"Mr Watson — Come here —I want to see you" If only Alexander Graham Bell had known about APPS!

I surrender! I have for a very long time been ignoring the smart phone craze. Mostly because I just can’t see myself doing everything, and I mean everything on a phone! But I have to admit, the proliferation of “apps” via a bazillion storefronts on the web, has me fascinated, from a business point of view that is, so I have spent a considerable amount of time researching what I call the “app phenom” and consequently, I have at least as many pages of stuff on the topic as there are app storefronts…I think! So, I confessed this to a colleague and he immediately said:” so do a column on it already.” After a bit of soul-searching, I decided what the heck, why not and I began to organize the plethora of info I have accumulated. Early on it became obvious I had not been very discriminating in what or how I filed away app stuff and I was about to pick another topic, when my friend, Andy Marken came along with the solution to my problem, so sit back and read a most inciteful dissertation on the subject of “apps”

Open for Business – Apple wasn’t the first to build a smartphone or the first to offer apps. They were just the first to make them real, real fun/interesting. Offer the right merchandise, the right mood and most people will take the bait. Source – Screen Gems

Guess when you have $56 billion and change in the vault in today’s economic environment you must be doing something right. Just wish our kids would quit contributing to the stash Apple is using to buy GPU (graphics processor unit) technology and game designer talent.

A few years ago Apple decided all smartphones sucked (they’re not too hot on netbooks either).

So they announced the step up from the iPod (they didn’t like those other MP3 players!)…the iPhone.

Make a Call Too – When Apple introduced the iPhone it was more than a smartphone. Actually it was everything else first and then a phone. Good move because the company set its solution way apart from everyone else and the rest of the market scrambled to catch up…still are. Source -- Apple

Changing the Game
Then they did something really dumb…gave AT&T a two-year exclusive on the phone.

They decided ecommerce was no longer cool and that iCommerce is so much better.

Goes well with:

• iTunes
• iPod
• iPhone
• iMovies
• iStore
• iApps

Instead of keeping a closed ecosystem as they did with the Mac, they encouraged others to make products they would sell in their store.

Sure it’s Apple which means:

• works on their devices (iPhone and iPod Touch), their way
• works in their closed environment
• sold only in their store
  

It also means:

• you use their SDK (software development kit) but heck it only costs $99
• they determine which apps fly and which don’t make the cut (sure fire rejection is something that competes with their stuff!)
• you agree to the 70/30 split (70% for you, 30% for them – seems retail fair)

 
Developers’ Dream – The new Apple developers kit makes it fast, easy for people to produce applications they can make available to iPhone/iPod Touch customers (once Apple gives its stamp of approval). Source - Apple

Cripes it seems to works!

Mega Store
The iPhone apps store looks like a Wal-Mart mega store.

The store has been open less than a year, product is stacked to the rafters, people are mobbing the aisles.

They’ve got 30,000 (give or take a few thousand) apps to choose from.

Some free…some $1-$5…some $20-$30…some heftier ones for businesses.

In less than a year they recorded some kid making the billionth download.

Number 1 Billion – Some kid really racked up the loot after being the one who grabbed the one billionth download from the iTune apps store. Lucky stiff – 10 grand in booty without even trying. The store has been open less than a year and has averaged 3.5 million app downloads a day and the iPhone/iPod Touch users have grabbed an average of 33 apps…each! Source -- GizModo

That’s:

• 3.5 million downloads a day
• Average of 33 apps per device

That’s an attach rate any company would kill for!

Suddenly they don’t look that stupid!

Carriers and other “interested” parties seem to agree.

Little apps stores are popping up all over the iNet.

Stores Everywhere – Big and small there are smartphone app stores everywhere. Some richly stocked, some sparsely. The challenge for developers is to be found on the shelves. The challenge for users is picking the ones they’ll need and/or enjoy the most. Source -- NYTimes

Google, Microsoft, Nokia, RIM (Research in Motion – Blackberry), all the carriers.

Who did we miss?

Oh yeah…Palm will eventually introduce its Pre counterpunch with powerhouse Sprint.

While everyone else has their app store shelves well stocked visiting Palm’s store is…depressing.

Looks a little like a grocery stores in St. Petersburg Russia in WWII…

We can see why OS folks want an app store.

The more apps on the shelves the more device manufacturers they attract, the better they look to carriers, the more app developers they attract and the popularity courting continues.

But carriers?

Dialing for Dollars
Selling apps won’t really impact their bottomlines.

Lots of the apps are freebies, most sales are $1-$5, they only get 20 or 30% out of the sales.

The developers drink from the same cup.

They’ll jump on the iTunes bullet train with their neat app.

