iOS: Where the money is

February 23rd, 2011

Wow, it has been a while… if you’ve been breathlessly reloading this page for months waiting for a new post, well, your wait is over! Enjoy this… minor comment on a news item.

Amidst the recent hubbub over Apple’s decision to charge publishers 30% of revenue for in-app subscriptions, and to require that such subscriptions be the same price or cheaper as subscriptions outside the app, many online commentators are convinced developers will flock to Android instead. However, one need only look at the facts to get a different impression:

The App Store now controls 82.7% of the worldwide app market [with $1.8 billion in 2010], down from 92.8% the previous year, IHS notes. Research In Motion’s (Nasdaq: RIMM) BlackBerry App World is second with 2010 revenues of $165 million, translating to a 7.7% market share and year-over-year growth of 360.3%; Nokia’s (NYSE: NOK) Ovi Store is next at $105 million, corresponding with 4.9% market share (up 719.4% year over year), with the Android Market bringing up the rear at $102 million, accounting for 4.7% of the market but experiencing 861.5% annual growth (emphasis mine).

30% more of zero is still zero.

» Apple’s App Store Yields 83% of App Revenues in 2010 (via Apple Outsider and Daring Fireball)

In a statement this morning, noted curmudgeon and control freak Apple signaled a surprising change of heart, announcing that it is “relaxing all restrictions on the development tools used to create iOS apps, as long as the resulting apps do not download any code.” Exactly what that means has yet to be revealed, but we’ll likely learn more very soon.

One of the big looming questions: does this mean Adobe’s Flash-based hero-to-zero Packager for iPhone will stage a triumphant comeback? Or will Adobe announce that it has had enough of Apple’s shenanigans and is perfectly happy in the strong, loving arms of its new beau, Android? (Perhaps a Harlequin romance novel cover graphic is apropos, I’d better start the Google search now.)

Apple also announced that it would allow at least a tiny bit of light to shine into its notoriously opaque app review process, thus revealing the arcane rituals and sacrifices necessary to get an app approved for the App Store. My guess is that it involves heaping piles of plantains and pig carcasses in an offering to appease the angry Jobs, who dances about in a loincloth speaking in tongues, stopping only to occasionally answer a random buffoon’s angry email rant. Just speculating, though.

» Statement by Apple on App Store Review Guidelines

Flash’s much-heralded, much-delayed appearance on Android with Froyo has received its share of attention, from both overly optimistic and relentlessly critical sources, and it’s difficult to give it a clear assessment at this point. A variety of videos have shown Flash running reasonably well, while others show it with its pants down around its ankles. The best verdict you can give it right now is, it depends on what you’re trying to do.

Apple’s argument has long been that Flash’s performance is not up to snuff on mobile devices, and there’s plenty of evidence to support that position. Even with the 10.1 update, many Flash-based sites run poorly, especially when playing video. Errors, choppy playback, failure to load and other problems are common. GigaOM’s Ryan Lawler, cutting to the chase as he presents a video by Kevin Tofel struggling with several different video sites on his Nexus One, concludes:

While in theory Flash video might be a competitive advantage for Android users, in practice it’s difficult to imagine anyone actually trying to watch non-optimized web video on an Android handset, all of which makes one believe that maybe Steve Jobs was right to eschew Flash in lieu of HTML5 on the iPhone and iPad.

However, I had another sort of experience with Flash on Android this weekend, which proves (at least to me) that there’s another side to the story.

I had recently shown my Web Foundation class the nifty Flash-based interactive video for “Sleepeater” by the New Zealand band Shihad. The song got stuck in my head, and I wanted to download it; and it happened, as these things often do these days, while I was in my car. (No, I wasn’t driving at the time.) However, the band’s latest album won’t be released for a few weeks, and a search on iTunes via my iPhone turned up nothing. (The song is actually available in the New Zealand iTunes store, but a kiwi I am not.)

