Europe

Survey: Smartphone Market Still Up for Grabs

With many smug spinmeisters and pundits proclaiming that the "smartphone wars" are over (with Apple and Google as winners), a new survey from GfK (n=2,653 mobile users in UK, US, Brazil, Germany, Spain and China) suggests a much more fluid marketplace. 

The survey found that as many as 75% of current smartphone users are open to changing or will change mobile OSs when they get new phones. Overall only 25% were loyal to their existing OS. Analysis of the findings argues that consumers are "keeping options open" as new smartphones come out on a seemingly weekly basis. This is particularly acute on the Android platform.

The frenzy of releases and the fast-changing nature of the device market has likely created the "disloyalty" reflected in the survey data. However I would caution that the sample sizes break down and become very small on an individual country basis.  

Among individual operating systems, the survey found that loyalty was highest to the iPhone (59%) and lowest for Microsoft (21%). Android and Nokia didn't fare much better (at 28% and 24% respectively). RIM saw 35% of BlackBerry users saying they would likely stay on the platform.

Earlier this year Nielsen found that the iPhone had slightly higher levels of loyalty than Android. But these findings showed much higher loyalty levels for both platforms and especially Android. Indeed, these US-only findings are dramatically different than those from the GfK survey. 

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The Outlook for WebOS: Not Good

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. 

Opera Releases 'Mobile' for Android

Opera has released its full "mobile" (as opposed to mini) browser (10.1) for Android devices. Here are the features:

  • Pinch to zoom
  • Download manager
  • Speed Dial
  • Tabs
  • Password manager
  • Geolocation

It offers a better version of the experience provided by Opera Mini, already available on Android and the iPhone. There's no Flash, however.

One of the big missing features of Opera Mini was "pinch to zoom." That's now rectified with Mobile 10.1

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Windows Phones Now on Sale in US, Sell out in Germany

Windows Phones are now on sale in the US market. In Germany apparently the handsets -- the HTC HD7 specifically -- have sold very briskly (initially sold out) and demand has been quite strong, exceeding expectations. According to WMPoweruser.com:

The high demand is not just confined to the HTC HD7 either. Vodafone Germany, who will be carrying the HTC Mozart and the Samsung Omnia 7 reports pre-orders are “exceeding expectations”, and were ordering increased quantities to satisfy customers.

Assuming the German experience is not atypical, Microsoft may have a hit on its hands. Certainly the distinctive UI will get attention and the smart media campaign ("get a life") has generated awareness of the new handsets. They're priced competitively -- even aggressively. You can get one for $149 through T-Mobile and, reportedly, $99 on Amazon with a contract (though I couldn't find that price). 

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If Facebook Were an Ad Network, It Would Be the Biggest

Yesterday in the context of its mobile event Facebook announced (consistent with my prediction) that the company had more than 200 million active mobile users around the world. I earlier asked Facebook to break this out by US vs. international numbers, which they declined to do. But let's try and figure that out . . . shall we.

Facebook itself says that 70% of its usage comes from outside the US: "About 70% of Facebook users are outside the United States." That means (assuming 500 million total users) that 150 million users are in the US. 

If we were to assume that mobile usage breaks down along the same US-international lines that would mean 140 million mobile users would be international, while 60 million would be in the US. My guess is that mobile usage doesn't break down along those lines exactly. Much of Facebook's mobile usage is likely to come from smartphones and its mobile apps in particular, although Facebook does operate sites for non-smartphone browsers and has a text only site at 0.facebook.com.

The US doesn't have the highest smartphone penetration among Western countries, Spain probably does. But in absolute numbers the US has more smartphones than any other country. Let's say (based on a collection of third party data points) that are something like 60 million smartphone users in the US. How many of those people are using Facebook (probably not 100%). Yet Facebook's mobile usage doesn't come exclusively from smartphones. We don't know, however, how many non-smartphone Facebook users there are in the US or elsewhere in the world. 

