10/20/09 by David Wachs | Blog, Industry Blog | No Comments »
As part of the new iPhone OS 3.1, Apple released a new “API” (set of programming language features) to its programmers. To me, perhaps the most interesting API set is the “In App Purchase” code. Here’s the description from the Apple web site:
In App Purchase allows you to embed a store directly within your application. You can use this in-application payment functionality to collect payment for enhanced functionality or additional content usable by your application. You implement In App Purchase in your iPhone application using the Store Kit framework. Store Kit connects to the App Store on your behalf to securely process payments from the user. Store Kit prompts the user and collects the payment, then notifies your application so that it can provide items the user purchased.
For example, you could use In App Purchase to implement any of the following scenarios:
- A basic version of your application with additional premium features.
- A book reader application that allows the user to purchase and download new books.
- A game that offers new environments (levels) to explore.
- An online game that allows the player to purchase virtual property.
On the outset, this seems harmless, right? But what does this really mean? Is content always going to be limited to “digital” content? Meaning, will you only be able to purchase items that can appear on your phone, such as apps, digital subscriptions, wallpapers, ringtones, silly “virtual property”, and news streams? Or, will Apple open this up and allow for real goods and services to be transacted via this API? The real question: is Apple now competing with PayPal and MasterCard?
One thing that’s sure, for this new model to work, Apple will need to lower its usurious 30% revenue share rates. At 30%, it’s impossible to create an economic ecosystem that extends beyond the handset. Many think American Express’ 3% rate is too high, so the marketplace certainly won’t accept a rev share that’s an order of magnitude higher. How quickly this rev share changes will be interesting to track. And exactly how Apple structures it will be even more interesting: will digitally distributed content carry a higher premium then real world content?
Before we assume Apple will proceed down this path, let’s explore the other ramifications:
- Dispute Resolution and Refunds: If Apple does enter the hard goods distribution path, how will it handle the myriad of dispute resolutions faced by credit card processors? Will Apple build out a call center to handle fraud claims?
- Direct Payment: Right now, when you make a purchase through the App Store, or iTunes, your credit card is billed for the transaction. If Apple begins competing with MasterCard, it will need to cut out the middle layer, and either bill the user (with 30 day terms), or directly debit the user’s bank account.
- Competition: What Apple does, the world (Google, Microsoft, Blackberry, Palm) follow. As Google continues to give away it’s Android platform to handset OEMs, will a quickly multi-carrier, multi-phone strategy model unseat Apple in the commerce arena? I’m guessing NO, but you can’t rule out the possibility.
- Donations: It’s only a matter of time before Kiva wants an app where you can track your donations and make payments. Will these be subject to the same 30%?
We’re still years (who am I kidding! MONTHS) away from seeing the true ramifications of this new API, and it will certainly be interesting to watch.
From a computer company, to a music store, to a phone manufacturer, to a commerce engine. What’s left, Steve?
06/12/09 by Cellit Staff | Blog, Industry Blog | No Comments »
Many people use mobile marketing and mobile advertising as synonyms. Even I’ve been caught taking the shortcut and lumping the two together. However, they are not. And that’s an important distinction.
Mobile Marketing, or the act of using mobile to market your product or service, is definitely here and doing well. This is the activity that (at least in Chicago) I’m starting to see pop up everywhere. I was out for Mexican food on New Years Eve, and the waitress tried to get me to sign up for their mobile coupon club. It’s at the barbershop, grocery store and lots of the little boutiques that dot my neighborhood. Mobile is really good for this type of activity; a close, personal interaction directly between brand and consumer.
Mobile Advertising, however, is still in its infancy. I read a great article about why that is and the pitfalls we should avoid as usage grows. The big stumbling block is two fold: fragmentation (as each carrier has different standards, along with the multitude of phone models available at any given point in time) as well as compelling creatve standards (there’s no equivilent of the banner ad).
The two activities have polar opposite advantages and disadvantages. In mobile marketing, the marketer owns the relationship but reaches a smaller audience initially as they grow their own database of phone numbers. In mobile advertising, someone else owns the relationship but the marketer gains access to a much larger network of people faster.
