This is Part 2 of our look at ICT developments in 2009 and beyond. The discussion is structured by the typical marketing lifecycle implemented by ICT vendors.
Part 1 discussed the use of hype and spin in ICT marketing. The terms were applied to the increasing importance of cloud computing in 2009 and beyond.
In this part our focus is on smartphones.
As IP and IT lawyers we’ll be monitoring in 2009 the business and software ecosystems around smartphones. This is because we serve the legal needs of those porting their products and service on smartphones, eg software application developers, website ventures, and publishers and other offline and online content owners.
Turning back to cloud computing a clarification is appropriate before discussing smartphones and our next term involved in ICT marketing.
- The clarification is that cloud computing used to be hype or spin when in the late 1990s it was solely termed “Software as a Service“, or in its digerati acronym, SaaS. Now it is a growing development and SaaS and cloud computing are interchangeable terms.
- In the late 1990s and early noughties, Software as a Service technology may have been there on the supply side, ie the software could do what its vendors claimed. But on the demand side our personal computers and online bandwidth did not have the required power or big pipe to process that software.
- So Software as a Service hardly left the ground. A lot of investment money was lost in Australia and elsewhere by software ventures that backed it.
- Like successful politicians today, ICT marketers are clever people in the way they play with words. So rather than try to relaunch Software as a Service using that tarnished term, they’ve instead relabelled it as “cloud computing”. I’ve not capitalised that term as I expect it’ll go the way of the internet and the web, ie so common that no capitalisation is required.
- There’s a wider lesson there. It is that ICT marketers may push new technology with genuine intentions but at the wrong time. This may be, for example, when the technology is not sufficiently available and hence the market for the new offering never takes off. Similarly, in the early 1990s informational or entertainment CD-ROMs containing multimedia never took off. Again, web ventures did not take off in a sustainable way before, during and for a couple of years after the dot com fiasco. The term Web 2.0 struck a chord, arriving as the supply and demand side came into synch from about 2005 onwards.
- A common part of the problem with Software as a Service, multimedia CD-ROMs and early web ventures was – the technology such as computers, disc drives, modems, and broadband big pipes were simply not there on the user side, on the demand side.
Buzz is our next term. In contrast to hype and spin, buzz is a positive word. It contrasts against the unreality at the core of hype and spin. Cash registers ring on buzz. Which brings us to smartphones and their increasing importance in 2009.
Ahead are more smartphones with better functionality for voice recognition, GPS, and docking into other devices. Moreover, ahead are smartphones with better software.
At least at the level of buzz, the business strategy wars are revolving around – Apple’s 3G iPhone and its applications versus Google’s Android (looking for smartphone hardware adopters) versus Research in Motion’s improved Blackberry offerings – and all versus the rest.
Among the rest is the Sony Ericsson joint venture. In 2007 it sold 101.3 million units (Source: Wikipedia). It is experiencing a lack of buzz due to not having ready and available high end smartphones. It experienced falling prices and margins in 2008 (Source: BusinessWeek.com, 18 Oct 2008).
Against everyone Finland’s Nokia remains way ahead in its global mobile phone market share. It aims to stay there focusing on improved features and value for money. With more buzz around the iPhone and Blackberry it is facing more competition. Recently it reported a 5% decline in revenues and 30% fall in net earnings (Source: BusinessWeek.com, 16 Oct 2008). Nonetheless, Nokia dominates with its mobile phone global market share of about 38% in Q3 of 2008, down from 39% in Q3 2007 and 40% in 2006 (Source: Wikipedia).
In contrast to years ago, the buzz about mobile phones is over their software, rather than their form factor, touchy feely elements, or skin appearance. The Apple iPhone is the epicentre of the buzz. It’s made rapid fire progress. Helping is the fact that Apple is an overall systems company (eg software + hardware + iTunes + Apple shops).
In contrast Google’s Android strength is in its clenched fist around search advertising and the relationship between online information publishers and users. Google is an intermediary, the classic middleman. It shapes the marketplace and then “sells” one to the other.
The strength of Research in Motion’s Blackberry is that it remains its market share among people in business. In the second half of calendar 2008 reviewers of Blackberry devices compared it to the iPhone. Devices from Sony Ericsson, Nokia, Samsung and others seemed to be rarely in the picture.
Buzz helps those it favours to be the model selected in the parade.
Apparently buzz is critical in online marketing, not just ICT marketing. In a video interview for McKinsey Quarterly in September 2008, Dr Eric Schmidt (CE0, Google) observed: “You can have a long tail strategy, but you better also have a head, ’cause that’s where all the revenue is.”
Apple’s done some sharp legal deals fuelled by iPhone buzz. In late 2008 one of those deals proved very costly for Optus. Following its July 2008 iPhone launch it suffered a A$44 million “incremental impact” to its EBITDA as a result, even though there was “robust demand” for the phone. A statement released by the company noted that “higher subsidy costs are associated with iPhone 3G”.
In 2009 as smartphones continue their move past hype, spin and buzz they will go deeper into the next stage. This is the stage at which an ICT offering becomes a habit. The habit stage in ICT marketing will be discussed in Part 3 of this series.