Data And Forecasts

Awaiting the iPad3 and Preparing for When PCs Are 'Just the Work Computer'

Next Wednesday Apple will reveal the iPad3 (and potentially a new Apple TV), with an improved display and Siri among other features. Mobile ad network InMobi released consumer survey data last week finding that 29% of respondents were intent on buying the new iPad, with half of those reporting they don't currently own a tablet. Many people (44% of those intending to buy one) also said they wouldn't consider another brand.

Whether or not these survey findings turn out to be accurate they reflect the momentum and mindshare of the Apple tablet, which has sold nearly 60 million units on a global basis. However, when the first iPad was introduced in Q1 2010 it was met with considerable skepticism and predictions of failure. It was seen as an "unnecessary" product, delivering a "watered-down" Internet experience; it was also "too expensive" and "wouldn't fit in your pocket." 

A year later Dell also predicted that the iPad wouldn't succeed in the enterprise. However in Q3 2011 Apple reported that 93% of the Fortune 500 were testing or deploying the iPad. By comparison Dell recently announced that it's exiting the consumer PC business. This juxtaposition is essentially a metaphor for state the PC industry as a whole. 

Increasingly, instead of buying a second computer or laptop, US (and non-US) households will choose tablets. While there's still growth in the enterprise PC market the consumer PC market is flat-to-declining. Many analysts expect Apple to sell 50-60 million iPads this year. When iPads are considered "PCs" (which they are not), Apple becomes the largest "PC" vendor surpassing HP.  

Mobile display advertising outperforms PC display according to considerable research from InsightExpress and Dynamic Logic. Beyond this, ads on the iPad and other tablets further outperform conventional mobile dislay advertising. Engagement with tablets is higher than PCs and consumers have shown a willingness to buy things through tablets in far greater numbers than they have on smartphones. There's also mounting evidence that people are spending more time with mobile devices and tablets than on the PC Internet and even with TV (in some geographies), according to recent data from Flurry and InMobi.

The totality of all this data leads to the inevitable conclusion that PCs will be outnumbered by smartphones and tablets within a year or two. PCs and the PC-Internet experience will merely be one form of Internet access and not the primary way people access the Internet (except at work). We truly are in a "post-PC" era. (That was a Steve Jobs marketing slogan that is becoming factually true.) Microsoft hopes to change the trend with the introduction of Windows 8 of course. But Windows 8 will also work on tablets. Moreover its consumer success, however, is far from certain. 

Publishers and advertisers that fail to recognize these trends and act on them in the near term will be at a significant disadvantage. (Flash should be abandoned right now, for example.) Indeed, publishers and advertisers should shift the bulk of their attention and development resources away from the "PC Internet" and toward smartphones and tablet-optimized sites. Mobile and tablet site design should guide PC website design (as recently happened with the redesign of Kayak.) This is especially true for certain categories such as retail and travel.

The notion that mobile is just an extension of the PC-centric Web, which still prevails in many companies, is completely misguided.

US Smartphone Ownership Now Over 50% -- Pew

According to new data out this morning from Pew, the US mobile market has reached an important milestone: 50% smartphone owners. In fact Pew's survey data, which the polling firm says is representative of the US population, indicates 53% smartphone ownership.

By comparison, Nielsen says the number is 48% and comScore says it's 42%. Among select segments, however both Pew and Nielsen say smartphone penetration is considerably higher than 50%. According to Pew, for college graduates, 18-35 year olds and $75,000+ earners, smartphone ownership has crossed 60%. Nielsen says for some of those groups it's even higher (75%).

The graphic below is Nielsen's US smartphone ownership chart by age and income segment. For example, if those over age 55 are excluded from the sample, US smartphone penetration rises to roughly 75%. For people between the ages of 25 and 44 and making $100,000 or more per year, Nielsen says 77.5% own smartphones. 

SmartPhone_income-and-age

The Pew findings are qualified and explained, given potential consumer confusion over what qualifies as a smartphone: 

--45% of cell owners say that their phone is a smartphone, up from 33% in May 2011
--49% of cell owners say that their phone operates on a smartphone platform common to the US market, up from 39% in May 2011

Taken together, just over half of cell owners (53%) said yes to one or both of these questions and are classified as smartphone owners.

