iPHONE 3.0: 2 MONTHS ON, POST-HYPE

I recently bought my son a new iPhone 3G, a month after they first went on sale, and buying it then was a bit less painful than buying it the first day. The first day was like attending the premier of Batman: The Dark Knight. And as the Dark Knight has made $500M as of this writing, Apple is still selling a lot of iPhones.

So, what is the experience of the iPhone 3G, now 8 weeks later, after the initial thrill of excitement, post-hype, after the reality distortion sphere has dissipated?

Here is the good, the bad, and the ugly

The Good

This launch has been very good for Apple in terms of revenue and market share growth. “iPhone 3G had a stunning opening weekend,” said Steve Jobs, Apple’s chief executive, in a statement.

• iPhone sales statistics:

1M first weekend

3M in the first month

8M iPhones? At this time, Apple had manufactured at least 5,649,000 iPhone 3Gs. Added to the 2.4 million first-generation iPhones the company reported it had sold in the first six months of 2008, that means that Apple has manufactured more than 8 million iPhones this year. In 2007, Apple sold 3.71 million iPhones.

Overall, the experience of buying an iPhone 3G, while in high demand initially, was pleasant and made easier by Apple’s convenient iPhone availability widget.

• AppStore:

There were 60 million downloads in the first 30 days, admittedly mostly for free apps, but with about $30 million in revenue, and a runway of 3 million more new iPhones out there to run them on.

The iPhone is a small part of Apple’s business — only 5% of its overall sales in the latest quarter. Macintosh computers and iPods typically generate 75% of Apple’s revenue. But iPhones are hugely profitable. By some estimates, Apple stands to make between $100 and $400 on each new iPhone sold, depending on the model (8 or 16GB) and wireless carrier.

Although Apple has less than 1 percent of the overall cell phone market, it has 19.2 percent share in U.S. smart phones, which pack more functions. That put it ahead of Palm, which had 13.4 percent, but far behind RIM’s 44.5 percent, according to research firm IDC. And the less than successful launch of Apple’s MobileMe “cloud” offering has made predictions of the demise of RIM’s BlackBerry seem rather premature.

The Bad

• iPhone 2.0 software

While there are many new features in the long awaited 2.0 firmware update, available on the first generation iPhone as well, there seem to be a number of steps backward as well. Some of the iPhone core applications are less stable, with the Mobile Safari crashing regularly when it didn’t do that with the 1.0 software. There are still some persistent and vexing features missing: copy and paste within and across applications or global search — it’s available only in Phone/Contacts.

Additionally, core applications have shown sluggish performance, slow typing, as well as clunky scrolling and Safari rotation. The 2.0.2 version update of software has addressed some problems, but not all.

• 1.0 Apps

While there are many fine 3rd party applications available in the AppStore, they are by definition 1.0 versions. Because there is no Apple-supported universal beta or try-and-by program in the AppStore, these apps don’t have the testing that most usual applications enjoy. Some are quite immature. Many of them are unstable and crash regularly. And when they do, they can lock up the entire iPhone. Steve Jobs said he’s look into it.

• Where are the AppStore “killer apps?”

Applications that one would expect, that are common on other platforms like Palm’s Treo or Windows Mobile phones are still missing in action on the iPhone. Here are the two most obvious:

Office documents: while you can view Microsoft Office and Mac iWork documents, you can neither edit nor create them on the iPhone.

Turn-by-turn navigation: the GPS feature on the iPhone 3G is very nice — though a battery killer — and on the iPhone’s native Google Maps is wonderful to behold. But Google Maps directions are not known for their accuracy. And while it works in a pinch, it is not the same as turn-by-turn navigation. While a number of popular vendors have mentioned intentions or successful porting to the iPhone, there have been no release announcements or available products at this time.

• Suggested Apps

Here are a couple of potential Apps that I know would be immensely popular:

Typing shortcuts: the iPhone keyboard does not allow one to type as fast as on a physical keyboard like the “thumb boards” on the Treo, BlackBerry, or other smartphones. And while it does have an auto-correction feature called “keyboard dictionary”, I’d like to see the availability of an app that does either predictive typing (T9) or “macro” shortcuts — think “.sig” for your signature.

Speed navigation: moving around the iPhones apps mean a trip through the “Home” button before moving to the next app. And drilling through menus even within an application can take a lot of time. Changing email accounts takes 4 “clicks”, toggling BlueTooth or 3G on/off also takes 4, email account modifications take more. Either a gesturing system or an imaginative use of the “hard buttons” would be greatly welcomed.

