Here at Cell Canada, we are big fans of ’cheap’ and ‘free’ in all their forms – whether it be cheap cell long distance with Alligato Mobile, or cheap gadget toys at DealExtreme, or the focus of this article, free Apple iPhone Apps.  We have a well earned reputation for being tight with our pennies.

Thus we thought it might be interesting to share our spendthrift-favorite iPhone Applications both to spread our cheapness but also to see if any of you may have a line on great free iPhone Apps that we may have missed.

Here’s our list::

Bloomberg:Classic thorough Bloomberg market and stock information in a smooth and easy to use App for all you market junkies out there.  (Hint, it’s probably down).

Blue Skies Lite: A great helicopter game.  Control the helicopter by using the accelerometer.  Shoot planes, tanks, avoid mines, etc.  Great graphics, great sound, and lots of fun.

Facebook: What can you say.  It’s Facebook on the iPhone.  It’s been widely presumed that one of the motivations for the new Facebook design was to align the online site with the mobile site.

Fring: A multi-IM client that supports Gtalk, AIM, Yahoo Messenger, MSN Messenger, ICQ, etc.   But even more importantly, a VoIP over WiFi client that supports Skype and a multitude of SIP service providers such as Gizmo, NewWorldDial, etc.  First generation and a bit rough still but it works well enough now and has lots of promise going forward.

Funky Punch Lite: A simple arcade type fighter game.  A simple and fun way to try out your combo moves.

Fuzzle: An addictive puzzle game.  Has all the hallmarks – easy to play, some mental complexity, good graphics and sounds. 

i.TV: A TV directory done right.  Episode guides, ratings, preview videos for movies, etc.

Last.FM: We love this application.  A must have for any music fan.  Stream music based on genres, tags, ’similar to’, and friends favorites.  Add in artist bios and concert schedules for some reading while you are enjoying the music.

Locly:  Locly finds restaurants, pubs, gas stations, cafe’s, events, dogs, and almost anything else in your local vicinity.  The interface is a bit rough and ugly at this point but the data is great.  Ever been in a new location and wondered where the nearest ATM was? or gas station?  Locly knows. 

Lux Touch:  Can you say the game of Risk without copyright issues.  Well this is it.  Graphics are lame but the gameplay is addictive.  Who doesn’t want to rule the world.

Midomi: A music discovery tool, like Shazam but with more cool features.  Put Midomi up to a song you hear on the radio and after 10 seconds of listening and about 30 seconds of hitting its online database, it will come back with the song.  Amazingly accurate.  The accuracy is even scarier when you try the ‘hum a song’ option.  Yes, it will predict a song based on your humming.

Say Who Dialer- A voice dialer for the iPhone.  Works and works well right out of the download.  No training required.  Just hold down the big button on the centre of the screen and say the name of the person you want to dial and it will pull their data out of your address book, or speak their phone number, and it will dial.

Tap Tap Revenge- One of the original great free games on the iPhone App Store.  Tap out the bubbles to the beat.  Nothing better than gaming to a beat.

Zenbe Lists – A simple and powerful to-do list application for all of you list junkies out there.  Ends off our list.

So did we miss any of your favourite free iPhone applications?  Drop us a line in the comments – we’d like to hear about them.

In late September, the initial Google gPhone was introduced: HTC Dream. Google’s strike on the phone market is significantly different than Apple’s, and could, if we measure success by domination of the Internet, be a viable threat to the tumultuous existence of the current mobile industry and cause Apple shareholders some concern.  Is this the wireless battle of this decade?   Since the market has been shifting from PCs to smart phones, this new encounter may well redefine the overall market influence of the various players, with Microsoft mobile being the most at risk, and Google with the most to gain (because it is just entering), and Apple defying all expert opinions by capturing the heart and soul of its customer’s.

Let’s assess a technology early adopter, In Japan, teens and university students are using mobile phones vastly more than they are their PCs for text communications, and any other activities that traditionally would normally require a PC.   In contrast to the younger generation, many executives who are travelling for a short 1-2 day business trip opt to use their smart phone for all communications and reviewing of key documents eliminating the need to take their laptop. These trends question the need for these influencer target markets to have a PC at all. In effect, the smart phone is probably about where the laptop was about 10-15 years ago, the big difference is that technology is growing at a much faster pace and it’s by products are on an accelerated adoption curve.

