Xoom Struggling, iPad 2 Nearly Sold Out

As the cliche goes: you don't get second chance to make a first impression. And that appears to be true for the already beleagured Motorola Xoom. Hailed as the "iPad Killer" it's proving to be anything but with sales that are reported to be "weak" according to some financial analyst.

The Motorola Xoom received mixed but generally favorable reviews when it was released in late February. But consumers generally aren't buying the device. This is in part because of the anticipated arrival of the iPad 2, which is now either sold out or almost sold out of its initial supply. But equally inhibiting consumers is Xoom's $799 price tag. (There have also been reports that Honeycomb is buggy.)

Despite the fact that the Xoom has been called "bloated" and "obese" next to the thinner iPad 2, it's the pricing decision that has hampered initial sales of Motorola's first generation tablet. Much has been written about Apple's economies of scale and retail distribution advantages in keeping prices down. However it was pure hubris on Motorola's part to introduce the device at a price point $300 higher than the WiFi version of the iPad.

While a comparably equipped iPad is closer to the Xoom's price, it doesn't matter. There's one Xoom and it costs $800. You can get an iPad 2 for $500. The marketing and psychological impact of that gap is quite significant. (You can get Xoom for $599 with a 2 year contract from Verizon; however the majority of iPad sales were the WiFi only device.) 

The higher Xoom price might be OK if the Xoom were truly and obviously a superior product. The opposite is true however. The Xoom's battery life is shorter and inconsistent according to various reviewers who've been testing the device. In addition new performance benchmark tests just released, the iPad 2 outperformed Xoom across the board. Cumulatively this is all bad news for Motorola. 

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When Xoom's pricing was first announced earlier this year I wrote:

The $800 pricetag is a strategic blunder by Motorola. The cheapest WiFi version of the iPad (with iPad 2 coming in March or April) is $499. The high price is likely to dampen sales, especially when the iPad is "the brand" and Motorola is the upstart/insurgent.

The Galaxy Tab was priced initially at $600, which was also too high. A better out-of-the-gate price for Xoom would have been $599 or maybe $699. At $799 people are going to think twice and with an iPad right there . . . opt for the iPad. 

In order to salvage Xoom 1.0 Motorola will need to cut the price by $200 (for the unlocked version), which would mean little or even no margin on the device. Alternatively Motorola might focus on the 7" tablet category, which is still open to competition because Apple doesn't have a product there (yet). 

Notwithstanding some early sexy commercials and claims by Motorola, it was almost always clear that Android tablets would compete on price and Xoom has failed to defy that prediction. Now Motorola must lower Xoom's price or pin its hopes on the next tablet. 

See related: Interest in iPad 2 far outstrips interest in rival tablets


Two Years Is Like 10 Smartphone Years

Microsoft watcher Mary Jo Foley points out that a Nokia Securities and Exchange Commission filing states that "transition to Windows Phone as its 'primary smartphone platform' will take 'about two years.'"

The first Nokia-made Windows Phones were supposed to be out later this year (October). However the companies have previously said that mass availability of Nokisoft phones wouldn't happen until next year. The "two years" in the filing implies something even later -- 2013. 

Nokia is really in a tough spot if this is true. The company says it continues to be committed to Symbian; however Symbian is not competitive. Nokia has also abandoned MeeGo, its other mobile OS developed with Intel. Prior to the release of Windows Phones there's likely to be stagnation in Nokia handset sales, except at the very low, price-conscious end of the market.  

Microsoft has several OEM partners building Windows Phones but those partners also build Android handsets and thus far are seeing much greater success with Android devices. Thus their motivation to push Windows Phones, except as a kind of "hedge" against Android dependency, is limited.

In this smartphone market "two years" is like ten. And given the trajectory that Android is on Nokia could easily forfeit its top position in global smartphone rankings -- ceding the spot to Android (and Google). Code red: neither Microsoft nor Nokia has two years to mess around. 

iPad 2 Hits Stores Tomorrow

The iPad 2 will be available "Friday at 5 p.m. local time at all 236 Apple retail stores in the US and through the Apple Store." It will also be available from AT&T, Best Buy, Target, Verizon Wireless and Walmart stores.

