Facebook’s New Gift Service: Nice, But Not Yet An E-Commerce Game Changer

From my Forbes.com blog The New Persuaders:

Just in time for prime gift-giving holidays like Friday’s World Rabies Day (or if you prefer, Ask A Stupid Question Day), Facebook today launched a social gift service. It’s rolling out to only a select few for now.

I must be one of them, because I was able to send something to my wife to try it out. But in its current form, I doubt I’m going to use it much.

This isn’t the 2.0 version of the Facebook Gifts virtual-gift service that the company shut down two years ago, by the way. In fact, the new Gifts is built upon, and run by, the folks at Karma, the gift-giving service Facebook acquired in May.

It actually looks pretty good. And while I have ordered precisely one gift that obviously has not yet been delivered, so I can’t judge the entire gift-giving process, it worked quite smoothly. I clicked on my wife’s Timeline, clicked the gift button, and off I went to order her some caramels. She can even pick her own flavor–that’s pretty cool.

In this case, I obviously know her address, so one advantage of Facebook Gifts–not having to know or ask for someone’s address–is moot in my case. What’s more, I didn’t get an automatic reminder I might get if it were her birthday, so that bit of friction elimination wasn’t a factor for me either. But it’s fast and easy to send gifts to friends, and that’s great–not just for consumers, but for Facebook, which can use a service that brings in revenues not dependent upon its brand of advertising that many large marketers are still doubtful about.

So what isn’t great, at least for me?

* A lot of the most prominent gifts are pretty vanilla–teddy bears, spa appointments, flowers, cupcakes. Maybe they’re fine products. Maybe they’re the sort of thing most people give their friends. But for a service with a tagline “real friends, real gifts,” too many of these products seem just too impersonal. Products, especially gifts, are not necessarily fungible, and all the less so for close friends for whom you’re supposed to be getting something special. And if they’re not close friends–and let’s be honest, most people don’t have several hundred close friends–I probably won’t be sending them many gifts, from Facebook or anywhere else. …

Read the complete post at The New Persuaders.

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Apple’s iPhone 5 Sales ‘Shortfall’ Means Precisely Nothing

Eager buyers crowd Apple’s Palo Alto store shortly after Sept. 21 opening

From my Forbes.com blog The New Persuaders:

Only one company could see its stock fall when it sells 5 million of its newest product in a single weekend: Apple.

Apple said today it sold 5 million iPhone 5s the past three days, and its shares promptly fell $9.30, or about 1.3% on the day. The reason: Analysts had forecast it would sell up to 10 million. Now they’re scrambling to explain what happened.

The correct answer: Nothing. Let’s get real. First of all, it’s not clear that Apple really fell short of any reasonable expectation. As one person noted today, the supposedly disappointing 5 million in iPhone 5 sales in a weekend is more than Nokia sold of its latest Lumia smartphones in an entire quarter. So Apple is hardly losing much ground to competitors.

Second, that 5 million–actually, as Apple put it, “more than 5 million”–doesn’t count people who preordered but haven’t yet received their iPhone 5s. It’s unclear how many that would be, but one analyst estimates it could be 1 million or more, even assuming Apple was correct when it previously said most customers who preordered would get their iPhone 5 last Friday.

Third, while Apple no doubt would like to sell as many iPhone 5s as possible, it so routinely runs short of demand on new products that you have to wonder if that’s part of its marketing plan. Scarcity, at least for a product generally well-reviewed and certainly highly anticipated, suggests to potential buyers on the fence that this is the device they’ve got to have. It’s hard to imagine that Apple, of all companies, doesn’t have the means to fulfill that pent-up demand over the coming weeks and months. …

Read the complete post at The New Persuaders.