Let’s disect the BIG three market players:

Google’s HTC Dream Phone, Apple’s iPhone, and Microsoft’s Windows Mobile Platform

Google’s desire for mobile phone world domination using its Chrome browser and Android platform won’t be because of the initial HTC Dream phone, in fact it will have to do with the stirring of iPhone and Microsoft concepts into a differentiated strategy that appears to form a “best of breed concept”.

HTC is one of the leading suppliers of Windows Mobile based smart phones, selling one out of every six smart phones in the US. Windows Mobile is actually, at an estimated 26 million sold, more successful than the iPhone in terms of volume. But why have none of its phones created the buzz the iPhone has created, or developed the design that Apple has innovated. Microsoft has power in numbers, but Apple, in today’s mobile market, has more influence on the market.  October 8^th, 2008 Fierce Wireless named Steve Jobs the most powerful influencer in wireless.

“Jobs’ ascent to the top of the wireless heap mirrors a massive paradigm shift in the structure of the industry itself. The 2007 introduction of Apple’s iPhone rewrote the rules that long governed the wireless marketplace, wresting absolute power away from operators while illustrating to consumers the full technological promise of the mobile platform.”

The Microsoft advantage in this space is that the Windows Mobile is hardware independent, thus they are executing a plan similar to Windows for PCs and they have been in the game many years prior to Apple or Google.

iPhone Advantages and Limitations

Apple’s iPhone is like the Model-T of smart phones, in essence the choice of designs and colors are limited to black or white, one size fits all.  The iPhone today is not customized in look and feel to suit your individual personality.   Also you are limited to either AT&T in the US and Rogers in Canada.  The iphone applications are an advantage; however, they may be limited as they must not create a competitive advantage against Apple.  In effect, with respect to applications and competition, it is like someone took a lot of the qualms consumers have made about Microsoft, and gift-wrapped them into an Apple strategy. Of the three companies, Apple is the most limited. Ironically however, its device is also the most desired, which is a credit to Apple’s design and marketing execution.  This may also suggest some of us are giving up our freedoms too easily.

The iPhone is incredibly easy to use, and connected to two market-leading services: iTunes and the Apple Application Store, both of which currently dominate the competition in terms of interest and capability.  These advantages alone promise the ability for Apple to continue its leap forward and make Apple a stock of choice for investors. 

Windows Mobile’s Advantages and Limitations

If Apple is about simplicity, Microsoft’s platform is about choice and connectivity. Windows Mobile is integrated to phones from a wide variety of vendors, ranging from Palm to Motorola and HTC. These phones come in different sizes, shapes, and colors, and even offer different interfaces. The Windows mobile platform connects back into Microsoft’s back end of communications offerings, led by Exchange, and the phone also has third-party developer support. However, there is nothing yet like the Apple’s Itune experience or Application store, in terms of available music content, programs and their ease of use. 

Microsoft also lacks any one phone that has the excitement created by the iPhone.  I am sure even CTOs in companies that make Microsoft Mobile phones probably also carry iPhones. HTC “Touch” has been the most aggressive in creating an iPhone-like front end for Microsoft’s Mobile platform, and its Touch line is the closest to the ideal created by the iPhone. The Sprint version of the HTC Touch “Diamond” (due largely to Sprint’s services) comes closest compared to all phones currently in the market.

Microsoft as usual has failed on closing the user experience and the marketing gap between Apple’s offerings and its own. With its new $300M marketing campaign Microsoft has chosen its traditional “build an inferior product; and market it better” approach.  The user experience issue is on hold perhaps until their next version of its platform, or until more manufacturers take lead and invest in touch interfaces with its Windows Mobile phones.

 Google’s Chance

Google is determined to create an ecosystem of services and partners that can rival Apple.  They have also approached a number of phone manufacturers to assure it gets Microsoft-like wide coverage. The first phone, the HTC Dream, is more of a mix of Blackberry RIM and Microsoft Danger concepts then it is a direct attack on the Apple iPhone.  Keep in mind this is the first of many product launches by Google. 

