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Is This the 'Breakthrough Quarter' for Windows Phones?

You can't turn on the TV, Internet or open a publication without encountering an ad for Windows Phones. And there are conflicting data about whether it's working and the corresponding strength of Windows Phone sales.

Several data sources continue to indicate tepid demand in North America but there is also some evidence that Windows Phone sales may be going reasonably well in certain parts of the world. The blog WMPoweruser identifies growth in the usage of Facebook apps for Windows Phones and extrapolates an increased sales trend on that basis: 

Using the number of Monthly Active Facebook users as a guide, we can see around 627,000 MAU of the built-in Facebook app has been added since the 1st October 2012, the start of the quarter.

Last year over the same period less than 150,000 was added by the 15th December, possibly hinting at the source of Steve Ballmer’s statement that “Windows Phones are so far selling at four times the rate of the same time last year” Last year according to Gartner, who claims to measure units actually sold to end users rather than shipments, said 2.759 million Windows Phones were sold in Q4 2011.

The data suggests already 7 million Windows Phones were sold so far this quarter, and we may finally be heading to a + 10 million Windows Phone quarter.

If in fact Windows Phones were to sell 10 million units to end users it would indeed be a breakthrough for the beleaguered platform. However there's other data to suggest that Windows Phones are not doing as well as that. For example, the most recent comScore US mobile market share data show that Windows continues to lose overall share to iOS and Android:

There are also recent sales data from Kantar Worldpanel that show Windows Phones losing share in accordance with the comScore data above:

However in Europe Windows Phones are making some inroads, probably as a result of Nokia's promotional efforts and legacy brand strength. While the EU5 shows a 4.7 percent market share (growth of 1.7% vs. a year ago) individual countries vary widely.

In Italy, Spain and the UK Windows Phones have performed better than in Germany and France. In Italy in particular Windows Phones have gained almost 8 points and now stand at an 11.7 percent share of recent sales according to Kantar. Again, this is probably on the strength of the Nokia brand in Europe.

Elsewhere around the world Windows Phone sales appear to be modest. However in "urban China" Kantar says Windows Phones contstitute 4.2% of all recent smartphone sales.  

It is possible that all these sales combined represent several million units around the world. But while there does seem to be momentum in certain countries it doesn't yet appear that this is a 10 million unit "breakthrough quarter" for the operating system. 

Mobile Apps Challenge TV for Temporal Supremacy

Flurry Analytics has been chronicling the rise of the app ecosystem and the growth of app usage by consumers for several years. In January of this year the company released data arguing that daily time spent with mobile apps had surpassed the PC internet: 94 minutes vs. 72 minutes per day. And earlier today Flurry released an analysis of US consumer time spent with mobile apps vs. television.

Ad network InMobile asserted earlier this year that consumers are now spending more time on a daily basis with mobile media than they do with TV:

[M]obile ranks first in media consumption among Americans with 2.4 hours of the 9 hours spent consuming media on mobile devices—this is more than a quarter of time spent on mobile, outpacing TV (2.35 hours), PCs (1.6 hours) and any other channel.

However according to the data compiled by Flurry, consumers are spending 127 minutes per day with mobile apps compared to 168 minutes per day with TV.  TV time is basically flat, or slighly down according to Nielsen, while app-time is gaining according to Flurry. 

Nielsen itself says that people in the US spend roughly 4 hours and 18 minutes per day on average with conventional TV (vs. 168 minutes [2.8 hours] in the Flurry graph). That would be about 2X of the time spent with mobile apps, using the Flurry figures.

The question of whether time spent with mobile already exceeds TV time or closing in on it is largely symbolic. The larger point is that consumers are highly engaged with mobile devices and the mobile internet. That trend will only continue to grow and gain in the next several years. Mobile ad spending, however, is nowhere near commensurate with the kind of time and attention that consumers are spending with mobile media. The chart below (also courtsey of Flurry) illustrates the huge disparity between the two.

Mary Meeker has argued that, based in part on this familiar time-spent formula, mobile advertising is basically a $20 billion opportunity in the US. That may be the case eventually -- though advertisers and their agencies aren't totally "rational." But in the near term are many barriers to the free flow of ad dollars into mobile right now: organizational politics and culture, lack of advertiser education, lack of budget and perhaps most of all lack of "clear ROI." 

It took a very long time for online advertising to attract the kind of ad dollars that were more or less consistent with consumer time spent online. It won't take quite as long for mobile to ramp. But it could still be a number of years before mobile marketing and advertising are significant budget items for the majority of advertisers.

For their part consumers are mostly indifferent to whether or how soon companies embrace mobile marketing and advertising. While they prefer mobile friendly sites and user-experiences they don't particularly care if marketers are fully exploiting mobile ad opportunities.

However, if marketers do not as the Thanksgiving holiday weekend has already proven, it will be their missed opportunity. 