Nielsen says there are 85 million mobile Internet users total. So one would need to assume that there aren't more US mobile Facebook users than 85 million. My guess then is that there are about 75 million mobile facebook users in the US. If we were to treat Facebook as a mobile ad network, where would 75 million users put them in the hierarchy?

According to the Nielsen data in the chart below, Facebook would be the largest mobile ad network. 

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Credit: Nielsen/TechCrunch/4Info 

Notwithstanding Facebook Deals, announced yesterday, it doesn't quality as a mobile ad network -- quite yet.

Europe Invests in Symbian to Counter iOS, Android

Almost all the major smartphone operating systems are from North America and the US in particular. Aside from RIM, iOS, Android, Windows and WebOS are all "American" platforms. The Europeans, always paranoid and mindful of having their own hedge against American technological hegemony, invested (€22 million) in Symbian (the "European OS") as an alternative: 

Under an initiative sponsored by the European Commission (EC), the Symbian platform was this week endorsed by the Artemis Joint Technology Initiative and specifically identified as a unique technology that is a vital focus for European-centric mobile software development.

As a result, the EC has granted €11 million towards the funding of the development projects proposed by the consortium. With matched funding (i.e. funding provided by companies in the consortium), this means a total of €22 million is being invested in the development of next generation technologies for the Symbian platform.

The group behind the investment "is made up of 24 organizations from 8 European countries." The Europeans were considering development of a common platform or OS as a counterweight to North American smartphone dominance. It appears this is the fruit of that conversation although the investment doesn't preclude a "from the ground up" effort in parallel.

They could potentially also customize Android and create a pan-EU version of it for carriers/OEMs operating on the Continent. 

With the Symbian investment they may be throwing their money away. It appears they're hoping to develop on an OS that isn't able to compete with iOS or Android in its current form. The response might be that a next-generation Symbian could be developed and give the Americans a run for their money. Though I'm not a developer or software engineer, I think that aspiration is very unlikely to come to fruition.

Nokia itself is apparently walking away from Symbian because it recognizes the OS's competitive limitations. Starting from scratch it seems to me would have been a better bet for Europe.

Nielsen: Smartphones Now 28% of US Market but Lags EU

Nielsen says that 28% of all US mobile subscribers now have smartphones. This estimate is running behind Nielsen's earlier projection, which said that smartphones would constitute about 31% of the market in Q3 2010. And the growth expectation was that by the end of Q4 2010 the US smartphone penetration number would be 35%.

It's unlikely that the 35% will happen until perhaps Q2 of 2011 or maybe even Q3, when Nielsen had said we were supposed to cross the 50% threshold. It will now likely be Q4 of 2012 when that 50% figure is reached. Regardless of whether it's a "year late" that day will certainly come, driven in part by carrier handset subsidies, cultural change and low-cost Android devices. 

Yesterday we saw numbers from NPD and Canalys that showed Android as the top OS in Q3, while the iPhone was crowned the top handset. Those were Q3 only figures however. Nielsen offers holistic market numbers showing that Apple is just behind RIM in terms of smartphone share (see graph), while Android is surging and now almost 20% of the overall market. 

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Among the smartphone platforms Android has the largest percentage of younger (under 35) users: 

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In Europe, smartphone penetration is greater as a percentage of the overall market (though markets are much smaller in absolute terms). According to Nielsen:

Compared to Europe, this puts the U.S. on a par with the U.K., which has a similar smartphone penetration rate, but well behind Spain, which boasted a smartphone penetration rate of 37 percent last quarter, and Italy, which had a smartphone penetration rate of 33 percent last quarter.  According to Nielsen’s new Global Smartphone Report, Symbian is the most popular smartphone operating system in Europe.

Regardless of which handset or OS is winning in the US, the rapidly growing penetration of smartphones holds major implications for consumer behavior and marketing opportunities as the population mobilize -- and people take the Internet2Go. 

