Europe

Will 'Point & Find' Get Nokia Back in the Game?

There's a long NY Times article that discusses the current competitive predicament of Nokia, the leading handset maker in the world. At the high end the OEM is losing the battle against the RIM, Android and the iPhone. Of course Apple and Nokia have recently sued each other. Nokia sued Apple after not being able to gain licensing deals (and access to Apple IP) on its terms; Apple counter sued saying, in paragraph 3 of the cross-complaint:

In dealing with Apple, Nokia has sought to gain an unjust competitive advantage over Apple by charging unwarranted fees to use patents that alleged cover industry compatibility standards and by seeking to obtain access to Apple's intellectual property. Nokia needs access to Apple's intellectual proety because Nokia has copied and is now using that patented technology.

While the company still maintains control of 37% of the global handset market, that share will continue to decline as more users adopt smartphones and Nokia offers weak handsets at the high end. The company maintains that its devices are more advanced than the iPhone but that it misjudged the market. In a statement that sounds very much like a rationalization (and one that's factually inaccurate to boot) Nokia's Anssi Vanjoki tells the NY Times:

“We didn’t execute; we were aiming at too geeky a community,” he says. “Apple is made for the common man. It’s more for Joe Six-Pack than techno-geeks. But we understand Joe Six-Pack too.”

I've argued in the past that to gain re-entry to the US market, Nokia should make high-functioning cheap devices for those people transitioning from the lowest end of the handset market. It can then re-establish the brand as it brings out better smartphones. Next year is supposed to see a refresh of the Symbian UI and UX; however there are doubts about whether the OS can compete long term with the iPhone OS and Android. 

There has been repeated speculation about whether Nokia was going to abandon Symbian in favor of Maemo. But recently Nokia said it was still very committed to Symbian. It issued the following statement about how it sees the two in its portfolio:

“While it is our policy not to disclose details of our product roadmap, we’d like to explicitly communicate that we remain firmly committed to Symbian as our smartphone platform of choice. Any speculation on what our 2012 roadmap, including operating systems and product branding, are completely premature.

As we have stated earlier, Nokia has multiple platforms to serve different purposes and address different markets. Symbian is more successful than ever in bringing smartphones to the masses. Maemo is our software of choice for devices based on technology that you’d typically find inside a desktop computer. It delivers a different user experience and enables us to widen the market we can address.”

Nokia, whose brand is strong outside the US but weak inside, must do some practical and splashy things to revitalize. One of those could be "Point & Find." Announced at the CTIA trade show in April, it's a visual search technology that uses the camera to obtain information by taking pictures of objects, images and places in the physical world. Conceptually this is identical to what Google demonstrated with Google Goggles

There are a range of companies that offer similar technology or "visual search" capabilities but only handset OEMs such as Nokia or Apple, or major Internet companies such as Google and Amazon, have the power and visibility to drive mainstream adoption. But the strategy that Nokia is pursuing with Point & Find may limit adoption: it relies on third parties to buy in/implement and it's charging them to become a part of the program. 

Point & Find is a next-generation capability that could generate excitement around Nokia handsets but it needs to be pushed aggressively. Nokia should go buy up all the "visual search" companies out there and make that experience a centerpiece of a new UX on its handsets. You can't beat Apple by trying to play the iPhone game; you need to change the rules.

Point & Find would be largely differentiated from everything else (especially if the company could do this aggressively across its product lines). In addition, given the installed base of Nokia users it could create an entire ecosystem around Point & Find that could rival the iPhone app store in one way of thinking. However I'm not sure that Nokia sees the opportunity clearly. 

Opera Moves to Shore Up Mobile Position

Opera announced yesterday that it was releasing Opera Mobile 10 to carriers and device OEMs. According to the company's blog post:

This direct-to-distributor version is available on Android, BREW, Windows Mobile and Symbian/S60 smartphones and includes Opera’s new, cross-platform UI framework. As a part of Opera’s shift to unify the look and feel of its mobile browsers, the cross-platform UI framework allows operators and OEMs to implement the same user experience quickly and cost-effectively across their entire range of handsets.

Opera says it's already on 135 millionn handsets globally. While there are no other browsers on the iPhone (yet) Opera is available for Android, Windows Mobile, RIM and Nokia smartphones.

Mobile has been much more successful for Opera than the PC. In mobile the company has a leadership position in terms of number of installs. 

Picture 74

BlackBerry, which the browser is already on but not part of the 10 release, is another key platform for Opera in the US and beyond.

