Microsoft Buying Nokia A Great Move. But iPhone And iOS 7 Are Already Set To Remake Mobile Computing Once Again.

Brian S Hall / September 3rd, 2013

Do not be misled. Microsoft purchasing (the best of) Nokia — at firesale prices — is a brilliant move. Nokia + Skype + Bing + Office + Outlook + Nokia Maps + Nokia imaging. That is a very powerful proposition.

Apple, however, remains at least one step ahead, and iPhone continues destroying and disrupting all in its path. The mostly wise and semi-literal sacking of Steve Ballmer is but the latest casualty of the iPhone. There will be more.

In less than a decade, Apple’s iPhone has fundamentally altered computing, connectivity, work, play — and industry after industry. Its impact simply cannot be overstated.

aapl versus the rest

Bet you didn’t see that coming.

Ballmer was absolutely not alone, of course, in failing to realize early on that iPhone was the personal computing equivalent of gun powder. Fact is, excepting Steve Jobs and Larry Page, nearly all in the computing industry whiffed on the iPhone’s game-changing potential — until it was much too late. Even the beleaguered Apple faithful, whom cheered when the iPhone was first launched, and aggressively downplayed the device’s initial glaring shortcomings, perceived it as little more than a touchscreen iPod with calling capabilities. They, like the CEOs of tech’s biggest, baddest companies, simply could not fathom how this little device with nearly no buttons, no software and no keyboard would soon re-construct our future, re-make Silicon Valley and devour content like some technological black hole, everything collapsing inside its glowing screen.

Now, we know better. Well, most of us. Far too many remain stubbornly clueless. Despite controlling the most used, most engaging mobile platform on the planet, despite the ongoing turmoil inside the Android camp — and, frankly, I still question Google’s long-term commitment to Android — we are treated to such nonsense as Fred Wilson’s “fear” that Android will obliterate iPhone and iOS.

Hard to take such unthinking proclamations serious. The iPhone is just getting started.

The iPhone Second Wave 

Apple has an astounding 600 million users on the  same version of the same operating system. This is more than anyone else. Given the global thirst for smartphones, it’s hard not to see this number reaching at least 1 billion in under two years. That ensures at least a decade of self-sustainability. There is more to come, however, much more. I believe the value of each individual iPhone, old and new, is on the cusp of a sizable increase in value and utility.

This is the most under-reported story about the iPhone

iPhones connect us to apps, to the cloud, to the web, to our content. The unstated genius of the iOS 7 operating system, however, is that our iPhones will increasingly connect to each other. This represents yet another fundamental computing shift.

iPhone to web (or cloud) was merely the first implementation of iPhone. Soon, it will be iPhone-to-iPhone-to-iPhone.

With iOS 7, Apple is rolling out AirDrop, which supports proximal one-to-one and one-to-many sharing of apps, web content, photos and other services. The new iOS will also leverage iBeacons, allowing us to connect our iPhone with (Apple-approved) wearables and intelligent accessories.

The value of these interactions is not derived from the web, but device to device, location to person.

In other words, Apple is on the cusp of having a billion users on the same platform, their computers always in hand, everywhere they go, connected to each other in physical proximity, not via the web, not via the public switched network, but iPhone to iPhone. I can only begin to fathom the unprecedented innovations we will quickly witness in location-based social sharing, gaming, and commerce.

Only Apple Can Do This 

No one else has this. No one has ever even had this potential.

Yes, Android phones are far more prevalent. Yes, Google does a far better job of connecting us to all that the world wide web offers. But, only Apple will be able to connect us en masse to one another, device to device.

Think of three modes of connectivity. All are vital, all are valuable.

  1. Apple does the very best job of connecting user with device — via the most intuitive operating system and a richer, simpler ecosystem.
  2. Android does a better job of connecting users (and their devices) to the real-time and increasingly personalized richness of the world wide web.
  3. The third path is entirely new: connecting device to device for all manner of sharing of content, data, money, photos and whatever else clever app developers invent.

Again, this is something only Apple can deliver. Hundreds of millions of devices, nearly all on the same version of the same OS, similar hardware, same modes of connectivity, same (Apple-based) standards, same simple method of sharing, same payments and distribution platform.

It will take years for Microsoft-Nokia, or Samsung or even Google-Motorola to catch up with, if they ever can.

My advice: Do not once again underestimate iPhone’s impact. It’s just getting started.

