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. 

PayPal Starts to Socialize In-Store Payments with Users

I have been fairly skeptical about PayPal's ability to win in the mobile payments space. However the methodology the company is using doesn't require any new devices, next-gen infrastructure or much consumer behavioral change. Today I received an email from PayPal telling me I could use PayPal to pay in stores (HomeDepot).

This is the first direct communication that PayPal/eBay has made to customers. There are two payment approaches being offered: a card and a user's mobile number + a security pin. Either can be used in the alternative. I wasn't previously aware of the card part; here's how PayPal explains it:

The PayPal payment card is one of the ways you can pay at any participating store locations accepting PayPal. It's a store only spending card linked directly to your PayPal account. The PayPal payment card can’t be used online or as a credit card.

You do not need the PayPal payment card to complete Store Checkout activation. We will automatically mail it to your home address 2-4 weeks after you activate Store Checkout.

The PayPal card isn't required and probably won't be widely used -- maybe it's a "training wheels" transitional product to get users comfortable with the system. The primary method is clearly the mobile + pin approach.

The following are the payment methods that can be associated with a PayPal account: 

• PayPal Balance
• Instant transfer from your bank account (if eligible)
• PayPal Credit (Bill Me Later, PayPal Extras Card, or PayPal Smart Connect)
• Debit card
• Credit card
• eCheck (a delayed transfer from your bank account - may result in significantly slower shipping by seller)

 Here's the list of HomeDepot Stores that are now accepting PayPal (as well as others outside California):

Associating bank accounts and credit cards with PayPal is somewhat painful in the beginning. But if the accounts are already set up then this is a convenient and more secure way to pay than allowing a store clerk to swipe your card at the point of sale. 

I haven't used it yet, but my perception is that it's pretty straightforward. Accordingly it could enable PayPal to gain faster consumer adoption than an NFC-based payments system like Google Wallet. We're in a bit of a land rush period right now, and if PayPal can gain broad acceptance at stores and restaurants it could become one of the winners in the segment. 

I don't know what this looks like from the merchant side -- other than to assume that the new in-store payment system is subject to PayPal's standard merchant transaction fees. 

From a functionality perspective Google and mobile carriers could do something quite similar: enable consumers to associate credit cards or bank accounts with mobile numbers and a pin. But there's a whole "infrastructure" that PayPal has set up that may not be so quickly duplicated by others (that's a bit of a blind spot for me). 

Regardless this is a bold new step toward educating consumers and mainstreaming mobile payments. 

How's Our Four-Year-Old Mobile Forecast Doing?

Several years ago Dan Miller and I built a mobile advertising forecast that factored in display, search and pay per call. We haven't updated it in part because we've been extremely busy but also because the market is so dynamic. Beyond this there are scores of mobile ad forecasts out there, so it just seemed like adding more noise to the cocophany.

Here's what we projected in 2008:

There's a new mobile ad-revenue forecast out today from eMarketer, which upwardly revises to $2.6 billion (2012) the company's previous forecast. It's very close to our number above. EMarketer's number is somewhat larger -- but not by much. 

While the eMarketer forecast isn't an "average" of third party data, it reviews and takes into account the other data in the market:

Generally speaking, most forecasts are either too conservative ("contrarian") or overly "optimistic," often in an effort to grab attention and coverage for the firms generating them. 

If (or when) we re-do our mobile ad forecast above -- since this year is( the final year of the projection -- our methodology will likely change somewhat, because the market has changed so much in the past four years. Frankly, I'm surprised and pleased that our forecast has so closely tracked the actual growth of mobile ad revenues. 

Nokia Sells a Million Windows Phones, AT&T's 7.6 Million iPhones and Fake Android Tablet Numbers

This morning both AT&T and Nokia reported quarterly earnings. AT&T sold 9.4 million smartphones, including 7.6 million iPhones last quarter, but generally missed expectations and posted a loss (partly because of the blocked T-Mobile deal). The company ended the year with 103.2 million mobile subscribers in the US. Verizon earlier this week said that it had 108.7 million subscribers.

Nokia beat the market's low expectations despite announcing a $1.4 billion (€1.07 billion) loss. More importantly the company announced that it had sold more than 1 million Lumia Windows Phones during the quarter in Europe. That was consistent with analysts' projections and has boosted Nokia despite the accelerating decline of its Symbian platform.

