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Tablets Make PC Industry Look Healthier than It Actually Is

For some time smartphones have been outselling PCs. And last week hardware tracking firm Canalys confirmed this was the case for the full year 2011. 

The firm includes tablets -- it calls them "pads" -- in PC shipments. If it had not done so the numbers would look worse for the PC industry. Overall, there were 488 million smartphones "shipped" (a metric I think has dubious value) vs. 415 million PCs. However 63 million of those are "pads." 

Deducting pads from the PC shipments, the number is reduced to 352 million for the year. What that means is that approximately 136 million more smartphones shipped than PCs. The discrepancy gets even larger (200 million) we include "pads" in a broader "mobile devices" category:

• Mobile devices (smartphones + tablets): 551 million
• PCs (desktop, laptop, netbook): 352 million

Below are the Q4 and full year 2011 smartphone shipments figures. 

I'm in favor of eliminating the "shipped" metric, which is not necessarily representative of consumer purchases or devices actually in market. However the larger point here is merely to call out the growing gap between "mobile devices," broadly defined, and more traditional PCs. 

Survey Shows Amazon Kindle Fire Subsidy Paying Off in Sales

According to various analyses of Kindle Fire hardware production costs, Amazon is actually subsidizing the cost and taking a small loss on the sale of each device. This was undoubtedly a contributor to Amazon's "disappointing" Q4. The company said it sold millions of Kindle devices without providing any concrete figures.

However the company's strategy has been to use Kindle as a platform or tool to sell other content: e-books, video, music and apps. These are high margin products for Amazon. 

A new survey (including 254 Kindle Fire owners) from ChangeWave argues that the company's Kindle Fire strategy is already paying off. Kindle Fire owners reported that they'll be spending more through Amazon in the next quarter than non-Kindle owners: 

The relatively low cost of the device ($199) was shown to be the biggest driver of sales and the most "liked" feature of the product: 

The chief "dislikes" were: no hardware volume button and no camera. The short battery life was also a complaint. Generally speaking, however, Kindle Fire users seem to be quite satisfied -- though not as satisfied as iPad owners.

Google has vowed to "fight" Kindle Fire and its bid to control the Android tablet market with its own "higest quality" tablet, which may be even more aggressively priced than Kindle. 

Related stories: 

• Samsung Being Marginalized by Amazon in Android Tabletland
• Kindle Fire: A Template That Will Burn Google? 
• Kindle Fire Won't Kill the iPad, but It May Kill Other Android Tablets
• Amazon Might Own Android Tablet Market

Jumptap: Android and iOS Clicks Going in Opposite Directions

Jumptap just released its January 2012 mobile metrics report. There are a number of interesting things in the document. Among them, Jumptap saw a meaningful decline in iOS share of traffic over the course of 2011. This is consistent with what others have reported.

In general Android now has a little less than twice the market share of the iPhone in the US. However, December data show an surge in iPhone growth because of the 4S. 

ComScore released the following market share data for smartphones in Q4. Android grew 2.5%, which was nearly matched by the iPhone on a percentage basis.

Here's previously released Nielsen data regarding smartphone share among recent US buyers. 

Another very interesting datapoint from Jumptap is the relative CTR rates of ads on Android and iOS devices. According to Jumptap, with successive versions of the OS, CTRs have gone in opposite directions for iOS and Android. Jumptap had no good explanation for the trend. 

Jumptap also presented a chart showing the relative usage of apps and the mobile web. In December they saw roughly equal shares of usage: 

• Apps: 50.7%
• Mobile Web: 49.3%

Compare comScore apps vs. mobile web share for December, 2011 (comparable in share):

• Apps: 47.6.%
• Mobile Web: 47.5%

Finally Jumptap offered some tablet traffic comparisons on its network as of December 31, 2011:

• iPad: 44%
• Kindle Fire: 30%
• Other: 26%

What this would suggest is that non-iPad tablets have a majority share of traffic (56% to 44%) in the US. This probably calls into question whether Jumptap's network is representative of the US mobile market as a whole.

Quantcast's Mobile Site Rankings Not Credible

I was unaware that Quantcast offered a ranking of top US mobile sites as well as PC sites until today. The metrics firm's PC site rankings are credible and generally consistent with other, similar rankings from comScore, Hitwise and Nielsen.

