The Android 2.3 Nexus S (T-Mobile in the US) is going on sale today for $199 with a contract and $529 without. The phone is NFC-enabled, which isn't meaningful to anyone right now because there's no NFC infrastructure for users to tap into. But it will be a feature of Android going forward. It also suggests Google's future intentions with regard to ads and payments on mobile devices.
Overall the handset is the best and most elegant and fully realized of the Android devices on the market (until the next one comes out next month). My HTC EVO is a "tank" by comparison. (I could put it in a sock and kill someone with it.) I'm not a fan of the "green" Samsung display however. I've been using it for the past week and really like the device. There's not much to criticize. I would buy one in a heartbeat if I didn't already have my EVO.
I haven't noticed many significant differences, beyond NFC inclusion, between Froyo and Gingerbread. It is however less "substantial" than its N1 predecessor and feels more like a "generic" Android device than a uniquely Google device (in the way the N1 felt different).
The differences between the iPhone and Nexus S are fewer than earlier and other Android devices -- the keyboard still under-performs (Swiftkey is still a must). But it's a pretty compelling handset overall. And for those who are heavy users of Google services, it's arguably better bet than the iPhone.
The two big differentiators for Android (vs the iPhone) are Navigation and Voice Actions. The iPhone has voice search and various alternative navigation apps and tools. But the integration of Google's services with Navigation is pretty compelling (never mind that directions are poor sometimes).
Sprint has stopped bleeding subscribers in the US and has won many pre-paid converts. It has also held the line on unlimited pricing as AT&T and Verizon move to usage-based pricing (which consumers don't like).
Yet being the first "4G" network has not won Sprint many or even any defectors from other carriers. As Verizon and T-Mobile roll out competing "4G" networks any hypothetical first mover competitive advantage for Sprint is gone.
However an idea floated during the recent "D" mobile conference by Sprint CEO Dan Hesse could be a real winner. According to a summary of his on-stage interview Sprint is considering offering a single plan (using the Clear infrastructure) for multiple devices, although he hedged on pricing and whether it would be truly "unlimited."
From the AllThingsD coverage:
Dan Hesse: Customers will pay a premium for simplicity. Even if it’s not in their best economic interest, they will go with the unlimited plan
Walt Mossberg: Are you not going to do tiered pricing?
Hesse: So far, we aren’t
Mossberg: Unlimited means unlimited or doesn’t it?
Hesse: No, it doesn’t . . . The trend is toward one plan for all of your devices, like tablets, phones, PCs, etc.
Mossberg: Are you going to offer plans for all those devices?
Hesse: We are thinking about it. That’s the next step to simplicity. Three years ago, it was about one device.
Pricing would be THE key to the success or failure of such a strategy, with performance a very close second. However, conceptually, this is a winner for Sprint and could gain the company plenty of new subscribers if implemented correctly. However if there were early signs of success it would be quickly copied by other US carriers.
Verizon announced that it was finally launching its 4G LTE network on Sunday Dec. 5 "in 38 major metropolitan areas, covering more than 110 million Americans." Verizon's statement said:
Verizon Wireless’ 4G LTE network is the fastest, most advanced 4G mobile network in America, providing speeds up to 10 times faster than its 3G network. In addition, the company is turning on its 4G LTE network at more than 60 commercial airports – most within the 38 initial launch areas, and some outside those areas for added convenience for road warriors. In subsequent years, an equally aggressive growth plan will result in full nationwide coverage in 2013. The company’s 4G LTE network ultimately will connect a full range of electronics devices and machines to each other.
There will be smartphones at launch; this will be mostly about laptops. Here's the pricing:
$50 monthly access for 5 GB monthly allowance or $80 monthly access for 10 GB monthly allowance, both with $10/GB overage. For laptop connectivity, two 4G LTE USB modems will be initially available: the LG VL600 is available at launch and the Pantech UML290 will be available soon, each $99.99 after $50 rebate with a new two-year agreement. Both USB modems provide backward-compatibility with Verizon Wireless’ 3G network. If laptop users travel outside of a 4G LTE coverage area, they will automatically stay connected on the company’s 3G network.
There are now three carriers in the market claiming 4G: Sprint, T-Mobile and Verizon. The coverages are all different and pricing is different. Sprint and T-Mobile offer 4G smartphones. The problem is that none of the 4G networks truly qualifies as 4G according to international standards. This caused me recently to ask Will False 4G Claims Invite Government Intervention?
Carriers are hoping 4G gets them into tiered pricing and grows revenues overall. Consumers, by contrast, want simplified pricing and lower costs. Fundamentally consumers don't understand how much data and usage (in practical terms) is accommodated by 5GB or 10GB. They understand "faster" but not what "4G" means -- because it means very little actually.
