According to data from a recent Forrester survey of roughly 20,0000 Europeans (reported in Total Telcom), on average 13% of Western European consumers now access the Internet on their mobile devices, while and 50% know their phones are Internet capable.
The numbers in the chart below vary by country and the data tend to change when you ask users about daily or monthly frequency, but in the US/Canada, the percentage of mobile Internet users is north of 20% (depends on the survey). Our figure is about 27% - 29% for the North American market (excluding Mexico).
There are two very clear variables that drive mobile Internet usage: the price of data and smartphone adoption. As data prices (and handset prices) come down more people will opt for smartphones and unlimited data plans. This is very analogous to the early days of the Internet on the PC where dial up gave way to unlimited broadband and usage grew dramatically.
Mobile is a more accelerated market. But things that may further speed up adoption, like carrier price wars, cannot be easily predicted. Overall, the cost of data and WiFi access should still come down over time, although smartphone handset prices will likely remain between $99 and $199 in the US.
Most mobile Internet ad revenue forecasts are tied to smartphone growth and penetration as a proxy for Internet access and usage. In general, I would tend to agree, but there's more nuance within the category because all smartphone owners don't equally access the Internet: iPhone and Android owners do more than BlackBerry or Windows Mobile owners for example.
There are probably a dozen mobile ad forecasts (or more) in the market. Kelsey just expanded theirs to include Western Europe. Here are their numbers (forecast period 2008-2013):
That adds up to roughly $7.8 billion in mobile ad revenues overall for both markets. Previously I was critical of the firm's emphasis on the local segment driving "more than half" of mobile ad revenues.
In light of what we know today, the earlier Opus/LMS mobile ad forecast for Western Europe and North America was somewhat crude and perhaps too bullish at $5 billion by 2012.
Shortly, we'll be publishing a roundup of third party forecasts together with our own numbers that take a more granular look at mobile ad revenues and factor in fill rates, the shift from CPM to CPC models, SMS, mobile apps, user response rates and generally decling ad pricing.
Ad network AdMob issued its June 2009 Mobile Metrics Report this morning. It focuses on the geographic distribution of iPhone and iPod Touch owners (Apple said in its recent earnings report that there are 45 million globally.) Here are the top-level findings from the June report:
Here are some charts from the report:
All of this must be qualified by the fact that this data comes from AdMob's network, which is not identical to the mobile Internet as a whole. However it's a large network and directionally consistent with mobile Internet trends more broadly.
The distribution of iPhone/iPod Touch ownership and usage is interesting to be sure but the bombshell in here is the data that Android-based usage is now bigger than Windows Mobile, this despite only one device (effectively) in the market for Android. This underscores the competitive urgency for Microsoft to get WinMo 6.5 and 7 into the market.
Here are mobile-related comments from Yahoo! CEO Carol Bartz made on the Yahoo! earnings call yesterday (bold text is my emphasis):
Beyond the numbers this past quarter we have three themes. One, we put a great leadership team in place. With Tim coming on board we are essentially solidifying my staff and we are closing in on someone to head our international region. Two, we continue to define our audience priorities. This includes identifying our most important vertical experiences like the Homepage, mail and our media properties as well as the capabilities that support all of them like open, social, video, mobile and more . . .
The new Homepage makes it much easier for users to bring together their online world in a single destination. Users can put virtually anything on their new Homepage in just a click or two whether it is content from Yahoo! or anywhere on the web. Starting next week they can synch their desktop with their mobile phone to get the same experience wherever they go . . .
Mobile reach and partnerships:
While we have been talking about creating the best, most complete online experience on the PC, mobile devices are just as important. Mobile momentum is so strong I want to spend a moment on it. When it comes to global reach our numbers are very impressive. The new Yahoo! mobile experience is available in 17 countries across 400 devices. We have teamed with more than 100 carriers and OEM’s globally to ensure Yahoo!’s services are front and center whenever users access the mobile web. Our leading position in so many vertical categories and markets attract top tier mobile partners all over the world.
