The Hype
Well even if we have been living under a rock, we would have known about Apple's iPhone release last Friday at 6pm. In fact that was single handedly the only piece of news out there in the tech community. But some of the stats are in (via TechCrunch). As of Sunday, Apple and AT&T moved 700,000 iPhones. Apple sold out in 95 of its 164 stores. The larger phone which was calculated at a cost of $220 and sold for $599 and the cheaper phone at a cost of $200 selling at $499 gives Apple somewhere of a $200 million + weekend IN PROFIT (less marketing costs, we'll talk about this later).
It's an amazing phenomenon. People were in line as early as 5am on MONDAY, a whopping FOUR days before the iPhone went on sale. How much marketing was done? Very little. If memory serves me correctly, a Super Bowl ad. That's it. The rest was Jobs talking at various conferences and user generated hype. How sustainable is this? If the iPhone promises to change the way we do telecommunications...a lot.
But what really interests me is the artificial hype that was created about this phone. Sure its a beautiful phone and this past week, when I noticed someone with the phone it made me turn my head, but never before has a phone really made this much impact. A phone as status symbol. Only Apple could do it. The Sidekick went for the young hipsters, the Razrs went for the mainstream, but the iPhone did it right. I'm not sure why but it did.
There are many Apple evangelists out there that support anything that Jobs does. I don't know if its a function of that fact that he's going up against the evil empire in Redmond led by evil Bill Gates and that in a way he's still David versus Bill (Goliath). But there is no other brand that has much loyalty as the Apple heads. And I cannot figure out why. You'd think that there'd be diehard Yahoo guys against Google, but there aren't. Wii versus Playstation. Nope. The only one that comes close and this is very distant are MiniCooper owners who seem to have formed a click. And for that fact other rare car owners (see Larry David's Prius episode).
But these supporters came out and did what Steve wanted them to do without him asking them. They just read his mind. They blogged about it, they created mock commercials about it, they waited in line for days, they thought about it, they drooled about it. Over a phone. Over an IPHONE. The fastest selling gadget of all time - people are trading off weeks of food for a $600 phone! And I bet you if it weren't for all of the mumbo jumbo that you have to deal with when you go to a cell phone service contract they would have to sold more. Which leads to my final point of sustainability. Sales will be sustained....but now the ball is in AT&T's court (which so far have not been positive)....
Will this Change Everything?
The much anticipated iPhone is launching in less than a month (June 29th). The implications are amazing. Many are finally predicting a convergence between Internet and mobile, Media and Commerce, and location and information. User generated commercials have popped up online.
However, is the iPhone as big of a deal as we think? Of course Apple is going to hype up their latest product which they hope will be as big as the iPod. Apple, though, is limited by Cingular and with a price tag of $499-$599 by wallet sizes. (Unlocked phones I hear are going for over $1100). I think the biggest breakthrough though with the iPhone is the touch screen interactivity of it. With this, there will be no more need for clunky QWERTY keyboards and t9 guessing algorithms.
Smaller devices will come out that can take advantage of this, being not only a phone, but a web browser, a camera, MP3 player, and camcorder ... all at the same time! But how will it affect marketing? I think the implications are obvious. Text messaging while powerful and popular will become even more when rich media can be delivered on the spot in relevant locations. Users won't be limited and programs won't have difficulty reading varied responses when web like applications appear on your phone. Overall, the iPhone is a step toward a world where we really will have the world at our fingertips, anywhere, anytime, anyplace.
OpenFaceBook The Facebook Platform, launched yesterday, is designed to do exactly what MySpace didn't want: Allow for third party content. Facebook has opened up all of its API's in order to encourage development for its site. There are tons of applications now that are sanctioned for use on Facebook. So unlike MySpace (when they shut down Photobucket, which they now own), Facebook encourages open access to their proprietary network. Facebook has some impressive statistics on growth and engagement and with the launch of their video network could really give MySpace and even YouTube a run for it.
Why is the opening of Facebook so important? Better yet, is that the right move? After all, third party widgets could take users away from the site. I think that it is. Think of Facebook as Windows. If Windows could only utilize Microsoft applications, there would be some utility but not as much as if Windows could also use Adobe products and (gasp) Apple products. Sure, the third party widgets are going to lure some users off of Facebook's site, but in the long run, users will be more engaged, Facebook will have free development, and third parties will develop cooler things for Facebook (leading to more and longer page views for the site). Think Amazon, Second Life, Linux...all of these tools were made better because users and developers could plug in their own enhancements. From a marketing and monetization standpoint, this offers unlimited possibilities. Zuckerberg noted that Facebook was the sixth most trafficked site in the country. The ability to create embeddable widgets on a site like Facebook offers huge possibilities for commerce and contextual advertising. Favorite books, shows, music, and media could be purchased off of someone's profile page. Facebooks photo application (the largest in the world) could be integrate with an Ofoto or Kodak Gallery to provide for prints. Mashable talks about some of the applications already created for Facebook. The lesson here is that closed source does not work in today's open world. The music industry learned that, Hollywood is learning, and Microsoft will eventually learn that. If we can embrace our users and partners, then we'll hae a better platform all around.