Brian S Hall

Brian S Hall writes about mobile devices, crowdsourced entertainment, and the integration of cars and computers. His work has been published with Macworld, CNBC, Wall Street Journal, ReadWrite and numerous others. Multiple columns have been cited as "must reads" by AllThingsD and Re/Code and he has been blacklisted by some of the top editors in the industry. Brian has been a guest on several radio programs and podcasts.
  • Anders CT

    Well, who are you going to iBeacon and AirDrop to? Other iOS users? Where I come from there just aren’t a lot of those.

    The thing about P2P and local communication, is that it depends on networking effect, which in turn depends heavily on market share. And here in Denmark people just don’t buy a lot of iPhones. They opt for Android devices.

    So for developers iBeacon is just not that relevant. NFC on the other hand is beeing rapidly introduced across retail, because that is what people have.

    • barryotoole

      Sorry about that, but it’s Denmark, not USA, China or India.

      • Anders CT

        I know that. I don’t claim to speak for the entire galaxy. Just posting my local and very subjective observations.

        • TheEternalEmperor

          Well, then everyone can flock to Denmark to use NFC. Everyone(600 million) else will use iOS stuff.

          And no you didn’t claim to “speak for the entire galaxy” but you made a pretty unqualified,general statement about iBeacon being “not that relevant” based on “very subjective observations” of your corner of Denmark.

          What was your point, then?

          • Anders CT

            My point is that NFC is relevant, as billions of euros has allready been invested in real-life NFC solutions. iBeacon and similar “iOS stuff” simply can’t fill that role outside of the US. Apple simply has to recognize this or suffer the consequences. My guess is that Apple will put NFC chips in their phones very soon.

          • TheEternalEmperor

            How do you figure that? Your example is ONLY for Denmark and by your own admission subjective and limited. What else do you have?

            Most iPhone units are sold OUTSIDE the US. Why would Apple ignore something 100x more ubiquitous like USB for NFC especially when they don’t have to change the hardware? Didn’t people say they would have to support USB? Or drop AAC? Or use flash? Or add a keyboard? Or add a removeable battery? Are you serious?

            Really, Flash’s demise alone should give you pause, don’t you think?

            I mean, no offense, but Apple has been ignoring proclamations like yours to the tune of BILLIONS of dollars per year…for years. Why would they listen to you? Recognize what? Suffer what consequences? More billions?

          • Anders CT

            Denmark, Sweden, UK and France amongst others. I was in France this year, and in a Leclerc store they even had NFC in the edge shelf label thingys.

            And you are essentially saying, that because Apple was right about flash they are also right about NFC. That does not follow. And I don’t think that Apple has much choice in this. If Apple still had a commanding marketshare in mobile, they might be able to influence the choice of signalpath to some degree, and that might still be the case in the US. But in europe no manufacturer really has that clout anymore.

          • TheEternalEmperor

            No, what I am saying is that bold predictions about what Apple must do and the dire consequences to Apple when they didn’t do generally haven’t ended well for the predictors. I mentioned a list of things and that list wasn’t complete. Netbooks? Anyone? SD slots? Stylus? I’m hard-pressed to think of a single example of HW that Apple was forced into adding against their will. What do you have?

            Heck, this is a company that defies all other companies by not branding or preloading software on their phones, tablets or PCs. But how? No manufacturer in Europe has that clout anymore?

            I can see that you’re now expanding to other countries. But that really doesn’t change anything. Apple has rarely been strongarmed into adopted other features that did want and so far you have no counter-examples to prove me wrong or even support your own assertions.

            In fact, history seems to put your clearly on the wrong side of this argument. Like I said, stick around and we’ll see what happens.

          • Tim

            No, you are openly lying on order to spread your ill concived opinion. iOS share in your home country of Denmark is 46% vs Android’s 36%. Windows Phone is only 1%.

          • steve_wildstrom

            I would be good if instead of trading accusations, someone could come up with some data citing the source. Not surprisingly, I am having a hard time finding any data whatever on market share in Denmark.

          • Anders CT

            Those industry data are availible from several souces but they are not free. We buy them for our own in house use.

          • Anders CT

            That is just pathetic crazy talk. I have no intention of spreading my opinions on this or any other matter. I offer my opinions and observations and you are free to regard them as lies, blatant fanboyism, fairytales or whatever. If you need to believe that 46%,56% or 96%% of smartphone sales in Denmark are iPhones or that NFC has no future, then go right ahead. Why would I care? It’s not an argument worth winning, as we will all know soon enough.

