The First Phone I've Been Excited About In A Long Time
The reasons I’ve never bought an iPhone are that I care about the following features in descending order of importance:
1. Call Quality
4. Web Surfing
7. Camera/Video Camera
That’s not uncommon, in fact, it’s pretty typical in the business world, which is still where most smartphones are sold. The iPhone’s call quality is notoriously abysmal, and though they made up a little ground on number 2 when they got Active Sync, they’re still Class B there due to lack of a dedicated keypad. While the iPhone pretty much blows away the competition in terms of #4 and #6, and it’s good enough for #2 for most people I’m sure, it blows on #3 and #7, and doesn’t even step up to the plate on #5. (Supposedly it will soon, but its utility will be greatly limited by AT&T’s atrocious network).
Moreover, I would say that most people place #3 further up the list than I do. People choose the network and then the phone, and Apple hasn’t changed that noticeably. Networks spend a lot of money in advertising and promotional bucks, and they have lots of extra features that encourage loyalty. For instance, they use the network effect with family plans and by making all calls or SMSes to other customers of the same network free. My wife is on Verizon, and she alone is probably 50% of my phone calls, so for a device to get me to switch it would have to be that much more appealing. And then there’s just plain laziness, as switching is more work than not.
So Palm, like Android, has a chance. Apple’s strategy has worked well, but it has major holes, and this Palm unit looks like it exploits them, perhaps even more efficiently than Android at this juncture.
And the best part of all is they’ve got a solid shot of beating them on one of the fronts they own: the app platform. The iPhone is far and away the leader in this area. It has seen a tremendous amount of development, and with good reason. It has a sizeable user base, which is a key component in any platform. And sure, there are bigger platforms, but (until recently anyway) not on phones that have Wi-Fi, GPS, touch screens, etc.
Through iTunes it also has pioneered the powerful centralized store that offers serious revenue or distribution to top apps. That, of course, has its own problems, but it creates the sort of a lottery that attracts independent developers.
For Palm to really compete in the app department, they need to do the following:
1. Open the phone to multiple carriers. Check. The Pre is starting out on Sprint, but will hit others after a few months. If your phone is on multiple carriers that collectively serve four times as many customers, it only needs to be some amount greater than 25% as appealing to get the same market share. I’m not sure how much greater (depends how strongly people really are attached to their network) but it’s not much.
2. Put the same OS on multiple form factors. Check. They’ve indicated this will be coming down the pipeline. Believe it or not, a lot of people just don’t want a smartphone. I tend to view them like wine, in that anyone who doesn’t like them just hasn’t found the right one yet. But just like wine, a lot of people never will care for whatever reason. Give them a free-with-contract clamshell that can still run many of the games and other apps, and you’ve expanded your user base significantly.
3. Make the app store more conducive to paid apps. This will return higher profits for Palm from app sales, which can be plowed back into marketing. And most importantly, it will return higher profits to developers, who will of course blog about it, thus encouraging more development. No word on this yet from Palm.
There have been more blog entries than I can count about what’s wrong with the app store’s apparent policy of ranking them by volume, which heavily favors free apps, and every one of them contains a suggestion as to how to fix it. For instance, showing the two separately, or sorting by revenue, etc. I’m not entirely sure the best way to run a store, but I’m convinced it isn’t the way iTunes does it.
4. Be developer friendly. With the exception of Loopt, Apple has treated their developers like parasites. They finally got rid of the NDA, which was absurd, but they still rule the approval process in a capricious and arbitrary manner that discourages serious investment in the platform. The worst part is, they’re only hurting themselves. There’s no reason whatsoever to worry about someone competing with your apps on your hardware platform. So a third party builds something that has some of the same functionality that iTunes should have but doesn’t, such as automatically downloading podcasts. What do you care? It just makes them love your iPhone more. You weren’t charging for iTunes anyway, but you did charge for the phone they were running it on.
It makes no sense. No app on an iPhone competes with Apple. Blackberry, WinMo, Android and Palm compete with Apple. Motorola, RIM, HTC, and the other Palm compete with Apple. iPhone developers are mercenaries fighting on Apple’s side.
Palm has stated that they won’t deny developers in that fashion, they better live up to it. They’ve got a real shot here. Their stock is up almost 100%, but I think people are still underestimating. That reminds me, I have to invest my year’s contribution to my IRA…