Does anybody really know what smartphone market share is?

An article in Wired online this week had a chart showing US smartphone market share (link). The chart gave more detail than I've seen recently from other research companies, so I thought it was worth reproducing the data here:



The source is Nielsen Mobile, formerly Telephia. The interesting thing about them is that they do much of the service quality monitoring for the operators, so they have much more direct access to mobile usage information than folks like IDC and Canalys, the people usually quoted for smartphone share.

Wired was focused on Palm's loss of market share, which is indeed striking (but not exactly news). But take a look at the chart again; there are a couple of other items that I think are more newsworthy.

The first surprise is that Nielsen shows Apple in fourth place in smartphone share. That's wildly different from what Canalys, the source usually reported, has been saying (link). Here's how they compare for Q4 2007:




What in the world is going on here?

I'm not sure, but I have some guesses. Canalys doesn't directly measure market share, it receives self-reported shipment reports from the manufacturers and then adds them up. That means Canalys measures shipments into the channel rather than sales, and it depends on the hardware companies to be honest.

Riiiight.

Nielsen Mobile doesn't explain on its website exactly how it measures share, but apparently it's using a mix of survey results and the usage data it gathers from the operators (link). So its numbers should reflect current usage of phones rather than shipments. If Nielsen is measuring installed base share, rather than share of current sales, that might explain the difference. Although in that case, share should not be changing as fast as Nielsen shows. So I'm still confused.

If anybody can shed more light on the source of the difference, please post a comment. I've also asked Nielsen, and will let you know if I hear anything.

The conflict in the numbers underlines how ridiculously useless the publicly-available third party sales numbers are in the mobile phone market, and how little attention the press is paying to the inconsistencies. Apple's share varies from 8% to 28%, and no one even notices. Hey, we got a pretty chart and it confirms what we wanted to say, so don't ask questions.

If you want more information on the problems with mobile market share tracking, I wrote a detailed post here (link).

I said there were two newsworthy things about the Nielsen numbers. Can you spot the second one?

That's right, since the iPhone was released, RIM has been gaining share. So much for the folks who predicted at the launch of the iPhone that it was going to take the smartphone market away from RIM. Instead, at least in the first round of competition, we see what you'd expect from a segmented market -- RIM appeals to some customers, Apple appeals to a different group, and both companies do well.

I can't wait to see what the numbers will look like in six months, after the iPhone 3G has been out for a while. Although probably Canalys and Nielsen will still disagree wildly on what's happening.

Only 10% of Japanese people know how to use all the functions in their mobile phones

A Japanese survey of mobile phone users, translated by What Japan Thinks, reports that only about 10% of Japanese mobile phone users say they have mastery (or a good command) over all the functions of their mobile phones (link). About 75% of users say they have mastered less than half of the functions in the phone.

The most confusing functions were e-wallet, applications in general, music player, and Internet access.

What Japan Thinks concludes that few people in Japan "are really comfortable with their phones," which I find reassuring because it says that people in Japan aren't all that different from everyone else on the planet. In many countries there's a tendency to believe that people in Japan (and Korea) use mobile devices so differently from everyone else that there's nothing useful to learn from them. It's as if they're on a different planet. But the reality is that even in Japan, a phone overloaded with features and cryptic menus is confusing to anyone except the most dedicated technophiles.

It is interesting that so many mobile phones in Japan have e-wallet, applications, music, and Internet built in. That's a result of the aggressive rollout of integrated phones and online services by Japanese mobile phone operators -- the real driver that I think makes the Japanese mobile market so different.

(By the way, in case anyone's interested, another survey determined that 14 percent of Japanese cats won't go to the bathroom if someone's watching [link]. Who knew?)

Hypenotized by Apple

Watching the cloud of hype around last week's release of the new iPhone, I was struck by the way Apple's psychological influence over the tech industry continues to grow. I'm having trouble thinking of any recent technology product, let alone a smartphone, that got such heavy coverage for both its announcement and its initial shipment.

Apple's PR miasma is also starting to twist the thinking of people in the tech industry who ought to know better. Apple's gradually becoming the yardstick against which other tech companies are measured -- and since Apple is such a unique company, it's almost impossible for anyone else to measure up.

