Apples most serious threat is Amazon, not Android

Rob Bamforth, Principal Analyst

Quocirca Comment
The term platform is overloaded with meanings in the technology industry and this is particularly the case in mobile telecommunications where it has been used to describe carrier infrastructure, hardware devices, operating systems and most recently, a commercial framework for publishing and selling content. For some time mobile operators have tried to work out how to provide service delivery platforms (SDP). They have been pushed from one end by the vested interests of their telecoms equipment providers and from the other by falling voice call revenues and the need to build new lines of business around data. While this infrastructure is as critical as other choices as to how networks are plumbed, its functional differences have little direct impact on end subscribers. Companies that have a legacy of building mobile phones think more about the hardware the mobile devices. These started off as straightforward cellular phones with some of the spare processing capacity originally turned over to some data activities and then matured into devices with two connected cores of functionality one a compute engine, the other a radio communications engine. These devices have typically been tuned to the needs of the primary customers, mobile operators, who have expected to have them tailored to sell particular features and services to their customer base. Next, IT companies entered the mobile space thinking about software architectures. These offer application programmer interfaces (API) of an operating system to developers just like on traditional computer platforms to be exploited by independent software vendors (ISV) to build and sell applications. There have been many mobile operating software systems including cross platform tools such as Flash and Java, but all require an ecosystem of serious developers to exploit them. These traditional telecoms and IT industry models have been turned on their heads by the whole service approach, first popularized by RIM with the BlackBerry. With this, device hardware, the applications they run and the back-end service infrastructure all come together to form something different a platform that delivers a commercial service. Early (and even current) BlackBerry users were not buying into particular hardware, software or mobile operator service, but a holistic email and personal information management (PIM) delivery service. Where BlackBerry was the forerunner, the company that really exploited this approach to the max is Apple, and despite the marketing and technology efforts of many other players Samsung and HTC with hardware platforms, Google with Android Apples market strength and mindshare dominance remains. It doesnt matter if others have better hardware or software, Apples strength comes from the completeness of the offer its a commercial publishing, not simply technically oriented, approach. With this approach it has evolved the concept of the application from something heavyweight and overly serious into the app. Apps now are content and short service delivery vehicles, hence Apples widely repeated tagline, theres an app for that. While they still must pass Apples criteria and checking process, they can be developed by individuals or smaller teams within organizations, and are then published to a readily available storefront, the App Store. Apple takes its margin as the publisher on its commercial platform many would say too big a margin and the developer makes money. True, some apps have been iTat and frivolous, but the overall numbers have been so gigantic that almost everyone in the industry operators, hardware and software vendors has tried in some way to bolt the concept on to their own offerings. The reason they mostly fail is they do

Apples most serious threat is Amazon, http://www.quocirca.com not Android

2012 Quocirca Ltd

not realize how core the commercial model is to the overall offer. For this reason the more serious contender Apple faces is, perhaps surprisingly to some, Amazon. Here is a company that has gone the other way by starting with the solid foundation of a popular commercial content delivery platform and building device capability onto the edge. Unlike the massive disruption and dislocation Apple caused with the mobile operators, Amazon has worked its mobile magic differently. True, most iPhones and a percentage of iPads are sold with cellular contracts, but these devices are network resource hungry; carriers struggle to deliver sufficient bandwidth and subscribers may suddenly realise there are service gaps, caps and additional costs, especially while roaming. This is a serious capacity crunch that many regions are struggling to deal with. At a certain point the cost of delivering rich media will have such an impact on networks that it must be reflected in the cost, as it was in the early days of mobile music and mobile TV. What is uncertain is whether consumers will pay if they dont there will obviously be a commercial impact on Apple and its would be imitators

Amazon amortised the mobile network element into the cost of the media it sells, and in particular for books with the Kindle this works very well. The communications element is seamlessly hidden and content neutral, but this is a difficult model to extend to ever-richer media and for example into large volumes of high definition video. Amazon needs to continue its push into the device space, but without compromising in ease of use and access to its media and content. As Amazon continues to extend its commercial proposition into more functional hardware, and Apple pushes further into media and controlling its publication, these two industry giants will increasingly be in direct competition. Whereas the past of the mobile industry has been focused on features, functionality and technology aspirations, its future will be concentrating on content, contracts and commercial realities. This article first appeared http://www.knowyourmobile.com on

Apples most serious threat is Amazon, http://www.quocirca.com not Android

2012 Quocirca Ltd

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Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of realworld practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption the personal and political aspects of an organisations environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocircas mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocircas clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox, EMC, Symantec and Cisco, along with other large and medium sized vendors, service providers and more specialist firms.

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Apples most serious threat is Amazon, http://www.quocirca.com not Android

2012 Quocirca Ltd