Adrian J. Slywotzky wrote a great article yesterday in BusinessWeek about how Apple competitors may be overlooking the iPhone’s real potential. He likens it to the iPod, when competitors saw an innovative music player but completely missed the underlying business model to distribute digital media. They attacked the pieces of that model individually—the iPod, the iTunes Music Store, and iTunes—with other music players, online stores, and jukebox software, but no one yet has attacked the whole.

Slywotzky says history may be repeating itself with iPhone, and he’s right. All the big players, including Nokia and the media in general, see an innovative phone but still seem to be missing how important the other pieces are: the online registration, syncing with iTunes, visual voicemail, and the OS itself. If they’re seeing the iPhone as a device and thinking, we’ll take our own devices and mimic those new features, they’re almost certain to fail for the same reasons they failed when trying to unseat the iPod:

It’s all about the experience, not the device.

The experience: Marketing the iPhone

The experience begins before you even enter the store. Look at the care Apple has lavished on advertising the iPhone. Where they’ve talked about features, they’ve showcased real features, not technical specifications. The recently released iPhone instructional videos are models of clarity and simplicity, the kind of thing you might expect in a really good user manual, but they’re being released as marketing. The television commercials have been about using the iPhone, not about its technical aspects. Maybe Apple understands that interested buyers are savvy enough to research the technical stuff on their own, but unless you go to Apple’s site for more information, the overwhelming impression Apple is making with the iPhone is that it’s easy to use. Sure, the iPhone is cool, but it’s cool primarily because it’s easy to use.

The experience: Buying the iPhone

Apple has already introduced several innovations with the experience of buying the iPhone: you can buy it in the store, or online; you can buy it from Apple, or from AT&T; whereever you buy it, you personally register it online using iTunes. These changes all shift power to you, the iPhone buyer.

The experience: Using the iPhone

Plenty has been said about the iPhone’s design, but the impression will probably be even stronger once you start using it. Using the iPhone will seem as easy as using the iPod did, and make competitors look just as clunky and undesirable. But the iPhone will also make you feel powerful, because you really will feel like you can use all of its features. Once you own an iPhone, it’s not the ease-of-use you’ll covet, it’s that power.

The experience: Upgrading the iPhone

What is the iPhone but a little box with a screen and one button? Everything else is software, which Apple can improve with Software Updates, just as it already does with iPod. Releasing system updates to add new features is tricky to do without running afoul of the Sarbanes-Oxley Act. Remember the uproar when Apple charged a small fee to add 802.11n support to existing Macs? It charged that fee to avoid a violation of the Act, which says you can’t recognize revenue now for something you’ll deliver later and was intended to address accounting frauds that led to scandals at Enron, WorldCom, and others.

Apple announced recently that it will book revenue from the iPhone over 24 months, rather than all at once. This repositions things as more of a subscription than an outright purchase, allowing Apple to release new software features before it actually recognizes revenue for those features. It will be interesting to see how this plays out, but what’s likely to happen is that Apple will announce a new feature, roll it out with Software Update with an updated Terms of Service mentioning that feature, after which Apple will recognize a portion of its revenue for that particular feature.

This arcane accounting is still all about the experience, about delivering new software features to your iPhone, no new device required.

 

Good user experience proceeds from the viewpoint of the user to address user needs. That sounds simple but isn’t, because it’s easy to mistake an element of the experience for the experience itself. It’s easy to think that what users want is a really good phone, when what users really want is really good communication. The notion “really good phone” leads to loosely-coupled features, while the notion “really good communication” leads to a honed focus on just that.

Judging by their products, the criteria some companies use to determine whether to add or change features is hard to fathom, but the best companies, including Apple, apply one over-arching criterion: does it improve the customer experience to solve customer problems? Hard to go wrong with that.

Thursday, June 28th, 2007, 10:47 am    Trackback.