Open letter to Apple: The killer App is not voice nor music

Dear Apple Inc

(UPDATED AND CORRECTED 12 Jan 2007)

So we now know the iPhone will launch in America in June on Cingular's network, and in the fourth quarter in Europe, and in Asia in 2008. It will cost 499 dollars for the 4GB model and 599 dollars for the 8GB model (Update: subsidised prices for 2 year contract). A big bright colour screen of 3.5 inches is very big for a phone. With the iPod music functionality and a 2 megapixel camera (and I believe it is a 3G phone It is not a 3G phone), it is slim, slick, sexy.

Apple's Steve Jobs was bragging about how much this phone is better than the existing crop of smartphones, and drew parallels to how the Mac changed everything in the PC world. A significant part of that is the lack of traditional alphanumeric keypad. Instead the iPhone will have an intelligent touch screen. This may well be the biggest change in mobile phone user interfaces in years.

I wish Apple all the very best with this venture. But I don't want Apple to fail in its quest by not understanding this market. Thus this open letter to Apple.

You are entering the mobile phone market. A market where 950 million handsets were sold last year, and a market which is fiercely competitive and profits are hard to come by. The market is very fashion-oriented, with new models released monthly. The development cycles are long and hitting the right mix of feature set, weight, battery consumption, cost is challenging. I am sure you have researched the market well before joining it, but am afraid you may have been blinded by being based in America - the laggard in mobile telecoms - and having your roots in the IT industry, which is almost diametrically opposite to the telecoms industry among engineering sciences. It may give you great competitive advantages to approach the industry from a fresh angle, but I hope you understand what makes this industry tick. People do not replace automobiles every 18 months, nor laptop computers, digital cameras, plasma screen TVs, Playstations... nor iPods.

But the mobile phone replacement cycle is 18 months and shrinking. Your target market - those who can afford a 500 dollar phone - are the addicted ones, who have two phones and their effective replacement rate is 9 months (and shrinking). The most widely used gadget on the planet, the mobile phone has one particular aspect to it, which makes it so very appealing. And that is not well understood in America, and it is usually totally misanalyzed by those whose background is the IT industry.

There is only one killer application in current (2.5G/3G) mobile phones. It is not voice calls. It is not music. It is not the camera function. The only killer app is SMS text messaging. Ever since Nokia first released its global messaging survey in 2001, to operator studies from the UK and France in 2002, to customer surveys in Malaysia, Singapore and Indonesia in 2003, onto South Korea and Japan; to the university study of phone addiction by the Catholic University of Leuwen in Belgium; and even now proven by the first American survey of SMS usage by ComScore Media Metrix - every scientific survey on the topic verifies that SMS text messaging is addictive. And that heavy users of SMS prefer text messaging to voice calls. Already more than half of British total population prefer communicating via SMS than voice on their mobile phones.

To draw a parallel. Apple obviously knows the Blackberry. Many call it the "Crackberry", as in crack cocaine the drug, because its users become so addicted to it. They find two powerful benefits - speed and privacy in their Blackberry usage, and they discover a concept we in the industry call "reachability". But here a valuable insight. Using e-mail wirelessly on the Blackberry is definitely addictive, but at a very mild level. It is not like crack cocaine, more like smoking cigarettes or marijuana; the MUCH MORE ADDICTIVE service is SMS text messaging (which can be done with a Blackberry of course, the Blackberry does do SMS as well). The "crack cocaine" heavily addictive communication service - much more addictive than wireless e-mail on a Blackberry - is SMS text messaging. That is why those who have never tried SMS - American executives - fall in love with the Blackberry. But that is also why European and Asian executives are lukewarm to it. European and Asian executives are already addicted to the much more potent service - SMS text messaging.

If the Blackberry is addictive because it is fast and private, and offers reachability. It is at its peak effectiveness when the other person also has a Blackberry. There are only about 6 million Blackberry users in the world. Now consider SMS text messaging. It is faster than the Blackberry, it is much more private (no corporate e-mail servers) and offers reachability of course. But its reach is 2.7 billion people. If your wife doesn't have a Blackberry, you can still reach her via SMS. If your kids don't have Blackberries, you can get a similar experience of two Blackberry users exchanging e-mails, if you use SMS with your kids (or wife). Now consider the opposite effect, for all who don't have Blackberries, THEY can achieve the "Blackberry benefit" already today, using their basic cellphone and SMS.

