The iPhone trap
Apple’s iTunes customer creation mechanism
The most interesting thing you’ll find in the iPhone package is not the iPhone (at least not after the novelty has worn off). What is interesting is the iTunes service that accompanies it. Apple releases regular iPhone software updates and the only way to get these updates (officially) is via iTunes.
So, every iPhone user becomes a customer of their chosen carrier and a customer of Apple. In terms of presence, Apple has the lion’s share. Every time you start iTunes (on your Mac/PC/iPhone) you are brought up to date with Apple’s latest offerings, and as you probably have a commercial relationship with Apple it’s now easier than ever to purchase whatever is on offer.
A commercial relationship with Apple? Yes, indeed! In order to get an iTunes account (with which to get the necessary software updates to your precious iPhone) you need to establish a commercial relationship. This involves giving Apple your credit card details. You even have to give them your secret CVV2 number from your card.
There is a work-around, but it can be complicated and if you’re stuck for time you’ll find giving Apply your credit card details is a lot easier. (The work-around involves buying an iTunes voucher, or getting a free one from a Web offer, and using it to set up an account, whereupon you are given the “none” option for your preferred payment method.)
It’s a clever approach to creating a loyal customer base, one that the rest of the handset vendors will follow. Nokia has already launched its Music Store service, but still has some teething problems (such as lack of Firefox support for the store’s website). Nokia’s store is also limited to music, unlike iTunes which is a vehicle for videos, applications, service packs, updates and more. The Sony Connect service died, but Sony have not given up, and have recently launched a download service that builds on the existing PlayStation Network. Meanwhile, Microsoft have a similar service connected to the XBox.
In a way, this mirrors the walled-garden Internet services of the early days of the mobile Web. When you buy a device, you enter into a long-term relationship with the device manufacturer, rather than with the network operator as it used to be in the bad old days. So now we have some bad new days instead.
Eventually this binding between device and media/application service provider will break down. Third parties will move in to provide device-neutral services. Initially this will be for pure media services, such as DRM-free music and video, and eventually it will evolve to include platform-neutral applications. The latter could take some time, as there are so many competing platforms, both native and virtual. It’s also possible that the browser will become the de-factor application platform, especially if standardised Widget technology evolves enough to compete with the likes of Gears. The browser developers must get their heads together to ensure the necessary level of interoperability to make this happen.
How will Apple respond when they see their iTunes services come under threat from so many alternatives? Whatever their response, it will be interesting, and global.
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