The speeds being touted and, more importantly, actually delivered under the rubric "4G" may be incrementally better than 3G but they're not true 4G and probably (for most consumers) don't justify the higher costs involved. Indeed, many consumers may just stay away because of confusion or lack of obvious benefits. Over time that raises an interesting issue: Will carriers force consumers onto 4G networks at higher prices?
As the carriers make competing and often misleading claims in ads about 4G expect: a) lawsuits and/or b) government intervention to regulate the use of the term "4G," which is barely more than a marketing slogan today.
I've been arguing for some time that the US carriers' moves toward usage-based or tiered pricing is at odds with what consumers really want. Analyst firm Sanford Bernstein conducted a consumer survey that appears to validate that argument.
According to a write-up of the survey data at CNET consumers don't want usage-based pricing because it creates uncertainty for them:
About a third of the more than 800 people responding to the Sanford Bernstein survey said AT&T's move toward usage-based billing sparked negative sentiment toward the company. The study also suggests that if forced to take a tiered data plan in lieu of an unlimited plan, a large proportion of consumers would switch carriers even if it means buying a new phone and paying a premium on a different carrier for the unlimited plan.
Consumers regard unlimited plans as a kind of insurance against "bill shock." The amount that they expect to pay each month is constant rather than unpredictable as with a tiered plan. Over a period of months consumers would likely cease to feel this uncertainty because usage patterns would be more transparent. It's the transition which is threatening.
The terms being used by the carriers to discuss the data component of many plans is confusing to all but the most technically savvy users. Take the ZTE Peel, for example, which lends 3G connectivity to an iPod Touch. It gives you 1GB of data monthly. Is that a lot? What does that represent in real usage terms? The overwhelming majority of people don't know.
What consumers ultimately want is unlimited or very generous nearly unlimited plans. (Those exist with some of the pre-paid plans but you don't get great phone selection.) This becomes more true as more people give up landlines and become more dependent on smartphones as Internet devices.
It will be interesting to see if carriers can continue to assert their own interests and present them as good for consumers when consumers actual interests are clearly going in the opposite direction.
In the US Sprint reportedly won't be selling any more Palm Pre 1 devices and it may not support the forthcoming Palm Pre 2. Meanwhile the Pre 2 won't have any subsidized carrier support in the UK, although the device will go on sale. Regardless the public won't be interested in the Pre 2 unless it's much improved -- and cheap.
HP bought Palm for roughly $1.2 billion earlier this year. The rationale was to get WebOS and build devices on top of it. First it didn't appear that smartphones were part of the picture for HP but then the company said it would continue to build smartphones as well as tablet devices. Meanwhile Palm has steadily been losing people.
The combination of the fact that carriers are less and less interested in Palm smartphones with the leadership instability at HP and the loss of key personnel from Palm suggests that the outlook for WebOS and Palm devices is getting bleak.
Palm/HP would need to introduce a totally new smartphone form factor to get carriers and consumers interested. It blew the Pre launch by underestimating the importance of apps and getting some UX elements very wrong. Beyond that it was a nice phone -- that I couldn't wait to get rid of.
If HP doesn't act fairly decisively in the next year and put out a tablet and/or new smartphone(s) it may find that it has entirely wasted its $1.2 billion.
Related: In direct contrast to the above, Palm chief Rubenstein offers very upbeat assessment of Palm's prospects going foward.
Surveys asking respondents to predict the mobile future -- especially five or more years out -- should be seen as more fun or interesting than accurately predictive. Things are evolving so quickly it's almost impossible to know what the world will look like five years from now -- except to say that it will be mobile centric.
However a forward-looking survey can accurately reveal present attitudes and even aspirations or hopes for the future. And so it is with a global carrier/operator survey funded by Airwide solutions, a mobile messaging infrastructure provider. The survey was conducted in the summer of 2010, with responses from "31 leading mobile operators spanning Western Europe, Eastern Europe, North America, and Asia-Pac."
Many in the mobile advertising world dismiss or minimize SMS and see it as a kind of interim step toward a mobile marketing future that more closely resembles the PC. I don't dismiss SMS, nor do I believe that mobile will exactly resemble the PC; it's a different medium.
Survey sponsor Airwide and the carriers themselves are hopeful that MMS and SMS will be at the center of mobile marketing and advertising in the future. Clearly opt-in SMS/MMS mobile loyalty and coupon programs will continue to be vital. But whether they're at the center or the domiant forms of mobile advertising is highly debatable.