Aggressive moves are necessary if the company wants to maintain its share and stay ahead of competitors. Android has its own browser for example. Users must be shown that using Opera offers a superior experience on those handsets. Window Mobile's browser is improving too. Eventually I believe Apple will allow other browsers into the App Store.

Firefox also has yet to show up in mobile in a big way. But the company promises to give Opera a run for its money as it expands out from this early beta stage.

Opera's October State of the Mobile Web Report

The following charts are from the Opera "State of the Mobile Web" report for October. They represent the top sites and other data from Opera users in the countries represented below. More countries' data are available via the Opera site.

Although there is some slight movement among sites, the "top 10" are fairly consistent over time. For example, Facebook and Google vie for the top spot in the UK and US month after month. The recent strong showing of Yahoo! (no. 3 and 4 in the US and UK) can likely be attributed to the company's improved mobile homepage/portal. 

You can check any month this year by going here and then changing the final number to the desired month. 

Picture 80

Picture 81

Picture 82

AdMob: RIM, Droid Show Gains on Network

The October AdMob metrics report is out (based on behavior and traffic on its network, rather than the mobile Internet as a whole). Here are some highlights:

  • Worldwide requests from RIM devices increased 44% over the last six months in the AdMob network . . . The recently launched RIM devices that are gaining traction are the Tour and new versions of the Curve (8900 and 8520).  
  • Worldwide requests from Android devices increased 5.8 times since April 2009 in the AdMob network . . . In the US, the Motorola Droid launched on November 6 with a big marketing push from Verizon and two weeks after launch it already represented 24% of all Android requests in AdMob's network worldwide. The Motorola CLIQ has also seen fast pickup since its launch at T-Mobile in the US and generated 6% of Android traffic worldwide on November 18th.
  • In October 2009, 70 percent of iPhone OS requests came from the iPhone while the remaining 30 percent came from the iPod touch.
  • The top Symbian and Windows Mobile devices have not changed in 2009 and both platforms have lost smartphone share. One of Nokia's first touchscreen models, the 5800 XpressMusic, is the one of the few newcomers to the list of Top 20 Symbian devices in 2009.

(emphasis added)

Here are some charts from the report:

Picture 68

What Do They Do with Smartphones in the UK?

Nielsen offers some interesting data on UK smartphone owners and what they're doing online with their devices. First the penetration numbers:

  • UK population: 61.4 million (world bank)
  • UK mobile subscribers: 75.75 million (more than 100%)
  • UK smartphone owners (per Nielsen): 6.2 million 

So the smartphone penetration rate in the UK is less than in the US and just over 4% if the numbers above are accurate.

Here's what Nielsen says smartphone/mobile users in the UK are doing -- a leading indicator of broader behavior later for the mainstream users as they upgrade:

Picture 179

Here's what Opera says are the most visited sites among its user base in the UK (September data):

Picture 5

More Visibility on Samsung Strategy

Over the past 24 or so hours there has been a great deal of news and speculation around Samsung, the number two handset maker and number three or four smartphone maker depending on the numbers you consult. Earlier the company said it would introduce "bada" ("ocean" in Korean) as a new mobile OS. Then there were rumors that the company was going to boost Android at the expense of the Windows Mobile and Symbian operating systems.

Apparently Samsung will retain WinMo for enterprise-oriented handsets and dump Symbian entirely. Today the Register UK provides some more dirt and visibility on the developments:

Samsung phones won't be Symbian based: they'll be using Android for high-end consumers and retaining Windows Mobile as it still has the edge in the enterprise, while the new Bada platform will fill that mid-range feature-phone market.

But for Nokia's footprint as the largest mobile handset maker in the world it would be time to say Symbian is dying. Indeed, the latest Nokia "flagship" handset, the N900 uses Maemo instead of Symbian, which is a statement in and of itself. 

___

Update: Samsung reverses or corrects itself, now saying that it will continue to support Symbian. While this saves face for Symbian/Nokia it ultimately doesn't matter because the user experience is no longer competitive. 

Droid's Solid Start, Nokia's Blues

Analyst polling and estimates put the Motorola Droid weekend "box office" at about 100,000 units a "good start." According to Bloomberg:

Verizon Wireless, the carrier for the device, had 200,000 Droid phones on hand, and most stores sold at least half of their stock, Mark McKechnie at Broadpoint AmTech Inc. said yesterday. Including other models, Motorola will sell 1 million phones based on Google Inc.’s Android software in the fourth quarter and 10 million in 2010, he said.

Motorola and Verizon are competing against a new version of Apple’s iPhone, offered in the U.S. through AT&T Inc. Apple sold more than 1 million of the latest model in its weekend debut in June. Motorola’s share of the global phone market dropped to an estimated 4.7 percent last quarter from about 5.5 percent in the second quarter, the company said last month.

