HP Tablet Will Be $89 on Black Friday

Reportedly Wal-Mart will be offering the HP Mesquite 7” Tablet for $89 on Black Friday. This is a "3.5 star" tablet but should sell out, given the HP brand and the aggressive price.

There are dozens of sub-$150 and even a surprising number of sub-$100 tablets now available. Most of them are "no name" brands and thus may hold US consumers back. That's why the HP brand matters at this price point.

Many of the low-cost Android-based tablets will be bought by parents for kids this holiday season. But the flood Android tablets, of varying levels of quality, inevitably means that the iPad's market share, with its much higher price points, will decline. That doesn't mean that iPad users won't still generate most of the traffic. Currently the iPad is responsible for more than 80% of US tablet traffic. 

The tablet race in the US is between Apple, Samsung, Google/ASUS and Amazon. A quick search on Amazon for tablets reveals page after page of inexpensive Android tablets

It's not clear right now how these aggressively priced Android tablets will impact the market, beyond bringing more users into the tablet realm (to the likely detriment of PC replacement cycles). But will they cut into iPad sales? Perhaps at the margins. Someone buying the $89 HP tablet is probably not in the market for an iPad Air or Mini, however. Such low-cost Android tablets are more likely to impact other Android OEMs such as Samsung or Kindle (Amazon doesn't classify Kindle Fire as an Android OS device). 

Amazon threw down the pricing gauntlet for tablets when it introduced the original Kindle Fire for $199. Now there's increasing price pressure on 7-inch tablets (other than Apple) to enter the market at $150 or less. If this HP tablet and similarly priced others prove to be successful that $150 price point may become "institutionalized" for 7-inch Android devices.

Profits be damned.

With iBeacon Adoption, Macy's, Apple on Vanguard of Indoor Marketing

Last week ShopKick introduced "shopBeacon," which uses Bluetooth low energy (BLE) indoor positioning technology. The company is testing it with Macy's, which has also independently been using indoor location for some time (mainly leveraging WiFi) to enhance its in-store app experience for customers. (See ShopKick demo video.)

ShopKick's adoption of iBeacon is an important move to insert the company back into the in-store shopping conversation. It had been an early pioneer in mobile loyalty, seeking to help retailers drive consumers into stores. But as indoor location has gained momentum ShopKick has largely been on the sidelines -- until now.

ShopKick has a wide range of brands and national retail partners, including Target, BestBuy, Sports Authority and JCPenneys. The company seeks to serve retailers but also "own the customer relationship." Accordingly there's some tension between working with ShopKick and providing a direct indoor-location experience, as Macy's does through its app.

A less-well-known company seeking to do something very similar for retailers is Swirl. Swirl has both a consumer-facing multi-retailer app but also powers the indoor experience for retailer apps through an SDK. Timberland is the company's best-known partner. ShopKick is now also an indoor-location enabler with its shopBeacon BLE beacons. 

Apple itself is going to implement iBeacon in its own stores. There are a range of obvious and secondary use cases, including providing enhanced product information and notifications about Genius Bar appointments. Beyond an improved in-store experience, Apple hopes to boost sales through iBeacon. The product can also be used to support in-store mobile payments (see, PayPal Beacon).

It's well established that a majority of consumers have used smartphones in store for research purposes and many are interested in indoor/in-store information. However recent research from ISACA suggests that retailers will need to be judicious about how they use in-store notifications and personalization and not become too "pushy" in trying to upsell and cross-sell consumers. 

targeted marketing 1

Another challenge of sorts for retailers with indoor location is the fact that majorities of smartphone shoppers use retailer mobile websites. Indoor-location features are much harder to deliver via websites. Smaller numbers of consumers use retailer apps. This makes sense because apps are typically downloaded and used by a store's most loyal customers, which represent a minority of overall store shoppers. 

According to NPD survey data, 71% of smartphone owners access retail websites but only 57% use apps. Many of those apps fall into disuse shortly after they're downloaded. In addition, the survey found that a majority of smartphone shopping-related research was done at home and not on the go, suggesting "that engagement on their smartphone is more of an alternative for online shopping rather than a showrooming tool."

Accordingly in-store information directed at enhancing the customer experience is a way to make apps more relevant and engaging. But as the ISACA study indicates retailers (or mall and venue owners) will need to develop information, content and indoor experiences for customers that are informational and not merely about trying to sell things. 

This is a complicated arena for retailers and would-be providers of indoor location and marketing. Experimentation and testing are necessary to determine what's going to "work" for consumers, vendors and venue owners. Macy's is very smart and to be applauded for "getting out in front" of the issue and trying things, notwithstanding the potential exposure to "indoor surveillance" criticisms.

