Youth oriented European MVNO Blyk has decided to give up being an MVNO and become an ad network and mobile applications provider instead. Existing customers are being transitioned to established carriers in the UK and Netherlands where Blyk operates. It will reportedly deliver ads to carries it works with in those markets, Vodafone and Orange. Though Blyk had some great case studies and ROI for advertisers seeking to reach the youth market, it was having trouble growing and broadening its reach.
Over in the US, MVNO VirginMobile is suspending its ads-for-free-texts-and-minutes-program SugarMama. The explanation offered is cryptic:
Why is Sugar Mama going away?
It's not because Virgin Mobile got sick of giving away free minutes, or because people were using it too much, or anything like that. It's due to some operational issues which impacted our ability to effectively deliver and administer the program.
One could read that as cost, as in the program cost to much for the returns it was generating for Virgin. But I'm speculating. What it means is that these two programs are now both shuttered. In Europe there may continue to be some ads-for-minutes programs available via Blyk but effectively the model is on "life support" if not dead.
These programs were ahead of their time because there aren't yet enough mobile ad dollars flowing through the market. As mobile advertising picks up we may see another run at ads-for-minutes/texts. Fundamentally these offerings are about youth markets. Blyk's audience was 16 - 24.
Related: According to PaidContent, Virgin Mobile is preparing litigation against the operator of the Sugar Mama program, Ultramercial. This would potentially explain the cryptic explanation ("some operational issues") above for shuttering the program.
According to data from a recent Forrester survey of roughly 20,0000 Europeans (reported in Total Telcom), on average 13% of Western European consumers now access the Internet on their mobile devices, while and 50% know their phones are Internet capable.
The numbers in the chart below vary by country and the data tend to change when you ask users about daily or monthly frequency, but in the US/Canada, the percentage of mobile Internet users is north of 20% (depends on the survey). Our figure is about 27% - 29% for the North American market (excluding Mexico).
There are two very clear variables that drive mobile Internet usage: the price of data and smartphone adoption. As data prices (and handset prices) come down more people will opt for smartphones and unlimited data plans. This is very analogous to the early days of the Internet on the PC where dial up gave way to unlimited broadband and usage grew dramatically.
Mobile is a more accelerated market. But things that may further speed up adoption, like carrier price wars, cannot be easily predicted. Overall, the cost of data and WiFi access should still come down over time, although smartphone handset prices will likely remain between $99 and $199 in the US.
Most mobile Internet ad revenue forecasts are tied to smartphone growth and penetration as a proxy for Internet access and usage. In general, I would tend to agree, but there's more nuance within the category because all smartphone owners don't equally access the Internet: iPhone and Android owners do more than BlackBerry or Windows Mobile owners for example.
There are probably a dozen mobile ad forecasts (or more) in the market. Kelsey just expanded theirs to include Western Europe. Here are their numbers (forecast period 2008-2013):
That adds up to roughly $7.8 billion in mobile ad revenues overall for both markets. Previously I was critical of the firm's emphasis on the local segment driving "more than half" of mobile ad revenues.
In light of what we know today, the earlier Opus/LMS mobile ad forecast for Western Europe and North America was somewhat crude and perhaps too bullish at $5 billion by 2012.
Shortly, we'll be publishing a roundup of third party forecasts together with our own numbers that take a more granular look at mobile ad revenues and factor in fill rates, the shift from CPM to CPC models, SMS, mobile apps, user response rates and generally decling ad pricing.
US carrier AT&T announced Q2 revenues this morning. Here are the highlights regarding the wireless portion of the business:
As an aside, the company said that there were 108 billion text messages sent in the second quarter, "nearly double 2Q08 levels."
Landlines declined just over 13% over the quarter.
Mindful of its new dependence on the Apple device, AT&T is also "diversifying" beyond the iPhone, offering subsidies and Internet access for a broad range of netbooks and the forthcoming Plastic Logic eReader that will compete with the Kindle. This will force Verizon (and Sprint) to expand their lineup of subsidized netbooks. It will also put pressure on AT&T's network.
