal product manager, Vodafone Group