[maemo-users] [Fwd: Apple, iPhone and iTunes - Impacts on the Wireless World]

From: John Holmblad jholmblad at acadiasecurenets.com
Date: Tue Jan 27 21:01:34 EET 2009

fyi. Here is the url to the www page for this Newsletter:


The Newsletter includes some mention of Nokia's recent moves, but 
nothing specific regarding the Internet Tablet.

Best Regards,

John Holmblad

Acadia Secure Networks, LLC

-------- Original Message --------
Subject: Apple, iPhone and iTunes - Impacts on the Wireless World
Date: Thu, 22 Jan 2009 19:47:45 -0500 (EST)
From: Dr. Mehmet Unsoy

Cartagena Capital

News and Events
Cartagena Newsletter - January 2009
Apple, iPhone and iTunes ? Impacts on the Wireless World
by Dr. Mehmet Unsoy

Happy New Year!

While the world is in the midst of major economic problems, it is good 
to start the New Year with some positive stories. I believe Apple has 
made and continues to make significant contributions to the development 
of the wireless industry. This is acknowledged by partners and 
competitors alike.

After the less than stellar MacWorld 2009 in San Francisco earlier this 
month, and in particular, after Steve Jobs' announcement of taking a 
6-month medical leave of absence, Apple's stock took some losses. 
However, this week Apple announced their 2009 Q1 results, with record 
quarterly revenue of over $10 billion and record quarterly net profit of 
$1.6 billion. Thus, Apple's future looks as bright as ever, and their 
flagship wireless product, 3G iPhone as well as iPhone apps on iTunes 
will continue to have a huge positive impact on the global mobile market.

You may recall that 3G iPhone was launched globally on July 11th, 2008. 
Within the first 6 months, around 12 million 3G iPhones have been sold, 
with significant majority in the U.S., to AT&T subscribers. However, as 
of now, iPhone is available in over 80 countries, through more than 100 
mobile operators. So, it truly is a global product.

Smartphones are the most important handset category to observe in the 
developed mobile markets. The features of 3G iPhone in particular are 
having major impacts on the direction of the smart phones. The 
multi-touch screen of iPhone has revolutionized not just the handset 
screen market, but has also triggered a major momentum towards touch 
screens for all sizes of display. We are experiencing a dramatic change 
in behavior: when you see any type of screen in your daily life, you 
will first ?touch? it, and if it does not respond, you may anticipate 
that there is something wrong with that screen! Bottom line is, we will 
see some new innovations, cost reductions, and new applications around 
?touch screens? in coming months / years. It is not outrageous to 
predict that non-touch screens may go the way of black & white screens!

On 3G iPhones, we have both an all-you-can-eat 3G mobile Internet 
flat-rate and Wi-Fi connectivity. This combination has significantly 
increased mobile Internet usage in the last 6 months, especially in the 
U.S. As of today, about 50% of all mobile Internet access in the U.S. is 
through a 3G iPhone, including the use of it through Wi-Fi access. 
Browsers on other smartphones including BlackBerry and Windows Mobile 
have followed suit and beefed up their feature sets and capabilities 
recently. So much so that we now have a serious debate as to whether it 
will be the browsers that will win the battle of mobile content, or the 
downloaded mobile apps. It is interesting that browsers on handsets may 
owe their recent success to Wi-Fi capability on the handset! In fact, 
Apple may be approving 3rd party browsers for iPhone, but this may have 
some strings attached!

The combination of assisted GPS, large screen and various mapping & 
navigational apps have made 3G iPhone one of the most exciting personal 
navigation devices (PND). This is not only triggering various other 
mobile devices to take on the PND role (both on-vehicle and pedestrian), 
but also opening up numerous location-based retail and advertising 
services, creating significant excitement and an effective value 
proposition around LBS. Maybe, after waiting for so many years, LBS is 
finally here, and iPhone has been a major enabler for this market.

One of the major frustrations with 3G iPhone has been the battery or 
power management. It is fair to say that if you use most of the features 
of iPhone, you may have to charge it multiple times during the day. 
Alternatively some important features such as 3G, GPS or Wi-Fi may have 
to be turned-off to conserve battery, which defeats the purpose of 
iPhone. However, frustration with the iPhone battery has enabled various 
innovations around back-up batteries, new battery technologies and power 
management solutions.

In fact, there is hope that iPhone 3.0 (which is rumored to be targeted 
for June or July 2009) may have some improvements in power management. 
Other rumors for iPhone 3.0 include 3D graphics, with the use of 
quad-core CPU, offering an excellent platform for new gaming apps. Yet 
another expectation is an iPhone Nano, also targeted for summer this 
year, to be smaller and cheaper, originally focusing on the Chinese 
market. It is fair to say that both 3D iPhone and iPhone Nano would be 
trailblazers, setting major new trends in the wireless market!

