Several years ago Dan Miller and I built a mobile advertising forecast that factored in display, search and pay per call. We haven't updated it in part because we've been extremely busy but also because the market is so dynamic. Beyond this there are scores of mobile ad forecasts out there, so it just seemed like adding more noise to the cocophany.
Here's what we projected in 2008:
There's a new mobile ad-revenue forecast out today from eMarketer, which upwardly revises to $2.6 billion (2012) the company's previous forecast. It's very close to our number above. EMarketer's number is somewhat larger -- but not by much.
While the eMarketer forecast isn't an "average" of third party data, it reviews and takes into account the other data in the market:
Generally speaking, most forecasts are either too conservative ("contrarian") or overly "optimistic," often in an effort to grab attention and coverage for the firms generating them.
If (or when) we re-do our mobile ad forecast above -- since this year is( the final year of the projection -- our methodology will likely change somewhat, because the market has changed so much in the past four years. Frankly, I'm surprised and pleased that our forecast has so closely tracked the actual growth of mobile ad revenues.
This morning both AT&T and Nokia reported quarterly earnings. AT&T sold 9.4 million smartphones, including 7.6 million iPhones last quarter, but generally missed expectations and posted a loss (partly because of the blocked T-Mobile deal). The company ended the year with 103.2 million mobile subscribers in the US. Verizon earlier this week said that it had 108.7 million subscribers.
Nokia beat the market's low expectations despite announcing a $1.4 billion (€1.07 billion) loss. More importantly the company announced that it had sold more than 1 million Lumia Windows Phones during the quarter in Europe. That was consistent with analysts' projections and has boosted Nokia despite the accelerating decline of its Symbian platform.
Yet data from forecaster Kantar, discussed by Reuters yesterday, reflected that sales of Lumia handsets in all nine markets where the phones are available were "less than 2 percent." Accordingly there's a long climb up the mountain for Nokia to reclaim its former position as a market leader on the back of Microsoft's OS:
Kantar said Microsoft's Windows Phone share in all of the nine key markets it measures remained at less than 2 percent despite the high-profile launch of the Lumia range from Nokia.
Nokia's flagship Lumia 800 model failed to break into top 10 smartphones sold in Britain by the end of the fourth quarter, the researcher said.
Nokia said in November the model was off to an excellent start in Britain, and had seen the best ever first week of Nokia smartphone sales in the UK in recent history.
Microsoft and Nokia have an arrangement where licensing and royalty payments change hands. But basically Microsoft is paying Nokia billions over a period of years to use the Windows Phone OS.
Finally, in the battle over marketshare numbers, Strategy Analytics put out an attention-getting release this morning arguing, "Android Captures Record 39 Percent Share of Global Tablet Shipments in Q4 2011." This conveys the impression that Android tablets have captured substantial marketshare, which is inaccurate.
The chart below suggests that Android tablets sold 10.4 million units -- in part because Apple actually sold 15.4 million iPads.
Kindle Fire, a quasi-Android tablet (quasi because it marginalizes Google and the Android Market), sold perhaps 4 to 4.5 million units. If correct that would constitute nearly half the "shipments" in the chart above. Beyond this Nook, another low-end Android tablet, may have sold quite well in Q4 also. These are the bestselling Android tablets. All others have had negligible sales.
Previously the HP TouchPad was the bestselling non-Apple tablet because it was reduced to $99 by HP to move units.
Let's end talk of "shipments" as a market share metric. Devices "shipped" does not mean devices purchased by consumers. Nor do "shipments" stand as a proxy for purchases, although they do typically in the unique case of Apple devices.
The "shipments vs. sales gap" was most starkly revealed last year specifically in the case of Android tablets (and RIM Playbooks). Millions of units "shipped" but almost none actually "sold" to consumers. Instead they sat on shelves. Effectively then "shipments" is a discredited and invalid metric to measure market share.
Statistically valid consumer survey data would be more reliable as a measure of market penetration.
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:
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.
Apple reports quarterly earnings today after the US market's close. Speculation about device sales and revenues is feverish. I'm less interested in whether Apple beats expectations than I am in getting a concrete sense of how many iPhones and iPads are in the market. Since earnings are a cat and mouse game in which the financial analysts try to predict sales and revenues and the company tries to surprise it's hard to say what will happen.