First impressions are very powerful, if consumers approve this is a huge win, and if not Google may lose prior to getting out of the gate. So far, the public’s impression seems mixed. Other than the fact this is a Google phone, few seem that excited about it. But the launch campaign is just commencing, so this may change. I’m already getting the sense that the launch is more similar to a traditional Microsoft one than an Apple event, which typically isn’t a good thing. Still, the Android platform is designed to work off back-end services, and Google has done a better job of both assuring the initial set of applications (some of Apple’s applications are not very good; however some are GREAT!) are good, and on being more liberal with them (they don’t have Apple’s Big Brother competition complex).  Google also has Amazon providing the multimedia services, as a strong alternative to iTunes.  Overall, even though we initially only have one phone, it’s not a bad strategy.   

Who Wins?

The market-share lead Microsoft has may become irrelevant, Apple has definitely emerged as the leader for the time being, simply because the consumers are excited about the iPhone and most of the major players are following it. The company’s limitation is scale, in both company size, and line breadth (we aren’t a Model T, one-product-fits-all world). If Microsoft and/or Google can close the design, marketing, and user experience gap with Apple, they could take the lead, because neither has the same scale issues. But this isn’t a multiple-choice challenge: They have to do all three. And so far, that has been very difficult. For instance, only Apple has subordinated the carriers to own the user experience. No one else has successfully done this and this has given Apple one more unique advantage.  If the overall market moves to a single future version of these platforms at large the only question that arises is can Apple’s current single-vendor strategy scale to the numbers this kind of opportunity represents?  (In 2007 there were 3.3B cell phones in the world.  Also where do the other established players such as RIM, Symbian and LiMo fit in this space?  This will prove to define the future of the mobile industry.

Blackberry Storm details are coming out fast and furious.  From early reviews, it seems to meet and beat most expectations.  It may certainly be the best corporate device ever built though I’m sure some will argue otherwise.  The keyboard, our big question in previous posts, is getting good reviews and RIM seems to have done a good job of using the capacitive aspects for actions and a hard button interface for selection.  Of course it has the strengths of RIM’s industry leading mail/contact/calendar applications with BES synch.  It appears to be somewhat weaker than the iPhone on the consumer applications side – video presentation, browser, and music.  Especially when it comes to the slickness, design, and hardware graphics acceleration of the consumer application interfaces.  The application store / deck / market has had little discussion so far though it appears from the rumours that carrier’s will control the application they allow in the market.  Payment/account registration etc. details are still unknown.

For us, we are very impressed and can’t wait to get out hands on it.  We don’t know if it will displace our affection for the iPhone – it seems to be missing the lifestyle aspects but it’s our ideal corporate phone. 

Competition is good.  Finally, we can kill the abuse of the term: ‘iPhone killer’.  We now have two very good and different phones to choose from – it’s no longer a one horse market.

Technologizer created a good early comparison table that we’ve copied for you below:

