iPhone's Success: First as a Browser, Then Apps

Last month, I visited the Quello Center for Telecommunication Management & Law at Michigan State University, where I chose to present an iPhone paper I’ve been working on with Mike Mace. I’ve posted my slides at SlideShare.net — my first posting there ever. (I joined the site after I saw speakers use it at the O’Reilly Web 2.0 conference in March.)

Since readers can see the slides, let me just summarize the argument in short form. Most people think of the iPhone as a success because of the app store. However, the app store was part of iPhone 2.0, and the success of iPhone 1.0 was based on a simple core idea: deliver the “real Internet.”

There are plenty of anecdotes to show that the iPhone succeeded in changing how people think about mobile browsing. Clearly iPhone users browse more than owners of other smartphones (at least in North America), as Google (GOOG) discovered in December 2007, and as AT&T (T) is finding as it seeks to keep “all you can eat” from destroying its 3G network capacity. We are trying to come up with more systematic data.

I gave the talk the day after Apple reported that it had achieved 1 billion downloads at the app store. For my talk, I tried to briefly classify the most popular applications, but I was tentative because it is not clear whether Apple’s “top paid apps” and “top free apps” were worldwide or US. (Tech Crunch has Mobclix data that is a little more useful here).

Clearly the top 20 paid apps are all games or other forms of entertainment. The iPhone / iPod Touch is a hot gaming platform which has many satisfied developers. The iPhone scores points both for an easy-to-use SDK and also for its convenient distribution channel. This is mostly the “kill a few minutes” casual gaming audience — such using mom’s iPhone as a video pacifier. But the units are rapidly gaining on the Sony (SNE) PSP if not the Nintendo (NTDOY.PK) DS.

Some are concentrating on the direct revenues to Apple, i.e. from paid apps. A lot of estimating the number of paid downloads depends on the assumptions of the ratio of paid to free downloads, as the Apple 2.0 blog at Fortune noted last week.

(I thought I saw an article around April 23 that noted actual unit sales for some of the top 20 apps, but I have been unable to find the article. Does anyone have such an article?)

However, what I found interesting was the free apps. Sure, there are some freemium offerings in game and entertainment. But there were also iPhone versions of some of the most popular wired Internet apps — Facebook, MySpace, Google Earth, the Weather Channel.

If the iPhone is heavily used for the same thing as the wired Internet, that means it will make progress on substituting for the wired Internet. I’m not ignoring all those motion-sensitive games (or location based services) designed just for the iPhone — only concentrating on evidence where the iPhone is compelling enough to get people to drop (or ignore) their PC.

Disclosure: No position

Comments

[uncleralph:]

bestethief - Your mother must be proud of you...

May 17 08:31 AM

[Cho Cha:]

bla bla bla

May 17 10:27 AM

[Neil Anderson:]

The upcoming iPhone 3.0 SDK is going to kick it up another notch.

May 17 07:11 PM

[Anthony B:]

Just tried out the Zillow app last night, like it better than browsing the site on the computer!

May 17 09:47 PM

[iphonerulez:]

Palm users claim they had thousands of apps years ago and they were better than what the iPhone has now. I don't know if it's true or not but I hear this story constantly. That PalmOS emulator that's being offered for the Pre claims to be able to run all those 30,000 or so apps and will be available for the Palm Pre on day one.

I'm still trying to separate fact from fiction. If the Palm platform was so good with tens of thousands of apps, then why did the company fall into such a decline. I guess having apps didn't drive hardware sales for Palm. Also RIM didn't have any corporate app store, yet hardware sales for BlackBerrys are very high. So I guess apps aren't everything.

I hear an awful lot of complaints about the quality of the games in the app store. People are complaining about games ported from the 1980's aren't nearly as good on the iPhone/iPod Touch as they were on "Console X" 20 or 30 years ago. If they're telling the truth, then that doesn't sound very encouraging for developers. I just shake my head and say that they couldn't put that console in their pocket or make a phone call with it, either.

May 17 10:30 PM

[Bastion:]

On May 17 09:47 PM Anthony B wrote:

> Just tried out the Zillow app last night, like it better than browsing
> the site on the computer!

Here, here - I like these apps (and Facebook, Weather.com, Yahoo!, etc.) more than using a PC browser because they are cleaner and simpler, usually having little to zero ads to boot!

May 18 12:32 AM