Below are selected data points and findings from the survey.
What do you expect to be the most used forms of communication and most used apps in 2015?
What will be the top 5 most used apps on the mobile phone in 2015?
How will the average consumer spend their mobile dollar in 2015?
Which 3 forms of mobile marketing/advertising will be the most widely accepted by consumers in 2015?
A few observations:
The widespread view that social networking will dominate would effectively mean that Facebook would be the dominant mobile site and potentially mobile ad platform/network. Facebook is already a dominant mobile destination and so it isn't such a leap to believe that this will continue to be so five years from now. Social networking here may also refer generically to the "socialization" of mobile apps and the mobile experience more generally: the social layer.
The finding reflected in the third chart, that "flat rate data plans" would be dominant in 2015, is quite interesting. Airwide is a UK-based company and I may be misinterpreting the answers to the question based on different terminology or received understandings (i.e., flat-rate data vs. subscription plans). But I read "flat rate data plans" vs. "subscription plans" not as pre-paid vs. contract plans but as unlimited vs other pricing structures. The US carriers at least are trying to move away from "flat rate" or unlimited pricing toward "usage-based pricing." However consumers want unlimited plans and predictable bills, which are the opposite of usage-based pricing.
Finally, the carriers see coupons and SMS/MMS as the dominant forms of mobile marketing and advertising, while search and display fall into the number three and four positions. The question asks about carrier perceptions of consumer acceptance rather than revenues or other measures. And from that standpoint it's plausible; consumers love deals and opt-in SMS-based marketing also generates high levels of "acceptance" by definition.
The language of this question, around consumer "acceptance," is carefully structured to produce just this result and suggest a future where SMS remains the dominant mobile marketing platform, consistent with the interests of the survey sponsor and the carriers themselves. But that's not necessarily what advertisers want, nor is it what will likely happen. SMS/MMS, as I said above, will remain a very important marking tool and coupons or deals will be central to the SMS value proposition for consumers -- they'll opt-in to get deals or notifications of sales events and so on.
But mobile search, display and rich media will be areas of greater focus for marketers going forward. There's also more than a hint of carrier aspiration here. In an SMS-dominanted mobile marketing world they have a role to play. By contrast, in a mobile world where search, display, QR codes and other forms of mobile advertising and marketing are pervasive the carrier's role is marginalized.
Related: There's speculation that next week Facebook could launch a mobile IM capability (including for groups). This would be a major potential blow to carrier SMS revenues going forward.
We all know now that the iPhone is coming next year to Verizon. But the US carrier already is selling the iPad (commercial below).
What's interesting to me is how that fact (and the coming iPhone) will affect "Droid" advertising. The aggressively anti-iPhone commercials that characterized the iPhone as "feminine" around the introduction of Droid will probably give way to something more conventional and even bland. Verizon won't call the iPhone names if it's trying to sell the device.
We'll have to wait for the first quarter of iPhone sales at Verizon (probably April 2011) to find out whether a) it affected Android handset sales in any way and b) had an impact on AT&T.
On a somewhat related note, as a Sprint customer I'm pretty excited about the ZTE Peel coming to Sprint next week. It offers a case that turns an iPod Touch into an always-connected device for $30 per month. If it also works as a wireless hotspot for laptops I'm in.
It's unlikely that people will give up a conventional mobile phone for this option but I suspect it will be relatively successful. It apparently provides 1 GB of data per month with no roaming but there are millions of iPod Touch devices out that that are eager for an on-the-go connection I'm sure.
You can also buy a MiFi and get unlimited data for $40 per month from Sprint subsidiary VirginMobile USA.
Computerworld ran a story that briefly reviews the amazing rise of Android in just three years. Android is indeed an amazing story in and of itself and for Google and its position in the mobile market.
The Computerworld article correctly attributes part of Android's gains to the massive Verizon marketing effort on behalf of its "Droid" brand. (The software has also dramatically improved since its launch.) The major omission in the story, however, is the iPhone.
More than any other market development the iPhone is responsible for Android's success. Without the iPhone Android, I would argue, would be a much weaker platform with sales not anywhere near where they are today.
ComScore, assuming the accuracy of its numbers, has charted the platform's remarkable growth in the US. If the momentum keeps up it will exceed the iPhone's overall market share next year:
Android's founding and early development work pre-date the iPhone's launch. But shortly after the iPhone came to market Android and its OEMs basically mimicked the Apple handset's look and feel and user experience, with some meaningful differences. Beyond the UX, here's the macro view of why I believe the iPhone is ultimately responsible for Android's success.