Related: AT&T EO Randall Stephenson acknowledges that the day will come when the iPhone is not exclusive.
I own an iPod Touch and bought a headset with a mic to make Skype calls over WiFi. But voice search and voice-powered apps don't work with the headset mic. In addition, there's no camera. But all that may soon change. Rumors previously surfaced that Apple was going to add a camera and a mic to the next iPod Touch refresh.
Now according to a Wired blog, the new iPod devices with cameras and mics will go on sale in "two to three months":
If iPod Touches with cameras and microphones go on sale “in two to three months,” as our source expects them to (and which corresponds with our expected timeframe), they will transform the entertainment-oriented iPod Touch line into a voice communications tool wherever WiFi is available.
More provocative than Skype on an iPod Touch is Google Voice, which offers a "normal" phone number for both outbound and inbound calls. I installed the Google Voice app on my Android phone -- the phone I got at the Google developer "I/O" conference.
That phone came with a month of free service, which has now expired. I use it on WiFi networks to test Android applications. The Google Voice app doesn't seem to work on just a pure WiFi network -- it seems to require an underlying carrier voice/dataplan -- although it should and I can send texts via Google Voice.
I'm hopeful that the forthcoming version of Google Voice for the iPhone (VoiceCentral already integrates them) will work on WiFi networks. If so, and the rumors about the iPod Touch with a built-in mic are true, Apple will effectively be selling an unlocked iPhone.
Google Voice, now rolling out to the general public, is a generally excellent service. The major drawback is that you must "socialize" a new phone number. But once you do it can be your "number for life," with other phone numbers rotating behind it. Now the full range of Google Voice's capabilities have been brought to mobile -- Android and BlackBerry devices at least. An iPhone app is awaiting Apple approval.
I wrote about the service and the implications of the new Google Voice mobile app on Search Engine Land.
Essentially the mobile app allows users to send SMS messages and make phone calls from their mobile phones using the Google Voice number. Those on the receiving end of the call see the Google Voice number on caller ID, not the underlying wireless carrier number. Users need only have a data plan -- though data-only plans aren't available from carriers -- to make calls and send texts, as well as use the mobile Internet. Thus Google becomes the brand that the user interacts with and the carrier is the provider of the commodity service (i.e., connectivity) in the background.
There are some potentially dramatic pricing implications for carriers here and if they "break ranks" it could represent a problem for their long term voice revenues.
The only requirement of Google Voice for mobile is that the handset in use be compatible with the app. The features of Google Voice make it highly desirable from a consumer and small business standpoint. If consumers can understand it, more of them will adopt it. And carriers won't like it.
This is a stronger consumer proposition than Skype or Truphone for end users because there's a viable phone number that gets used and exposed. Also the range of features is broader and richer.
With the July 28th Verizon Developer Community event on the planning horizon, Verizon executives have reportedly started discussing alternatives to its rigid BREW-based rules governing application distribution and revenue splits. The venerable BREW protocol (developed by Qualcomm in the last century), has become an artifact of the pre-AppStore days, when sterile descriptions like "Binary Runtime Environment for Wireless" had a certain mystique and feature phones (rather than smartphones) were the highest-profile applications platforms.
Today, as this post by Stacey Higginbotham in GigaOm notes, Verizon is making a partial about face. An event that's akin to a bar camp and the introduction of a developers "portal" smacks of mobile Web 2.0. Verizon is attempting to capture the creative energy of developers looking to deliver their wares to smartphones running the Windows Mobile, Palm, Android and BlackBerry operating systems. Higginbotham quotes Ryan Hughes, VP Partner Management, to the effect that a Verizon-branded application store will be up and running before year's end and that it will be, not surprisingly, the "sole marketplace" displayed on Verizon-supplied devices. This makes it something of a pre-emptive move against direct access to the Blackberry App Store or the Windows Mobile Marketplace.
It's estimated by the US Center for Disease Control that 20.2% of US households are now wireless only. The major carriers are seeing their wireless businesses boom and their traditional wireline businesses decline at an accelerating rate.
In its recent quarterly earnings announcement, AT&T de-emphasized its wireline losses, disclosing them in SEC filings but offering little specific detail in the investor release and slides.