Why 2 Million Apple Fans Ignored Reason And Bought An iPhone 5 Anyway

From my Forbes.com blog The New Persuaders:

Even though I recommended that most people not buy Apple’s just-launched iPhone 5 last week, I’m the last one to be surprised that my sage advice was largely ignored. Apple just announced that 2 million people pre-ordered its latest and greatest smartphone in the first 24 hours. I fully expected the new iPhone to be enormously popular because, well, Apple’s major products almost always are.

I still stand by my advice, however, despite the record pre-orders. I continue to think that most people who own a smartphone purchases in the last year or two have no overriding reason to buy a new one so soon, and some good reasons not to. Nonetheless, it’s worth asking why so many people did anyway–and why a third of Americans want one:

1) People didn’t read my post. Hey, I fully understand that I am no Walt Mossberg or David Pogue.

2) The iPhone 5 is the right decision for a certain portion of smartphone buyers–easily millions in a market of hundreds of millions of them. As I wrote before, if you have a phone that’s more than a couple of years old, technology advances mean it’s about time to get a new one, and the iPhone 5 is a great choice, if not the only good one.

3) The new iPhone is a clear advance over the iPhone 4S, even if it’s not a revolutionary advance. It has high-speed 4G data capability, its screen is larger, and it’s noticeably lighter. All good.

4) Media hype. The dirty little secret of tech media is that anything written on Apple gets a lot of readership, even if it’s not positive–though it was hard to be too awfully negative on the iPhone 5. Sure, the Samsung Galaxy S III and other smartphones have more bells and whistles, but not enough more to really shame the iPhone 5, and the S III has its own shortcomings as well. And so that mostly positive iPhone coverage drove more interest in the new Apple phone, and record pre-orders. Nothing new here, but this dynamic undeniably gives Apple products a leg up on every other rival.

5) People don’t always buy in an economically rational way. If you’ve got a 4S with an unlimited data plan, you’ll be spending on a new device and paying more for data to boot if you buy the iPhone 5–a device that for all its improvements probably won’t change your life, your productivity, or your mobile communications or entertainment very much. Nothing new here either, but I still contend that many of the tens of millions of people who will snap up the iPhone 5 in coming months will fit this profile. And that’s not counting idiots who can’t tell the difference between iPhone models.

6) I’m actually an idiot, so why would anyone take my advice anyway? OK, I don’t believe that, but clearly a lot of commenters on my previous post do, so I feel obligated to mention the possibility that I don’t know what I’m talking about. Besides, I wanted to provide one answer that would satisfy all those rabid Apple fanboys.

Why You Shouldn’t Buy Apple’s New iPhone 5

From my Forbes.com blog The New Persuaders:

We’re just hours away from what will certainly be one of the most massive hypefests of the year: the introduction of Apple’s newest iPhone. Even without the benefit of Steve Jobs to add that extra touch of magic reality distortion to the proceedings in San Francisco, the entire tech world will see a plunge in productivity for several hours starting at 10 a.m. Pacific while they watch and chew over the launch of what is all but now confirmed to be called the iPhone 5.

* Update: Catch Forbes’ liveblog of the event here. And here’s Apple’s own announcement.

No doubt Apple will sell a ton of the new iPhones. Indeed, though I find this hard to believe, iPhone sales could even add a big boost to this year’s Gross Domestic Product. Diehard Apple fans, and there are millions upon millions of them, won’t be able to resist lining up at Apple stores the night before they become available to be among the first to buy the latest and greatest iPhone.

But you shouldn’t be one of them. Here’s why I think most of you–not all, but most–would be better off not buying the new iPhone:

* It probably won’t be revolutionary. I know–blasphemy! The many leaks of what the new one will look like and the way it will work indicate the new iPhone will, of course, be thinner and faster and sport a bigger screen. So what else is new?

And think about the last time. The iPhone 4S had Siri, the voice assistant that was supposed to revolutionize the way we interact with devices and, oh, by the way, kill Google search. It did neither (though ask me again in a few years, as Siri no doubt steadily improves).