When the iPhone entered the market it shocked the carriers and presented a fundamental challenge to other handset makers. They essentially had no response. It was two years ahead of everything and anything they had at least. Android was the only viable option at the time. Symbian and Windows Mobile weren't competitive with the iPhone user experience. Microsoft grossly underestimated the iPhone. RIM's BlackBerry OS was entirely proprietary. WebOS didn't exist yet.
The only place OEMs could turn -- the only real choice they had -- was Android. And they embraced the platform with gusto.
Verizon, seeing consumers head to AT&T to get the iPhone, embraced once-rival Google and developed a brand for its Android handsets. The company spent millions to build consumer awareness around "Droid." Verizon customers (and to a lesser extent Sprint and T-Mobile customers) unwilling to switch bought Android handsets to get the experience of the iPhone without having to change carriers. Now, with more than 100,000 apps, and a rapidly improving platform Android handsets are better than "good enough" they're generally quite competitive with the iPhone user experience.
Had Apple broken with AT&T a year ago and made the iPhone more broadly available to consumers the comScore data above wouldn't look like it does. More people would be buying iPhones. (In Europe where exclusivity is gone, the market looks different than in the US.) Without the iPhone (and Apple's AT&T exclusivity) Android would just not be where it is today. Ongoing software and platform improvements are also motivated partly by Google's desire to "beat" the iPhone. There would be somewhat more complacency there if the iPhone didn't exist and Android were only competing against RIM, Nokia or Windows.
However now that a more viable Windows Phone has shown up it may divide the OEMs' loyalties, because they now have another option. It may also peel off some Android buyers. But we'll have to see. What's also interesting is that the new Windows Phones are a hybrid of the iPhone and Android: the iPhone's "coherence" and Android's multi-OEM, multi-carrier strategy.
For quite some time I've argued that usage-based data plans ($X for 1GB of data) are confusing to consumers and highly undesirable because they're unpredictable. But carriers are adopting them to some degree to make consumer data consumption on their networks more predictable. (The "feds" will probably need to mandate that carriers explain pricing impacts in real-world terms that are comprehensible rather than "5GB" or "1GB".)
Unlimited plans cost a lot but consumers don't worry about "bill shock" or usage levels. Kevin Tofel at GigaOM says that flat-rate data is dead and argues that moving from unlimited to usage-based plans doesn't really address the carrier issue of predicting how much data consumers will use.
Usage-based pricing does make heavy users pay more for their data and so benefits the carriers in that it moves people to appropriate rate and usage leves. It may well be true, however, that it doesn't help them predict demand. I won't argue that. But I do take issue with the premise that flat-rate data is dead.
It may be disappearing from post-paid carrier contracts in the US on AT&T and Verizon. But it still exists at Sprint and T-Mobile (for now). And flat-rate data is alive and well in the pre-paid world. Boost Mobile's plan, for example, offers unlimited talk, text, data for $50, which can "shrink" to an amazing $35 over 18 months.
Boost is owned by Sprint. VirginMobile USA (also Sprint-owned) offers a $60 unlimited plan (talk, text, web) and a $40 unlimited mobile broadband plan:
There are also other examples. The problem with the pre-paid market is that you get a more limited selection of handsets (and no handset subsidy). This is the carrier strategy to prevent the flight from post-paid to pre-paid for the same network coverage. However that should improve and ease somewhat over time. Some people will want the "latest and greatest" handsets. But many will be satisfied with "good enough" handsets (e.g., the Samsung [Android] Intercept) and be happy to pay greatly reduced monthly bills.
In fact the more carriers eliminate all you can eat data from contracts, the more we may see pre-paid cannibalize post-paid subscriptions. As a personal case-in-point, my wife and daughter moved from Sprint to Virgin to get the same or better plans. They don't care about having the iPhone or Android phones so they're very satisfied and we save about $100 per month on the equivalent service on the same network.
Carriers may want to completely eliminate flat-rate data from their portfolios. And while that might (might) be possible in the contract world, I would argue that competition and consumer demand ultimately won't let them entirely get rid of these plans.
T-Mobile some time ago was talking to Sprint's Clearwire about investing in WiMax as part of an effort to build out a 4G network. But why invest when you can simply claim to have "America's Largest 4G Network."
T-Mobile has apparently decided that's its new marketing tagline. I saw signage for it in T-Mobile store windows in New York yesterday. In addition, the company has launched a TV campaign that spoofs the "I'm a Mac" ads that were so successful for Apple. It ridicules AT&T's network as aging and slow. "America's Largest 4G Network" is the rebranding of T-Mobile's HSPA network, which earlier this year was called "America's fastest 3G network."
