Tuesday, May 25, 2010

Apple MobileMe will be free(mium)

I wrote about freemium at the beginning of the year. Quoting myself (very bad thing to do, I know):
In my space, Apple charges $99 per year for MobileMe. There is a lot of room to cut that price (and it works only for the iPhone, so good luck if someone in the family has a different device). At the other end of the spectrum, Google charges zero for Google Sync (albeit it is quite a bad product, sometimes free can be of a depressing quality...). How do you move between these two extremes if you are a carrier? Per-month, per-year, free, advertising or freemium?

I say, for now, stick to per-user per-month on the high end of the market, and check freemium for the masses (they are coming).
In the last five months, the market has moved superfast. No surprise here: mobile is the hottest thing around and sync is the killer app when it comes to connected devices. Everyone jumped into this market, from MOTOBLUR to Nokia Ovi to Microsoft My Phone. Lots of activity, lots of opportunities.

Google itself has been pushing its cloud even more. They made it a bit too tightly coupled with Android, in my opinion, but I can understand why they are going that way. They are going for an open platform with open source, but tightly coupled with a cloud service. In a way, it is an horizontal-vertical play, if there is such a thing. Go horizontal and open source on the device (a step forward from the Microsoft model), but vertical on the cloud integration (a step forward from the Apple model).

It seems to work. You have a lively community of developers, but most of the Android phones come pre-bundled with the Google cloud services. You get your address book, your calendar, your pictures automagically synced on the Google cloud. It is sticky. It is easy to use (so much that it is transparent). And it is freemium (2GB of storage are free, then you start to pay). What not to love?

What about Apple? Well, they chose a different route. They chose to charge you $99 per year for the MobileMe service. I hear it is going reasonably well, but nothing to be bragging about (in fact, they never brag about it on stage, and that is a sign for things that do not work too well at Apple). They had technical issues at the beginning, but I do not think that is the problem.

The issue is the $99/year.

People want sync, they want to backup their data to get them back in case they lose their phone, but they are not going to pay for it right away (I still believe you can charge upfront in the enterprise, but consumers are only for freemium today). Same for picture sync (Flickr) or networking (LinkedIn) or many other freemium models. Get them hooked and they will pay, eventually. They will recognize the value. Maybe not 100%, but a good percentage. Enough to justify a business model.

Apple missed the mark (to use a Facebook term ;-) They were greedy and thought they could make money right away. They are probably not making enough. And they are not making their service sticky enough. While Google is attacking them and eating in their plate, with a freemium cloud service strategy (which, eventually, might even be only supported by ads).

Since I am good at predicting what Apple announces at its conference (am I?), I have one for you: Apple will make MobileMe freemium at WWDC on June 7th. They will have a free service for everyone, and a premium service for those that want to pay for more storage or more features (such as Find my iPhone).

They should have read Hal's paper for mobile operators "Using Free-nomics to Avoid Pipe-ification" six months ago...