Apple | *contains graphic material

April 20, 2010

3 Mobile: give up the iPhones!

Well. I am plum tuckered out. I’ve just spent a gruelling couple of days successfully convincing 3 Mobile in Australia to let me have an iPhone contract. As a basic negotiation between two parties I find getting a home loan or attaining UK citizenship to be easier.

As I have just moved back to Australia from the UK with my partner and baby daughter, don’t yet have a job, and am staying with my parents, I fail 3 Mobile’s hilariously stringent credit policy. (although my partner, strangely, doesn’t, by virtue of the fact that as a woman she can claim the legitimate occupation of ‘housewife’). In a protracted series of conversations, I was forced to prove I had enough cash to pay a 2 year contract outright approximately 40 times over. The credit department said ‘meh’ and offered me a Nokia 2730 instead, claiming I couldn’t necessarily be trusted with a ‘high end’ iPhone. Eventually they relented after I pointed out the stupidity of approving my partner for the same phone, despite us sharing bank accounts.

I get that there are genuine credit risks out there. People who will likely default and cost 3 money, and I don’t blame them for trying to weed such people out. But by spending a couple of minutes looking at my particulars, any bank manager could see I’m not a huge credit risk. If I can’t get approval with 3, there must be many more people in the same boat – I imagine younger people with casual/part-time jobs would struggle, and would also be very likely to want one. What do 3 Mobile get out of denying them contracts?

For starters, iPhone users are valuable customers for a carrier. They spend more on voice and data, are willing to be tied to long/expensive contracts, and also spend more on content (this is potentially good for 3 Mobile Australia which has invested a lot in some great content).

I get that for carriers, selling iPhones probably runs a thinner margin. Some reports have suggested that iPhones aren’t profitable for carriers, although I and others find that hard to believe. While I’m sure carriers make an initial loss (and Apple make a bomb), over the life of the contract I’m sure they can turn that into handsome profit.

But even so, if the iPhone makes a loss it’s a very strong loss leader. Everyone wants an iPhone – it is by far the most desirable mobile phone on the market. If you don’t scoop those people up, they’ll go somewhere else. If your credit policies are making it difficult to turn customers into more valuable iPhone users, I wouldn’t exactly throw contracts at people, but I would think seriously about refining my policies. Find a way to put iPhones into the hands of part-time workers and 19 year olds. Pre-paid, contract, something else entirely, maybe something – golly – innovative (a first for the Australian consumer telecoms industry). Just find a way to make it work, because if you don’t, you’ll lose in the end.

April 11, 2010

Jeff Jarvis (and Cory Doctorow): completely wrong about the iPad

While we in Australia await the local iPad release, it’s been pretty irritating to see US commentators like Jarvis and Doctorow decry a device we haven’t even been able to touch yet.

The whole issue is about Apple creating a device that’s clearly designed more for consumption than creation. Jarvis:

The iPad is retrograde. It tries to turn us back into an audience again. That is why media companies and advertisers are embracing it so fervently, because they think it returns us all to their good old days when we just consumed, we didn’t create, when they controlled our media experience and business models and we came to them.

There’s lots more of this fruity stuff about ‘control’ in the full piece, and in a follow-up a few days later.

My problem with this is that it takes a progressive/well-off/tech-savvy/media-advertising-academic professional idea of what a device should be and superimposes it across everyone else. As Jarvis says:

We are, indeed, moving past a page-, site-, and search-based web to one also built on streams and flows. This shift to apps is a move in precisely the opposite direction. Apps are more closed, contained, controlling.

Although I recognise what he’s saying of my own experience, I still think it’s fair to ask Who, exactly, is moving to this new web? My Dad, who uses the internet exclusively to watch live horse racing? Or my mum, who opened a Facebook account on my insistence, friended only 6 of her wide circle of friends then completely lost interest? I think my dad, for instance, would enjoy a device that would make watching horse races more pleasing … or is he just doing it wrong? Is there something wrong with people who Just. Don’t. Want to blog / edit video / attend a fricking tweetup?