Meanwhile Sprint/Clearwire and Verizon (with LTE) are making their respective 4G claims -- or gearing up to in Verizon's case. The only problem is that none -- none -- of these networks is truly 4G. Actual "4G" requires speeds of 100 mbps. None of the carriers in the US market are remotely near those speeds.
My question is this: when will the FCC or FTC step in and smack all these claims down so that they can't simply be made without some basis in fact? It's fine to say, "We've got a faster network." But it's not fine to make claims that simply aren't real or true.
That's what you might call . . . false advertising.
The Samsung Galaxy Tab goes on sale in a couple of weeks in the US. Will it sizzle or will it fizzle? My guess is something in between.
Here's what Steve Jobs had to say about the forthcoming bunch of tablets, led by the Galaxy Tab:
First, it appears to be just a handful of credible entrants, not exactly an avalanche. Second, almost all of them use seven-inch screens as compared to iPad's near 10-inch screen . . . [The] screens on the seven-inch tablets are a bit smaller than the bottom half of the iPad display.
[E]very tablet user is also a smartphone user. No tablet can compete with the mobility of a smartphone, its ease of fitting into your pocket or purse, its unobtrusiveness when used in a crowd. Given that all tablet users will already have a smartphone in their pockets, giving up precious display area to fit a tablet in our pockets is clearly the wrong trade off. The seven-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.
[The] iPad now has over 35,000 apps on the App Store. This new crop of tablets will have near zero . . . and [ ] our potential competitors are having a tough time coming close to iPad's pricing, even with their far smaller, far less expensive screens.
Endgadget is out with its Galaxy Tab review. The gadget blog generally likes the hardware but says the device lacks app support. I haven't used one so I can't comment; however I think the pricing is wrong. It ranges from $399 for the two-year contract subsided version (Sprint, T-mobile) to $599 or $699 for the "unlocked" version of the device.
Here's the problem. The contract version is $100 too expensive and can't (apparently) be used as phone, other than with VoIP providers. The unlocked versions are too expensive when compared with the larger-screen iPad. The right way to do this would have been to enable the device to be used as a smartphone substitute. Then the $399 price is more palatable.
But as Jobs suggested most Tab buyers will have a smartphone already. So they're not going to want to buy yet another carrier contract. They're likely to wait for the WiFi version and buy it unlocked. But then it's too expensive for a device that in most respects is inferior to Apple's tablet.
My prediction is that when it becomes available in a couple of weeks there will be decent but not great sales for the Samsung device. If it had been priced more aggressively it might have flown off the shelves. Apparently the Galaxy Tab cost $200 to manufacture so a $300 price point cuts deeply into margins. But the right price for the (subsidized) Galaxy Tab would have been $299.
By this time next year we should have several Android tablets in market, together with an HP WebOS tablet and a few windows-based tablets. RIM's Playbook will also be out. The market will be a great deal more interesting and potentially confusing as consumers try and navigate all the device choices and how to connect them all to the Internet in the most economical way. (This is a huge issue: consumers want the best devices and unlimited connectivity at the cheapest prices; carriers want to thwart that objective.)
For the time being Apple owns 95% of the global tablet market according to Strategy Analytics:
Two sets of data are out this morning from Canalys and NPD group measuring handset sales in Q3 2010. These are Q3 numbers only; not overall marketshare figures. They show directional momentum but not total marketshare or absolute number of units shipped.
Global: Apple had a 17% share of smartphones; RIM has 15% share this quarter. US: Apple had a 26% share, RIM fell behind Apple (as IDC and others have confirmed). Android phones ("OHA" in the chart below) collectively captured the largest share of Q3 shipments at 43.6%.
Here are the top selling US handsets in Q3 according to NPD; four out of five were smartphones:
Android's growth was dramatic, moving from a 3% share in Q3 2009 to a 44% share in Q3 2010. Apple and RIM's share of shipments declined relatively speaking -- RIM's significantly. Here are the YoY Q3 numbers according to NPD:
Again it must be emphasized that these numbers are Q3 only and don't reveal absolute unit sales or shipments. Clearly, however, Android -- with its several carrier relationships and multiple hardware OEMs -- has got tremendous momentum in the US.
We'll see what happens when the iPhone finally goes on sale at Verizon. But it's probably about a year too late to slow Android's momentum. RIM, for its part, has got to be increasingly concerned that its momentum is in the wrong direction.
Today AT&T and Sprint announced new mobile payment initiatives. AT&T announced beta tests (essentially) with Boku, Zong and BilltoMobile. In each case the vendor will handle the transaction and AT&T will include the cost of that transaction in the mobile user's monthly bill.
