Quite a few people questioned me on this.

“Apple’s no need,” they said, “Things are rosy,” they told me, “Apple don’t pay attention to shareholders,” they cheered, “There’s nothing wrong in iPhone land,” they chanted.

There is.

The problem is Android and shareholders who don’t know anything beyond the fact that Apple is currently being WIPED from the planet by the search engine behemoth.

You should have seen the emails arriving in my inbox from some financial analysts.

“How do you account for the fact Apple’s share has dropped by HALF in one year whilst Google’s almost doubled?” one senior chap asked me, “That would mean the market actually INCREASED massively since last year and that’s not likely is it?”

“Yes, that’s precisely what happened,” I wrote back, “And your darling [Apple], couldn’t hack the pace.”

Heh.

This is the problem, you see. If you’re American, there are two mobile platforms that matter for you: Apple and Google. Both coincidentally operate from Silicon Valley. As is right and proper for any American technology. Everything else is irrelevant. The fact RIM could be viewed as ‘North American’ is irrelevant.

It’s Apple and Google.

Apple was the acknowledged winner. Google was viewed as a good egg. You know, doing well. Keeping things moving in the market and doing ‘good work abroad’. Which is a trillion miles away from anything relevant to the United States.

Until, that is, the Telegraph reports this:

The world’s biggest search engine will have about 38.9pc of the global market this year compared with 18.2pc for Apple, according to research firm IDC.

Panic stations!

Apple’s management is likely to be questioned on this issue on Tuesday when the company reports its results for the quarter that ended in June

You bet they will.

A wonderful $5.7 billion profit for the quarter to June will, I’m sure, silence most shareholders.

For the moment.

All these shareholders looking at iPhone will be thinking, “But I thought Apple was — like — the BEST mobile phone maker, ever?”

Yeah. No.

“How come Apple is just 18% compared to Google?”

The answer, of course, is a mix of price, logistics, marketing.

“So make some cheaper iPhones then to compete? Don’t LOSE the market, Apple.”

Yup.

This the fundamental problem. No amount of amazing profit announcements will quell the unsettling news that Apple is operating as a bit-player in the mobile marketplace. Especially when the other players — Google in particular — are so skilled at manipulating and working with the media.

550,000 activations per day, anybody? That’s what Google’s apparently doing right now with Android. The US market can’t help but compare this to Apple’s paltry figure (by comparison).

“Put that in your pipe and smoke that, Mr Jobs,” say the Android fans, “Where are your fancy minimalist slide decks now?”

If you assume 18.6 million iPhones shifted in the first quarter of 2011 (Cnet), split that by 90 days and you get 206,666 iPhones sold per day. Not a patch on Android. Not enough to quieten the nagging doubts of many an Apple shareholder.

It’s not just shareholders who matter, though. It’s the raft of analysts, advisors and market commentators who influence the wider industry. As far as they’re concerned, Android is conquering everything.

These kinds of news items from the mainstream media discussing Apple’s shoddy share-price (“worst first-half figures since 2008″) are precisely what Apple’s shareholders don’t want to see.

[It should be pointed out that by comparison, Apple's share price performance is streets ahead of many of the other players out there!]

Bring on the Nano. Or, at least, let’s have some sizeable Apple movements in the next few quarters. The market could do with a bit of sizzle.

Back in 2009, I remember discussing the horror with which the industry react to the phrase ‘iPhone Nano’. This was back when Apple had dribbled out a few iPhones to the planet but really, the product was highly restricted because it required a heck of a lot of money up front (compared to a subsidised Nokia of equal value) and the tariffs were, on average, at least £5/$5 more. But everyone wanted one. Everyone on the street wanted one.

As Apple began relaxing the exclusivity in many markets, iPhone ‘joy’ spread. Operators who previously were unable to officially offer the device(s) jumped on the bandwagon. Industry Chief Financial Officers toasted the iPhone for it’s ability to get consumers locked-in to 24-month contracts.

Whilst iPhone remained a bit-player, everybody was reasonably content. More and more now, operators have begun realising (and recognising) that every time they flog a 24-month iPhone contract, their assuming ‘bit pipe’ status for that customer. Never again will an iPhone customer click or tap ‘internet’ and land on the operator portal. Operator branded app store? You can forget that. Yes, the only revenues you’re going to see from that 24-month contract customer are the ones you’ve factored in: £35/month and a few odds-and-sods, maybe an additional text bundle, maybe a bit of roaming data.

It’s fine though, when it’s a small percentage of your total subscriber base. You can still let your marketing and propositions team play with the rest of them.

This industry loves stability. And, for the most part, we’ve had stability from Apple on the iPhone front for a long time. If you think about it, apart from the launch and the introduction of the App Store concept, iPhone has been certain and predictable at least from the point of view of the mobile operator and competitors. Yes there have been all manner of announcements and launches from Apple, new models were launched with a lot of pizazz — but the iPhone fundamentals remained stable.