These partners clearly recognize the power and draw of Yahoo!’s services on their devices and networks. For example, we recently announced a leading telecom service provider in Taiwan to bring our mobile search to their users, replacing Google. Our partners aren’t just distributing our services. Many partners around the globe, especially in Asia, are proactively promoting our search and other mobile services because the experience is that good.
In earnings news both Nokia and Sony Ericsson posted losses. For Sony Ericsson it was the fourth consequtive quarterly loss, although somewhat less than expected:
Sony Ericsson posted a EUR213 million net loss for the three months to June 30, down from a EUR6 million profit the previous year but better than analysts' expectations for a EUR298 million loss, partly on lower restructuring charges.
The report marks Sony Ericsson's fourth consecutive quarterly loss, although the result improved on the EUR293 million net loss in the first quarter.
Nokia, for its part, saw a drop of 66% in Q2 earnings:
Net profit was euro380 million (US$535 million), down from euro1.1 billion in the same period a year earlier. Sales tumbled 25 percent to euro9.91 billion . . .
Nokia shipped 103 million mobile devices in the quarter, down 15 percent from a year earlier but slightly better than some analysts had expected.
Nokia's global market share is about 38% (down from 40% the previous quarter) though in North America Nokia sold 3.2 million devices in the second quarter, a decline of 30% from the same period the prior year. Generator Research is predicting that Apple will surpass Nokia in handset shipments by 2013. That may not be entirely accurate -- it seems quite aggressive -- but it illustrates the opposite fortunes of the two companies at the moment.
And finally Apple's iTunes update disables the capacity of the Pre to sync with the online media store. That (expected) news has apparently sent shares of Palm down this morning. However, iTunes syncing is a very marginal consideration for most people interested in the Pre.
God bless 'em, Jingle Networks (800-Free-411) is supposed to be profitable but neither it nor the "free DA" providers have broken out of obscurity. Several years ago I had thought that free DA would be widely used by mobile consumers, especially feature phone owners, as an alternative to search in some cases and that there was a strong ad opportunity accordingly.
While the ads convert well, the call volumes haven't continued to grow and the overwhelming majority of mobile users don't call DA at all, let alone the free services. Among the free services Jingle's 800-Free-411 is the best known. But it remains somewhat mysterious as to why more consumers aren't using them. The quick answer is lack of promotion. Answering the question of why depends on whose service you're discussing: carriers, independents, search engines.
Now in a bid to gain some new attention and usage (and ad inventory accordingly) Jingle is offering free long distance and international calls:
Callers from the continental United States can place a five minute call through 1-800-FREE411 to reach out and connect with loved ones no matter how far away they may be. To place a free long distance call, callers dial 1-800-FREE411 and listen to the main menu prompts where they can select "free call."
After entering the phone number that they wish to call, including a country code, they will be connected free of charge for five minutes. Callers have to listen to two short advertisements and there is no limit on the number of calls they can make in a day. Mobile phone callers may still be charged for minutes by their service provider.
This move will generate some usage but it won't solve the free DA segment's main problem: lack of consumer awareness.
In our most recent research (n=707, 4/09) 79% of survey respondents said they simply did not call DA/411 from their mobile phones. Among the 20% that did, 46% of that group called it once a month or more frequently. But 86% of those who did call DA on their mobile phones only called it "a few times a year." There are some claims of higher usage rates in the market, but in several surveys over the past two years we have consistently seen ignorance or lack of consumer awareness regarding the free DA services.
Google is using Goog 411 primarily to train Voice Search; the carriers don't want to cannibalize their cash cow 411 businesses and Jingle doesn't have the money to run TV ads and so relies on PR and promotions like the one above. But without awareness advertising this segment will limp along or disappear as more people turn to search and app-based alternatives on their mobile devices.