Revenues are expected to exceed $40 billion; consensus estimates are about $39 billion. Roughly 30 million iPhones have been sold according to the various estimates. One question mark is iPads. Were sales hurt by the cheaper Kindle Fire? The expectation is somewhere between 13 and 14+ million were sold last quarter. We'll know later today.
Meanwhile over in Windows Phone-land, early sales estimates for the Nokia Lumia line in Europe appear to be promising, with analysts estimating that the company sold more than 1 million phones since launch. Bloomberg averaged the numbers and determined the consensus is that 1.3 million units "shipped":
The Lumia handsets, which went on sale in Europe in November, probably sold 1.3 million units globally to operators and retailers by the end of last year, according to the average estimate of 22 analysts compiled by Bloomberg. The projections range from 800,000 to 2 million and only one analyst predicted sales of fewer than 1 million handsets.
Separately, another source shows that Nokia handsets already dominate Windows Phones that have actually been sold to consumers (vs. shipped). According to data compiled by WMPowerUser, Nokia-made Windows Phones now constitute nearly 50% of the active market.
Finally, as I had predicted early this month, RIM's co-CEOs were ousted or sacrificed to appease investors, who have punished the stock over the past year because of the company's performance and perceived complacency in the face of rapidly declining share. Remarkably, RIM's new CEO Thorsten Heins, a company insider, said that no new strategy is required to right the ship:
Mr. Heins has worked at RIM since 2007, most recently as the senior of two chief operating officers. On a conference call Monday, he immediately emphasized that he will mostly follow the path set by his predecessors, co-Chairmen and co-Chief Executives Jim Balsillie and Mike Lazaridis.
He told analysts not to expect "seismic changes" and ruled out splitting up the company. Mr. Heins (pronounced like Heinz ketchup) said he was focused on getting out the company's newest line of phones, to be run off its latest operating system, BlackBerry 10.
RIM and Nokia may turn out to be case studies with opposite outcomes. Nokia, having taken radical action, may turn around and regain momentum (though it's not clear yet). RIM, if Heins merely stays on course, may crash and burn.
RIM's OS and devices aren't competitive with the iPhone and Android at this point. It can no longer rely on the enterprise market and its product line is confused. Developers are also not writing for RIM. It thus needs to embrace the Android ecosystem in one form or another -- probably sooner rather than later.
Indeed, the company doesn't have that much longer to take some dramatic action. But by picking a loyal and apparently complacent insider in Heins RIM may have all but precluded that from happening.
Retailers: if you haven't yet got a tablet app or optimized site, you're behind the curve. Earlier today the Pew Internet Project released data showing that between early December and January the population of US tablet users effectively doubled, from 10% to 19%. This is of course due to holiday gift giving.
If one were to extrapolate these figures out to the entire US population it would mean (by my quick calculation) roughly 45 million people now have tablets (distinct from eReaders). And by some measures Tablet users are more valuable than smartphone and even PC users.
According to data released last week by Adobe, based on an analysis of 16 billion visits to top retailer websites, tablet owners spent more money and were more inclined to buy than smartphone owners and PC users:
Tablet owners had slightly lower conversion rates, however, than PC users. And there is much less traffic coming from tablets vs. PCs. However there does appear to be some "cannibalization" going on.
Here are the top-level findings from Adobe's study (AOV is "average order value"):
There's plenty of other evidence that support's Adobe's finding that tablets are an important new commerce platform:
Several recent studies have shown that retailers in particular are lagging in their adoption of optimized mobile sites and apps. The Pew data and Adobe findings should be a wake up call to retailers that they have to address tablets as a distinct channel.
Yesterday when Microsoft released quarterly earnings the company said nothing specific about Windows Phone sales. It touted its relationship with Nokia but didn't disclose any figures or evidence suggesting "momentum." Nonetheless three hardware analyst firms, Gartner, IDC and most recently iSuppli predict that by 2015 Windows Phones will have greater share than iOS.