The device has been very well, if not ecstatically reviewed. The consensus is that the combination of value pricing (with the entry level tablet at $499) and feature upgrades has cemented the iPad's leadership position over a gaggle of competitors. To that end, iPad 2 also probably cut the legs out from under Motorola's Xoom's potential sales. Xoom is the recognized Android tablet leader so far. 

As with its smartphone OS, one can expect that the Android tablet OS will improve with time. 

There are two questions in my mind: how many new tablet buyers will enter the market to get iPad 2 and what will sales be of iPad's competitors? Most of the competitors haven't yet shown up. One market segment that is open to competition is the 7" category (e.g., Galaxy Tab). RIM's Playbook is 7", which probably gives it a fighting chance in enterprises. 

The original iPad has sold 15 million units globally. I'm eager to get an iPad 2 despite the fact that I have an iPad. My wife will be upset if I do, but I may not be able to control myself. 

Kindle survives because it is now heavily discounted vs. its original pricing and it's a well-built single purpose device. But pricing is the key factor; if it were priced at the original $359 it wouldn't be selling. The larger and more expensive Kindle DX is effectively dead -- although Amazon could always reinvent it at some point with a color screen and new features. 

Update: IDC just put out some data about 2010 tablet sales:

  • Nearly 18 million tablets "shipped" in 2010 (Apple sold 15 million per Apple)
  • Apple's share was 83% (per IDC)
  • eReader shipments were more than 12 million
  • Western Europe and Asia/Pacific (excluding Japan) regions accounted for 89% of all media tablet shipments in Q4; US is the largest market, but W. Europe and Asia (excluding Japan) are growing faster
  • IDC predicts 50 million unit sales (including eReaders like Kindle) in 2011

Microsoft in Deep Mobile Trouble

Microsoft's Windows Phone mobile OS is well reviewed but it isn't really moving. According to comScore's latest data, the platform continues to lose share vs. rivals. And the big bet and tie-up with Nokia that was announced last month won't have the opportunity to bear fruit for many months still. There are rumors that a Nokia-built Windows Phone won't be out until October. That's quite a long time to wait in this market. 

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Bloomberg is now reporting that Microsoft is paying Nokia "more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement." That's a chunk of change to keep Nokia away from Google.

We won't know how competitive these "Nokisoft" phones are until they hit the market -- though the mock-ups look nice. However, as mentioned, consumers don't seem to be flocking to existing Windows Phone handsets. So absent some compelling new features and marketing campaign it's not clear that simply having Nokia build them will help all that much. 

Separately other reports indicate that there won't be a Microsoft tablet (notwithstanding the Windows 7 HP entrant) out until basically August or September of 2012: 

Microsoft Corp., the world’s largest software maker, won’t release a competitor to Apple Inc. and Google Inc.’s tablet operating systems until the 2012 back-to- school season, people with knowledge of the plans said.

I've argued that the company should adapt Windows Phones OS for the tablet rather than trying to modify the PC OS. Waiting until Q3 of next year to put out its 1.0 tablet means a longer wait for a truly competitive product. Xoom is already toast vs. iPad2 and Samsung is rethinking its pricing plans.

Regardless of how many tablets you think will sell this year (30 million?) they do appear to be eating into PC sales. According to the Wall Street Journal

Today Gartner Inc., a tech research shop, reduced its forecast for 2011 and 2012 personal computer shipments. The firm said the popularity of other devices, such as the Apple iPad, will cut into sales fro traditional PCs.

Here's Forrester's view: 

It's quite possible that Microsoft, if slow development cycles continue, will effectively be shut out of much more than a minority share in the smartphone and tablet segments. However an irony here is that Android OEMs might turn to Windows as a hedge against Android dependency and being reduced to "commodity producers" of the Google devices.

See related: Microsoft Is Said to Pay Nokia More Than $1 Billion in Deal.

Google Surging, iPhone Flat, RIM Falling in Latest comScore Metrics

There have been a flurry of reports from Nielsen and comScore that have now consistently established Android outselling the iPhone. But now Google has become the clear dominant smartphone platform in the US.

Last Friday when Nielsen put out mobile market share numbers showing that Android had topped RIM and Apple, comScore rushed out a chart showing something similar. However today comScore released its more complete mobile marketshare data:

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The impact of the Verizon iPhone is still not reflected here -- the iPhone is flat on a percentage basis -- but Android's momentum continues to grow impressively. And look at RIM; it's slide continues. 

