Smartphones Are to Mobile As Broadband Was for the Desktop

Most of the "disruptive" consumer behaviors we're seeing -- disruptive of traditional media -- didn't really kick in until broadband ("always on") Internet access reached critical mass about three or so years ago. There's a direct correlation between Internet usage frequency and engagement and broadband adoption. That's old news.

In the mobile segment the analogy is smartphones. You might argue, "no wait," the analogy in mobile is 3G. (3G subscribers are gaining in the US and around the world.) I would argue that smartphones are actually more analogous. 

Whereas consumers actively sought out high speed Internet for their homes, they aren't necessarily doing that in mobile (iPhone 3G is an exceptional circumstance). Generally consumers are ignorant of the network speeds of their mobile devices. It's much more "opaque" for consumers in mobile than for desktop Internet subscribers where the contrast was dial-up vs. always on.

Consumers are attracted to smartphones, and smartphones are increasingly part of 3G (and later 4G) networks. Gartner previously forecast handset sales as follows:

  • Asia/Pacific: 472.5 million units in 2008, a 17.9 per cent increase from 2007.
  • Japan: 47.7 million units, a 9.1 per cent decrease from 2007.
  • Western Europe: 188 million units, a 1.5 per cent decline from last year
  • North America: 185.7 million in 2008, a 5.3 per cent increase from 2007. 

As people look to replace their old handsets, they will increasingly be upgrading to smartphones -- which are becoming cheaper and more popular. And with smartphones, come data plans and wildly different behavior: 

smartphone internet usage
Source: comScore/M:Metrics (2008), n=31,389


Nokia Lowers Outlook, Symbian Phones Down

Finnish mobile hardware giant Nokia said that it was lowering its handset outlook for Q3 and would see a lower market share:

Nokia now expects its mobile device market share in the third quarter 2008 to be lower than in the second quarter 2008 . . . Nokia expects the overall mobile device market in 2008 to be impacted by the weaker consumer confidence in multiple markets. However, Nokia continues to expect industry mobile device volumes in 2008 to grow 10% or more from the approximately 1.14 billion units Nokia estimated for 2007. Nokia also continues to expect industry mobile device volumes in the third quarter 2008 to be up sequentially.

The full-year outlook for the company was generally upbeat (the stock is down on the warning). In addition, shipment growth in phones with the Symbian OS declined (to 5%), the company reported this week. In the first quarter, the annual growth rate for Symbian was 16.5%. Last year, growth was faster than that. Overall, at a time when smartphone growth is gaining, Symbian appears to be slowing -- in opposition to the trends in the broader market. Growth for smartphones is 16% annually according to Gartner. Symbian is mostly run on Nokia phones.

The following is data from our recent survey of North American mobile phone users, showing market share of various devices:

 mobile market share

Source: Opus/LMS/Multiplied Media, 8/08, n=789 (US and Canadian adult cellphone users)

Adoption of 3G Devices Growing in U.S.

Thanks in part no doubt to the release of the iPhone 3G, the U.S. has seen an explosive growth in mobile subscribers with 3G-enabled devices in the past year.

According to comScore:

The United States has caught up with Western Europe in the adoption of 3G with 28.4 percent of American mobile subscribers having 3G devices versus 28.3 percent in the largest countries in Europe. The number of U.S. subscribers with 3G enabled devices has grown 80 percent to 64.2 million during the past year.

A look at the top subscribers in U.S. versus Western Europe:

3G Growth

3G Growth

'Photostream' App Shows Android Interface, Features

The Android Developers Blog shows a new open-source app called "Photostream." It's described as "simple photos browser and viewer for Flickr." But the post also shows more interface images and what the user experience on Android looks like:

Android 1 Android 2

The forthcoming HTC Dream, from T-Mobile, is rumored to be the first actual Android-based phone to hit the market later this year (maybe later this month). Recently the Wall Street Journal gave a very mixed-to-bad review of the HTC Touch Diamond. 

Voice and Search Assist Removing "Friction" for Yahoo! Mobile Search Users

Yahoo recently rolled out (for Nokia Series 60 phones) an idle screen oneSearch shortcut that comes with a mobile version of Search Assist, the company's search suggestion tool for the desktop. The original announcement of the shortcut was made earlier this year at the CTIA show in Las Vegas. 