Yet data from forecaster Kantar, discussed by Reuters yesterday, reflected that sales of Lumia handsets in all nine markets where the phones are available were "less than 2 percent." Accordingly there's a long climb up the mountain for Nokia to reclaim its former position as a market leader on the back of Microsoft's OS:

Kantar said Microsoft's Windows Phone share in all of the nine key markets it measures remained at less than 2 percent despite the high-profile launch of the Lumia range from Nokia.

Nokia's flagship Lumia 800 model failed to break into top 10 smartphones sold in Britain by the end of the fourth quarter, the researcher said.

Nokia said in November the model was off to an excellent start in Britain, and had seen the best ever first week of Nokia smartphone sales in the UK in recent history.

Microsoft and Nokia have an arrangement where licensing and royalty payments change hands. But basically Microsoft is paying Nokia billions over a period of years to use the Windows Phone OS.

Finally, in the battle over marketshare numbers, Strategy Analytics put out an attention-getting release this morning arguing, "Android Captures Record 39 Percent Share of Global Tablet Shipments in Q4 2011." This conveys the impression that Android tablets have captured substantial marketshare, which is inaccurate. 

The chart below suggests that Android tablets sold 10.4 million units -- in part because Apple actually sold 15.4 million iPads.  

Kindle Fire, a quasi-Android tablet (quasi because it marginalizes Google and the Android Market), sold perhaps 4 to 4.5 million units. If correct that would constitute nearly half the "shipments" in the chart above. Beyond this Nook, another low-end Android tablet, may have sold quite well in Q4 also. These are the bestselling Android tablets. All others have had negligible sales.

Previously the HP TouchPad was the bestselling non-Apple tablet because it was reduced to $99 by HP to move units. 

Let's end talk of "shipments" as a market share metric. Devices "shipped" does not mean devices purchased by consumers. Nor do "shipments" stand as a proxy for purchases, although they do typically in the unique case of Apple devices.

The "shipments vs. sales gap" was most starkly revealed last year specifically in the case of Android tablets (and RIM Playbooks). Millions of units "shipped" but almost none actually "sold" to consumers. Instead they sat on shelves. Effectively then "shipments" is a discredited and invalid metric to measure market share. 

Statistically valid consumer survey data would be more reliable as a measure of market penetration.

Apple's Really Really Big Quarter (by the Numbers)

Apparently Kindle Fire didn't take much wind out of iPad's sales. Apple's holiday quarter solidly beat the most aggressive analysts' estimates. Here are the big numbers:

• Revenue: $46.3 billion (cash on hand is now $97 billion) -- kaching!
• Mac sales: 5.2 million
• iPhones: 37 million (vs. about 30 million expected) -- 2X YoY
• iPads: 15.4 million (well over a million more than expected) 
• iPods:  15.4 million (iPod Touch was more than 50% of sales)
• Apple retail stores: $6.1 billion (22K visitors per store per week)
• Gross margin: 44.7%
• Quarterly profit: $13.06 billion (yowza!)

Across the board unit sales were higher than expected. In short a pretty remarkable quarter. US and Japan were identified as Apple's strongest iPhone markets, although the 4S just launched in China. Demand there is "off the charts." 

Tim Cook characterized the iPhone 4S audience reception as "breathtaking." The iPhone 4S was the "most popular" iPhone (vs. the cheaper models) according to Apple.

Apple said that there are now 315 million iOS devices in market, with 62 million sold in the last quarter alone. 

Kindle Fire: A Template That Will Burn Google?

I've now had my Kindle Fire for about a month. It's the most successful Android tablet on the market (probably to the tune of about 4 million in sales) but much less of an Android tablet than others. As most people know, Amazon operates its own Appstore and users don't have access (w/o an awkward hack) to the Android Market proper.

My grade for device is "B." It's awkward as a web-browsing device. It's really awkward for email; the keyboard is sloppy and there aren't the customary Android alternatives (Swype, FlexT9, Swiftkey). It's good for reading eBooks and watching movies. In general, apps are what redeem its shortcomings as a web-browsing device.