    • Idon’t Know

      NFC is dead in retail and everywhere else. I don’t know where you get your information from but I work in the payments industry and NFC is a non-starter. Retail doesn’t want to buy the readers when there aren’t many users and NFC requires more than just NFC on a device and a reader. It requires processing which barely exists and doesn’t look like it ever will. Low power bluetooth is where everything is going and is where Apple is correctly pointed.
      Funny how you live in Denmark and claim people don’t have iPhones when I was just at a conference there and saw lots of them.

      • Anders CT

        NFC readers are now in place in roughly 50% af retail stores in Denmark and are beeing rolled out in the UK and in France also. Apple has little choice to put NFC in their phones (which i guess they will) or lose badly in those markets. And yes, some people in Danmark has iPhones, but Android devices are outselling iPhones 4-5 to 1, like in most of the non-US world.

        In the US things are different, I get that, and maybe bluetooth and NFC will be dominant payment technologies in different countries. But if that turns out to be the case, smartphones will still need to have BOTH technologies to be competetive across those different markets.

        In short: I don’t really see Brian Halls narrative about Apple beeing in a unique position to enable device to device communication, phone payments and stuff like that. The way I see it, the next iPhone will need to come with built in NFC support (which it almost certainly will), or Apple will lose both marketshare and brandvalue.

        • Kizedek

          No, smartphones won’t still need to have BOTH technologies to be competetive across those different markets. They can use existing technology that IS already available in every shop in the world: barcode scanners. You can pay with an onscreen coupon or voucher, already, and technology like Apple’s Passbook make lots of interesting things possible.

          So, no, it’s not necessary to include NFC, especially with the concerns over security.

          • Anders CT

            But you probably wont be able to walk into a shop and pay with a smartphone using a barcode scanner. You will by using NFC (where I live, at least). It is not enough that something is technically possible for it to happen. The shop has to agree to it, the payment company or bank has to enable it, and it has to be reasonably hasslefree.

    • Next year is the year for NFC! This time I mean it!

      • Anders CT

        Sure. Where I live NFC is in the shops right now.

        But let me ask you this: Do you think the new iPhone to be released shortly will have NFC?

        • I would be surprised. I just don’t see the value in it. How does Apple benefit itself (sales) or its customers by building NFC into upcoming iPhones?

          • Anders CT

            I imagine it would be pretty embarrassing for Apple, when everyone starts using their Android and Windows smartphones to pay at gas-stations and in supermarkets, while iPhone users are forced to produce their old-fashioned leather wallets.

            And in my country that could very well happen. I can see the readers when I pass through the lines in supermarkets and cenvenience stores. The investments has allready been made, store clerks has been trained and so on.

            I think the next iPhone will have NFC. But we will find out soon enough.

          • TheEternalEmperor

            Don’t go away. I’ll take that bet. The iPhone will have NFC when it gets flash.

          • Now it’s getting interesting!

          • TheEternalEmperor

            Not really. This is what he said “The way I see it, the next iPhone will need to come with built in NFC support (which it almost certainly will), or Apple will lose both marketshare and brandvalue.”

            So, not only will the next iPhone have it…”almost certainly”, but if it doesn’t, Apple will lose both marketshare and brand value.

            This seems like a pretty safe bet on my side. 😉

          • Anders CT

            Sure thing. We’ll see. I have no problem eating crow when I’m wrong.

        • Rene Stein

          Nope, this will not happen. Bluetooth does everything that NFC does except passive RFID tag type things. Why have three technologies in your phone when you only need two?

          • Anders CT

            I don’t know. My argument is not that NFC is the superior solution. My point is that where I come from, NFC is the solution chosen by retail.

  • Nangka

    I have to hand it to you Brian. You’ve spotted quite a few things most others, even CEOs, couldn’t. This may yet be another.

    I’ve been following your posts from your blog. Have to say I sometimes missed the colorful languages.

    • I try and keep my naughty bits confined to @brianshall on Twitter;-)

    • ajaquith

      Brian, I too occasionally miss the colorful language!

