3 Reasons the iPhone Will Keep Winning

"Platform" may be the most overused and misunderstood word in tech. Nondescript and colorless, it refers to anything that runs or enables software. Operating systems, PCs, servers, even smartphones; they're all platforms.

We techies place faith in platforms because we know from the success of Microsoft's (Nasdaq: MSFT  ) Windows that the next great platform could be a millionaire maker.

The Windows of mobile over Windows Mobile
Among smartphones, Nokia's (NYSE: NOK  ) Symbian operating system has long held the lion's share of the market. But that's changing:

Mobile Operating System

Q3 2008 Shipments

% Market Share

Q3 2007 Shipments

% Market Share

Symbian

18.583 mil.

46.6%

21.219 mil.

68.1%

Mac OS X

6.899 mil.

17.3%

1.107 mil.

3.6%

BlackBerry OS

6.051 mil.

15.2%

3.298 mil.

10.6%

Windows Mobile

5.425 mil.

13.6%

3.797 mil.

12.2%

Linux

2.028 mil.

5.1%

1.361 mil.

4.4%

Others

0.862 mil.

2.2%

0.372 mil.

1.2%

Source: Canalys.

Look at how Apple (Nasdaq: AAPL  ) is mirroring its success in the PC market by eating away at Symbian, here. Research In Motion (Nasdaq: RIMM  ) is, too, but the iEmpire's superhuman leap up the charts is more impressive. And it could have as much to do with the iPhone being an (ahem) "platform" as anything else. Here's a look at the software programs available for each of these mobile OSes:

Mobile Operating System

Applications

Symbian

9,834

Mac OS X

6,000+

BlackBerry OS

Unknown

Windows Mobile

18,000 +

Sources: Company reports, TMF research.

Anecdotally, there's evidence of a huge number of add-ons for RIM's BlackBerry. Yet, it appears that very few are sanctioned and available at the company's website. That’s an issue, trade magazine CIO reports. "Today, there's no central repository for BlackBerry applications, save for a page on BlackBerry.com that lists officially sanctioned applications. However, not all of those apps can be downloaded directly to a handheld from the page. Desktop computers and RIM's Desktop Manager Software are required to install some apps, which complicates the acquisition process," writer Al Sacco explained in an early October post.

Fair enough. But digital dealers are out there for CrackBerry addicts. Symbian's no slouch, either, having recently reported 25% growth in its available apps. And Microsoft has a huge footprint. What's so groovy about the App Store?

Just this: The App Store today has at least 500 more applications than it did when Apple reported earnings on Oct. 21. On that day, CEO Steve Jobs said that the App Store contained "more than 5,500 applications," and that the uptake for iPhone software was unlike anything he and his team had ever seen.

Mr. Mac is beginning to look like Mr. Softy
Can you blame him? The math is incredible; 500 applications in 30 days equals 16 new software programs each day. No doubt much of this code won't interest users. But some will. Some will even be game changing. Here are two applications that I believe meet that description:

  1. Orb. Nokia has for years toyed with bringing live TV to mobile devices. EchoStar last year bought Sling Media and its rebellious Slingbox for a similar purpose. But now, if Orb has its way, iPhoners will have live TV pretty much whenever they want it. Orb streams video from -- irony alert! irony alert! -- a Windows PC. Anything stored or accessed on your PC can be broadcast to the iPhone, including YouTube videos, movies, or -- if your PC has a TV tuner -- live programming, VentureBeat reports. That's a massively disruptive idea in that it could, if widely adopted, bring AT&T's (NYSE: T  ) 3G network to its knees. (Apple has banned other streaming applications for similar reasons.)
  2. Google Voice Search. Is there anything that DoubleGoo can't do? Google's (Nasdaq: GOOG  ) Mobile App is so rich that it makes me wonder. And that was before it had voice search -- a feature so slick, so well designed, that it feels like it came from Apple. The interface is simple: Press "voice search," put the handset to your ear, and speak your request at the prompt. Even my tech know-nothing three-year-old was impressed.

There's also Flash. More a technology than an application, Adobe's (Nasdaq: ADBE  ) Flash is vital in that it's frequently used to animate some of the Web's most highly-trafficked sites. Apple hasn't exactly been quick to adopt Flash because of its similarly styled QuickTime software. But now it could be coming in from the cold. This week, Adobe's Chief Technology Officer, Kevin Lynch, confirmed that the iPhone would soon be Flash-ready. (Barring approval from Apple.)

Windows became what it is today because of developers. Now, a decade later and on a new platform, it's Apple and the iPhone that the coders crave.

Apple is a Stock Advisor selection. Nokia and Microsoft are Inside Value picks. Google is a Rule Breakers recommendation. Try any of these market-beating services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers had stock and options positions in Apple and Google and a stock position in Nokia at the time of publication. The Motley Fool's disclosure policy likes to crank call other disclosure policies.


Read/Post Comments (5) | Recommend This Article (5)

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  • Report this Comment On November 20, 2008, at 3:24 PM, BoTom wrote:

    It's pretty naive to think that the iphone sales growth will remain at this level. Did everyone already forget how fast it went downhill same time last year? Even holiday season didnt buff it. And why is that? The loyal apple fans and general early adopters and gagdet freaks all got their new toy. But the vast majority doesnt necessarily feel it is justified to put down upwards 600 bucks for a contract free phone or get locked up in a 24 month contract while they're still bound by another contract of their current phone (i'm one of those who are now paying for 2 contracts because I wanted my iphone 3g on launch day). And this year, we got a worldwide recession at our hands... think about it.

