Where’s the Beef?
The Ogilvy & Mather commercial celebrated the irony of this by depicting a marvelous spoof war waged by McDonald’s, Wendy’s and Burger King poised by platoons of their respective icons (Ronald McDonald, Wendy’s Clara Peller ”Where’s the beef”, and Burger King’s Herb the nerd) in a WW2–like battle scene against each other.
The 60-second segment brought to light that the respective campaigns of these chains had gone well beyond the reality that their products were, after all, fast-food burgers!
If we were to carry this same theme to the current onslaught of smart-phone advertisements, it would have to be depicted more as a Star Wars battle in outer space with humans against androids…
The following is my attempt to call out the clutter and identify the main business enablers when choosing a strategy to deliver smart-phone solutions.
An Objective Perspective – No Kool-Aid Here
Because biases often interfere with objectivity in these matters, let it be known that I currently do not own an iPhone, Android, BlackBerry, nor Windows Phone 7.
The only Kool-Aid I drink leaves a stain on my upper lip, not an opinion in my heart.
I will admit, however, there is no way to fully understand all dynamics involved and welcome comments to this post to instill greater clarity on the subject.
Phone-Wars is Truly Multi-Dimensional
The first thing to consider in this topic is that it is far from cut & dry. Advertising campaigns make it all simple and 2D, but it simply is not so (see Why do we only apply 2D thinking to 3D problems?)
There are many internal and external influences to smart phone platforms. Each influence can be multi-dimensional within itself as well. Let’s examine several of these many dimensions which must be considered…
Varying Business Models: Volume vs. Profitability
Focusing first on IASA’s Business Technology Strategy pillar, I want to take what may be an over-simplified look at the sustainable income business models used. I want to focus on a really great studies by Asymco (US Population by Phone Operating System and Can Android change the distribution of profit among phone vendors?) where we see volume of sales and profitability are two different beasts:
Apple: Apple obtains its profit from the hardware device sale, they take a [healthy] percentage on any apps purchased, and they have residual profit coming from memberships (MobileMe) and ads (iAds). Delivering solutions on this platform will find profits mainly through iTunes sales and minimally through iAds.
Bottom line, profitability is found in a customer base willing to pay for what it gets. You don’t need to capture a majority segment of the business domain.
Android: Android devices, on the other hand, are subsidized by Google which actually is a media company (i.e., sells advertising like ABC, Time, etc.). Their push for advertiser subsidized "free" apps on the Android platform is very much in line with this very strategic approach (give away the OS and sell advertising as a reoccurring revenue stream on the devices). When an Android phone sells, both the hardware manufacturer and Google take their slice of the pie (either directly or indirectly). Delivering solutions on this platform will focus on many small profits through the Android ads system.
Bottom line, profitability is found in advertising on freely distributed device apps. Capturing more of the market is paramount for success.
Enterprise/Subscription: Windows Phone 7 and BlackBerry utilize an Enterprise License strategy where their devices while masked as a consumer device are more highly positioned with tight integrations to enterprises where there is a healthy investment in an underlying licensed infrastructure. Additionally, as in the case of Windows Phone 7, there may exist integration into a membership service like Xbox Live that subsidizes profitability. Delivering solutions on this platform will focus more on the platform vendor subsidizing your development costs and sales (i.e., what’s in it for them to subsidize your costs?).
Bottom line, profitability is found in enterprise licenses and subscription service memberships, not consumer device sales.
Can’t We All Just Get-Along?
These three different business models all individually work well and can theoretically coexist in separate market spaces if you consider the market as a Blue Ocean Strategy form of non-competition (supported by the Volume Comparison above) – but the vendors don’t see it that way, do they?
Vendors attempt to obtain exclusive loyalties not only with their consumer customers, but especially with their supporting vendors and integrators (regardless of how many times they state they utilize an open-standards architecture) by enticing exclusivity in their relationships, enforcing development platform restrictions, pressuring adoption of their revenue models, etc. They do everything they can so that apps run best on their platform, if not only on their platform.
In a deep red ocean of competition, they push their products into markets outside their own business models in an attempt to increase overall market share (e.g., Apple iAds). Next, they position hardware manufacturers and/or telecoms against each other (e.g., Android on Samsung vs. HTC). Finally, there are the back-stabbing political attacks to instill fear of a competitor’s perceived weakness to promote their own agenda (e.g., remember Antenna-Gate?).
It is very easy to see how Phone-Wars has evolved.
Beware the metrics! (or, understanding the FUD)
One interesting commonality about phone marketing is how items being sold are singled out by using some metric that may or may not have anything to do with product use or quality, but we are led to believe that it is a most important must-have capability. Here are some of the major ones in Phone-Wars:
- Number of apps in their app store – what does it matter if you have 1,000 apps, 10,000 apps, or 100,000 apps if the app you really want is not to be found anyway? The reality is that the best-of-the-best apps will most likely be replicated on all device platforms.