Opera State of Mobile Web for September

Opera has released its latest "State of the Mobile Web" report. Through data compression the company says its Opera Mini browser "saves consumers worldwide more than 2.2 billion USD each month on their mobile data bills . . . Consumers in the United States and Nigeria benefit the most from Opera Mini’s unique compression technology, which reduces the size of web pages up to 90 percent (%). Using prevailing metered rates, United States consumers could save 141 USD on average each month . . ."

Here are charts for China, the US and UK based on Opera Mini users' online behavior patterns. The top sites and leading handsets have remained relatively stable for months. 

 Screen shot 2010-10-27 at 6.35.55 AMScreen shot 2010-10-27 at 6.35.39 AM

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Nokia Q3: Doing Well, Except in US

Earlier today Nokia announced Q3 earnings, which beat financial analysts' estimates. The company sold slightly more devices than the same time a year ago, a massive 110 million. It reported €10.3 billion in revenues ($14.4 billion).

However look at the chart below. In contrast to most regions the company sold a comparatively anemic 3.2 million devices in North America, which actually represents growth. But it also indicates weak demand for Nokia (the devices and the brand) in this important smartphone market. While Nokia has a trusted brand around the world, the brand is very weak here. 

Nokia Q3 sales by region:

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One could argue that Nokia is just "a phone away" from having a hit in North America.

One really compelling handset could reverse the company's fortunes in the US. However given its software development and product-vision challenges that breakthrough handset is probably not immediately in the pipeline. Nokia is at least a year -- and perhaps two years -- away from potentially being competitive again in the US. I've argued that Nokia's North American strategy should focus on low-cost smartphones rather than trying to compete at the high-end, which it cannot at the present moment.

The company also announced that it would cut 1,800 jobs this morning in order to start to streamline the bureaucracy that is endemic to the Nokia corporate culture

Nokia has today communicated to its employees the company's plans to accelerate its transformation and increase effectiveness. The plans include simplifying operations in product creation in Nokia's Symbian Smartphones organization, as well as Nokia's Services organization and certain corporate functions. The plans are expected to result in a reduction of up to 1800 employees globally.

Nokia can be hugely successful without North America, in Europe, Africa, Asia and China in particular. But it shouldn't walk away from the US and North America because there would be a ripple effect in other regions.

I've argued in the past that Nokia's true competitor isn't the iPhone, which won't sell at the levels that Nokia does -- ever. Rather it's Android, which can be made to compete on price with the cheapest Nokia phones in some cases. Android is the platform that Nokia really needs to worry about globally. 

UK Carrier O2 Teams with Placecast for LBS Opt-In Marketing to a Million Consumers

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:

  • O2 More customers entering the Starbucks geofenced areas (who've opted in to food and drink) will receive an SMS offering them money off Starbucks VIA Ready Brew at a nearby Starbucks store (this will also include grocery stores later)
  • O2 More customers within a geofenced area owned by L’Oréal (opted-in to beauty) will receive an SMS offering buy one get one free on L’Oréal Elvive hair care range at Superdrug.

Here's an example of one of the L'Oreal alerts:

 Screen shot 2010-10-14 at 3.32.53 PM

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. 

Opera Introduces Ad Exchange Aimed Partly at Feature Phones

Most of the ad marketplaces and "exchanges" that have been created to date have been focused on smartphones. However Opera is announcing a new mobile ad exchange, based on its earlier AdMarvel acquisition, that is directed at least partly toward feature phones.

In January Opera bought AdMarvel for an estimated $8 million with a potential $15 million earnout. According to press materials:

The Open Mobile Ad Exchange makes the world's largest mobile audience, 66.5 million Opera Mini users, available to advertisers, publishers, and wireless operators. With this launch, Opera opens the world of feature phones, where Opera Mini is the dominant browser, to mobile advertising.

Called the Open Mobile Exchange, it will offer inventory on all Opera Mini browsers whether they're installed on feature phones or smartphones, such as Android and the iPhone.

