Apple's iPhone 4: A Tale of Two Platforms—HTML5 and The Other One

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Steve Jobs wants to make something very clear: Apple is both open and closed.

"We support two platforms at Apple," said Jobs, the company's CEO. "The first is HTML5, a fully open, uncontrolled platform. We fully support HTML5, love the technology in it, and Apple's browsers are the lead in terms of HTML5 support."

"The second is the App Store," he continued, referencing the iTunes App Store that powers delivery of applications for the iPad, iPhone and iPod touch. "This is our curated platform with over 225,000 applications-the most vibrant app community on the planet."

Jobs says that 15,000 apps in 30 languages are submitted each week, including new applications and updates. Jobs also claims that 95% of these applications are approved within 7 days.

"What about the other 5% of applications that aren't approved?" he asked, rhetorically, then said that there are three reasons they don't get approved: the app doesn't operate as advertised by the developer, the apps use private APIs, or the apps crash.

"We're very clear on private APIs," said Jobs. "When we change the operating system, those private APIs are not guaranteed not to change. Developers who use private APIs of course know exactly what they're doing."

Jobs has taken heat from Adobe on this very topic, after a change in Apple's developer agreement documentation disallowed the use of third-party developer environments to make an iPhone- or iPad-specific "port" of an application.

While Adobe claims the change in the developer's agreement targets Flash, Jobs went on record at the D conference last week saying the concern was more about analytics firms being able to get detailed information about upcoming devices that Apple was testing than it was about Adobe, although he did repeat his claims that Flash isn't the right vehicle for interactive delivery on the iPad or iPhone. Adobe also owns an analytics firm, having purchased Omniture last year.

Why all the fuss about Apple's closed system? Jobs seemed to indicate (or perhaps vindicate) developer critics who say they're being shut out of a large market.

"eBay CEO John Donahoe really loves the iPhone platform," said Jobs, "and the company expects to do $1.5 to $2 billion worth of business this year via its iPhone app."

Jobs also revealed that a total of 5 billion downloads from the App Store have been downloaded, and that the company has paid developers more than $1 billion as part of an agreement in which Apple keeps 30% of the price of an application, supposedly to cover its delivery costs.

Jobs also said that Apple it has 58.2% of the entire U.S. mobile browser usage, despite only accounting for 28% of the number of smartphones being used in the United States. By comparison, RIM's Blackberry has 35% market share but only accounts for 12.7% of mobile web usage.

The one rapidly growing competitor is Google's Android platform, which launched last year. With only 9% market share, the Android platform accounts for 22.7% of mobile web usage. While Jobs tried to spin the 58.2% iPhone versus 22.7% Android as a victory for Apple in terms of dominance, it's clear that Android users are generating proportionally more web data traffic than iPhone users.

Closer to home for the streaming industry, Netflix CEO Reed Hastings appeared on stage at WWDC to talk about a free Netflix app for the iPhone.

"One of the biggest requests we get is for an iPhone app," said Hastings, "and we're pleased to announce that it's coming this summer. Now you can get the same service on your HDTV, laptop, iPad and iPhone: you can start a film on your TV and pick up on your iPhone whenever you'd like."

Besides just showing movies, the Netflix app will also give access to personalized recommendations and account and queue information. It will also take advantage of Apple HTTP and adaptive bitrate streaming technologies, as does the Netflix iPad app.

Late in his keynote, Jobs revealed that Apple really does consider itself a fully engaged Google competitor that's willing to work with other tech giants to keep the search and ad giant at bay. 

He did so in two ways, announcing that the new iPhone operating system, iOS 4, will use Bing as a secondary search engine, and that iAds in iOS 4 will support ads directly within the browser or application.

"Google will remain the default," said Jobs on the first topic, ending speculation that Microsoft's newer search engine would become the default search choice.

Yet he wasn't letting the moment go as Google and Apple move into more competitive areas, and he used Apple's embrace of the HTML 5-the platform he spent scant time talking about during today's WWDC keynote-to make his point.

"Microsoft's done a really nice job with Bing on the iPhone, with its HTML5 presentation," said Jobs. "Check it out."

On the ad front, Jobs talked about iOS 4's ability to support ads directly within the application, without needing to write an application specifically for ad serving through Apple's new iAd technology.

"iAds keep you in your app," said Jobs. "The worst thing you want as a user is to tap on a banner and be hijacked out of the browser. Developers don't have to write an app to put an ad into the app; it's built right into iOS 4."

Of course the built-in ad application and ad service comes with a price: Apple will take 40% of the ad revenues, with the remaining paid to the developer of the application through the same channels they use to be paid for applications.

Yet, with another milestone about to be hit-that of the 100 millionth device to be powered by the iOS-Jobs is gambling that Apple can leverage user discontent and a desire to have standardized app placement to the company's advantage.

"We've only been selling ads for eight weeks," said Jobs, "but I want to tell you about some of the brands. We've attracted some pretty exciting brands and they've committed over $60 million for the second half of this year."

Jobs then went on to show a Keynote slide that listed companies such as AT&T, Best Buy, Chanel, Geico, Nissan, State Farm, and Target, among others. He also noted JP Morgan's estimate that mobile display advertising in 2010 as a whole would be approximately $250 million.

"We may account for 48% of the second half of 2010 mobile advertising," said Jobs. "This is from eight weeks of selling, so we're off to a pretty good start."

With developers leery of writing apps that use third-party APIs to send information about the device at a heightened level, Apple may successfully negotiate itself into a situation where it not only sells the hardware but will also sell and host enough ads that it will be in a unique position to have a detailed first look at user behavior for some very powerful brands.

In other words, Apple's trying to pull off a Google, using its advocacy of an open platform to drive features in another, closed platform.

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