- Can you surf the internet while you’re talking on the device? – Do you really need to do this? Maybe if you are trying to read/write email while driving using the device as your GPS and monitoring your stocks. Even better, with video calls, your connected party can actually see that you are ignoring them while surfing the web! Still, the marketing media will point out that if you cannot find a certain coffee shop while talking to your friend, your are, indeed, a failure.
- Millions of Units Sold – a valuable measure for market penetration, but not necessarily analogous to unit profitability as shown in the Asymco study.
- OS Upgradability – How easy is it to upgrade your phone’s OS? One word of advice, don’t make decisions based on futures. When you do, you most likely will be disappointed because your device may not be capable of delivering the future capability (anyone buy a Notebook PC that was Vista ready only later to find when it released and you upgraded you could only run Aero Basic?). Because there are multiple points of responsibility/failure, any one of the many parties involved (hardware, OS, telecom service) may or may not support the upgrade. My 5-year old smart-phone has never been upgraded because both the telecom and hardware manufacturer did not support it (i.e., two points of failure).
- Network Coverage & Speed – who has the fastest and largest? These need to be weighed appropriately and the fine print really must be examined. Assumptions will quickly lead to trouble. Coverage is only important for where you and your users will be. A network can claim the largest network in the world, but if it doesn’t work where you will be, then does it really matter? My phone network does not work in Europe or Asia unless I purchase a global phone which is not even a smart-phone. The expense of using your phone out-of-country may actually be cost prohibitive, so an internet connectable device using Skype or Google Voice may be a better approach anyway.
What is an IT Architect to do?
Well, it depends… (how all architectural questions are answered)
My overall advice is to push back against the pressures to lock into a single vendor platform. The phone device market is changing much faster than any other form of PC market. The rise and fall of hardware vendors, OS’s, and telecom services can alienate those who are less agile in their adoption, support, and solution thinking.
When building a phone app, consider what I call the Angry Birds Pattern. It is based on the Tech N’ Marketing interview with Peter Vesterbacka. With only a modest sized development team, Rovio has created a version of their highly successful game on multiple phone platforms using that platform’s revenue model.
- This means, a purchased/free-light version on Apple, add based on Android, and for the enterprise platforms – if they want it bad enough, then have them pay you for the development on their platform.
- Without question, developers will have their own platform bias (Rovio developers like Apple best) – you will have to deal with this.
- Build versions to their native platform – meaning avoid the temptation to rely on a one-framework-supports-all-platforms approach. These Philosopher’s Stone frameworks only promote mediocrity never delivering fully to their promises – so avoid the many headaches awaiting by not even going there to start with.
- Instead, create an architecture of your own re-usable components (assets) where possible and branch to native platform specifics where necessary.
Consider the telecom service too. Phone apps aren’t only reliant on the hardware and OS. The call stack provided by the telecom vendor will have an impact on your development efforts. Further, the various telecom service vendors will often tweak their hosting OS (when they can) to provide supposed value-add features to entice adoption of the particular device on their network. It can all become very nasty, so appropriate scheduling of timelines for development must take into account this impact.
- Should you standardize on a specific device/platform? Warning Will Robinson!
- How can you standardize on any platform that has a life expectancy of 6-12 months? We have seen the damage done by doing this with enterprise PCs where many are permanently locked into Windows XP. Do you even want to repeat this?
- Compatibility from one platform version to the next may require much restructuring of your solution – plan for this, do not be a victim here.
- Integrations to email and file shares (e.g., Dropbox, SkyDrive, etc.) make it much easier to share information from any platform with the enterprise – meaning the more flexible an enterprise can be, the better off their users will be in having the freedom to use their personal devices.
- Should you build device apps or mobile format browser apps?
- Let your business case, not your development capabilities, dictate this.
- Bring in external expertise where you are lacking and learn from their example.
- For many initial start-ups, mobile formatted browser solutions often have a more immediate return on investment – just be sure to build to your least common denominator.
Look to the Cloud for phone based solution architectures. Some of the most successful phone apps are built on cloud-solution architectures, and for good reason. The phone concentrates on delivering a great end-user experience while the cloud back-end does all the heavy lifting.
The best phone-cloud architectures will often have the client phone-app cache major portions locally so they can remain functional when off-line.
Using the cloud for phone apps actually is a great inroad (excuse, motivation, you pick which applies) to adopt a cloud infrastructure and create frameworks for many future applications that will support devices yet to be developed – so the more you polish your expertise in this area, the better off you will be in the long run.
Bottom Line – Who Wins in Phone-Wars?
Quite simply, the consumer wins. That is to say, if they can filter out all the smoke and noise and then take the time to choose a path that best fits their needs & desires.
If you tend to follow the crowd, as a consumer, then you may be one of those individuals who is changing their platform every 6-12 months, subsidizing all of us who can pick and stay with a platform, for say, perhaps, 5-years.
I guess it’s time my business partners and I revisit our standard corporate phone choice and actually consider upgrading!