Case in point: A recent commentary by a CNET reporter, writing about RIM (link):

"There is no RIM hype machine and when a new BlackBerry is released, hardly anyone in the major media outlets care. And if they don't care, neither will the average consumer who doesn't know too much about the tech industry and won't read columns like this; they rely on the NBCs of the world to get by. So if RIM wants to more effectively compete against Apple, it needs to do everything it can to follow the Steve Jobs formula: secrecy, compelling products, and a great PR team. If it does, look for RIM to not lose as much ground as you may think. But if it doesn't, Apple will run amok."

Problem number one with this thinking is that Apple and RIM don't sell to the same markets. RIM's core is middle-aged business professionals; Apple's is hip twentysomethings. I'm not saying there is no overlap, but I've spoken to plenty of RIM users who would be embarrassed to carry a music-playing, video-watching hunk of eye candy like the iPhone into a business meeting. It's like announcing to a client, "I spend my work time on YouTube."

The second problem is that Apple's skill at PR has somehow turned into an excuse for reporters not to do their jobs. The implied message in the CNET article is, "if you don't put on a spectacle, the press will ignore your products." Excuse me, but isn't the press's job to dig out the real value and separate it from the hype? Don't we pay you (or sit through your ads) to look past the PR and fancy speeches and advise us on what really matters? If we just wanted someone to echo the latest hype, we could get all our news from blogs.

But the third problem is the one that worries me the most. Apple is almost uniquely good at marketing. Its communication power is a combination of longtime company history, Steve Jobs' personality, and a culture that values perfection in marcom. Any tech company that makes its goal to match Apple's flash is going to look bad by comparison.

If anyone from RIM is reading this, please listen to me closely. I beg of you, don't be chumps. You're Canadian, for God's sake. You don't do sexy. You do humble and inoffensive.

Steve's from California. He's a pop culture icon from the '70s; the Madonna of technology. If you try to imitate him, you're going to look like mom and dad pogo-dancing when Rock Lobster comes on at a wedding reception.

Not pretty. Not pretty at all.

Which brings us to Microsoft's latest marketing plan.

Word on the street is that Microsoft is planning a huge advertising campaign this fall to pimp its image. Microsoft executives say they have finally tired of taking all that abuse from the Mac vs. PC ads, and they're going to fire back with their own cool advertising this fall.

Remember what I said at the start of this post about Apple twisting the minds of tech company managers? They have done an incredible number on Microsoft, the sort of thing I used to dream about when I worked at Apple.


Welcome, Microsoft. Seriously.

When I was at Apple, one the competitive team's central goals was to goad Microsoft and Intel into targeting us in public. We used all sorts of tactics to irritate them. We printed bumper stickers that read "Honk if your Pentium has bugs." We hounded them in online discussions. We did press and analyst tours demonstrating all sorts of annoying flaws we'd found in Windows.

The whole idea was to get them so pissed off that they would lash out at us in public. Because we knew that when a market leader attacks a challenger, it just makes the challenger more credible.

So what is Microsoft doing? It's attacking the challenger. Microsoft VP Brad Brooks specifically called out Apple in a recent speech (link):

"There are a lot of myths out there in the marketplace today, a lot of myths around Windows Vista...we know the story is very different than what our competitors would like our customers to think.... Windows Vista is the safest OS in terms of security vulnerabilities in its first year of operation, safer than any other commercial or Open Source OS in its launch. Now, I don't hear Apple making claims about security around a product that is that great.... The other big thing that's different this time around is that we've got a pretty noisy competitor out there. You know it, I know it. It's had an impact, been a source of frustration for you, but today, that line, we're going to start to challenge. We're going to get our story back out into the marketplace.... We've got a highly vocal minority out there in Apple. They kind of look at this and say, hey, you know what, you're kind of boring with the mundane message; it's not cool. They tell you it's the "i-way" or the highway. Well, you know what--we think that's kind of a sad message."

Macintosh share is still just a small fraction of Windows' share, but Microsoft is treating Apple like not just a challenger, but as the opinion leader. Microsoft is responding to Apple's marketing, and what's worse, it's bragging about it in public. What an incredible turnaround from Steve Jobs' first days back at Apple, less than ten years ago, when Bill Gates appeared on the big screen and Jobs publicly kowtowed to him.