Immediately below is December data for comparison purposes: 

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The following is comScore's data on mobile content usage, which is all pretty flat: 

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In the chart app usage is growing faster than browser usage, though browser penetration remains greater by a little under 2 points.

It would be interesting to discover whether these Android users are upgrading from feature phones or BlackBerry devices. It's curious to me that we have all these new Android handsets in the US market but not that much more mobile Internet usage. 

The iPad2's 'Smart Cover' Is a Genius Branding Move

Today Apple announced what it was pretty much expected to announce: a lighter, faster and thinner device with front and rear-facing cameras. Pricing remains largely the same (except that the original iPad is now $399). There are other performance improvements and some new apps (iMovie, Garage Band, Photo Booth and of course Face Time).

The device doesn't leapfrog other tablets (most of which aren't yet out) but it eliminates any feature gaps and it reasserts Apple's position as the "brand," while Android and others are "clones" or "followers." 


Credit: AllThingsD

The metaphor for all of this is the simple yet brilliant Smart Cover

The innovative new iPad 2 Smart Cover provides protection for the iPad screen while maintaining its thin and lightweight profile. Designed with a unique self-aligning magnetic hinge that makes it easy to attach and remove, the new iPad 2 Smart Cover automatically wakes iPad 2 when it’s opened and puts it to sleep when it’s closed, and has a soft microfiber lining to help keep the screen clean. The Smart Cover also folds into a stand for typing or viewing videos and is available in vibrant polyurethane for $39 or rich leather for $69 in a range of colors, including a (PRODUCT) RED one which helps support the Global Fund to fight HIV/AIDS in Africa.

This clever, multifunction accessory offers personalization and a differentiated look to the Apple tablet vs. others in the market, which now resemble "gray boxes" (like Windows machines). It's another stroke of marketing and product design genius. 

Steve Jobs, who appeared at the event, confirmed that 15 million iPads had been sold in the 9 months since launch (April to December), for a total of $9.5 billion in revenue. Reportedly iPad 3 will be announced later this year. 

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iPad 2 Day, Price Wars and Tablet Mania

Unless you're just getting back from your trip to the outer reaches of the galaxy, you know that Apple is set to reveal its highly anticipated iPad 2 today around 1pm Eastern. Thinner, faster and with a better speaker and cameras, the new device is an interim upgrade for the highly popular tablet.

Those improvements bring it to feature parity with some of the newest Android tablets like the Motorola Xoom, which at present appears to be the "flagship." LG, RIM, Samsung, HTC, HP, and others all announced and are soon releasing competitive tablets, most based on Android; however WebOS in the case of HP-Palm and QNX in the case of RIM. (RIM will run Android apps as a way to stay relevant given the limitations of its own "App World.")

The Xoom has been reasonably well reviewed but, despite many of its superior features, (vs. "iPad Classic") has not been pronounced superior overall. Part of the problem with Xoom is its $799 price (lower with carrier subsidy). Most of the tablets now coming out are trying to match similarly equipped iPad pricing. But Xoom has made a serious pricing error and will see lost sales as a result.

Motorola Mobility CEO Sanjay Jha said that Xoom sales have gone "relatively well" (read: disappointing). However if iPad 2 matches its features, as expected, you can expect that any sales momentum that Xoom has to abruptly end -- unless Motorola cuts prices. 

Only a small number of "high-end" Android tablets will exist by the end of this year. The market will support several winners but not a dozen. The iPad will likely capture much of the high end of the market as Apple has historically with Macs. There may be several viable tablets at the sub-$300 price range that can survive on price competition alone. It will be interesting to see if "good enough" Android tablets at the low end put pressure on the higher end Android tablets to cut prices themselves. 

We'll see what Apple shows up with later today and how it's priced.

Apple surprised everyone when the original iPad was introduced with a WiFi-only "entry level" version for $499. That pricing helped propel interest in the iPad and generate over 15 million unit sales to date (we'll hear an update on those numbers today I'm sure).

iPhone 'Nano' Rumor Upstages Many MWC Announcements

There are already dozens of announcements coming out of Barcelona and the Mobile World Congress. Many of them have to do with new devices (mostly tablets); there are a few acquisitions and partnerships being announced, many carrier-related announcements, some mobile payments activity and many chip and networks-related announcements. 