The problem, however, is that not all Android apps are available. Surprise of surprises: Netflix, which competes with Amazon's own video service, is available. But the main New York Times app is not -- presumably because Amazon is selling subscriptions to the Times. I would expect that more Android apps will eventually become available, however.

The following chart was produced by SAI from survey data collected by RBC Capital Markets. It reflects that most people use Kindle Fire as they used the original Kindle: for reading eBooks. 

Kindle Fire is an aggressive example of something that was always hypothetically always envisioned for Android: extreme customization by device makers and carriers. To that end, BusinessWeek has an article this morning about Kindle Fire and Chinese versions of Android on mobile handsets, which leave out many of the otherwise pre-installed Google apps:

Amazon.com Inc. and Chinese Internet giants Baidu Inc. and Tencent Holdings Ltd. are using Android as a building block for their devices, skipping preloaded applications such as Gmail, Google Maps and YouTube that generate ad revenue for Google, as well as its app store. Amazon’s Kindle Fire tablet, which is gaining ground on Apple Inc.’s iPad, comes with none of those apps.

The article makes the case that if more OEMs follow suit Google will lose revenue, citing a recent Cowen & Company report which estimates that Google makes roughly $7 per Android device sold. However that's not entirely true.

Most of Google's mobile ad revenue is from search -- although mobile display is growing -- and most of Google's query volume is via the browser. It's really only if there's a different "default" search engine on devices that Google will truly suffer. Accordingly, browser-based search is where Google is most vulnerable. However, third party apps that feature ads from Google/AdMob will also continue to money for the company regardless of whether Google-branded apps are on the phone.

Nonetheless, it's a provocative article and interesting to contemplate how many more hardware companies may emulate Amazon. For example, RIM or Nokia could take Android and build UIs that are very customized on top of the software. That's probably something RIM should start doing -- immediately. It would be potentially unique and provide access to the trove of apps that Android Market offers. RIM could even build its own Android appstore like Amazon. Without apps BlackBerry will fail. 

Google, for its part, doesn't want to lose control of the Android ecosystem. It has responded to Kindle Fire's challenge by promising an aggressively priced, "highest quality" 7-inch tablet later this year.

Of Devices and Men: Apple Earnings, Nokisoft Sales & RIM's Complacency

Apple reports quarterly earnings today after the US market's close. Speculation about device sales and revenues is feverish. I'm less interested in whether Apple beats expectations than I am in getting a concrete sense of how many iPhones and iPads are in the market. Since earnings are a cat and mouse game in which the financial analysts try to predict sales and revenues and the company tries to surprise it's hard to say what will happen. 

Revenues are expected to exceed $40 billion; consensus estimates are about $39 billion. Roughly 30 million iPhones have been sold according to the various estimates. One question mark is iPads. Were sales hurt by the cheaper Kindle Fire? The expectation is somewhere between 13 and 14+ million were sold last quarter. We'll know later today.

Meanwhile over in Windows Phone-land, early sales estimates for the Nokia Lumia line in Europe appear to be promising, with analysts estimating that the company sold more than 1 million phones since launch. Bloomberg averaged the numbers and determined the consensus is that 1.3 million units "shipped": 

The Lumia handsets, which went on sale in Europe in November, probably sold 1.3 million units globally to operators and retailers by the end of last year, according to the average estimate of 22 analysts compiled by Bloomberg. The projections range from 800,000 to 2 million and only one analyst predicted sales of fewer than 1 million handsets. 

Separately, another source shows that Nokia handsets already dominate Windows Phones that have actually been sold to consumers (vs. shipped). According to data compiled by WMPowerUser, Nokia-made Windows Phones now constitute nearly 50% of the active market. 

Finally, as I had predicted early this month, RIM's co-CEOs were ousted or sacrificed to appease investors, who have punished the stock over the past year because of the company's performance and perceived complacency in the face of rapidly declining share. Remarkably, RIM's new CEO Thorsten Heins, a company insider, said that no new strategy is required to right the ship:

Mr. Heins has worked at RIM since 2007, most recently as the senior of two chief operating officers. On a conference call Monday, he immediately emphasized that he will mostly follow the path set by his predecessors, co-Chairmen and co-Chief Executives Jim Balsillie and Mike Lazaridis.