Earlier today I wrote about Samsung's new mobile OS and its rumored adoption of Android (and its own OS) at the expense of Windows Mobile -- and Symbian. And speaking of Nokia, today it began shipping the much anticipated N900 "mobile computer," which is also a phone.

Om Malik gave a mixed but upbeat review of the device and in a blog post today GigaOM tentatively suggested that this Maemo 5 handset  "may be a first step in reversing its fortunes." I'm here to say that assessment is incorrect and that the device -- in the US at least -- is very unlikely to succeed.

First it doesn't offer a strong enough user experience from what I can tell. And priced at €500 (almost US$750) there's absolutely no chance it will succeed as a mainstream device without a major carrier subsidy. The de facto price ceiling for smartphones (with operator subsidy) is $200. That figure will be used to judge the N900 when it makes it to the US. That means it must have a pretty aggressive subsidy to be competitive. Even with such a subsidy it will have difficulty competing. 

The Nokia brand has limited value (after years of neglect) in the US and there are very few apps that Nokia's Ovi store offers:

Picture 87

Source: news reports and company documents

It doesn't matter that there are no apps; it's a handheld PC, a "mobile computer" right? Netbooks cost less than this device and thus people with that mindset ("I want a mobile computer") will likely buy a netbook before they buy an N900. As a smartphone it will lose to the iPhone and Android in terms of brand, UX and consumer appeal.

Accordingly, this is not the device that will turn Nokia's fortunes around in the US or probably at "home" in Europe. Indeed, at a conference in Europe last week I heard a number of people discuss how they had left Nokia for the iPhone and how Nokia was "falling behind." That was the phrase they used. These comments are isolated and anecdotal but I consider them to be significant because they were from people who had generally be loyal to Nokia until now. 

I've argued in the past that Nokia's "way back" in the US market lies in cheap but reasonably high functioning smartphones to develop mass appeal, as a springboard for other product launches. However even that may be foreclosed to Nokia with the likes of the Droid Eris at $99 and a $99 iPhone, not to mention sub $200 BlackBerry devices). Because its operating systems are not as strong as competitors' it will have difficulty competing at the high end. A radical step would be to try and acquire a Palm and simply throw Symbian and Maemo away.

Nokia retains global handset and smartphone leadership but its share continues to erode. 

Canalys Smartphone Sales and Share Data

Research firm Canalys put out Q3 smartphone sales and share data that tracks handset sales and market share for the major platforms and providers. Here's the top-line from the firm as well as their charts and figures:

Global smart phone shipments in Q3 2009 rose 4% year on year, slower than the 13% annual growth seen last quarter, and held back primarily by a 6% fall in EMEA. Shipments in North America were up 5%, but the APAC region saw a remarkable 26% rise after several flat quarters. 

Nokia retained its worldwide smart phone lead, with a share of 40% – slightly up on its year-ago position, but down almost 5% sequentially. RIM held onto second place with a largely unchanged (compared to Q2) share of 21%, while Apple reached a new high of 18% share in third, significantly up from the 14% it held in Q2 as supply of the iPhone 3GS improved in many countries. HTC retained its fourth-place position with 5% share.

Looking at the market by operating system, Symbian’s overall lead shrank as its share fell to 46%, ahead of RIM and Apple. Microsoft remained in fourth with its share dipping slightly below last quarter’s previous low point of 9%. The proportion of smart phones running Google’s Android OS climbed to almost 4%, from just under 3% in Q2.

Picture 58Picture 57Picture 59

Compare data from:

Is Vodafone 360 a Model for Other Carriers?

In this new era of branded handsets and OEM app stores carriers are having to scramble to figure out how to remain relevant to users and prevent connectivity from becoming a pure priced-based commodity. Several US carriers, Sprint, AT&T and Verizon, have all anounced apps stores and are courting developers. I'm very skeptical that these app stores will be very successful among smartphone users (given the competition from the OEM app stores); however I could be wrong.

I think there is an opportunity for carrier app stores among lower-end phones. (See also Microsoft's OneApp, along these lines.)

In the UK Vodafone, minority owner of Verizon Wireless, has officially launched Vodafone 360, a multifaceted service that offers social networking apps/tools, photo tagging/sharing, online backup and enhanced mapping. Will this turn out to be like "bloatware" on PCs or will it be a valuable suite of services that prove compelling and "sticky" among users?

he group communication aspects of the service could prove to be quite popular. Of course it all depends on how well these things work in practice. 