Here are the iSuppli handset sales projections (RIM is presumably among the "others"):
According to the firm most of Windows Phone sales will be driven by Nokia:
Although Nokia is not the only seller of Windows Phone smartphones, the company is expected to dominate the market, accounting for 50 percent of all Microsoft OS-based handsets sold in 2012, IHS iSuppli predicts. The company's share then is set to rise to 62 percent in 2013. Nokia's portion of the market will begin to decline in 2014, as other companies increase their sales of Windows Phone products.
The cyan Nokia 900 was one of the big hits, at least aesthetically, of the recent CES in Las Vegas. It's a solid phone and one that Gartner et al anticipate will mark the return of Nokia to North America. Indeed, these Windows Phone beats iOS forecasts are largely based on the strength of Nokia's global footprint.
Despite the near consensus that Nokisoft will power a comeback for the two companies there are skeptics. At the other extreme take Om Malik's thoughtful piece likening Nokia to Kodak, which just declared bankruptcy:
Sure, Nokia has a brand, global presence and a sizable marketshare. So did Kodak. It took 132 years, the last 15 of those spent in constant belt tightening, for the photo film company to sink. Having missed the big wave, Nokia doesn’t have the luxury of time.
Malik anticipates near total failure for the Nokisoft effort. And there are others who agree. My view resides in the middle. I said in my "mobile predictions for 2012" that Windows Phones will see modest but not huge success in North America, greater success in Europe/Asia.
I don't think that Windows Phones will take the market by storm in North America. I believe the two companies will have less than 10% market share here. With lower-cost models in developing countries they will see more success as well as in Europe, where Nokia's brand is much stronger.
However, predicting what will happen in even three years in the mobile market is next-to-impossible given the pace of change. Yet I remain quite skeptical of the Gartner et al "automatic" assumptions of Nokisoft's win over iOS -- largely on the basis of Nokia's historical performance.
Yesterday I discussed a Yankee Group survey (n=15,000) showing 47% of US adults now have smartphones (Android 39%, iPhone 25%). This morning Nielsen released data nearly matching that figure, reflecting 46% of mobile subscribers in the US own smartphones as of Q4. However, Nielsen says, Q4 iPhone sales have "closed the gap" somewhat with Android among recent buyers:
Among recent acquirers, meaning those who said they got a new device within the past three months, 44.5 percent of those surveyed in December said they chose an iPhone, compared to just 25.1 percent in October. Furthermore, 57 percent of new iPhone owners surveyed in December said they got an iPhone 4S.
Nielsen adds that 60% of recent handset buyers are increasingly picking up smartphones. Of concern to Microsoft, RIM and Nokia their relative shares are tiny. RIM's is less than 5% among recent buyers.
Nielsen says among recent acquirers Android still holds a lead but that the iPhone is within 2% points of a tie (chart below). This is a reversal of earlier trends wherein Android seemed to be pulling away. We'll see what the next comScore data release shows.
Overall Android still leads the iPhone 46% to 30% in the US, while RIM has 15% of the market.
PC sales are slowly eroding -- and mobile seems to blame. One could argue that the economy has taken a toll on PC sales, and that would probably be accurate. But mobile devices (smartphones, tablets) are gaining mindshare and sales at the expense of PCs.
Hardware watchers Gartner and IDC both said that Q4 PC sales fell -- somewhere around 1%. Macroeconomic conditions and component shortages are factors. But the big news is tablets and smartphones. Tablets (iPad, Kindle Fire, Nook) were among the most widely requested and given holiday gifts, to the tunes of millions in sales.
EMarketer rounded up third party data and estimates on iPad and Kindle Fire sales. Hardware tear-down firm iSuppli estimated that Amazon sold 3.9 million Kindle Fire tablets in Q4. Barclay's Capital estimated the number to be 4.5 million. The reality is probably in-between.
Meanwhile iSuppli argues that Apple "shipped" 18.6 million iPads in Q4. Shipped is a bogus metric, but with Apple products sales and shipments are closer than with other OEMs. The iSuppli estimate is probably high, but we'll find out when Apple releases its quarterly revenues on January 24.