The Ugly

Here are a couple of things that detracted from the huge media event of 8 weeks ago, both of which persist.

• MobileMe

This long awaited enhancement to the dusty .Mac service got off to a rocky start the first day, lifted off, crashed, was rumored to be fixed, but alas, no. Apple has as much as admitted it wasn’t ready, and no longer promotes it as it was originally stated “Exchange for the rest of us.”

Steve Jobs said in an Apple internal memo in August:

It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store. We all had more than enough to do, and MobileMe could have been delayed without consequence.

This appeared to be a back-end infrastructure problem, at least on the first day during what has been called the iPocalypse. Why Apple did not take advantage of VMware Fusion technology to avoid the server meltdown earlier, is hard to understand. But MobileMe still isn’t performing as expected. iPhone updates “to the cloud” is occasionally near instantaneous, if you have “Push” turned on in Settings — another real battery killer — but synchronization with iCal/Address Book is at best 15 minutes out.

To that end, Apple has twice offered extensions to users’ annual contract, first one month, the second time two months.

• Battery Life

My personal biggest complaint is the battery life. While Steve Job’s launch said the battery in the 3G is superior to the 1st generation, that has not been my experience, nor that of most of the people I know and correspond with. While it may be the case that the battery is better than the 1st Gen when both devices are in standby mode, the new iPhone 3G has capabilities that the 1st doesn’t, and one or more of those may be the culprit. Here are some examples:

GPS radio: I’ve seen this feature run a device dry, even when plugged into a car lighter charger. I now usually leave “Location Services” off.

3G radio: AT&T’s coverage maps is, shall we say, wildly optimistic. I live in the coverage area, but only get one 1 bar. Not all locations in the country get coverage, I usually leave this off.

“Push” email: Microsoft Exchange, and even MobileMe support pushing email to the iPhone, but this can run down the battery faster. I only push Exchange.

3rd party apps: some of these are location-aware — which turns on the GPS to find your location — others apps connect to Web servers. I suspect some buggy versions are a battery culprit.

Bottom line: is it a keeper? Sure. I trust that upcoming firmware upgrades address some of these issues, more stable apps are less sloppy in their use of memory and battery, and that some killer apps do come over the horizon.

Thanks for coming along.

BillPetro.com

iPHONE 3G LAUNCH: A TALE OF TWO CITIES AND TWO VENDORS

Remember the old Far Side cartoon that shows a couple thinking about each other — with the commentary “Same planet, two different worlds”? That was the sense of the first day the iPhone 3G went on sale in the US.

It seemed that the two partners — AT&T, the exclusive carrier in the US, and Apple, the creator of the new device — had no idea of what the other was doing. AT&T referred customers to Apple, and vice-versa. Most of the AT&T stores sold out of stock early the first day, Apple had stock well into the evening. This is the story of the AT&T Store in Colorado Springs and the Apple Store in Denver, Colorado.

Folks started showing up at the AT&T store in Colorado Springs around noon the day before the new iPhone 3G went on sale. Calls to the store the day ahead said they were prepared, following their experience selling the iPhone 1.0 a year earlier. However, they sold out an hour and a half after opening. Police appeared when the natives became restless after they heard that they couldn’t get a “rain check” for additional phones that would come later, but could happily order and pay for a device they’d get in 7 to 10 days. When asked, the store manager said that the Police were there for her protection. She said this out loud?

The more popular 16GB device sold out early, to a person who had been standing in line since 4:45 am that morning. A number of folks where there to get their 1st generation iPhone “unbricked” as they’d installed the pre-release version of iPhone 2.0 software the day before and their device was now unusable. Alas, no joy for them as the manager didn’t know what a “brick” was.

Some of the iPhone Phans headed north to Denver, to the main Apple store in Colorado. Their experience was very different indeed. While the line was quite long, the Apple employees made the wait fun. Indeed, while waiting and participating in the “gallows humor” associated with such a long line, the following table of comparisons between the two stores was developed:

The Apple employees came by from time to time with a cart filled with soda, water, candy, chips, and nuts. Medical application of chocolate can be a strong palliative and it appeared with abundance. The Apple Store is located in the Cherry Hill Mall in Denver, the most high-end mall in the state and a busy mall on any day. Other provender could be obtained by foraging, including pizza and Mrs. Fields cookies.