According to Forrester, my old man’s not in the minority either. Social technographics stats shows that ‘spectators’ and ‘joiners’ (like my mum who join things but are inactive) far outnumber the ‘creatives’, who actually write blogs, comment etc. Another quote from Jarvis:

We in media have a bad habit of viewing the world in our image. We think the internet is a medium (I say instead it’s a place…)

The internet is not a place. It is a bunch of wires and machines and cables. It just seems like a place because that’s how Jarvis and his cohorts use it. For my dad, it is a medium – specifically, a kind of TV – because that’s how he uses it. And I don’t think that’s bad. And the iPad will improve his experience of it, and I don’t think that’s bad either (even if he is spectacularly unlikely to get one). And he will never in his life liveblog a conference on social media, and I for one will be delighted, because there are plainly enough dingbats doing that already.

January 28, 2010

3 reasons the iPad won’t save newspapers

A big slice of the Jesus Tablet presentation yesterday was taken up with the New York Times’ SVP for Digital, Martin Nisenholtz, demo-ing the NYT’s iPad optimised app. Apparently the app was thrown together in 3 weeks (!), but already looks like a fantastic interface for looking at content, and one I personally will certainly purchase for myself. Nisenholtz said “We’re incredibly psyched to pioneer the next generation of digital journalism. We want to create the best of print and best of digital, all rolled up into one”.

But will the iPad save newspapers? Will it help publishers crack the paid content puzzle, and get people buying news content again, like the good old days? I really, really don’t think so, much as I’d like to believe it. Here’s why:

1. Readership. Newspapers are/were a genuine mass market medium. I mean really, really mass: the majority of the country used to purchase one every day. Even 10 years ago national daily papers in the UK sold almost 13m copies a day, which at current prices translates to ~£6m in revenue every day. In the year 2000 daily newspapers made £1.8bn in cover sales. To put it in context, the Daily Mail sold about £400m, while Coca Cola sells about £500m. Serious business, and that doesn’t even include advertising revenues.

In total, over the last 10 years the daily newspaper market has lost about £465m a year in cover sales. Now … let’s suppose, generously, that a newspaper might make £10 from the sale of one iPad app. In order to cover that shortfall App store would need to sell 46,000,000 newspaper apps to cover that shortfall.

The reality is, however great it looks, the iPad will probably still be a niche item. If they do really well, Apple might sell 2m in the UK. Of those, let’s say 1.5m buy a paid-for newspaper app (this is unlikely but still possible, considering the Guardian has sold 70,000 iPhone apps in the first month). That’s still only £10m to share between 10 daily papers. Handy new revenue line, but a long long way from revolutionising your business.

2. Competition from the internet. The iPad is, according to Jobs, the “best web experience you can get”. From what I’ve seen, it looks it, and that’s enough for me.

This is the difference with the iPhone, and its stunning success as an app platform. The iPhone apps are vast improvements over what you could expect using the iPhone’s net browser – intuitive, quick, nice to use. But if the iPad is built with the internet in mind, will people convert to a paid-for newspaper app when they can look at the same newspaper’s website for nothing? Some people will, including myself, for the small incremental benefits you will no doubt get from an optimised native app. But I bet a whole lot of people will be satisfied with the “best web experience you can get”.

3. Fundamental structural industry problems that remain un-addressed. The newspaper industry is in trouble because its structures and costs are way out of proportion with a digital age. It’s not in trouble because consumers were waiting for a nice piece of kit to read newspapers on.

When digital distribution means a one-man operation can start a site that competes on the same stage as national newspaper sites with hundreds of employees, there’s a big problem.

And unfortunately, the economics of iPhone/iPad content app distribution will be exactly the same. While big publishers will get in first with apps, pretty soon the smaller guys, the startups, will start to compete in the same space. And their apps will probably be free as well, and then you’ll be back where you started, except you spent £100,000 on an above the line marketing campaign for your app and they didn’t. And there you go

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Category: Apple