iAd’s

Will iAd’s fail? This guy thinks so.

Came across a very interesting take on Apple’s iAd’s over here, today.

Now I certainly don’t want to see them fail – because, as a marketer any channel that is efficient, effective and one that users actually enjoy interacting with is a good thing, from my perspective. But Brandt Dainow’s argument is strong.

“Apple’s new iAd proposition has been generating a great deal of discussion lately, most of it positive, and most of it remarkably short-sighted. It seems most people, including Steve Jobs, have forgotten the basic lessons of computing and the internet. People who forget history are doomed to repeat it. The iAd has no future, and neither does the iPhone/iPad. I will show why iAds must inevitably die, and how Steve Job’s strategy for iPhone and iPad will inevitably lead Apple into becoming at best a marginal niche player, at worst an ex-business.”

That’s a pretty gutsy thing to say – it takes me back to all those articles from years ago that used to say the internet was a passing fad and would die. But read on and I can’t help but to think, ‘well he’s got a point’.

Brandt goes on to say:

They may have started as phones, but they outgrew that classification a couple of years back. The only serious difference between a smartphone and a computer is size and the fact that smartphones are inherently location-aware. You will notice that the creators of smartphone operating systems are all computer companies.

As computers, smartphones are subject to the multi-layered business model common to all computers. Technology manufacturers, such as Nokia and Samsung, build the physical hardware. Above them we have the providers of operating systems, of whom the major players are Apple, Google, and Microsoft.

It is important to remember that developers do not build applications for hardware, they build applications for operating systems. If the app works on Android, it makes no difference who built the hardware, the app will work on all Android phones.

Operating systems are attractive to application developers and service providers to the degree that they offer profitable development paths. For a developer, profitability is a combination of ease of development (which determines cost), and the deployed base of the operating system, which determines the size of the market. No one is interested in developing an application for an operating system no one uses.

The critical component in all this is the customer. In order for everyone to make money, people have to purchase the hardware, apps, and services. Smartphones, like all other computers, sell on the basis of what you can do with them. People buy IT equipment (laptop, PC, or mobile) on the basis of the applications they can run on it. The item purchased needs to be able to do what the customer wants it to. There are so many programs around for PCs today that this is rarely a consideration — almost every conceivable application you could want is available.

As a result we have largely forgotten that capabilities are central to sales. However, there are many instances in which purchasing a Mac is not an option because the required software does not exist, which shows that applications still control purchases.

This creates feedback loops in the smartphone marketplace — hardware is sold on the basis of the range of apps available. The range of apps available is dependent on the operating system. The success of the operating system depends on providing a good platform for apps and services. An operating system is attractive to a mobile hardware manufacturer only if they think it will help them sell hardware, and in order to sell, they must have apps and services.

You can read the whole article here, it’s five pages of interesting, compelling and logical argument.

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