The mood in the rather long line was high — this was a media event. Nothing like it has occurrence except a movie debut or a new music album release… or a new video game release could compare. But this was just a phone — or was it? Comments like this got mock stern looks from the Apple employees working the lines an comments like “You, out of line!” Regular nervous requests to these employees of whether they’d have the coveted 16GB model were met with “We have enough.”

As people got to the front of the line, some having waited for 7 hours, they’d be escorted into the Apple Store. These entrances were accompanied by cheers from those in line behind them knowing that their turn was coming up next. Ben was the Apple employee extraordinaire who performed this duty with good humor and grace. Inside the store there were a number of stations where numerous orange t-shirted Apple employees quickly and efficiently processed and fulfilled the order. They would ask a series of questions to understand any special circumstances. If you had a special AT&T contract though, they’d have to forward you over to the “specialists” at the Genius Bar. If, for example, you had a special company discount on your AT&T contract they could not apply the new iPhone 3G to that contract. However, they were MOST careful to make sure people left the store with a new iPhone — much more motivated than an AT&T employee — and made numerous calls to insure that. A suggestion to a customer that they could buy it more efficiently with the discount applied if they went to the AT&T store elicited a “been there, done that, they’re sold out” (see above) did not daunt them, and they found a way to address the special need. This was customer service par excellance.

Is it the iPocalypse?

The first day of the iPhone launch has been called the iPocalypse as device activation often failed, especially earlier in the day. This was caused by a “perfect storm” of several factors, all on the same day.

• To minimize jailbreaking 3G iPhones — unlocking devices to run on other carriers, a common occurrence on an estimated 20% of the 1st generation iPhones — AT&T and Apple required that all new 3G iPhones be activated in the store before departure. And this practice was to be carried out worldwide, as the new device was being sold in countries other than the US. This put a considerable strain on Apple’s iTunes servers, which did the activation.

• The new iTunes and iPhone 2.0 software (discussed in my previous article) were released on this day for download from Apple’s servers.

• The Apple AppStore debuted on the same day, putting an enormous strain on Apple’s servers as people downloaded many new iPhone apps.

• MobileMe, the new incarnation of the .Mac service, debuted on the same day putting an incredible strain on Apple’s servers.

Are you seeing the trend here?

I’ll discuss this more in my next article: the iPhone 3G experience, post-hype, some 8 weeks later.

Thanks for coming along,

BillPetro.com

Christmas came a day early for iPhone Phans. They were expecting the iPhone 2.0 firmware update on July 11, but it became available for download (if you knew where) along with the new MobileMe software (ditto) and early adopters were updating their iTunes software to version 7.7 and examining the new AppStore (discussed below), which is already online.

I’m not talking about the new iPhone 3G device, which debuts tomorrow, rather the iPhone 2.0 firmware update — which will also run on the 3G by the way. iPhone 2.0 runs on today’s iPhone version 1.0 device.

AppStore

More than 550 applications are available at opening, 130 of them are free. The iPhone Phaithful began downloading these applications this morning.

• Prices: $0 – $69.99
• Free: about 25% pf apps
• $0.99 – $9.99: about 70% of apps
• Over $9.99: about 6% of apps

The selection of applications at the AppStore range from the sublime to the silly.

For the sublime, Epocrates Rx is highly valued by physicians and is indespensible in their moving from the Palm, Windows Mobile, or BlackBerry platforms — to the iPhone.

On the silly side, PhoneSaber is a little application that allows you to display a lightsabre, in your choice of color — upon your iPhone screen — and when you move and rotate your iPhone, it makes the renown Star Wars lightsabre sound. But it’s cool.

Loopt on the other hand, is one of the first of many location-based social media applications. There are over half a dozen presently on the AppStore, including MySpace, Facebook, and Twitterific (for Twitter) but this one ties in friends and location in new and innovative ways — as was shown at the Steve Jobs announcement at the recent Apple WWDC.

Remote, which has become popular in the first day, is an application that allows you to control iTunes remotely via WiFi. The iPhone is becoming a universal remote, software utility belt, and information treasury.

Applications drive volume in attracting both developers and consumers to a new platform. Windows Mobile has many applications available for smartphones, the Palm platform has thousands of applications. For Apple to jump in to this market with over 500 applications on the first day is remarkable. Many have complained that it took Apple a year to open up the platform. Those who couldn’t wait would “jailbreak” their iPhone to install 3rd party apps. But now there is a remarkably easy and attractive way to select, download, and install free or inexpensive software applications for this device. In addition to syncing from iTunes, applications can be downloaded and installed over-the-air from the AppStore application on the iPhone.