Isis Mobile Wallet Launches, Most Americans not Interested

Last week, Isis, the NFC-based mobile wallet initiative from a joint venture of mobile carriers, launched nationwide. It only works on smartphones with an NFC chip, which essentially excludes the iPhone.

While most people expect mobile payments to become mainstream at some point, the outlook for Isis in particular is murky at best, if new survey data from Harris Interactive are reflective of general public opinion. 

Harris Interactive surveyed 2,577 US adults in September about their attitudes toward "mobile payments," generally. Scenarios described in survey questions included Square-like smartphone card swipes and "tap-to-pay" NFC systems. Broadly the firm found that more Americans were exposed to and had used some form of mobile payments vs. previous years.

A majority of respondents said they believe that mobile will replace cash and card payments "within five years." However a substantial minority (34%) believe that NFC systems (tap-to-pay) will never become mainstream. Among those who expressed a lack of interest in mobile payments, a "lack of compelling motivation" was cited as the main reason:

Among those not interested in using a smartphone to process payments, a simple lack of compelling motivation remains one of the top factors impeding interest, with 53% saying they don't see any reason to switch from cash or payment cards. This also holds true for smartphone users where a majority (58%) don't see any reason to switch from cash or payment cards either . . .

Simply put, large numbers of people don't see mobile payments, especially NFC-based approaches, as solving a problem. The people behind Isis are conscious of this and are trying to overcome consumer indifference by offering discounts, coupons and cash-back rewards for using it. For example, Amex is offering a 20% cash back award (up to a maxium of $200 total). 

However before Android (and Windows Phone) owners can start using Isis they'll need to get an enhanced SIM card. Then they need to download and install the app. Then they need to find merchants with NFC-enabled point of sale systems. 

The Harris survey data also reflect that interest in mobile payments in the US has fallen somewhat since last year. Security remains a top concern among a majority of survey respondents: "62% listed the fact that they don't want to store sensitive information on their phone as a reason for lack of interest."

Still the fact that most people believe mobile payments in some form are inevitable means there will eventually be consumer acceptance and adoption. As we've argued before the entry point for mobile payments is not these broad "horizontal" payment platforms but "point solutions" and vertical scenarios featuring a stored payment card (e.g., Uber, Amazon, Starbucks, AirBnB, OpenTable, parking, etc.). 

In such situations the convenience and efficiency of paying with an app are obvious to the end user. Indeed, the missing "compelling motivation" is present. Those vertical payment scenarios or point solutions will be the ones that familiarize people with mobile payments, ultimately paving the way for more horizontal payment systems. 

The question for Isis is whether it can survive until that day comes or whether it will have to change its approach or otherwise broaden its capabilities to attract more users, especially iPhone users. 

Can Apple Make a Bigger Screen iPhone but Preserve One-Hand Control?

One of the maddening things about the cult of iPhone news coverage is that immediately upon the release of this year's product the cycle of rumors and speculation begins about next year's product. So it was and is with the iPhone 5s.

Essentially the day after the iPhone 5s was announced the iPhone 6 rumors began. Part of that was fueled by disappointment about the iPhone 5s' current 4-inch screen and anticipation of a larger-screen in the iPhone 6 (or "Air" as it's now being called). 

Indeed, one feature that most US -- perhaps all -- current and would-be iPhone buyers want from the device is a larger screen -- though longer battery life might be a close second. One of the primary ways that Android handsets have successfully competed with the iPhone is by offering larger and high-resolution displays.

Many iPhone owners now have what might be called "screen envy."

Yet Apple has set a very difficult task for itself. It wants to offer a larger screen on the next iPhone -- speculative reports have asserted that there are 4.7-inch and 5.5-inch models being tested -- but the company still prizes "one-handed control." 

That would seem out of the question for a 5.5-inch device; but it might be possible with a 4.7-inch screen. It's difficult to imagine what a one-handed, 4.7-inche phone would look like.

Might it be even "taller" than the 5s, which lengthened but didn't proportionally widen the screen? Most larger-screen Android models (4.8-inch and above) can't be entirely operated by one hand. But they preserve proportionality, which in my view is lacking in the "tall" 5s.

The largest a smartphone screen can stretch before it becomes a "phablet" is about 5-inches. Apple's next phone needs to reach about 4.7 or 4.8 inches to be competitive; 4.5 won't cut it. And despite rumors of curved displays it's not clear how Apple is elegantly going to attain that objective and still make one handed control possible. 

Moto G Set to Shake Up the Smartphone Market with Rock-Bottom Pricing

Android is the world's dominant mobile operating system. In Q3 IDC estimated that Android represented 81% of all smartphone shipments globally.