The phones	BlackBerry Storm 9530	Apple iPhone 3G
Platform	BlackBerry (Java based)	Apple’s proprietary OS X
Availability	Soon	Now, although supply is occasionally spotty
U.S. carrier	Verizon	AT&T
Price	TBD	$199 for 8GB model or $299 for 16GB model with two-year contract
Data plan	TBD	$30 a month for unlimited data; $5 a month extra for 200 text messages
Locked?	Presumably, to Verizon	Yup, to AT&T
Colors	Just black, as far as I know	Black (8GB and 16GB); white (16GB only)
Size and weight	4.4” by 24” by 0.55”; 5.46 oz.	4.3″ by 2.4″by 0.33″; 4.05 oz.
Screen size and resolution	3.25″; 480 by 360	3.5″; 480 by 320
Input	Multi-touch haptic-feedback touchscreen with QWERTY and SureType keyboards	Multi-touch touchscreen with on-screen keyboard
Buttons	Volume; lock; left and right Convenience; mute/play; send, menu, end, and escape	Home; volume; vibrate
Accelerometer	Yes	Yes
Headphone jack	Standard 3.5mm	Standard 3.5mm
Bluetooth	Stereo	Monaural
Voice dialing	Not sure	No
Voice recording	Not that I know of	No
MMS	Yes	No
Camera	3.2 megapixels; flash; digital zoom; video capable	2 megapixels; no flash; no digital zoom; no video
Voice	Quad-band GSM and CDMA	Quad-band GSM
Data	Both HSPA and EVDO	HSDPA
Use as tethered modem?	It has the ability technically, at least; not sure if Verizon will permit	Violates AT&T’s terms of service; tethering plan is rumored
Data plan	TBD	$30 a month for unlimited data; $5 a month extra for 200 text messages
Wi-Fi and GPS	Nope on Wi-Fi; yep on GPS	Got ‘em both
Battery	5.5 hours talk time; 360 hours standby; removable	5 hours talk time; 300 hours standby; not removable
Web browser	BlackBerry Browser	WebKit-based Safari
Web searching	Presumably in some form, but I don’t know the details	Yes, via Google or Yahoo
E-Mail	IMAP, POP, BlackBerry Enterprise Server	MobileMe, GMail, Yahoo Mail, AOL; other services supported through IMAP
Calendar	Yes, with to-do list	Yes, but no to-do list
Microsoft Exchange support	Yes–hey, it even supports Notes and GroupWise	Yes
Instant messaging	AIM, Windows Live, Yahoo, ICQ	Only through third-party apps
Office Apps	Documents to Go Office-compatible suite, with editing	Microsoft Office-compatible viewers, but no editing
Maps	Yes (BlackBerry Maps)	Yes
Turn-by-turn navigation	Not standard that I know of; apparently available through third-party apps	No, but may be coming from third party developer(s)
Music	Supports MP3, AAC, AAC+, eAAC+, WMA, WMA ProPlus formats	iPod player and iTunes Store; supports MP3, AAC (with or without Fairplay), WAV, Apple Lossless, AIFF, VBR formats
Video	Yes; supports H.264, MPEG4, and WMV formats	iPod player, YouTube; movies through iTunes Store; supports H.264 and MPEG4 formats
Photos	Yes	Yes
Wireless synching	Yes, through BlackBerry Internet Server and BlackBerry Enterprise Server	Yes, through MobileMe
Desktop synching	Yes, through BlackBerry Media Sync	Yes, through iTunes
Application store	RIM is supposedly readying an application store; apps available from third-party stores	Yes, the iTunes App Store

As we discussed in “Apple Opportunity #1 – An OS Inflection Point”?, there have been some highly publicized numbers coming out of Apple lately:

* Apple is expected to sell over 4 million 3G iPhones by the end of the September quarter.  Roughly 4x the totals from a similar post-launch period for the first iPhone.

* The iPhone App Store saw over 60 million downloads in its first month of existence.

These numbers are all very impressive but the naysayer will hold true and naysay.  Yes, Apple sold 4 million iPhones, but the number in insignificant when taken against the 1.15 billion mobile phones sold in 2007. 

The naysayers certainly have a point however we believe that they miss seeing, or discount, the beginning of a positive feedback loop.  As discussed in the previous article, positive feedback loops birth de facto standards.  In the case of the iPhone: More iPhones sold leads to more developers engaging to develop applications, leads to more iPhone utility/functionality, leads to more iPhones sold.  In a fragmented market, such as the mobile phone market, positive feedback loops can lead to the reinforced ascension of a dominant de facto standard.

As we discussed in “iPhone – The Mobile Internet is Here“, Apple through its wins and losses in the computing space over the last 32 years, understands the importance of the entire ecosystem to the development of a positive feedback loop.  There have certainly been a great number of mobile applications available for Symbian, Windows Mobile, Palm, and RIM mobile OS’s for some time now.  Download portals have also existed on most smartphones from most carriers for some time now as well.  However, the mobile application industry has been a colossal underperformer even with this massive effort and investment.

Up until now.  Apple has taken the pieces that already existed and packaged the mobile software discovery and download effort into a simple and consistent experience for consumers.  In North America, only roughly 3% of cell phone users have every downloaded an application to their device.  In Europe this is closer to 13%.  I haven’t seen the numbers for the iPhone but I suspect that it is north of 60% based on my non-statistically valid sample.  This totally changes the game.  We will begin to see application based purchasing drive towards the iPhone over the next year or so.  Consumers or businesses will purchase the iPhone because it runs an application that they need or desire – whether it is SAP for enterprise or streaming radio for consumers.  There may not emerge one killer application but there will certainly emerge many purchase inducing applications.

The others mobile phone manufacturers and mobile OS developers will certainly learn from this model and follow.   However, will they be able to catch momentum before the positive feedback loop Apple has put in place becomes insurmountable?

OSX market share approaches 8% in July 2008.  Up 2% from a year earlier.