The Most Interesting Mary Meeker Slides about Mobile

Former Morgan Stanley financial analyst, now KPCB partner, Mary Meeker did one of her patented blizzard of stats/data dump presentations at Stanford University the other evening. The slides (available here) are essentially an updated version of a presentation given earlier this year. 

You know most of the material by now. However, below are the most interesting slides I culled from a much longer set. They go to device adoption and mobile ad revenue projections. 

The noteworthy thing about the above chart is that it argues there are 172 million smartphone subscribers in the US. If that's true it would mean a smartphone share of something like 68% or 73% depending on the base used. This is undoubtedly high. But it's not unreasonable to argue that there may be 60% smartphone penetration by the end of Q4 in the US (or early Q1). 

From the chart below: there may not in fact be 5 billion individual mobile phone users around the world. There are "only" 7 billion people on the planet. It's probably more accurate to assert there are something like 5 billion subscriptions/SIM cards (there are some dual subscriptions). Still the global smartphone growth opportunity is massive. 

The following chart is based on Pew survey data, showing that 29% (as of earlier this year) of US adults owned a tablet or eReader. Tablets are going to be the number one electronics gift item this year. We could be looking at 80 million total tablets in the US in Q1 2013. 

What's most interesting about the slide below is that it projects tablet ownership to pass PC ownership by the end of next year; in other words: more tablets than PCs. This may be a aggressive forecast but it's not out of the question. 

The final slide is about mobile advertising and app revenue. There are many sources behind this projection. It envisions a $20 billion global market by the end of the year, with mobile advertising around $6 or so billion. 

US mobile advertising was worth roughly $1.2 in the first half and is on track to be somewhere between $2.6 and $2.8 billion for the full year 2012. Globally mobile ad revenues will probably reach between $5.5 and $6 billion by the end of Q4 this year.

Nielsen: 79% of Mobile Consumer Time Spent with Apps

Social networks and social-mobile apps are undeniably mainstream at this point. Indeed, mobile is where much of the growth is happening for social media. A new report, compiled from Q2 data and issued by Nielsen, illustrates this and compares time spent and access by media device.

What the data show is that the amount of time people are spending with mobile devices (vs. PC) is growing and that mobile apps continue to be where mobile time is concentrated. Along with smartphone and tablet penetration, mobile time overall has grown vs. 2011 but growth has been concentrated in mobile apps. They see roughly 79% of consumer time with mobile media and the mobile internet. 

Mobile media time overall is now roughly 43% of the time spent on PCs as of Q2 2012. 

Mobile use of social networks tends to show slightly higher levels of engagement than on the PC. In mobile, as on the PC, women tend to be more engaged than men. But the most engaged groups are slightly different in each category.

The most engaged group of mobile social media users is the 25 - 34 age range, whereas on the PC it's the 18 - 24 year old cohort.

The following chart illustrates that among the major social sites, Facebook dramatically leads in terms of time spent (although Instagram isn't present on this list). In addition, time is roughly divided 85% mobile apps vs. 15% mobile web. And while the ratios are slightly different for each social media publishers the directional trend is the same -- toward mobile apps.

Nielsen also looked at the major ways in which consumers connect to the Internet generally. It found that the PC was still the dominant way but that PC penetration was down slightly since a year ago. By contrast, as you might expect, mobile access to the Internet has grown significantly on smartphones and especially on tablets.

Marketers who continue to ignore or only nominally address smartphone and tablet users -- especially app users -- are losing access to an increasingly large user base and may be doing their brands and reputations harm in the process.

Shipments vs. Traffic: Market Share Data that Really Matter

Numbers are everywhere as we head into the final month of 2012 -- an undisputed "year of mobile" -- and many sources have released loads of market share and device penetration figures over the past week. Some of those numbers are meaningful and some are not.

Among them ad network Millennial Media put out some monthly device figures this morning, based on ad impression share on its network. I'll take a quick look at those numbers and then discuss some of the other recent device data in the market, with an emphasis on tablets.

The iPhone is the single most prevalent device (and has been so for several years) on the Millennial Network. It generated 16% of all the ad impressions in Q3, while iOS devices in total generated 31% of all Millennial's ad impressions. Collectively Samsung devices (phones, tablets) were responsible for 24% of impressions; the second most prevalent device OEM.

RIM devices were responsible for 7% of ad impressions, which is now basically on par ith the company's overall market share in the US. There are no Windows Phones in the top 20 on Millennial's network. Windows Phones (Lumia in particular) has sold reasonably well in select countries in Europe (i.e., Spain, UK, Italy). However they have not sold well in the US. 

While Apple is the leading manufacturer and has the leading device on the Millennial network, Android devices dominate collectively -- with 52% of all impressions, compared with 34% for iOS. This share breakdown is almost identical to comScore's September US smartphone market share data.