New iPhone, New Business Model For Apple

Apple will be selling the new third generation iPhones at a much cheaper rate. $200 less than older versions, if you can imagine that. That's sure to kill future purchases for older models though

But the way Apple now shares its income with carriers has also changed. Whereas historically, carriers get a percentage of the initial purchase and the users continuing payments during the life of the contract, the new scheme lets Apple keep all of the initial sale while carriers will benefit more from the recurring fees of users.

I think this isn't such a bad idea as carriers will be forced to provide more continuous customer support after the sale.

Apple has decided to expand its dealership for operators. Under the former business model, Apple reached exclusive deals that allowed only one operator per country to sell the phone. That strategy, while building up demand, was criticized as cloistering the iPhone from a potential huge audience.

All this will fall into place when the new 3G iPhone goes on sale next month. So watch out for it. It's twice as fast at only half the price -- on sale July 11

Google Has The Business Model To Beat -- Sucking The Life Out of Competitors And Old Meda

Henry Blodget, a Wall Street analyst during the dot-com heyday who now runs Silicon Alley Insider, published a report Friday that examines Google's advertising growth in 2007 against those of 17 online and traditional media rivals, including Yahoo, Microsoft, Time Warner, Disney, Viacom, CBS, and Clear Channel.

From the story:

"The year-over-year growth of revenue (in 2007) on Google.com (U.S.)--approximately $2 billion--was more than twice as much the growth of ad revenue in all of the offline media companies in this sample combined. This is such an amazing fact that it bears repeating: A single media property, Google.com (US), grew by $2 billion. All the offline media properties owned by the 13 offline media companies above, meanwhile--all of them--grew by about $1 billion."

Here are the statistics on Google's growth

• Total US ad revenue across all 17 companies grew 9% from 2006 to 2007, from $53 billion to $58 billion

• Online ad revenue grew 28%, from $14 billion to $18 billion.

• Offline grew only 3%, from $39.5 billion to 40.6 billion. This was helped significantly by the inclusion of affiliate fees and (and global revenue) at CBS, Viacom, and News Corp.

• Online ad revenue grew by $4 billion.

• Offline ad revenue--in all other media--grew by $1 billion.

So advertising revenue is flowing online at a frantic rate. That's the whole story? No. Let's look at how that online revenue breaks down.

• Online ad revenue grew 28%, or $4 billion.

• Online ad revenue at Google grew 44%, or $2.7 billion.

• Online ad revenue at Yahoo, Microsoft, and AOL grew only 15%, or $1.3 billion.

• Google captured 2X as much revenue as its closest three competitors combined.

The confirms it, Google has got the business model to beat at this point. Because right now Google is sucking the life out of old media and greatly shifting ad spend towards its direction.