Anyway, let’s face it, smartphones in their current incarnation may not get much better fundamentally. As Steve Shankland at CNET recently pointed out, we’re in an era of incremental refinement more than revolutionary change. At some point, Apple may well come up with yet another product that actually resets the standard for computing and communication devices. But by all reports, the new iPhone isn’t that product. Simply put, you don’t need to own this phone.

* There’s always a risk that something won’t work quite right on the new model, leaving you with buyer’s remorse. Apple’s better than most at avoiding this sort of thing. But remember that faulty antenna in the iPhone 4 two years ago? Update: One word: Maps.

* The older iPhones are still great. Even though some reviewers criticized Apple for touting a machine that didn’t provide many advances, such as a larger screen, the iPhone 4S last year still was widely seen as the best iPhone yet, and still the best overall on the market.

* You will get several of the benefits of the new iPhone just by installing iOS 6–for free. No big screen, no fast LTE data, of course–two biggies, to be sure. But you won’t be left with lagging services like you do with many Android phones that can’t upgrade to the latest OS.

* The older iPhones are also cheap–or free! For one thing, used iPhones are flooding the market as people get ready to buy the new one. Last month, Sprint Nextel and even Apple itself discounted the iPhone 4S, and it doesn’t stretch the imagination to think that when the new model appears, prices for older iPhones will fall across the board. When the iPhone 4S came out, the iPhone 4′s price fell to just $100 and the 3G model was (and still is) free with at AT&T contract. If the pattern holds, doesn’t a free iPhone 4 sound pretty sweet?

* Update: Yes, it does sound sweet. The new iPhones will cost from $199 to $399 depending on the amount of memory, but the 4S will fall to $99. And the 4? With a two-year contract, it will indeed be free.

* If you go with an older model, you can also save bigtime on service plan costs. If you go with a prepaid carrier such as Virgin Mobile or Cricket, you have to pay more for the phone, but over a couple of years, their lower-cost data plans save hundreds of dollars. It’s not clear whether similar deals will be offered with the new iPhone, but it appears unlikely at the outset–so your only way to get those savings is to go with an older model.

* You may have fewer unlimited-data plan options with the new iPhone. Verizon and AT&T have ended their unlimited-data plans, so that’s not new. But on existing phones and contracts, they’re grandfathered in, a significant reason to think twice about an iPhone purchase that would require you to switch carriers. Sprint may offer an unlimited-data plan, but that means switching carriers if you’re not already on it.

* There are–yes–other smartphones out there. Android phones such as Samsung’s Galaxy S III, and even some Windows 8 phones such as Nokia’s Lumia 920, get rave reviews. …

Read the complete, Apple fanboy-inciting post at The New Persuaders.

Five Reasons Apple May Not Dare To Sue Google

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(Photo credit: Wikipedia)

From my Forbes.com blog The New Persuaders:

Now that Apple has scored a decisive win over Samsung in its smartphone patent trial, the big question is whether the maker of the iPhone and the iPad will go after the real enemy: Google. The search company is the maker of the Android software underlying Samsung’s and many other companies’ mobile devices, after all.

But a direct shot at Google looks unlikely at this point for a variety of reasons:

* Apple’s schoolyard bully strategy of going after the legal weaklings like Samsung worked like a charm, so it’s likely to continue going after hardware firms such as HTC and the now Google-owned Motorola Mobility, rather than Google directly. There are many other cases involving those companies, as well as Samsung, around the world–plenty to keep Apple busy, especially now that it has such a clear victory to build upon.

Indeed, patent expert Florian Mueller of FOSS Patents, a persistent Google critic, thinks Apple is more likely to go after Amazon.com first. As Mueller told Fortune’s Philip Elmer-DeWitt: “If I were in Apple’s shoes the next company I would sue is not Google, but Amazon, which has an even weaker patent portfolio than Google and sells large volumes of Android-based devices with a subsidies-centric revenue model, which is even more of a threat to Apple’s margins than Google’s advertising-based model.”