It's easy to say what Microsoft shouldn't do, but a lot harder to say what they should do. They do have an image problem, and they do need to do something about it. Here's my take: Apple has always been the cool one, and always will be. Microsoft has traditionally been the safe one. Not as flashy as Apple, but dependable and prudent; the choice that'll never get you fired. That's why 80% of the public has chosen Windows over the years. Rather than trying to act cool, which is destined to end in embarrassment, I think Microsoft should apologize for the problems with Vista, give a timeline for fixing them (I think many of them actually are fixed by this point), and then move heaven and earth to make sure people see them deliver on that promise.

The ironic thing is that Brooks actually did some of that in his speech:

"We had an ambitious plan. We made some significant investments around security in this product. And you know what, those investments, they broke some things. They broke a lot of things. We know that. And we know it caused you a lot of pain in front of your customers, in front of our customers. And it got a lot of customers thinking, and even yourselves and our partners thinking, "Hey, is Windows Vista a generation that I want to make an investment in?" "

That's not a bad start, but in today's Apple-soaked industry atmosphere, the snide comments on Apple dominated the coverage. The best example was the Wall Street Journal's business and technology blog, which headlined its article, "Microsoft Ready to Hit Back at Mac Guy" (link).

So now every Microsoft ad in the new campaign is going to be judged on whether or not it's as clever and cool as an Apple ad. I'd like to ask for a show of hands -- who thinks Microsoft can out-cool Apple?

Anyone?

And as for RIM, well, I'm sure you could do a better job of PR than you do today. But don't try to be sexy. A message more like, "real men use a thumb keyboard" is probably the ticket for you.

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Thanks to mjelly.com for featuring Mobile Opportunity in the latest Carnival of the Mobilists.

The end of the dream

No matter how it works out in the long run, the purchase of Symbian by Nokia marks the end of a dream -- the creation of a new independent OS company to be the mobile equivalent of Microsoft. Put a few beers into former Symbian employees and they'll get a little wistful about it, but the company they talk about most often is Psion, the PDA company that spawned Symbian.

Psion never got much attention in the US, but it was a pioneer in the PDA market in the UK, and even to this day I think the Psion Revo is one of the two coolest-looking PDAs ever made (the Palm V is the other one).


The Revo

Psion explored many ideas that eventually turned into major new consumer electronics categories, but it failed to follow up on them. The company was effectively dismembered when Symbian was formed, and many of its best people drifted off to other companies. Now Symbian itself is transitioning to something very different, with most of its people absorbed into Nokia. What the Psion veterans talk about wistfully is how many smart people worked at Psion, how many great ideas the company fumbled, and how successful many of the people have been in the tech industry post-Psion. In this sense, Psion is similar to many other tech pioneer companies that assembled staffs of very bright people, taught them how to work together, and then blew apart like exploding stars, scattering the elements of new companies across the industry. This process dates back at least to Fairchild Semiconductor, which trained the founders of many of the most prominent semiconductor companies (link). You can find similar networks of former employees from places like Apple, Netscape, and Palm. I think Yahoo is in the process of forming a network now, and some day there's going to be a dandy one made of former Googlers.

What makes the Psion story different is that many of the Psion veterans had to leave the UK, or join non-UK companies, in order to become successful. Some are in other parts of Europe, some are in the US, and some are in London but working for foreign companies. This is a source of intense frustration to the Psion folks I've talked with. They feel like not only their company failed, but their country failed to take advantage of the expertise they had built.

There's a big body of academic research on why Silicon Valley has been successful in sustaining itself, and part of the reason is that the Valley recycles companies very efficiently. Failing companies do not last long, but in the process the brightest people and ideas are rarely lost, they are just shuffled around into new configurations.

About a year ago, Andrew Orlowski of the Register wrote an amazing article on the history of Psion, and how company culture and government philosophy failed to take advantage of it to grow a new industry. It's the longest piece I've ever seen in the Register, almost the nucleus of a book, and it's well worth reading. It didn't get enough attention when it was published, and I'm embarrassed to say that I never posted a link to it. So I'm glad to remedy that now. If you want to understand the context what happened to Symbian, and learn a bit about how the tech industry works, go read it here.

If you want to hear more about what Symbian is morphing into, two of its executives have just started personal weblogs in which they are commenting on the migration to Symbian Foundation (among other things). It's an interesting move, and it seems symbolic of the transition they're trying to make into the open source world. Previously Symbian had a company blog that several execs contributed to; now the execs have personal blogs where they talk directly to the industry.

David Wood (Symbian's EVP of Research) link.
John Forsyth (Symbian's Strategy VP) link.