When Opera acquired AdMarvel it wasn't entirely certain what it was going to do with the company. This marks a big shift for Opera, into mobile advertising in a serious way. The straddling of feature phones and smartphones offers something somewhat unique in a market that has a growing number of mediators, marketplaces and exchanges. 

Microsoft recently launched a new mobile ad exchange. Yesterday Velti bought exchange Mobclix. Google (through AdMob) has a mobile ad exchange. Smaato and Amobee are also broadly in this category too. So is Nexage.

We're in a period of consolidation and scaling. Winners will be the networks/exchanges with the greatest reach. However, companies such as Millennial and inMobi believe that the value in the ecosystem is created at the network level, with direct advertiser relationships. 

Report: Skype & Facebook Planning 'Deep Integration'

It makes a lot of sense. AllThingsD is reporting that Facebook and Skype are planning a "deep" integration, which may or may not (though probably will) extend into mobile. According to the blog post users will be permitted to call and SMS their Facebook contacts for free:

Skype had 124 million people using it at least once a month and 560 million registered users, which will be bolstered by the 500 million Facebook users who will now be able to use it more seamlessly within Skype.

That will include allowing users to SMS and call Facebook friends from Skype, which will now deploy Facebook Connect.

This should further boost Skype awareness and usage in the US, where it has fewer active users than outside the country. It will also add another "practical" dimension to Facebook. 

Indeed I've long thought that a more full-fledged "communications" role was out there for Facebook to seize or exploit. The company has gone some distance down this path (chat/video chat) but not anywhere near as far as it could. This deal may represent the beginning of the realization of that opportunity.

Screen shot 2010-09-29 at 5.52.54 AM

While the service could be enormously valuable to end users, the big question is: will Skype make any money off this relationship and precisely how?

Skype now makes money when users buy accounts that enable them to call mobile phones or landlines. It also makes money on SMS. It appears that most of the services contemplated by the deal will be free, although some "Skypebook" users might also convert to paid accounts as well. 

The likelihood that most or all of the services will be free raises the prospect of ads. At one time, after eBay acquired it, Skype saw itself as a PPCall advertising platform and more recently the company has done a few PPCall deals with yellow pages publishers (e.g., European Directories).

There are certainly some interesting scenarios here where relevant ads could be injected into the user experience in a number of ways and either sold by Skype (unlikely) or use Facebook Ads with a revenue share to Skype. And because users will be signed in to Facebook (obviously) there are also some interesting potential targeting capabilities. 

Culture, Not Technology, Often the Source of Success or Failure

Yesterday's NY Times discusses how Nokia prototyped a device in 2004 that would have pre-empted the iPhone only to decide not to develop it because of perceived risk:

A few years before Apple introduced the iPhone, research engineers at Nokia prepared a prototype of an Internet-ready, touch-screen handset with a large display, which they thought could give the company a powerful advantage in the fast-growing smartphone market . . . 

But management worried that the product could be a costly flop, said the former employee, Ari Hakkarainen, a manager responsible for marketing on the development team for the Nokia Series 60, then the company’s premium line of smartphones. Nokia did not pursue development, he said.

There are no revelations in the piece (except perhaps for that opening section) but it's a solid illustration of how cultural issues, often invisible to outsiders, can be determinative of success or failure in the marketplace. 

Pundits and the blognoscenti tend to focus on gadgets and technology as the key to success but corporate culture behind those gadgets is much more significant in the scheme of things. Culture is what permits such gadgets to come into being or quashes them, as in the opening example. The following passage captures the main point of the article and stands as a metaphor for the Nokia's challenges:

Juhani Risku, a manager who worked on user interface designs for Symbian from 2001 to 2009, said his team had offered 500 proposals to improve Symbian but could not get even one through.

“It was management by committee,” Mr. Risku said, comparing the company’s design approval processes to a “Soviet-style” bureaucracy. Ideas fell victim to fighting among managers with competing agendas, he said, or were rejected as too costly, risky or insignificant for a global market leader. Mr. Risku said he had left in frustration at its culture; he now designs environmentally sound buildings.