 Picture 10

Vodafone is very aggressively marketing 360 across London and chiefly emphasizing the social elements of the service. The marketing and "value proposition" are not unlike the social software layer on the Motorola CLIQ/DEXT (through Orange in the UK). 

If the Vodafone 360 service proves to be a hit it could be something of a model for other carriers -- value-added services built around contacts, with a PC tie-in -- which must be creative, even experimental, to now avoid the "dumb pipe scenario."

Opera: We Save Consumers $8 Billion per Year

Opera has released its monthly State of the Mobile Web report for September. This month's report is focused on the Russian-led Commonwealth of Independent States. The company is also highlighting how its Opera Mini server-side compression of data/sites speeds up the mobile Web and saves consumers money on data charges (unless you're on an unlimited plan of course).

Here are some of the data and findings from the report:

  • In September 2009 more than 35.6 million people used Opera Mini
  • Those 35.6 million people viewed 15 billion pages in September 2009 . . . On an average day, Opera Mini users view 500 million Web pages on their phones.
  • Opera Mini users generated nearly 227 million MB of data for operators worldwide in September 2009 . . . Opera Mini is compressed up to 90%, meaning Opera Mini servers processed up to 2.1 petabytes of data this month.
  • Users in the top 10 countries save up to 672 million USD per month, or over 8.1 billion USD per year.
  • On a monthly basis, users in the United States and the United Kingdom save the most money using Opera Mini, based on their usage and the average cost of browsing (per MB).

 Picture 5Picture 4Picture 6

One thing that's great about the data Opera provides is that it reflects a part of the market that typically isn't captured by all the smartphone focused reports.

Note Yahoo's gains in the UK and US, especially the US. Also in the US most of the top ten handsets are BlackBerry, which offer a generally poor mobile Web experience today. RIM has promised to change that "within a year." We'll see and we'll see how that impacts Opera usage in the US. However in the Windows Mobile smartphone we demo'd (HTC) Opera was pre-installed as was IE. It's probably safe to say that Opera's brand is strong in mobile than on the PC. 

For additional data and information on more countries you can get the full report here

BBC Finds Tepid Interest in Mobile TV

The BBC has decided not to go forward with ambitious mobile TV syndication plans, in another sign of lackluster consumer interest in mobile TV. In a year-long trial with top mobile operators (save O2) the BBC found limited interest among users. According to a published report:

The 12 month trial was held by the BBC last year in partnership with Orange, Vodafone, T-Mobile, 3 and Sky. A subsequent BBC consultation document said the trial results ‘suggested that the level of demand for content delivered via 3G is uncertain and may, at least in the short to medium term, be relatively small’.

At its peak, only 580 users per day accessed the BBC’s TV channels during the trial.

Apparently however the BBC still has plans to stream Olympics coverage to mobiles. 

These findings are consistent with limited consumer interest in the US in "mobile TV." Mobile video continues to grow as a broader category; however consumers have little interest in paying premiums to watch TV on their handsets. Pricing and user experience are the central challenges for mobile TV. As part of a bundle to lure subscribers into an "unlimted" tier of service, mobile TV may have some appeal. 

However given increasing price competition among US operators such deals may be unprofitable for both them and the mobile TV vendors. Eventually we predict that TV subscription revenues will provide only a small amount to the involved parties and most of the "mobile TV" revenues will come from advertising. There may eventually be some appeal for on-demand programming on a per transaction basis, but that will probably need to wait for 4G. 

Is Palm's Acquisition Inevitable?

I have a like-hate relationship with my Pre. The device is elegant as a phone; as a mobile Internet device it leaves a lot to be desired. Simple and obvious things have been left out: no voice diailing or searching, no virtual keyboard, no predictive text or auto correct and so on. But next to the iPhone it's in some ways the best device in the market.

It can't do everything that the Android devices can do but it's crisp and more "coherent" (integrated) in some ways than Android. But the Pre and the forthcoming Pixi seem destined to be overshadowed by the iPhone, Android and probably RIM's devices. Depending on how Palm's EU push and the Pixi do, the company may or may not be bait for an acquisition.

By whom? By Microsoft or Nokia, that's whom. 

Palm's market cap is more than $2 billion so it would take some number above that for either company to acquire it. But it would also take a big mea culpa and admission that Symbian/Maemo or Windows Mobile were essentially dead ends. Neither Microsoft (which plans to release WinMo 7 next year) nor Nokia is ready to do something like that just yet. 