* Other hardware makers may now decide to settle with Apple, ratcheting down the need for Apple to go after Google. Analyst after analyst notes that with the clear loss for Samsung, the leader among Android device makers, other firms may decide it’s not worth continuing a fight they now seem more likely to lose.

* Apple looks less likely to win a patent infringement case versus Google. For one, Google itself mostly makes only software, and although its Nexus S device co-branded with manufacturer Samsung was identified by the jury as infringing Apple’s patents, it’s the only one and it’s not clear whether a single device provides a strong case for a separate suit. (It’s also not on Apple’s list of Samsung products it wants banned from sale.)

What’s more, Google doesn’t charge hardware companies for using Android, relying instead on ad revenues derived from Android device use, so there may not be much for Apple to sue about. Finally, let’s not forget that Android existed well before the iPhone came out–in fact, Google bought the company that made it in 2005, two years before the first iPhone. That doesn’t guarantee that whatever Google has done with Android since then is on firm patent ground, but it doesn’t seem a stretch to cast doubt in a jury’s collective mind that Android is simply copying iOS when Android the company clearly predates the iPhone.

Not least, Google has pockets deep enough to counter whatever legal threats Apple throws at it. Indeed, this ruling could well galvanize Google’s mostly passive efforts so far to protect Android hardware licensees. Apple may get all it wants from going after hardware producers, given that Apple makes most of its money from hardware itself.

* Apple has already gotten what it wanted from Google with this ruling: the likelihood that Google will have to change aspects of Android to avoid infringement, potentially reducing the competitiveness of Android devices. As Needham & Co.’s Charles Wolf writes: “Google will be forced to design workarounds of the violated software patents, which was the intent of Apple’s lawsuit, not the monetary award. These workarounds are likely to materially degrade the Android user experience relative to the user experience on Apple’s iOS operating system.”

* Google itself may start talking with Apple about some kind of way to avoid litigation. Wells Fargo Securities’ Maynard Um told investors in a note today that the $250 million or more that Apple could get in licensing fees from Samsung–not to mention additional fees from other device makers that may settle or lose in court as well–would be significant enough for Apple to be worthwhile. Add Google in there, and it may be a cash flow Apple can’t resist. After all, it apparently already offered a royalty deal to Samsung, whose rejection led to Apple’s suit.

One might wonder why Apple would feel the need to deal. …

Read the complete post at The New Persuaders.

Why Google’s New Tablet Could Be The iPad’s First Real Competition

From my Forbes.com blog The New Persuaders:

Google is just a couple of days away from debuting a new tablet that could finally shake up a market utterly dominated so far by Apple’s iPad.

Reports from Gizmodo and others say Google is likely to introduce the diminutive 7-inch tablet at its Google I/O developers conference (whose Wednesday keynote I will be covering live here). The kicker, according to the reports: The tablet, built by Asus, will start at $199 for an 8 GB of memory, up to $249 for a 16 GB version.

Amazon.com’s Kindle Fire already plowed this pricing ground, of course, so such a tablet wouldn’t be entirely new. But while the Fire has been reasonably successful for Amazon, it hasn’t made much of an apparent dent in the iPad because of its limitations, including a somewhat app platform controlled by Amazon itself. And the Fire doesn’t run a standard version of Android, making it tougher yet for developers to do apps for it.

Let’s not forget Microsoft’s coming Surface tablet, either. But the reported pricing on that device, introduced last week, sounds quite close to the iPad’s. So unless it’s significantly better, which seems doubtful, it seems unlikely to mount a serious challenge.