To succeed, new Nokia CEO Stephen Elop must alleviate this "management by committee" phenomenon and associated bureaucracy that stifles innovation. Microsoft, where Elop is from, suffers from some of the same cultural challenges. Accordingly it will be interesting to see whether he's able to enact change, not just among top management but at the middle management and grassroots levels. 

Get-in, Get-out: New Windows Phone Commercials Emphasize Efficiency

There are a couple of new Windows Phones ads out that feature the HTC "Mondrian." The really interesting thing is how they're trying to differentiate themselves vs. other smartphones. This is an enormous creative challenge because these handsets are "late to market," and will have fewer apps than other, competing platforms. So what do you say?

There are no direct references to other handsets (unlike the Verizon Droid campaign which took on the iPhone by name). But you do see what looks like a BlackBerry in the first ad below.

The angle in these two moderately humorous ads is that you can get all the information you need quickly from the homescreen and so you "get in and get out," rather than lingering or paying more attention to your handset than "your life." They struck me as fairly effective. 

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The reported launch date for Windows Phones is October 21. 

Nokia Says "Piss Off" to Android

Many have suggested that Nokia (and RIM) switch to Android to: a) reduce development and R&D costs/overhead and b) become more competitive "instantly." Nokia has several times said it won't do such a thing; it now has two (count 'em) operating systems: symbian and MeeGo.

A Financial Times interview with Anssi Vanjoki, the departing chief of Nokia’s smartphone division, said that hardware OEMs who've adopted Android (e.g., Motorola, Samsung) are like "Finnish boys who'pee in their pants' for warmth in the winter. Temporary relief is followed by an even worse predicament."

As the piece points out financial firms such as UBS have argued -- just as they did with Yahoo adopting Microsoft search -- that "Nokia could cut annual R&D spending by about €1bn a year if it stopped working on software, lifting the division’s operating margin by 400 basis points."

Vanjoki argued that while there would be some immediate gains, along the lines suggested, in the long term adopting Android would be destructive of Nokia. Adopting Android, he argued, would turn Nokia into "a commoditised box-maker like Dell, scrapping for market share with rivals that all use Android and so seem more or less the same."

This is the predicament that HTC, Motorola and Samsung now find themselves in. It's very challenging to differentiate their phones, although some are more distinctive than others. Because of the "commodity box maker" predicament, I would expect all of them to try and "diverisfy" with Windows Mobile if it's any good. 

While Nokia is theoretically correct in its Android analysis, it's uncertain that the Finnish company can deliver a best-in-class smartphone experience on its own software; that's the X variable. For that reason, Nokia might want to do a small test and develop an Android device as merely one among several handset lines -- just in case.

Google Gets More 'Connected' to BMW in Europe

Google has renewed and expanded its relationship with BMW (ConnectedDrive) in Europe. According to a new blog post:

Today, we’re happy to announce that in a joint effort with BMW, we have renewed the package of Google services that come with BMW’s ConnectedDrive service. As part of this major update, if you’re a ConnectedDrive customer in Germany, Austria, France, Italy and the U.K., you’ll have access to several exciting Google services you’ve never before experienced in a car.

ConnectedDrive is a suite of services that include maps and directions, as well as other Internet content. Major improvements to the Google Maps portion of the service include local-search suggest and new imagery, including Street View. The service is currently only available in Europe. 

It doesn't appear there are any ads on the map but that may be something slated for the future. Regardless this is a "branding vehicle" (so to speak) for Google. Google competitors have relationships with other in-car or PND vendors, including Ovi Maps/Navteq and MapQuest. And then, of course, there's Microsoft/Bing and Ford, which are making a big push.  

In general we can anticipate that the Internet will be a much more significant part of the in-car/in-dash experience going forward. There's also the "rolling hot spot" phenomenon, where the car provides the connectivity or people have MiFi devices in the car.