Overall, iSuppli argues that global tablet shipments were 65 million units in 2011. Not only are tablets "sexier" but they're typically cheaper than PCs, notwithstanding price erosion in the Wintel PC market. Take a look at charts from Horace Dediu (the first one above via GigaOM), showing the decline of traditional PCs over the past couple of years.
Separately the Yankee Group conducted a US consumer survey (n=15,000), released earlier this year, which features some striking findings:
What that means as a practical matter is that only a small minority are considering another platform. While survey data shouldn't be taken as definitive, they indicate how people are thinking and, by implication, the challenge Microsoft and Nokia's joint marketing efforts face. Windows Phones are nice but struggling to grab mainstream consumer attention and interest.
In terms of tablets, Windows 8-powered tablets won't be out until later this year. Rumor has it that they could be more expensive than some Windows 8 laptops (to be determined). Windows Tablets face the same "outsider" problem that Microsoft confronts in the smartphone market. By offering laptop-tablet hybrids (like the image above), Microsoft might be able to justify a higher price and grab consumer interest.
However the totality of evidence suggests Microsoft is under intensifying pressure with Windows Phones and Windows 8. Indeed, can Windows 8 "bring sexy back" to the PC market?
There are two recent studies that show national brands and retailers lagging in their adoption of mobile or under-investing in mobile as a platform. Brand consultancy L2 just this week released what it's calling "Prestige 100 Mobile IQ." Basically a survey of top brands' mobile presences and their efficacy, the firm found that most top brands were not taking mobile (and tablets) seriously enough, despite increasing consumer adoption.
Roughly 30% of the top 100 "iconic" brands surveyed didn't have a mobile app and 33% didn't have a mobile-optimized website. According to the study 52% had both an app and a mobile site, while 16% had no mobile site or app -- no mobile strategy whatsoever. Overall 44% of the brands qualified as "feeble" from a "mobile IQ" standpoint.
The top 10 brands with successful mobile sites/apps and strategies, according to the survey, were the following:
In a related set of findings, ForeSee Results measured consumer satisfaction with leading retailer mobile sites and compared those to online satisfaction scores. ForeSee found that most retailers and ecommerce sites' mobile ratings were lower than those for their PC websites. (Apple was the exception, with a mobile rating that was greater than its PC-experience rating.)
It's not entirely clear, at first glance, whether these scores mean consumers found the retailers' mobile sites sub-par or whether they simply preferred the PC sites. Let's assume, however, that it's the former and consumers were expressing dissatisfaction with these mobile sites.
If so, there will be near-term consequences in terms of lost opportunities as well as a negative brand impact among those companies that fail to optimize for mobile. Mobile and tablets are no longer a novelty phenomenon that can be addressed "later." Mobile internet access will eclipse PC internet usage in the next three to five years. Time spent with mobile apps is already greater than time spent online according to calculations from Flurry Analytics.
The "takeaway" from these two pieces of research is that you can no longer simply rely on your PC site. Brands and retailers must have an optimized mobile presence. But it's not enough to have a "mobile presence;" brands and e-commerce sites must deliver a positive mobile experience to their customers, which means all of the following:
These investments are rapidly becoming "tablet stakes" and those that fail to "ante up" will suffer.
Millennial Media is out with its latest SMART report (November, 2011). As always it showcases advertiser behavior and tactics on Millennial's network. This month focuses on the Telecom industry and its mobile ad efforts. What's interesting to me is how advertisers are increasingly and self-consciously using mobile to send people into stores and local dealers.
There are a mix of advertiser objectives on display in the Millennial document:
However Millennial reports growth in the use of store locators and local market targeting:
We're still in a period of experimentation with mobile advertising and best practices have yet to clearly emerge (although there are obviously some). Eventually people will figure out the best uses of mobile and what scenarios are most effective.
I think however we'll see two almost paradoxical things emerge: mobile is great for driving online-->offline visits (a kind of direct response) as well as a great brand-awareness medium.
Last June mobile analytics provider Flurry released a startling statistic: people were spending more time with mobile apps per day than they were on the PC web. The number of people on the mobile Internet in the US is still smaller than the PC Internet (100 million-ish vs. 218 million). But the implications of Flurry's engagement data are both obvious and dramatic.