Microsoft will need to introduce 7 and see what the response is. If 7 fails to ignite the imagination and sales then more drastic measures may be in order. By the same token if Nokia continues to see its position in the market deteriorate further it may similarly be time to make a big acquisition (Palm would also be a way to get back into the US market in a potentially big way). However the NAVTEQ acqusition, at $800 million, has so far failed to pay off or pay meaningful dividends for the company as far as I can tell. So the company may be reluctant to shell out huge money in another takeover bid. 

Palm itself will resist any takeover discussion until it's clear how the new WebOS and related devices are doing (at least a year from now). But right now at least they're not doing as well as Palm had hoped. At a lower price point, the Pixi might be the right device for the company, but the Pre has to be seen as something of a disappointment. 

If the Pixi doesn't take off, and there aren't any new devices up Palm's sleeve, and Nokia and Microsoft's fortunes don't improve significantly we may see one or both companies talking to Palm about taking it over. Right now an acquisition isn't inevitable (or even likely), a year from now it could be an entirely different story. 

Apple Earnings Call: iPhone Comments

The following are excerpted iPhone-related comments from the Apple earnings call transcript (Seeking Alpha). . .

Apple CFO Peter Oppenheimer:

We are thrilled to have sold almost 7.4 million handsets in the September quarter. That’s a new company record and an increase of 7% over the prior September quarter when we increased channel inventory by 2 million handsets following the introduction of the iPhone 3G and the dramatic expansion of geographic distribution. iPhone sell-through in the quarter increased 38% year over year . . .

We are looking forward to selling iPhones in China beginning later this month as this very large market represents a great opportunity to expand iPhone's reach even more broadly. We also plan to expand our carrier relationships in the U.K. and Canada.

The Apps store continues to be an unparalleled success, with over 85,000 apps available and over 2 billion customer downloads to date, including over half a billion downloads in the September quarter. In addition to adding more apps at an amazing pace, we have continue to enhance the Apps Store experience with iPhone OS 3.1 which includes new features such as genius recommendations and a streamlined way to organize apps within iTunes.

Recognized revenue from the iPhone handset sales, accessory sales and carrier payments was $2.3 billion during the quarter compared to $806 million in the year-ago quarter, an increase of 185%. The sales value of iPhones sold during the quarter was $4.5 billion.

Question (multiple carriers, pricing changes):

[If] you start to go to multiple carriers can you talk a little bit about the pricing of the phone when you go from exclusivity to multiple carriers? And obviously, not specific but any sort of color we can have in terms of pricing dynamics change on the phone from you to the carrier?

COO Timothy D. Cook:

Our pricing is confidential . . . so it’s not something I could comment on in detail but generally speaking from markets where we’re already selling I would not expect to see a wholesale price difference as we bring on other carriers. However, the end user price is really set by the carriers themselves so you may or may not see a street price difference.

Question:

So when you go from exclusive to multiple carriers, you wouldn’t necessarily see change in pricing that you are charging the carrier? Is that correct?

COO Timothy D. Cook:

That’s correct.

Question (competition for the iPhone):

There’s a lot of obviously wannabes that are coming to market in the season, particularly Android and many of them are offering touch screens and richer browsing and media and app stores and are being given carrier support. How do you think about maintaining your momentum and differentiation amidst that kind of environment?

COO Timothy D. Cook:

Well, Mike, we feel great about how we ended the fiscal year with selling 7.4 million, as Peter talked about in the preamble. And that put us over 20 million -- almost 21 million for the fiscal year, which was up 78% from before. And so we have significant momentum.

Also when you look at the ecosystem that we’ve got with iTunes and the Apps store with the Apps store having over 85,000 apps, which is a country mile more than anyone else, plus the very strong product pipeline that we have, we feel very, very good about sitting up and competing against anyone.

Frankly I think that people are really just trying to catch up with the first iPhone that was announced two years ago and we’ve long since moved beyond that.

Question (iPhone enterprise performance and Europe):

I have a question on I guess the enterprise business. . .  [On] your iPhone business, any color you can share with us, the break-out between consumer and enterprise? At least qualitatively and how that has been trending?

COO Timothy D. Cook:

The iPhone is either being deployed or being piloted in well over 50% of the Fortune 100 and from an international point of view, if you look at Europe, this is true in about 50% of the Financial Times 100. And so we feel very good with the progress that we've made since the iPhone 3GS was announced.

Also, another very key market for us, that some people call enterprise, is that over 350 higher-ed institutions have approved iPhones for their faculty, staff, and students. And in addition to both of these, we continue to be very happy with our sales in the government arena.