In each case we're talking about relatively small transactions. Carrier billing avoids having to give another third party a credit card number. So it's potentially convenient and safer. I would speculate that those without credit cards are most likely to use and benefit from the system, however.
Consumers don't "trust" carriers, which generally have low satisfaction ratings (although some are improving). In addition, there are already huge monthly bills coming from carriers (often associated with "bill shock"). Adding third party payments into this scenario is probably quite undesirable from a consumer perspective -- certainly from mine. It's also not clear whether consumers would have the same protections and recourse they do with credit card companies (which are not well liked either).
Sprint's "mobile wallet" is smarter and may be more viable because it's essentially a pass through to a credit card or other payment system and doesn't show up on the carrier bill. It will also be used to help facilitate application purchases and enable developers to monetize their efforts in a less cumbersome way than now exists outside iTunes. According to Sprint's release:
Sprint Mobile Wallet is the first mobile payment solution of its kind from a U.S. carrier. It allows customers to use a universal PIN to make purchases using their Visa, MasterCard and Amazon Payments accounts along with other payment methods, right on their phone . . .This new capability is different than carrier billing. With the Sprint Mobile Wallet, Sprint is providing a safe, secure “container” for customers to easily use traditional payment methods while on-the-go. . .
Sprint thus facilitates payments between consumers and merchants and is a convenience on top of the existing payments "culture." For most US adults, this is the right model. AT&T's is not.
Sprint thus facilitates payments between consumers and merchants and is a convenience on top of the existing payments "culture." For most US adults, this is the right model. AT&T's is not.
In the ongoing struggle to make themselves relevant to consumers and developers carriers have launched app and developer initiatives. Verizon is the highest profile of those with its Android apps. But now Sprint is making a move with a "cross platform" initiative that would use the browser rather than a traditional app store to deliver apps to consumers.
According to a write up in Computerworld the company would offer network location as well as demographic and behavioral data about users and analytics to woo developers, potentially giving the effort superior data and tools vs more "traditional" app stores:
Sprint is looking at providing data on user activity across both device-resident and Web-based applications, according to McGinnis. It could offer both general statistics about the subscribers that use an app and data on a particular user, he said. The individual subscriber data would only be used if the customer gave explicit consent, and personally identifiable information would be removed, he said.
But that data could give developers the resources to make their Web applications more relevant than those in the established app stores, according to Openwave's Nguyen. The information could include location, Web browsing history and other data. With data about where a particular subscriber has gone on the mobile Web, carriers could use Integra to place that subscriber in a particular demographic segment, Nguyen said. Knowing that demographic segment would help the application provider offer more targeted content or advertising.
Location, analytics and user data is certainly one way to make carriers relevant in the new smartphone world. However there's a privacy nightmare looming here. The online world is currently grappling over myriad privacy controversies and litigation. Unless it was very carefully executed (opt-in) carriers and their partners would find themselves on the receiving end of class action lawsuits.
Though the passage above references "explicit" consumer consent, any scenario in which carriers "watch" their users and provide demographic and behavioral information to third parties (even if anonymous and in the aggregate) will be met with litigation.
The O2 More-Placecast opt-in SMS model is a much cleaner and better approach to reinserting the carrier brand into the consumer experience (and reaches a broader audience as well). Of course it's not mutually exclusive of providing data and location to developers. However too much data is going to be a major legal problem.
Carriers do have some sway over Android and potentially Windows 7 Phones. But this cross-platform app strategy won't work on a device like the iPhone, where the consumer's allegiance is to Apple and the carrier is the incidental provider of bandwidth.
After a price of $599 from Verizon and BestBuy's rebate-free $499, Sprint comes in with the right price for the Galaxy Tab: $399. The catch is that it requires a two-year agreement. Data plans start at $29.99. According to the release:
It will cost $399.99 (taxes not included) with a new line or eligible upgrade and two-year service agreement on a 3G Tablet Mobile Broadband plan. Sprint customers will have two rate plans to choose from for their Samsung Galaxy Tab: a 2GB data plan with unlimited messaging for $29.99 per month or a 5GB data plan with unlimited messaging for $59.99 per month (plus taxes and surcharges).
The device in California will cost an addition $50 or so because it's taxed a full price, not the subsidized price. Beyond this, now with tiered pricing, nobody really understands what these levels (2GB, 5GB) mean as a practical matter.
But Sprint is getting the price right in my opinion. It appears that it can be used as a phone, although pricing for voice + data isn't present on the Sprint site. Clearly one could use a VoIP service like Skype (or eventually Google Voice) for this device.