Flurry recently updated its numbers and found the gap had widenend -- in favor of apps. According to the company Americans now spend an average of 94 minutes per day with apps vs. 72 minutes on the PC.
Here's what Flurry said about its methodology and how it calculated the numbers:
For the web, shown in green, we built a model using publicly available data from comScore and Alexa. For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.
Assuming the calculations are accurate the implications are profound for marketers and brands. In other words, if you're not optimized for mobile and not doing mobile advertising/marketing you're going to miss a significant audience. And that audience spending more time with apps may be your target.
People invariably want to get into the apps vs. HTML5 debate; that misses the point. The real comparison is mobile (apps + mobile Web) vs. PC. The PC audience is largely flat and time online isn't growing. But time with mobile and tablets is.
Smartphones, tablets and one day "smart TV" will be where more and more consumer eyeballs go especially for non-utilitarian tasks. It's a four-screen world; get used it.
As you may recall, last April Wal-Mart bought Kosmix for roughly $300 million and turned that into the nouveau social-mobile-e-commerce initiative @WalmartLabs. Yesterday the division of the world's largest retailer acquired a Portland Oregon based mobile agency and app developer Small Society: "A highly respected mobile agency, is joining the @WalmartLabs mobile team. Small Society embodies what has made us successful in 2011 and will help us accelerate that success in 2012."
Stepping back the question is: what is Wal-Mart thinking about its strategy going forward? Sure, it's smart to set up a Silicon Valley shop that incubates social and mobile products. But what is Wal-Mart actually going to do with them?
Wal-Mart could take on Amazon and try to become a better version of the e-commerce pioneer. While that would take enormous corporate commitment and be risky, the company could leverage mobile and social functionality being developed at WalmartLabs. Alternatively or in tandem it could try and build verticals and new initiatives that cultivate new audiences and shoppers.
Building new audiences and expanding beyond its value-conscious/price sensitive demographic is a major Wal-Mart company objective. It sees Target as a big threat in the US, which has much greater appeal to "upscale" and younger shoppers.
This quickly brings us to the Wal-Mart brand. Yes, it's a global brand -- but it's a brand like McDonald's: low quality, high volume. Wal-Mart has also been tainted in some quarters by its discrimination class action litigation with employees. Accordingly, with certain demographic segments (affluents, higher education) Wal-Mart is seen as an exploitative employer that peddles low-quality products.
Wal-Mart is equally often seen as destructive of local communities and small business. It's not uncommon to see grass-roots efforts to keep the store out of communities (e.g., San Francisco). This kind of anti-Wal-Mart outrage doesn't exist with other retailers, and Target in particular.
This negative brand image and reputation is directly at odds with the mission and self-image of @WalmartLabs and will be a major impediment to success -- either via a direct challenge to Amazon or any other "2.0" initiatives that carry the Wal-Mart brand.
However, Wal-Mart could use its own brand and potentially find success over time in a head-on challenge to Amazon and other e-commerce retailers if it did the following things:
If the company were to succeeded across the board on these fonts Wal-Mart might be able to not only appeal to new audiences but it could improve the standing of the brand overall. However, any sort of specialty, vertical or category specific initiative would need to carry a new brand.
While there's great potential in @WalmartLabs I don't think the necessary corporate-level commitment is really there.
Last week I put some mobile predictions for 2012 into a column at Marketing Land. However many people probably didn't see them given that it was still during the holiday. So here they are again in more compact form:
Mobile industry consultant Chetan Sharma conducted a 2012 predictions survey among "executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain." The complete findings are available here. Many of them are interesting, but in total they indicate to me that most insiders have no great clarity on the direction of the market.
What's most interesting to me about the survey is the discussion of mobile payments. Respondents thought that mobile payments will be the "breakthrough category" of 2012. But they also believe that banks and credit card companies will dominate the emerging segment:
While it's logical to assume that banks would control mobile payments -- they control the infrastructure -- I don't agree that the "financial guys" will define the segment. For the most part the credit card companies and operaters are not going to be able to deliver a compelling user experience -- especially the operators.