Here's what it looks like:

Search assist for mobile

I was speaking to Yahoo!'s Lee Ott about the impact of Yahoo!'s deal with Vlingo and voice search on mobile and he pointed to mobile Search Assist as a comparable tool. Both reduce "fricition" -- inputting content into the search box.

Ott said that voice client users were doing approimately 35% more mobile searching than conventional oneSearch users on WAP. However he also said that Search Assist was driving more frequency as well. 

Ott said it was "too early" to tell how big a bet Yahoo! would make on voice for mobile search. But he pointed to Search Assist as a similar tool. Voice may function in situations where Search Assist does not (i.e., driving) and vice versa. So ultimately tools like this could be regarded as complementary. 

U.K.'s O2 Finding Consumer Appeal for Mobile Payments

Using mobile phones to purchase goods and services is a fast-growing concept that is gaining traction from carriers, consumers and payment networks alike. Mobile payments rely on near-field communication (NFC) technology to facilitate purchases and include associated technologies for mobile couponing and payment authentication.

U.K. carrier O2 released the results of six-month mobile payments trial in which 500 people were given Nokia 6131 handsets loaded with cash to make store purchases or travel throughout London. According to O2, nine out 10 participants enjoyed making cell phone payments.

Among the mobile payment activities in the O2 trial included:

  • Travel on subway, buses and trams in London, using the handset like an Oyster contactless payments card
  • "Smart posters" containing embedded tags which serve as shortcuts for services enabled through the handset by tapping the phone on the poster.
  • Barclaycard payment application allowing purchases of £10 or less at retailers including Books Etc, Chop’d, Coffee Republic, EAT, Krispy Kreme, Threshers and YO!
  • Ability to check available funds and locate nearby retailers that accept payments.

Elsewhere, Visa announced the launch of new mobile payment programs in Brazil, South Korea and the United States. Visa has been working for some time with financial institutions, telecommunications providers and handset manufacturers in delivering mobile payments with efforts to improve the consumer payment experience.

According to the release, the latest programs include:

  • Brazil: Visa announced yesterday the availability of remote mobile payments in Brazil by Banco do Brasil. It is the first program of its kind in Latin America, allowing Banco do Brasil's Visa cardholders to pay with their mobile device and confirm the transaction via text message. The service is accessible through any Brazilian mobile carrier serving the more than 140 million subscribers in the country. Companhia Brasileira de Meios de Pagamento (VisaNet Brasil), the acquiring institution for all Visa debit and credit payment transactions in the country, will be running the deployment of this technology in Brazil.
  • Korea: In a world first and in partnership with T-Money provider KSCC (Korea Smart Card Company), card issuer Shinhan Bank and Korea Telecom Freetel (KTF), Visa has made it possible for commuters to use their Visa account to top up their T-Money balances automatically on the phone's SIM card when it falls below a certain level. By conducting the entire transaction automatically over the mobile network, commuters are freed from the inconvenience of waiting in line at transit kiosks or other agents to top up their transit account.
  • U.S.: Visa recently announced a partnership with Chase Bank for a pilot program to deliver personalized mobile offers to select consumers in Phoenix, AZ. With more than 50 participating merchants, the program has capacity for 5,000 participants who will receive offers, including discounts or special deals, directly to their mobile devices via text message. They will be able to redeem these offers at the merchant’s location or online. The pilot will also cover special game day offers for baseball fans attending games at Chase Field, home of the Arizona Diamondbacks.
  • North America: Visa is working with multiple leading issuers, such as PNC Bank, SunTrust Bank, U.S. Bank, Wachovia, and Wells Fargo in the United States, and RBC, TD Bank Financial Group, and Vancity in Canada, to trial a transactions notification program that is able to send near real-time information to cardholders. Participating cardholders will receive e-mail or SMS text messages on their mobile devices whenever one or more transaction "triggers" occur, sometimes before they leave the store. These mobile notifications will be created simultaneously with the transaction, providing cardholders with an effective way to monitor and manage their accounts.