Nokia Reports First Loss Since '96

The globe's largest handset maker reported its first quarterly loss since 1996 today. Here are the big numbers from the Wall Street Journal and Bloomberg:

The largest mobile-phone maker took goodwill impairment charges of €908 million ($1.36 billion) on Nokia Siemens Networks, its network equipment joint venture with Germany's Siemens AG, as third-quarter sales at the unit fell 21% on year to €2.8 billion.

The company sold 16.4 million smart phones, it said. Last quarter’s smart-phone sales were 16.9 million.

Sales of the N series multimedia phones were 4.5 million in the quarter, the company said, less than the 4.6 million reported last quarter. Nokia sold 4.4 million of the E series, consisting of business-oriented models that compete with Research in Motion Ltd.’s Blackberry, compared to 4.7 million reported last quarter.

According to Gartner's Q2 smartphone numbers, Nokia has 45% of the world's high-end handsets. However that number will continue to go down with increased pressure from Apple, Android and RIM. Its stronghold in Europe is even under threat long term unless Nokia can improve its user experience considerably.

Picture 33

I've argued that in the US (re smartphones), absent a low-end, low-cost strategy, Nokia is all but done. There are just too many competitors and the Nokia brand has no resonance at this point in America. However Nokia could gain some traction with a new netbook in the US market. It will sell for $299 but requires a 24 month, $60 per month AT&T contract (which could hurt sales).  

T-Mobile Data and Voice Price War?

To every potential price war I say "bring it!" T-Mobile, which just suffered a massive PR snafu with the sidekick data loss disaster, is potentially going to lower the cost of unlimited data and voice plans in the US to lure subscribers (potentially from Sprint) according to reports. Unlimited plans might come down to between $50 and $80 reportedly. 

If this happens some financial analysts believe that Sprint is the most vulnerable of the big carriers to subscriber defections. However, if prices go low enough, so are the smaller pre-paid carriers. Sprint's Boost pre-paid unit has had a very successful $50 "all in" plan for some time; however the network is the inferior NexTel network and handset selection is limited. So it hasn't attracted many post-paid converts. 

T-Mobile believes that the US market can support four major competitors and suggests that it won't be seeking to do any dramatic deals such as the joint venture with France Telecom in the UK. 

In the UK, the availability of the iPhone from O2, Orange and Vodafone means a big price war with the Apple handseet dropping to free potentially, with a 24 month contract. Something similar might also happen if the iPhone were available from multiple carriers in the US, although it's unlikely that we'd ever see it go free. 

The larger point is that competition (and a certain amount of desperation) is driving prices down. Sprint recently announced a free mobile to mobile calling plan that allows any subscriber to call anyone else on a mobile phone without counting against plan minutes. Only landlines are charged. With the exception of AT&T with the iPhone all carriers have now is pricing -- and to some degree their network reputations -- to compete with. This notwithstanding the efforts of Verizon to be an apps provider or Vodafone to build a social software layer onto handsets. The era of the "dumb pipe" has arrived. 

If T-Mobile USA in fact drops unlimited voice and data plans to $50 or $80 Sprint may be forced to match. However, AT&T and Verizon will likely take a wait and see approach rather than automatically lower prices because they both feel more secure in their subscriber retention.

Nielsen Q2 Mobile Data: Smartphones, Ads, Social Nets

Nielsen blogged about a range of mobile data and user behavior earlier this week. Here's a summary of highlights:

Handset purchase criteria: Mobile consumers around the world applied different criteria when deciding what phone to purchase. Cost was the top factor across the board

US mobile subscriber numbers: the U.S. mobile subscriber base grew 7% to 277 million by the second quarter of 2009, which represented 221 million unique users, adjusting for multi-phone holders. (This argues there are more than 50 million people in the US who own more than one phone.) 

Smartphone penetration figures: Currently, smartphone penetration varies by country. In Italy and Spain, more than one-quarter of new mobile handsets purchased were smartphones, with 28% and 23% market penetration respectively. The United States followed at 17%, Sweden at 13%, Canada-Germany-United Kingdom at 12% and France at 11%.

(comScore contends US smartphone penetration is 12%; our data from earlier this year show roughly 15%)

US voice and data spending: All mobile subscribers spend $57.04 in billed services, with the monthly voice plan accounting for $35.40 and data extras adding $12.10 to the bill. Blackberry owners typically rack up $88.85 per month in charges, with $45.10 in voice plan costs and $28.20 in data extras. iPhone users spend nearly as much on data ($37.60) as they do on voice ($42.00) and have an average monthly bill of $89.35.

iPhone usage patterns: iPhone owners lead the way in media usage when it comes to mobile Internet (89%), text messaging (87%), software/application downloads and location-based services (75%), video/mobile TV (41%) and full track music (38%).