So, I turned to the most logical source in a situation like this: MySpace. As luck would have it, Shihad’s MySpace page had the song in its music player, and it didn’t care what country I’m in. The MySpace music player, as you are probably aware, is Flash-based. I loaded their page on my Dolphin HD browser, scrolled over to the player, and tapped it to download the Flash piece, which went relatively smoothly. After it appeared, I tapped the song in the playlist, and after a bit more non-Flash-related fumbling to turn on the sound, my car filled with the song I would otherwise be unable to hear.

Now, the experience was not fantastic — the player is slow, it’s not very responsive, and of course the sound quality is fairly mediocre. But it worked. And the reason why that’s relevant should, I hope, be obvious: there’s an awful lot of content on the Web that’s locked up (or set free, depending on your point of view) in Flash, and many people will want to get to it, sooner or later, on a mobile device.

Apple’s approach is to try to convince the world it doesn’t need Flash content, because people can download an app to do the same thing; but that only works for the content someone has decided to put into an app. The same is true of HTML5 content. Howling reports of atrocious Flash video performance aside, there is a valid reason for wanting to use Flash on a phone, even if the experience is poor. Video and games may not be ideal candidates, admittedly. But the next time you just have to see or hear something on your phone and it happens to be in Flash, Android at least gives you a chance of success that is greater than zero.

That may be faint praise, it may not be a selling point for everyone, but it’s difficult to accept the idea that you should be glad your iPhone and iPad are absolutely, unequivocally unable to play Flash. Rocking out to “Sleepeater” in my car the past few days, I was certainly glad not to be stuck with Apple’s decision.

Android fans have been crowing over a Nielsen report that Android phones outsold the iPhone in the first six months of 2010, and it is likely a harbinger of things to come. Android’s carrier ubiquity and choice of hardware almost guarantee its eventual rise to smartphone OS marketshare leader.

However, the real story for Apple continues to be profit, as a recent report reminds us: Apple earned 48% of mobile hardware revenue in Q2 (you know, where the revenue actually comes from) despite selling only 3% of the units that quarter. The numbers echo its position in the PC market, where it commands 35% of the operating profit with 7% of the market share.

Make no mistake: Apple has enjoyed its position as the king of the smartphone era, and it will certainly not fade quietly. While we haven’t heard any rumblings on the patent lawsuit front in a while, we probably haven’t heard the last of it; like a mama grizzly, Apple is known to aggressively defend its creations when threatened. With the antenna drama mostly behind it, Apple should be able to focus on 7″ iPads or magic levitating iPhones or whatever else it’s cooking up next (my vote is for streaming your iTunes library via LaLa technology, but I’m not holding my breath).

However, even when iOS is no longer the dominant smartphone platform, Apple will still sit at the top of the profit heap, which will give them the capital to thrive even without controlling the market. And the iPhone shares the sheen of attainable luxury with the rest of Apple’s product line, which will likely keep it in the hands of the hip and influential for some time to come.

» Apple Snags 48% of Mobile Profit Pie (GigaOM)

(Note: NSFW language)

This video, which I can only assume is making the rounds, beautifully encapsulates both the myopic allegiance of some iPhone users to their favorite device, and the unshakable belief among the tech geek set that simply listing another device’s set of superior-on-paper features constitutes an ironclad repudiation of the device in question. (Plus it’s just pleasantly weird in its execution, thanks to Xtra Normal.)

As I’ve pointed out before, for the average user, experience trumps features. “It’s better because it’s better” is a perfectly sound argument, and I believe it’s the primary reason most people buy the iPhone (or most things, really). Like the iPad, it’s an emotional purchase more than a rational one — it simply feels right to the people who love it — and Apple’s deep understanding of this type of purchasing behavior is what keeps them on top.

(Full disclosure: I own an Evo, and will probably also be buying an iPhone 4 before long.)

Update! With a retort from more robotic 3D humanimals.

It's hip to use Square

Sci-fi convention vendors, street mimes and hot dog cart owners, rejoice! Square, the mobile credit-card-swiping system announced late last year by Twitter co-founder Jack Dorsey, is now open for business. The rare company whose name, logo and product are all the same thing, Square offers a slick and simple method for accepting credit cards through an iPhone, iPad or Android phone, no merchant account or confusing accounting scheme required. That’s right, you can now accept credit cards as a buy-in at your weekly poker game, and when someone says, “Dude, I’ll give you twenty bucks for that t-shirt,” you can say, “Visa or Mastercard?”