From the investor release from Q1 2009:
Total first-quarter wireline consumer revenues were $5.4 billion, compared with $5.8 billion in the year-earlier quarter, as declining voice revenues more than offset growth in video and broadband.
Here's what the 10Q filing said about wireline losses (in millions):
Our wireline segment operating income decreased $809, or 27.4%, in the first quarter of 2009. Our wireline segment operating income margin decreased in the first quarter from 16.7% in 2008 to 12.8% in 2009. Operating income continued to be pressured by access line declines due to economic pressures on our consumer and business wireline customers and increased competition, as customers either reduced usage or disconnected traditional landline services and switched to alternative technologies such as wireless and VoIP.
Local voice revenues decreased $632, or 10.8%. The decrease was driven primarily by a decline of $501 attributable to a decline in access lines and by a decline in revenues from AT&T Corp. (ATTC) mass-market customers of approximately $40. We expect our local voice revenue to continue to be negatively affected by the slowing economy and increased competition from alternative technologies.
- Long-distance revenues decreased $517, or 14.2%. The decrease was primarily due to lower demand for long-distance service from global and consumer customers which decreased revenues $369 and expected declines in the number of ATTC’s mass-market customers, which decreased revenues $148.
- Local wholesale revenues decreased $62, or 15.4%. The decrease was primarily due to declining number of Unbundled Network Element-Platform (UNE-P) lines sold to competitive providers.
Last week Verizon sent a letter to non-Verizon customers encouraging them to "cut the cord" and ditch their landlines in favor of a Verizon wireless plan. Verizon, too, is losing landline customers.
The following data are from our recent consumer survey. The number who've given up their landlines (16%) is lower than the CDC number because this includes Canadian responses, where users are more likely to retain their landlines.
Source: LMS/Opus Research (n=707, April 2009)
Idle screen mobile ad platform Mobile Posse put out a press release that touted an 18% click-through rate on a holiday promotional campaign for Ace Hardware. According to the release:
A national campaign launched around Ace’s Memorial Day Sale invited consumers to visit their local Ace Hardware to take advantage of great deals. The campaign was executed by Horizon Media and generated an average CTR of 18%. In addition, consumers that viewed the campaign were nearly 30% more likely to visit an Ace Hardware retail store . . .
The Memorial Day campaign, consisting of two ads and a seven-day sponsorship of weather forecasts, delivered strong overall results. Ace Hardware ads generated an average CTR of 18%, while the weather sponsorship generated an average CTR of 17%. Nearly 65% of Mobile Posse customers viewed at least one component of the Ace Hardware campaign during the promotion . . .
In follow-up to the Ace campaign, users were asked whether they had visited an Ace Hardware store within the past seven-to-ten days. Users that viewed the campaign were 29% more likely to have visited an Ace Hardware retail store than users that did not view the campaign.
These are impressive response rates, especially when one considers it's entirely a "push" display campaign. Compare online display CTRs of .06% to .17% (per DoubleClick), although clicks are not the right metric for display measurement. There was also a local component of the campaign, likely a store locator, based on the language in from the release.
The idle screen ads are targeted to feature phone users, who must "opt-in to Mobile Posse’s free application to receive informative and fun content, along with valued offers from local and national retailers."
We've seen varying levels of interest, generally, in mobile advertising. It depends to some degree on how the advertising "value proposition" is presented.
If consumers understand clearly the benefits they'll receive, they're more favorably disposed toward mobile ads. Offers and coupons are categories of greater interest than generic mobile advertising. More sophisticated mobile phone users (e.g., smartphone owners) and those that are more engaged in the mobile Internet are also more favorably inclined toward mobile ads as a rule.
Not long ago NPD Group produced a study that reportedly found, among 600 US netbook buyers, a significant minority were not entirely satisfied with the performance of the machines:
Despite this apparent dissatisfaction, netbooks currently represent the growth segment of the PC market. I saw the ad from US electronics retailer RadioShack this weekend, promoting an expanded lineup of netbooks subsidized by US mobile carriers AT&T and Sprint. Here are four machines ranging from "free" to $399 provided users sign on for the two-year carrier agreement.