US user access to social networks on mobile devices: The distribution of 18.3 million unique social network users by the top three sites is Facebook (26% reach), MySpace (13% reach) and Twitter (7% reach).

Mobile advertising: One-third of all mobile data users were exposed to some form of mobile advertising in Q2 2009. SMS and MMS comprised the two most popular forms of mobile advertising response. Roughly 16% of consumers responded to mobile ads most frequently via text message, a picture or MMS message, email or by visiting a designated web site. Teenagers were the most accepting of mobile advertising—the acceptance rate declines as age increases. Perceptions of mobile ads were highest among all age groups if it lowered their bill. Consumers age 45+ were the least accepting of mobile ads.

Picture 15

Regarding mobile advertising, here's what our April consumer survey data show about ad exposures and ad types:

Opus Research/Internet2Go 4-09

Source: Opus Research April, 2009 (n=707 North American mobile users, exposed to ads [n=75]) 

iPhone UK Price War & 'World Domination'?

As we said before the newly competitive iPhone market in the UK will be one to watch. With Vodafone, O2 (which just sold out of 3GS inventory) and Orange selling the Apple handset in the UK, we're likely to see a price war. How will that play out as each carrier tries to be the one that lures subscribers or seeks to retain subscribers? Some have speculated that prices will rise on other handsets to offset the deep subsidizes that are anticipated for the iPhone. Will it get to free with a 24-month agreement? (My guess is yes).

This could be a precursor for the US when the iPhone comes to other carriers. There's been considerable discussion in the past couple of days, based on a Morgan Stanley analyst report, that the iPhone could more than double market share in the US once it leaves AT&T exclusivity behind. I would agree and be even more aggressive in predicting that the device might climb to nearly 50% of the US smartphone market if it were available from several carriers. 

Under a multi-carrier scenario like this -- think 2011 in the US -- we'd see aggressive pricing on the device as carriers try to lure and retain customers, as we're likely to see in the UK. I don't think we'd get free iPhones in the US but we might hit a new smartphone ceiling of $99 (currently it's $200 with operator subsidy). 

The iPhone in particular has shifted the balance of power from the carrier to the OEM and OS providers. The UK situation illustrates this very clearly. The carriers are the pipe -- notwithstanding Vodafone's new personalization/PC-crossover strategy -- and that's not likely to be changed by software layers, carrier app stores or social media strategies. 

In terms of handset competition, there are only two smartphone "brands" in the US: iPhone and BlackBerry. Windows Mobile is not a consumer brand; we'll see what happens with "Windows Phone." Android is not (perhaps yet) a consumer brand. Nokia is all but done in the US (absent an aggressive low-end strategy). Globally Nokia remains very strong and Windows will be competitive by virtue of the sheer number of handsets in the market. The Pre has lots of buzz and mindshare at the moment, so it's got a good base from which to build a strong brand. However, usability is mixed and will need to be improved for long-term competitive sustainability. 

BlackBerry's consumer future is not entirely clear and contingent upon improved mobile browsing and overall usability. Android should chug along and grow as more OEMs introduce the handsets and more carriers pick them up. Pricing should get more competitive across the board. And there will likely be consumer confusion as people try and decide between, say, the HTC Android handset and one that appears almost identical but runs Windows. Microsoft can try and leverage cloud services and its PC dominance to differentiate, but the OS needs to get better overall.  

In this climate of intense competition and potential consumer confusion, the iPhone wins. This is especially true if it's available through multiple carriers who are aggressively subsidizing it. So far it's an unbeaten device (except for the dropped calls part) and has strong brand recognition in the market. If the price comes down (to $99 in the US and free in the UK) and it's widely available through multiple operators it will fly off the shelves -- and become the iPod of phones to so many other MP3 players in the market. The other handset OEMs and OS vendors must struggle mightily to avoid that. 

Are You Having an Affair with Your Phone?