However the mobile site rankings seem completely incorrect to me. I just don't buy them.

First, here's the list of Quantcast's top PC sites: Google, Facebook, YouTube, Yahoo, etc.

Below are the company's mobile rankings. Clearly Answers.com is not the top mobile website in the US. Where are Google, Facebook, YouTube, Yahoo or Wikipedia? These are top mobile sites in the US and globally according to Nielsen and Opera. 

Payments: T-Mobile Boosts Square, Apple Preps for NFC with iPhone 5 (Probably)

Square continues to forge ahead in its remarkably successful run up to either a multi-billion dollar acquisition or IPO. Today, T-Mobile announced that Square credit card readers will be available for SMB customers in select stores in the US. It's the first wireless carrier to offer the mobile payments system to small business customers: 

Today, T-Mobile USA, Inc. reiterated its commitment to small business as the first wireless carrier to offer Square credit card readers from San Francisco-based Square, Inc. in select retail stores. When T-Mobile’s fastest 4G smartphones running on America’s Largest 4G Network are combined with Square, small businesses can accept credit card payments in the U.S. nearly anywhere, anytime, with the money from transactions sent for deposit into their bank accounts the next business day. This easy-to-use solution, paired with T-Mobile’s affordable small business plans, aggregated business applications, equipment financing and trade-in services, and in-store support, allows small businesses to maximize their wireless investment and transform their business.

Square has several competitors using a similar smartphone-plug-in credit card reader for small businesses, including Intuit and the newly launched Payfirma. PayPal also targets the SMB market but doesn't offer a comparable smartphone or iPad card reader. 

Meanwhile MasterCard's Ed McLaughlin may have spilled the beans on Apple's potentially impending move into payments. The next iPhone is widely expected to support NFC and an eWallet. Nokia, RIM and selected Android phones currently support NFC. Google Wallet has so far seen limited adoption because it's only available on one phone through one carrier in the US.

In an interview with Fast Company magazine McLaughlin said the following:

I don't know of a handset manufacturer that isn't in process of making sure their stuff is PayPass ready."

So that would include Apple then?

"Um, there are...like I say, [I don't know of] any handset maker out there," McLaughlin says. "Now, when we have discussions with our partners, and they ask us not to disclose them, we don't."

Apple has millions of credit card accounts on file. Every iTunes user must provide a credit card when an Apple mobile device is activated. That means effectively that in excess of 300 million people around the world have given Apple their credit card numbers, forming the basis for a payments program. Apple said on its last earnings call that there are now 315 million iOS devices in market, with 62 million sold in the last quarter alone. 

Previously Retrevo found that Apple was more trusted than credit card issuers to provide a mobile payments solution. 

Source: Retrevo (Q4 2011)

Other surveys have argued that 2012 will be a "breakthrough year" for mobile payments and NFC. I think 2012 will see an acceleration but not yet a consumer breakthrough. 

See related: Obama and Romney Campaigns Adopt Square for Funding

Carrier IQ Scandal Results in 'Mobile Device Privacy Act'

US Representative Edward Markey has released a draft of the new "Mobile Device Privacy Act." The proposed legislation emerged in the wake of the Carrier IQ scandal in which data from mobile handsets were being transmitted to mobile operators without users' knowledge or consent.

The MDPA would require disclosure of any device monitoring by carriers, OEMs or app developers. It would also require the information collected to be identified and consumer consent to be obtained. According to a missive put out by Markey's office:

[The Mobile Device Privacy Act] would require companies to disclose to consumers the capability to monitor telephone usage, as well as require express consent of the consumer prior to monitoring. News broke last month that Carrier IQ software installed on millions of smart phones and mobile devices can track every keystroke of users and send the information back to the software company without user knowledge or permission.

Here are the rules, requirements and enforcement provisions contained in the act in broad strokes:

• Disclosure of mobile telephone monitoring software, including when a consumer buys a mobile phone; after sale, if the carrier, manufacturer, or operating system later installs monitoring software; and if a consumer downloads an app and that app contains monitoring software.
• Disclosure to include the fact that the monitoring software has been installed on the phone, the types of information that are collected, the identity of the third party to which the information is transmitted, and how such information will be used.
• Consumer consent be obtained before monitoring software begins collecting and transmitting information.
• Third party receiving the personal information must have policies in place to secure the information.
• Agreements on transmission to third parties must be filed at the Federal Trade Commission (FTC) and Federal Communications Commission (FCC).
• Outline an enforcement regime for the FTC and FCC, along with State Attorney General enforcement and a private right of action. 