We'll now see if Steve Jobs' prediction that the 7" tablets won't sell comes true. He argued that they're neither large enough to provide a great "larger screen" experience nor small enough to fit in your pocket. I'm guessing Sprint's Galaxy Tab is going to be pretty popular, however.
It will be available on November 14.
Verizon reported Q3 results this morning. The company said it had revenues of $26.5 billion, down 3% vs the same quarter a year ago. Here are the wireless results:
The company said that smartphones (read: Android) were driving wireless growth. Verizon said that 60% of smartphone contracts during the quarter were upgrades who were new to the category. The company also said that 23% of its post-paid subscribers now have smartphones.
AT&T earlier this week said that it activated 5.2 million iPhones in the quarter and added 745,000 contract customers -- more than Verizon -- against 2.6 million new wireless subscribers overall. Accordingly AT&T still seems to be benefiting from the iPhone.
Once Verizon gets the iPhone later this year or early next year it will be interesting to see the impact is on Verizon's new subscriber acquisitions and the corresponding sales impact on Android phones.
Verizon will also be selling both the iPad and the Galaxy Tab. However the Galaxy Tab is being (mistakenly) priced at $599. That might have worked if there were a contract version priced at $399. However at the higher price point I suspect the Samsung device won't sell as well as it might have or as well as the iPad will at Verizon.
UK carrier O2 today announced that it has teamed up with Placecast to deliver geofenced (proximity based) SMS and MMS shopping alerts and offers on an opt-in basis to UK mobile subscribers. This is a version of what Placecast has been doing in the US market with its successful ShopAlerts program.
Carrier O2, which is owned by Spain's Telefonica, already has an opt-in marketing program called "O2 More," with roughly a million members receiving "exclusive offers from brands." Overall O2 says it has a UK customer base of 22 million. Placecast now brings the carrier the ability to deliver locally relevant offers at scale as part of O2 More.
O2 sells the ads and Placecast provides the hosted infrastructure, through a new European data center. Offers are reportedly capped at one per day and customers won't receive the same message twice. Consumers must also have opted-in to the particular shopping category (e.g., health + beauty, food + drink, etc) to receive specific offers.
Placecast CEO Alistair Goodman told me earlier this week that "This is the first time a carrier has deployed an LBS marketing program at scale for a large number of users." I asked him about interest from other carriers, which I expect will spike after news of this program gets out.
He said, "We’ve seen enormous interest from carriers and from those who’ve aggregated large audiences from all over the world. This is a way to take your brand strategy and extend it into mobile without building an app."
The first two announced brands to take advantage of the geofencing component of O2 More are Starbucks and L'Oreal. The programs they'll be running are the following:
Here's an example of one of the L'Oreal alerts:
Previously Placecast reported that "65% of customers who were part of the [US ShopAlerts] beta program made a purchase as a result of an SMS and MMS." Though this occurred during the early testing, these results are really impressive.
Carriers have flirted with mobile couponing in the past but the O2 More program and its new geofencing/LBS angle (through Placecast) create a model that could help reestablish the carrier's relationship with the consumer and generate considerable ad revenue at the same time. It also utilizes carrier-consumer data for greater targeting relevance -- all in the context of an opt-in program (which makes it more effective).
It's a model that US carriers should look carefully at and strongly consider. Indeed it's a lot better and more interesting than trying to force people onto a "deck" that is no longer relevant to most mobile users.
I'm pleased to report that the US market appears to be entering another round of price cuts by carriers. T-Mobile is about to announce a range of more affordable and flexible pre-paid plans. That's good news.
But what really caught my eye this morning was Boost Mobile's novel loyalty and retention plan that reduces the cost of subscriber bills if they pay on time:
The no-contract wireless service on the Nationwide Sprint Network now offers its customers the opportunity to reduce their $50 monthly unlimited plan to a monthly price of $35 by simply making on-time payments. For every six on-time payments, a customer's monthly cost will shrink by $5, eventually getting down to $35 a month for unlimited nationwide talk, text, Web, e-mail, IM and calls to 411.
It will take users 18 months to get to the $35 dollar level. But what a deal for unlimited service -- and what a smart loyalty/retention program. The catch here is that the phones associated with this deal are low-end phones, save the lone Motorola Android device (which is itself a second-tier Android handset).
The thing that will allow carriers to retain post-paid customers and prevent them from switching to lower cost plans like this is a selection of higher end devices and, in the future, access to faster versions of their networks. Regardless I would expect this Boost program to be quite successful.
Boost is owned by Sprint, as is VirginMobile (in the US), the company's other pre-paid carrier.