Apple is expected to sell over 4 million 3G iPhones by the end of the September quarter.  Roughly 4x the totals from a similar post-launch period for the first iPhone.

The iPhone App Store saw over 60 million downloads in its first month of existence.

These numbers are all very impressive but the naysayer will hold true and naysay. The numbers are still vary small in the grand scheme of things.  Yes, OSX market share is approaching 8% but don’t forget that Windows is still at 90%.  Yes, Apple sold 4 million iPhones, but the number in insignificant when taken against the 1.15 billion mobile phones sold in 2007.

The naysayers certainly have a point but what I believe that they miss or discount is the strategic positioning of both the OSX and the iPhone OS products and the potential for mammoth inflection points in both the fixed and mobile computing space.  Andy Grove of Intel, who first highlighted the concept of a business inflection point in his book “Only The Paranoid Survive” defines an inflection point as “a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”  He also discusses how markets may not notice inflection points until well after the market has passed over the inflection point.  “They build up force so insidiously that you may have a hard time even putting a finger on what has changed, yet you know that something has.”

The fixed, referring to laptops and desktops, computing OS market feels to be potentially approaching an inflection point.  Microsoft has owned this market through the network effect benefits that converged and locked the market into a de facto Windows OS standard.  De facto standard locks are born out of positive feedback loops.  More Window’s OS licenses on desktops drives more applications developed for the OS, drives an increase in the utility/functionality of the OS’s desktop, drives and increase in the number of OS licenses.  The positive loop can create a dominant market position out of a fragmented market.  Rarely is a de facto standard overcome other than through a complete change of the playing field/rules of the business.  At this moment in time however, it feels like there is a change in the wind.  The stumble and general lack of interest in Vista, the ability to run Windows programs on Macs, and the mass market Apple brand halo effect from iPods are all leading to an increasing number of OSX converts in both the consumer and enterprise space. 

Apple has at least 3-5 years until Microsoft brings out a Vista successor to grow mainstream acceptance of OSX.  I believe that if they are able to get over 15% or so market share and show accelerating market share gains, then the Window de facto monopoly is over.  The positive feedback lock will be broken and the market will be wide open for either the Windows successor or OSX.  Given that OSX gained two percent market share over the last year and appears to be gaining mainstream credibility, it is entirely possible that it can achieve 15% over 3-5 years. 

Apple is rumoured to be introducing successors to the Macbook and Macbook Pro in September.  Also rumoured, and fueled by their CFO’s projection of increasing revenue and decreasing margin, is a sub $1,000 Macbook to compete in the territory that is still generally completely owned by Windows based machines – the high volume low end/entry level laptops.  Watch for it.  If they do come out with a sub $1,000 Macbook then they’ve made their intentions clear – they see the inflection point opportunity and are going after market share hard while Microsoft’s on the mat with Vista.

Yes this is a bit premature.  The Thunder is not out yet and at best we have rumours on design and specs and photoshopped images.  However I thought I’d touch on it given that, with all the buzz around competitive responses to the iPhone from the major mobile handset manufacturers, this is the one that I believe has the most potential. 

No doubt the Samsung Instinct, the HTC Touch Diamond, the Sony Ericsson Xperia, and the Nokia Tube will have their strengths and given carrier marketing dollars, will take some market share.  Some, especially Nokia with it’s huge Forum Nokia developer community, will have the backing of developers, and most of them will have superior hardware specs to the iPhone – better cameras, video, etc.  However I don’t expect that any will capture the mass market consumer’s aspirational interest the way the iPhone has captured it.  They will not have the Apple brand image, the incredibly simple and elegant UI, and most of all, the fully integrated and well developed App Store.  Download portals – yes probably – but a simple, easy to use, fully capable application download function with discovery, one touch download and install, and a simple integrated payment mechanism - probably not.  And that is why they will remain also rans.  Many will promote how packed they are with superior hardware functions but the Internet scale innovation that a fully integrated App Store brings will be missing and with it, the weekly and monthly buzz about the latest and greatest must have application.  “Have you heard about Shazam?  It’s a super cool new app that…”

Current expectations have the Thunder arriving in September but given that the Blackberry Bold will probably land around then, expect RIM to clear some PR time for the Bold before beginning the Thunder PR press.  So Thunder in time for the Christmas season or early 1Q2009?   Mobile sales have taken up the retail sales cycle pattern over the last 3-5 years and the Christmas season now represents a significantly disproportionate amount of a carrier’s annual sales.  Given this, expect that RIM’s and it’s partners Verizon and Vodaphone will be pushing hard for a pre-Christmas release.  No word on a Canadian partner or date yet.