AOL's Platform A Optimizes Ads for the iPhone

AOL's consolidated ad serving and technology unit, Platform A, has introduced ad optimization for the iPhone. According to a press release out this morning:

When an iPhone user is browsing sites within the Third Screen Media mobile network, the web network, or any of AOL’s leading media properties, Third Screen Media’s targeting technology will serve an ad specifically optimized for viewing on an iPhone. In addition to optimizing ads for the iPhone, Third Screen Media can redirect iPhone users to special versions of marketers’ sites that are optimized for the iPhone experience.

If I understand this correctly it addresses the issue and challenge of viewing ads on "full HTML" mobile browsers, in this case Safari. But there are also Opera, Skyfire, Opera Mini, the forthcoming mobile IE and Firefox, as well as Android's browser. We've written in the past that if these browsers become the dominant gateway to the mobile Internet, instead of WAP or, to a lesser degree, apps, then it creates problems for mobile advertising because ads are small and/or maginalized on the page. 

Platform A may have just solved the problem. 

Competing mobile ad network AdMob has created special, optimized ad units for the iPhone and iPhone applications.


I spoke with AOL after writing this and confirmed that my reading of the press release was correct. Here are examples of conventional advertising (from the Internet) presented in the Safari browser and the same unit optimized for the iPhone. 


iPhone ad a


iphone optimized ad 

AOL also said that it can do this for other, similar browsers: Skyfire, Opera, Android, etc. However the company said that this capability would only be available to advertisers participating in its network and not a stand-alone technology or capability it would otherwise license or make available to publishers and advertisers not participating in one of the Platform A company networks. 

AOL also will optimize landing pages or microsites in similar fashion for the iPhone. 

Chrome and Android Browser Share Elements, Code

At this point only those living under rocks are unaware of Google's new Web browser Chrome. So I won't go into a long discussion of its features or my impressions of the browser.

At the press event and demonstration on the Google campus yesterday a question was asked about the relationship between Chrome and Android. The answer was "The Android team has developed its own browser. They both share WebKit [the rendering engine] and code." But the browsers are distinct. WebKit is the same open-source engine that is at the core of Safari (online and mobile).

Chrome is analogous to Android in another way. While Android may be a somewhat bigger and bolder play by Google to move the entire mobile infrastructure forward in terms of user experience, Chrome has some of the same ambitions. Google wants to move "Web applications" (SaaS) forward and sees an improved browser as the way to do so. Google believes that "richer Web apps" will be built as a result of Chrome.

The company also believes that by making the browser faster, more stable and secure, from a consumer point of view, it will indirectly reap benefits because of the strength of its brand and market position. That's almost the identical thinking behind Android. 

Are U.S. Consumers Warming to Mobile Advertising?



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Jingle Launches "Connect" Ad Network to Increase Reach

In something of a strategy shift, Jingle Networks is introducing what it's calling JingleConnect. It's an effort to build an ad network, beyond in-bound 800-Free-411 calls, incorporating "call centers, information lines, or any high volume call environment where their consumers are on hold." While Jingle has historically been the leader in  free 411 services, partly because it's the incumbent, over the long term it's potentially vulnerable to competitors (e.g., Goog411) and the "mobile Internet" more generally.

Ad-supported, free 411 services are appealing to consumers and potentially to advertisers because of the massive potential reach these services have. They're totally device independent. Yet nobody is doing any consumer marketing to build awareness, which our research shows is generally low among the US population.

Some analyst firms have made big bets on free 411 as a driver of mobile ad revenues. Initially we had agreed that free 411 services would potentially be a broad consumer entry point for mobile search and a strong advertising opportunity. However, that does not seem to be the trajectory of the market of late. We still believe that free 411 services have a role to play and will generate meaningful call volumes over time, depending on awareness. But they won't be as significant a way, as once predicted, that people get information on the go.

The JingleConnect effort is logical. But there's a question about the quality of "leads" generated in these other environments (e.g., consumers on hold in call centers). It would seem to me that JingleConnect (depending on the distribution) is probably most valuable as an awareness vehicle rather than a direct response medium, which is primarily how free 411 is positioned. 

Jingle claims 130,000 advertisers today. Some of those are direct but many of those are delivered via third parties (e.g., Superpages, ServiceMagic, Ingenio/