During a recession and otherwise, it's very hard to resist these prices. Psychologically, what it also does to consumers is make them less willing to pay more than $500 (maybe $400) for a conventional laptop -- even without a carrier subsidy. (Apple Macs may be the exception.)
In the same way that $200 (with the subsidy) is now the ceiling for smartphones that want to compete in the US market, we may be seeing the comparable -- and wholly unintended -- establishment of a price ceiling for PCs.
Related: TechCrunch's (potentially $200) "CrunchPad" now becoming a viable Internet tablet, though it still must address the connectivity issue.
The first paragraph of a recent Verizon Wireless direct mail campaign begins:
These days, more and more people are looking for ways to cut costs and save money. Some are even disconnecting their home phone for the convenience and security of their wireless phone. Not to metion the savings. This is a great opportunity for you to cut down on costs by making your wireless phone your only phone.
Given that Verizon is a carrier with lots of landline customers this would seem to be somewhat heretical. Here's what Verizon said in its 2008 annual report about loss of consumer landlines:
Declines in switched access lines in service of 9.3% in 2008 and 8.1% in 2007 were mainly driven by the effects of competition and technology substitution. Residential retail access lines declined 11.4% in 2008 and 9.5% in 2007, as customers substituted wireless, VoIP, broadband and cable services for traditional voice landline services. At the same time, small business retail access lines declined 5.0% in 2008 and 4.0% in 2007, primarily reflecting competition and a shift to high-speed access lines. The resulting total retail access line loss was 9.1% and 7.6% in 2008 and 2007, respectively.
The US CDC now estimates that about 20% of American households are wireless only:
More than one of every five American homes (20.2%) had only wireless telephones (also known as cellular telephones, cell phones, or mobile phones) during the second half of 2008 . . .
Back to Verizon. It turns out that this promotion is targeting non-Verizon-landline customers:
"It is not a reaction to cable VoIP or cable phone customers," says Verizon spokesman Robert Elek. "The majority of the people receiving this are not Verizon landline customers," he says. "It is designed for all customers in the country."
To retain landline customers Verizon is doing things like introducing media phone "The Hub," which seeks to blend the phone and the Internet:
UK carrier O2, owned by Spain's Telefónica, has won an exclusive deal for Palm's Pre in the UK market, according to the Guardian. The carrier is also the exclusive source of the iPhone in the UK.
O2 is the UK's leading carrier by market share, followed by Vodafone, Orange and T-Mobile and finally Hutchison's 3.
There have been persistent rumors that Deutsche Telekom is looking to sell its UK T-Mobile unit. The leading contender is reportedly Vodafone, although Telefonica may also be interested to preserve its market-leading position. That may create a bidding war for the T-Mobile unit.
According to Barron's, Charter Equity Research analyst Ed Snyder says, based on an internal "channel check," that the Palm Pre may already have sold as many as 370K units through the end of June. He also estimates that Palm is producing 15K Pre units per day and will ship more than 1 million units during the first quarter of the phone's existence.
Snyder, reportedly a bearish skeptic, writes that Palm will begin to expand in Canada and broadly in Europe as well as offer other WebOS-based devices to other US carriers. Barrons says "He expects a non-Pre WebOS-based device to launch with Verizon in early 2010, and a WebOS-based 'Centro like' device with AT&T soon after that."
If all of that is true Sprint should see a big bump in its stock when these numbers officially come out.
There have been rumors for some time that Dell was developing a smartphone or smarphones plural. But the Wall Street Journal reports this morning that a Dell "mobile Internet device" (MID) based on Android will be released later this year:
Engineers atInc. have been developing a pocket-sized device for tapping into the Internet, said people familiar with the company's plans.
The gadget would run onInc.'s Android software, these people said. Two people who saw early prototypes described the device as slightly larger than Inc.'s iPod Touch, which is similar to the iPhone but does not have cellphone capabilities.
Another person who was briefed on the company's plans said Dell may begin selling the device later this year, though this person said the plan could be delayed or scrapped entirely.
