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The Golden Child of Smartphones?

  |  August 5, 2010   |  Comments

Apple has succeeded because of its appeal to consumers. What happens when the consumers get angry?

Apple is a company whose brand embodies beautiful efficiency and competence. While the company’s products have not always had the latest features or technology, they’ve been very successful with consumers. The first iPhone didn’t have 3G even though it was a pretty widespread technology then and now the iPhone 4 lacks the 4G speed of one of its chief competitors, the HTC EVO. The iPhone and iPad still lack Flash and Macs don’t compete on speed with their like-priced counterparts. While Apple products have not been the cutting edge in terms of features, they’ve had the aura of effectiveness. They work and they work easily. Apple is also viewed as consumer friendly. This is because design and ease of use is such a part of its brand image and also because Apple has introduced some very consumer-friendly changes into rigid industries. Way back when, iTunes really cracked open the music business with inexpensive, legal downloads. Apple introduced a better way of doing voicemail when it brought visual voicemail to AT&T. And, of course, there were wireless applications available before the App Store, but Apple put them all in one place, made many of them free, and made them easy to download.

However, you wouldn’t know it from the mountain of bad publicity that Apple has received in the wake of the newest version of its smartphone. The problems with the so-called “death grip” and Apple’s somewhat tone deaf response of “you’re doing it wrong” didn’t send the right message. Finally, it seems Apple has built something that didn’t work perfectly right out of the box.

Apple and AT&T are facing a lawsuit for anti-competitive practices stemming from the two companies secret agreement to keep the iPhone exclusive to AT&T. On June 10, that lawsuit was allowed to move forward by a federal judge in New Jersey. It has also been given class action status.

On an anecdotal level, I got my iPhone 4 a few weeks ago, and many friends and colleagues who’ve seen it commented they are holding off on upgrading. I’ve also recommended to friends with iPhone 3G or 3GS that they not upgrade to the latest software - it’s slow on the old phones. Macworld has an article on how to do the uninstall.

So, Apple isn't looking like the consumer-friendly, everything-it-touches-is-gold company of late. And it’s not great timing because the smartphone market is hot. There are currently 285 million wireless subscribers in the U.S., according to the CTIA, the wireless industry trade group. Nielsen Mobile is projecting that smartphones will make up 51 percent of the mobile phone market in the U.S. by Q3 2011. With smartphone ownership currently at about 30 percent, that means over 50 million new smartphone users will be browsing, downloading, and networking over the next year.

And the long-rumored iPhone killers seem to be emerging. IPhone has held off ballyhooed challengers like the Palm Pre, BlackBerry Storm, and HTC G1. But now, Android powered smartphones like the HTC EVO and Droid X are garnering great reviews and robust sales. More tellingly, the users of these phones are going to the mobile Web in droves. While the iPhone is the most popular handset on mobile Web, Android phones are now gaining. Ad network Millennial Media reported that while iPhones account for 56 percent of mobile Web traffic, Android’s share of traffic is increasing at a faster rate. Despite the launch of the iPhone 4 on AT&T, Verizon’s line of BlackBerry and Android phones outsold AT&T last quarter by a healthy margin. The Wall Street Journal reported that Verizon added 665,000 new customers in Q2, while AT&T added 496,000.

What does this mean for marketers?

  • While smartphone growth isn't a surprise, it’s becoming very important. If half of all mobile phones are smartphones, it’s important to make sure your mobile website is taking advantage of the more robust capabilities these phones offer. And be savvy about mobile search - Google is reporting that mobile searches have grown 300 percent in 2010 and that’s attributable to the better mobile Web experience provided by smartphones.

  • If you have an iPhone app or are launching one soon, make sure it’s backwards compatible with previous iPhone OS. There may be more holdouts with previous software versions than before.

  • Be more device agnostic. If you have an iPhone app, you should have an Android version. The Wall Street Journal reports that there are 160,000 new Android users every day. You don’t want to be missing these people.

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Davis Brewer

Davis Brewer is lead strategist of emerging channels for Spark Communications. As the lead strategist, Davis manages the robust expansion of all Spark client activity in the digital advertising space.

He acts as a client resource for the agency's digital futures practice, providing insights and analytics as well as risk management, for the latest emerging advertising opportunities in the digital media space. In this dual role, he continues to oversee his existing list of forward-thinking clients.

Davis began his career at an online advertising agency in San Francisco at the height of the dot-com boom. He quickly became a successful agent in the digital commerce arena after moving back to Chicago, armed with the unique perspective of a bubble-burst veteran.

A pioneer of behavioral targeting online, Davis was named a 2006 Rising Star in "DiversityBusiness" magazine. He received his degree in English from Dartmouth College.

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