IT research firm Gartner says that consumer subscription-based LBS services (e.g., navigation/friend finders) will double and continue to grow. According to the company's release:
Worldwide consumer location-based services (LBS) subscribers and revenue are on pace to double in 2009, according to Gartner, Inc. Despite an expected 4 per cent decrease in mobile device sales, LBS subscribers are forecast to grow from 41.0 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.
Gartner defines LBS as services that use information about the location of mobile devices, derived from cellular networks, Wi-Fi access points or via satellite links to receivers in (or connected to) the handsets themselves. Examples are services that enable friends to find each other, parents to locate their children, mapping and navigation. Location-based services may be offered by mobile network carriers or other providers. They are also known as location-aware services.
Correctly the company qualifies all this by saying that free LBS services will gain and eat into LBS subscription revenues. But the company doesn't take that far enough.
Those that are willing to pay for PND devices and navigation subscriptions will be a tiny minority in a very short period. Free (assuming a not-free data plan) will all but destroy the paid market unless those consumer fees are one-time payments or truly nominal monthly subscriptions.
Too many folks will be offering maps and turn-by-turn directions for free (e.g., Google, MapQuest) and there will be a number of free friend finder products that will replace the paid "family locator" subscription products in the market today. In short absent some super-compelling, unimaginably fantastic applications (which Gartner is counting on), the paid LBS market is going to get smaller and smaller . . . not bigger.
UK carrier O2, owned by Spain's Telefónica, has won an exclusive deal for Palm's Pre in the UK market, according to the Guardian. The carrier is also the exclusive source of the iPhone in the UK.
O2 is the UK's leading carrier by market share, followed by Vodafone, Orange and T-Mobile and finally Hutchison's 3.
There have been persistent rumors that Deutsche Telekom is looking to sell its UK T-Mobile unit. The leading contender is reportedly Vodafone, although Telefonica may also be interested to preserve its market-leading position. That may create a bidding war for the T-Mobile unit.
Opera Software released its "State of the Mobile Web" report for May. The report places an emphasis on trends in Southeast Asia: "Growth rates in Southeast Asia remain high: Vietnam leads the top 9 countries with 412.9% growth in users this year, followed by the Philippines (353.6% growth) and Malaysia (249.6% growth)." However it also presents data for the range of coutries in North America and Europe that have Opera users.
Remember this is not the entire mobile Internet, nor does it represent a true view of smartphone users (other than perhaps on BlackBerry, which has a poor browser currently). Rather these data are from handsets where users have downloaded and installed the Opera browser. They offer a view of a different segment of mobile users than we're used to hearing about, given the industry's focus on smartphones -- which remain in the minority.
Here are some of the data for the US and UK:
Note the "average number of search portal page-views" in the data: 35.7 for the US, 21.4 for the UK. This is not necessarily eqivalent to query volume per user but it's probably directionally eqivalent. These numbers are much higher than 2008 "official" averages (per Nielsen) of 8 searches per user. Our data also show much higher volumes, though not quite as high as the Opera numbers suggest.
Personal navigation and GPS-aided turn by turn directions are moving from hardware to software. Given that the new iPhone enables turn by turn navigation to be integrated into third party developer apps and that TomTom is going to be on the iPhone, the days of separate PND hardware devices are likely numbered.
While some such devices may continue to sell, consumers will see fewer and fewer reasons to buy them (and spend the additional cash) now that smartphones will be largely as capable as PNDs and have broader utility. Several next-gen navigation apps have already emerged in the post 3.0 iPhone world:
The improvement of navigation on smartphones combined with the move of a group of companies to provide their software on the iPhone platform will mean that eventually the entire industry will move in this direction.
Recently RIM also acquired "connected" PND platform Dash. So one would assume that many of these same capabilities will shortly come to BlackBerry devices. (I was just reminded that MapQuest provides turn by turn directions on BlackBerry devices currently.)
Layar is derived from location based services and works on mobile phones that include a camera, GPS and a compass. Layar is first avaliable for handsets with the Android operating system (the G1 and HTC Magic). It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers. This makes Layar a new type of browser which combines digital and reality, which offers an augmented view of the world.