The Power of the Blog
Yes there are two posts today! I had to write about this (via IRWebReport) because it really supports how powerful the blog is, who is reading them, and what a popular blog can do to a big company. Engadget, a very popular blog about technology, wrote about how Apple's iPhone would be delayed as well as the new Mac OS X Leopard. The post was at 11:49am yesterday and accordingly Apple stock dropped nearly 3% from 107.89 to 104.63. Wow! Since then its been outed that the email in which Engadget derived its information was a fake and has been retracted. However, this is a good sign for tools like Monitor110 that look at the blogosphere for various tips that could give you an edge in trading and that information is moving faster than ever. Sometimes there won't be time for an editor to read something over and that's why the blog is a great tool for communication (as long as the information is accurate). But in the dense world of the blogosphere, the tools to find the information you need are going to be more and more important and hence tools like Google and Technorati are going to be playing a big part in determining what is information. Could these new tools be the new Bloomberg of Wall Street? Time will tell.. It just goes to show you the power of the blog, the investors that read them and the power one blog has over a very successful and powerful company.
Music Industry Growing eMarketer's report today talks about growth in the music industry (yes, believe it or not, GROWTH). Revenues last year (2006) were $60.7 billion and by 2011 will be $67.6 billion (about a 2% annual growth rate). The report states the obvious that CD sales will continue to plummet and digital continue to grow, however, digital sales will never make up for the loss from CD's. Thus, the growth will come from other innovative ways to exploit the music such as online and mobile, concerts, licensing deals with TV, films, video games, and tie in with various products (the report states U2 and iPod and Bob Dylan and Victoria's Secret). I think that the record labels have definitely enjoyed a monopoly on this business for a while, however, in order for good music to continue to be put out, there needs to be a way to monetize this business. Apple recently put announced that 100 million iPods were sold and about 2.5 billion songs sold via iTunes, which puts each iPod on average with 25 legally downloaded songs, a far cry from the thousands of songs that you can put on it. So where is the other music coming from? I wonder....Regardless, some very interesting models have come out, one of them I talked about before called AmieStreet which is a true supply and demand model. However, with sites like MySpace offering streaming music how would a band make money from them? The answer: Poptopus. Poptopus (reviewed by Mashable), is a widget (we talked about these yesterday) that you can embed on your site and revenue is shared by the artist and the publisher. Advertisements play in the video portion of the player and are paid on a per listen basis. It's actually a radio type model but uses the visual portion of the Internet to play the commercial while you are enjoying the music. I think its a great way to utilize the single servingness of the Web with a business model that could be sustainable. And since everyone makes money, or gets eyeballs, everyone should be happy....the one downside I see is that if a popular band doesn't want to be associated with a certain advertiser (but I think those are few and far between).
Regardless, its a good time for the music business as they've finally embraced the Internet as opposed to fighting it and it turns out that artists as a whole will be making more money than ever and some artists will actually be able to call themselves full time musicians because of this long tail phenomenon. We'll keep track of the music space as it continues to innovate....perhaps Sirius XM can take a lesson here? (i.e. Give away your units and advertise on your proprietary hardware?)
Power of the People Even Digg couldn't withstand the power of the people or the so called Wisdom of Crowds. Digg, traditionally against any type of DRM, monitors its posts and takes down anything that they feel is morally wrong. Yesterday (via TechCrunch) someone posted the decryption key to HD DVDs. After the Digg team took it down, someone reposted it. Pretty soon, the entire Digg site went down with a deluge of the decryption key posted all over it. Kevin Rose, Digg's co-founder, says on their blog:
But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.
So that's it, that's what happens when you try to turn against popular opinion. Digg (valued at $60 million per Businessweek's cover story) could become the next Friendster, where users left at the blink of an eye. Fickle consumers have the power and especially online where the butterfly effect is magnified ten times over. It's a scary place to be right now for Digg as many of their million plus users have revolted against them.
What does this mean? Well, I've touched on it before, and again, I'm not sure how this phenomenon happens but if you think about companies out there Apple, Google, and Craigslist are the "good guys" while Microsoft, Yahoo, and Dell are the "bady guys." It's a connotation that can most likely be traced to a few choice events (Microsoft knocking down Netscape, Yahoo charging for email, and Dell's customer service debacle.) While Apple has come clean with its iPod batteries, Google discloses all (or wants you to think that), and Craigslist doesn't make that much money only through its job postings. Since then Dell has apologized, Microsoft has been a bit more open, and Yahoo provides free unlimited storage. However, the damage is done, and just like Gladwell's book Blink, these corporations are the evil empire while our knight in shining armor are the former companies. Stay open, make sure that your PR team has experience in damage control, and address your customers because the power of the crowd is too much to handle (at least for a $60 million company).
