Hardware

Moto G Set to Shake Up the Smartphone Market with Rock-Bottom Pricing

Android is the world's dominant mobile operating system. In Q3 IDC estimated that Android represented 81% of all smartphone shipments globally.

Android's lead may further expand if the forthcoming Moto G smartphone from Google is as successful as I suspect it will be. The phone carries fairly strong specs, including a long battery life and 4.5-inch display. But it's the price that will drive sales volume.

Pre-empting Amazong and poking a finger in Samsung's eye, the unlocked phone will cost $179 (8GB) or $199 (16GB). Google must be planning to sell the phone at cost or even at a loss. We'll find out when the iFixit people get a look. 

 comscore Sept smartphone share

Motorola has continued to lose market share over the past few years. The Moto X was the first phone designed by Motorola after Google's $12.5 billion acquisition of the company. However its sales have been lackluster. Absent some major flaw the Moto G looks like it could be an antidote for Motorola's brand and sales woes.

Moto G's low low pricing also puts pressure on Amazon (as well as everyone else). The latter had been rumored to be building a low-cost Android handset. But it will be challenging for Amazon to match Moto G's price and apparent quality without losing money. 

The fact that Moto G is unlocked and so inexpensive could change the broader dynamics of the market -- motivating more people to buy pre-paid carrier plans and get away from contracts (which is a broader trend anyway).

Apple is unlikely to try and answer the handset's pricing but other Android OEMs may be forced to. That's potentially bad news for Samsung and especially bad news for HTC, which is under tremendous pressure and may be forced to sell itself (or into bankruptcy) eventually.  

Mobile Impacting Retail Design -- Just Don't Forget Indoor Location Data

A provocative article in Mobile Marketer this morning discusses how the aesthetics and layout of retail spaces are changing to accommodate the mobile shopper. Here's a representative excerpt:

AT&T recently unveiled a new store format intended to reflect customers’ mobile lifestyle where café-style learning tables replace cash registers.

The store layout highlights products and services in three different thematic areas. In the Connected Experience, shoppers can see how solutions can be used in their everyday lives. The Community Zone features an open and interactive space where customers can test products. In the Explore Zone, there are digital monitors to highlight AT&T’s lineup.

This sort of "customer experience" was largely inspired by or modeled on Apple retail stores -- especially the replacement of cash registers with free-roving sales associates. However beyond improving the "flow" and "engagement" of retail spaces there are other considerations to be factored in. 

The article doesn't at all discuss how data gathered from indoor analytics can help retailers do a better job with layout and usability of their stores. Indoor location data and usage patterns should be included in the "aesthetics" and layout discussions because they will lend empirical grounding to what is otherwise a relatively speculative discussion.

How do consumer actually behave in stores? How are they interacting with displays? These sorts of data are readily available and can inform the broader debate about how to reconfigure retail environments.

Another interesting angle here is how mobile payments will be affected by retail store redesign. My belief is that low-skilled and poorly paid store (and QSR) cashiers will be increasingly replaced by mobile payments and self-checkout kiosks.

Loyal store customers will increasingly have a mobile app with stored credit card information. That scenario will become increasingly prevalent in stores. For those customers without a retail/payment app, Apple-style mobile in-store checkout will prevail.  

Apple Makes Incremental US Share Gains Against Android

Earlier this afternoon comScore reported its September US smartphone market share numbers. Nielsen has said that 64% of US adults now carry smartphones; however comScore asserts the number is 62%.

Android continues to be the dominant operating system, followed by the iPhone. However Android lost some ground this month though Samsung gained share. All the other Android OEMs are basically a diminishing sideshow to Samsung. 

 comscore Sept smartphone share

Microsoft also saw a small bump for Windows Phones. It has had considerable success in Europe because of the continuing strength of the Nokia brand but little success to date in the US market. Perhaps that will improve as BlackBerry users are forced to change platforms as they upgrade.   

The numbers above probably still do not reflect sales of the iPhone 5s and 5c, which went on sale on September 20 in the US. The October figures should better reflect the iPhone 5s/c impact on the market. 

comscore Sept smartphone share

Perhaps most interesting is the data about leading mobile apps and web properties. Overall Google has the greatest mobile reach, although Facebook continues to have the single most popular app. This is very analogous to the iPhone and Android, where Facebook is like the iPhone in this example.

Google Maps saw some unexpected loss of usage and reach vs. last month, dropping from the fifth most popular app to eighth position.  

. top mobile properties September 2013

To Succeed Surface Pro Must Become True Laptop Replacement

Microsoft will reportedly spend north of $400 million this holiday season on marketing in the hope of selling 16 million Surface tablets. It will likely have trouble because the Surface Pro tablet is neither a true PC replacement nor does it offer as good a tablet experience as the iPad

Surface Pro 2 also starts at $899, making it considerably more expensive than the entry level iPads and even many Windows PCs. The argument in favor of Surface Pro is that it has Office and offers greater productivity than the iPad. However it's not clear that consumers are seeking a unified device for all their computing needs. 