Several of the highlights include the following:

Last night Nokia CEO Stephen Elop went before reporters to further elaborate upon the Microsoft deal and deny that he was a "Trojan Horse" sent by Microsoft to secure this deal in particular. It also emerged that Nokia will receive "billions" in value from the Microsoft relationship in direct and indirect ways.

Essentially Microsoft appears to have "outbid" Google for the Nokia deal but the scales were also tipped by Nokia's fear that if it adopted Android it would become a commodity producer of Google devices and would have a diluted brand in the marketplace. (Arguably it should have embraced both Windows and Android.)

Intel will apparently go on with development of the open-source MeeGo despite the fact that Nokia has essentially abandoned it. It appears that Intel was blindsided by the Nokia-Microsoft announcement at the end of last week. Effectively MeeGo is now an "also-ran" OS.

Seeking to grab attention and divert it from rivals Apple strategically leaked information to the Wall Street Journal (earlier reported by Bloomberg) that it was developing a "nano" version of the iPhone, somewhat smaller and about 50% cheaper to better compete with Android at the low end. We discussed this last week when the first rumors surfaced. 

According to the Journal:

Apple Inc. is working on the first of a new line of less-expensive iPhones and an overhaul of software services for the devices, people familiar with the matter said, moving to accelerate sales of its smartphones amid growing competition.

One of the people, who saw a prototype of the phone late last year, said it is intended for sale alongside Apple's existing line. The new device would be about half the size of the iPhone 4, which is the current model.

The new phone—one of its code names is N97—would be available to carriers at about half the price of the main iPhones. That would allow carriers to subsidize most or all of the retail price, putting the iPhone in the same mass-market price range as rival smartphones, the person said.

Apple is also considering making its cloud-storage service MobileMe free. Currently it costs $99 per year.

The purpose of the leak was to generate coverage, discussion and speculation about Apple's products during the MWC event and upstage other OEMs that are showcasing their competing devices. Apple has done similar things in the past in conjunction with CES, another show it doesn't attend. 

So far, the strategy appears to be paying off

How Many VZW iPhones Have Already Been Sold?

Search network Chitika launched an "iPhone tracker" showing the distribution of iPhone-generated traffic on its network. In just over 48 hours since its public launch the Verizon iPhone in the US is responsible for 3.6% of the traffic that Chitika is seeing on its network. 

But how many phones is that? Chitika research director Dan Ruby estimated that the traffic was coming from roughly 900K Verizon iPhones. 

The crowds that turned out for Thursday's in-store launch of the iPhone were relatively light. There were several potential explanations, including the weather, the online pre-orders and the prospect of an iPhone 5 this summer.

Many Verizon customers who really wanted the iPhone ordered it online. Verizon said last week that it had "record sales" of the iPhone over the Internet, exceeding previous first day sales totals. 

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AT&T has been doing a number of things to keep its iPhone customers from jumping ship: including rewarding them with 1000 minutes and offering a broad, new free mobile to mobile calling plan. These tactics, combined with general "inertia" seem to be working. 

According to a pre-iPhone launch Forbes article, relying on anecdotal information from electronics reseller Gazelle, more existing Verizon customers appear to be ditching their Motorola Droid phones than AT&T customers defecting to Verizon:

Gazelle, which has retail partners but primarily operates through its website, says it has received thousands of Droids following Verizon’s Jan. 11 announcement. The recent shipments have doubled the volume of Droid phones the company usually gets, according to Gazelle President and Chief Executive Israel Ganot. Droid trade-ins climbed even higher in the past week when Verizon began accepting pre-orders for the iPhone, says Ganot. Gazelle expects the pace to accelerate more once Verizon opens iPhone orders to the general public on Feb. 10.

Gazelle has seen a smaller bump–around 20%–in the number of AT&T iPhones coming in over the past few weeks, says Kristina Kennedy, the company’s senior manager of branding.

While the relentless introduction of new and better Android handsets makes buying one ever more challenging -- the new "flagship" will be out next month -- that sort of thinking may now be weighing on the iPhone. It's hard to know how much the "inside baseball" rumors and tech coverage permeates the public consciousness. But it appears that some people are waiting for the next iPhone.

Certainly I'm not going to buy an iPhone 4 on Verizon when iPhone 5 is probably coming in a few months.