The total cost of ownership of iPhone is still rather extreme. For most consumers, the iPhone is one of their most expensive (and treasured) purchases. It’s broad in appeal but highly restricted in terms of affordability.

Oh anyone can buy one now. You don’t need a credit check, you just need the readies. Five hundred smackers, typically, to buy an iPhone ‘pay-as-you-go’. Even on eBay, it’s difficult to find a cheap iPhone. They hold their value very very well.

So we’re fine.

Until, that is, Apple introduce a raft of iPhone Nano devices each priced at a highly competitive £49. For the entire device. Or £99.

Imagine the trauma that would engulf the industry. Imagine the queues. £99 one-time fee to own an iPhone? Available unlocked from all good consumer electronics retailers? They’d fly off the shelves. Faster and at greater volumes than any iPhone launch we’ve ever seen.

Why would Apple bother with this?

Oh it’s simple. Although they’ve a market cap of 326 billion dollars (14x BIGGER than Nokia and 54x bigger than Motorola), Apple is a minnow when it comes to mobile phones.

An absolute minnow.

The company sold 18.65 million iPhones last quarter. In a good quarter, the giants of the market (Nokia, Samsung) would (roughly) eclipse that in the first 10-15 days of the quarter.

And whilst I know Nokia isn’t quite at it’s prime, my point is, iPhone is small.

Something needs to be done.

Why?

Because iPhone is one of the central pivots of Apple’s on-going strategy. It’s a key gateway point for consumers into Apple. Indeed, buy an iPhone and the chances are — as we see anecdotally all the time — it won’t be long before you’re eyeing up a MacBook. Or an iPad. The ‘gateway’ point is only going to get more important as we begin to see the effects of iCloud on the world.

Something needs to be done because Apple’s share price is in the pits.

Well, not really.

But run with me on this. Suspend your disbelief. If you’re a shareholder, you’ll rightly be delighted with Apple’s performance since the end of 2006.

The company has added well over $200 in value across the last 5 years.

And that is the challenge for Apple.

At last count, the company had $63 billion sitting in it’s bank accounts. Enough to buy Nokia, three times over.

Apple also has the unenviable position of having to deliver consistent returns to highly demanding shareholders who want, very much, to see the share price hit $400, $500 and beyond.

These shareholders, not necessarily wise in the way of the mobile industry, will be looking upon the growth of Android with no small amount of alarm. Apple’s market share is evaporating — not because they’re doing anything wrong per se, but because the market is growing substantially. And most folk are buying Android phones — the growth is obviously coming from the lower end too.

What is Apple doing about this? Huh? Eh? Come on! We want to see results!

That’s what the shareholders will soon be demanding. A bit-player position is simply untenable.

And goodness me, see if Nokia and Microsoft actually start getting traction, the pressure will continue to mount for Apple to do something about it.

This is why we’re getting all sorts of he-said, she-said, some-guy-overheard style rumours percolating across the marketplace. The rumours are coalescing into ‘two phones’ at the moment. Apple will apparently launch two phones. Your guess, at this point, is as good as mine. The executives I’ve spoken to are, on pain of huge, huge penalties, saying nothing. There’s not even eyebrow wiggling going on.

Expect to see Apple begin to target the lower end of the market. This is the market that has traditionally been buying £199 iPod Touches as the cheapest way to access the App Store (and gaming).

I think it might take a few product generations before we see £99 iPhones, but it’ll certainly be on the cards. Especially when the pressure to ‘do something’ begins to get untenable.

The problem with being big and having pots and pots of cash is that the market is going to start screaming for more, soon. Not even the Jobs Halo will withstand that.

There’s plenty of precedent too. It’s precisely what the company did with the iPod Nano. With one product announcement, the company democratised cool music players. Anyone with $49 could join the Apple world — and millions did.

The elephant in the room though is the ‘computer issue’. An $800 iPhone is useless to you unless you have an $800 desktop/laptop with which to activate it. And if you only bought an 8GB iPhone, then you can only buy 4 or 5 movies from Apple before you run out of space.

The existing iPhone framework dependent on desktop sync does not work when you move out to the wider audiences. A case in point: A few months ago, one of the chaps who cleans the offices in which I work got himself an iPhone. He was delighted. He paid top dollar for the iPhone 4 from 3UK. A super purchase. The only problem? He couldn’t activate it as he doesn’t have a computer. He doesn’t need a computer. He can’t be bothered with desktops. So I activated it for him.

I guarantee you he hasn’t upgraded the phone. He hasn’t backed it up. He hasn’t synched it. He’s no infrastructure beyond the actual phone.

