CRM and the iPhone

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For the rest of the March 2009 issue of CRM magazine, please click here.

Your stomach growls. Anticipating the first bite of an expertly wrapped, fantastically stuffed, deliciously warm burrito is enough to make you salivate. But wait: As you open the glass door, and that chili pepper emblem meets your line of vision, you suddenly recoil. Your head sinks. Your shoulders sag. Is the line really that long? You start doubting the notion of “fast food.”

Suddenly, a light-bulb moment: online instead of in line. You pull out that sleek and slender device from your pocket and re-engage on the path toward burrito heaven. Some software you had the prescience to download to your phone allows you to order your burrito on the spot. You customize your order, enter your credit-card information, bypass the 50-odd suckers waiting in line, and swoop in to pick up your swiftly ordered (and rapidly assembled) Southwestern delight at the register. You kiss the screen of your pocket device, thankful for the burrito miracle.

Welcome to the new reality, made possible by your iPhone. (Or…maybe not. Turns out your burrito wasn’t immediately possible. More on that a little later.)

It’s no exaggeration to say the Apple iPhone has changed the way people think about handhelds. Your friend caresses her iPhone as if it were a pet. Your brother has given his a nickname. The sentiment seems to be that the iPhone is more than a phone.

“The iPhone works the way you’ve always dreamed a phone would work,” says Dave Meeker, a user-experience strategist with Roundarch, a consultancy focused on providing businesses with solutions for portals, content management, and integration. Sure, users have fallen in love with the iPhone’s clean interface and its touchscreen capabilities—but what’s made the difference, Meeker says, has been the App Store, an online clearinghouse of iPhone-specific software, available for download at a predetermined price point—often zero.

When Apple opened up the iPhone’s software development kit (SDK) to developers in March 2008, the company already had more than a nicely designed hunk of hardware—there was a customer-centric approach that CRM practitioners could immediately relate to. “Apple did an amazing thing,” Meeker says. “They didn’t build a better piece of hardware necessarily—the hardware aspect of it isn’t that revolutionary. Where Apple really nailed it was on the user-experience piece.” Apple has set the stage for all future phones: Platforms are the new trend and touchscreens are here to stay. “Apple has done a masterful job of creating a product where users love the phone to the point that they have a personal relationship with it,” Meeker says, admitting that of the phones he owns—and there are several—he always turns to his iPhone for its ease of functionality.

Despite the iPhone’s prettiness and its depth and breadth, challenges remain—as they would with any new technology, especially in a corporate environment. And while practically everyone loves the iPhone, some people still grumble about AT&T, the wireless provider that won the right to be the iPhone’s exclusive carrier.

Despite the fever pitch of the iPhone consumer craze—remember people camping out in front of Apple and AT&T stores before the launch dates?—there hasn’t been quite the same buzz on the business end of the spectrum. Meeker says that, while some firms are providing employees with iPhones, the traction is nowhere near what it was like when the BlackBerry, the popular handheld from Research in Motion, was at a similar point in its evolution.

Businesses, Meeker says, can still make valid arguments against adopting Apple devices. Most trace back to internal technology departments familiar with BlackBerrys and with the Windows Mobile operating system that runs on many of the devices. These veterans are loathe to switch to an entirely new platform.

Even more problematic for corporate technology, however, is that the iPhone must be provisioned and operated through iTunes, Apple’s online multimedia portal, to get business applications up and running. Meeker says Apple’s insistence on iTunes as the interface for consumers and businesses alike might be a mistake in the long run: Make iTunes a desktop necessity and the doors are suddenly open for employees to download music, play movies, and so on—basically a corporate firewall’s worst nightmare.

For an enterprise looking to supply its one thousand employees with handheld devices, provisioning a thousand iPhones is far more complicated than it would be to simply hand out a boxed BlackBerry to each worker, Meeker says. With a new operating system comes the need for support and training.

