Did the iPhone SDK mean Apple will corner the Anywhere device market?

GottaBeMobile.com has an interesting claim that Apple's SDK announcement yesterday may have an unexpected result:

Apple opened a big door with the announcement and shut quite a few others in the process. Apple not only took the UMPC/MID market away, it will own mobile for some time to come, with everyone else playing catch up. The race to the top is over. Now everyone else can scramble to figure out who is number two.

[From GottaBeMobile.com]

So here's how I'm going to gauge whether this is happening or not: track the sales of Asus Eee PC at Amazon. If they fall off a cliff, Apple killed the segment. But given the incredible diversity of developers and users, some of whom have not interest in iPhones or Apple, I suspect they'll do just fine. The key to thinking about Anywhere products is that people have many different requirements for how they will use and buy mobile devices. No one company can meet all those needs, no matter how wonderful the device.

Of course, that doesn't mean that Apple won't make a whole lot of money trying.

Apple knows how to launch a platform

I'm in the midst of writing an analysis piece for Yankee about what Apple's announcement of its iPhone Software Development Kit means for enterprises. But here's the short version:

Apple just showed everyone how to grow a developer ecosystem.

Apple kicked off the announcement by giving enterprises features they had requested to approve iPhone uses in business, including:

• Microsoft ActiveSync built in for secure push email and remote wipe and Exchange integration,
• 802.1x and WPA2 WiFi security,
• Cisco VPN support for secure communication

But then Apple kicked things up a notch with the SDK details, which included:

• Complete integration with Apple's existing developer framework, Xcode,
• Performance analysis tools to make apps run fast on the iPhone
• Access to nearly every API on the device, including OpenGL, multi-touch, WiFi, accelerometers
• A full iPhone simulator to help with debugging.

Just to prove this wasn't hype, Apple gave the SDK to a group of companies for about two weeks to see what they could do with it. Each of those companies created versions of their applications in that time, including Electronic Arts' Spore, Salesforce's Salesforce Automation Epocrates's instant messenger, Epocrates' Drug Identifier, and Sega's Super Monkey Ball. Not bad for two weeks of work.

But the real surprise was Apple's efforts to market and develop an ecosystem for third-party iPhone development. Marketing and distribution terms were:

• All third-party applications will be distributed through a new iPhone AppStore. Developers wishing to do so pay a $99 fee, but can set their own prices for their apps, including free should they choose to do so.
• iTunes will have a part of its store dedicated to third-party apps and promoting the top downloads. Developers get 70% of revenues for paid apps.
• Kleiner Perkins is launching a $100 million iFund to fund iPhone developer companies. That means money shouldn't be a barrier to getting an great third-party iPhone software business off the ground.

Now I know that not everyone will agree with all the details, and I think everyone expected Apple to seed iPhone development with its SDK. But what Apple actually did is till the ground for development with enterprise features, seed it with the SDK, water it with marketing and distribution, and fertilize it with cash. If third-party apps don't grow with that kind of support, nothing will.

Working Anywhere: today it's the hospital

I'm try to take the title of this blog -- Notes From Anywhere -- seriously and blog from wherever I happen to be most days. Today, I'm in Emerson Hospital in Concord accompanying my son who is in for X-rays. The hospital accommodatingly provides guest WiFi, so I can work from the waiting area. I'm not sure this is necessarily a giant step forward, but it is handy for staying in touch.

I remember once advising a hospital client about WiFi wireless networks when they were new. Being an old radio and RF guy, I cautioned them not to introduce new wireless technologies into their environment without doing careful interference testing with life-support systems and other critical hospital gear. The guy looked at me with an amused look, and said, "You don't understand -- we already have the wireless networks; we just want to know how to manage them." Oops. So much for the all-knowing analyst.

Today, hospitals have nearly as many computers and networks as they do patients. Some patients even get WiFi in their rooms so they can stay in touch with family and friends. And visitors like me can work from waiting areas with guest WiFi. And why not? After all, you can be sick Anywhere.

Anywhere apps get a choice of development tools

Today, I'm thinking about two news items this week as I am researching mobile Web site development for my upcoming report:

• The Apple announcement that it will release its iPhone SDK and roadmap on March 6, and
• A blog post by Michael Mace writing the obituary of native mobile phone apps called Mobile applications, RIP

These two news items reflect the two camps I've talked to about Mobile Web sites. One camp believes that native mobile applications are the only way to get the responsiveness and integration needed for a great mobile experience. In the other camp, though, are a large group of people who believe that the mobile Web will evolve to capture the lion's share of mobile user attention, just as it has on the desktop.