The latest comScore data on US smartphone marketshare show an even tighter race between Apple and Android. Nielsen's August numbers showed Apple with 28% of the US smartphone market and Android with 19%; however comScore reports that gap to be even smaller (less than 3 points):
Ironically Android would probably not be as successful as it is today without iPhone. Apple shocked and rocked the carriers (other than AT&T) and other OEMs and shifted consumer focus to the handset, loosening the carriers' iron grip on the mobile consumer in the US.
At the time of its introduction there was no "answer" to the iPhone other than Android. Neither Symbian nor Windows Mobile were competitive; RIM and webOS were proprietary like Apple's OS. Android was the only viable choice for OEMs, hence their broad adoption of the platform. And fierce competition between Apple and Google has helped make Android better and better.
With the rise of Android has come the struggle to differentiate for both OEMs and carriers. HTC and Motorola have sought to develop proprietary interfaces and software, Sense and MotoBlur respectively, to make their Android handsets different from one another. Samsung is promoting its screen resolution and pre-installed Swype keyboard. Other hardware features are being promoted by the different OEMs as well.
Carriers in the post-iPhone, Android era are confronting the same thing. They want to avoid being commodity providers of mobile data -- or commodity providers of Android devices.
Verizon in the US has promoted and branded its network as the most reliable and fastest. Sprint has sought an advantage by being the first to (partly) roll out 4G -- although Verizon will have LTE deployed in almost 40 cities by the end of the year, substantially eliminating any competitive advantage there for Sprint.
Verizon has also sought to cultivate a developer community and build a parallel universe of proprietary apps for its Android handsets. For its part Sprint has now come out with Sprint ID, an app-based personalization strategy. Sprint announced this out at CTIA yesterday and describes Sprint ID as follows:
Sprint ID allows LG Optimus S users to quickly download ID packs that deliver a predefined experience, including applications, widgets, ringtones and wallpapers, all at once. Packs are designed to meet customers’ interests, whether they are sports fans, fitness fanatics, auto enthusiasts or more. The packs could be brand-specific; allow users to easily switch between English or Spanish; or be specifically tailored to the customers’ businesses or lines of work. The marketplace of Sprint ID experiences is growing and customers can have one or up to five on their devices, powered by the Now Network.
These Sprint ID-app bundles will be available initially on three new Android devices from Sanyo, LG and Samsung. Here's a video shown yesterday during the announcement explaining Sprint ID:
MocoNews explains that ad targeting will be part of the equation for Sprint. ID bundles will offer contextually targeted advertising opportunities:
The carrier’s business model was curiously left out of the press conference today. Afterwards, Sprint’s President Steve Elfman explained to mocoNews how it works. “First you buy the data plan, and then we have a revenue share from the ads, he said. “It’s very targeted.”
For example, ESPN could bundle together a number of apps and then deliver an advertisement for running shoes. An Electronic Arts pack was offering a demo of some of their games, like Tetris, and was also driving traffic to their Facebook and Twitter accounts. Other app packs will be built by strong consumer brands, such as Oprah, Comcast, Disney, MTV, Yahoo. Sprint will take a share of the revenues from ads and any premium content sold through Sprint ID.
It's very unlikely that consumers will choose Sprint vs. other carriers on the basis of this strategy. However Sprint may enjoy some ad revenue from this approach if ID is nicely done and people adopt these bundles.
Sprint ID does not, in my mind, accomplish the task of differentiating Android handsets from Sprint vs. Android handsets from Verizon or T-Mobile. Sprint's Boost and Virgin units are successfully competing with price. But for the post-paid plans it will be about network reliability and speed as well as price/value. These proprietary software initiatives will have a marginal impact at best on consumer decision making.
Yesterday the Wall Street Journal reported (again) that the iPhone is coming to Verizon. This is clearly a boy who cried wolf scenario, although we know that AT&T will relinquish exclusivity in 2011 at some point. If Apple doesn't release the iPhone to more carriers it will be crushed by Android. Once the iPhone is available elsewhere it will be interesting to see whether and how market dynamics change.
Location platform and data provider deCarta made a flurry of announcements today that seek to position the company as the leading alternative to Google for local search content, maps and related services for carriers and handset OEMs. The company announced some new partnerships, a new navigation application and an upgraded map-based local search offering, MapSearch.
Here are the components:
The quote in the release from deCarta CEO Kim Fennel is very telling in terms of the pitch to partners: "MapSearch is all about delivering control of state-of-the-art mobile local search applications back to the MNOs and Handset OEMs."
Telenav offers a similar value proposition and positioning, although it's not quite as broad a product offering.