Carriers and others in the industry are likely to cry foul over "new government regulation." However, almost without exception -- Verizon claimed it never used the monitoring software -- US carriers and OEMs used Carrier IQ on their handsets without making any disclosures to consumers.

As with GPS-based tracking and monitoring the law is struggling to keep up with the pace of technology and cultural change in its wake. 

Samsung Being Marginalized by Amazon in Android Tabletland

Confirming what we've seen from a number of data sources in the past several weeks, Flurry Analytics shows how Kindle Fire has become the leading Android tablet in the space of about a month or so. Samsung has vowed to fight back with new devices, but Kindle's Success is about low pricing, content and the strength of the Amazon brand.

Samsung is outmatched when it comes to content and brand strength (at least with US consumers). It also probably can't match Amazon's loss-leader pricing. 

Flurry had this to say about the chart below:

On the left, in November, we see that Samsung Galaxy Tab dominated application session usage on Android, with the Kindle Fire only having recently launched. At that time, the Samsung Galaxy Time was widely considered the only viable competition to the iPad, though a distant second.  In January, after the holiday boom in devices and in apps, we see that strong adoption of Kindle Fire, combined with significant downloads driven from the Amazon App Store, resulted in a massive surge in session usage that just edges out the Galaxy Tab. 

In some ways the Kindle Fire is less an Android tablet than it is an enhanced Kindle eReading device.

Sales estimates of the Kindle Fire, for Q4, now range from under 4 million to 6 million. 

Related posts: 

• Nokia Sells a Million Windows Phones, AT&T's 7.6 Million iPhones and Fake Android Tablet Numbers
• Kindle Fire: A Template That Will Burn Google? 
• Millennial Seeing 'Hundreds of Millions' of Kindle Fire Ad Impressions
• Why Kindle Fire Will Do Well: Price, Brand
• Kindle Fire Won't Kill the iPad, but It May Kill Other Android Tablets
• Amazon Might Own Android Tablet Market

Pew: 64% of In-Store Smartphone Users Decided Not to Buy Right There

Pew is out this morning with some new survey data on smartphones and shopping. The top-level data, from a survey conducted during the holiday shopping window, are nothing new. They reflect the way in which smartphone owners are using their handsets as shopping assistants. The Pew numbers are low vs. other studies that have been done: 

• 38% of cell owners used their phone to call a friend while they were in a store for advice about a purchase they were considering making
• 24% of cell owners used their phone to look up reviews of a product online while they were in a store
• 25% of adult cell owners used their phones to look up the price of a product online while they were in a store, to see if they could get a better price somewhere else

According to Pew, "33% used their phone specifically for online information while inside a physical store—either product reviews or pricing information."

Again, there's nothing new here. Data released by Google, InsightExpress and many others have shown that consumers use smartphones for product and price research in stores. In 2011 Google released survey based data that said the following:

• 79% of smartphone consumers use their phones to help with shopping (price comparisons, product reviews, locating stores)
• 70% of consumers use smartphones in a store

In 2010, InsightExpress found that 82% of smartphone consumers were using their phones in stores. 

However the part of the Pew report that's very interesting and relatively new is what happened after the smartphone/Internet was consulted:

• 37% decided to not purchase the product at all
• 35% purchased the product at that store
• 19% purchased the product online
• 8% purchased the product at another store

What this means, effectively, is that 64% of in-store smartphone users decided not to buy on the spot -- probably because of some piece of information they accessed then and there (price, reviews, etc.). 

Pew further explained that "5% of all cell owners who purchased a product online this holiday season [did so] after looking up its price online from a physical store." This practice, now known in the industry as "showrooming," is of increasing concern to traditional retailers, who are trying to combat it with various strategies.

But the big picture is that most of the people in this study took some other action after the in-store lookup: left the store, bought from another store, bought online, didn't buy at all. What we don't know is what they would have done absent the smartphone information.