According to data from app marketing platform Fiksu, the iPad Air had a powerhouse opening weekend. The device "is seeing five times the usage the iPad 4 did two days after launch - and more than 3 times that of the iPad mini," explains Fiksu.

iPad Air launch

Stellar reviews and early momentum indicate the iPad Air may have a very good Q4. The new iPad Mini "Retina" launches later this month, which could either divert some iPad Air sales or simply generate more tablet "shelf space" for Apple. That would be potentially bad news for Microsoft, which is competing directly with the iPad.

On the Android side in the US market it's really Kindle vs. Nexus 7 (Samsung has more of a presence in Europe). Between the two Kindle has the stronger brand and greater distribution through Amazon. But the Nexus 7 is probably the better device overall. In the 9 - 10 inch category the Air really doesn't have any competition from an Android tablet. 

In order to see more than token sales, Microsoft will have to truly make the Surface Pro (RT is RIP) a laptop replacement, with a longer battery life and better typing experience. Surface Pro 2 is not that device; so we'll need to wait for Surface Pro 3. That won't be out until next year -- if then.

That means Microsoft, no matter how much it spends on marketing for the holidays, is unlikely to meet its ambitious sales goals for Surface. That is, unless it starts cutting prices very aggressively, with a capital "V."  

Can the iPad (and the PC) Withstand the Cheap Tablet Onslaught?

The iPad Air officially became available around the world today. Supplies appear to be readily available in the US but have slipped in some international markets. In the US the 128GB T-Mobile version now has a 5 - 10 business day wait. (Update: New York is reportedly selling out of some models.) 

The new iPad Retina Mini will become available "later in November." There are undoutedly many people trying to decide which one to buy (iPad Air vs. iPad Mini Retina). 

Beyond the iPad there are the Nexus 7, Kindle HD tablets and Samsung's Galaxy Tabs. The best of that group remains the Nexus 7. However the Nexus 7 is not as polished or quite as good as the new iPads, though it is cheaper. And lower cost is a meaningful factor for many people.

These three makers form a middle tier of price and quality after the iPad.  

 

However, at the bottom, there are scores of "no-name" Android devices selling for less than $150. Many (as in the graphic above) are selling for under $100.

These super-cheap tablets are likely to have battery life and performance issues. They're not going to last little more than about a year if that (my original Nexus 7 broke twice in the same year with eventual total screen failure). Still, low pricing will make them very attractive to some. Indeed the prices are so low in some of these cases they can even be treated as disposable.

These low-end Android tablets will undoubtedly boost Android's share of the market. In the US the iPad still is responsible for more than 80% of tablet-generated web traffic. We'll have to revisit those data in Q1 2014. 

There are a couple of ways to see the potential impact of the proliferation of low-end Android tablets. They're not mutually exclusive 1) they will take share from the iPad and 2) they will expand the market for tablets to more price-sensitive groups who otherwise wouldn't pay a premium for an iPad.  

Regardless, the tablet explosion is not going to be good news for Q4 PC sales. People are likely to avoid replacing or buying new PCs in favor of smartphones and tablets. 

Google Announces KitKat, Nexus 5 and New 'Advertising ID'

This morning Google announced its new Android OS update, KitKat, as well as a new Nexus handset, the Nexus 5 from LG (priced pretty aggressively at $349). In addition the company said that it would begin indexing "deep links" to Android apps in search results (on Android devices): 

Just like it crawls and indexes websites, Googlebot can now index content in your Android app. Webmasters will be able to indicate which app content you'd like Google to index in the same way you do for webpages today — through your existing Sitemap file and through Webmaster Tools. If both the webpage and the app contents are successfully indexed, Google will then try to show deep links to your app straight in our search results when we think they’re relevant for the user’s query and if the user has the app installed. When users tap on these deep links, your app will launch and take them directly to the content they need.

Here's a screenshot provided by Google:

 

Google doesn't mention what happens if users don't have the specified app installed. Presumably users would be directed to a download page for the app (or maybe there's some kind of detection and the link doesn't appear if the app isn't installed). There's no word on Apple devices. Technically it's probably not possible for Google to do this on iOS devices.  

The other significant announcement to come out today is that Google replacing the unique Android ID (similar to Apple's old UDID) with a new "Advertising ID." The new Advertising ID is very analogous to Apple's Identifier For Advertising (IDFA). Google's new Advertising ID implicates ad tracking and targeting in apps only, not the mobile browser.

It moves mobile app advertising away from the unique device ID and "up" to an anonymous identifier that can be cleared or reset by the user at will: 

Google Advertising ID

In addition to resetting or clearing the Advertising ID (like clearing cookies in a brower), Google users will be opt out of "interest based ads" (see graphic above). This doesn't mean no ads, just no retargeted or behaviorally targeted ads.

