At the launch of IPhone OS 4, Steve Jobs announced many innovations to the iPhone operating system, in particular Multitasking (the ability to use multiple applications simultaneously) and iAd, the advertising platform for Apps.
Steve Jobs articulates his reasoning for the iAd launches:
The current advertising systems on Mobile are “ineffective” do not offer a useful or positive experience for users because:
- Users in the iPhone world do not behave like on the web, they do not search, so search advertising does not work;
- To search for information, they use Apps (that currently number 185,000) and represent the main potential platform for advertising;
- The average user spends 30 minutes a day on Apps and this represents a total potential of 1 billion impressions per day;
- The reason for the success of online advertising is the interactivity while the television one is the ability to excite;
- iAd wants to combine the interactivity of online with the engagement and emotion of television advertising;
- iAd will allow developers to have a business model that can support the development of free or complementary to the development of paid Apps;
- iAd will be sold by Apple and retain 40% of its revenues, leaving 60% to developers.
After inventing the idea of “personal media” with iPhone and iPad, Apple on one hand uses this distributed platform to create a support mechanism for the developer ecosystem whilst adding a new pillar to the traditional business model on the other.
The same observation made for Google Android also applies to Apple. When a company comes from the tradition of having competitive advantage and enters an arena dominated by competitor, it must face some very important cultural / organizational challenges.
It’s important to understand whether it will be easier for Apple to become an Advertising sales powerhouse, or for Google to be an efficient distributor and retailer of digital gadgets.