Installation

Installing the iPhone 2.0 firmware update is quite straightforward. After downloading it through iTunes — which you’ll first want to update to version 7.7 — you install the firmware update to the iPhone. You have a choice of “wiping” the iPhone clean, or installing it and retaining all your settings. I elected the former, as I wanted a pristine device. However, if you want to keep your settings, note that by using this approach you may lose your Notebook data on the iPhone and all your email account settings, along with other settings and home page bookmarks.

In this scenario, I elected to restore my Calendar and Contacts – essentially overwriting the iPhone with iCal and Address Book information.

More details in my next post.

Bill Petro
www.billpetro.com

iPhone and Cloud Computing

iPhone represents a phenomenal growth in user-generated data, as Joe Tucci alluded to in his EMC World 2008 keynote, when he said that by 2010:

• 70% will come from individual creation
• 85% will become the responsibility of organizations: YouTube, Flickr, Twitter, Google
  

We know that since the advent of the iPhone just over a year ago, Google has experienced a HUGE jump in mobile access to its site, primarily via this device with it’s image-rich Safari Mobile web browser. As Google mobile product manager Matt Waddell said back in March,

“We have very much hit a watershed moment in terms of mobile Internet usage. We are seeing that mobile Internet use is in fact accelerating… as many as 50 times more Web searches” vs. standard, so-called feature phones.

According to data released by M:Metrics, roughly 85% of iPhone users access the mobile Internet and almost 60% perform mobile web search. These numbers are dramatic and outstrip usage on other smart phones as well.

While the iPhone 2.0 firmware upgrade release will increase the appetite for end-user device consumption, including over-the-air downloads, the iPhone 3G will double or triple the data download speed over the first generation iPhone. Greater speed will likely mean greater consumption.

Cellphone tower triangulation has been a feature on the old iPhone as well as other mobile devices, but the new GPS capabilities of the iPhone 3G will mean even greater online data consumption.

The implications on data consumption, and on cloud computing with MobileMe can be significant. Apple used the term “cloud computing” at their announcement at the WWDC in San Francisco. The idea is that any item you change in your Calendar, Contacts, or Email will be near-instantly be changed in the cloud and be updated on your Macintosh (if you have one) or on a web-based tool on your Windows PC.

The service will be MobileMe, the rebranding of Apple’s .Mac service. It will be beefed up in space to 20GB of space and will cost $99/year. For those who already have .Mac, they’ll be automatically upgraded. This secure online server holds the information and pushes the updates to the other locations in seconds. On the Mac it will work with the native applications: iCal, Address Book, and Mail. On the PC it will work with Windows XP or Vista. On the handheld, it will work with the iPhone or iPod Touch. As Apple calls it, “Exchange for the rest of us.“

The PC web-based applications will be available from MobileMe at me.com. There will be mail, contacts, calendar, photo gallery, and iDisk, the online file storage. This is not the first time we’ve seen cloud computing, but it’s the first time we’ve heard Apple discussing it in a product launch. Cloud computing is the popular name for a number of different trends and technologies that involve online computing, data manipulation and storage.

One of the more popular consumer applications of cloud computing is Mozy Backup, which I’ve mentioned before. For about $5 a month, a user can backup an unlimited amount of PC or Mac data “into the cloud” over the Internet. The initial full backup can take some time, but thereafter, it backups just incremental changes at a block level. For those who want “off site” backup, this is ideal… and at much capacity than .Mac/MobileMe offers.

I’ve been asked about the implications of cloud computing.

Question:

Isn’t my data on someone else’s server?

Answer:

Yes, just like your email is at your ISP before you download it (via POP) and as it always is if you use IMAP email.

The trade-off here is the sense of insecurity in having your private data somewhere else (though Mozy encrypts it) compared to the flexibility of being able to access it anywhere that you can connect over the Internet. I gave up POP email years ago for the convenience of being able to collect it on the road, at work, at home, or from a hand held device, using server-side spam filtering and sorting. Another concern is:

Question:

If I can’t get online, won’t I be without  access to my information?

Answer:

Yes, unless it’s synced locally to your hand held (like an iPhone), or unless you have an offline copy. Technologies like Google Gears are making browser based information more persistent when disconnected.

