Apple (NSDQ: AAPL), still riding high from a successful iPad launch, added another feather in to its cap today. By far the biggest consumer-facing new feature in the latest iteration of iPhone OS 4.0 is multi-tasking, but the game-changer is iAd, a mobile advertising platform that could result in bigger revenue streams to support developers and publishers that build applications for the iPhone, iPod or iPad. More below on how iAd will work.
On stage at today’s unveiling, Apple’s CEO Steve Jobs was chipper and eager to poke fun at a bevy of companies from Microsoft (NSDQ: MSFT) to Adobe (NSDQ: ADBE) and Google (NSDQ: GOOG). “We weren’t the first to this [multi-tasking], but we will be the best,” he said. About iAd, he declared: “We think most of the mobile advertising really sucks…We thought we might be able to make some contributions.”
For the first time since Jobs returned from sick leave, he took questions from the audience at a press event—and eagerly answered them. At one point, he took a swipe at the way other handset-makers handle multi-tasking. The iPhone will not have a task manager, where you can kill apps that are draining too much of the phone’s resources. Jobs: “The user doesn’t have to worry about it all. If you see a stylus, they blew it. If you see a task manager, they blew it. Users should never have to think about that stuff.”
He also spoke directly about Google’s acquisition of AdMob. “Google came in and snatched them from us. We bought a much smaller, but good company Quattro,” he said. With iAd, Apple directly targets Google. Jobs said people aren’t searching on their phone, which is how Google primarily sees ad revenue coming in in mobile—they are, instead, using apps. He thinks user behavior is different on the phone vs. the PC because the 185,000 apps currently available on the iPhone “get you into every corner of the internet…They don’t exist on PCs. This is a new phenomenon that is occurring on the iPhone for the first time in history.” Note: Jobs may be underplaying search’s relevance on mobile phones: Google often talks about the significant volume of searches that are done on the iPhone.
The prime difference between iAd and other mobile ad networks is that iAd is built into the OS. “We have figured out how to do interactivity and video content without ever taking you out of the app,” Jobs said. “People will be a lot more interested in clicking on these because they don’t have to find their way back to the app.” Apple will sell and host the ads, and developers will get a 60 percent split. (Apple did not mention whether it, like Google, will share any of the revenues with carriers.) Apple provided a couple of advertising examples, in which an advertisement is almost like a mini-app that opens when a user clicks on a banner. In a mock-up for Toy Story, Jobs shows how a user could watch a trailer, download wallpapers, play a free game, or buy a game.
He calculates that by summertime, the iPhone will be generating one billion ad impressions a day. On average, he said an iPhone user spends 30 minutes a day in applications. If they serve one ad every three minutes, and there’s 100 million iPhone and iTouches as of this summer, there will be one billion ad impressions a day. “It’s not the largest number but it’s a large number, and the demographics are one of the most desirable in all of advertising—not just in digital.”
The iPhone OS 4.0 is being released today to developers, so they can start integrating the features into their apps, but won’t be available to the public until summer. Only iPhone 3GS and iPod touch (third generation) owners will be able to multi-task, although iPhone 3G or iPod touch (second generation) will be able to upgrade to OS 4.0. The iPad will get the OS update this fall.
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