Tracking smartphone adoption and penetration was/is really a surrogate for other things: mobile Internet access -- people with smartphones behave differently than feature phone owners -- and the mobile ad opportunity. We should now collectively shift our focus to mobile operating system share (which people are obviously tracking) and mobile Internet adoption and frequency. 

Tablets Become a Key Local Search Platform

We've known for several years how important and influential smartphones are in finding local business information, especially "on the go." However the latest Local Search User Study from Localeze, 15 Miles and comScore documents, among other things, the increasing role of tablets in the process of finding offline information.

Consistent with other consumer data in the market, the survey of 4,000 US adults found that the top reason for conducting a local business lookup on a mobile device/smartphone is the immediate need for information. Interestingly, the survey discovered that nearly half (49%) of smartphone and tablet owners were using apps for local business searches (e.g., Yelp, Urbanspoon, YP.com) vs browser-based search (e.g., Google).  

http://www.screenwerk.com/media/Screen-shot-2012-02-29-at-2.00.48-AM.png

The Local Search Study also found that while tablets were used "throughout the [local search] process," usage was concentrated in the early and middle stages (research + consideration) of the purchase process. This might be expected because of the analogy to PC usage. However comScore found that among the three groups (PC, smartphone, tablet users) tablet owners are the most engaged and active: "most tablet users conduct local business searches at least once a week . . . more frequently than PC/Laptop users and mobile phone users." 

Another interesting finding: tablet owners had increased their usage of the devices over the past year. That wasn't equally true of smartphone owners. Part of the higher levels of tablet engagement can be attributed to the fact that tablets are more "immediate" than PCs but offer a larger display for "more complete information" -- as the graphic above reflects. 

 Screen shot 2012-02-29 at 6.59.51 AM

Consistent with this heightened engagement the study found that tablet owners were more likely to make purchases after local search activity (which in this case largely mean offline transactions) and spend more money on average.

Report: Mobile Time Spent More than TV Globally

Ad network InMobi today released what it’s calling the "first wave” of a mobile media consumption study spanning 18 countries and 20,000 consumer-respondents. The results, generated in Q4 of 2011, were not broken down by region or country however.

Accordingly they should be seen as global averages and are relatively less meaningful. However they have symoblic value in highlighting the rise of mobile.

InMobi says that time spent with mobile now trumps TV: 

  • Mobile: 27% of media time 
  • TV: 22% of media time
  • PC-online: 32% of media time

Again, these figures are global. So in any individual country the data may look very different. Indeed, data from Flurry Analytics and other sources contradict the findings above for the US market, with TV capturing almost twice the amount of media time spent as mobile. 

Screen shot 2012-02-28 at 7.48.51 AM

In addition, according to Flurry (drawing upon third party data as well), time spent with mobile apps now trumps PC-online. That contradicts the InMobi finding above in the context of the US market once again. 

Screen shot 2012-02-28 at 7.49.12 AM

What's clear is that users are spending more time with mobile and the mobile Internet. The InMobi findings are thus directionally accurate across countries/regions. 

InMobi also reported that “66% of mobile users are just as comfortable with mobile advertising as they are with TV or online advertising.” That may well be in many instances. However a recent UK and US survey from YouGov found something quite different.

Consumers were much less tolerant of ads on mobile phones than in other media: 

[The] Digital Advertising Attitudes Report warns that consumer openness to advertising is lowest on mobile phones versus any other device such as PC, laptop or tablet. The vast majority of Brits (64%) and Americans (67%) would find it most unacceptable to receive unwanted advertising on their mobile phone/smartphone over other electronic devices.

There is a further warning that mobile display advertising is not the way to go. Less than one in six (11%) Brits and 15% of Americans who have surfed the internet on their mobile phone have ever clicked on a mobile banner advert and only one in every 100 Brits who surf on their mobiles and 1 in 50 Americans click on banner adverts frequently. The vast majority of those who surf the internet on their mobiles (79% in the UK and 72% in the US) find banner advertisements on their mobiles or smartphones irritating. . . 

Report: Mobile Ad Spending Badly Lags Consumer Adoption (23:1)

For years online marketers and agencies have complained that they're not getting their fair share of ad spending, based on estimates of consumer time with media. The assumption has always been that ad spending would, as a rational and practical matter, catch up with time spent -- and it has started to after many years.