In the enterprise, though, the largest iPhone challenge involves custom software, Meeker says. Developers seem to be at odds about how to build an application: Should it run natively on the iPhone or over the phone’s built-in Safari Web browser? “There are a lot of issues around building an app using the SDK,” Meeker says, including the basic need to program on a Mac, which remains only a minority player in the computing world.

In fact, users of the Apple operating system accounted for just slightly more than 10 percent of the total (business and consumer) marketplace in January, according to Net Applications, an operating-system tracking company. (That figure’s on the rise, though—helped along by the iPhone’s half-percentage-point share.)

Meeker says that a truly good application introduces new interface paradigms, such as the use of the touchscreen, camera, contact list, or accelerometer (which is sort of an internal gyroscope that allows the mere movement of the iPhone—rotation, tilting, etc.—to become a source of input).

Assume you succeed in building an iPhone application, though. Then what? Many forget that application deployment has to be followed by maintenance. Know what you need to support an iPhone application? A Mac. Meeker notes that, in today’s economy, a technology team may have a hard time asking to buy six or seven Macs for iPhone software development in addition to existing corporate PCs. Apple’s review process, with its strict guidelines for the distribution of accepted applications, is another potential roadblock.

So why build an application directly for the iPhone rather than an application the phone could reach over the Web? One reason, Meeker suggests, is that, shallow as it might sound, companies want the buzz of saying, “We’ve built an app for the iPhone.”

The business and relationship intelligence division of Dow Jones, for example, began work on an iPhone application during the summer of 2008. “It was important for us to enter [the iPhone market]…as soon as possible,” says Frank Filippo, executive director of product management for the division, which provides sales tools loaded with Dow Jones data. Launched on the App Store in December, the Dow Jones Sales Triggers quickly became a top free-download business application. (See the sidebar, “The iPhone’s Greatest Hits (So Far),” at the end of this article, for the current download leaders.)

Filippo admits this isn’t a revenue-generating project for his company—more a chance to get the Dow Jones brand out on what he calls a “game-changing platform.” With visibility on the App Store, he says, “we can reach a massive audience who didn’t know about our solutions without the marketing spend normally associated with such broad reach.”

“Everyone took this first leap and is getting the mobile app out there—it’s ‘Hurry and get one built. We need to stay competitive. We just need to get one,’” Meeker says. It’s not until after an application launches, he says, that most companies step back to see what else is possible. Meeker argues that unless an application needs to access functions native on the iPhone such as the GPS, the camera, or the address book, there aren’t many reasons to develop an SDK app rather than a Web application. “Really weigh the pros and cons of using the browser,” he says. “It looks and feels just like the desktop app.”

For Jaica Kinsman, the senior learning-technology specialist for Hannaford Bros., an East Coast supermarket chain, having access to the same programs from computers and handheld devices is essential—especially with the iPhone she bought for her own use. “My iPhone is my lifeline,” Kinsman says. “I use it for everything.”

Hannaford uses Socialcast, an internal social-networking application that allows for employee collaboration, communication, and document sharing. In December, Socialcast became accessible through the iPhone Web browser, and Kinsman recalls jumping at the chance to connect, in part because of how often she’s on the road. That’s when the iPhone, and the Socialcast app, really matter, she says—keeping her in touch with teammates from anywhere.

“I can ask a question to the whole group though Socialcast,” she says. “I can get feedback immediately.” Kinsman says the Web application doesn’t seem to be a lighter version of the actual software. “It has more functionality than I expected it would for an optimized Web page,” she says. “It’s more similar to an iPhone app than a Web page—I was surprised.”

Although access to Socialcast on her iPhone has made Kinsman more productive, she’s still in the minority at Hannaford. Only a handful of employees are testing it—about seven, she says—and there’s no companywide deployment.

“I don’t think Apple has learned how to deal with corporate America,” Meeker says. Historically, Apple doesn’t have much experience with the enterprise, he adds, and the stereotype that Macs are only used by “creative” people is true to a certain extent. Apple also has a reputation for being a bit inflexible. Still, Meeker admits the iPhone is relatively new, and challenges are expected. “The iPhone has probably been a bigger success than [Apple] would ever admit,” he says.