Visa, Amex and MasterCard will be the "Intel inside" of mobile payments but the user-experience front end will be delivered by someone else in my opinion (like Square). Some consumer surveys indicate that, right now, credit card issuers are more trusted than others in the emerging ecosystem (other surveys show the opposite). Credit card issuers and banks are a known quantity; they're familiar to consumers.
However mobile payments are still mostly hypothetical for most people because few have had any practical experience with it. Once various "solutions" appear and people engage with them the landscape of survey responses will likely change to favor those with the best user experience (and/or most favorable terms on the merchant side).
Source: Retrevo (Q4 2011)
Square contradicts the "banks will dominate" assumption. The company is an amazing success already, largely because it created an elegant user experience for both merchants and consumers. This is not something that would have been done by a credit card company or bank. Ultimately a credit card company, financial entity, Intuit or eBay will buy Square, however.
In the next few years, there will probably be a few mobile payments entry points for consumers on top of a couple of payments infrastructure ecosystems. Unless there are common standards, however, there won't be many consumer-facing players.
I don't think this means that Visa or Amex will dominate, though they will have to be involved. I also don't think that PayPal will win in the segment. I would have bet on Google in the past but the operators (at least Verizon) seem inclined to block the company's mobile wallet. Amazon and Apple are dark horses but still have considerable potential because of their installed bases of credit card accounts.
As with the example of Square I think there's still room for startups in mobile payments, provided they don't ask users and merchants to change behavior or adopt new proprietary systems. However unlike some of the larger or more established companies they must overcome the "cold start problem" (building usage among consumers and merchants simultaneously).
In my view this year is still about developing the ecosystem and infrastructure and not a "breakthough" year for payments. That will come in 2013 or 2014 in terms of mainstream consumer adoption.
It has taken some time, and longer than I would have expected, but more people are now using apps to access content on mobile devices than are doing so with a mobile browser according to comScore's most recent data release. While the number of people who "used downloaded apps" and "used browser" are almost identical this is the first time in comScore's tracking that apps have surpassed browser usage.
The data are survey based. They likely underestimate the relative role of apps in the overall smartphone user experience.
What these comScore data mean effectively is that mobile apps have a reach that now slightly exceeds the mobile browser on smartphones. But in terms of time spent or engagement mobile apps have for some time dominated mobile browsing (and even PC browser time according to Flurry Analytics).
Flurry also estimated that during the Xmas to New Years Day period, more than 1 billion apps were downloaded around the world.
Separately research has confirmed that apps can have a dramatic, positive impact on brand favorability metrics. Accordingly brands' attention to apps as interactive marketing tools should increase dramatically in 2012. And we should also see much more mobile display advertising used to build app awareness and generate downloads.
It used to be that the "free" phones being given away by the carriers were very low-end feature phones. Not anymore. Now, with a two-year contract, you can get a range of no-cost Android smartphones from AT&T, Verizon or T-Mobile.
Verizon was especially aggressive during the holidays; and this morning I counted no fewer than six pretty decent Android handsets available for free from T-Mobile with a two-year contract. These kinds of promotions have helped power Android's rise. The operating system now represents about 47% of all US smartphones according to comScore.
I don't have and haven't seen data about upgrade patterns from feature phones. But my guess would be that most smartphone upgraders are going to Android, partly because of the "free" promotions as well as the selection and ubiquity of these devices.
InsightExpress not long ago pointed out that all smartphone owners aren't the same. They can be segmented by engagement and activity level. And while I haven't seen any data on the behavioral differences between Galaxy Nexus owners (Android flagship) and those who own an LG Optimus (entry level Android handset), there likely are some.
How else does one explain the NetApplications data now making the rounds. These data, showing browser usage across millions of sites, reveal iOS with more than 3X the mobile browsing share of Android in December (iOS includes tablets here).
Given the comScore numbers above these data from NetApplications are fairly dramatic -- and curious. However, the gap isn't nearly as large in StatCounter data (global and North America below):
In North America, Apple's lead is considerably less than in the NetApplications data; and if one looks at "mobile browser" share -- the data above reflect "mobile operating system" -- Android is ahead of iOS in North America and globally. It's not clear how to explain these differences between the data sets.
