Apple

Droid, Android, and how Google could hurt Apple

Verizon, Motorola and Google can all be pleased at the pace of Droid sales, estimated at $250,000 the first weekend. While Apple’s iPhone sales record dwarfs that of Droid, it’s still the fastest-selling Android phone, and it’s said to be already responsible for half the Internet activity for Android handsets. Another report says it will likely drive Android past Windows Mobile in market share soon, a formidable achievement despite Microsoft’s indifferent promotion of its mobile phone system in the past.

Droid seems a clear winner, which could have significant impact on the credibility of Google’s Android and the potential Android may have as the near-term, de facto competitor to the iPhone and the eventual winner in the smartphone space. Apple with iPhone now faces a very “Mac-like” dilemma. The IBM PC won decisively in the market because it was open, but Apple has stayed very profitable and continues intact, while the PC has been fragmented and sold off to various players.

Should Apple now open things up with iPhone to seize market share or play the same game in the smartphone space? We think they’ll decide for the latter, but Google is a much smarter competitor than any Apple has faced before, and an Android success could establish Google as a broader alternative OS player, something that would hurt not only the iPhone but the Mac.

Verizon’s smartphone direction still chasing AT&T?

Verizon is apparently planning a total smartphone blitzfor the holidays, including the already-discussed Droid from Motorola, but also according to rumor, a new HTC Android smartphone and perhaps a third model as well.

The Verizon moves are, we think, are calculated to make things complicated for AT&T and Apple with the iPhone for the holidays. A multiplicity of models at various sizes and price points makes sense at this stage in the market, but there is no question Apple still has the cachet that other smartphones have so far been unable to match.

We think all of these smartphone wars are a signal that whatever the FCC might do with wireless net neutrality, operators are committed to the mobile web.

Google Voice, Apple, AT&T and the FCC: The flap continues

Google has released some information that suggests that Apple’s statements to the FCC in July about blocking Google Voice were not correct, and the rumor is that even more damning information is available at Google for release should Apple not reconsider its position.

Apple claimed that its “rejection” of the Google Voice application was for look-and-feel reasons, but the Google release suggests it was explicitly because Google Voice competed with basic Apple/AT&T functionality, something the FCC would likely rule on.

This issue could bite both Apple and AT&T because an actual false statement to the FCC would be bad politics, at the minimum. We say this because it’s not clear whether the FCC really has authority over Apple and handsets. The FCC would have to contend that Apple was simply a stalking horse for AT&T interests in this case, and AT&T is within the FCC’s jurisdictional web.

Google and wireless regulation in the U.S.

There’s more debate on the smartphone VoIP front as both Google and T-Mobile deny there were any deliberate restrictions placed on Skype for the T-Mobile Android handsets. Google said there was no full-feature Skype implementation offered as yet for Android, and T-Mobile said it had put no pressure on Google to restrict VoIP applications.

All of this stems from the fact that Apple limited iPhone Skype to WiFi connections and blocked Google Voice (for, said Apple, reasons of lack of support for the iPhone’s distinctive GUI). We think these issues may combine with the Comcast net neutrality appeal to create some momentum for legislative intervention, though the FCC may also look into the matter. If the FCC takes action, it may help uncover just what basis the FCC will claim for regulation of net neutrality issues; the net neutrality principles published by the FCC were not part of an order and thus have no direct legal status.

Open handsets: It’s about the apps

While the number of iPhones sold is a popular metric of mobile change, the more significant metric may be the number of applications sold for iPhones. The iPhone phenomena, more than Google’s Android, is responsible for the open handset movement that is reducing the barriers to application innovation in the wireless service space.

Operators looking for IP transformation strategies have latched onto partnership relationships both with handset developers and with developers who use network APIs. The handset opportunity for operators comes because applications promote smartphones that are more expensive but also promote data service usage, a major goal.

Some research has shown that specialty applications have been responsible for the growth in data usage outside the traditional “corporate male” segment of the market. The question now is what platform will win, or how developers will split their resources across the multiple phone operating systems that are available.

Apple MobileMe as major competitor?

Apple’s MobileMe may be more than an “Exchange Killer” (or at least a competitor); it may be the beginning of Apple’s challenge to Microsoft’s Connected Services Framework (CSF) and also a challenge to network operators. Finally, it may be a boon to Cisco. The reason is that MobileMe is an example of an over-the-top application of advanced service features, and thus a step in further disintermediating operators that might want to offer similar services themselves.

That’s what Microsoft has been doing, but more in partnership with operators than as a competitor.  But it’s pretty much what Cisco had hoped to do (and presumably still hopes to do) with WebEx Connect. In all, we think MobileMe may be the most important thing about the latest iPhone announcement because it may be setting off a new industry trend. We also think that MobileMe is the revenue kicker that Steve Jobs sees in his new iPhone deals with providers, which eliminate the Apple cut of future service revenues in favor of a one-time subsidy.