Advertisers and ad networks on Android must migrate to the new Advertising ID after August 1, 2014: "Beginning August 1st 2014, all updates and new apps uploaded to the Play Store must use the advertising ID (when available on a device) in lieu of any other device identifiers for any advertising purposes."

Separate from Advertising ID Google is increasingly trying to get Chrome browser users to sign in so that it can track and better target them across devices (and later into stores). This is an opt-in system and users can simply not sign in if they have privacy concerns. 

Apple's IDFA approach has been very well received and Advertising ID should also be. It seeks to strike a balance between privacy and advertiser targeting interests. 

Apple Sells Almost $20 Billion Worth of iPhones

Earlier today Apple announced quarterly earnings. Gross revenue was $37.5 billion vs. $35.9 billion last year. The company generally beat expectations on revenue, earnings per share and iPhone sales. Mac sales were in line with expectations. However, iPad unit sales came in slightly lower than anticipated.

Here are the top-line figures from the release: 

  • Revenue: $37.5 billion (vs. expectations of $36.8 billion)
  • iPhone sales: 33.8 million units (expectations: 31 million) 
  • iPad: 14.1 million (slightly less than expected)
  • iPods: 3.5 million
  • Mac sales: 4.6 million
  • Margin: 37%

Regionally Americas sales rose only 1% year over year. Europe was flat. China was up 6% and Japan was up 41%. Here are the revenue numbers by product:

  • iPhones: $19.5 billion (52% of total revenue)
  • iPads: $6.2 billion
  • Macs: $5.6 billion 
  • iTunes/software $4.3 billion 
  • iPods: $573 million

According to Localytics the following is the global breakdown of iPhones in market: 

New iPads Coming Today Amid Intensifying Competition

Later this morning Apple will introduce at least two new or updated iPads. It's widely expected that Apple will offer a 5th generation full-sized iPad that incorporates design features of the Mini and will be thinner and lighter. In addition the company will likely introduce a "retina" display iPad Mini. There are likely to be other announcements tied to Macs and the Mavericks OS update. 

However the iPad will be the center of attention.

This update is important as Apple faces intensifying competition from Google, Samsung and Amazon. There are also a host of "no-name" tablet makers pushing the price of smaller tablets down. Intel, for example, believes that there will be reasonable quality $99 tablets for sale this holiday season. Accordingly it will be interesting to see whether Apple adjusts the pricing of its iPads in any way. 

According to data from Localytics, the most popular iPad is the iPad 2, which has 38% of the global iPad market. The 4th generation iPad has only 18% and the iPad Mini has 17% according to the firm. Among Android tablets it's a three way race between Samsung, Amazon and Google/Asus. 

Global Tablet Share by Model2

On a global basis Samsung is the Android leader with 55% market share. In the US however Amazon Kindle tablets have outsold Samsung. Overall, according to Chitika in June, the iPad drives 84% of tablet-based traffic in North America. The ad network is set to update these numbers today.  

Gartner and IDC continue to forecast the decline of the PC, with tablet growth continuing. However, thus far, Microsoft has not produced a competitive tablet to stem its falling OS and device market share. 

On Friday the Pew Research Center offered new data showing that 43% of Americans over 16 owned a tablet or an e-reader. That makes for a total of just over 100 million people in the US with one or both devices. Among them Pew said that 35% owned tablets, which I calculated was roughly 84 million people. 

Tablets and ereaders 

Report: 103 Million People in US Have Tablets or eReaders

One still gets the sense that there are marketers who treat the rise of mobile devices as something of a novelty. The idea that mobile devices have supplanted PCs in many use cases hasn't quite sunk in for many.

There are nearly 150 million smartphones in the US today, with many of them being used as primary internet devices. Now, according to Pew Research Center data released this morning, there are nearly 103 million people in the US (over 16) who who tablets or e-readers. Eventually tablets will replace e-readers for most. 

A survey of more than 6,000 people in the US (over 16) conducted between July and September found that 35% of Americans own tablets and 24% own e-book readers. Combined, a total of 43% of Americans own one or the other or both. After Q4 the tablet number will be at or above 40%. 

Tablets and ereaders

Source: Pew Research Center 

Here's the breakdown in terms of real population numbers by category -- if the Pew data are reliable: 

  • Tablet owners: 84 million
  • E-Reader owners: 57.6 million

Apple is scheduled to announce new iPad models next Tuesday at an event in San Francisco. While Android tablet shipments (and presumably sales) have been growing the great majority of tablet traffic in North American is still from the iPad.  

Ad network Chitika reported in late June that the iPad was responsible for 84% of all tablet traffic in North America. The company is currently updating its numbers and will release new data next week. 

However this is what the tablet landscape looks like (until further notice) in terms of actual tablet-based traffic to websites:  

June iPad traffic

Source: Chitika 

Report: 33% of Google's Paid-Search CTRs Now Coming from Mobile

Paid search marketing firm The Search Agency released its Q3 "State of Paid Search Report" for the US market. The report is based on a large volume of client data and discusses paid search trends by search engine and several industry segments. The headline is that a third of Google's paid search clicks in the US are now coming from smartphones and tablets. 