An Android based smartphone might simply fade into the sea of Android devices now coming (unless it was very aggressively priced). But a pocket-sized Internet device that might also be able to make calls (via Skype, etc.) is more interesting and has potential to sell. It could be positioned as a Kindle competitor but with a better Internet experience. If priced right something like that could generate significant demand.
The issue in that hypothetical scenario would be the IP connection. Dell would either need to hook up with a carrier and do a deal, like the HP or Acer deals with Verizon and AT&T, or embed a connection as Amazon has done with the Sprint network in the background. Dell could potentially cover the network costs by simply passing them on to the consumer, without any margin. If those costs were cheap enough you'd probably find a fair amount of demand.
But this is the challenge in my mind with such a device or all MIDs: how to ensure that consumers would have mobile Internet access from the beginning, in a simple and cost-effective way.
Sprint now has an add that directly takes on Apple. The last time Sprint did that with the Instinct it made itself look foolish because the Instinct was a weak imitation of the iPhone. The Pre is a much stronger competitor; however it doesn't completely measure up to the new iPhone 3GS across the board in terms of video, speed, apps, etc. In addition, the price cut on the 3G device ($99) may pull more people into the iPhone corner.
The copy in the ad echoes remarks before the Pre launch made by major Roger McNamee, co-founder of Elevation Partners, which owns 39% of Palm:
"If you bought the first iPhone, you bought it because you wanted the coolest product on the market,” said McNamee, 52. “Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”
There's also a dig at AT&T (in related copy) about the quality of network. Indeed, Sprint's network is superior to AT&T's however the Pre so far has mostly been attracting existing Sprint customers and not driven new acquisitions, according to early estimate and speculation.
Here's what the Facebook Wall photos page copy says:
You can have a mighty fancy phone, but it’s only as good as the network it uses and the calling plans available to consumers. Look past the iHype and we think you’ll see a new Sprint with a strong network, appealing new phones and value-priced calling plans.
The Pre is just the first of new Palm devices to use the WebOS. We can expect improvements in the Pre as well as other models that offer different features and maybe price points as well.
Many consumer surveys reveal the essential value that consumers place on their mobile phones -- Pew found that consumers would give up the PC Internet before their handsets. However, mobile data/Internet doesn't enjoy that same level of importance in consumers' minds, according to a new survey from Strategy Analytics. At least that's true in the context of financial pressure and the hypothetical need to reduce household expenses.
The firm conducted a survey of 1,110 US "household decision makers regarding their multiplay spending intentions over the next year, the impact of the economy on household entertainment purchases, and the relative importance of each component of the so-called multiplay 'bundle' (broadband, digital television, fixed voice, mobile voice and mobile data)."
Here's the question:
Imagine that, due to household budgetary constraints, you have to reduce home entertainment /communications services expenses. How would this affect your spending on:
In other words, almost 50% said that given the need to reduce expenses they would drop mobile data services entirely. That compares with just 10% saying they'd drop the PC Internet.
What would be interesting to discover is whether there were any smarphone/iPhone users here and how their results compared with the averages. My guess is that you'd see more of them reluctant to drop mobile data.
In addition if you surveyed a broader age group -- household decision makers are parents/older adults -- you'd also probably find younger users willing to drop mobile voice before their SMS/data plans because they text a great deal more than they talk on mobile phones.
Google Voice (formerly GrandCentral) is starting to open up to people who had requested invites to the service. Whether you want to describe this as a next-gen telco service or "unified communications," it's potentially very powerful and appealing given the fact that its free and feature loaded, with the promise of more features to come.
As powerful as it is ordinary users will need to be educated about how/why to use it. Then there's the issue of "yet another phone number" to socialize among your friends and colleagues. But assuming you do that -- and Google remains committed to the service over time -- it represents the prospect of a "single number for life." However one of the things that is high on the potential feature list is the ability to port your number to Google voice.
Despite the enthusiasm from Silicon Valley types for the service ordinary users are totally ignorant of Google Voice and are unlikely to adopt simply because it becomes generally available. This is a potentially huge product (over time) for Google with lots of revenue implications. It could be even more strategic than GMail has become for the company. However Google will need to make the case for the service.