Application developers generally wonder which platform to focus on for 
their development. Sometimes (not always) numbers speak for themselves! 
Apple has launched the App Store for iPhones in iTunes on July 11th 2008 
with only 500 apps, (about 150 of them free); In December 2008, this 
number exceeded 10,000 apps (which is a remarkable and record-breaking 
number to achieve within 5 months). In addition, in the same period, 500 
Million application downloads to iPhones have occurred. That is about 
100 Million app downloads per month!

One of the reasons for iPhone app success was the remarkable ease of app 
development with SDK and open APIs. Apple's single OS X platform offers 
a much bigger global target market, which attracts more developers. Lots 
of iPhone apps are free, but for those that cost some small amounts, 
Apple is reportedly giving 70% of the revenues to the app developers. 
This is a very significant enticement!

YouTube has been one of the flagship mobile apps on iPhone; in fact, 
YouTube on iPhone has been credited for the ground-breaking take-off of 
mobile video streaming in the U.S. It is one of the most advertised, 
most sexy apps and one of the most used multimedia apps on iPhone. It 
has triggered far more interest in the use of mobile video as well as 
mobile TV. When mobile TV becomes more prevalent on handsets soon, it 
will be partially thanks to YouTube success on iPhone.

Social networking apps on iPhone are probably the ones that take 
advantage of the GPS feature of the handset the most. Instant messaging 
/ chatting, locating friends, but most importantly, staying on-line with 
YouTube, MySpace and Facebook all-day long, and for professionals 
staying connected with LinkedIn or Plaxo while on the go, are all new 
possibilities, that were not feasible just 6 months ago (unless you 
carried a laptop!) We should expect tons of more innovative new apps in 
this space, as more and more user demographics are introduced into 
mobile Internet.

In fact, one major area of innovation we should look forward to is 
secure mobile applications, i.e. anything from mobile signatures, mobile 
banking, to mobile money transfers. There are already various but 
limited services and apps out there, but this is one market that will 
grow dramatically in the coming months or years. Smartphones such as 
iPhones are particularly suitable since they can offer levels of 
security but also significant ease of use.

One type of iPhone apps that I personally use frequently is the 
on-device portals. They provide me with all sorts of latest news, 
downloaded periodically, which are ready for me to read whenever I have 
the time to do so. Going forward, we should expect various innovations 
around on-device portals.

iTunes is one of the most successful digital content delivery platform 
in the world. It has been reported that to date, more than 6 billion 
songs have been sold through iTunes. Apple's recent announcement that 
iTunes content becomes DRM-free, with variable pricing, will further 
help to increase the delivery of digital content, including to those 
iPhones. Even though, there may be challenges to Apple from some 
Hollywood studios & record labels, this game-changing initiative may 
drive the whole multimedia industry toward simpler, more innovative and 
DRM-free digital content delivery business models.

For the mobile industry, 2009 is expected to be the year of 
applications. It is the applications where the user excitements are at; 
it is the applications that will justify and drive the deployment of 
wireless broadband / 4G networks in the future; and it is the 
applications where ultimately the money is.

That is why, when a new platform is being deployed, such as iPhone last 
year, or more recently Google's Android based G1 phone, it is the 
applications that attract the most attention. It is fair to say that, 
for G1 to succeed, innovative Android-based applications will be 
absolutely critical.

The vertical integration of handsets and applications is not limited to 
Apple. In fact, Nokia with OVI, has been innovating similar apps and 
content delivery solutions, through mobile operators. Nokia's Comes with 
Music, albeit currently limited to a few Nokia devices, offers some 
revolutionary business models. Nokia is already working on Comes with 
Video. RIM is reportedly working on launching a similar music store for 
Blackberry, in the next couple of months. Also, Google is working on 
Android Market as the app store for the G1 phone.

Finally, even though the world is facing some severe economic 
difficulties, Apple is in a very healthy position. They have over $25 
billion cash reserves, 35% gross margins and thus they have the 
financial means to maintain leadership in innovation and market 
deployment of iPhones. Apple has a VC fund that they use to steer 
innovation and applications. Some analysts are predicting around 77 
million iPhones deployed in the next 4 years, and that Apple would grab 
the smartphone market-share leadership from Nokia, by taking 40% of this 
prestigious high-margin market. Also, the vertical integration with 
their iTunes App Store will give Apple a strong standing, and will allow 
Apple to influence the future direction of the wireless industry as a 
whole. Whether these predictions are right or wrong, it is fair to 
expect that Apple, iPhone and iTunes will play a major role in the near 
future of the wireless industry. Especially Apple's willingness to adopt 
disruptive, game-changing technologies and business models, should give 
everyone in the wireless industry, reason to monitor closely what Apple 
is doing!

Dr. Mehmet Unsoy
Partner, Cartagena Capital
munsoy at cartagena-capital.com


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