“What makes the iPhone so great for consumers is that [the phone itself] doesn’t do 9 million things—it allows third parties to fill in that gap,” Meeker says. But the popularity of those third-party apps helps explain the intense relationships people have with their iPhones—often to the point of obsession. It’s no wonder that the consumers who own and love iPhones are now asking, “Well, why can’t my business applications work as well as my personal ones?” Instead of high-end corporate technology trickling down to consumers, which historically had been the norm, the roles have reversed. The consumer space, Meeker says, has become a more engaging market. (See our January 2009 cover story, “The Google-ization of CRM,” for more on how consumer technology is trickling up.)

Imagine that you subscribe to Showtime, but your friend doesn’t. You’re over at his place, and decide you want to watch the channel—except you realize you can’t. Or can you? What if your subscription data were stored on a handheld device? If you simply place the device in front of the TV then—Poof! The cable box would recognize your identity as a Showtime subscriber. Seconds later you’re enjoying Dexter without any problems. (Not sure why you had such a killer desire to catch Dexter? “Innovation Nation,” another of this month's features, may help explain what drew you in.)

One day, your mobile phone—no longer just a phone—will have that capability. That handheld device will serve as a piece of your personal identity—much like a wallet. Everywhere you go, you’ll be recognized. The handheld will essentially connect you with other devices—be it a computer, a television, a grocery-store checkout machine, or the ticket scanner at the movie theater.

“It becomes less of a phone and more of a mobile computer,” Meeker says.

Ever tried to make a purchase only to discover you forgot your plastic loyalty card? You could have accumulated points toward a free gift, or saved 10 percent—but if you don’t have the card, you lose out, right? Not for much longer. Coupons, promotions, and loyalty cards can be stored on (or accessed by) your iPhone, enabling you to simply brandish the device at the register and cash in on any offers. This idea is being tested by many vendors, but Oracle’s Mobile Sales Assistant product for the iPhone may be one of the more compelling, tying together customer loyalty, social CRM, and retail transactions.

“We deliver an enterprise solution that helps companies manage and monitor their loyalty programs,” says Melissa Boxer, a vice president of loyalty and marketing for Oracle. “We realized that ‘mobile phone as a touch point’ would be great to deliver this integrated solution, targeted promotions, and the Web 2.0 concepts of community ratings and reviews.” Essentially, Oracle’s product, being tested now with several retailers, is a “smart, social, loyalty application delivered on a mobile platform,” Boxer says.

Demoed at the 2008 Oracle OpenWorld conference, the application led some to speculate about Oracle’s plans for social networking and the iPhone (among other devices). “We needed to incorporate consumer-based concepts and social networking,” Boxer says. “We also needed to make them usable and we needed to deliver them on new platforms.” Because of the iPhone buzz, the Oracle team started developing there first, with the idea to extend to other platforms down the road.

Boxer says another motivating factor for developing the iPhone application was the concept of channel ubiquity. “In today’s world, consumer expectations are incredibly high, especially in the U.S.,” she says. “People want to interact across every channel and are living on the phone. They want to be recognized and rewarded, to have that same consistent personalization regardless of where they’re living.”

“Apple builds nice-looking, well-working hardware with a great operating system,” Meeker says. “They lock it down to, ‘This is our baby…. You can customize a little bit. But it is what it is. We’ll continue to control it.’” Apple’s tight reins have inspired competitors to differentiate themselves based on openness. Take the G1 Android phone, for one—the first handheld to run on Google’s Android operating system. Meeker says most consumers don’t realize that Android isn’t tied to any particular hardware: Eventually, there will be dozens of Android-based phones. Don’t like your interface? Fine: Pick another. “The open nature of Android promises to have a lot of functionality,” he says.

Despite opposing Apple’s rigidness, Android manufacturers (and makers of other phones) are more than happy to mimic the iPhone’s application platform: An “app store” for Android is already on tap—and so are ones for BlackBerry and for Palm’s highly anticipated Pre handheld, which was unveiled in January (though with an unspecified 2009 release date).

