Pew: 137 Million Mobile Internet Users

Today 91% of American adults own mobile phones according to new data from The Pew Research Center. More than 61% (64% per Nielsen) own smartphones. In this latest survey Pew takes a look at common activities on mobile devices (including non-smartphones).

Pew found that 81% of mobile phone owners text, the most common activity, while 60% access the internet. Just under half (49%) use maps or access location-based information on their handsets. All these percentages are higher if non-smartphones are excluded. 

There are approximately 250 million US adults today. If 91% own mobile phones that means about 228 million adults in real numbers. Of that group about 146 million own smartphones (per Nielsen's 64%). If kids and teens are added in we easily have in excess of 150 million smartphones in the US market. 

If 60% of adult mobile phone owners in the US access the internet that would be roughly 137 million people (not counting teens and kids).  

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Among the 60% going online from their mobile handsets (not including tablets) Pew says the following: 

African-Americans and Hispanics are more likely to do so than whites. Younger adults, those with at least some college education, and those with an annual household income of over $75,000 a year are particularly likely to access the internet via cell phone. Those who live in rural areas are less likely than urban or suburbanites to have mobile internet access. Among those who use the internet or email on their phones, more than a third (34%) say that they mostly access the internet from their phone. 

A recent Nielsen study found that 46% of US survey respondents relied exclusively on smartphones or tablets in conducting online research across a range of categories (i.e., retail, banking, gas and convenience). That same study found that, in the banking category, more than 50% of smartphone and tablet users did not use a PC to make purchase decisions (e.g., about credit cards).

What we're thus seeing is the emergence of a "mobile first" population in the US, which may be 50 million people on the low end and 75 million on the high end. 

Nielsen: Smartphones Now 64% in US Market

The first wave of iPhone 5S reviews have come out and they're essentially raves, exemplified by Walt Mossberg's superlative laden missive: “[T]he new iPhone 5s is a delight. Its hardware and software make it the best smartphone on the market.”

While there is some question about the early success of iPhone 5C pre-orders, the 5S is almost a sure sellout when it's released this weekend. According to a survey by Opus Research, the 5S is the most desired "next smartphone" available in the US market, while the 5C is in fourth place (after Galaxy and other Android devices). 

However according to new data from Nielsen, 61% of recent smartphone buyers chose Android devices vs. 34% who bought iPhones. We'll see how those numbers are impacted, if at all, by the launch of the 5S.

Overall Nielsen says that in the US 64% of mobile subscribers are now owners of smartphones. Those in the 25 - 34 age group have the highest smartphone penetration at 81%, with teens 13 -17 closing in at 70%. Feature phones are now concentrated among those over 55 years of age. 

Below is the current smartphone OS market-share distribution according to Nielsen:  


Google Wallet Moves Beyond NFC in Bid for More Consumer Adoption

As I wrote last week the advent of iBeacon and bluetooth low energy may effectively mean that NFC as an in-store mobile payments standard in the US market is dead. Google Wallet had placed a big bet on NFC payments but has been thwarted in its bid for adoption by two principal factors:

  1. The public doesn't understand or care about NFC and the NFC infrastructure is still piecemeal
  2. The major carriers other than Sprint blocked Google Wallet because they have a competing NFC intiative (this anti-competitive behavior was never investigated by the FTC)

Google Wallet 1.0 thus was a failure. Google is now out with a new Android version (and soon iOS) is making a renewed bid for consumer adoption with a range of new features and a partial move away from NFC. In-store payments still depend on NFC and so won't be happening at scale any time soon for the same reasons cited above.

However the new features add utility and breadth to the user experience. Here's what's new:  

  • Google has added the ability to send money via email from Wallet (following the ability to use Gmail to send money with Google Wallet). This is a great feature. 
  • The ability to enter/scan loyalty cards into Google Wallet. ("Google Now will notify you when you have a saved loyalty program nearby.")
  • Save and later redeem Google Offers via Wallet (showing the phone at checkout to redeem).