Another piece of data: last month an online and mobile shopping study found that iOS devices accounted for 92% of all non-PC sales. In other words Android users aren't very active in m-commerce. In addition the study reported that "Apple mobile devices also have a larger AOV compared to other mobile platforms ($123 for Apple vs. $101 for Android in December 2011) – and far outstrip desktop orders ($87)."
Last year Nielsen posted some demographic data on iPhone and Android users and found them more similar than different. But in 2011 the recommendations site Hunch conducted a user survey (n=15K) and found some meaningful differences between Android and iPhone users. Chief among these differences were levels of education and affluence; iPhone users were generally older, more urban, better educated and had higher incomes according to the self-reported data.
Back to the comScore data above. Clearly Android is a more "mainstream" smartphone than the iPhone. Almost twice as many people own Android handsets in the US than the iPhone. However, looking at the rest of the data above, iPhone users are more engaged and active than their Android-owning counterparts on the whole.
As we move from a market still dominated by feature phones to one controlled by smartphones, by the end of this year, we'll see most people embrace Android as they upgrade. Apparently, however, this doesn't mean that they'll immediately begin displaying radically different behavior, though it does mean at least incremental changes.
Accordingly it might be fair to say that the lower-end Android handsets are becoming "the new feature phones."
The Pew Research Center’s Global Attitudes Project recently published a report on globaly technology usage. Among the findings interesting to this blog were those on SMS usage and mobile Internet access.
According to Pew, a full 75% of mobile users on average (in 21 countries) use SMS. Mobile Internet usage is less according to the data: "more than four-in-ten mobile phone owners use their device to go online in Israel (47%), Japan (47%) and the United States (43%).
If there are roughly 240 million adults in the US and 85% of them own mobile phones that's 204 million adults with mobile phones (comScore uses a base of 234 million adults with cell phones). Pew's data then argue that about 88 million access the Internet on their mobile phones.
By contrast Nielsen's data assert that there are now 100 million mobile Internet users in the US. Certainly if mobile phone owners under 18 are included we've easily crossed that threshold.
Millennial Media is out this morning with its latest "Mobile Mix" devices report. The report reflects the distribution of devices and corresponding operating systems on Millennial's network. Over time the percentage of smartphones on Millennial's network has grown dramatically and now stands at 70%. By contrast smartphone penetration in the US is about 44% according to the latest Nielsen figures. The other 30% of devices on the Millennial network are feature phones (14%) and so-called "connected devices" (16%): iPod Touches, Kindles, iPads and other tablets.
Connected devices are the main focus of Millennial's newsletter this time, in particular the Kindle Fire. Millennial confirms the popularity and apparently significant sales of the Kindle Fire, saying that the company is seeing a "monthly run rate of hundreds of millions of impressions":
Since its release in mid-November, the Kindle Fire has made an impact on the connected device market right out of the gate with early signs of strong consumer adoption.
On the Millennial Media platform, impressions from the Kindle Fire have grown at an average daily rate of 19% since its launch several weeks ago. We’re not just seeing millions of impressions, we’re seeing a monthly run rate of hundreds of millions of impressions.
The Kindle Fire’s impression growth on our platform has slightly outpaced that of the iPad when the iPad launched in early 2010. Though the Kindle Fire has been introduced into a more mature tablet market than the market which greeted the original iPad, the integration of Amazon’s robust digital entertainment library and the $199 price point may also have helped drive this early use by consumers. (emphasis added.)
The question raised in the excerpt above is whether "the $199 price point may [ ] have helped drive this early use by consumers." It's pretty clear the answer is "yes." The Amazon brand has certainly been critical, but it's mainly the $199 price that is responsible for the device's huge sales. The iPad created the new market for tablets and Kindle unlocked demand among those who we're more price sensitive and resisted buying "no-name" lower-priced Android tablets.
Among the smartphones on Millennial's network, 50% are Android based handsets. However, save the Nook and Kindle Fire, Google/Android tablets have had almost no success for reasons of price and quality.
