THE BLOG
06/16/2008 09:30 am ET Updated May 25, 2011

iPhone 3G: Beyond The Hype

It's easy to view last week's much-awaited and endlessly ballyhooed release of the second generation iPhone as simply a PR triumph. But that would be a mistake. By incorporating 3G technology and GPS, and lowering the purchase price by 50%, Apple has radically altered the landscape of the mobile marketplace. The timing is impeccable. It coincides with last week's Mobile Marketing Forum (MMA); mostly bullish Q2 white papers from a half-dozen research firms; the coming battle between WiMax and LTE camps. Brands are beginning to experiment on mobile, spurred on recent partnership announcements between marketers, carriers, manufacturers, and content providers - of any and all combinations. This will be the year, then, we find out whether or not the mobile phone is the Third Screen.

IPhone All the Time

Coverage of the iPhone 3G was ubiquitous. CNet did a nice roundup of the week's festivities at Apple's Worldwide Developer Conference -- reminding us that it wasn't just about Jobs' Monday morning tour de force. Out of the gate there were many critics chirping over Apple's decision to accept a phone subsidies. The New York Times quoted Sanford C. Bernstein analyst Craig Moffett as believing that it was a step back for Open Networks. Ostensibly, the Economist agreed. PaidContent's Tricia Duryee interviewed two senior Apple execs, Bob Borchers and Chris Saito, who credited the iPhone's success to an interdisciplinary approach merging hardware, software, and services. Our Shelly Palmer contrasted Apple's back to the future model with Google's Android platform (due out Q4). While Palmer concludes that it was a necessary move to ensure mass adoption of the smartphone, Slate's Tim Wu believes it augers the return of Ma Bell. For its part, CNet reasons that it's a first step away from carrier exclusivity. BusinessWeek found the offering a boon to both Apple's marketshare and to carriers. Even Nokia, a direct competitor, with 45% of the world's smartphone market, was savvy enough to recognize that (to paraphrase) "a rising tide lifts all mobile manufacturers."

Format Wars Redux?

Following the FCC's 700 MHz wireless auction, both Verizon and AT&T emerged winners with blocs of wireless spectrum. Clearwire's WiMax initiative attracted more than $3.2B of investment from the likes of Google, Intel, Nortel, Sprint, and Comcast. Recently Nortel pulled away from the effort to instead pursue the competing Long-Term Evolution (LTE) solution-based 4G network. Last Thursday, "New Clearwire" was undeterred at its presentation, projecting 30.8M subscribers by 2017. Related: Verizon's recent $28B acquisition of Alltel, both of which are focusing on LTE, which it expects to make commercially viable by early 2010. The wireless industry has been called a "poster child for competition" -- are those days behind it? Or will we have a replay of HD-DVD vs. Blu-ray?

Survey Says

There's no shortage of data on mobile. Harris Interactive, Nielsen Mobile, Gartner, eMarketer, Motricity, Research Analysis of Media (RAM), and Jupiter Research all have findings to share. At the Mobile Marketing Forum last week, JumpTap shared the study it commissioned with RAM, which found that mobile had stellar results in brand recognition, recall, and purchase rates. Gartner gauges the worldwide mobile advertising marketplace to be $2.7B, up from last year's $1.7B; above all it points to usability and relevance as the two main drivers for growth. EMarketer looks at the global ad spend and puts a figure of $1.7B on it - with most of the growth forecast across the Asia-Pacific. Nielsen Mobile's bi-annual Mobile Advertising Report looked at the behavior of 22,000 mobile users during Q4 2007 with the stark finding that only 10% of users thought mobile advertising acceptable. But not so fast -- while Harris Interactive doesn't dispute this metric, it makes lemonade. The research firm touts the personal relationship consumers have with their phones, noting that despite the economic downturn -- and the fact that a sizable percentage of consumers say they'll cut back on tech purchases - that 41% will press on where cell phones are concerned. Harris finds that consumers are willing to accept messages as long as they are properly incentivized. Motricity's takeaways (presented at the MMA) included the findings that content providers considered targeting and demographics most crucial to campaigns, while wireless carriers believed that personalization and customization was the key to success. While marketers admitted that their agencies spent less than 2% on mobile marketing initiatives, one third of the same group pegged the ad spend increase for mobile at 25% in the next year. Consistent with Harris Interactive's findings, UK-based Mobixell Networks, an ad-supported mobile network, found that 18-35's consume 56% of all mobile media content.

Brand Innovators

It's notable that it took a pair of predators, two large cats, to validate the mobile platform. Puma has just launched "Together Everywhere" to support the Union of European Football Association's Euro 2008 games. Downloaded ringtones will sound when one's team scores; up to ten soccer fans can chat live during a match. Luxury automaker Jaguar recently ran a campaign with Yahoo Mobile to promote its XF sedan in conjunction with the Los Angeles Auto Show, targeting males 35-53 with household incomes over $150,000. Jaguar placed banner ads on Yahoo! pages, which served 20 million unique monthly visitors, generating over seven million brand impressions. These advertisers have come to appreciate the flexibility that a mobile campaign can often, the ability to jump in and out of a campaign, with a lifecycle of as little as one weekend. Yahoo Mobile has itself worked with over two dozen brands in addition to Jaguar, such as American Airlines, Wachovia, VH1, Paramount, and Delta. It has also recently partnered with Coupons, Inc., supporting its transition from the world's leading provider of printable coupon marketing onto the mobile platform.

Mobile has played a role in the release of Madonna's new release, Hard Candy, which came bundled with SonyEricsson phones. Screenvision, in partnership with Verizon, polled theatergoers on their music preferences prior to a screening. The Nokia Advertising Alliance was launched last week to support campaigns for brands using cutting-edge technology, from location-based targeting, click-to-call, coupons, and basic banner ads. Current members of the Alliance include: i-movo, Mobile Acuity, Mobiqa, and uLocate. (A mockup of Nokia's response to the iPhone, code-named "The Tube" is pictured above.)

During Steve Jobs' (lengthy) presentation last Monday, he wielded some stats that should have had everyone stand up and take notice: 98% of iPhone owners use the mobile Web; 94% use email; 80% use 10 or more features. And that's iPhone 1.0! Apple's launch of an app market for its 3G phone represents a forward-looking initiative, as well as a cash cow (Piper Jaffray thinks it could reach $1.2B in revenues by 2009).

As we go forward the mobile industry holds promise, with the caveat that there are variables aplenty contesting its ultimate success. As the FCC's Kevin Martin is considering a tighter rein on Early Termination Fees (ETF), will consumers continue to accept the notion of a walled garden? Or will they push back at even such an aesthetic (and usable) icon, as they have in demanding that they take their phone numbers from carrier to carrier? In the face of this will Google's Open Handset Alliance gain traction?

Next week paidContent will explore these and other pending questions at a June 26 panel entitled, "Mobile Advertising, With 4G On The Way" at Seattle's W Hotel. Speakers will include folks from Clearwire, Yahoo Mobile Advertising, MSNBC.com, and Alltel. Let us know what you hear.

To communicate with or to be contacted by the executives and/or companies mentioned in this column, link to the JackMyers Connection Hotline.

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This post originally appeared at JackMyers.com.