ALKHOBAR/COPENHAGEN: Much has been written about Apple’s iPhone and its fans are many. This year the iPhone came to Saudi Arabia and there was quite a bit of excitement surrounding the device. John Strand, CEO of Strand Consult pointed out that “in Saudi Arabia there is a tradition that you should have the latest phone. It’s a status symbol and an easy way to differentiate yourself to the other people in the community.” So the interest in the handset was expected.
But there’s a lot of hype out there about the device. “The moment of truth: A portrait of the iPhone” by Strand Consult is an effort to give an overview of this smartphone’s position globally. In its report Strand Consult pointed out that there are some important numbers to know when discussing the iPhone. The world’s mobile handset market is dominated by five companies that sell between 14 and 100 million handsets every quarter. Apple is not one of them. Nokia ships more handsets than any other company. In the second quarter of 2009, Strand Consult noted that Nokia shipped 103.2 million mobile phones. Its closest competitor in that quarter was Samsung, which shipped 52.3 million handsets. Keeping those numbers in mind, consider that in the second quarter of 2009, about 5.3 million iPhones came into the global marketplace.
“In many countries the iPhone currently represents one to two percent of the phone sales. Globally it’s about 0.6 or 0.7 percent of the phones in the world,” said Strand. “The iPhone is a beautiful platform and you can make some nice services for it. But the majority of the applications downloaded for the iPhone are free apps and developers for the iPhone are addressing a very small part of the market.”
Apple has touted the large download figures from the Apple iStore, but the real earnings for developers are somewhat disappointing. According to Strand Consult, taking initial figures from Informa/Mobile Entertainment Forum and extracting only “premium mobile services consumed via the phone, removing music sales, TV voting, etc., you end up with a total premium services market of $8.6 billion. Most people in the industry believe that Apple’s share of the market in 2008 was approximately $150 million which corresponds to a market share of 1.75 percent.”
Problematic as well for developers is that the iPhone continues to sell well in its category because Apple keeps opening up new markets to the device — not because it’s radically growing user numbers in the original markets where it was offered. This further fragments the interests of the customer base, which is a challenge for developers trying to maximize earnings through premium apps. More markets doesn’t equate to more potential. The iPhone was sold early on in markets where there were very large numbers of individuals with the ability to pay for a premium smartphone. Emerging markets such as India have a population four times that of the USA, but the sales of the iPhone there will be limited.
Naturally, the iPhone has competition from numerous other handsets and even from such products as netbooks. The largest maker of mobile handsets, Nokia, hasn’t been standing still since the iPhone’s launch. Nokia’s $7.7 billion purchase of Navteq two years ago means that the company now has a strong focus on GPS and location based services. Strand believes that to capitalize on its Navteq purchase, more of Nokia’s handsets will run on the Series 60 software platform — which will bring more Nokia smartphones into the market — and a larger potential Nokia customer base for mobile app developers. Nokia has also just introduced the N900 — a personal computer that’s the size of a cellphone.
But this talk of hardware hides what is the real concern for the Middle East and the Arab World. There continues to be a lack of content and mobile applications targeting the Middle East, meaning that top of the line mobile devices can’t offer good value for their premium price. Nokia held the first contest for mobile Arabic language apps this year. Apple has shown little support in this area. Strand believes it is urgent that more encouragement is offered to the Middle East’s mobile developers and Arabic content providers, particularly from Middle East telecoms.
“The market for mobile Arabic content and more local mobile content in the Middle East is largely untapped,” said Strand. “The Arab market is huge. The average age in the Arab World is very young and these populations are willing to try new things. To make the most of the mobile licenses that they have won, local operators need to encourage the development of value added services that they can offer through their own billing platforms. This does not mean simply developing services and applications which imitate those found in the west, but coming up with completely new offerings that Middle Eastern consumers find to be amusing or informative.”
Such a strategy would be profitable for both Arab developers and the Middle East’s telecoms and it’s a great way for the Arab World to become a strong participant in the global mobile revolution.
The report “The moment of truth: a portrait of the iPhone” may be accessed free from (www.strandreports.com/sw3896.asp)