Symbian changes everything, and nothing

[With a correction made on June 26.]

The Symbian Foundation announcement today is a fascinating change in business strategy, but I'm not sure if it will help or hurt Nokia in the long run. I think something like this was probably necessary just to clean up the mess in Symbian's ownership structure. If Nokia can make the new structure work, it'll be a milestone in the use of open source by large tech companies, but I'm not sure it helps Nokia win the smartphone war.


What happened

--Nokia is buying Symbian. Everyone currently working at Symbian becomes a Nokia employee after the deal closes. Nokia said it will spend the next six months deciding "how we will use the unique talent we are gaining."

[By the way, the buyout by Nokia is a change I said was possible two and a half years ago when it first became clear that some of Symbian's owners wanted out (link). I am astounded that the change took so long. I looked back at my old post a few months ago and thought, "wow, I really got that one wrong." Now I am relieved to say that I was not wrong, I was merely prematurely correct ;-) ]

--Symbian OS will become free. Nokia's Symbian-related assets, including both Symbian OS and the S60 interface, will be contributed to the new Symbian Foundation, a nonprofit that will control the Symbian platform. So Nokia writes the code and then gives it to the foundation for free.

Founding members of the foundation include: AT&T, LG, Motorola, Nokia, DoCoMo, Samsung, SonyEricsson, ST Micro, TI, and Vodafone. It's very interesting to see some operators in the mix, especially AT&T.

The foundation will open source the new Symbian platform over a two year period. So eventually Symbian will be available for free.

The new Symbian Platform will have a broader scope than the current Symbian OS. It will include:

-An application suite (previously controlled by licensees)
-Runtimes (including Webkit, Flash, Silverlight, and Java; previously licensee-controlled)
-UI framework (formerly controlled by licensees)
-Middleware
-OS
-Tools, SDK, and application signing (previously shared between Symbian and licensees)

--UIQ is dead. SonyEricsson's UIQ technology, and NTT DoCoMo's MOAP, both of which are user interface layers written on top of Symbian, will also be contributed to the foundation, which will incorporate pieces of them into S60. The new Symbian foundation partners said at the press conference, "We will reposition UIQ in the new ecosystem." That's seems to be a face-saving way of saying, "UIQ is dead." Confirming that, UIQ announced immediate plans to lay off more than half its employees (link).

These are huge changes, even though they'll take a couple of years to implement. We won't get the first release of the new merged platform until 2010, although the partners say S60 and native Symbian apps will continue to run in the future, so they hope many more developers will create Symbian apps today in anticipation of future growth.

--Nokia will continue to control Symbian development. This is my interpretation, not something they announced. Technically, control over Symbian and S60 passes to the new Symbian Foundation, with product plans controlled by a managing board and councils made up of foundation members. This makes Symbian sound independent. But Nokia will employ most of the people maintaining and extending Symbian and S60, and could divert them to other Nokia projects if it ever dislikes the direction of the foundation. More to the point, the whitepaper explaining the new foundation says, "device manufacturers will be eligible for seats based on number of Symbian Foundation platform-based devices shipped, with the other board members selected by election and contribution" (link). So Nokia as the dominant shipper of Symbian devices gets the most seats, and can then control the election of additional board members. Symbian contacted me on June 26 with a correction: "Five Foundation board seats will be allocated to handset vendors on the basis of volumes shipped using the Symbian Foundation platform. There will be a maximum of one (1) board seat per company." So Nokia gets one board seat, and does not control the foundation.

The right phrase for this, I think, is puppet strings. But I don't mean that in a bad way; it would have been insane for Nokia to actually give up control over its smartphone OS. Just don't have any illusion that the strings have been cut. They've merely been relocated, and in fact I think Nokia now controls things more directly since it owns the Symbian development team. Added June 26: Nokia has given other companies a formal say in the feature set, with less official control by Nokia than it had when it held about 50% of Symbian, but perhaps more practical influence because it now directly employs most of the people doing the engineering. So I think Nokia gave up the official veto it had over Symbian's actions, and replaced it with a practical one.


What does it all mean?

I don't know.

The announcement is so complex, and so many things are changing in the mobile market, that it's very difficult to predict how everything will turn out. Also, the whole thing depends on crisp implementation. Even the most brilliant strategy fails if you can't execute on it.

