Why the iPhone Platform is Still the Best Game in Town


How quickly we forget our very recent history. On January 9, 2007 Steve Jobs announced the iPhone at the Macworld convention. The original iPhone was to be serviced exclusively by Cingular. Also in January of 2007 we learned that Cingular, originally a joint venture between SBC and BellSouth, would be re-branded as AT&T. We then slowly learned as the iPhone’s official release date drew closer, that the iPhone would continue to be exclusive to AT&T, would not be subsidized by AT&T, and you could purchase phones directly from Apple Retail Stores.

As the layers of this onion were pealed back even further, we learned that Cingular (or was that AT&T?) agreed to pay Apple nearly eighteen dollars per month per subscriber for the privilege of being exclusive. Apple was also in control of the activation process which required an iTunes account. Moving forward Apple was also responsible for distributing all updates to the iPhone, not the carrier, not AT&T. Apple was completely in charge, completely. Oh, and there was one more thing, no third-party native apps, only web apps. In fact, Steve Jobs was at that time quite adamant that there would never be natively developed applications for the iPhone and that web 2.0 applications would be all that developers would ever need.

Who Owns the Relationship with the Customer?

What this fundamentally did was change the dynamics of whose customers were they first. The carrier’s or the device manufacture’s? A question that, until this point in time, was never asked. The point that Apple was making, was that consumers would choose Apple products before they would choose a cell phone carrier. And Apple was right. For the first time, a device manufacturer was in control of the relationship with the customer ahead of the carrier. If you owned an iPhone, you belonged to Apple first, then perhaps to the cell phone carrier. This change in the fundamental relationship with the consumer was cemented by large numbers. Very large numbers. Some of the largest numbers in the history of mobile computing.

App Store Downloads

Then it happened, the App Store opened on July 10, 2008 and the next day the iPhone 3G was launched with iPhone OS 2.0. All existing iPhones and iPod touches were able to update to iPhone OS 2.0 as well. A new player was introduced into the equation, the third-party developer. Apple may have won the battle with the carrier in establishing its position with the customer, there was no question there. Apple came first in that relationship. But where does this third wheel fit in? A distant fourth place in line would be the manufactures of development tools and technologies that third-party developers choose to use. Companies like Adobe that manufacture these tools and technologies are even further removed from the mobile customer. Their focus is on making life easier for developers, not better products for mobile customers. It only makes sense since their customers are the developers. But just how important would this new iPhone development platform be to third-party developers and companies that build solutions that these third-party developers use? As only time would tell, and that all depended on what was at stake. And in the beginning, what was at stake was not yet known. That is, not until the numbers started rolling in. Quarter over quarter record-breaking sales of iPhones and iPod touches, and quarter over quarter record-breaking sales of Apps and unimaginable download statistics. Now everyone wants to own the customer. The only player that was clearly out of the race was the carrier, they were just along for the ride.

This is all well and good for the device manufacturer, cellular carrier, and third-party developers. But there was another quite player out there whose battle was already over. The music and movie industries. What everyone seems to have missed was that the explosion of the iPhone into the hands of consumers was more of a play of convergence than its ability to surf the web, respond to e-mail and play games. A cell phone, and an iPod in one device (not just a phone with iTunes installed). Forget everything else. Everyone had a cell phone, and everyone had an iPod. And in June of 2009, when the price dropped to $99, absolutely everyone started thinking about using their iPod to answer phone calls. This is an important factor to consider. Everyone who had (or still has) an iPod is utilizing iTunes to manage and even purchase their music. Once you have a sizable music library in iTunes, and you have grown accustomed to purchasing musing from the iTunes Music Store, you are pretty much hooked. And the numbers on this side of the equation are not too shabby either. In April of 2008, Apple finally passed Walmart and iTunes became the #1 Music retailer currently representing more than 25 percent of all music sales in the U.S.

Loving Their Music

Consumers have a relationship with their music, not their device and certainly not their cellular carrier. What has always defined the relationship has been the music. And Apple was and still is in control of that. It really had nothing to do with how great the iPhone was or was not. The fact that the iPhone is great only strengthens the bond, but it did not create the bond. That bond between consumers and Apple began with the iPod and remains intact due to the consumers owning and maintaining sizable music libraries via Apple’s software, hardware and online services. Every so often the music industry has tried to wrestle control of the customers away from Apple, but has thus far been unsuccessful.

So now we can come to understand why developers are flocking to the iPhone platform and developing applications for Apple’s iPhone. There is a huge install base of customers purchasing apps that seems to increase quarter over quarter. And these customers have proven time and time again that they are willing to pay for music, movies, apps and connectivity. Focusing on the Apps, for the most part, since its debut on the market, Apple has maintained a single platform. The variations between the iPod touch and iPhone has remained subtle. Each being able to host the latest version of the iPhone SDK. Making the current total of units an astounding 50 million units. 50 million units all on basically the same device, running basically the same OS, and all able to access the same software from the same App Store. With the device manufacturer owning the relationship, and in control of software updates and distribution of third-party applications. What’s more is the length of time that this particular situation has been stable. Three years running on a stable platform (which also includes iPod touch devices) to a growing number of users that now totals 85 million customers. Never before has such a consistent mobile platform been available to as many users for this length of time.