Who knows what the future holds for other more powerful technologies.

Thanks for coming along.

BillPetro.com

iPhone 3G: the Second Coming

Last week, after an eagerly waited and much speculated upon announcement from Steve Jobs at the World Wide Developer Conference, we finally got the story on the 2.0 version of the iPhone, known as iPhone 3G. While it’s really iPhone 2.0, we get the appearance of a 3.0 product with the new name. The event was a combination of Woodstock love fest, fan boy rally, and reality distortion field generation par excellence. But Steve Jobs announced what most people were expecting, and then some.

In the past, when people have asked me what I have thought about the first generation iPhone, I told them “Excellent as a media device: music, movies, YouTube, email/web browsing are all seamless.” But the flip side was this: as a data device is was sorely lacking. Specifically:

• No 3rd party applications could be (safely) installed

• No data, including Office files, could be transferred to the iPhone for editing

• The PIM (Personal Information Management) tools were immature: Address Book had no searching, Calendar had no colors for sub-calendars, Mail was weak

These will change with the iPhone 3G and the updated iPhone 2.0 software expected on July 11. Here are the highlights:

• Apple’s App Store will permit and distribute 3rd party applications for the phone, in some cases over-the-air

• Integration of Microsoft Office and Apple iWorks documents. (Though we don’t know yet about “editability”)

• PIM upgrades: Address Book will allow searching (though not any “cut & paste” yet?), Calendar will support different  sub-calendars with different colors, Mail will allow push technology from Exchange via ActiveSync.

Game Changers

There are several things both explicit and implicit in the announcement that could change the way people use mobile devices like smart phones. While 3G and GPS are not a new item in cell phones, the combination of a number of elements in the iPhone ecosystem could change the game.

• Location Based Services: while there are other phones with both 3G and GPS, the iPhone holds out the promise of an easy-to-use, high resolution mobile device that can support services that rely on knowing where you are. One was demoed at the announcement, Loopt is a social networking tool that would tell you where your friends are and vice-versa. Adaptive GPS (A-GPS) will take advantage of the closest satellite as well as WiFi and cellphone tower triangulation to identify a users location. Will this serve as the communicator locator from Star Trek: The Next Generation, or introduce a privacy concern?

• 3rd party applications: The Macintosh has some of the most innovative developers, several apps previewed at the announcement could have a profound impact on productivity, enterprise connectivity and gaming. 250,000 iPhone software development kits have been downloaded and an analysts at Piper Jaffray believes it could be the start of a billion dollar ecosystem. The previously existing Web-based-only applications are trivially easy to “install” (use), but can be slow to start up and don’t work without a connection to the Web.

• Enterprise connectivity: Access to the corporate Exchange server, previously only available for  the BlackBerry with the BlackBerry Enterprise Server, could have an impact on how corporate users access their email, calendar and contacts. Could they turn their BlackBerry back in?

• Wide availability: Presently, the iPhone is only (legitimately) available in 6 countries. Of course, unlocked versions have appeared everywhere, not tied to the official carrier of the country. When I was in Hong Kong last December, I saw iPhones available many places for sale, despite the fact there is no carrier there. By July 11 this year, it will be available in 22 countries, and 70 are expected by some time next year. Notably missing on the map are China and Russia, but confirmed contracts with carriers there seem to have simply missed the announcement date, work continues apace.

• Cloud computing: Apple plans their own over-the-air updating system, “Exchange for the rest of us” as it were. The rebranded .Mac, aka MobileMe will allow near real time synchronization of email, calendar and contacts between the iPhone, Macintosh, and web-based PCs. More on this in a subsequent article.

TCO vs. ROI?

Although the new iPhone 3G will have a lower initial purchase price of $199 vs. the previous $399 for the 8GB device, the Total Cost of Ownership is measured by the initial cost plus the ongoing monthly service fees over the 2 year commitment to the carrier. Announced by AT&T on the same day as the iPhone 3G, but not as part of the Apple announcement, was the new pricing service for the device. The monthly data plan and SMS plans will cost more, making the device more expensive to own over 2 years by as much as $160. But perhaps the more valuable analysis would be the Return On Investment. The incremental value of being able to pull data down faster over a 3G connection, or the added value of GPS functionality… all add up over a 2 year period and may be compelling enough for a new purchase, or upgrade.

Thanks for coming along.

BillPetro.com