So why is the Thunder so interesting.  It will probably have a weak download portal like the other competitors and RIM has typically received poor reviews for its difficult developer tools.  The Thunder is interesting because RIM, similar to Apple, understands its market very well and knows how to laser focus product into its market.  They usually do not try to pack in the best set of hardware features and a kitchen sink into their high end products but instead understand the basic needs of the corporate market and fulfill those needs better than anyone.  Heavy email, high security, Exchange integration.  No one beats RIM in the corporation.  With the Thunder, RIM is taking a risk going keyboard-less but I expect that it is a well thought out risk and we may be very pleasantly surprised by the innovation in their touchscreen keyboard.  Current rumours list a soft keyboard with tactile feedback, full QWERTY and SureType entry, and multi-touch capability.  Add a Webkit browser and it gets interesting.  A RIM device, with BES integration, an innovative touch keyboard, and the most focused corporate needs execution, could hold back or slow down the iPhone’s push into the corporate world.  Or conversely, if RIM can’t hold it’s corporate turf against Apple, then Apple will own everything – the consumer market and the enterprise market.

 UPDATE: The Blackberry Thunder / Storm on video!

(I know there is a large camp that pines for a white knight in Android but I’m not drinking the kool-aid.  Android introduces more noise in an already noisy mobile OS ecosystem.  If anything, LiMo may be a stronger open source player than Android.  More on Mobile OS’s in another post.)

Side by Side

 Boy Genius has one of the better high level reviews and it summarizes into:

1. If you are a hardcore Blackberry email junky and have a preference for a hard keyboard, then go Bold.  It’s a bit larger than recent Blackberry’s but has great styling, great keyboard, an improved browser and the best Blackberry screen to date.

2. If you are not hooked to Blackberry’s and are a moderate email user then go iPhone.  It’s the best general purpose mobile device.  Great OS, great design, the best browser, good email, and a growing list of easily accessible and innovative applications. 

The Bold looks great though I prefer the smaller size factor of the Curve.  Big anticipation here at Cell Canada for the Blackberry Thunder.  It will be RIM’s first foray away from the hard keyboard tha thas defined their products and success for so long.  If it just keeps up with the iPhone and doesn’t come with an App store, then RIM’s chances of defending against Apple longer term are suspect.

It has been an unprecedented few weeks in the Canadian cellular market. 

The iPhone has finally arrived in Canada with an array of plan options, Bell and Telus have just announced new incoming text message charges, and there will be three new carriers vying for cellular customers by 2010. 

Cell phones have become a fashion item, a personal statement, a lifeline, a business tool, an entertainment conduit — a must-have 24/7 accessory. An estimated 50 per cent of the world’s population now uses mobile phones. This has grown rapidly from just 12 per cent in the year 2000.  

So why the hype around the iPhone? Its introduction heralds the beginning of a new era in mobile communications. Though referred to as a phone, it is much more. 

The iPhone is an Internet connected portable computer with a revolutionary user interface. It portends the mass market emergence of the mobile Internet – the Internet in your pocket. As a platform, it is as revolutionary as the first IBM PC with DOS. 

Just as during the early days of the personal computer, there have been other smart phones on the market for several years. The iPhone however arrives with the ecosystem elements to drive the smart phone into the everyday lives of consumers.  

From an ecosystem perspective, the iPhone combines an attractive piece of hardware with an elegant, innovative, and class-leading user interface. With Safari, it has by far the best mobile Internet browser. With the unique iPhone App Store, it is the easiest way for consumers to discover, purchase, and install software on a mobile phone. 

This is evident in the 10 million downloads from the App Store in the release weekend alone of the 3G iPhone. According to Apple, there are now more than 800 native iPhone applications available via the App Store, with 200 of them offered free of charge.

The completeness of the developer kit and the focus on creating an easy take-to-market, transaction, and billing and collection capability for developers will ensure that iPhone functionality grows tremendously as software developers create innovative new programs, ultimately leading to further consumer adoption.

