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How To Ride On The iPhone Network Effect Opportunity

July 10th, 2008 by Wai Loong (2 Comments)

Just today, I caught sight of an exciting article on Forbes that the 2nd generation of iPhone has been scheduled to be released simultaneously in 22 countries on 11th July 2008.  If you’ve been planning to buy one, hold on!  The new generation iPhone promise a boatload of desirable features – all at a fraction of the cost of its predecessor!

Sure, you don’t need to be a rocket scientist to realize what this means.  With a sales record of over 6 million units sold to date, Apple Computer now extends its projection to 10 millions units of iPhone devices sold worldwide by the end of this year.

So what is this opportunity I’m taking about?

I’m not suggesting that you go around scooping shares of Apple Computer.  It’s way overvalued anyway, unless you’re betting your money on the short term momentum growth of its international iPod/iPhone/iTouch sales.

I’m coming up some ideas that you may be profiting from if you pay attention to the unstoppable world demand to mobile computing.

To understand its explosive growth, let’s take a look at some features that Appel has been quitely building so far.

iPhone 2.0 OS:

The new OS has plenty of firepower.  One of the smartest move Apple ever made is to release the iPhone Software Development Kit (SDK) and the support for enterprise network connectivity.  If you’re a seasoned software programmer, it is very hard not to imagine the possibilities you can do.

The iPhone SDK comes with a iPhone simulator – an emulated environment where software developers can run, test and debug their applications without actually owning the gadget.  The SDK empowers developers to create killer applications that leverage on the iPhone’s groundbreaking technologies, such as the Multi-Touch™ user interface and animation technology.  With large memory for storage and built-in three-axis accelerometer and geographical location technology (GPS), the iPhone may be destined to set a new standard on how mobile devices gets tightly integrated into our everyday life.

From a user perspective, you can connect your iPhone to your cooperate network via Microsoft Exchange ActiveSync, running secure-over-the-air push mails, contacts and calendars – all pushed to your iPhone device!  IT administrators can easily set up multiple iPhones, password policies, VPN setting, installing certificates, email server settings, all to be easily managed and securely through private cooperate networks running Cisco’s IPsec VPNs.

As you can see, as the user base increase over time, hundreds and thousands of developers may be in a mad rush to create the next killer iPhone application.

Users of iPhones will have to be wary though.  Malicious iPhone application developers may seek to exploit unannouced software valuabilities.

The Network Effect:

Although the size and scope of Apple’s developer program remains a mystery at this point of time, it is not hard to realize the potential of software sales demonstrated from online auctioneer eBay and various social networking sites.

If you haven’t realize by now, the best way to promote any product is by word-of-mouth – and social networking tools are all set empower software developers to extend their reach to a hungry pool of iPhone users.

As partners of the new Apple Store, it is likely that Apple will take a profit cut from the sales of 3rd party downloaded through iTunes.  iPhone developers though, may be allowed to sell their software at any price they see fit.

Get Funding Through iFund?

I’m not kidding!

Even if you’re not keen to develop iPhone or iTouch software, you can always setup an outsourcing team and manage the projects and do your own marketing, or even outsource them out!  So you may be asking, where do I draw the capital from?

Answer:

The KPCB’s iFund™.

Essentiall, iFund™ is a $100M investment initiative that will fund market-changing ideas and products that extend the revolutionary new iPhone and iPod touch platform. The iFund™ is agnostic to size and stage of investment and will invest in companies building applications, services and components. Focus areas include location based services, social networking, mCommerce (including advertising and payments), communication, and entertainment. The iFund™ will back innovators pursuing transformative, high-impact ideas with an eye towards building independent durable companies atop the iPhone / iPod touch platform.

– iFund™ FAQ

If you can see what I envision, location based services + social networking + mobile commerce is likely to be the next big bang of the mobile/wireless lifestyle.  Not to mention the lucrative revenues from advertising and a massive bazaar and marketplace for real-time auctions, the world may get a little smaller with the power promise of wireless connectivity.  It is hard to imagine why Google and Microsoft hard biting hard on the next biggest onslought of paying consumers in the face of recession and slowing economic growth.

On a personal note from the standpoint of a private investor, it is sad to uncover that the venture capitalists firm Kleiner Perkins Caufield & Byers are only interested to work with investment opportunities, rather than seeking investors.

Nevertheless, the future of iPhone/iTouch is bright; and as aspiring entrepreneurs who dream to earn their first million bucks may be brave enough to venture right into this new venture.

Will you be the garage born multi-millionaire?  Or will it be your neighbour next door?

Stay hungry, stay foolish and live a life with passion!

Zemanta Pixie

Posted in Investment, Life

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::Comments::

2 Responses:

1
Yen Thim Wai on July 11th, 2008 at 2:57 am

A lot times, we have been influenent by the surrounding.
Without knowning that, we are actually chasing after wants than needs. Will you get one expensive phone or stick to the
basic functionality of a phone? haha, I know u v. well…

2
Wai Loong on July 11th, 2008 at 10:36 pm

Hi Buddy!

You seem to have completely missed the essential points I am driving at. My position from this article is to show folks the way to profit from the iPhone mania.

True, the iPhone is indeed a desirable want. I’d like to own it too if it’s not too expensive. I don’t mind forking out a little more than SGD$200 for a dream-combo device that comes with GPS and WiFi function on a 9″ display. I’d say it’s a steal!

Anyway, I believe I’m pretty frugal by nature and I believe in buying value, investing and business building. The value of the new iPhone is not some US$799 when it was first introduced to the world sometime last year. This new baby has features that will explode your mind if you ever use one.

In case you’re not aware, iPhone is likely to retail at US$199 from Singtel exclusively, provided the nitty gritty details of the deal has been ironed out with the new iPhone Telco locking mechanism. But then again, someone is sure to crack it soon.

With such a world-class device out there virtually free for you to develop your killer apps, it’s difficult not to tap onto the amount of money software developers can make while combining the network effect of social networking portals.

If you’ve been following my post all these months, you’ll know what exactly I mean. :)

I trust that will lit up that invisible bulb in your head! :)

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About Insights, Inspirations, Tranquility, Peace and Harmony

Ng Wai Loong

Wai Loong is an electronics engineer by profession. He currently resides in Singapore, a thriving hub at the heart of South-East Asia. When he is not so stress out on the computers or laboratory, he enjoys value reading, jogging at his own pace and blogging in his spare time. Other times, he likes to catch up with some close friends over a cup of latte or teh tarik. As a gift from this friend, you are invited to interact freely with him on his personal blog.

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