    As far as flash goes (no, quicktime is not in the same technology league as flash - its just a pretty decent movie and VR player after all, whereas flash is much more than that), the main reason the iphone still cant handle flash in websites is that flash is a power hungry technology. And processing power isnt exactly what the iphone has plenty of compared to other smartphones. It would be a mistake if apple gives the nod to flash before it runs in a useable fashion on their platform. Heck, I wouldnt even be surprised if we wont see flash for the iphone and iphone 3G at all or before the next installment of the iphone arrives... perhaps late next year.

    Now lets talk about App Store. There isnt much to say. I love some of the apps. They're great. But out of the 5500 or so apps, 5400 are utter junk. Its a classic matter of quantity over quality. And whats even worse, apple started to kick out the really hot ideas, claiming it violates pre-installed apps or future apple apps - considering that developers have to put down alot of cash for the iphone SDK and considering apple grabs 30% of the sales revenue, this uncertainty is a perfect recipe to discourage developers, perhaps even driving them away and into the arms of the jailbreak/installer scene (which recently was endorsed by Steve Wozniak, co-founder of Apple).

    With that said, I love my iphone 3G. But i'm a realist who cant stand this unfounded hype surrounding it in these dire economic times. People will go for value not for bling-bling extravanganza.

  • Report this Comment On November 20, 2008, at 4:41 PM, scorp1us wrote:

    BoTom, you missed the point. The iPhone is the FIRST user-centric platform. Prior to the iPhone you got whatever the manufacturer loaded. Maybe if you had WinCE you could buy and load a lame app. But what happens with the iPhone is it isn't a business-only device. People young and old can enjoy it, and with the apps, customize the device to themselves. It is this high degree of customization that users really appreciate. My contacts, then my music, and now my apps and games.

    Next, the Flash issue. Look for this to (in part) drive new iPhone sales. Bigger batteries, faster CPUs will be needed to properly support flash. I keep thinking about what I would put into iPhone 3.0 (3rd gen) - hardware and software - but all I can come up with is faster CPU and more battery, 802.11n, higer DPI screen.All those are incremental and don't change the platform.

    I am concerned however, over the open platforms taking over. This will only happen if Apple gets draconian, but it won't matter for some time.

  • Report this Comment On November 20, 2008, at 4:53 PM, cheatsheet wrote:

    Get some facts straight. iPhone SDK is free! (http://developer.apple.com/iphone/) What cash are you talking about? $99/year to register your app on the AppStore? Is $99/year a lot to pay to access 10 million (and growing) users per year? Keep in mind that there are 250 million downloads thus far. Work some numbers into that. If you are a developer, how else are you going to access that rate of downloads on a platform. If this thing slows down it will show in the coming months. But do you think Apple is in this for the short term? Do you think they are going to rest on their laurels? Competition in this market is ratcheted up with the Storm. I'd expect everyone to up the ante. It's a good thing. Even in a horrible economy, Apple is positioned well to get through it with $24.5 billion cash. That's more than what Microsoft has on hand at the moment. The competition on the other hand has an interesting game to play maintaining the different segments of the market they're in. I consider that a more difficult task since A) They only make cell phones and are not using desktop level APIs. B) They do not have the resources of Apple. C) They are still playing catch-up given their divided resources for non smartphone products. D) Their AppStore strategies are thus far modeled after iPhone and most are only announcements. E) Despite your opinion that 5400 of apps are junk, the volume of downloads AppStore has will attract more talented developers. This is a tough fight for any competitor of the iPhone. Recall that most critiques believed Apple will fumble on their first attempt with the iPhone. Giving reason such as being green in the industry and having no leverage over carriers, etc. It seemed this has never come to light since every smartphone makers are copying the heck out of the iPhone platform model. Missing cut and paste, video recording, MMS, physical keyboard, Flash, etc. It's like the iPod missing a radio or use of streaming music services of yesteryear that all its competitors used to distinguish themselves. It didn't work. I think the pattern is repeating on the iPhone.

  • Report this Comment On November 20, 2008, at 4:55 PM, unclestretchy wrote:

    own a Bold and the new iPhone.. iPhone gathers dust...impossible to message/email with (texting is super however), slow, battery life stinks (really stinks) and it's very slow at everything... does manage the home music/theater network well when it finally connects.....

  • Report this Comment On November 21, 2008, at 2:55 PM, bmcarney wrote:

    Mobile phones are a consumer led market (first-and-foremost) and a massive market at that. It requires much more than developers to succeed on a global scale. Boring things like phone call quality, battery life, reliability, security are probably more important to most people than apps.

    The value-chain is complex, with much variation in business models caused by carriers, regulatory authorities and local variations; e.g. Symbian's numbers dropping were as much influenced by a change in device subsidy regulations in Japan. A useful fact stated in your source, but you omitted from your analysis http://www.canalys.com/pr/2008/r2008112.htm). Symbian already has an impressive 40million devices in the Japanese market alone http://www.symbian.com/news/pr/2008/pr200811003.html

    As for developers, the iPhone does not even allow premptive multitasking (i.e. apps to run in the background) and has not even begun to address the additional requirements of security for a mass market mobile device. This really restricts the types of applications that developers can develop and what/how the channels they can use to deploy them (http://voices.washingtonpost.com/fasterforward/2008/09/apple... ).

    From a scale perspective, Apple simply does not have (1) the global supply chain and (2) the mindshare to be more than a niche; albeit with a distorted large marketshare in some countries, but not others.

    This is not dissimilar to what happened with the Mac and the iPod as well...For sure Apple know how to create a great product and profit from the segment. That is the most impressive aspect of what they do, but Symbian has a massive (global) headstart as the platform and mobile ecosystem of choice.

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