Exactly a year ago we surveyed 1,501 US adults and found the vast majority were not interested in the idea of mobile wallets: 71% said "I'm not at all interested . . . in using [my] mobile phone to pay for things and replace cash or credit cards." Another 15% said they had only "limited interest." Only 14% had some interest or significant interest. 

In specific contexts, where consumers see the tangible benefits of mobile wallets, these numbers change. But in the abstract the public remains largely uninterested in mobile wallets.  

Charting the Rise of the 'Mobile-First' Audience

This morning the Pew Research Center released new survey data about mobile internet access. According to the findings, 93% of smartphone owners (and 63% of all mobile phone owners) go online with their handsets. Tablet usage was not part of this survey.

The most interesting finding, however, was that 34% of all those who go online with their phones do "most" of their internet browsing via mobile:

One third (34%) of cell internet users say that they mostly use their cell phone rather than some other device such as a desktop or laptop computer . . . Half (53%) of cell internet users say that they mostly go online from a device other than their cell phone, while 11% say that they use both their phone and some other device(s) equally.

Pew told me in email this number was basically the same percentage for smartphone and non-smartphone users.

Those who are "mostly mobile" include "young adults, non-whites, the less educated, and the less affluent." This is highly analogous to those who have a mobile phone but not a landine (or who essentially don't use a landline).  

Nielsen's recent Mobile Path to Purchase study (sponsored by xAd, Telmetrics) found that in certain categories the "mostly mobile" or "mobile only" internet population was nearly 50 percent (or above 50% in the case of online banking). Indeed, in specific segments or verticals (e.g., Local) the numbers may exceed 50%. For example:

  • 59% of searches on Yelp are from mobile devices
  • 50% of search on YP’s network is from mobile devices
  • As of Q4 2012 Google Maps had more mobile than PC users
  • Nearly 50% of Groupon transactions in June (for North America) came from mobile 
  • More than 50% of search traffic on Zillow is from mobile devices

What we're witnessing is the rise of an audience that may not use the PC at all in certain cases or use it purely as a secondary matter. As a counterpoint, see the recent comScore-Jumptap data that show people prefer larger screens in many instances.

Once more sites and internet experiences are better optimized for mobile devices, however, we may see an accelaration of this mobile-first/mobile-only trend. 

McDonald's Could Accelerate Mobile Payments Adoption

Last week news broke than McDonald's is considering rolling out mobile payments. Currently the McDonald's app is primarily a store locator. The app also offers nutrition information.

According to a Bloomberg report, the company has been testing mobile payments in Salt Lake City, Utah and in Austin, Texas. McDonald's has roughly 14,000 US stores and 35,000 globally. 

Mobile payments would allow McDonald's patrons to pre-order meals online and then pick them up at the drive-thru window. Other fast-food chains have tested, are testing or now using mobile ordering/payments. The McDonald's app will also feature deals and rewards according to Bloomberg.

A mobile ordering/payments capability may also help McDonald's attract younger users and Millennials, who are less inclined than others to visit the QSR chain. According to an AdAge write-up of an NPD Group survey

Millennials are indeed going to burger chains, but they are going less often. The hamburger category, which includes McDonald's, Wendy's and Burger King, still receives 29% of all millennials' quick-service visits, according to NPD, more than any other restaurant category. Fast casual, which includes chains like Chipotle, gets 6% of millennial quick-service traffic.

But hamburger chains have seen a 16% decline in traffic from Millennials since 2007, NPD said. In the year ended November 2012, Millennials made 3.6 billion visits to hamburger chains, down from 4.2 billion visits in the year ended November 2007. There was a 12% decline in quick-service restaurant visits by Millennials in the same time period.

Ultimately all QSR chains will offer mobile ordering/payments. And that will help acclimate a generation to using their smartphones as wallets to pay for things. 

Once people are familiar and comfortable with mobile payments in a specific context (e.g., ordering food) they will be more inclined to embrace them in other scenarios.

