January 9th, 2007

… and the questions I still have … No discussion of the phone itself here … please refer to my colleague, Michael Gartenberg’s blog. He has a lot of posts about the iPhone. I will say though that I definitely want one. Was very cool. My colleague David Card posted separately on the music capabilities. I had the privilege of attending the Apple Inc. MacWorld keynote today by Steve Jobs. As I sat there mesmerized by the amazing features, functionality, user interface (i.e., scrolling), sensors, etc., I kept asking myself, “Is Apple going to launch this as an unlocked phone? or with a carrier?” It was a very Apple-centric presentation. We knew early on it would be GSM as there was/is a slot for a SIM card (on the outside no less). Also, as soon as Jobs turned it on, we could see the “Cingular bars” at the top. What we didn’t see was Jobs boot up the phone/turn it on. Will I see the familiar “apple” logo? or will I see the orange Cingular person/jacks symbol? I didn’t see an icon on the “home” screen for Cingular. Will iTunes begin selling games for the phone? Will glu and the rest develop games for the Apple platform? Will iTunes sell ring tones? (The demo’ed polyphonics were a bit ‘yesterday’ … I was waiting for him to go into the iTunes library and convert a song into a ringtone …ok, not happening) What about their (Cingular’s) TV/Film relationships? Will the next version of the iPhone have a MediaFLO chip? or DVB-H? If I have the iTunes phone, will I be excluded from live TV and the Sopranos? With Yahoo! and Google applications/services shipping on the handset, it seems to imply that Cingular is open to applications/services competitive with their own. With most announcements between the handset manufacturers and content providers/Internet portals/et. al., it’s hard to assess the impact as the carrier often – at least in the US – has the final say on what is shipped on the handset they are selling. The Cingular branding wasn’t yet on this device – makes sense as it was Apple’s day in the spotlight. The Cingular announcement was made at the very end, and there wasn’t much detail around it. I was a bit surprised by the carrier announcement at the end despite all of the rumors from the analysts and press. Everything seemed to be leading up to an unlocked phone. Subsidies from Cingular will help sell the $499/$599 phone. Will be interesting to see if Cingular has the same terms as many of Apple’s other distribution partners i.e., one price/no discounting. Most “hot” new phones launch at high prices (e.g., the Razr), but quickly come down in price. With a target of one percent market share globally, Apple/Cingular may not need to do so. I’m sure most folks left thinking that this was round one, and there would be subsequent phones at prices designed for higher adoption like the ipod.

Today was a big day for mobile video in the US. Verizon announced that they will launch a broadcast video service (MediaFLO) in the first quarter of 2007 while Modeo (Crown Castle) announced the launch of their beta DVB-H service in New York City. And, not to be upstaged, MobiTV sneaked in with an announcement about the new, interactive features added to their service. It’s a lot to absorb in one day let alone in a market where only one or two percent of mobile subscribers have video subscriptions on their cell phones.

My colleague Joe posted a blog on the MediaFLO launch with Verizon. He answers one of the questions that I am often asked: “Why would I want this service? Isn’t broadcast just like what we had 20 years ago with the Sony Watchman? And why do I have to pay now?” So the answer is “kind of.” Except now, it’s on this small handheld device that you carry with you anyway and you get access to some exclusive content that would never have been broadcast in the past. Joe also makes a good point about the on-demand expectations DVR-addicted consumers now have. At 4:18pm, I probably want a two-minute news summary. Consumers should like the price of broadcast if the economics that MediaFLO is promising trickle down to the consumer. There is content – maybe not the OSU game last night if you’re an Ohio fan – that consumers would like live, but not if they only have two minutes. A service like iTunes gives you a choice – summary or full length program. Verizon will do some of this initially at least by continuing to offer their Vcast service while rolling out their new broadcast service.

Modeo is interesting separately. Certainly they are rolling out a technology (DVB-H) that will be more popular globally and has been rolled out in some countries in Europe. They are launching a beta without a wireless carrier in the US. One might ask … “why do they need a carrier?” … the answer is “they don’t.” The technology could go into any one of many CE devices or a laptop computer. Someone, however, is going to have to go out and sign consumers up to a subscription service (unless it’s going to be offered for free through ad-sponsorships – unlikely though without a proven business/business model in a nascent market).

MobiTV’s announcement, however, sheds more light on the vision of TV on a cell phone. When people ask, “how is it different than my Watchman from the eighties?”, this answers the question, partially. A cell phone allows for interactivity. It’s a two-way communication device that offers a direct response mechanism to advertisers and consumers.

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