The power of Apple will sell their music program, video games, direction/people finder, weather tracking, restaurant/store finding friends tracking (stalking), whatever app and they’ll instantly get rich.

Assuming people can figure out how good your thingy is and how much he/she needs it – awful tough without good articles/reviews -- the apps dude/dudette will make a whole 70 percent on each of those $1-$5 sales.

But for carriers it’s all about selling more connection time, more bandwidth.

Their bucks come from:

• your data communications over their pipes
• making sure you stream music, TV, video to your third screen.
• connecting you with other gamers, friends.

The carrier sells you airtime for days, weeks, months, years on end.

Someone needs to ask the carriers almost the same question Beth asked Derek, “She was naked in your hotel room?”

Then quickly add what Derek told Sharon, “You need help.”

It’s the money play folks!

Our kids are like the millions of other iPhone, iPod Touch users around the globe.

They love muddling through the Apple iTunes app store …just to see what’s new, what’s hot, what’s fun, what’s available.

Apple Apps – 30,000 iPhone/iPod Touch apps and counting. Serious developers,
kids in class, techs in their spare time (or at work) are all busy developing business, personal entertainment, game, audio/video applications they hope will rack up big sales on the iTunes site and profits for them. Move them to other platforms and even more money if they look as good on the other devices. Source -- Apple

Too bad there aren’t any aisle (category) signs or sampling stations along the way.

Since there isn’t, they see something they think they’ll like and BAM !!! easily download from iTunes (we get billed).

Then they suck up more minutes from AT&T!

Sure Google, MS, Nokia and Blackberry are adding apps as fast as they can but it’s just way too easy for folks to buy from iTunes.

Our son – who has an “I can make it better” mind – was thinking about some apps that he knows people are eagerly waiting to buy.

He coughed up the $99 for Apple’s SDK.

Next Round
He got real excited when Apple announced the iPhone OS 3.0 SDK…100 new visual features, 1,000 new APIs (Application Programmer Interface), the thinly veiled promise of doing stuff that would run beautifully on three screens – TV, computer, iPhone.

 
Next Generation – One thing you have to admit is that Apple makes a big deal out of every announcement and the unveiling of the iPhone OS 3.0 software and new SDK was no exception. The event said a lot about the company’s three screen plan without saying a lot and opened new doors for more powerful, more graphically intensive iPhone games and applications. Source - Apple

That got his mind racing.

All we saw with the new developer’s kit was that Apple had raised the bar again with their closed environment. That means:

• people will develop more, richer, more intensive, more intrusive apps for Apple to sell so they dig their hooks even deeper into those poor Kool-Aid drinking folks
• more people will get excited about buying/using/playing with the iPhone and Apple might – just might – become the #1 smartphone producer (something they totally ****ed up with the all-inclusive Mac)
• AT&T will sell more 2-year contracts, more on-air minutes

Sure Apple may do an iPhone Lite for Verizon (huge whisper campaign going on) but who wants lite when you can have a real iPhone?

And an overly stuffed/easy to use iTunes store.

Lite just doesn’t seem to have the panache!

Suddenly a smartphone is so much more than an e-wallet (iWallet).

Really smart kids, doodling program developers and idea folks see their road to riches!

First they’ll supplement their income making fun, neat, useful, relaxing, whatever apps.

Then they’ll rent Steve’s grounded jet.

The mobile apps market may reach $214 billion by 2014 but it’s a market made up of tens of thousands of inexpensive apps developed by thousands of people.

Herding Cats
It doesn’t have the formula to appeal to VCs.

It’s tough for them to sell these “businesses” to the public or some other company so they can rack up a huge return.

It’s too much like herding cats.

But that’s ok.

Can’t wait for the kid to release his iPhone apps and starts collecting the dimes and quarters.

Then he plans to modify them for Android, Windows Mobile…maybe even BlackBerry.

Think Man, Think – Apple’s enclosed ecosystem has executives at other OS and hardware firms scheming on how they can outdo the fruit company and have the same unfair advantage with carriers and consumers. Individuals with serious and funky application ideas see the locked system as a great opportunity to earn fame and fortune. Source – Screen Gems

If we’re lucky he may be able to replenish our devastated 401K.

Apple may have gotten it right this time.

Key question is how quickly, how comprehensively, how successfully will the other players – Google, MS, RIM, Nokia/Symbian -- get their acts together.

So, the key question for me is, will I now take the leap to the app world and get a smart phone?
Stay tuned and I will let you know what I decide, and remember to have fun with all the new goodies, specially if you already are a smart-phone person. I’d be interested in what you think. Be sure to give me a call!

Aloha, Lou