Time Spent Online: Mobile 51%, PC 49%

Jumptap (now part of Millennial Media) and comScore released a report last week on cross-platform device usage. The report contains considerable data about smartphone and tablet penetration, day parting and device usage by content category and demographic group.

Much of the data is from comScore and has already been released in other contexts. However there were a number of interesting data points in the report worth revisiting, including the fact that combined smartphone and tablet time online now exceeds time online with PCs.

As a general matter smartphones and tablets have increased overall time spent online rather than simply cannibalizing PC time, though there has been some of that (e.g., maps, local). 

Another interesting set of data in the document explore device share of online minutes by content category or vertical. The PC is dominant (more than 50% of time spent) in a little more than half the categories examined.

PC usage is highest in the automotive segment and lowest in "radio" (think Pandora). Retail sees slightly more mobile than PC time. 

The numbers above are aggregate data. Demographic segments are going to display different device behaviors. For example, those in the US under 30 are likely to be more involved and spend more time with smartphones than those over 50. That pattern has been repeatedly shown in our surveys and other third party data, including this report.

Below are the demographic groups profiled in the report:

Age 18 - 24: 

  • 69% own a Smartphone
  • 65% of digital users are cross-platform
  • 59% of time with digital is mobile

Women 25 - 49:

  • 69% are cross-platform
  • 67% own a Smartphone
  • 14% Mobile only (vs. 17% PC only)
  • Spend 63 hours monthly on Smartphone
  • 75% of time on social media is on Mobile

Men 25 - 49:

  • 74% of digital users are cross-platform
  • 62% own a Smartphone
  • 45% of time with digital is Mobile

Age 50+:

  • 39% own a Smartphone
  • 51% are cross-platform
  • Represent 31% of Tablet owners (only 25% of Smartphone owners)

There's quite a bit more data in the report, which can be downloaded for free.

As a broad takeaway marketers can now assume almost everyone above a certain income threshold is "cross platform." The minority are "smartphone only" or "PC only" (select younger and older users respectively).

Marketers can also reliably make the assumption that those under 45 are going to favor smartphones vs. PCs as primary devices in a wide range of categories. However people are also rational and prefer larger screens in many contexts (at least until mobile user experiences are improved).

By comparison tablet behaviors are still being established. However the tablet is typically used as a PC substitute (provided a larger screen) in the home.

Microsoft Bought Nokia to Block Android Lumia Phones

Nokia's Lumia handsets represent about 80% of Windows Phone's sales. However Nokia was continuing to lose share to Android and iPhone in key markets across the globe. By the same token Windows Phones had failed to enable Nokia to re-enter the US smartphone market in any convincing way. 

Since the inception of the Microsoft-Nokia deal in early 2011, we had been arguing it was a serious mistake for Nokia to not offer an Android phone. However the terms of the agreement between the companies precluded that. In 2014 the deal was set to expire. But before that deal was renegotiated, Microsoft acquired Nokia's phone hardware business for roughly $7.2 billion.  

In the middle of last year we speculated that Microsoft might be compelled to acquire Nokia for defensive reasons. When the acquisition was announced a little over a week ago, I argued had Nokia embraced Android it would not have been so weakened and forced to sell itself. I also speculated this summer that Nokia would be compelled to come out with Android handsets if it wanted to survive:

My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral.

Now the NY Times is reporting that Android Lumia phones were in development: 

A team within Nokia had Android up and running on the company’s Lumia handsets well before Microsoft and Nokia began negotiating Microsoft’s $7.2 billion acquisition of Nokia’s mobile phone and services business, according to two people briefed on the effort who declined to be identified because the project was confidential. Microsoft executives were aware of the existence of the project, these people said.

There are two overlapping potential scenarios: Nokia was developing Android handsets in part to add leverage in negotiations with Microsoft (for renewal or acquisition); and/or Nokia was developing Android handsets in earnest and would have rolled them out -- forcing Microsoft to avoid that outcome through an acquisition.