So what does this mean to the end consumer? When the first cell phone went on sale in Canada on July 1, 1985, it was seen as a specialized niche business tool rather than the must-have mass market accessory it has become. Certainly, most did not expect to be personally paying around $60 per month in 2008 for this new cellular service.

In the same way that the cell phone and home high speed Internet have become integral necessities of life for many, the mobile Internet will become an integral part of the lives of the majority of Canadians in the next 5-10 years. Whether it is an iPhone or a competitor device, many of us will simply not be able to leave home without it. 

Having all of the world’s information available at all times — the Internet in your pocket — will become an indispensible part of everyday life. And of course, plan to budget an additional $30 to $50 per month to feed this habit.

The introduction of the iPhone in Canada heralds the beginning of a new era in mobile communications.

Though referred to as a phone, it is much more.  It is a networked portable computer with a revolutionary user interface.  It portends the mass market emergence of the mobile Internet – the Internet in your pocket.  As a platform, it is as revolutionary as the first IBM PC.  Though, just as with the early days of the personal computer, there have been other smart phones on the market for several years, the iPhone arrives with the ecosystem elements to drive the smart phone into the everyday lives of consumers.  

The iPhone ecosystem combines lessons learned from Apple’s history in computing and Apple’s more recent dominance in a once fragmented music player market.   Apple is one of a few companies that has a corporate memory that spans the entire period of the personal computer industry, from the emergence of the first personal computers in the mid-1970’s to the present day mass market ubiquity.  Steve Jobs, the Apple CEO, helped invent one of the early personal computer businesses in Apple and saw it through several cycles of successes and failures, developing an unparalleled understanding of the zeitgeist of the computing era and technology consumer market.  Apple applied this learning to the fragmented mobile music player market.  Realizing, from the history of computing, that the value of hardware, or the music player, was greatly driven by the value of the software, or the music itself, to the end consumer.  To this end, while other mobile music players relied on consumers to find their own methods to convert music to MP3 files and load the music onto their music player, Apple built a simple and elegant ecosystem, combining iPod hardware with the iTunes music store for easy discovery of music, easy purchase of music, and easy mobile enjoyment of music.  For music creators, it facilitated an easy way to access a large market of consumers and an easy way to charge and collect for electronic music sales. 

In the same way, the longer term market opportunity around the iPhone is not about just the hardware.  No doubt the hardware is more elegant and has an ease of use unparalleled in previous smart phone hardware.   The iPhone differentiates itself from previous smart phones through its consumer and developer friendly ecosystem.  It’s about the software again.  Just as Apple learned with personal computers and with the iPod, innovative software and killer applications will drive hardware sales.  To this end, Apple has built very tight integration between the iPhone and its new App Store.  The App Store is essentially an iTunes type store for iPhone software.  Apple has made it incredibly easy for consumers to discover new software, purchase new software, and enjoy new software on the iPhone.   For the other side of the ecosystem, for developers of mobile software, the App Store enables easy access to a large market of end software customers, taking care of the difficult challenges of being discovered, conducting a sales transaction, and then getting paid for the sale.  This integrated ecosystem creates a well greased reinforcing loop.   A large number of iPhones sold with an installed and simple App Store leads to a large and easily accessible market for software innovation.  This leads to a great amount of software development which in turn increases the likelihood of the development of a killer application.  Killer applications in turn drive more iPhone sales.  RIM, Samsung, Nokia, HTC, and other smart phone makers will continue to improve their hardware and have tried to run App Store type software development and distribution models in the past but they have always missed key components – whether they be ubiquitous distribution, or ease of purchase, or ease of payment and collection.  In many cases, they have been forced to cede control of the software portal to the cellular carrier who has in turn outsourced it to a wireless portal company.  This non-strategic and fragmented approach has led to slow adoption of mobile phone applications. 

Apple on the other hand has leveraged its learning from the personal computing wars and its test case in the music player world to start what could develop into a de-facto market dominating position in the smart phone market by closing the hardware-software loop.

So what does this have to do with the stock (AAPL)?  Buy it.  With the iPhone and the App Store, Apple has the potential to develop a mobile platform near monopoly.  Similar to what Microsoft was able to do with DOS/Windows and Apple was able to do with the iPod.  An ecosystem with a positive loop network effect can quickly eat market share in a fragmented market.  All the pieces are in place and the next couple of years should be very interesting.