Most of the marketplace is like this chap: No desktop.

So that’s a real barrier. However you’ll note that Apple have addressed this with iOS 5 — to the whooping delight of the gathered keynote crowds a few months ago.

And the data storage issue is a problem. How can you be expected to sell more stuff to consumers if they run out of disk space on the device they use to do the purchasing? Yeah. iCloud is taking steps to solve that.

So Apple is headed in the right direction.

If we’re truly going to see two handsets, I wonder if we’ll see a budget vs a high end device? I wonder if Apple will begin to break things out like they’ve done with their laptop range, to hit as many price points as possible?

They’re going to have to. There’s no question about it.

Why, then, is an iPhone Nano priced at a highly accessible £49 or £99, a total flipping nightmare for the rest of the marketplace, operators and OEMs combined?

Well Apple is already heavily influential way beyond it’s market reach — and that’s when the company is lucky to ship in the 50-75 million devices a year range. What would the market look like if Apple hit 200 million devices a year? How would the world look if, by 2014, there were 800 million iPhones in use across 4 billion people?

I know the figures are a little… blue sky… but consider the ramifications.

If 80% of America was running on Apple, what would the market look like? How would the market respond to Apple deciding to obsolete ’3G’ and ’4G’ in favour of LTE-Advanced, provided by LightSquared in the 2014 models? Apple’s got a rather successful (and rather annoying) history with forcing change upon it’s willing customers. And with such huge market share, Apple would have some serious leverage.

This is the fundamental issue. The company is already massively influential yet they’re nothing compared to Samsung and Nokia’s logistical scale. If they actually start heading toward 200,000-500,000 sales per day, that’s going to start to cause no end of headaches for the market. It’s a remote possibility at the moment — but I submit that simple economics will require Apple to expand market share downwards to the larger audiences.

Bring it on.

What do you reckon? Will we see an ‘iPhone Nano’ style product priced competitively in the next year or so?

The apocalyptic nightmare scenario for much of the mobile industry is an Apple iPhone Nano.

I can’t underline enough just how much of a problem this scenario is.

Talk to the right person in each global operator and chances are, they’ve got a document stored somewhere about just how bad life could be for them in an iPhone Nano world. I know. I’ve written and contributed to some of them. The documents outline the catastrophic effect of a $79, $99 or $199 unsubsidised Nano could have on their ecosystem and explore an array of scenarios in terms of pricing, distribution, bandwidth requirements and so on. Some of the key concerns? The power it would foist to Apple. The global consumer riot to get hold of one. Scaling the network to meet the demand. The possibility of just what would happen when 100 million Chinese and 100m Indian people walk out and buy one on launch day. The middle classes of both China (and to a lesser extent, India) are already blowing wads of cash on iPhone 4s right now. What would a larger market do with a keenly priced iPhone Nano?

The even bigger worry for many of the operators is this: At what point does Apple say, ‘enough, Mr Operator, you are now in our way.’

(By the way this could apply to Google, too).

At what point would Apple, with $60 odd billion in cash decide that the global mobile operator industry is done. That, instead of being a tolerable delivery mechanism, it’s now a serious barrier to the company’s ability to transact significantly higher volumes of revenue?

And at what point would one of the global operator companies — Voda, Telefonica, France Telecom, Deutsche, to name a few — buckle. At what point would one of them say, ‘Okokokokok, what do you need?’ and, in the face of a billion dollar guaranteed deal from Apple, bend to simple carrier status?

When you start thinking big — the way they do in Silicon Valley — and when you start recognising that, fundamentally, the carrier role is already ultra-commodified (relegated in the UK, for example, to simply providing finance subsidy and a network connection), it’s easy to see how things could get interesting very quickly.

Of course, there’s thinking big, in macro terms, then there’s day to day reality. You do need to pull yourself back to the ground.

A $200 iPhone Nano (or, more likely, a $199 iPhone Nano) would certainly cause a lot of problems for the industry. I think it would be very successful too. It starts to get rather exciting when you explore what would happen to the market at price ranges of $149, $99 and so on.

Here’s the news as reported by Bloomberg via BGR.

The announcement timing is, by the way, highly convenient. A day before Nokia’s ‘wake up and smell the coffee’ event. The week ahead of MWC. If you thought Apple was happy occupying the $800 high ground, think again.

I’ve heard a lot about the Nano and I’m looking forward to seeing the fruits of Apple’s labour.

I’ve been highly frustrated with the fact that the iPhone is completely 100% out of the league of most normobs. In fact, the anecdotal research I’ve been doing recently is pretty horrific with the summary being:

Love the iPhone. Won’t even consider it.

Instead, the majority of PAYG users I spoke with are thinking very carefully about spending £19 on a handset, let alone £299 for the iPhone 3G.