Multi-Platform Investment

That brings us to the value proposition. There is a cost associated with supporting additional platforms when developing mobile applications. And that cost will be balanced against the total opportunity there is to be gained. Each splinter in the platform, be it screen resolution, device capabilities, of operating system difference all increase the cost of targeting and maintaining software on that platform. These costs are not only related to writing code specific to each platform. The way that a Blackberry user expects to interact with an application is different from that of an Android user and different again from an iPhone user. Each platform has its own Human Interface Guidelines. This requires modifications in the design of the application as well as the support of variations in the testing cycle. And depending on how great the variances between devices are within a given platform, the approach to on device quality testing may vary as well.

Facebook not Blackberry

Looking at the current competition, RIM may still outnumber based on the total number of units sold to date, but if one takes a closer look, one will quickly discover not only a seriously fragmented collection of device profiles to test against, but also some rather low numbers of individuals downloading and using third-party applications. The “Crackberry” does one thing better than any other device on the market, and that is e-mail. The problem is that times change and most consumers are not utilizing e-mail as their primary means of electronic communication. Twitter and Facebook are replacing SMS and e-mail. So much so that in a recent survey, 40 percent of all existing Blackberry owners claim that they will switch over to iPhone when they replace their current device. What would be interesting to know is how many of those same Blackberry customers already have an iPod and an established iTunes music library. RIM’s only fault is that they have been a player for a long time. And over time, a device manufacture’s will ultimately start to splinter, and their customer base will fragment making the maintenance of applications for third-party develops across all fragments more and more expensive.


Then there is Android. Can anyone honestly deny that Google will help Android become the dominate licensed operating system across portable devices? The problem that third-party developers face is that right out of the gate Google fragmented the market. With the OS divided into almost equal thirds presently (1.5, 1.6 and 2.1), the number of new Androids coming to market is mind numbing. Buyers remorse with a locked in two-year contract has become par for the course. The support costs for third-party developers on the barley one year only Android platform is that it is actually in worse condition than Blackberry. The number of variances based on-screen resolution, device capabilities and operating system versions is a nightmare to manage. And at the rate to which new devices are coming out, it is impossible to test on device across all variations, simply impossible. What is worse still is that each device manufacture can decide whether or not to include the “Google Experience” with their device, and decide on their own when to provide updates for the carrier to push out to the carrier’s customers. This will prove to be problematic for those responsible for identifying testing scenarios, budgeting time, and scheduling regression tests to ensure consistent quality.

Android Platform Versions

Android Platform Versions

Return on Investment

What will the ongoing development costs be and what is the potential gain? For iPhone the overall support costs are currently low as the platform is not too terribly fragmented. Another thing that Apple has going for it is the predictably in which it operates. Almost like clockwork year after year. Original iPhone released June 2007, iPhone OS 2.0 announced March 2008, iPhone 3G released June 2008, iPhone OS 3.0 announced March 2009, iPhone 3GS released June 2009, iPhone OS 4.0 announced April 2010. Developers can plan for it, and business investors that fund third-party development can budget for it. A very stable platform with extremely predictable release cycles. Can the same be said for Android after just one year? Who knows when the next device will be making its way to consumer, what version of the OS it will have on it, and which manufacture will produce it. We don’t even know if it will be a phone or a television set! Not only does Google not own the relationship with Android customers, neither does the device manufacture. The carrier is still in control of the relationship following the old school paradigm of cell phone carriers. With RIM, the majority of users are hanging on to older devices that are not capable of running a modern mobile application. Certainly nothing on par to what can be developed on the most recent Blackberry OS, or even on Android or iPhone. And will RIM have its Blackberry 5.0 out of beta and on enough devices long enough for any sort of return on investment before Blackberry 6.0 is released? While RIM may in fact have a model more closely resembling Apple in the fact that they own the customer relationship first, not the carriers, RIM suffers from its long running legacy.


The point being is that the iPhone is a very well-managed, barely fragmented (as of today) platform with a huge customer base that can’t seem to get enough apps to satisfy their need to make mico-purchases at the app store. The iPhone has effectively replaced the candy rack at the checkout aisle for impulse purchases. Under the guidance of Steve Jobs, and since October 2001 with the introduction of the iPod, Apple has been earning its right to own outright the relationship it has with its customers. Through rigorous engineering best practices, and the ability to deliver a quality product like clockwork year after year, the consistent stability of the platform has made the iPhone a safe haven for third-party developers. Developers that are interested in developing high quality solutions to a well-groomed customer base that is willing to pay for that experience. What could possibly be a justifiable reason for the government to step in and take all that away?

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