Now Flurry Analytics has developed an analysis, using its own data and third party sources, that does the same thing for mobile. Among the media channels examined, the greatest discrepancy between consumer time spent and ad spending is in mobile.

While that's to be expected because mobile is the newest and most immature of all the media looked at it's still dramatic. Consumer adoption is growing quickly while mobile ad spending (for several reasons) has not kept pace. According to Flurry's analysis, consumers are spending 23% of their media time with mobile but only 1% of ad spending is going to mobile. 

http://blog.flurry.com/Portals/41620/images/MobileAdSpend_vs_TimeSpent-resized-600.png

Traditional media of all kinds (TV, print, radio) are getting more money "than they deserve" based on time spent. Digital media get less than their "fair share" according to Flurry. 

As the chart above and experience over the past 5-10 years have shown, brands, marketers and agencies don't always (or perhaps I should say rarely) act rationally. If they did, there would be closer alignment between consumer behavior and ad spending. Accordingly, the 23:1 gap illustrated above may not close for quite some time -- years in all probability.

Flurry also talks about audiences and their value to publishers in its post. The company discusses publisher eCPM rates earned by age, gender, education and income. Those data are also very interesting.

Based on all of the data examined, the following is Flurry's analysis and conclusion regarding mobile advertising's "sweet spot":

As a total snapshot, our analysis shows that females and males, between the ages of 25 and 34 years old, who have higher levels of disposable income and a bachelors degree or higher, more strongly interact with mobile ads.  Leading sociologists William Thompson and Joseph Hickey define this class as “the rich” or “upper middle class,” comprised of highly educated salaried professionals whose work is largely self-directed.  Typical professions for this class include lawyers, physicians, dentists, engineers, accountants, professors, architects, economists and political scientists.  

Nielsen: For Those Under 55 Smartphone Ownership Now 75%

Nielsen now says US smartphone penetration is at 48% (of mobile subscribers). This data and estimate are based on a survey of 20,000 US respondents in January. However Nielsen goes on to segment the data by age and income to find penetration figures that are well over 50%.

As one might expect smartphone penetration goes up with income. But younger users are also more likely to own smartphones than older consumers, if income is removed from the equation. In addition, recent buyers are also much more likely to have purchased smartphones than others. For example, 73% of those between ages 25 and 55, who bought a handset in the past 90 days, purchased a smartphone. 

If survey respondents over age 55 are excluded, overall smartphone penetration rises to roughly 75%. And looking at those between 25 and 44 making $100,000 or more per year, Nielsen says 77.5% own smartphones. 

SmartPhone_income-and-age

As the figures above show smartphone penetration is much higher among key audiences and demographic segments. It's simply not true that feature phones are the majority any longer for these groups. 

In this context, the delay in optimizing websites, building apps and using mobile advertising is effectively a kind of "malpractice" for many agencies and marketers. 

Mobile and Non-PC Device Growth Accelerating

A flurry of hardware-growth projections have recently come out and, though I seem to repeat myself frequently on this point, their implications are quite profound. Accordingly, here are some of the numbers being pumped out . . .

Forrester projected this week that there would be 1 billion smartphones globally by 2016. The company also estimated that there will be 126 million tablets in the US by the same date. NPD said this morning that Android handsets with sub-$150 USD price tags will claim 80% of the smartphone market in Africa, India and China by 2015.

Cisco recently estimated that by 2016, "one-quarter of mobile users [on a global basis] will have more than one mobile-connected device, and 9 percent will have three or more mobile-connected devices." 

http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/images/white_paper_c11-520862-06.jpg

Meanwhile the general PC market is likely to remain flat, especially in the consumer segment according to various estimates released in the past several months. Finally below are the Gartner 2011 mobile device and Q4 smartphone sales figures. Android's share is a little more than double that of the iPhone according to the IT consulting firm, although Apple had the top-selling smartphone in Q4. Microsoft lost share but the expectation is that it will still be one of the "big three" when the dust settles. 

Screen shot 2012-02-15 at 7.10.41 AM

Screen shot 2012-02-15 at 7.22.26 AM

Though tablets are alternately classified as PCs and mobile devices by different firms, they are not traditional PCs. And given their reliance on apps and the absence of a traditional keyboard they're more like smartphones than PCs in most respects. Regardless, the proliferation of "mobile" Internet devices is accelerating. It thus won't be long (3 years) before PC Internet access is something of a sideshow or secondary tool for large numbers of people.