Previously, payments platform Google Checkout was launched as a product with potential appeal to both consumers and Google advertisers/e-commerce sellers. It was touted as an "PayPal killer" hyperbollically. I argued at the time in 2006 that Google needed to actively sell (market) Checkout to consumers to make the system work. Google did some limited online advertising for Checkout, aimed manily at AdWords advertisers and e-commerce sellers. But the failure to mount a broader consumer campaign for the product caused it to largely fail.
Checkout gets another opportunity as the payments back end for Android's paid apps marketplace. It could become a broader mobile payments platform as well.
Over the years Google has warmed up to consumer marketing, offering some outdoor awareness ads for Goog-411, Google Transit and some limited sponsorships on public radio and TV. (It's doing court-mandated newspaper advertising in connection with notifying authors of its Book Search settlement.) Most recently it more dramatically started doing TV ads for its browser Chrome. It needs to do something similar for Voice if it hopes to build awareness for the product.
If number portability comes that will remove a big barrier to adoption but Google still needs to fundamentally answer the question "why" to mainstream users. Exposing the features, benefits and price (free) through a mainstream media awareness campaign will eventually be critical if Google hopes to make Voice the success it has the potential to become.
On the heels of yesterday's post about voice-guided, subscription based turn by turn navigation apps on the iPhone (and the impending death of the PND market) comes AT&T's entry with AT&T Navigator. It's feature rich (though I haven't used it) and costs $9.99 per month. The wrinkle here is that you're not billed through iTunes, but directly through your AT&T bill (no 30% tariff for AT&T).
Here are the features verbatim from the release:
It also provides business listings from AT&T's Yellowpages.com subsidiary. This is now the second, voice-guided GPS directions app for the US and the fourth to hit the market (not counting TomTom) since the 3.0 software update and iPhone 3GS launch.
According to the WSJ we'll see two new Motorola Android devices from T-Mobile and Verizon this year. Both will have slide-out keyboards. Beyond the keyboards they'll attempt to differentiate with social networking software pre-loaded. According to the WSJ:
The software, built on Android, will emphasize "social communications" services, a person familiar with the device said. The phone will have a range of built-in social-networking software from popular providers such as Facebook and Twitter, the person added.
What that means precisely remains to be seen. How will it be different than apps for example? T-Mobile is about to release the myTouch 3G with a Samsung Android phone ("Bigfoot") to follow. So T-Mobile by the end of the year should have three Android devices -- if these Motorola phones reach the market.
The WSJ piece also argues: "The biggest advances in smart-phone development in recent years have come not in hardware but in software that makes phones simpler to use." But once we have "18 Android devices" in the market, all with software and user experiences that are nearly identical, it will likely fall back to pricing and/or hardware to be the differentiators.
Related: Sprint releases two "social networking" phones -- Samsung Exclaim ($79.99) and HTC Snap ($149). The company is also making a bigger effort to market and do CRM through social media, including Twitter.
These two phones have tiles or other pre-installed social networking software on the handsets. The combination of this sort of positioning and lower price points could make such phones popular with those looking to save money vs. more expensive and higher-end phones (such as BlackBerry or the Pre).
So how did the new iPhone do over the weekend? According to this report (based on Piper Jaffray estimates), it sold 750K units. For context, the iPhone 3G apparently sold 1 million units during its first weekend. Here are some other estimates and figures from Piper Jaffray's in-store survey:
This is a solid performance. But the smaller number of people switching to AT&T to get access to the phone may mean:
We're aware that the current version of Google Mobile App does not fully support Apple OS 3.0. It is still functional, but some users may experience difficulties using voice search when lifting the phone to their ear (like you reported) or have blank rows appear in their search history. If you want to conduct a voice search, just tap the microphone icon instead of lifting the phone to your ear.
Apparently they're working on the fix.
Update: Apple put out a press release that says it sold more than 1 million 3Gs iPhones:
Apple today announced that it has sold over one million iPhone 3GS models through Sunday, June 21, the third day after its launch. In addition, six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.