Oy! Here Come More Operating Systems: Facebook, EU Carriers

Who's got a mobile "operating system"? Let's see: Apple, Google, Nokia, RIM, Palm, Microsoft, Samsung (not to mention Java and Brew). Now we discover that Facebook may be building a phone with a hardware OEM and the European carriers may be working on a joint, pan-carrier OS to combat Google and Apple.

First the EU carriers: they're reportedly considering a range of options that could include a common mobile OS. This comes from an article published friday: 

French newspaper Le Figaro has reported that Stephane Richard (pictured), chief executive officer of France Telecom-Orange, has invited the heads of Deutsche Telekom, Telefonica and Vodafone to discuss the possible creation of a common platform for mobile devices. The talks, which are scheduled to take place 8 October in Paris, are motivated by a view that Apple’s iOS and Google’s Android operating systems have become a “Trojan horse” for these companies to establish their own relationships with mobile customers, reducing the significance of the operators in the value chain.

Due to the early state of the talks, it has not been decided what form the alliance will take, with options mooted including the formation of a joint venture or creation of a common apps development unit....

The article speculates that the joint venture could involve one or more of the following:

  • Creation of a common platform based on Symbian (or LiMo)
  • Creation of a highly distinct version of Android
  • Creation of a common middleware layer that is branded to carriers 
  • Creation of a new OS from scratch

The carriers will probably recognize that creation of a new OS is not likely to succeed. They're not software companies and will have difficulty competing accordingly. A custom version of Android and/or a proprietary middleware experience is more likely. Regardless they're not going to be able to "go back" to the days when they owned the customer entirely. It's pure nostalgia to think so.

The bureaucracy and cultural challenges within these large companies combine to suggest the risk of total failure for such an initiative is quite high. A case-in-point by analogy: at one point the French wanted to create a pan-EU search engine to combat Google, which completely failed.

A parallel development reported by TechCrunch is the rumor that Facebook is working with an OEM on developing a phone, similarly wary of Apple and Google's rising control of the smartphone market. However there have been many "social networking" phones that have featured Facebook to date, all largely unsuccessful. The most visible was Microsoft's ill-fated Kin.

Motorola's MotoBLUR software focuses heavily on Facebook but it hasn't really served to differentiate the phones that carry it. And INQ Mobile (owned by the Hong Kong-based Hutchison Whampoa) has put out a couple of "social mobiles," handsets that prominently feature Facebook: the INQ Mini 3G and the INQ Chat 3G. I don't have any sales data but they appear to be decent devices. 

If the "Facebook phone" rumor is true it almost certainly must be directed toward younger text-heavy users and not the higher end of the market. To succeed as a smartphone there would need to be more to the software than simply Facebook. Facebook has more than 500 million users around the world, but those users don't simply "do" Facebook. (Update: the OS is potentially Android, which if true addresses some of my critiques.)

Perhaps Facebook thinks it can revive "Platform" and compete there with apps and a developer ecosystem. However, it would be much smarter to go after the middle or lower-end of the market. For these and other reasons, I'm skeptical that the Facebook phone initiatve is quite as ambitious as the rumor argues, but we'll see.

New operating systems are unlikely to change the market substantially. Notwithstanding tools that allow developers to "write once" for multiple platforms (e.g, Rhomobile, Appcelerator) there's room for only about five smartphone operating systems to survive. That's partly why I think the Europeans will build whatever they decide to build on top of existing platforms (Android, Symbian/MeeGo) rather than create something new -- and probably mediocre -- from the ground up. 

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See related: How Long Before FB Is a Mobile Ad Network?

Skyhook Integrated in Augmented Reality Browser

Skyhook's location positioning capabilities are being integrated into the Layar augmented reality browser for Android. The impact should be better location awareness and precision for Layar. According to the press release: 

Skyhook, the worldwide leader in location positioning, context and intelligence, today announced that Layar, the world's leading augmented reality browser platform, has added Skyhook's Core Engine to its Android application for improved location results.