As mobile devices reach parity and then exceed PCs for Internet access, the cross-platform fragmentation described by Google in recent Q4 survey data (written up here) will be quite common. In other words, consumers will be using multiple devices throughout the day and week. It will be more complicated to track and market to those customers.

Screen shot 2012-02-13 at 3.45.17 PM

Source: Google-Ipsos (Q4 2011 survey data)

Most advertisers and marketers are, still tinkering in mobile, are ill-equipped to confront a future where the primary exposure to their brands and products is via smartphones or tablets and their PC websites are merely a secondary, "utilitarian" resource. 

Less than 10% of Mobile Ad Impressions Are 'Hyper-Local' with Lat-Long

Last week I moderated an evening workshop about mobile ad exchanges and mobile advertising more broadly. The event was sponsored by DataXu and intended to introduce agencies to the concept and mechanics of mobile ad exchanges. It featured a mini-ecosystem of company representatives:

  • Rob Kramer, EVP Sales, Celtra
  • Jim Payne, CEO, MoPub
  • Brent Gaskamp, President, Collider Media
  • Iryna Newman, Mobile Marketing Manager, Groupon Mobile
  • Lara Mehanna, GM Mobile, DataXu

There were lots of interesting questions and issues discussed. It was a great event.

However I was struck by a comment made by Groupon's Iryna Newman during the session. I'm paraphrasing but she essentially said that she would pay a premium for as many lat-long mobile impressions as she could get her hands on -- but there simply aren't enough of them. 

This seems a strange comment given the much-touted location targeting capabilities of mobile apps and ad networks, and the frenzy around LBS and "hyper-local" advertising.

There are still numerous barriers to delivering lat-long information to advertisers. Privacy is one, especially on iOS. But many mobile ad networks are offering location only at the country, state or DMA level, without any precision beyond that. 

Some networks and publishers represent they can offer a lat-long but may in fact be "faking" it. 

On the mobile Web you're typically only getting IP-based targeting; and that faces the same accuracy challenges in mobile that it does on the PC. There's also a perceived lack of demand from advertisers for "hyper local impressions." However, the Groupon remark contradicts that very clearly. 

I was told by someone in a position to know that only about 5% to 10% of mobile ad impressions currently carry a lat-long. If accurate, and I assume it is, it's somewhat shocking given the rhetoric of mobile advertising and its targeting capabilities. 

There are various ad forecasts now in the market that argue that a substantial minority or a majority of mobile ads will be geo-targeted in the very near future. The analyst firms that developed these forecasts may be largely unaware of these fundamental "plumbing" and infrastructure challenges (mostly on the display side). In search it's a completely different situation and the same is true for individual apps.

Google, with the advent of Chrome for mobile, is seeking to remedy this for Android-based handsets. It will follow users from PC to mobile and also have much more data about them when they're mobile. 

As a general matter, there are display workarounds involving landing pages that can generate more location precision. But the industry currently faces a gap regarding what it says it can do and what it can actually deliver at scale.

Eventually there will be alignment. But I was quite surprised to learn about all these limitations. 

Google: 46% of Holiday Shoppers Used Smartphone for Research Before Buying Offline

Earlier today Google released data from two related studies of US consumer shopping behavior during Q4 2011. The studies were both conducted online and fielded in January 2012. In both cases just over 600 consumers were surveyed. Both studies claim to be representative of their respective populations -- essentially e-commerce buyers who own smartphones (and tablets).

There were a great many datapoints in the material released. However, the bottom line is that consumers are now fully engaged with smartphones (and increasingly tablets) as part of their "online" shopping. Marketers and brands need to reach consumers in appropriate ways in each context -- mindful of the overall movement of users from platform to platform.

As a foundational matter, the internet was used as a shopping tool or research medium more widely than any other according to this research. 

Screen shot 2012-02-13 at 3.36.04 PM

However "the internet" is not a single channel any more. Google and its research partner Ipsos found that consumers shopped and purchased via multiple device categories. 

Screen shot 2012-02-13 at 3.41.58 PM

Beyond this basic insight the patterns quickly get very "non linear." The slide below reflects multiple categories of shoppers, some of whom start online and finish offline and some of whom visit the store only to purchase online or via mobile ultimately.

