I think that the missing formula for making the iPhone a big winner is to change the approach for gaining a profit stream from the equipment sale to that of participating in the transaction processing revenues. The iPhone and internet in general are ideal tools to enable consumers to do on-line directory searches and secure impulse buying. Say you arrive home late in the afternoon after a busy day oat the office, fighting traffic and doing some errands with your spouse (or aide), you pop in the door or your home and both sigh, "It's too late and I'm too tired to fix anything, let's call out." You go into the kitchen or living room, punch the iPhone menu for restaurants and see some current specials for take out Tai food. You punch the button for your selection, punch another button for how many servings and hit another to send the order. The system already has encrypted credit card information so just asks you for your PIN to verify. The screen then changes to thank you for the order and a few seconds latter tells you that the order is expected to take 15 minutes to prepare and 6 minutes to deliver and gives you the order total (input by the restaurant). The restaurant benefits because it gets a direct, verified order and can dynamically change the "specials" so that it fits the food stuff they have prepared and want to move out - if they run out of an item, it gets blanked from the specials. The merchant pays an advertising fee and the normal credit card transaction fee. Cidco or their partners, could participate in the advertising fees (just like the yellow pages, only better) and the transaction fees. Multiply this possiblity by tickets to sports, arts, or concert events that can change as the evenging news or TV special heightens interest, and you have custom tailored advertising. Then multiply that by a database that keeps tract of the household's user profile, including their past purchases, and you have very effective target marketing. What makes this more sustainable and attractive compared to the internet at large is that Cidco (or it's partners) can control the interface and, therefore, the cash flow whereas on the inet, info or cash flow is not easily directed.
Give the darn iPhones away for $200-250 and make the money on the resulting revenue stream!!! This is the hen that lays the golden egg that Microsoft, IBM, DEC, AT&T, etc. are trying to figure out how to get a piece of. Cidco has a key product strategy, they just need to implement it's sale in a way that yields the biggest long-term profit and that takes advantages of its differences with PC enabled internet access. |