But Google’s tablet, assuming as Chairman Eric Schmidt has promised (and this is a very big assumption) that it performs well, could for the first time challenge the iPad. And it would come at a time when tablets are the focus of everyone in tech from chipmakers and hardware manufacturers to app developers to marketers and publishers hoping to capitalize on a new mobile Internet device that could give them the creative canvas to rival (or exceed) the appeal of television and magazines. Here’s why Google might have a hit this time:

* It’s cheap. Now, merely being cheap won’t guarantee people will buy it in sufficient numbers to matter. But at $199, it doesn’t have to be every bit as good as the iPad. As Clayton Christensen has noted in cases dating all the way back to the transistor radio in the 1950s, a rival can most successfully challenge an established incumbent not by matching it feature-by-feature, but by offering something good enough for most people for a lot less money.

* The rock-bottom price will attract more app developers. If it’s decent enough to sell a lot thanks to the low price, that suddenly makes Android a more attractive platform for app developers. One of several reasons the iPad is the most popular app platform is that Apple controls the operating system version so developers don’t need to rewrite an app for each device running different versions. …

Read the complete post at The New Persuaders.

Here’s How One Marketer Made Google Mobile Ads Pay Off

From my Forbes.com blog The New Persuaders:

Amid widespread concerns that mobile advertising may never work as well as ads served to people’s desktop and laptop computers, several companies are attempting to prove the naysayers wrong. Facebook partners piled on earlier this week with studies showing the social network’s mobile ads produce way more clicks and revenues than its desktop ads.

Now it’s Google’s turn. This morning it’s trotting out, along with updated mobile search ads, a case study of how T-Mobile last year used Google mobile search ads to try to get more new customer activations to its cellular service. Kari Nicholas, T-Mobile’s director of media, said in an interview that the company aimed to do that by making it easier to sign up online or reach them via their existing mobile phone to visit nearby stores.

The main goal, given that most people doing a search on T-Mobile or other more general wireless-related words such as smartphones or 4G are likely to be well down the path to getting a new phone or service, was to guide those searchers quickly and easily to the nearest store. So the campaign served separate ads to mobile users, automatically showing both the nearest store on a map and a click-to-call button. The company also served different ads depending on whether the person had an Android or an iPhone or was on a particular service such as Verizon or T-Mobile.

The results: In one month, the campaign attracted 162,000 people to T-Mobile’s website. The mobile search ads tied to a person’s location got a lot of clicks–a 13% click-through rate, which is orders of magnitude higher than standard display ads. And the ads also generated 20,000 phone calls to stores. …

Read the complete post at The New Persuaders.

What Madison Avenue Needs to Know About Mobile Advertising

Cross-posted from my Forbes.com blog The New Persuaders:

Still struggling to figure out how to participate in Facebook and the rest of the social Web, marketers now face a brand-new set of challenges and opportunities to their established way of doing business: mobile advertising. As more people abandon their personal computers to do everything on their iPhones and iPads, advertisers need to figure out how they can continue to reach them on a tiny screen, often in the social context of Facebook and other social networks people use on their mobile devices.

A group of mobile and advertising startups took a crack today at educating the marketers and agencies they want to sell to during a panel at AlwaysOn’s OnMobile conference in Redwood City, Calif. On the panel are host Bill Cleary, founder of Cleary & Partners; Ragnar Kruse, CEO of Smaato, which represents 50,000 mobile publishers on ad networks; Lucy Jacobs, COO of Facebook ad firm Spruce Media; Are Traasdahl, founder and CEO of Tapad, which offers cross-platform ads; and Lon Otremba, CEO of mobile social gaming platform Tylted. Here’s what they had to tell Madison Avenue folks about how they can tap into the emerging mobile opportunities:

Q: How do you deal with the cynicism of Madison Avenue about Facebook and mobile?

Otremba: It’s the same scenario we saw when the Web came around. There’s as much fear as anything. They know their clients are going to beat the hell out of them if they don’t figure it out soon.

Read the rest of the post at The New Persuaders.