The following are some of top-level data released in the report:

  • Google average CPC was up across all 3 device types, with the largest growth occurring in tablets, which grew 14.2% YoY.
  • Google’s distribution of clicks continued to shift away from desktops toward smartphones and tablets, which now make up more than 1/3 of the search engine’s clicks in Q3.
  • While clicks on desktops were flat YoY, search clicks on tablets increased 63.4% and clicks on smartphones more than doubled.

The following charts show the percentage of paid-search clicks by device category.

In the aggregate, Google saw 33% of paid clicks in Q3 coming from smartphones and tablets, with the greatest growth coming from tablets. Bing saw about 18% from mobile devices, since it has a much smaller and less visible mobile presence.  

PC Market Continues to Limp Along

The third quarter US PC shipments figures have been coming out. While there was a mild recovery for some of the PC makers, the numbers overall remain very weak.

Both IDC and Gartner see PC shipments off from 7.6% to 8.6% overall vs. last year. In addition shipments don't equal sales. Consequently the actual sales figures may be weaker than suggested by the shipments numbers. 

The market has structurally changed. Smartphone and tablet usage has replaced PC usage in many cases. Smartphone and tablet growth will continue to gain for the next 3 - 5 years, generally at the expense of PCs. We're also not likely to ever see high-end ($1,000+) PC sales at any volume in the consumer market again.

 

While Apple has been able to maintain higher desktop and laptop prices, most PCs now sell at sub-$500 levels (they're effectively disposable). And once consumers make that leap psychologically they'll want to spend even less (hello Chromebooks).

There's also less and less urgency to replace or upgrade older PCs. Consumer indifference to Windows 8 also compounds challenges for the PC industry.

The "aha" about the Q3 Gartner and IDC PC shipments estimates above and below are that the back-to-school shopping season did almost nothing to boost sales. HP, Lenovo and Dell saw modest growth while other PC makers saw significant double-digit declines. 

 

Meanwhile tablet (and hybrid phone-tablet) devices continue to grow. Roughly 34% of the adult US population now own tablet devices according to earlier 2013 Pew survey data. Those numbers are likely to be above 40% and perhaps as high as 45% after Q4 2013. 

Pew tablet ownership 

The thing separating the PC from more precipitous declines is arguably Microsoft Office. If a functioning version of Office comes to non-MSFT tablets or if the cloud based version of Office is more widely adopted, PCs will be even less "necessary" for consumers than they are today.  

Place 2013 - Agenda & Presentations

Place 2013 brought together the entire spectrum of companies building the indoor location ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors attended this unique, one-day event at the Palace Hotel in San Francisco and was the first-of-its-kind anywhere.

Sponsors
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Agenda & Presentations

8:45 AM - 9:00 AM
The Consumer Foundations of Place-Based Marketing - The majority of smartphone owners are already using their devices in stores to find product and price information, as well as coupons. Opus Research will present proprietary findings on in-store behavior, privacy attitudes and consumer receptiveness to indoor promotions.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation

9:00 AM - 9:45 AM
The State of Indoor Location - For the past several years online mapping giants and technology providers have been laying the groundwork for indoor location. What is the current state of the infrastructure? What technologies are already deployed and how accurate are they? What indoor consumer and advertiser scenarios are possible today and what might be possible within three years?
Speakers:
Joseph Leigh, Head of Venue Maps, Nokia
Leslie Presutti, Mobile, Location and Computing Business Unit, Qualcomm Atheros
Zack Sterngold, VP of Americas, Boingo Wireless
Avinash Joshi, Chief Technologist, Wireless LAN Group, Motorola Solutions

9:45 AM - 10:25 AM
Keynote: Why Indoor Location Will Be Bigger than GPS or Maps - The explosion of smartphones with built-in sensors, accelerometers, GPS and WiFi is making indoor positioning not only possible but also inevitable. The emerging indoor opportunity for venue owners, retailers and technology providers is potentially massive. Google’s Don Dodge, an investor and close observer of the space, will explain why he believes indoor location and marketing is going to be huge and potentially larger than GPS and maps.
Speaker: Don Dodge, Developer Advocate, Google

10:45 AM - 11:05 AM
Case Study: Point Inside - Point Inside was one of the early consumer-facing apps in the indoor location space. The company has since shifted its focus to enterprises and enabling retailers to take advantage of indoor location. The company will present a new case study featuring a major home-improvement retailer.
Speaker:Todd Sherman, Chief Marketing Officer, Point Inside
View slides from this presentation

11:05 AM - 11:30 AM
Featured Case Study: Forest City and Path Intelligence - Forest City Enterprises are many years into using mobile device monitoring and advanced indoor analytics to help create a better environment for their shoppers and their retailers. Hear from the project sponsor and partner Path Intelligence on how they have transformed asset management, leasing, and marketing.
Speakers:
Stephanie Shriver-Engdahl, VP, Digital Strategy, Forest City
Cyrus Gilbert-Rolfe, VP, Path Intelligence
View slides from this presentation

