Moses Kagan's Aurora Borealis

Apple's shareprice dipped 4% yesterday on news that ATT has connected just 146,000 iPhones since launch. Analysts had predicted that up to 500,000 iPhones would have been sold by now.

Here's why the 500k figure is crazy. Assume there are 250m mobile subscribers in the US. Assume further that 50% of these are contract subscribers, as opposed to pay-as-you-go. Assume 25% of contract subscribers are the kind of people (young, rich) who might be willing to spend $500-700 on a mobile phone. That leaves 31.5m potential customers - but we're not done yet.

If we assume that customers only want one contract at a time and that there is an even monthly distribution of contracts ending, Apple / ATT are actually targeting ca. 2.6m customers per month.

The iPhone was launch almost exactly a month ago, at the end of June 2007. Signing up 500k subscribers by now would have meant convincing nearly 20% of the possible customers in the market to purchase an unproven, expensive product which is duplicative of two pieces of equipment they already own (a phone and an iPod) and which (likely) requires that they switch mobile networks.

The fact that, despite all of the impediments, Apple / ATT have managed to sign up ca. 5% of the available customers is actually pretty impressive and, in my opinion, bodes well for the future of the product.

Labels: Apple, ATT, iPhone

Six months after Google's acquisition of Youtube, Mark Simon at SearchInsider decries Google's Shaky Investments, arguing that Google overpaid for Youtube and still lacks a revenue model to support the $1.65b valuation.

Two thoughts:
1. Paying $1.65b for the market leader in a rapidly growing segment of the internet when you're worth $175b is no big deal. In fact, I'd argue it was probably cheap when viewed in the slightly longer term.

2. Google itself did not initially have a revenue model. Rejecting VC pressure to run banner ads, Google waited until the advent of the PPC auction model (by GoTo / Overture) several years later to begin monetizing the enormous traffic volumes it was generating. The Google team are wisely repeating the same strategy: focus on the user experience while waiting for an ad model to emerge that doesn't screw up that experience.

Labels: advertising, Google, Youtube

Blodget has an interesting commentary on eBay's launch of Kijiji in the States this week. His argument is that at least eBay is finally doing something that is about getting people to buy and sell things, instead of messing around with VOIP. My argument is that they should have done this 5 years ago, since the site could have been built for $100k.

Labels: Blodget, eBay, Kijiji

David Carpe, of passingnotes.com, has an awful post on what he thinks Google is going to do in 2008:What Google is Really Doing for 2008.

Carpe's big idea is that Google is going to flip a switch on what will be the biggest social network in the world by knitting together each of its different social apps (Google Pages, Calendar, Gmail, etc.). He thinks this is going to blow MySpace / Facebook / etc. off the map.

What Carpe doesn't realize is that Google's not cool. It's slick, it works really well, it 'organizes the world's information'. But it's not cool. And social networking sites, at least the ones that target teenagers (the heaviest users), need to be cool. They need to stand for something, whether it's music (like MySpace or Last.fm) or college gossip and hookups (Facebook) or whatever. By standing for something, and basing their design decisions around that one thing, the best networks create communities with distinct feelings.

So, David: Who, exactly, identifies with 'organizing the world's information'?

Labels: facebook, Google, MySpace, social-networking

This is my mobile internet manifesto:

1. Three successful business models have emerged on the internet: advertising (Yahoo & Google) / subscription (Match.com) / transaction fees (eBay)

2. This was b/c of the payment problem – it was impossible to charge customers small amounts, b/c credit card companies didn’t want the business and internet service providers a. didn’t understand it and b. used variable IP addresses and so lacked a perfectly straightforward manner of determining who had purchased what

3. Meanwhile, WAP emerged – crap technology, bad hardware, slow speeds, etc

4. But, the mobile networks, with their long history of billing for premium rate phone lines, slowly worked out a creaky, painful, but ultimately workable way to bill subscribers for purchases on their phone bills

5. More recently – emergence of WiFi and high-speed mobile data connections, flat rate data contracts

6. Launch of the iPhone and competitive gadgets

7. There will be a huge audience of (affluent) people with: high quality mobile internet devices, fast connections, and the ability to buy goods and services priced at $0.10 / $0.20 / $0.50, etc. – admittedly, the mobile networks still charge far too much for their service but this will change

8. Over the next 2-3 years, new business models will emerge that have the potential to re-shape the way we think about internet businesses

Labels: billing, internet, mobile