Android's lead may further expand if the forthcoming Moto G smartphone from Google is as successful as I suspect it will be. The phone carries fairly strong specs, including a long battery life and 4.5-inch display. But it's the price that will drive sales volume.

Pre-empting Amazong and poking a finger in Samsung's eye, the unlocked phone will cost $179 (8GB) or $199 (16GB). Google must be planning to sell the phone at cost or even at a loss. We'll find out when the iFixit people get a look. 

 comscore Sept smartphone share

Motorola has continued to lose market share over the past few years. The Moto X was the first phone designed by Motorola after Google's $12.5 billion acquisition of the company. However its sales have been lackluster. Absent some major flaw the Moto G looks like it could be an antidote for Motorola's brand and sales woes.

Moto G's low low pricing also puts pressure on Amazon (as well as everyone else). The latter had been rumored to be building a low-cost Android handset. But it will be challenging for Amazon to match Moto G's price and apparent quality without losing money. 

The fact that Moto G is unlocked and so inexpensive could change the broader dynamics of the market -- motivating more people to buy pre-paid carrier plans and get away from contracts (which is a broader trend anyway).

Apple is unlikely to try and answer the handset's pricing but other Android OEMs may be forced to. That's potentially bad news for Samsung and especially bad news for HTC, which is under tremendous pressure and may be forced to sell itself (or into bankruptcy) eventually.  

Mobile Impacting Retail Design -- Just Don't Forget Indoor Location Data

A provocative article in Mobile Marketer this morning discusses how the aesthetics and layout of retail spaces are changing to accommodate the mobile shopper. Here's a representative excerpt:

AT&T recently unveiled a new store format intended to reflect customers’ mobile lifestyle where café-style learning tables replace cash registers.

The store layout highlights products and services in three different thematic areas. In the Connected Experience, shoppers can see how solutions can be used in their everyday lives. The Community Zone features an open and interactive space where customers can test products. In the Explore Zone, there are digital monitors to highlight AT&T’s lineup.

This sort of "customer experience" was largely inspired by or modeled on Apple retail stores -- especially the replacement of cash registers with free-roving sales associates. However beyond improving the "flow" and "engagement" of retail spaces there are other considerations to be factored in. 

The article doesn't at all discuss how data gathered from indoor analytics can help retailers do a better job with layout and usability of their stores. Indoor location data and usage patterns should be included in the "aesthetics" and layout discussions because they will lend empirical grounding to what is otherwise a relatively speculative discussion.

How do consumer actually behave in stores? How are they interacting with displays? These sorts of data are readily available and can inform the broader debate about how to reconfigure retail environments.

Another interesting angle here is how mobile payments will be affected by retail store redesign. My belief is that low-skilled and poorly paid store (and QSR) cashiers will be increasingly replaced by mobile payments and self-checkout kiosks.

Loyal store customers will increasingly have a mobile app with stored credit card information. That scenario will become increasingly prevalent in stores. For those customers without a retail/payment app, Apple-style mobile in-store checkout will prevail.  

Apple Makes Incremental US Share Gains Against Android

Earlier this afternoon comScore reported its September US smartphone market share numbers. Nielsen has said that 64% of US adults now carry smartphones; however comScore asserts the number is 62%.

Android continues to be the dominant operating system, followed by the iPhone. However Android lost some ground this month though Samsung gained share. All the other Android OEMs are basically a diminishing sideshow to Samsung. 

 comscore Sept smartphone share

Microsoft also saw a small bump for Windows Phones. It has had considerable success in Europe because of the continuing strength of the Nokia brand but little success to date in the US market. Perhaps that will improve as BlackBerry users are forced to change platforms as they upgrade.   

The numbers above probably still do not reflect sales of the iPhone 5s and 5c, which went on sale on September 20 in the US. The October figures should better reflect the iPhone 5s/c impact on the market. 

comscore Sept smartphone share

Perhaps most interesting is the data about leading mobile apps and web properties. Overall Google has the greatest mobile reach, although Facebook continues to have the single most popular app. This is very analogous to the iPhone and Android, where Facebook is like the iPhone in this example.

Google Maps saw some unexpected loss of usage and reach vs. last month, dropping from the fifth most popular app to eighth position.  

. top mobile properties September 2013

Google Updates iOS Apps with Hands-Free Voice Search

Google updated its iOS search app today for both the iPhone and iPad. The new app brings some additional functionality to Google Now, which is embedded within the app: 

  • Notifications (appear on home screen)
  • Reminders
  • New Google Now cards

The update also enables hands-free voice searching through the trigger/wake-up word "OK Google." This capability started on Google Glass and has migrated onto Android handsets such as the Motorola Moto X and LG Nexus 5. It's now available to iPhone 4S and above users. 