11:30 AM - 12:15 PM
Digital Analytics for the Real World - Using a variety of technologies to identify when and where smartphone shoppers are in stores, retailers can now leverage "big data" previously reserved for Internet companies alone. These "real world analytics" hold profound implications for everything from in-store merchandising and staffing to consumer marketing. Leaders in the segment will offer views on opportunities and potential pitfalls for indoor analytics.
Speakers:
Jon Rosen, Executive Vice President, iInside
Will Smith, CEO, Euclid
Alexei Agratchev, Co-Founder, RetailNext
Michael Healander, General Manager, GISi Indoors

1:15 PM - 1:55 PM
Retail Spotlight: Aisle411 & Dick's Sporting Goods - Aisle411 will discuss current retail deployments and their impact on operations, consumer loyalty and marketing. Dick’s Sporting Goods will share how it’s thinking about indoor location, privacy issues and the overall opportunity. And Bob Rosenblatt, former COO of Tommy Hilfiger Group, will outline the intriguing business opportunities for retailers in develop- ing indoor marketing strategies.
Speakers:
Nathan Pettyjohn, Founder & CEO, aisle411
Rafeh Massod, VP, Customer Innovation Technology, Dick's Sporting Goods
Bob Rosenblatt, CEO, Rosenblatt Consulting
View slides from this session from aisle411

1:55 PM - 2:15 PM
Using Store Visits and Data for Advanced Retail Intelligence - Online to offline has been the dominant but largely invisible paradigm of Internet-driven spending. Using mobile to better target and influence store visits is only the beginning. PlaceIQ CEO Duncan McCall will offer a major retail case study fo- cused on measuring store visits after mobile ad exposures. He will also discuss how to connect online, nearby and indoors for a more complete picture of the customer journey.
Speaker:Duncan McCall, Co-Founder & CEO, PlaceIQ
View slides from this presentation

2:15 PM - 3:00 PM
Ad-Tracking to the Point of Sale - Panelists will discuss the current and future use of indoor location as a way to demonstrate ROI and sales lift on a per- campaign basis. What is the current state of the art in matching store visits to ad exposures? And what are the broader implications of connecting online ads and offline data?
Speakers:
Monica Ho, Vice President of Marketing, xAd
David Shim, Founder & CEO, Placed
Ameet Ranadive, Director of Product, Twitter Ads Team
Michael Shevach, SVP Ad Solutions, Retailigence
Duncan McCall, Co-Founder & CEO, PlaceIQ (moderator)

3:20 PM - 3:50 PM
Opt-in or Opt-out: Indoor Location & Consumer Privacy - Indoor location has already gained the attention of members of Congress and been called "troubling." While not everyone agrees about the level of concern, there are obvious consumer privacy issues raised by in-venue smartphone tracking. How should the companies be addressing these issues today and what might regulation require tomorrow?
Speakers:
Jennifer King, School of Information, UC Berkeley
Jules Polonetsky, Executive Director & Co-chairman, Future of Privacy Forum

3:50 PM - 4:10 PM
Case Study: Meridian/Aruba Networks - Meridian, who was recently acquired by Aruba Networks, will offer two indoor case studies, one involving a small business (Powell’s Books in Portland) and another involving a major U.S. apparel and housewares retailer.
Speaker: Jeff Hardison, Vice President, Meridian
View slides from this presentation

4:10 PM - 4:55 PM
Microfencing: Targeting In-Aisle Shoppers - Billions of dollars are spent each year by brands and manufacturers trying to influence consumer buying in stores. A percentage of that money will migrate to indoor digital marketing. What conditions must first exist and what will those brand-consumer interactions look like? The panel will explore these questions as well as the contours of the broader indoor marketing experience.
Speakers:
Neg Norton, President, Local Search Association Ben Smith, CEO, Wanderful Media
Melissa Tait, VP of Technology, Primacy
Erik McMillan, CEO, BrickTrends
Asif Khan, Founder, Location Based Marketing Association (moderator)

4:55 PM - 5:30 PM
Reality Check: Assessing the Indoor Opportunity - The other sessions explored major opportunities (and challenges) of indoor location and marketing. Now it’s time for a fun, yet sober assessment of whether and how soon these scenarios will come to pass. Is there real demand and who will own the “indoor channel”? Where will the "place-based market" be next year, in three years?
Speakers:
Jeremy Lockhorn,VP, Emerging Media, Razorfish
John Gardner, Partner, Nokia Growth Partners
Chandu Thota, Engineering, Google
Wibe Wagemans, IndoorAtlas

Android Hits a Wall in US While iPhone Climbs

Yesterday comScore released its US smartphone market share report for August. The interesting thing is that these data do not reflect the release of the iPhone 5s and 5c. Apple was the single most popular handset maker, with just under 41 percent of the market. Samsung was second with 23 percent. 

