In my last piece I talked about how Apple has created a revolutionary new generation handheld in the iPhone/iPod Touch. But that is only half of the story. The other half is the brilliant strategy Apple has created, either by plan or chance, that all but guarantees that Apple will dominate the handheld arena even as that market expands from its current niche status to encompass the First World middle class much as the PC did in the 1980s.
I realize this sounds like ravings from a rabid Apple fan, so first I want to establish my bonifieds as an impartial observer. Basically the only Apple product I have ever owned is an iPod. I did use an Apple Macintosh for a few years while at Gartner, then an Apple shop, back in 1988-'92, but even then I also used a DOS laptop (a GRiD) as my job required portable computing and at that time Apple did not yet sell a portable. I have nearly 20 years of experience as a PDA power user, but I used the Tandy-Radio Shack Z-PDA rather than an Apple Newton in the early years. From there I moved to the Palm Pilot. Today I use a Palm Tungsten T-3 and three Windows computers. I am writing this on a Sony VAIO UX running Vista. Nor do I have any contact with Apple. If anything, I am biased toward Palm, not Apple.
However, the logic behind my statement above is both simple and compelling and goes like this:
1.While the PDA and smartphone markets remain niche markets with users still numbered in the thousands, the Apple iPod has attained general market status to the point that it has fostered a sub-market of its own. Today iPod users can buy speaker stands, devices to connect their iPods to their car radios, cases, and yes, even stylus/pens, despite Steve Jobs' dislike of them, from a variety of vendors. Many of these devices use Apple's proprietary iPod port and so do not work with other MP3 players. They also can get audio books and programs directly from Audible.com. This thriving market is a strong indication of just how many iPods are in use today. 2.The iPhone/iPod Touch were built first and foremost as next-generation iPods. Their connectivity and other advanced features, as well as their revolutionary user interface, are logical iPod additions. Thus, as the legion of iPod users need to replace their present units, and as the iPod attracts new users, an increasing percentage of them will buy the new generation devices rather than staying with what is now known as the iPod Classic design. Eventually Apple will discontinue the older version entirely, and the new design will become the only choice. It is important to remember that while the iPhone is only available from a very few selected cellular carriers worldwide (AT&T only in the United States) and is not available at all in some countries, the iPod Touch has no connection with the cellular market at all. Thus when I replace my present iPod, if I do not want to sign a data contract with AT&T or indeed do not want a smart phone or for that matter any cell phone at all, I still will probably upgrade to an iPod Touch. And as improved versions are introduced, the cost of the older versions is steadily dropping, putting them in the range of increasing numbers of people. So you no longer have to be a CEO to afford one. 3.Once those iPod users do upgrade, whether they realize it or not, they now carry a smart phone or PDA with full WiFi connectivity, and quite a few vendors will be very conscious of the market that presents and want to sell to it. This will foster new online services that will be marketed to users and will in many cases be marketing efforts in themselves. The addition of GPS in the more recent versions of the iPhone/iPod Touch opens it to localized services. In the near future it is easy, therefore, to visualize someone searching for a restaurant and getting a list of what is available within a preselected distance of where he is, viewing menus and prices, making reservations and GPS guidance to the restaurant, all from his iPhone. Most consumers will not see this as PDA or smart phone technology, but it is. Actually it is not even new – services exactly like this have been tried out already, but the population of users of devices capable of supporting them has been too low to justify such services. With the huge growth in devices driven by the iPod revolution, major restaurant chainss and other retailers will market those services aggressively over the TV and other media to gain competitive advantage. The result will be a huge and growing group of consumers who become as used to getting information on their iPods as they are today with email.
This has major implications for both internal and external corporate operations. Internally, IT is going to see increasing demand from the growing group of iPhone/iPod Touch users among corporate employees for access to corporate applications on their devices, regardless of what the corporate standard is. Why, they will ask, do I have to carry a Blackberry or Windows Mobile device just to get corporate email and access corporate functionality when I have an iPhone that is sexier, easier to use, and that I like much more? CIOs have already heard variations of this question from senior corporate executives who bought the first iPhones. The answer back then was that the iPhone did not support the right email standards. That excuse no longer holds water, and with the iPhone developer's kit now available and huge amounts of software about to arrive from third-party suppliers – including in all likelihood front ends for standard enterprise software such as major ERP systems – and companies adapt SaaS and similar Web-based services that can work with any front-end with a standard browser, the reasons for supporting the iPhone will become increasingly compelling.
Externally, the marketing departments of consumer-oriented companies from restaurant chains to auto manufacturers will soon be competing to come up with the cleverest, most compelling Web-based services to deliver to iPhones. IT groups with internal development groups will be asked to develop these ideas. Those without internal development capabilities will need to find a consultant who can take on the task.
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