Retrevo presented some interesting survey data yesterday showing consumer tablet demand is greatest for the iPad, followed by the Kindle Fire and then the B&N Nook. Retrevo shows that there is a market for Android tablets -- the Kindle Fire has already confirmed that -- provided the price is right and at least $100 less than the iPad.
Putting aside quality for a moment -- Android Honeycomb was a major disappointment from a UX perspective -- price is the major variable that consumers are responding to in Kindle Fire (but with the confidence of the Amazon brand behind it). The problem is that it's almost impossible for most tablet OEMs to get prices low enough to make any margin on them and be price-competitive.
If they match the iPad pricing they're perceived as imitators (e.g., Motorola Xoom, Samsung Galaxy Tab). But mobile carrier subsidies, which bring down the prices of smartphones, have not worked so far stimulate Android tablet demand -- mainly because consumers don't want another two-year carrier contract and the associated data fees. They're buying WiFi tablets instead.
Android-based tablets that have been priced at or below $200 in the past have been made by companies that are unfamiliar to consumers and received poor quality ratings from experts and consumer reviewers alike. Even though Kindle Fire has had its share of problems and disappointed many reviewers, consumers know and like Amazon.
It was also shown that Amazon was taking a loss on the sale of every Kindle Fire, to establish a beachhead in the tablet market and because the company figured it could make up the loss and much more on content sales.
There are rumors that Apple will introduce a 7" tablet next year to compete with the Kindle Fire, just as Amazon will go "up market" and deliver a 10" tablet.
Google, for its part, has suggested that it will respond to lagging Android tablet sales by bringing its own "higest quality" tablet to market next year. We'll see whether this is with an OEM partner or Google-branded (i.e., Chrome or Nexus tablet). Google is clearly another company -- one of the very few -- that could offer the combination of brand-instilled consumer confidence and subsidized pricing.
I've now written a number of posts, yesterday most recently, that point out most mobile shopping and purchase activity is not happening in stores or "on the go," but at home. Data vendor Compete last week released some findings from its most recent smartphone user survey that confirm this.
What Compete found is that mobile "shopping" (not buying) was largely performed in the home or, to some degree, at work. What's significant here is that people are choosing to use mobile devices (smartphones typically) when they likely have access to a PC.
A significant minority of people (34.5%) used their devices in stores (price checks, reviews, coupons) and another sizable group (28.6%) shopped while killing time.
Below are the most common mobile shopping activities. Note that the largest category is "store information" (people preparing to visit a store location). According to Compete "made a purchase" just missed the list with 31.8% of people reporting making a purchase on mobile devices.
Of all the mobile shopping apps in the market, the company with the most data on consumer-user behavior is undoubtedly Amazon. But price monitoring mobile application ShopAdvisor also probably has a pretty good window into consumer behavior as well.
The company behind ShopAdvisor, Evoqu, released some data (based on its 100K users over the Thanksgiving-Black Friday weekend) that captures the varied ways in which mobile apps are being used by consumers. It revealed three mobile shopping behaviors (based on purchase location):
Evoqu said that consumers generally placed products above $156 on "WatchLists" for later research, discussion or price drops. Price-driven alerts later caused purchases of many of the "watched" items. This was also interesting about e-commerce vs. local/offline shopping: mst of ShopAdvisors' users stayed away from local stores during that first weekend:
Mobile users shop locally, but not so much on Black Friday. The proportion of consumers who used ShopAdvisor to find local products dropped by 50% during the busy holiday shopping weekend. In the week prior to Thanksgiving, 20% of mobile users chose a local retailer to make a purchase, but from Black Friday through Cyber Monday, only 10% of users braved the mall or other local shops.
Here are the top 10 categories by percentage of mobile shopping (not necessarily buying) activity:
Assuming that the data above (in-store, couch, deferred) reflect the actual point of purchase, what's interesting is that the minority of mobile purchases happened during in-store shopping, which may have been based in part on crowd avoidance that weekend. Most (at least 54%) happened at home, where a PC was readily available. It may also be that a sizable chuck of the deferred purchases happened at home. It's not clear.
Regardless, this is another study that shows how assumptions about mobile behavior and actual mobile behavior are often quite different.