He told analysts not to expect "seismic changes" and ruled out splitting up the company. Mr. Heins (pronounced like Heinz ketchup) said he was focused on getting out the company's newest line of phones, to be run off its latest operating system, BlackBerry 10.

RIM and Nokia may turn out to be case studies with opposite outcomes. Nokia, having taken radical action, may turn around and regain momentum (though it's not clear yet). RIM, if Heins merely stays on course, may crash and burn.

RIM's OS and devices aren't competitive with the iPhone and Android at this point. It can no longer rely on the enterprise market and its product line is confused. Developers are also not writing for RIM. It thus needs to embrace the Android ecosystem in one form or another -- probably sooner rather than later.

Indeed, the company doesn't have that much longer to take some dramatic action. But by picking a loyal and apparently complacent insider in Heins RIM may have all but precluded that from happening.

Tablet Ownership Doubles, Now Critical Channel for Retailers

Retailers: if you haven't yet got a tablet app or optimized site, you're behind the curve. Earlier today the Pew Internet Project released data showing that between early December and January the population of US tablet users effectively doubled, from 10% to 19%. This is of course due to holiday gift giving.

If one were to extrapolate these figures out to the entire US population it would mean (by my quick calculation) roughly 45 million people now have tablets (distinct from eReaders). And by some measures Tablet users are more valuable than smartphone and even PC users. 

According to data released last week by Adobe, based on an analysis of 16 billion visits to top retailer websites, tablet owners spent more money and were more inclined to buy than smartphone owners and PC users:

• Tablet Visitors spent over 50% more per purchase and were nearly three times more likely to purchase than Smartphone Visitors
• Tablet Visitors spent over 20% more per purchase and were nearly as likely to make a purchase as Traditional Visitors

Tablet owners had slightly lower conversion rates, however, than PC users. And there is much less traffic coming from tablets vs. PCs. However there does appear to be some "cannibalization" going on.

Here are the top-level findings from Adobe's study (AOV is "average order value"):

There's plenty of other evidence that support's Adobe's finding that tablets are an important new commerce platform: 

• Call It 'T-Commerce': Almost 50% of iPad Users Have Made Purchases in Past Month
• It's a Four-Screen World Baby

Several recent studies have shown that retailers in particular are lagging in their adoption of optimized mobile sites and apps. The Pew data and Adobe findings should be a wake up call to retailers that they have to address tablets as a distinct channel. 

Windows Phone's Polarizing Predictions: Either Beats iOS or Total Failure

Yesterday when Microsoft released quarterly earnings the company said nothing specific about Windows Phone sales. It touted its relationship with Nokia but didn't disclose any figures or evidence suggesting "momentum." Nonetheless three hardware analyst firms, Gartner, IDC and most recently iSuppli predict that by 2015 Windows Phones will have greater share than iOS.

Here are the iSuppli handset sales projections (RIM is presumably among the "others"):

According to the firm most of Windows Phone sales will be driven by Nokia:

Although Nokia is not the only seller of Windows Phone smartphones, the company is expected to dominate the market, accounting for 50 percent of all Microsoft OS-based handsets sold in 2012, IHS iSuppli predicts. The company's share then is set to rise to 62 percent in 2013. Nokia's portion of the market will begin to decline in 2014, as other companies increase their sales of Windows Phone products.

The cyan Nokia 900 was one of the big hits, at least aesthetically, of the recent CES in Las Vegas. It's a solid phone and one that Gartner et al anticipate will mark the return of Nokia to North America. Indeed, these Windows Phone beats iOS forecasts are largely based on the strength of Nokia's global footprint.  

Despite the near consensus that Nokisoft will power a comeback for the two companies there are skeptics. At the other extreme take Om Malik's thoughtful piece likening Nokia to Kodak, which just declared bankruptcy: 

Sure, Nokia has a brand, global presence and a sizable marketshare. So did Kodak. It took 132 years, the last 15 of those spent in constant belt tightening, for the photo film company to sink. Having missed the big wave, Nokia doesn’t have the luxury of time.

Malik anticipates near total failure for the Nokisoft effort. And there are others who agree. My view resides in the middle. I said in my "mobile predictions for 2012" that Windows Phones will see modest but not huge success in North America, greater success in Europe/Asia. 