Screen shot 2012-02-13 at 3.45.17 PM

Google also said that 42% of respondents used more than one internet device simultaneously, while 68% started on one type of device or machine and then kept going or concluded on another (e.g., tablet-->smartphone). Interestingly, the content viewed on each category of device (PC, tablet, mobile) was basically consistent.

Screen shot 2012-02-13 at 3.46.30 PM

There were some differences in behavior, however. In this sample people used PCs much more than other devices to do price comparisons and to look for deals or coupons. And they were more likely to contact a retailer via smartphone.

Though not reflected above, video was heavily used by shoppers for product reviews/ratings, demos and to generally learn about products. But if you want to make video accessible to mobile or tablet users Flash must be avoided of course.

In addition these respondents used both apps and the mobile web to conduct research and to shop. 

I could go on with more but the larger points are made already. People use PCs, smartphones and tablets to shop and buy. Brands must be prepared to interact with consumers at every point in the purchase "funnel," or perhaps more precisely: purchase continuum. That means being aware of how consumers use and interact with devices and offering device-friendly content and user experiences accordingly.

Mobile is no marginal or experimental experience for anyone any longer. Today, Forrester predicted that by 2016 there would be 1 billion smartphones on the planet. At that point the PC will be simply one of several ways that people get online.

And in the not-too-distant future hierarchy of devices and internet access methods it could well rank third out of three. 

RIM Suffering in 'Consumerization of IT'

Is RIM in a "death spiral" or not? It's being widely reported today that global energy concern/evil-doer Halliburton is dropping BlackBerry in favor of the iPhone on a global basis. While this means 70,000 fewer users it's more significant symbolically: a global corp. is shunning RIM.

As recently as a year ago corporations were still a stronghold for the company, but as more companies adopt "bring your own device" policies RIM is seeing increasing losses in the enterprise. 

On the other side, RIM's Developer VP Alec Saunders told a RIM-friendly developer conference in Europe that not only are BlackBerry owners using apps, but that there are 6 million daily app downloads. In his effort at "myth-busting," he added that RIM's app world sees more paid downloads than the Android Market and that developers are making more money than with Android.

Regardless, there's a growing stigma associated with BlackBerry usage -- in much the same way that an AOL email address went from being a symbol of tech savvy to tech laggard status. That stigma now exists in the US for BlackBerry users and to a much lesser degree in Europe where the brand and usage still relatively strong.

Screen shot 2012-02-07 at 10.11.09 AM
Source: StatCounter

Recent IDC Q4 2011 data are not quite as grim as the StatCounter data above, but directionally consistent.

http://fortunebrainstormtech.files.wordpress.com/2012/02/screen-shot-2012-02-07-at-4-06-40-am.png

New company CEO Thorsten Heins said that not much needs to be changed strategically at RIM. He's thus declined to do what Stephen Elop did upon taking over at Nokia: assert radical action was necessary to save the company. As a consequence, unless RIM's next handset is a blockbuster, we're going to see more erosion and a continuing downward spiral.  

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: 

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. 

Screen shot 2012-02-02 at 1.30.08 PM

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.

http://marketingland.com/wp-content/ml-loads/2012/02/Screen-shot-2012-02-02-at-1.06.33-PM.png 

Here's previously released Nielsen data regarding smartphone share among recent US buyers. 

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2012/01/smartphone-recent.png 

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. 

Screen shot 2012-02-02 at 1.27.36 PM

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.

Screen shot 2012-02-02 at 7.47.37 AM

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

Screen shot 2012-02-02 at 7.48.02 AM

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. 

Screen shot 2011-06-20 at 9.15.23 AM

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

 

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. 

Android Tablets by Sessions

In some ways the Kindle Fire is less an Android tablet than it is an enhanced Kindle eReading device.

 Screen shot 2012-01-24 at 7.46.55 AM

Sales estimates of the Kindle Fire, for Q4, now range from under 4 million to 6 million

Related posts: 

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. 

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:

Screen shot 2011-10-04 at 8.41.30 AM

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:

Screen shot 2012-01-26 at 10.15.23 AM

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.  

Screen shot 2012-01-26 at 8.13.28 AM

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. 

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. 

http://wmpoweruser.speedymirror.com/wp-content/uploads/2012/01/g2oemshare.jpg?e83a2c

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.