An iPhone version is reportedly in development. One thinks immediately of Google Street View and how that might evolve into a true "geobrowser" along these lines in the future. There are many different use cases one can imagine easily. Of course the data have to be there and accurate for the experience to be as impressive and useful as it has the potential to be.
What it also illustrates is that there are going to be many other "search" modalities on mobile phones than the conventional search field. Here's Layar in operation (click the image for the YouTube video):
Yesterday there was an article from IBD about how Vodafone aims to not only build an apps store but get deeply involved in the mobile ad ecosystem:
A new mobile online store is part of Vodafone's ad strategy. So are location-based advertising and text-messaging ad formats . . . By year-end, Vodafone plans to open an online store where mobile phone users can download games and other software applications, aiming to duplicate the success of Apple . . .
Vodafone also hopes to generate dollars from ads that are inserted within some applications.
Vodafone plans to expand a text-messaging ad service, called "Please call me," to more markets this year. Developed by Vodafone's South African subsidiary, Vodacom, the service lets prepay customers send a free, ad-funded text message to someone asking them to call back.
Vodafone also seeks to make money on mobile TV.
AT&T and Verizon have announced apps stores in the US. (Vonafone owns part of Verizon.) However I'm extremely doubtful that carrier apps stores can succeed like Apple has. There's a possibility of modest success perhaps, but apps are directed to smartphones and all the device OEMs have their own apps stores and so does Microsoft.
Carriers didn't/couldn't get the mobile Internet experience right for their users in the past. It's unlikely they can create an apps store experience to equal, let alone rival the OEMs.
Carriers might be able to succeed at the lower end by creating apps for users not on the major smartphone platforms. In addition they can gain a piece of ad revenue by partnering with ad networks around opt-in demo and location targeting. That's a trickier proposition; and very soon they'll start to be marginalized in terms of ad network revenues -- unless they buy the mobile ad networks.
The Microsoft-Verizon ads deal, however, will be one to watch and may represent a model for carriers going forward -- if it's successful.
Last week, StatCounter reported that Opera (Mobile/Mini) passed Apple's Safari in May as the most popular mobile browser. In light of the Apple claim this morning that 65% of all mobile Internet browing is happening on the iPhone, there's reason to be somewhat suspicious of the StatCounter numbers. However comScore previously said that 70% of those accessing the mobile internet are doing so on "feature phones." Enter the Opera Mini.
StatCounter reported the following market share in May:
The Opera Mobile 9.7 browser uses compression of files on the server side to accelerate display of mobile pages. Here's a video demo showing performance:
UK directory and local search site Scoot, which embraced Twitter recently on behalf of its local advertisers, has added an iPhone site. It uses icons and location-awareness to find the nearest business in the given category. From the release:
Scoot uses the iPhone’s GPS capability to locate the user, then find the nearest cafe, bank, restaurant, petrol station and much more. “It’s so quick and easy to use when you’re on the move”, said Sue Barnes, Scoot’s managing director. “There’s no need to type anything in: you just open the app and tap the relevant icon – cafe, for example. Scoot will then show your nearest cafes with name, address, phone number and distance from your current location.
The mobile user can tap the ‘More’ button on each business listed to see further information such as descriptions, opening times, payment methods, special offers/coupons, pictures and even videos. They can see the business on a map, get directions, click to call or view their website. Your browser may not support display of this image.
The application includes a number of standard icons as the default, representing some of the more popular business categories within the Scoot UK business directory. These include banks, cafes, car repairs, chemists, dentists, doctors, drinks, estate agents, food, hospitals, hotels, newsagents, petrol stations, post offices, supermarkets, special offers and favourites. However, the user can easily customise the application by using the simple on/off toggle button to add search icons for more categories or even their favourite brands. Scoot will be adding more categories and brands in future releases of the application.