In terms of operating system share, Microsoft gained 0.2 points while Android lost 0.8 points. The iPhone saw a 1.5 percent gain. It certainly will be interesting to see what the September numbers are, post iPhone 5s. 

  August OS share 

In the aggregate Android devices represent just over half the smartphone market in the US (now 64% of mobile users). However it appears that may be the ceiling for Android -- at least for the time being. 

Depsite this it appears from comScore's data that Google has achieved nearly 100% (92%) smartphone reach in the US through a combination of apps and mobile search usage, though Facebook remains the top individual mobile app: 

top mobile apps August

According to research conducted by investment bank Canaccord Genuity the iPhone 5s was the top selling mobile handset at each of the four major US carriers in September, with the 5c taking second place at AT&T and Sprint and third place at Verizon. 

Notwithstanding its second place finish, the 5c is quite a bit less popular than the 5s. Hitwise (Experian) reported that search queries for the iPhone 5s were 4X more than the 5c in early September.

top-five-iphone-search-terms 

This basically mirrors our survey finding correctly predicting the enormous popularity of the 5s and lesser interest in the 5c:

iPhone survey

Source: Opus Research, n=1,508 US adults (Sept 16 - 19 2013)

Elecontrics retailer Best Buy is offering a $50 instant discount on the 5c, which effectively cuts its contract-subsidized price to $50 for the entry level device. Wal-Mart by the same token has cut the 5c's price to $45 "permanently." This should help boost sales of the 5c considerably in the short term.  

Report: Windows Phone Continues to Gain Share in Europe

Kantar Worldpanel ComTech has released new smartphone market share data showing significant gains for Windows Phone in Europe. The research firm says that Windows Phone is now within a point of the iPhone in Germany and that its growth is outpacing Android across the Continent: 

Android remains the top operating system across Europe with a 70.1% market share, but its dominant position is increasingly threatened as growth trails behind both Windows and iOS. Windows Phone has hit double digit sales share figures in France and Great Britain with 10.8% and 12% respectively – the first time it has recorded double digits in two major markets.

Kantar also says that Apple is continuing to show momentum in the US: "Apple continues to grow strongly year on year and now makes up 39.3% of sales." These data do not include the recent 9 million handsets sold by Apple upon the debut of the iPhone 5s and 5c.

Windows Phone's strongest markets are France, UK, Germany and Italy, where Nokia's brand is still relatively strong. It continues to lag in the US and China, however. 

  

Amazon's New Devices, Aggressive Pricing Seek to Reclaim Tablet Spotlight

When Amazon introduced its original color tablet the Kindle Fire its chief innovations were aggressive pricing ($199) and the fact that the company used a "forked" version of Android that declared its independence from Google. There have since been two updates to the line (including yesterday's), which now includes four color tablets.

Yesterday Amazon CEO Jeff Bezos introduced refreshed Kindle hardware and software. There's a new "operating system," called Mojito (based on Android Jelly Bean). There are essentially two new tablets: Kindle Fire HDX (as in "beyond HD") in 7 and 8.9 inch versions. The Kindle Fire HD (7 inch) has been dropped to $139, which is sure to be the biggest seller, though it's effectively last year's model. There's also a clever new cover/stand called Origami

The big software innovation is "Mayday," which is live video tech support on the tablet screen. Here's how Amazon describes it: 

Kindle Fire HDX also introduces the revolutionary new "Mayday" button. With a single tap, an Amazon expert will appear on your Fire HDX and can co-pilot you through any feature by drawing on your screen, walking you through how to do something yourself, or doing it for you—whatever works best. Mayday is available 24x7, 365 days a year, and it's free.

As a practical matter Mayday is mostly a marketing gimmick, which probably won't see a great deal of actual use but will give some confidence to older and less tech-savvy buyers. What's more interesting to consider is the degree to which Mayday may be emulated by other industries (e.g., travel, shopping) for customer care purposes. That will be fascinating to watch. 

North American Non-iPad Traffic Share

Source: Chitika, September 2013 (North American Android tablet traffic share)

Currently in North America the iPad controls about 84% of tablet-based web traffic according to Chitika. The remaining 16% is mostly Android tablets and really a battle between Amazon, Samsung and Google (in order of market share). The $139 price point on the Kindle Fire HD will capture buyer attention and may put pressure on Samsung and Google. 

When Google introduced its new Nexus 7 earlier this year the company raised the price from $199 to $229 for the entry level model. The price increase was justified on the basis of new specs and a higher resolution screen. Amazon's Kindle Fire HD is almost $100 cheaper at $139. Without ads it's $154. The Nexus 7 is a superior device (to the Kindle Fire HD) but many people will not see a difference and opt for the much cheaper Kindle. 

The Samsung Galaxy Tab 3 is $199. Accordingly it will be very challenging for Google, Amazon or anyone to sell many smaller tablets at much above a low $200 price point. Whether the iPad Mini feels similar pricing or sales pressure is a question that remains to be answered. However I suspect iPad Mini sales will only be affected at the margins. 