New Google Now cards include:

  • Tickets for movies, concerts and events
  • Airline boarding passes
  • Reservation confirmations for car rentals
  • Transit information
  • Local event listings

The combination of voice search and Google Now has turned "Google Search" into the "Google Assistant," without being rebranded as such. The combined Google capabilities rival Siri and arguably exceed it in some respects.

On iOS hands-free voice searching (OK Google) isn't as readily available as on Android. Users must first launch or open the Google Search app, which can be done with Siri, ironically. Then the hands-free searching can be initiated. That sort of defeats the point. On Android handsets voice search is immediately available on the home page. 

While probably no single feature launched today will generate massively more Google searches from iOS devices, collectively they may bring more user engagement. 

The new hands free search capability may have the biggest impact on the iPad. While users could perviously perform voice queries from Google's iPad app in the past, this new purely speech activated feature may generate more searches for Google from Apple's tablets -- which drive about 80% of all US tablet traffic.  

Google, Facebook, Twitter and Pandora Combine for 90% of Mobile Ad Revenue

Google is the world's largest mobile advertising company. However after Google there are only a few big players on a US or global basis. Google doesn't disclose mobile revenues as a separate line item.

According to the IAB, US mobile ad revenues in the first half of 2013 were roughly $3 billion. That means we can probably expect between $6.5 and $6.8 billion for the full year 2013. 

Online just 10 companies accounted for 70% of total online ad revenue in Q2 2013. In mobile, ad revenues are even more concentrated in a smaller group of companies. 

IAB IH numbers

Google's mobile revenues are probably, conservatively, in the range of 15% of its total ad revenue, which will come in around $49 or $50 billion globally for the full year. Let's also assume that roughly 50% of Google's mobile revenue comes from the US market. That would all mean Google would have about $3.6 billion in US mobile ad revenue this year. It could be more, however. 

Facebook, Twitter and Pandora all report the portion of their advertising revenue that is generated from mobile devices. Facebook has by far the most mobile ad revenue of the group, which is likely to come in a little over $3 billion for the year. Twitter has said that 70% of its revenue is coming from mobile -- and most of that is from the US market. 

The mobile component of total ad revenue for Facebook, Twitter and Pandora collectively will be roughly $4 billion for calendar 2013. It's not clear what percentage of Facebook's mobile ad revenue is from the US; however it's likely to be a substantial portion at this stage. 

Accordingly, putting together my estimates for US mobile ad revenues from Google, Facebook, Twitter and Pandora takes us to about 90% of projected US mobile ad revenue for the year. Ad networks such as YP, Millennial and a couple of others fill in the rest. 

To Succeed Surface Pro Must Become True Laptop Replacement

Microsoft will reportedly spend north of $400 million this holiday season on marketing in the hope of selling 16 million Surface tablets. It will likely have trouble because the Surface Pro tablet is neither a true PC replacement nor does it offer as good a tablet experience as the iPad

Surface Pro 2 also starts at $899, making it considerably more expensive than the entry level iPads and even many Windows PCs. The argument in favor of Surface Pro is that it has Office and offers greater productivity than the iPad. However it's not clear that consumers are seeking a unified device for all their computing needs. 

According to data from app marketing platform Fiksu, the iPad Air had a powerhouse opening weekend. The device "is seeing five times the usage the iPad 4 did two days after launch - and more than 3 times that of the iPad mini," explains Fiksu.

iPad Air launch

Stellar reviews and early momentum indicate the iPad Air may have a very good Q4. The new iPad Mini "Retina" launches later this month, which could either divert some iPad Air sales or simply generate more tablet "shelf space" for Apple. That would be potentially bad news for Microsoft, which is competing directly with the iPad.

On the Android side in the US market it's really Kindle vs. Nexus 7 (Samsung has more of a presence in Europe). Between the two Kindle has the stronger brand and greater distribution through Amazon. But the Nexus 7 is probably the better device overall. In the 9 - 10 inch category the Air really doesn't have any competition from an Android tablet. 

In order to see more than token sales, Microsoft will have to truly make the Surface Pro (RT is RIP) a laptop replacement, with a longer battery life and better typing experience. Surface Pro 2 is not that device; so we'll need to wait for Surface Pro 3. That won't be out until next year -- if then.

That means Microsoft, no matter how much it spends on marketing for the holidays, is unlikely to meet its ambitious sales goals for Surface. That is, unless it starts cutting prices very aggressively, with a capital "V."