The Layar Reality Browser displays real time digital information on top of reality in the camera screen of the mobile phone. While looking through the phone’s camera lens, a user can see houses for sale, popular bars and shops, tourist information of the area, play a live game, etc. The Layar platform serves as an enabler for mobile location services – any database with geo-location information can easily be turned in a content layer.

Skyhook's triangulation data was replaced on iOS 4 by Apple's own system, though it remains on earlier versions of the iPhone/iOS.

Simply put, augmented reality has been over-hyped. Everyone knows about Layar but I'm unaware of anyone who regularly uses it for ordinary mobile searches. The concept is very "cool," but the utility is quite limited. The same is true for Yelp's "monocle." It's "cool" but far less useful that Yelp's regular features. 

Augmented reality will be useful as a way to get more information about places, objects (e.g., art) and products right in front of me but it will have a smaller role to play as a replacement for general search. There are other use cases depending on how we define "augmented reality."

Having said that the camera will be an increasingly important content-input mechanism. However this is distinct from augmented reality as I'm defining it. 

As an aside many of the important "augmented reality" patents are owned by early pioneer GeoVector. Someone will probably want to acquire GeoVector if for no other reason than to get its IP portfolio. 

Smartphones Selling Fast, Gartner Joins Throng and Predicts Android Win

Mindshare is consolidating around Android and many pundits are predicting that the Google mobile OS will soon become the number two smartphone platform globally. The only question is when.

Financial firm Piper Jaffray says it will be 2012, IDC says 2013 and IT consulting firm Gartner now says it will be this year as well. 

All of these predictions are based on current sales momentum enjoyed by Android, perceived weakness from Nokia, RIM and Microsoft. They also assume that Apple sales will be steady but flat compared to Android. Some firms also believe that RIM and maybe Nokia will be compelled to put out Android handsets. 

Here's the Gartner forecast, which predicts share losses by everyone but Android during the forecast period: 

Screen shot 2010-09-10 at 5.44.07 AM

Clearly Android has momentum but it's possible that Winodows (Mobile) 7 and a reinvigorated Nokia (MeeGo) could moderate or diminish some of Android's potential gains. In the US a more widely available iPhone would almost certainly do the same. The Gartner forecast also probably underestimates iPad and iPod Touch sales. 

Indeed, forecasts inevitably turn out to be incorrect though they may be "directionally" accurate. Whether or not Gartner's numbers above come close or miss the mark by a mile, it's clear that Android is a remarkable success story for Google. 

Related: Smartphones selling faster than anticipated

Nokia's Howard Stringer: Stephen Elop

The big mobile-related news of the morning is the announcement that Canadian-born Microsoft executive Stephen Elop will lead Nokia as CEO, starting September 21. Previously he was COO at Juniper Networks. According the press release this morning:

The Nokia Board believes that Stephen has the right industry experience and leadership skills to realize the full potential of Nokia. His strong software background and proven record in change management will be valuable assets as we press harder to complete the transformation of the company. We believe that Stephen will be able to drive both innovation and efficient execution of the company strategy in order to deliver increased value to our shareholders," said Jorma Ollila, Chairman of the Nokia Board of Directors. 

While the specific selection of Elop may be a bit of a surprise the replacement of existing CEO Olli-Pekka Kallasvuo is not. Nokia has been losing marketshare and mindshare for at least two years, despite its position as global leader in the overall handset and smartphone markets.

There had been indications that Nokia was looking for a North American to lead its business and help revive its fortunes here. I previously compared the company to Sony, which hired its first non-Japanese CEO in Anglo-American Howard Stringer when it felt it needed to shake things up. Elop will be the first "outside" CEO for the Finnish company. 

There's something strangely appropriate in Nokia hiring a Microsoft executive to replace OPK. Microsoft and Nokia are similar: giants and leaders in their respective markets that have stumbled and are having trouble recovering under extreme competitive pressure. 

There are some who see the move as a mistake because Elop is a "manager" and not a "product visionary." That could be a valid criticism. I'll reserve judgment because I know very little about Elop beyond his public resume.