From PaidContent: What's the top mobile browser? It's reportedly the ACCESS NetFront browser, which the company says is now on more than 700 million devices globally. According to the company's release out yesterday:
ACCESS CO., LTD., a global provider of advanced software technologies to the mobile and beyond-PC markets, today announced its NetFront™ Browser is the standard browser shipped on more handset models in the U.S. and through multi-country operators in the top five European markets (France, Germany, Great Britain, Italy and Spain) than any other mobile Internet browser. Based on an analysis concluded in February 2009 of devices offered by top-tier operators and device ownership data from comScore's MobiLens research, there are more mobile phones on the market with ACCESS' NetFront Browser than any other mobile Internet browser.
Now let me critique this . . .
There is no brand here; this is the pre-installed "default" browser on many handsets. Thus while people use it by default, they don't seek it out. The market will move away from this experience unless there's a radical change in quality. Today on smartphones and many feature phones users are seeking out familar browsers (with the exception of the BlackBerry) and/or better experiences that what their OEMs are serving up to them. And, in general, the BlackBerry browser experience is quite poor, though it will improve.
PaidContent says that the media has incorrectly focused on Opera, Safari, Skyfire, IE, etc. But these Fennec and Chrome will be the browsers that the market ultimately embraces as more people seek a better mobile Internet experience.
So in a way talking about this default browser is a little like talking about ringtones: sure there's a big market but it's yesterday's market and doesn't represent the future.
Vodafone in the UK is apparently going to end its exclusive ad sales relationship with Yahoo! and reach out to other providers/channels/networks. The two companies reportedly will continue to work together but the exclusive dimension of the relationship will end.
Yahoo! has more direct operator relationships on a global basis than its major rivals. For the time being the carriers still see the greatest reach to mobile audiences, although over time that will change as more people shift to smartphones and greater direct mobile Internet adoption accordingly.
VZ Navigator (from Networks in Motion) has been relatively successful as a monthly subscription serivce. But it's under pressure from increasingly competent free apps and tools on smartphones. To remain viable over the long term the service has to remain one or two steps ahead of rivals.
In an effort to do so the service is going global. According to the press release out today VZ Navigator Global:
- Provides business and leisure travelers the ability to find locations and access turn-by-turn directions in North America and Western Europe, including Canada, Mexico, France, Germany, Italy, Norway, Spain, Sweden and the United Kingdom -- additional countries will be added to the service throughout the year;
- Alleviates stress or confusion caused by reading road signs or directions in an unfamiliar language -- VZ Navigator Global customers can choose either English or Spanish as the default language, and miles or kilometers to mark distances;
- Will be initially available on the BlackBerry(R) Storm(TM) 9530 smartphone from Research In Motion (RIM) while VZ Navigator Global capabilities will be available later on additional smartphones; and
- Finds restaurants, gas stations, banks/ATMs and other popular spots in these countries using Local Search.
Domestic VZ Navigator is $9.99 per month. Existing users can upgrade to global for an additional $10 per month. The service costs $19.99 per month and includes the domestic data for new subscribers.
Even more than traditional VZ Navigator, Global probably is a niche product and will have appeal to a very select class of international business travelers.
Samsung announced the Android-based I7500 this morning. Here are the specs:
Samsung I7500 comes with latest multimedia features. The large and vivid 3.2“AMOLED display ensures the brilliant representation of multimedia content and enjoyable full touch mobile experience. Along with supporting a 5-megapixel camera and various multimedia codec formats, the I7500also provides a long enough battery life (1500mAh) and generous memory capacity up to 40GB (Internal memory: 8GB, External memory: Up to 32GB) to enjoy all the applications and multimedia content. The phone also boasts its slim and compact design with mere 11.9mm thickness.