While the road may be a little slower, it would be my recommendation that businesses looking to experiment with mobile take the path of mobile marketing and build their own database while controlling the relationship. Not only does this prove (in my mind) to be the better longer term solution, but also avoids all the uncertainty and growth pains that mobile advertising is going through.
06/11/09 by David Wachs | Blog, Industry Blog | No Comments »
In the mobile industry, there’s a term for the mobile sites available directly on the phone, via the menu system. It’s called “on deck” content, which is nestled safely in the carrier’s ”garden”. On AT&T this garden is called mmode, on Verizon it’s VCast… each carrier has a marketing term, but they’re all just beautiful gardens. Oh the garden! Like the Garden of Eden, what a safe place it is! Where you can run free and frolic among $2.99 clips of Saturday Night Live and Bollywood, yellow pages search results, and ESPN news. Where everything you could ever need is just 5 or 6 clicks away! Why go outside the garden? Why look elsewhere when everything you want is available there? I mean, that wacky joke of the day page is all I need! And the carriers want me to stay here! I’m sure it’s out of their benevolent love and acts of kindness! I’m sure it’s not due highly profitable contracts and revenue share agreements!
And then there was the shiny fruit…It beckons you. Tempts you from the tree of knowledge. With its curves and its shiny screen. It’s an Apple on the tree. And now the Apple only costs $99!
You touch the Apple. And then everything you now know changes. The garden walls collapse and you have the entire internet in front of you. You now realize there’s life outside the walls. There’s more than one place to get those Bollywood clips! And they’re FREE or at least cheaper because they don’t have to rev-share with the carriers!
It was only a matter of time, really. The death of on-deck. Of course, technology and market demand trump contracts. And those precious on-deck deals are slipping away.
With the new $99 iPhone (which I think is more impactful than the expensive 3GS) and other powerful and cheap “superphones”, we’re seeing more and more a democratization of the mobile experience. More people can afford it, more people can explore it, and more people can finally leave Eden and see what the mobile internet is about, and not just what the carriers are paid to show us.
04/15/09 by Cellit Staff | Blog, Industry Blog | No Comments »
Research in Motion, maker of the Blackberry series of phones, announced the creation of the Blackberry App World, a mobile application which allows Blackberry users to easily download special applications and software for their devices. This is only the latest entry into a growing list of companies trying to provide venues for both paid and free applications for mobile phones.
Recently, the Wall Street Journal had a great article about whether small businesses should invest in a mobile website (see article). In it, the author, Roger Cheng, suggested that the business pay attention to their customers and if the customer experience could be improved by doing so, to go ahead and consider it. In much the same way, I would encourage small businesses to also think about mobile phone applications.
Ask yourself: Will my target consumer have reason to interact with me while they are on the go? I’m online all day at work, and have access at home, so it’s not often that I want to conduct research or order products via my phone. Rather, it’s when I’m in transit, or stuck on the train, or, as happens often, waiting for a meeting to begin, that I find myself playing on the phone. During those juncture moments, are your target customers going to want to interact with your business? Facebook, Twitter, AIM (all social networking companies) are perfect examples of great mobile applications that target activities I’m most prone to want to conduct in those brief down moments on the go.
Ask yourself: What information can I provide them quickly and easily that would be beneficial on a phone? Addresses, hours, directions and some other ‘critical’ information usually provides me with enough detail to get through 90% of my needs for most businesses. However, special circumstances do indeed warrant more in-depth information. When purchasing /renting a home, attempting to make dinner reservations, or finding out bar specials and entertainment offerings – obtaining more information while on the go becomes a defacto must have. For Rent Magazine has identified that their users need apartment information and specs on their mobile devices; MGM Grand realized that their consumers (travelers) wanted to interact with their entertainment, dining and other services while on location (and thus, not near a computer) at their facility.
As Cheng points out, the answers to your consumers questions will define your need to invest in either a mobile WAP site or a mobile application. There are additional considerations to think through, as the multitude of mobile platforms makes designing an application for all phones extremely expensive. However, if you again apply consumer logic to the decision process, it’ll guide you to the right mix of features, functionality, and platform.