You can't say that Nokia lacks guts. The foundation members said at the announcement that it is one of the largest open source announcements ever, and I think that's true. It's a very interesting, aggressive move for Nokia, and I respect that. There are precedents for a big company acting as a sugar daddy for an open source software project, but I don't think it's ever been done with a project that is as central to the parent company's operations as Symbian is to Nokia. It will be fascinating to see if Nokia can really work effectively through the foundation model. I presume they have thought about this a lot and feel the risks are well controlled.

I'm having trouble seeing the big picture of how this changes the world, though. I suspect the announcement is actually half cleanup and half power move. The power move is that it challenges Android, and could help harness the energy of the open source community to support Symbian. The cleanup is that the ownership situation of Symbian was unstable and had to be changed eventually, and SonyEricsson clearly wanted to get out of the UIQ business. The creation of the foundation solves all of those problems at once. My guess is that since Nokia is paying most of the bills, the other foundation partners were willing to go along with it. The Symbian investors get some money from Nokia, and can sit back and wait to see what the foundation delivers.

Here are some other issues and questions that stand out to me:

Symbian gets its UI back. Years ago, Symbian took itself out of the user interface business, allowing Nokia and NTT DoCOMo to develop their own UIs, and spinning out the UIQ interface team. The company declared that it had been a mistake to ever go into the UI business. So it was amusing to hear Symbian at today's press conference saying how disruptive it was to have multiple user interfaces, and how great it is to have them unified.

The reality is that OS companies have traditionally created the UI along with the rest of the OS because they need to be coordinated closely, and because developers want to work with one consistent interface. So the real mistake was getting out of the UI business, and Symbian has now corrected that.

What will happen within Nokia? At the press conference, Nokia was asked what happens to its internal S60 development team (which is rumored to be larger than Symbian itself) once the merger is complete. Nokia said vaguely that it's going to spend six months working out all those integration issues, and what it will do with the multiple geographic locations. It's hard for me to believe that working out process won't result in some layoffs. I hope I'm wrong; I have friends at both Nokia and Symbian, and layoffs would be incredibly painful for the Symbian folks, many of whom have spent most of their careers there.

The fate of the people is just one of the open questions about what the merger means to Nokia. Another is the fate of Trolltech, the development tool that Nokia purchased recently and said would unify app development across Series 40 and S60. Will it be contributed to Symbian? And what does the open sourcing of Symbian mean for Nokia's use of Linux?

How does Nokia differentiate its software? The theory behind S60 was that Nokia would have its own user interface, helping to differentiate its phones from other Symbian vendors. Now that S60 will be given away, how will Nokia differentiate? The Symbian Foundation says licensees will be able to create a "differentiated experience" on its unified UI framework. Lord only knows what that means. Maybe Nokia has decided the UI is not a point of differentiation at all, and plans to focus on something else (web services, perhaps?)

Will the change in Symbian really drive more developers? As the Symbian partners pointed out repeatedly in the press conference, they have already sold 200 million phones. If that's not enough to excite developers, how will adding another 200 million -- or even 500 million -- do it? Although Symbian now has a nicer long term story, I don't think most developers were paying attention to that. They respond to user excitement and the chance to make lots of money. The new Symbian strategy doesn't directly drive either one.

What does it mean to Apple? I think it's probably good news. Although the Symbian partners could theoretically bleed Apple by sharing investments that Apple has to fund for itself, Apple competes on speed and elegance, not cost control. Nokia and Symbian will now spend the next six months sorting out how they'll integrate and rationalize their organizations. No matter how much they try to avoid it, this will slip schedules and force people to revisit plans. And the other Symbian licensees have to wait two years for the new OS. That gives Apple a long, long time to build up its iPhone business. The Register put it very bluntly in its commentary on the Symbian announcement (link):

"Apple must now see a clear road ahead for world dominance...it's now Apple's business to lose."

Wow, from new entrant to industry leader in just a year. That sort of stuff must drive Nokia nuts.

Is Google happy or upset tonight? My first reaction is to say that Google should be worried because there's now another very credible operating system being given away for free in competition with Android (or there will be in two years). What's more, the leading mobile handset companies all participated in the Symbian Foundation announcement. That makes it harder for Android to get licensees. But the new open Symbian OS is two years away from shipment, giving Google lots of runway to get established (that's what I meant about execution determining the real impact of the announcement). Also, the governance system for Android is a lot simpler than Symbian's. While the Symbian committees must debate and agree on product plans, Google can just decide whatever features it wants to add, and toss them out there. In theory, Google should be able to move much faster.