An iPhone Nano — with iTunes, a few gig of storage and a £99 followed by £49 price tag…

Is that possible?

I wonder.

The iPhone 3G! This was bound to appear somewhere, and so I thought it’s best to get it out of the way sooner, rather than later. Personally, I’m not a fan; and from what I’ve read, seen and heard accounts of, it hasn’t been all too great for Apple too. However, as much as I insist that it’s a pile of rubbish (feel free to beg to differ); it sold once again in its thousands.

Apple has conquered another market, and whether it’s because they found monopolising the MP3 market too easy, they’ve certainly made a statement. And even though the 3G came out way back in June/July the device still makes a regular appearance here on MIR. I do not doubt for a second that Apple have something lurking up their well-tailored sleeves, and if the rumours of an iPhone Nano are anything to go by… Then 2009 will be dominated with more Apples than your doctor can prescribe!

Secondly, Blyk! Hmm, well, me and Ricky between have more than enough to say on Blyk. For me, I was so hopeful that Blyk could be that turning point, especially here in the UK – where we ever so often fall behind in the world of technology and thought – and I was so disheartened with what eventually happened with them, it still annoys me now.

It can’t all be bad, and as much as I say I don’t like them and that their bound to fail… They haven’t yet. In fact, Blyk is over one year old now, and it still seems to be maintaining momentum. I think in 2009 we’ll either start to see how incredibly flawed Blyk’s aims and business model is; or dare I say it, it still surviving and the European expansion working out for the better for the company.

For me also, as I’ve begun to really take note and interest in the world of the Mobile Phone, I’ve seen certainly more usability on the rise, and a better use of SMS and mobile communications from businesses and services.

The “Knife Crime” Crime Stoppers text in service has to be, for me one of the single best things I have come across. It’s been implemented correctly in schools (well, at least in my school), without making itself appear too formal, and scary to use. And it’s using basic innovation, which as I know I have repeated many-a-time over the past few months; is severely lacking.

Slowly though, I’m beginning to see more and more use of mobile communications, for example my local hospital texting me when I have an upcoming appointment so I can’t forget; or my School using a system to ensure parents know if you’re not in school – when say you’re meant to be.

Hopefully over the next twelve months more of this good thinking and logic will be applied to other aspects of our general lives; and maybe with that, we might even get some more innovation out of that… And surely, that can only be a good thing?

Finally, my favourite mobile application… Well this has to go to MusicStation, which is available to Vodafone users. When I was first introduced to it by Ewan, I’ll admit I was majorly sceptical; I’m a music lover in every sense of the word. I don’t like the idea of being sold half-hearted 96kps versions of a song, or only having a minute and pointless library of music to download from; and this is all I expected to get.

I was wrong, and I loved the service. I haven’t yet seen it used by anyone I know on Vodafone, in fact, I’m not even sure if any of my friends are even aware of what they can get on their mobiles for a small fee per month; but if they did, then I do not doubt that it would be highly used by all of them.

Nokia I suppose are heading out in a similar direction, although I can’t comment on how the “Comes with Music” service works; I don’t doubt for a second that music services like the ones Vodafone and Nokia are offering are going to stop or end here.

—

I look forward to the next year, and I look forward to the new technologies developing, and being released, and being pleasantly surprised as I have been this year. I also see that as much optimism that I have, one cannot forget the looming “recession” and what impact will that have? I dare not speculate, but for more than one reason I’m pretty sure next year will be interesting and something to look forward to!

Anyway, I wish you all a Happy New Year!

Samantha.
samantha@mobileindustryreview.com

News has reached us from the phone accessory case maker XSKN’s website and via TrustedReviews the iPhone Nano could be a reality after all. As the well known company has started making and selling cases for that exact handset.

Since the beginning of time, well, the last few months really, rumour of a new Apple phone has come to light. In keeping with the existing iPod range, the Nano model being their smallest has been attached to this speculative concept.

Although to be entirely honest the Shuffle is the smallest, but who in their right mind would buy and use a screen-less key-less mobile. Hence, the Nano being the next obvious choice in the iPhone’s lineage naming.

XSKN a popular maker of cases for mobiles now has a range of cases especially designed to fit the iPhone Nano. A plethora of ‘masks’ can be seen on their site, all adding to the possibility of the new phone being just around the corner.

What adds even more weight to the expected news of the Nanos arrival is that you can already buy the cases, even before the phone has been official announced or even confirmed by Apple.

With Mac World being only a few weeks away, the likelihood of the handset being unveiled seems a distinct possibility after all. And with 17 different styles of the casing’s finishes to choose from, you’ll be hard pushed not to believe the phone will be here soon.

Either way they could just be hedging their bets here, or they know something that we don’t know we should know but have known about the knowing all along.