      One of Apple’s underappreciated ingrained traits has been incremental adoption of just-nearly-there technologies; giving them a little push. For example: adding USB back in the day. Embracing downloadable high-definition media instead of making a costly foray into Blu-Ray. Podcasts. Low-power BlueTooth. Passbook (genius! I use it on every trip). On the flip side, Apple has had a knack for knowing when to move away from legacy technologies, too. Examples: ditching Ethernet on the MacBook Air; getting rid of removable media drives on most mass-market machines; moving from PowerPC to Intel (the smoothest architectural transition I can remember). The rule seems to be: drop it if it doesn’t cause much “drag” to ditch it, or adopt when the “friction” is low enough on the ecosystem that they can get up to speed quickly.

      In the case of AirDrop and iBeacon, we have two new technologies with a lot of potential. AirDrop, for example, is really, cool, really disruptive, and really easy for developers to add to their apps because the APIs are dead simple.

      Should be very interesting to watch.

  • FalKirk

    “Microsoft purchasing (the best of) Nokia — at firesale prices — is a brilliant move. Nokia + Skype + Bing + Office + Outlook + Nokia Maps + Nokia imaging. That is a very powerful proposition.”

    Vehemently disagree. Plan “A” for Microsoft was to conquer mobile by selling software as usual. Failed. Plan “B” was to move to selling both software and hardware. Failed with Zune and, so far, with Surface. Plan “C” was to flee up-market to become corporate only service provider. Perilous move, but necessary.

    Instead, Microsoft has just doubled down on Plan “B”. Their end in mobile is not near but they just made their end in mobile inevitable.

    • steve_wildstrom

      In fairness,when Brian wrote that I don’t think he knew that Nokia Maps were not part of the deal. I’m still not sure about imaging software.

      • Thanks. I did initially think that maps was part of the deal (not just licensed). But, I think that Microsoft still has a very strong proposition for the market. There are over 5 billion people without smartphones.

    • Anders CT

      It should also be noted, that the combination of Nokia + Skype + Bing + Office + Outlook + Nokia Maps + Nokia Imaging allready existed in the market before the takeover. And it hasn’t been some kind of magic ticket to mobile glory yet.

      The fact is that the vertically integrated one-shop model is very difficult to pull off, and has more often than not led to failure for companies like Commodore, Nintendo, NeXT, IBM, and even Apple before its spectacular resurrection. It is not easy beeing good at everything.

    • We will see. If you are correct, then Microsoft will soon be little more than a provider of reliable enterprise software. But, I think the 5 billion plus on the planet without smartphones have a very good reason to choose Windows Phone, especially if Microsoft can continue to offer devices across the price spectrum, as Nokia long has.

      • steve_wildstrom

        And I will concede that many of those 5 billion are in emerging markets where Nokia has traditionally been strong. Still, I think low cost Android phones are more likely to win those markets (more than a billion of those 5 are in China, where home-grown sort-of android phones already dominate.)

        Being a provider of reliable enterprise software may well be Microsoft’s fate (though I think there is also a lot of money to be made in the SMB market.) The problem at Microsoft is that Ballmer has set his successor up to juggle five chainsaws. Going to be really hard not to drop a couple.

        • Anders CT

          In fairness Ballmer received a few flying chainsaws himself, and in fact handled a couple of them gracefully while cutting off limbs with some of the others.

  • dax mcanear

    I only kinda read your whole article, the jobs-slobber got kinda tedious.

    I am an android user, who values the competition.

    You blow-jobs are always touting design, and never wonder aloud the strangeness that was the blazingly futuristic hardware with lame linen stuff, and the leather in the calender app, and those silly water drops. it was weird.

    I mean…everyone agreed the g1 was fucking ugly/weird/cool. Like the Pontiac Aztec.

    any way. in your sci-fi “apple is the new interweb” thing above. Does google still make most of the best apps?

  • westwave

    I don’t think so. I think what you’re saying is equivalent to “team x won the superbowl the last 2 years, so we can be sure they’ll win the superbowl for the foreseeable future.” John Hagel makes some great points here http://www.scoop.it/t/knowledge-management-information-sharing/?tag=crowdsourcing that can be used to characterize Apple and Android in an entirely different light. Apple is the push institution milking its knowledge stocks for all they’re worth – which “at any point in time, diminish in value at an accelerating rate.” The openness of what most people consider to be a messy Android ecosystem looks more like a pull institution participating in what Hagel calls knowledge flows. If Hagel is right, it will be really difficult for Apple to keep its walled garden model of asset development and stay relevant, even if it is able to milk its install base for a long time to come.

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