Meeker says the iPhone has the “user lock-in” of any Apple product. “I can’t take the computer I love and put the Mac operating system on it—it’s the same thing with the phones.” Android developers can write one piece of software to operate on multiple phones. The Android app store has yet to reach scale, but Meeker calls the operating system powerful, more like a mini-computer than a cell phone.

In the meantime, the iPhone continues to make noise. Even Wal-Mart wants a piece of the action, offering iPhones at a price point ($99) that makes clear the device is ready to expand beyond the tech-savvy early adopters and enter the mainstream. That means a rise in consumers using the device, B2B customers supplying it to their employees, and developers building applications for it.

The expansion won’t come without a fight from competitors like the BlackBerry, the devices running Google’s Android operating system, and possibly the Palm Pre, but Apple may have made a beachhead for itself. Predictions aside, it will be interesting to see how the market plays out. Just think: A year ago, your only choice for obtaining that mouth-watering burrito was from actually waiting in line.

Which brings us back to that burrito we started with. Chipotle was the forward-thinking chain that launched that iPhone app in January—only to yank it from the App Store almost immediately.

The problem wasn’t a technical glitch with Apple—but with the popularity of the device and the application: Chipotle’s servers couldn’t handle the sudden explosion of traffic, forcing the company to remove the application and begin reworking a scalable version. 


SIDEBAR: Can Apple Ride Out the Storm?
Research in Motion’s newest BlackBerry model was supposed to be the last hurdle to Apple’s smartphone hegemony.

Momentum surrounding the release of the BlackBerry Storm—the first touchscreen device from Research in Motion (RIM)—was thunderous. Touted by many as “the iPhone killer,” the Storm launched in November—reportedly a mad dash to get the product out the door before “Black Friday” on November 28. Around the same time, the RIM folks released the BlackBerry Bold—a bigger-yet-sleeker version of the traditional BlackBerry. Perhaps not surprisingly, sales of both the Storm and the Bold have failed to reach the iPhone’s level of public demand—or what many would call a craze.

According to The Wall Street Journal, RIM sold about 500,000 Storms in that device’s first month on the market—and about the same number in its second. Not bad, but Apple sold a million 3G iPhones in just one weekend—to a marketplace that already had a goodly number of first-generation iPhones.

Still, despite lower unit sales and talk of user frustration with the new touchscreen interface, BlackBerry and RIM are holding ground. According to Gartner, sales of BlackBerry smartphones increased close to 82 percent in the third quarter of 2008. A December Gartner UK report states: “RIM continued to expand its presence within the consumer segment and refreshed its portfolio with new models and form factors. RIM sales will receive a boost from its new products in the fourth quarter. Analysts said the Storm is RIM’s most important product launch to date and has the potential to be a major product for the company.” In terms of smartphone market share, Gartner says RIM trails Nokia, but third-place Apple—growing 327 percent from 2007 to 2008—is nipping at RIM’s heels.

The iPhone isn’t the only competitor BlackBerry has to worry about. Devices such as the Android and the Palm Pre will be clamoring for a piece of the smartphone pie. The BlackBerry model still remains heavily used and liked—and it probably doesn’t hurt that President Barack Obama loves his BlackBerry so much, he successfully fought to use one in the White House.

The subsequent press coverage of that battle generated a level of free publicity for RIM that, according to an expert cited by The New York Times, was worth the equivalent of perhaps $25 million or $50 million in advertising.  —Lauren McKay, with additional reporting by Joshua Weinberger


SIDEBAR: The iPhone’s Greatest Hits (So Far)
A look at the 20 most-popular business-application downloads off the iPhone App Store


SIDEBAR: How Apple’s iPhone Efforts Bore Fruit
See the March 2009 print edition of CRM for a timeline of the Apple iPhone's development.

Assistant Editor Lauren McKay can be reached at lmckay@destinationCRM.com.

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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