I don't think that Windows Phones will take the market by storm in North America. I believe the two companies will have less than 10% market share here. With lower-cost models in developing countries they will see more success as well as in Europe, where Nokia's brand is much stronger.

However, predicting what will happen in even three years in the mobile market is next-to-impossible given the pace of change. Yet I remain quite skeptical of the Gartner et al "automatic" assumptions of Nokisoft's win over iOS -- largely on the basis of Nokia's historical performance. 

Nielsen: Smartphones Now 46%, iPhone "Closing the Gap"

Yesterday I discussed a Yankee Group survey (n=15,000) showing 47% of US adults now have smartphones (Android 39%, iPhone 25%). This morning Nielsen released data nearly matching that figure, reflecting 46% of mobile subscribers in the US own smartphones as of Q4. However, Nielsen says, Q4 iPhone sales have "closed the gap" somewhat with Android among recent buyers: 

Among recent acquirers, meaning those who said they got a new device within the past three months, 44.5 percent of those surveyed in December said they chose an iPhone, compared to just 25.1 percent in October. Furthermore, 57 percent of new iPhone owners surveyed in December said they got an iPhone 4S.

Nielsen adds that 60% of recent handset buyers are increasingly picking up smartphones. Of concern to Microsoft, RIM and Nokia their relative shares are tiny. RIM's is less than 5% among recent buyers. 

Nielsen says among recent acquirers Android still holds a lead but that the iPhone is within 2% points of a tie (chart below). This is a reversal of earlier trends wherein Android seemed to be pulling away. We'll see what the next comScore data release shows. 

Overall Android still leads the iPhone 46% to 30% in the US, while RIM has 15% of the market. 

Mobile Eroding PC Sales, Survey Says iOS-Android 'Duopoly' to Dominate

PC sales are slowly eroding -- and mobile seems to blame. One could argue that the economy has taken a toll on PC sales, and that would probably be accurate. But mobile devices (smartphones, tablets) are gaining mindshare and sales at the expense of PCs. 

Hardware watchers Gartner and IDC both said that Q4 PC sales fell -- somewhere around 1%. Macroeconomic conditions and component shortages are factors. But the big news is tablets and smartphones. Tablets (iPad, Kindle Fire, Nook) were among the most widely requested and given holiday gifts, to the tunes of millions in sales.

EMarketer rounded up third party data and estimates on iPad and Kindle Fire sales. Hardware tear-down firm iSuppli estimated that Amazon sold 3.9 million Kindle Fire tablets in Q4. Barclay's Capital estimated the number to be 4.5 million. The reality is probably in-between.

Meanwhile iSuppli argues that Apple "shipped" 18.6 million iPads in Q4. Shipped is a bogus metric, but with Apple products sales and shipments are closer than with other OEMs. The iSuppli estimate is probably high, but we'll find out when Apple releases its quarterly revenues on January 24. 

Overall, iSuppli argues that global tablet shipments were 65 million units in 2011. Not only are tablets "sexier" but they're typically cheaper than PCs, notwithstanding price erosion in the Wintel PC market. Take a look at charts from Horace Dediu (the first one above via GigaOM), showing the decline of traditional PCs over the past couple of years. 

Separately the Yankee Group conducted a US consumer survey (n=15,000), released earlier this year, which features some striking findings:

• 47% of survey respondents own smartphones (Android 39%, iPhone 25%) -- this is the highest percentage figure in the market to date
• Over 80% of consumers (including current smartphone owners) say they'll buy either an iPhone or Android handset in the next 6 mos.

What that means as a practical matter is that only a small minority are considering another platform. While survey data shouldn't be taken as definitive, they indicate how people are thinking and, by implication, the challenge Microsoft and Nokia's joint marketing efforts face. Windows Phones are nice but struggling to grab mainstream consumer attention and interest. 

In terms of tablets, Windows 8-powered tablets won't be out until later this year. Rumor has it that they could be more expensive than some Windows 8 laptops (to be determined). Windows Tablets face the same "outsider" problem that Microsoft confronts in the smartphone market. By offering laptop-tablet hybrids (like the image above), Microsoft might be able to justify a higher price and grab consumer interest.

However the totality of evidence suggests Microsoft is under intensifying pressure with Windows Phones and Windows 8. Indeed, can Windows 8 "bring sexy back" to the PC market?