Apple has been focusing its recent iPhone marketing efforts on applications. This is an approach I am quite pleased with as it has tremendous strengths in regards to expressing the 'more than a phone' capabilities of the device. Application distribution on iPhone is unmatched, and now with more than 10,000 apps downloaded more than 300 million times (on millions and millions of devices), it's hard to argue with Apple's marketing taglines in its new iPhone TV commercials - "Solving life's dilemmas, one app at a time" and "This is when you realize, this is going to change everything."
This is a game changer, and while handset manufacturers have been racing to deliver competing touchscreen devices over the past 18 months, that only addresses a portion of the consumer demand. Mobile application delivery is a winner. Companies like Samsung, LG, Motorola, and Sony Ericsson can't easily solve that problem. RIM, Microsoft, Nokia, and Google can. Carriers claim they can, but I remain highly skeptical of this. Smartphone applications are tied to operating systems, not networks, not handsets (although this used to be the norm). And as the world waits to see these competing mobile application delivery platforms from mobile OS vendors, Apple keeps racking up the numbers. The lead keeps growing - more applications, more devices, and we're on the road to consumer smartphone dominance. While I don't expect Apple to steamroll the competition with the same level of ease it has done in the portable music market with a 71% marketshare (Source: NPD Group, May 2008), iPhone will become the number one consumer smartphone in the not so distant future. No one else really stands a chance here.
Critics focus on Apple's 30% take of the iPhone application market as the primary reason behind its marketing focus on apps. By marketing apps, Apple helps to create a new revenue stream akin to iTunes with music. Perhaps, but the reality is that Apple loves free apps. Let's take a look at Apple's two recent marketing initiatives for iPhone:
iPhone TV Commercials: Four of out six featured apps are free (67%).
iPhone Newspaper Ad: Ten out of sixteen featured apps are free (63%).
Yet, only 25% of iPhone apps available in the App Store are free. Free applications provide added platform value to customers with no additional financial commitment required.
I'm not trying to make the case in this post that free apps are superior to paid apps. Both are important. I have many friends who are making a living developing paid apps. iPhone needs commercial opportunity to attract large numbers of developers to innovate on the platform. There is an entire economy emerging here for iPhone developers in regards to paid apps, and while free apps compete in some categories with paid apps, the benefits to developers far outweigh the costs.
Applications will drive iPhone purchases, especially now when backed by Apple's recent marketing campaign. And with free apps totaling a quarter of the App Store inventory and perhaps 200 million of the 300 million total app downloads, free apps will play an important role in overall platform growth. That's why Apple loves free apps.
© 2011, O'Reilly Media, Inc. (707) 827-7000 / (800) 998-9938 All trademarks and registered trademarks appearing on oreilly.com are the property of their respective owners. |
|
Good points. But remember it's not just about selling iPhones. As you point out Android, WinMo and RIM should be able must decent app stores of their own once they get the over their various respective hurdles. Apps are also about selling iPod Touch - the next generation iPod.
@RichardL: These apps aren't just about selling the iPod Touch either. These are a setup for continuance of the Touch Platform onto a tablet device.
There's another point to be made about that 30% that Apple takes for each purchase. Not only are they actively promoting apps with that money, they're paying out affiliate fees.
Apple gives 5% of each sell to the referrer that linked the customer to the sell. So, in that case, Apple is only taking home 25% of the apps price..
With the affiliate payments, they incentivized (not really a word) the outsourced advertising of apps as well. Many sites like ours (AppBeacon.com) are already trying to make a dime guiding people to the App Store. So, for just a small percentage of their profits, Apple is building up some amazing (almost free) advertising that will help them and their developers.
Apple is being very smart in developing, promoting, and controlling an entire economy built around the App Store. I don't think any one should be complaining about that "30%" commission Apple takes. They're spending lots of that money to drive additional sales.
Let's see Google do the same for the Android store. Oh yeah.... They aren't taking commissions...So, they probably won't be helping those developers out by driving sales.
> These are a setup for continuance of the Touch platform onto a tablet device.
I know a lot of fans think that's going to happen someday, but I don't subscribe to the theory especially now that cargo pants are out of fashion.
While this is interesting, I think it makes sense for Apple.
1. They want to highlight the features of the platform and drive iPhone customers to the App Store.
2. People are more likely to look for what they see in the commercial.
3. People are more likely to download and try something free.
4. Once they see how easy it is, and how many applications are available, they are more likely to become "return shoppers".
5. Using free apps for adds does not unfairly advantage a for-profit application from a marketing and revenue perspective.
6. Using free apps does not create the perception of "bait-and-switch" by the consumer who has spent money on the device and now want's "what Apple shows" on TV for free.
In essence, I think Apple views free apps as a "free" loss leader from an economics/marketing perspective.
Totally! The varied and strongly useful functionality found in some of the top free apps really helps Apple keep the iPhone selling strong. I've run into many people who see me use AroundMe or Shazaam and suddenly want an iPhone, too. Anyone who has seen iPhone commercials knows how well they show off the many useful things you can do with an iPhone.
That's something that really irks me about the new Blackberry commercials -- iPhone commercials show all the cool things you can do with your iPhone via the OS and the apps. Blackberry mentions the touch screen and vaguely notes that the Storm and Bold are "faster" and let you surf the web and check emails. Like there aren't already a million phones out there (smartphone or otherwise) that let you surf the web and check emails. Come on, Blackberry, are you going to go fully into the obvious and mention how you can make phone calls, too?
I was actually excited about the Storm and Bold opening up BB ownership, because there are some pretty cool apps for the BB (e.g. TellMe -- say "coffee" into the handset & it'll pull up coffee shops near you using GPS, no typing required). But honestly, I think BB is shooting themselves in the foot by refusing to go after anyone who isn't already a Blackberry owner, and it's a huge shame -- for people who don't like the iPhone (or don't like AT&T), the Blackberry could have been a sexy, appealing alternative if they only knew how neat it can be.
Anyhow, sorry about the BB rant, Raven -- you just reminded me of how well Apple is advertising the iPhone and how the apps play a big part.
[fyi I own an iPhone and love it ;) ]
I believe Apple is using the Blue Ocean Strategy wherein it is virtually creating a new market space with the focus on Apps, on which the other companies are not focussing right now. Thus it is cementing its place in the newly created space be becoming a pioneer here.
Classic Apple, where the marketing is done out of the box and out of the textbook.
signed up for an account and completed 1 offer which I have received credit for. Now I need referrals. HELP! http://www.YourFreeiPhone.com/index.php?ref=5599535
It's all about market share domination, and with the iPhone, Apple are onto a winner. The increasing number of games and applications can only increase its desirability among consumers, which in turn increase sales.
Very nice blog by the way, and I'll keep checking back.
Hello everyone, Welcome to the http://www.shopgogo.ca/apple/a1079.htm apple a1079 battery , and cheap, where you definitely have an unexpected harvest!