SPIRE SIGN IN Register

SpirE-Journal 2010 Q2

Does the iPhone change everything?

Reader's Ratings:

Does the iPhone change everything?

The incredible hype surrounding the launch of successive versions of the iPhone has inspired not only counter-campaigns from vendors like Blackberry and Nokia. It has also drawn attention to the usage of mobile phones as lifestyle enhancement devices with hard commercial potential. Spire takes a look at how the iPhone phenomenon has created a brand new marketing arena in Asia for nascent categories like Mobile Shopping, Mobile Financial Services, Mobile TV and Social Media on the go.

The International Telecommunications Union expects the number of global mobile cellular subscriptions to reach 5 billion in 2010. China and India have the biggest mobile phone subscriber pools in the world. The Asia Pacific alone accounted for 46 percent of the world’s mobile phone subscriptions in 2009.

Against this backdrop, the Silicon Valley firm Apple has placed a big bet on the global smart-phone market. Their success with the iPhone series is well-known. Since 2007, Apple has launched four generations of smart-phone – from the first iPhone to the iPhone 4, which some industry experts believe will change the face of mobile commerce.

A powerful indicator of the iPhone’s success is the 200,000 applications available in the iTunes store. These include the popular Google search for iPhone and WorldCard Mobile from Penpower Technology that captures business card data as an iPhone contact.

Consequently, more and more enterprises, such as Bausch & Lomb and Microstrategy, have purchased the new iPhone for their employees. Even though about 70 percent of businesses still support BlackBerry, about 29 percent of businesses have chosen to support the iPhone.

iPhone usage data across the Asia-Pacific region in June 2010 reveals that Australia, Hong Kong and Singapore had the highest iPhone penetration rates in the region, with Japan and Korea not lagging too far behind6. However taking into consideration both total population size and the initial success of the iPhone phenomenon, China may have the best growth potential.

The success of the iPhone has energized the campaigns of competing smart-phone vendors like Blackberry, Nokia and HTC, ensuring that Apple is not the only beneficiary of the life-style enhancing smart-phone phenomenon. According to research from Strategy Analytics, Nokia shipped a record 20.8 million smartphones worldwide in Q4 2009, rising an impressive 38 percent from 15.1 million units a year earlier. RIM shipped a record 10.7 million smartphones worldwide in Q4 2009, remaining comfortably ahead of Apple’s 8.7 million units during the quarter.

With these breakthroughs in smart-phone hardware penetration, new application markets have been spawned. Some of these are seeing explosive growth in the region, promising to redefine marketing possibilities across industries.

Mobile Shopping

Mobile shopping “more than tripled in the US from 2008 to 2009 and is poised for another sharp hike this year.” Asia is moving along the same growth curve but at an earlier stage. Taobao, one of China’s leading shopping, networking and information sharing sites, sold USD 800 million worth of goods in 2009 via mobile transactions.

Transactions aside, however, China is lagging in terms of the use of smart-phones for building awareness and brands. Speciality stores have yet to tap this platform. In Singapore, for example, footwear and fashion accessories label Charles & Keith has developed an iPhone application for engaging customers on the go. This application broadcasts news of new products, promotions and corporate developments. And with footwear being a category where customers prefer to “try before they buy” rather than purchase online, the application also helps users locate physical stores and products. In the same vein, Italian fashion and leather goods label Gucci launched a Gucci iPhone application to showcase the latest fashion trends in each season.

Mobile Financial Services

Bank Services

In the iPhone era, banks are competing vigorously to offer mobile banking services to their customers. These solutions are often loudly messaged as competitive success factors.

In Hong Kong and Singapore, the Citi Mobile application enables users to transfer funds, pay bills and view account balances on their mobile phones. It also enables users to search for the nearest Citibank ATM, Branch or Citigold Center. The application even supplies information on the best dining offers under the Citibank Gourmet Pleasures program. Singaporean iPhone owners who are DBS Bank customers enjoy the convenience of being able to bank on the go. DBS Bank’s iPhone application enables customers to check account information and transfer funds, among other things.