How Facebook–and Its Advertisers–Can Make Money From Mobile

Cross-posted from my Forbes.com blog The New Persuaders:

If there’s one thing that gave investors pause about Facebook’s underwhelming initial public offering last month–besides Nasdaq’s royal screwup–it was that the social network has been AWOL from the hottest trend in tech today: mobile. Facebook admitted shortly before its IPO that it wasn’t making any money on mobile advertising even as its users increasingly access the service from their smartphones and tablets.

But it’s also quite early in the opportunities associated with skyrocketing use of mobile devices, whether it’s games or advertising or payments. Lucy Jacobs, COO at Spruce Media, a company that helps brands do performance advertising on Facebook, offered a brief perspective on what Facebook and brands hoping to use it for marketing can do to make money from all the people ditching their PCs for iPhones, iPads, and Android devices. Here’s what she had to say during a talk at AlwaysOn’s OnMobile conference in Redwood City, Calif.:

Only about 32% of the world has a mobile phone so far, she says, and most of them aren’t smartphones, so there’s plenty of opportunity. We’re currently monetizing only 1% of all ad impressions even though 10% of time is spent on mobile devices. Result: Ad rates are five times lower on mobile devices vs. desktops.

Facebook is well-positioned to monetize mobile, Jacobs says. Why? Very rapid user growth, large number of innovative developers, broad base of advertisers, highly engaged consumers, and apps that are essential utilities.

Facebook now has four formats, or locations, for mobile ads–in the news feed on the home page, in the news feed in mobile, on the right-hand side, and on the log-out page. And last week, it announced the ability to run just mobile ads instead of having to do desktop and mobile ads simultaneously.

The mobile newsfeed ads have really high engagement and good results, Jacobs says. Click-through rates are 1% to 5%, or 10 times higher than on standard Facebook ads. That suggests that mobile has a huge upside for Facebook, since clicks on its other ads are way lower than the average display ad.

However, conversion rates, or the rate at which people buy something, fill out a form, or the like, are one-third lower. She doesn’t say why. Other marketers and agencies have suggested that it’s likely people using their devices on the go, such as in or near stores, simply buy the product in the store, but that purchase doesn’t get attributed to the Facebook ad.

Jacobs offers several tips and tricks for brands using mobile ads on Facebook:

Read the complete post at The New Persuaders.

What’s the Next Breakout Mobile Startup? Here’s What VCs Think

Cross-posted from my Forbes.com blog The New Persuaders.

Mobile computing is arguably the most disruptive force in tech right now. Just look at what it did to Zynga’s stock today. Or what it has already done to Facebook’s and Google’s shares.

Today, a group of venture capitalists laid out what they think is coming for mobile investment this year–in other words, who’s going to disrupt whom next. On a panel at the AlwaysOn OnMobile conference in Redwood City (Calif.) were host Mihir Jobalia, managing Director at KPMG; Rob Coneybeer, cofounder and managing director at Shasta Ventures; Paul Santinelli, a partner at North Bridge Venture Partners; Sling cofounder Jason Krikorian, now general partner at DCM and the Android Investment Fund; Navin Chaddha, managing director at Mayfield Fund; and Aydin Senkut, founder and president of Felicis Ventures.

Here’s what they had to say:

Q: What are the opportunities and challenges in Apple’s iOS vs. Google’s Android?

Chaddha: With Android, even though it’s open, not having control is a big issue. If developers have an app, they go to iOS first, then they look at Android, but there are so many choices, phones. It’s just hard. In the iOS, iPad and iPhone are all the same–life is easy.

Senkut: iOS’s big advantage is monetization. If you want growth and high numbers, it’s difficult without Android.

Coneybeer: It’s a stable duopoly. You need to do both. But nobody’s talking about any other platform now. For developers, you’re looking at a five-year-plus duopoly.

Santinelli: In a few years, you’ll be able to do all development in HTML5. It will solve a lot of those fragmentation problems.

Q: Where are the most interesting growth opportunities in the next five years?

Read the full post at The New Persuaders.

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