Besides, there is the question of why Google really created Android. One school of thought says that Android was just a tool to bleed Microsoft and force openness in the mobile ecosystem. If that's the goal, then the opening up of Symbian is a kind of a triumph for Google. Nokia is, in many ways, doing Google's work for it. Which brings us to...

What happens to Microsoft? Here's the weird thought for the day: Microsoft is the last major company charging money for a mobile operating system. The throwback. The dinosaur. How many companies are going to want to pay for Windows Mobile when they can get Linux, Android, or Symbian for free? This is Microsoft's ultimate open source nightmare, becoming real.

Thoughts on the 3G iPhone announcement

Apple's 3G iPhone announcement today was probably the minimum necessary to please the community. The real news was the things that weren't announced:

--No tablet device (again).
--No major changes to the form factor of the iPhone.
--No other major product announcements.

Apple has made its Macworld and WWDC keynotes into a specialized form of performance art, complete with cleverly-dropped pre-announcement hints, and often some sort of surprise at the end of the speech. Apple's own past successes have now raised the anticipation for the keynotes so high that it's a disappointment if some sort of major surprise doesn't happen.

Check out Engadget's live blog of the speech if you want to see the result (link). It's littered with whining like this:

"We love what you've done here, but we're yawning."
"Man, these demos are crazy boring."
"Man, please let this string of demos end!"
"Another developer demo. Ugh."
"Wow, we heard Apple's stock is down almost $5 since this keynote started. Maybe they should just demo their top three and keep going."
"Someone, wake us when Steve's back."

I didn't actually attend the talk, so I don't know how boring all those demos were. But I think it's fair to remind people that the WWDC is a developer conference. It is traditional to do a fairly large number of app demos at a developer conference, because that's a low-cost way of rewarding your developers.

Apple discussed some other interesting things in the keynote. Here's what stood out to me, with some comments:

The "lower" pricing. This was completely necessary. AT&T claimed in an interview with the New York Times that $199 is a magic price point for smartphones (link). They're right, it is. But as the Times pointed out in another article, the price cut isn't actually as meaningful as it sounds -- AT&T is making up for it by raising the price of the iPhone data plan by $10 a month, with a two year contract requirement that will apparently be rigorously enforced. So to get that $200 discount on the purchase price of the iPhone, you pay an extra $240 over two years.

You're actually losing money in the long run, but now the iPhone is priced in the same way as every other phone on the market, making it more comfortable to buy. That figures to help iPhone sales -- especially in Europe, where the unusual price structure for iPhone caused a lot of complaints.

If they really do enforce the contract, that will probably put an end to the widespread practice of buying iPhones in the US, unlocking them, and shipping them to places like China. But the iPhone is getting much stronger international distribution, with up to 70 countries in the works according to Apple. We have no way of knowing how well the contracts will be enforced around the world. Chances are there will be gray market leakage from somewhere.

Notification vs. background processing. One of the critiques of the iPhone is that it doesn't allow third party applications to run in the background, without being visible to the user. Apple said this is to prevent background applications from hurting performance, the way they do on Windows Mobile. But that's a very disingenuous explanation -- Windows Mobile manages memory very strangely, often leaving things in memory whether they run in the background or not. You could create a very efficient architecture that still allows background processing.

Apple says it has solved the background problem by setting up a notification server that can wake up applications on your iPhone and pass incoming messages to them. I don't know how that looks on screen -- since Apple won't run apps in the background, does that mean they'll suddenly launch on screen and start operating on their own? Creepy. And although notification does some of the things you'd want from the background, it doesn't do them all. For example, some developers want to write background applications that would perform tasks automatically, whether they are pinged by an outside server or not.

All in all, it's interesting that Apple's establishing a messaging server for iPhones. Combine that with Apple's new MobileMe service, and Apple is gradually creating a lot of back end infrastructure for the iPhone. In the long run, Apple could build many innovative new services around that infrastructure.

I wonder if they'll charge developers a fee for passing messages through the Apple infrastructure.

When do the developer limits come off? Apple bragged in the keynote that there were 25,000 applicants to the iPhone developer program, but the company admitted only 4,000. In other words, they seriously pissed off 21,000 developers. Not the sort of thing I would brag about, but this is Apple and they can sometimes operate on a different set of rules.

