The iPhone Era: A New TKG Report

On Friday, we released a report that looks at the 3G iPhone and new App Store. One overall theme is how the iPhone’s new features and lowered price tag will combine with easy availability of mobile apps to bring new mobile search standards and mainstream appeal to the market for the first time.

There is also finally a developer-friendly environment and open standards that step away from the carrier-controlled environment that has traditionally stifled innovation and prevented good mobile apps from reaching the market. Leave it to Apple to shake things up: This could do for mobile applications what the iTunes Store did for digital music. There is also an analogy between the iPod and the iPhone as a medium, and even a social phenomenon, that will drive the growth of this new form of digital distribution.

The outlook shouldn’t be too rosy in terms of current metrics, though. IPhones still make up less than 1 percent of mobile device penetration and there have been less sold to date than the volume Nokia pushes on a weekly basis (about 10 million phones). So far the iPhone’s impact has instead been influence and media attention, rather than actual penetration. But give it time — the iPhone is now priced the same as the (then) hot new Motorola Razr was just two years ago.

The point is that the open development, easy consumer access, new hardware standards and reduced price tag should all bring mobile search out of the early adopter phase where it has been stuck for years. Through this, mobile search volume should increase, advertiser interest will follow, and ad networks and mobile ad sales will develop in turn (YP opportunity at the local level). It will take the next couple of years for this to really come together, and there is a great deal of complexity involved. But the wheels are finally in motion.

Clients of TKG’s Interactive Local Media program can log in to read the entire report (public summary here), including a series of profiles on iPhone mobile local apps. These too are beginning to exhibit certain patterns around things such as social networking, which is one way local search is starting to take form in mobile. A TKG session at SES San Jose on Aug. 21 will also demo a few of these applications. Hope to see you there.

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