Study: More than 75% of iPhones Sold Are the 5s

There was an initial surprise yesterday that Apple had sold 9 million iPhones over the weekend. Since the smoke cleared, however, there has been considerable "day two" analysis of those sales. Mobile analytics firm Localytics, for example, has done a geographic breakdown of global activations and traffic iPhone 5s and 5c devices in the past 72 hours. 

According to the company's analysis, the majority of overall new iPhone sales have been in the US, followed by Japan and the UK. 

iPhone 5s and 5c Global Market Share by Country

Though a still small market for the iPhone in absolute sales, China is significant in that the Chinese seem to be buying the 5s in much higher numbers than the 5c. This is something of a suprise considering that the price of the 5s in China exceeds $800. The now sold out gold version is selling on the grey market, according to several reports, for more than double that. 

iPhone 5s vs 5c by Country

In the US, roughly 3 out of every 4 iPhones sold is a 5s. Internationally, Localytics says that more than 80% of new iPhones sold are 5s devices.

 iPhone 5s vs 5c Distribution by Region

Our survey, conducted a week ago among 1,500 US adults, correctly predicted high demand for the 5s as well as the 5s to 5c ratios. 

What's interesting is that even in the face of massive weekend sales, the perceived weakness of the 5c is keeping Apple's stock down and fuelling the bearish Apple-investor narrative that the company has lost its old magic.

Perhaps surprising was that of the eight countries where the most iPhone 5s’ or 5c’s were sold, the highest ratio of preference for the 5s wasn’t in the United States or Japan; leading the pack is actually China.

iPhone 5s vs 5c by Country

One possible explanation: there was a lot of hoopla around the addition of the gold-colored iPhone 5s as a very attractive addition in particular for Asian markets so this hypothesis may hold true. Keep in mind the gold-colored version is only available on the 5s, not the 5c.

Other major markets also had a very high ratio of the 5s vs. the 5c. In fact, the only country that didn’t have at least a 3 to 1 ratio of the 5s vs. the 5c was the United Kingdom. With the economy in the UK still in recovery, a slightly less strong affinity for the 5s could be the result of a more cost-conscious buyer. Subsidies also play less of a role in the UK’s phone market than in the US, making the upfront cost of phones higher for consumers. Globally the iPhone 5s represented 78% of all of the new iPhone 5s and 5c devices; 76% in the U.S. and 82% in the rest of the world.

 iPhone 5s vs 5c Distribution by Region

 One possible reason why more iPhone 5s’ were sold was because of the tendency of hardcore apple users wanting to buy the top of the line iPhone on the weekend it was released. It will be interesting to see if the 5c can pick up a bit of momentum in the next few weeks.

iPhone 5s & 5c Adoption by Country

Overall, the United States accounts for 68% of all active iPhone 5s and 5c devices worldwide, with Japan in second place with 13% of 5s and 5c’s.

iPhone 5s and 5c Global Market Share by Country

- See more at: http://www.localytics.com/blog/2013/china-leads-the-pack-in-preference-for-iphone-5s-over-5c/#sthash.tVuxOsR6.dpuf

First Weekend iPhone Sales Exceed 9 Million

Apple announced this morning that it had sold more than 9 million iPhone 5s and 5c devices this past weekend. It did not indicate how many of the 9 million were 5c devices vs. 5s devices. Most of the demand globally is likely to have been for the 5s. That's what our survey showed (see below).

The market became very nervous after the 5c went on sale for pre-orders a week ago and Apple didn't issue a press release last Monday. Many institutional investors sold Apple shares. Then the very postive 5s reviews came out stoking consumer demand.

Here's what Apple said in its release this morning: 

Apple today announced it has sold a record-breaking nine million new iPhone 5s and iPhone 5c models, just three days after the launch of the new iPhones on September 20. In addition, more than 200 million iOS devices are now running the completely redesigned iOS 7, making it the fastest software upgrade in history. 

Essentially the 5s sold out of its initial supply.

demand for 5s

Source: Opus Research, n=1,508 US adults (Sept 16 – 19 2013)

Last year Apple said it had sold 5 million iPhones during its first weekend. That was a record at the time. This nearly doubles it. The company also announced this morning that since iOS7 became available late last week, 200 million devices around the world have been upgraded.

I was concerned that I would dislike or be ambivalent about the new OS. However I actually like it quite a bit. 

The iPhone 5s sellout will only fuel further demand for the device. Supplies of the 5c remain available. But the public seems to recognize the 5c as "last year's model" with a new coat of paint. While that's not entirely true (there are some upgrades) demand for the 5c has been much less than the 5s as our survey last week predicted. 

Update: Localytics now answers the 5s vs. 5c sales question, saying that the 5s outsold the other device by a factor of more than 3X in the US and an even larger margin outside the US:

Carrier market share for iPhone 5s and 5c

5s vs 5c global

Nielsen: Smartphones Now 64% in US Market

The first wave of iPhone 5S reviews have come out and they're essentially raves, exemplified by Walt Mossberg's superlative laden missive: “[T]he new iPhone 5s is a delight. Its hardware and software make it the best smartphone on the market.”

