iPhone shines a light on the battle for the second market: Red Sox, Yankees, and the Cask ‘n Flagon – watch it!
Before I left work for the ballgame yesterday afternoon, I read an article about the July 11 release of the new iPhone. The reviewer was impressed with Apple’s hardware improvements, such as the move to 3G technology, but was more impressed with the fact that Apple has opened its doors wide to applications developers. This got me thinking about what I call “second markets.”
As we left Fenway Park after the game (a victory march, following the Sox clubbing of Minnesota, 18-5), a sign outside the Cask ‘n Flagon, a bar located immediately outside the ballpark, caught my attention. It read, “Ranked #2 Baseball Bar in the Nation by ESPN.”
The signed begged the question: Who is number one? So I asked one of the bar’s employee’s, sitting outside. “The Mickey Mantle’s Restaurant in New York City,” he answered grudgingly. It was a typo, he chuckled.
Here I am, living in Boston, a city with one of the world’s great sports rivalries always on people’s minds: Yankees v. Red Sox. In business terms, this is the primary market, the first market; these teams are giants in the sports world (the baseball world, anyway).
The Cask ‘n Flagon and Mickey Mantle’s Restaurant are duking it out in a parallel arena. Their fame is secondary. Their fight for market attention (The Cask ‘n Flagon may host as many as 5,000 patrons on game day) very much rests on fan interest in the teams themselves. If baseball succeeds, so might they. Should interest in the sport wane, these restaurants likely will suffer a similar decline.
After the short conversation with the Cask’s staffer, my thoughts wandered back to the cell phone arena. As in sports, leaders shape a “first market.” The first market leaders in phones include Apple and its iPhone, Nokia (the leader in number of handsets sold), Samsung, LG, and others.
At the same time, there are scores of companies in a second market. These are primarily the software developers, those that create the platforms and applications that make the phones powerful tools, taking them way beyond the dumb, wired phones of our past.
We do lots of research for and on companies in second markets. While these entities may remain hidden in the long shadows cast by the market creators (the first market players), they are potent forces themselves. Second market players in the pharmaceutical business may be billion-dollar companies. The same argument applies to technology companies. EMC is thought of as a leader in storage, often considered secondary to computing leaders, such as IBM. Nevertheless, EMC commands sales of over $13 billion. Storage, a second market, has mushroomed with companies such as EMC overtaking many of these first market leaders.
Stephen Jobs has encouraged developers to create applications for his phone with over 500 applications soon to be available. Microsoft claims over 18,000 applications written for its Windows Mobile operating system. Palm claims it has 30,000 developers writing applications for its phone platforms.
These applications range from the serious, to the convenient, to the frivolous. Ways to use your phone as a GPS device, ways to increase your productivity on Ebay, and ways to receive your favorite baseball teams scores.
Microsoft’s Mobile Windows platform and Apple’s iPhone have spawned another second market of mobile platform applications, a market with fierce competition. Watch this second market. Giants may emerge.