Chinese banks do not want to be left behind. The Bank of Communications became the first Chinese bank to confirm that it would be offering mobile payment services to its customers using near field communication handsets supporting the Single Wire Protocol. It follows the signing of a partnership agreement between China Unicom and Bank of Communications in April 2010 which led to successful field testing at the World Expo in Shanghai. In reaction to the iPhone phenomenon, the Bank launched its “E-communication” application, which can support all smartphone platforms, including Android, Windows Mobile, Symbian and Apple’s iPhone.

Equities

Mobile trading of stocks has been widespread in countries like Taiwan and Korea for some years. Now, a growing number of applications are appearing in China with a similar purpose – to support stock trading on the go. These applications provide financial information about China’s stock market, offering real-time stock quotes from the Shanghai and Shenzhen stock exchanges. Consumers are able to customize a list of stocks where they wish to view real time quotes and news.

Mobile Gaming

The iPhone is taking a big bite out of the global mobile gaming market. According to a recent report, the biggest loser in market share in 2009 was the Sony PlayStation Portable (PSP) followed by the Nintendo DS. The PSP, which had 20 percent revenue share in 2008, dropped to 11 percent and the DS saw a drop from 75 percent to 70 percent. During this period, Apple games – iPhone games and iPod Touch games – went from 5 percent share in 2008 to 19 percent in 2009.

More importantly, however, iPhone and iPod Touch game platforms are taking market share from the two incumbent handheld manufacturers without competing directly with them. This development is being echoed in markets with significant iPhone penetration in the Asia-Pacific like Australia, which is also a sizeable gaming market.

Mobile TV

While the slow growth of mobile TV has disappointed many observers in Asia, there are signs that the iPhone phenomenon is helping to pick up the pace.

In China, an important development has been the launch of Imgo TV by Hunan Golden Eagle Broadcasting and Apple on the iPhone platform. iPhone Mobile TV has its drawbacks such as lack of coverage, relatively poor quality and limited 3G capacity. However it does carry valuable content – in this case, the full range of Hunan’s satellite TV and eight other channels which run on Imgo TV.

The potential for future development of mobile TV among China’s 500 million mobile subscribers is unmistakable – though it remains to be seen if this potential can be converted into a viable business, given the anaemic reception to mobile TV in other countries.

Mobile Content and Social Media

Media owners such as The Wall Street Journal, BBC World and The South China Morning Post deliver news to mobile devices. These applications are popular among white-collar professionals who wish to utilize their long commutes to catch up on the news. In this context the iPhone has helped to accelerate development of the logical next step – social media on the go. Some of the social networking sites that are available as applications in the iPhone include, Echofon – Twitter usage on iPhones, Facebook, LinkedIn and Flickr.

Government authorities and NGOs are turning to social media platforms like Twitter to broadcast alerts on matters of public interest, such as locations affected by flooding – or, in the case of Mexico city, gang violence. It was recently reported that even the government of North Korea had begun using Twitter and Youtube to execute a propaganda offensive directed at overseas audiences!

What lies ahead for mobile markets in the iPhone age?

The smart-phone phenomenon, defined as it has been by the incredible hype surrounding the iPhone, has seen its fair share of highs and lows over the past three years. The flurry of excitement around the many new iPhone applications has been tempered by a number of disappointments, such as the frequency of dropped calls with the iPhone 4 due to incorrect handling of the hand-set.

It should be recognized that had the iPhone not come into existence, it is likely that many of the new services we now see would have been launched to run on other smart phones, hand-held devices or even notebook computers tapping onto public hotspots. Some of these services already existed prior to the iPhone’s debut.

However by elevating the smart-phone to a lifestyle device, the iPhone has created a critical mass of content creators and users around lifestyle enhancing functions going beyond the purely practical, such as mobile gaming, mobile social media and retailer applications targeted at shoppers in malls. In this regard, the iPhone has decisively transformed the smart-phone into a new marketing and lifestyle platform for future services and marketing approaches yet undreamt of.

Whether the main beneficiaries of this phenomenon will be hardware vendors like Apple and BlackBerry, application developers or brand owners utilizing these new platforms to reach out to their customers will come down to the talent and discipline of each company’s marketers.

Back to Top

Back to Home
BTBTBTBTBTBT