Everything about Square screams simplicity, from the cute little card reader you plug into the headphone jack, to the service itself, which sports a beautiful and incredibly straightforward user experience, to the fee system — 2.75% + 15¢ per transaction for swiped cards, period. It also does lots of things the traditional credit card process should do, like email receipts and show the merchant a photo of the card holder for verification. You’ll want to get one just to try it out, and there’s really no reason not to — the reader, app and setup are all free, and available today. Now you just have to come up with something worth buying.

» Square Web site (and Fast Company, via Gizmodo)

In a less-than-shocking turn of events, Adobe’s Mike Chambers announced in his blog Tuesday that Adobe will cease its efforts to bring Flash-powered apps to the iPhone, following the release of Flash CS5:

While it appears that Apple may selectively enforce the terms (of the iPhone SDK), it is our belief that Apple will enforce those terms as they apply to content created with Flash CS5. Developers should be prepared for Apple to remove existing content and applications (100+ on the store today) created with Flash CS5 from the iTunes store.

We will still be shipping the ability to target the iPhone and iPad in Flash CS5. However, we are not currently planning any additional investments in that feature.

Read the rest of this entry »

Well played, Apple

April 20th, 2010

Only one thing is definitely true about the headline-grabbing melodrama going on over at Gizmodo: it’s all good news for Apple. It doesn’t even matter whether the alleged iPhone 4.0 prototype really was left in a bar by an overserved young Apple engineer — they’ve garnered a huge amount of attention throughout an entire news cycle, without actually revealing anything definitive (only a new piece of hardware that may or may not be the actual iPhone 4-HD-whatever), while sowing just enough doubt to keep some of the wavering faithful from leaving the fold for one of the sexy new Android phones like the Droid Incredible (arguably worth a few lost sales between now and June). And there’s still plenty left to reveal in June, including the actual screen resolution, front-facing camera (or not), and whatever else Gizmodo didn’t uncover. And they get valuable early feedback on the design — whether or not they could or would ever tweak it based on such feedback — while still being able to claim it’s not the final unit. And, hell, they could probably still even sue Gizmodo if they wanted, if the whole thing started to look too perfect.

Fake? Leaked? Stolen? Red herring? It doesn’t even matter. Apple wins.

Engadget is reporting (based on a post on PhoneGap developer Jesse Macfayden’s blog) that Apple has confirmed that apps created with cross-platform dev tool PhoneGap will not be rejected based solely on their use of the tool.

Apple’s recent change to the iPhone OS 4.0 SDK agreement has had the development community in a tizzy for the past week — tools such as Adobe’s Flash-based Packager for iPhone, Novell’s C#-based MonoTouch and 3D game development tool Unity all seem to be forbidden under the new terms.

However, the fate of other tools such as PhoneGap and Appcelerator’s Titanium has been unclear, since they use Javascript, HTML and CSS to create native code. PhoneGap now appears to be in the clear, but Titanium functions differently, and the differences could be a problem for Appcelerator.

Read the rest of this entry »

Amidst the excitement over multitasking, the Game Center, folders and the other new features announced for the iPhone OS 4.0 on Thursday, there has been an undercurrent of dread among some over another new iPhone initiative — Apple’s new iAd advertising program:

As far as I’m concerned, that particular ad is sucking away 1/8th of my experience, jamming its nose in my portal to a device that I paid (a lot) to own and use. 1/8th is too much in my book, and it infuriates me that the guy who sold me this phone is the same guy selling someone a means to take part of that phone from me.

» Apple Wants 1/8th of Your iPhone Back—Don’t Give It to Them
(Mark Wilson, Gizmodo)

Without addressing all of his points — and his argument makes some sense — Wilson is really trying to push back the tide when it comes to mobile advertising. Though mobile is a minuscule portion of overall digital advertising, and though display advertising is itself a tiny percentage of overall mobile advertising spending (some numbers and analysis from TechCrunch here), in-app mobile ads are here to stay, and are only going to get bigger. (Literally.)

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