Also, do not for one moment listen to any experts who make comparisons or parallels with e-mail. SMS is not the dumb little brother of e-mail. E-Mail is last decade's communication method. Clumsy, slow, formatted. SMS is the next generation of messaging. Young people in South Korea say nobody uses e-mail except to communicate with their elders. Young people in America say, e-mail is so last year. No matter how much you may understand e-mail and perhaps wireless e-mail, that is not how SMS is used. Don't make parallels from e-mail, but rather research SMS usage. It is the most powerful time-management tool BY EXECUTIVES from Japan to Scandinavia to Israel to Italy to Britain.

So Apple executives, as you consider the iPhone and are finalizing what it will do and how, first study the addiction of the Blackberry. Then go and study the addiction of SMS text messaging.

Then understand. Those customers you are fighting for - who are cool enough to want an Apple, wealthy enough to afford the iPhone, and as addicted to cellphones to want a 500 dollar smartphone - this is a segment who is already addicted to SMS (remember that already even in America, 42% of Americans are already using SMS).

So my point is this - going without a keypad is a bold, brave move. Many will applaud it, others will doubt it. I want it to succeed. So please, Apple, make sure your SMS text messaging ability is as good as the current crop of top-end phones. Recognize that SMS is used by busy executives who carry a laptop briefcase in one hand and operate their phone in the other hand as they hussle from the elevator to the cab; and by college students who send secret messages to their friends in class, with the phone out of view. Your iPhone will need texting ability that can be used single-handed, and without looking at the phone.

Make sure your iPhone is at least on par with top text messaging phones out there today. You have six more months to accomplish that. But please, Apple do it.

If you don't , I am afraid you will fail. Voice is NOT the killer app for current mobile phones. Neither is music; neither is the camera feature; neither is video. The killer app is messaging, specifically SMS text messaging (and very rapidly also mobile IM ie Instant Messaging, and other collaboration such as mobile blogging). Understand that those phones that are not good at messaging are going to be returned to the store by dissatisfied customers, and the mobile operators will be forced to substitute alternate phones. You don't want phones returned because of poor texting, as Nokia learned with its unconventional keypad designs in 2003 - and rapidly corrected this colossal error.

To use an analogy, imagine driving a car (1.8 billion people on the planet already KNOW how to send SMS text messages, in fact twice as many people as who drive cars). Everybody knows the pedals of the car, the accelerator and the break. You don't have to look at the pedals to move or stop the car. Now, consider if BMW released its new supercar, but the driver always had to LOOK at where to place the feet? You couldn't look at the road when you aimed your feet. Because people are accustomed to how driving works - and moving the car is the killer app for the car, not its sound system - we all expect every car to have its pedals in the familiar way.

But if you make sure the iPhone is very good at messaging, then your users will also remain loyal to the iPhone.

Our industry needs innovation, and Apple is nothing if not innovative. Only I wish your cleverness in the user interface did not kill the goose that lays the golden eggs. Do not make this a bad texting phone, please. We need Apple in the industry to foster competition in innovation.

Yours Truly

Tomi T Ahonen   :-)
four-time bestselling author and expert on mobile phones and their services
lecturing at Oxford University on mobile services and convergence
and a lifelong fan of Apple

THREE  RELATED POSTINGS:

UPDATE FROM JUNE - I've done a major revision of the market analysis, now with break-down of the regional sales as well as quarterly projections, at this blog: Crunching the Numbers for iPhone

I have posted a long analysis, handicapping the chances for Apple to reach its aggressive 10 million unit sales in the first year, with contrasts between the American, European and Asian markets. That analysis is at:

http://communities-dominate.blogs.com/brands/2007/01/handicapping_th.html

I also wrote on the striking similarities between the recent award-winning large-screen variant of the LG Chocolate, which is eerily similar to the iPhone. See my blog and links to pictures of the two side-by-side, at this posting:

http://communities-dominate.blogs.com/brands/2007/01/creepy_iphone_i.html

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