Perceptions of Online Video
Today's eMarketer statistic noted that most media and entertainment executives thought that online video (especially short form content) had the highest growth potential, triple that of the current cash printing format, the video game. Further they report that user generated content will be more than half of what is viewed online. However, the major difficulty here (in summing up the report) is
Commercials
Inconsistency of Production
Bad Search Capabilities/Too Much Stuff!
Now, I have to note that user generated content and short form content seem to be grouped together at least in the way that eMarketer has presented it. However, I have to point out a distinction between pure amateur video, prosumer/semi professional video, and professional video. While amateur video will always have a market (wacky clips taken on the moment by your cell phone camera), the rising of the "middle class," the prosumer/semi professional video will be the one to watch. These are the filmmakers/videographers with the new $5200 AG-HVX200 HD Panasonic camera, the latest Final Cut Studio for $1200, the latest Adobe After Effects for $1199 and so on. They'll have all the tools to make professional grade media, but at a fraction of the labor cost, and without the connections to achieve mainstream distribution. If you notice the top 10 all time viewed YouTube videos, 7 of them have editing that is probably beyond the scope of iMovie or Windows Movie Maker.
I've argued that semi-professional videos will soon become the growing segment of online video, but as a marketer, how does that affect you? I think that it may mean access to lower production costs and more ideas for getting your brands out to audiences. From my limited knowledge of production, I know that it takes 5 guys to change a light bulb due to all of the union regulations out there. Well, now the guy in Iowa can create similar content at a fraction of the cost without the labor unions. It also means that with large prizes like a Superbowl Commercial (a la Doritos), more and more prosumers will be vying for an opportunity to utilize your marketing muscle to make it big. If Frito Lay were smart, they'd be asking some of their runners up to be creating their next wave of commercials (again at a fraction of the cost). But, here's the most interesting one: As computer skills become as necessary as typing skills were 30 years ago, we're going to see a new age of marketer: the creative techie marketer. Marketers: Be on the lookout for this person (or these people) as they will be pushing the frontier of what is possible in this new and exciting space.
Google Rules the World So in addition to their purchase of Doubleclick and their announcement of the Clear Channel Radio ads roll out, coupled with Google TV and their purchase of YouTube last year, Google seems to be the major force in the new world of targeted advertising. Google's database is going to stretch across all media which will truly be either a scary thing or an extremely good thing.
With Doubleclick, Google now has a presence in serving up banner ads and other display media. Coupled with their AdWords product, Google hopes to serve up relevant ads not just in text but also via banners. Overall Google is hoping that you have one crossover Google account. You can be hit with advertisements for your favorite foods and mainstream brands on TV, your favorite restaurants while on the road via Radio, and anything else they've missed via the Internet. One area where Google is lacking (although I'm sure they can find a small fledging company in this space that would LOVE to get bought by them) is mobile. Could Google be going the way of Apple and their iPhone product? Mobile is the hot new area of growth especially in the advertising front. Mobile gaming has grown in triple digits, nearly everyone has a cell phone (80%), web access is coming up on 50% and so on. While Google has their text messaging feature, it will be a matter of time before Google offers you free service, but only if you listen to an ad or if someone interjects during your conversation about different goods and services from some type of voice recognition pattern. Scary huh?
One last point. With this inevitable big brotherliness about Google, why does everyone still cower down on Microsoft? Why is Microsoft evil while Google is always the good guy? It's clearly not David and Goliath anymore but rather a battle of two near equals. I think it comes down to the fact that Google doesn't charge YOU the end consumer and for the people that they do charge, they have guaranteed results. Google is open source everything, opening up their API's, and integrating their revenue source into it. Microsoft meanwhile is more old economy by selling IP and closing off the rest of the world to their monopoly. Lesson here? Be open, be liked, and also take over the world while you're at it.
Web 3.0? With all of the hype that Second Life is receiving along with the other virtual reality worlds out there, I have to talk about where I think this whole thing is going to go. Mashable reviews Cruxy today, a widget that works inside various virtual worlds, even World of Warcraft. The widget is a player that embeds within an avatar so that artists can sell their audio, video or stills.
Second Life and other virtual worlds are being infiltrated by big brands such as Dell, American Apparel and Nike. Yet while these big brands are necessary I believe that this peer to peer interaction will still drive commerce. For example, your avatar is sitting next to mine at the Second Life Apple Store. I chat with you about the differences between iMovie and Final Cut and you tell me that you think that Final Cut does things so much better and that is worth the price. Then I can purchase Final Cut right from the Apple Store. With Cruxy, the product is you going around telling people to listen to your music. That doesn't really happen in real life outside of Times Square. Again, I think that while big brands have little to lose in Second Life (since most of their stores are not manned anyway), the real interaction is peer to peer. Where recommendations and such will really drive sales and marketing.
Is Second Life overhyped? Probably. Is it the future? Again possibly. While today's mechanisms are a bit clunky, in essence, Second Life is one big chat room with nice graphics, imagine the possibilities when you are virtually there. Think Nintendo Wii meets Second Life...that would be cool.