Regardless it appears that the idea of Nokia marketing both Android and Windows Phones was a potential disaster that Microsoft sought to avoid at great cost -- literally. As I've written elsehwere, however, it remains unclear that Microsoft's $7.2 billion have been well spent.

Microsoft Readies Its Answer to Siri: 'Cortana'

Microsoft is reportedly readying its answer to Siri and Google Now: Cortana. Named after a central character in the game Halo, Cortana aims to go beyond both Siri and Google Now by being a more comprehensive way to interact with Microsoft devices.

According to Microsoft watcher Mary Jo Foley:

Cortana, Microsoft's assistant technology, likewise will be able to learn and adapt, relying on machine-learning technology and the "Satori" knowledge repository powering Bing.

Cortana will be more than just an app that lets users interact with their phones more naturally using voice commands. Cortana is core to the makeover of the entire "shell" -- the core services and experience -- of the future versions of Windows Phone, Windows and the Xbox One operating systems, from what I've heard from my contacts.

A comprehensive personal assistant powered by AI across all Microsoft systems and devices is a very ambitious plan. It remains to be seen whether Microsoft can do it. 

Yet in order to not be perceived as more than a me-too product Microsoft will have to roll out something truly impressive and more utilitarian than Siri or Google's mix of voice-enabled search and personalized data features.  

Update: TheVerge offers a series of relatively bland Cortana screenshots.  

Apple Shunned NFC, Has Anointed BLE for Indoor Location

I wrote several days ago on my Screenwerk blog about PayPal's new Beacon payments and indoor location initiative. I explained that Apple's decision not to include an NFC chip in the new iPhone means essentially that NFC is marginalized if not dead in the US market. In its place Bluetooth Low Energy (BLE) may become the mainstream alternative to what NFC would have enabled (e.g., mobile payments).

PayPal Beacon relies on BLE. At those businesses where a Beacon device is plugged in PayPal users simply check-in. Beacon identifies them and payment is automatically transferred from the default account. Payment happens “hands free” without a tap, swipe or other app interaction. 

Beacon is also PayPal’s entry into indoor location. PayPal will obviously know you’re in a venue and then can do any number of things, including delivering highly specific, indoor marketing messages or ads. PayPal is also making Beacon available to third party developers, who will be able to do similar things accordingly.

Apple's iOS 7, which will be available on September 18 (to older iPhones as well), will permit all eqipped devices to interact with BLE iBeacons in malls, airports, stores and other venues. 

Apple acquired indoor mapping company WiFiSlam earlier this year. That was the "wake up call" for many people to take indoor location seriously. One of the first and obvious applications of iBeacon is indoor mapping. But it doesn't stop there. 

Just as with PayPal's BLE initiative, iBeacon will enable Apple to move into payments and indoor marketing and allow third party developers to leverage those capabilities. With its more than 600 million credit cards on file I've got to believe that Apple will enter mobile payments eventually and BLE will be the way in all likelihood.

More broadly I suspect that iBeacon will popularize and jumpstart indoor location for a host of third party developers. 

For a comprehensive introduction to the indoor location and marketing opportunity, and its broader implications, come to Place 2013.

iPhone 'Touch ID' Is the New Siri

The Apple iPhone event just concluded. Everything that was announced at the event had been leaked or written about beforehand, including:

  • The cheaper iPhone 5C in 5 colors
  • The gold iPhone 5S
  • The faster 5S processor
  • iTunes Radio
  • The biometric fingerprint sensor that unlocks the phone ("Touch ID")

However that last item, the "Touch ID" fingerprint sensor, was the stand-out announcement in my view. It will enable users to both unlock their phones and confirm iTunes purchases instead of entering a password: 

Put your finger on the Home button, and just like that your iPhone unlocks. Your fingerprint can also approve purchases from iTunes or the App Store.

What I mean by the headline is that Touch ID is to the 5S what Siri was to the 4S: a kind of "wow" feature that helps it stand out from other smartphones. It partly compensates for the fact that Apple didn't introduce a larger screen, which everyone now wants. That's coming with the iPhone 6.