While there is some question about the early success of iPhone 5C pre-orders, the 5S is almost a sure sellout when it's released this weekend. According to a survey by Opus Research, the 5S is the most desired "next smartphone" available in the US market, while the 5C is in fourth place (after Galaxy and other Android devices). 

However according to new data from Nielsen, 61% of recent smartphone buyers chose Android devices vs. 34% who bought iPhones. We'll see how those numbers are impacted, if at all, by the launch of the 5S.

Overall Nielsen says that in the US 64% of mobile subscribers are now owners of smartphones. Those in the 25 - 34 age group have the highest smartphone penetration at 81%, with teens 13 -17 closing in at 70%. Feature phones are now concentrated among those over 55 years of age. 

Below is the current smartphone OS market-share distribution according to Nielsen:  


Google Wallet Moves Beyond NFC in Bid for More Consumer Adoption

As I wrote last week the advent of iBeacon and bluetooth low energy may effectively mean that NFC as an in-store mobile payments standard in the US market is dead. Google Wallet had placed a big bet on NFC payments but has been thwarted in its bid for adoption by two principal factors:

  1. The public doesn't understand or care about NFC and the NFC infrastructure is still piecemeal
  2. The major carriers other than Sprint blocked Google Wallet because they have a competing NFC intiative (this anti-competitive behavior was never investigated by the FTC)

Google Wallet 1.0 thus was a failure. Google is now out with a new Android version (and soon iOS) is making a renewed bid for consumer adoption with a range of new features and a partial move away from NFC. In-store payments still depend on NFC and so won't be happening at scale any time soon for the same reasons cited above.

However the new features add utility and breadth to the user experience. Here's what's new:  

  • Google has added the ability to send money via email from Wallet (following the ability to use Gmail to send money with Google Wallet). This is a great feature. 
  • The ability to enter/scan loyalty cards into Google Wallet. ("Google Now will notify you when you have a saved loyalty program nearby.")
  • Save and later redeem Google Offers via Wallet (showing the phone at checkout to redeem).

Exactly a year ago we surveyed 1,501 US adults and found the vast majority were not interested in the idea of mobile wallets: 71% said "I'm not at all interested . . . in using [my] mobile phone to pay for things and replace cash or credit cards." Another 15% said they had only "limited interest." Only 14% had some interest or significant interest. 

In specific contexts, where consumers see the tangible benefits of mobile wallets, these numbers change. But in the abstract the public remains largely uninterested in mobile wallets.  

Time Spent Online: Mobile 51%, PC 49%

Jumptap (now part of Millennial Media) and comScore released a report last week on cross-platform device usage. The report contains considerable data about smartphone and tablet penetration, day parting and device usage by content category and demographic group.

Much of the data is from comScore and has already been released in other contexts. However there were a number of interesting data points in the report worth revisiting, including the fact that combined smartphone and tablet time online now exceeds time online with PCs.

As a general matter smartphones and tablets have increased overall time spent online rather than simply cannibalizing PC time, though there has been some of that (e.g., maps, local). 

Another interesting set of data in the document explore device share of online minutes by content category or vertical. The PC is dominant (more than 50% of time spent) in a little more than half the categories examined.

PC usage is highest in the automotive segment and lowest in "radio" (think Pandora). Retail sees slightly more mobile than PC time. 

The numbers above are aggregate data. Demographic segments are going to display different device behaviors. For example, those in the US under 30 are likely to be more involved and spend more time with smartphones than those over 50. That pattern has been repeatedly shown in our surveys and other third party data, including this report.

Below are the demographic groups profiled in the report:

Age 18 - 24: 

  • 69% own a Smartphone
  • 65% of digital users are cross-platform
  • 59% of time with digital is mobile

Women 25 - 49:

  • 69% are cross-platform
  • 67% own a Smartphone
  • 14% Mobile only (vs. 17% PC only)
  • Spend 63 hours monthly on Smartphone
  • 75% of time on social media is on Mobile

Men 25 - 49:

  • 74% of digital users are cross-platform
  • 62% own a Smartphone
  • 45% of time with digital is Mobile

Age 50+:

  • 39% own a Smartphone
  • 51% are cross-platform
  • Represent 31% of Tablet owners (only 25% of Smartphone owners)

There's quite a bit more data in the report, which can be downloaded for free.

As a broad takeaway marketers can now assume almost everyone above a certain income threshold is "cross platform." The minority are "smartphone only" or "PC only" (select younger and older users respectively).

Marketers can also reliably make the assumption that those under 45 are going to favor smartphones vs. PCs as primary devices in a wide range of categories. However people are also rational and prefer larger screens in many contexts (at least until mobile user experiences are improved).

By comparison tablet behaviors are still being established. However the tablet is typically used as a PC substitute (provided a larger screen) in the home.