Previously when Samsung said it would be making Android-based phones it said it would downplay the "Google experience" dimension of the phone:
Samsung also wanted to put its own spin on Android. Hong drew a distinction between devices built on the Android platform and "Google Experience" devices, which not only use Android but are also Google-centric, packed with the search giant's own applications. "Our commitment is more to the Android phone than the Google Experience device," [Won-Pyo Hong, executive vice president of global product] said. In other words, Samsung is doing plenty of customization work on top of the Android platform to make operators happy.
Yet in the announcement this morning the following copy prominently appears:
The Samsung I7500 offers users access to the full suite of Google services, including Google Search™, Google Maps™, Gmail™, YouTube™, Google Calendar™, and Google Talk™. The integrated GPS receiver enables the comprehensive use of Google Maps features, such as My Location, Google Latitude, Street View, local search and detailed route description. Hundreds of other applications are available in Android Market. For example, the application Wikitude, a mobile travel guide, allows consumers to access details of unknown sights via location-based Wikipedia articles.
That's a lot of Google for a purportedly non-Google experience device. It will launch in Europe in June. No word on if/when it will come to the US. However a Samsung Android phone will reportedly make its way into Sprint's line-up this year in the US.
Opera released its latest "State of the Mobile Web" (reflecting usage on the Opera Mobile and Mini browsers) for March. It covers a broad range of countries in North America, Europe, Asia and now Latin America. I'm reproducing the US and UK charts, which show top sites and handsets on Opera's network.
More data on other parts of the world are available in the full report. Google is the dominant site in most of the countries examined. That may well be navigational as much as it is "search."
Opera also looked at when people were browsing the mobile Web (24 hour clock):
The greatest use appears to be in the block between 4pm and midnight, in particular 8pm and midnight.
The price of voice and data continues to decline, driven in large part by competition and consumer price sensitivity. Even though most Americans still don't have a data plan, that will change in a relatively short period of time. The price and penetration of mobile data plans is the single "X variable" in the entire mobile Internet adoption mix. Handset type is important but not as important as eliminating cost uncertainty for users.
As we've argued in the past, an unlimited data connection will one day be more important than voice to mobile users. But US carriers have so far declined to allow users to buy data-only plans, because they want to preserve voice profits and move subscribers "up" to data as well. Accordingly, the carriers have largely resisted VoIP services such as Skype because they fear that it may lure people away from voice plans to minimal voice and data or data only (assuming that were available). That's an "empirical question" but on another level they're resisting the inevitable.
This past week UK operator 3 (a unit of Hong Kong based Hutchison Whampoa) announced free Skype-to-Skype voice and IM:
In a world first, 3 UK has opened up its network to allow anyone with a 3 SIM and a compatible 3 handset to enjoy unlimited Skype-to-Skype calls and messages without ever having to pay.
From 1 May, there will be no data charges or top-up fees for either contract or pay-as-you-go customers who use Skype on 3’s network. Anyone with a 3 handset will be able to buy a 3 SIM with Skype enabled and talk as much as they want to other Skype users without ever having to pay another penny.
During the summer, 3 will expand its offer to make it possible for anyone with a compatible 3G phone to take advantage of free Skype calls, whether or not their phone is from 3. Anyone that wants to talk on a mobile for free will be able to use a Skype-enabled 3 SIM to make and receive totally free Skype-to-Skype calls and to use Skype’s instant message (IM) service.
By removing access and pricing barriers to Skype-to-Skype calls 3 UK is creating a compelling reason for new customers to join 3 and to enjoy all the services available on the UK’s biggest mobile broadband network.
In the 3-Skype program, it's about Skype to Skype, not Skype-Out or In. You can make Skype-Out calls to other countries, but in the UK to make calls to non-Skype handsets or landlines you have to use a 3 voice plan. That's how the operator has struck a balance here and prevented its voice minutes from being entirely substituted by Skype's services.
Reportedly 3 UK has found Skype users churn less than non-Skype users and in fact use more traditional voice minutes than non-Skype users. They also use more data as well. So it may be the case that the feared scenarios described above don't come to pass when VoIP is more directly embraced.