The question is, when (if ever) do the other 21,000 developers get into the program? As far as I know, Apple was silent on that issue. If they were about to open up the program, you'd think they would have announced that.

The application demos skew toward consumers. Four of the applications demonstrated during the keynote were games, one was a consumer news applications, one was a social network product (Loopt), one was consumer shopping (eBay), one was consumer blogging (TypePad), one was sports information, and two were vertical medical. Although Apple talked about enterprise at the start of the keynote, the apps they chose to demo tell you everything you need to know about who Apple sees as the iPhone's buyers.

What happens next? The iPhone is only a year old, and it generally takes 18 months to design a major new device. So the 3G iPhone we saw today was probably already in early development when the original iPhone was launched. We could see more radical hardware change this fall, but I think it's more likely that would wait for Macworld 2009.

What happens to iPod pricing? I was surprised that the price of the iPod Touch didn't change today. It now looks more expensive than the iPhone, and it lacks GPS. I would not be shocked if the Touch ends up getting a price action this fall.

As for when we'll see the long-rumored larger-screen iPod/iPhone, your guess is as good as mine. Fall is the best time for introducing new products, because it's right before the holiday/new year buying season. If the product exists, that would be the time to announce it.

Nokia goes for 1% market share in the US

Okay, I'll admit in advance that this is going to be a pretty snarky post, but it never ceases to amaze me how badly Nokia handles itself in the US market. In Europe and most of the rest of the world, Nokia operates like a fighter jet, incredibly nimble and powerful. But in the US, it's more like a biplane. An old biplane. With holes in the wings. Nokia's market share in the US has dropped from 20% to 7% in the last two years (link), and sometimes I wonder if it's trying for 1%.

Case in point: Nokia's "Open to Anything" ad campaign featuring people who have created software for Nokia N95 smartphones (link).

It features, swear to God, a guy who created a self-hypnosis application for the N95, someone who created a bad breath detector, a man in the Witness Protection Program who created a location-aware app to track the hit men chasing him, a ditzy woman who uses the phone to track fertilizer schedules for her plants, a jealous wife who created a lie detector, and a flake Jewish photographer who glued together two n95s to create a 3D camera.

"You've never really seen a bris until you've seen a bris in 3D." --Nokia's website

They're all fantasy applications from obviously fake people, but beautifully animated in an elaborate Flash-driven site.

From time to time, I've talked with Nokia employees who were confused about why people don't buy more application software for their Nokia S60 smartphones. There are a lot of reasons -- lack of awareness that they can do it, lack of a built-in software store on the device, incompatibility between various versions of S60, etc. But one huge reason is because no one has ever made a compelling case to most users on why they should care about smartphone software.


The triumph of creativity over business sense

The Open to Anything campaign is a great example of how Nokia's hurting itself in the applications business, and in the US market in general. I'm sure Nokia's intent was to do something light-hearted to draw attention to the N95, and if you view the ads as standalone short films they are moderately witty. You see this a lot in online marketing lately -- a creative agency will create humorous websites (often with video) designed to draw traffic from bored web surfers. But unless the ads also align with your strategy, they don't drive sales. In Nokia's case, they actually do harm:

--Once again, Nokia is communicating that its users are freaks and morons, which in the US is not the way to build a loyal following. Nokia has a long habit in the US of positioning itself as the preferred phone of people who lack social skills. At least this time there aren't any sluts in the ad (link).

--The benefit of an open phone is not that you can write your own apps, it's that you can buy applications created by others. Almost no one wants to create their own apps. So we're being told that N95 users are not only freaks and morons, but they are freaks and morons who have programming skills -- an even narrower demographic.

--Since the argument for why users should care about applications has not been made, showing a bunch of nonsensical applications actually makes people less likely to take an interest in mobile apps at all. It trivializes the whole idea of mobile software, at a time when Nokia claims it is trying to make itself into a computing company that can compete with Apple and Google.

Meanwhile, Apple's ads depict its users as smart and hip, it puts its CEO on stage with real developers showing lustworthy iPhone applications, and it plans a built-in software store for the iPhone. Care to guess which platform is going to get more user and developer loyalty?

I'm tempted to start taking bets on when the iPhone application base will be larger than S60's. Unless Nokia wises up quickly, it won't take long.