[Here's a bonus TiPb of the Iceberg for you this week, courtesy of the humongous news coming out of Apple's Quarterly Conference Call]
Tuesday's news that the iPhone has been selling
well stupendously well, in case you weren't paying attention, was really big. It's tough to express how big. Some of the bullet points:
- They exceeded their sales goal of 10 million iPhones in 2008 already, with the holiday season still ahead of them
- They sold nearly 7 million iPhones in three months.
- They sold more iPhones than RIM sold BlackBerrys (yes, that's the proper plural spelling)
- Based on revenue from iPhones, Apple was the #3 cellphone maker last quarter, behind only Nokia and Samsung.
- They achieved all this in 15 months.
Now, there are caveats to these numbers: there was pent-up demand for the iPhone 3G so these numbers almost surely won't hold; RIM's sales were depressed because of delays releasing the BlackBerry Bold. Don't let these caveats mislead you, though, what Apple did with the iPhone 3G in the past three months is unprecedented in the mobile industry, it was pretty much unprecedented in any industry.
The most recent numbers we have show that RIM and the BlackBerry enjoy the undisputed lead in US Smartphone marketshare, while Nokia has the undisputed lead worldwide. Apple may have its work cut out for it going after Nokia, but it seems very clear that they are on track to seriously challenge RIM in the US market.
What's amazing about that possibility is that RIM and Apple have very divergent strategies. RIM has dozens of different BlackBerry models aimed at nearly every demographic imaginable: from the Pearl Flip and Pearl for the low end all the way up to the Bold and Storm for the high end. They have phones available on every carrier. Most importantly, they have practically locked-up the enterprise market and are as effective as anybody (but Apple, perhaps) at targeting the consumer market.
To counter that broad, multi-pronged strategy, Apple has one model on a single carrier. Steve Jobs:
Well, I wasn’t alive then but from everything I heard, Babe Ruth had only one homerun, he just kept hitting it over and over again. So I don’t think that -- I think the traditional game in the phone market has been to produce a voice phone in a hundred different varieties. But as software starts to become the differentiating technology of this product category, I think that people are going to find that a hundred variations presented to a software developer is not very enticing and most of the competitors in this phone business do not really have much experience in a software platform business. So we are extremely comfortable with our strategy, our product strategy going forward and we approach it as a software platform company, which is pretty different than most of our competitors. [Seeking Alpha]
Apple's dedicated to presenting the iPhone as a single platform as much as possible. That strategy appears to be working. Not only is it easier for developers to target a single device (or, if they do indeed introduce an iPhone HD, a single device with multiple resolutions), it's radically easier for Apple to continue to develop the platform.
RIM's platform challenges are much bigger. As Mike and I discussed in this week's Podcast (forthcoming!), RIM's BlackBerry Operating System may need to be completely overhauled in the coming years, but the recent BB Developer Conference did show that it has more legs than I previously gave it credit for. Still, BlackBerrys have a confusing array of Operating System versions that vary from device to device, from carrier to carrier, and from region to region. On top of that, they've recently added the Storm to the mix, which features a touchscreen and requires a different UI.
Although RIM does have an aggressive development roadmap that's clearly a response to Apple, it remains to be seen if they'll be able to roll out their improvements quickly enough to counter the iPhone onslaught.
In short -- Apple has not only hit the ground
running like a Formula 1 racer, they also are not towing a trailer full of backwards compatibility and multiple-device compatibility issues. If this were the entire story, I would have little hesitation in simply saying "Game Over, Apple Wins."
But there is one area where Apple is still going to have a tough time of it: the enterprise market. There are a couple of reasons for this, but both of them have to do with companies feeling 'locked in' to the BlackBerry ecosystem. The first (and perhaps smaller) lock-in is BlackBerry Messenger, a BlackBerry-specific IM-like protocol that does indeed see heavy use. Our friend CrackBerry Kevin noted that while he was in New York he met a ton of people who purchased BlackBerrys specifically so they would be "in" with all the Wall Street types who use this form of communication extensively.
The second, and bigger, lock-in is the array of features tied to the BlackBerry Enterprise Server and BlackBerry Internet Server (BES and BIS). This includes not only push email and PIM, but comprehensive device management, enterprise applications, and (soon) a protocol to push any information whatsoever to a BlackBerry (much like Apple's now-late push notifications). Much has been said about the iPhone's Exchange support, but push email via Exchange isn't a magic bullet. In fact, Microsoft's Windows Mobile has had Exchange support for several years now and they recently introduced MSCMDM, which offers comparable device management to the BES. These features haven't so much helped Windows Mobile gain traction as they have helped stem the bleeding. Of course, we can have another discussion about why Windows Mobile isn't gaining traction against RIM (Hello UI), but for now I'll just make the smaller point that simple Exchange integration doesn't cut it.
Apple also has not traditionally be able to 'get' enterprise on the Mac front either -- fundamentally many see them as a company that's not focused on the enterprise. That may continue to be the case -- in fact I think it will be -- so don't expect RIM to be forced to close up shop as quickly as Apple has established themselves. This is a fight that will go on for awhile.
Wither Symbian, Windows Mobile, Palm, and Android? I honestly believe all of the above have the potential to become more than 15%-ish players in the US smartphone market, but I don't think any of them will be able to pull it off in the next year or so. Heck, even if they never pull it off, 15% of the US smartphone market is totally legitimate given its rapid growth. But for right now, the big boys are Apple and RIM.
One last thing to mention: as John Gruber notes in his excellent analysis, if you dig a bit into the numbers it becomes clear that the iPhone is soon going to be Apple's biggest business and the platform will soon become their most important platform:
So the question is: Despite continuing strong iPod sales and record-breaking Mac sales, how long until the iPhone is undeniably the primary product and platform made by Apple?
My answer: Not long.
And I think Apple’s executive team sees it the same way.
Agreed. Looking back, it's amazing we didn't see this coming the moment Mac OSX became a great platform with 10.2. The Mac is an elegant operating system with a creative and engaged developer community; it's only sold on incredibly good hardware; it 'just works' and rarely crashes. That's exactly what has long been needed in the smartphone market.
Whereas the Mac faces a market where the superstructural elements prevent it from rapidly gaining marketshare, the smartphone market is much more fluid. It's no surprise that the iPhone is coming on strong when you think of it in this light. It seems surprising because we assume that the smartphone market is like any other market that has come before -- it's not. People can switch phones more easily than they can switch computers if only because of the lower prices, and they do.
Companies are different, though, they hold on to their platforms -- both PC and Smartphone -- for 4-5 years before they consider a change. Now that we have number portability, the last real thing keeping people from switching smartphone platforms every few years is Enterprise lock-in. RIM's managed to get it, Microsoft less so, and so the question becomes twofold:
- Will that lock-in hold?
- If the iPhone can't crack Enterprise, will the consumer / small business market be enough to push them up to #1?
The answers are "For at least a few years" and "Yes."
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