Market research company Synovate released findings from a wide-ranging survey of 8,000 mobile phone users in 11 countries (504 respondents in the US). The markets included Canada, Denmark, France, Malaysia, the Netherlands, the Philippines, Russia, Singapore, Taiwan, the UK and US. Here are some of the top-level findings (largely verbatim):

  • 82% of Americans never leave home without their phones
  • 36% of people across the world (42% of Americans) say they 'cannot live without' their cell phones
  • Almost 50% report sleeping with their phones "nearby"

More than two phones + smartphones:

  • 23% said they own more than two mobile phones. Americans and the French are more likely to own more than one phone
  • UK and US mobile users are most likely to own a smartphone: 21% and 20% respectively

Most used features:

Beyond voice and text messaging, the most regularly used phone features were:

  • Alarm clock – 67% globally use this regularly / 56% of Americans
  • Camera – 62% globally / 68% of Americans
  • Games – 33% globally / 31% of Americans

Mobile Internet access:

  • 17% of respondents use email on their mobile on a regular basis: 26% in the US and 25% in the UK
  • 17% access the mobile Internet: UK at 31%, US at 26%
  • 11% say they social network regularly via mobile: UK (17%), US (15%)

SMS behavior, dating and lying: 

  • 31% of people across 11 markets have lied about their whereabouts via text
  • 20% have set up a first date and 12% have broken up with someone by text
  • 20% have set up a first date, including 9% of Americans
  • 12% have broken up with someone via text, led by 23% of Filipinos. Just 4% of Americans have done this
  • 35% agreed that they have hidden behind text to say no or send a difficult message, led by 49% of Filipinos.
  • Least likely to hide behind text are Canadians (79% say they haven't done this) and Americans (71%). 31% agreed they have lied about why they were running late or where they are, led by 57% of Filipinos. Least likely to lie via text (or so they say) are the Dutch (84% say they haven't) and the Americans (79%)

What these data show (once again) is that people find their mobile phones an indispensible piece of personal technology and communications tool. They love them; they're more attached to them than the PC.

The figures above on mobile Internet access are consistent with what we've independently found -- 27% of US users accessing the Internet on their mobile phones. We also found an identical number regarding social network access via mobile phone among US users: 15%

GetJar Launches Smart App Downloads for Publishers

Independent, cross-platform app store GetJar launched what it calls a App Download Page, which enables publishers and developers to consolidate their apps and drive more downloads through their own sites (as opposed to the app stores). Essentially this is a hosted, white label offering that enables a mobile site to detect a user's phone and offer the correct version of a mobile app to download (BlackBerry vs. iPhone vs. Android vs. Windows Mobile vs. Symbian vs. Java). Hence the headline of the press release "GetJar Launches Service to Convert Mobile Visitors Into Application Users."

According to research by comScore and AdMob (n=1,117 US users, 8/09), there are a range of ways that apps are discovered (word of mouth, apps stores, ads, etc.) But the proprietary apps stores and their rankings are the principal way: 

Picture 202

GetJar CEO Ilja Laurs told me that with the App Download Page GetJar's initial partner Facebook was driving "a million downloads a day" through its site during the trial period. Now that has tapered off to a million a week reportedly. 

Apps have become strategic for many publishers to offer a better mobile Web experience and drive higher levels of engagement and loyalty. In a future webinar we'll feature an apps vs. mobile Web debate with GetJar. 

August AdMob Metrics: Globally Apple, Android Up, RIM Flat

AdMob put out its monthly metrics report showing market share trends, among other things. Here are some of the highlights (verbatim) from August:

  • Worldwide iPhone OS marketshare has increased from 33 to 40 percent in the last 6 months, with substantial share in all regions except for Asia and Africa.
  • Although its marketshare has been declining, Nokia continues to hold 12 of the top 20 smartphone devices in AdMob’s network. Nokia’s N97 and 5800 XpressMusic touchscreen devices were the fourth and fifth most popular smartphones in the UK in August.
  • RIM smartphone share declined only slightly over the last 6 months.  There are 7 RIM models in the top 20 smartphones in North America.
  • Android is growing rapidly in North America and Western Europe. The HTC Magic (my Touch) is a Top 10 smartphone in both North America and Western Europe.
  • Palm Pre also had a strong month due to the addition of new publishers to the AdMob network.

Picture 192

Business Insider's Dan Frommer savages the report as being a misrepresentation of the market. While I've always cautioned that AdMob's data reflect its own network, which may be iPhone heavy, I believe it's directionally consistent with the broader market. In addition, internal trends -- changes month over month -- are significant and interesting.

Apple has a disproportionate share of mobile Internet activity, especially given its relatively small handset market share. I was speaking with ad exchange Mobclix, which began life as an iPhone apps analytics platform, and the company said that 90% of the activity it sees is on the iPhone. This too is skewed by virtue of the company's legacy. But it cannot be denied that iPhone users are much more engaged than users of comparable smartphone devices. 

This is true in my experience as well. Observing my own usage of the Palm Pre and my iPod Touch. I do email on the Pre and use my calendar (and Pandora). By contrast, my use of the mobile Internet is much greater and broader on the iPod Touch because of its superior user experience.