Just like with desktop and laptop computers, I don't think mobile app development will ever be a completely "either-or" proposition; I think we'll see Web AND native app development. For example, if you want to edit photos you've loaded on our laptop, you can edit them either using a desktop app like iPhoto or Photoshop (assuming you have them installed), or you can edit them online using Snipshot.com, Picnik.com, fotoflexer.com and a host of others (assuming you have enough online access available). So why would we expect Anywhere mobile applications to be any different? Some applications will require dedicated native software, others will make more sense on the Web. Both approaches work.

Of course, Apple has already figured this out. Last year, it touted using Web technology to develop iPhone apps. This year, they're announcing the native iPhone SDK. Developers will get to choose which approach meets their customers' Anywhere needs best. The open question is which approach will generate the most excitement and enthusiasm for the platform. And while native apps have always held the edge in prior platforms like Palm and RIM devices, those platforms didn't boast browsers that were as a capable as the iPhone's. Only time will tell which tools developers will choose as their favorites, but at least developers will have the choice.

Apple's Anywhere iPhone

Apple's invitations to an event on March 6 to discuss the Apple Software Development Kit for the iPhone generated several Apple inquiries around here, and Apple COO Tim Cook's talk yesterday at the Goldman Sachs event added more fuel to the story. I thought I'd take a break from my usual "Anywhere all the time" writing, and just pass on some of the data and answers I've been providing to reporters.

• Has the iPhone wave peaked? No; in fact, I would argue that the iPhone phenomenon has just gotten started. The Apple iPhone is truly an Anywhere phone, putting communication, media, and Internet content in the palm of nearly anyone's hand anywhere in the world and on (mostly) any GSM network. Despite the iPhone only being available for sale in four countries, it's being used today in more than 100. This adoption is amazing because no official native third-party apps have been released and the device is a version 1.0 device, Apple's first effort in a market most pundits said it could never succeed in. Imagine what sales will look like when there are official distribution channels in more than four countries, when third party developers can create new iPhone applications, and when Apple has version 2.0 and 3.0 devices in the market.
• Are iPhone unlockers hurting Apple? I think this idea is way overblown. Apple receives full retail price and full retail profits for every phone it sells, locked or unlocked. The device is profitable by itself, regardless of whether it gets carrier revenue sharing or not. Further, the fact that Apple is doing carrier exclusive deals now doesn't mean it is wedded to that model, a point Tim Cook made in his presentation. So everyone who is claiming Apple is "losing" $1 billion due to unlocked phones is simply noting problems with their own models of Apple's business, not Apple's. Apple of course doesn't acknowledge or report any revenues from carriers associated with the iPhones, so any numbers or losses you hear about those are inferred speculation, not facts.
• Does Apple need to cut prices on its Iphone? Not in the least. Apple has no intent of chasing Motorola to see who can lose more money on phones in a futile attempt to gain market share. Market share isn't the name of Apple's game; consistent and growing profits are. Apple's brand says to nearly everyone in the world that its products are fashionable, easy-to-use, and a bit exclusive. Apple competing only on price would be like BMW cutting prices on its cars so they can be distributed through Wal-Mart; it would be marketing suicide.
  
  In my opinion, Apple's game plan on its Anywhere phone will likely mirror that of iPods. iPods started with one model and then gradually branched out to three or four of them (depending on whether you consider the iPod touch to be an iPod or a low-end iPhone). Even today, the 16 GByte iPod touch sells for the same price as the original iPod introduced in 2001. People should expect there to be both cheaper and more expensive iPhones over time, but that the target price points for the iPhone with touch screens and Internet capabilities will remain what they are today.
• Is Apple going to make its iPhone goal of 10 million phones by the end of 2008? Yes. Apple doesn't provide goals if it doesn't think it can both make and exceed them. While the economy and consumer spending are throwing up some roadblocks, I see Apple easily exceeding that goal by about 25% by the end of calendar 2008. And in case anyone was confused, that's the benchmark that Steve Jobs set: 10 million phones by the end of 2008, not 10 million phones in the first year of sales or the first fiscal year.

The bottom line: as the buzz at the Mobile World Congress proved, Apple changed the mobile phone market worldwide with its first and uncertain effort in a new market. Just as it did with computers, Apple isn't playing a market share game; it's building mind share. And while there only officially successful in a few countries today, imagine what will happen when they are Anywhere.