RIM Turns to Android Apps to Compete

RIM is hedging. Its new tablet the Playbook will cost the same as Apple's lowest-priced iPad. Given all the tablet competition however it's going to have a very tough time. RIM is be hoping its enterprise legacy will give the new tablet a leg up among corporations vs. others.

Now in a bid to overcome the weakness of its own apps ecosystem the QNX-based Playbook will reportedly run Android apps. This may help boost the appeal of the device for some people. QNX is to be the basis for BlackBerry devices going foward -- across the board.

What that probably means is that RIM handsets will also eventually run Android apps. In turn that will likely mean the end of BlackBerry's own App World. If developers can gain access to RIM's users by creating Android apps, they'll have no incentive to separately develop BlackBerry apps. Even the perception that Android apps will eventually run on BlackBerry handsets will kill interest in App World. 

A Q1 developer survey from Appcelerator and IDC found flat interest in BlackBerry as a platform (although there was some interest in the PlayBook):

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Now that Microsoft and Nokia are aligned we may see interest in Windows increase because of anticipated market reach. Windows will become a third contender after the iOS and Android. As I said, I assume that BlackBerry as an independent apps platform will go away. 

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The embrace of Android apps is like RIM adopting Android without really adopting Android fully. We'll have to wait and see whether it emerges as a half measure, too little too late, or is a shrewd move that enables BlackBerry to remain competitive in the future.

Mobile World Congress: CES Redux

Next week's Mobile World Congress in Barcelona is a gargantuan event that will feature a kind of soup-to-nuts inventory of what's happening in mobile: advertising platforms, developers, carriers and handset OEMs will all convene to promote themselves. The press releases are already flying fast and furious. 

Even though it's not a hardware show exactly, most of the focus will be on handsets and tablets. There will likley be little genuine news of interest and mostly PR about mobile. Probably the biggest news of the event happened today with the announcement of the Nokia-Microsoft deal

Microsoft's Steve Ballmer will keynote but there will be little new information. He will likely re-iterate the new world that Nokia's adoption of Windows opens up for Microsoft. Yahoo's Carol Bartz will speak. Twitter will be represented in a keynote. RIM co-CEO Jim Balsillie will be there. All the chipmakers and carrier CEOs are there.

Everything to say will already have been said in various forums: mobile is huge, disruptive and so on. 

I was actually seeking to go this but the absence of available hotel space thwarted my effort. Nonetheless I'm on the press list and will be receiving all the news. I will be blogging about the things I find most interesting but certainly not providing anything like comprehensive coverage. 

Apple will apparently have no official presence (just like CES) but will cast its long shadow over the event as Europe's most popular smartphone. 

MWC is like a mashup of CTIA (carriers) and CES (devices).

Nokia Makes Its Choice: Windows Phone

All over the technosphere this morning is the news of Nokia's deal with Microsoft: Nokia will compete with the iPhone and Android by using Windows to power its smartphones.

This came as no surprise and had been speculated about for months. Here are the high-level bullets and general outline of the deal:

  • Nokia would adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.
  • Nokia would help drive the future of Windows Phone. Nokia would contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.
  • Nokia and Microsoft would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.
  • Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services.
  • Nokia Maps would be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience
  • Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.
  • Microsoft development tools would be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.
  • Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience.

Nokia chose Microsoft's operating system in part because it was credible and because Nokia CEO Steven Elop is a former Microsoft employee and has a good relationship with the company. He may have also been offered "hundreds of millions" in support from Microsoft (and to not adopt Android):

Most Nokia smartphones run on the much-criticized Symbian operating system. To get Nokia to switch, Google and Microsoft are offering hundreds of millions of dollars worth of engineering assistance and marketing support, according to a person who has done consulting for the company and was told of the talks. 

Android might have been a better choice for Nokia from a consumer standpoint; Android has more traction, more apps and bigger developer ecosystem and so on. However adopting Android would have turned Nokia into "a commodity" provider of Android devices. It would have diluted Nokia's brand. With Windows Nokia can retain some measure of "proprietary uniqueness."

It will be very interesting to see how Asian Windows Phone partners (e.g., HTC, Samsung) react. My guess is that Windows Phones have not sold well for them vs. Android. This move may alienate them somewhat. I'm speculating. 

The Nokia-Microsoft deal is probably better for Microsoft than it is for Nokia as my comments above suggest. However the interests of the two companies are well-aligned; they sink or swim together. I suspect, in the end, this will marginally boost Windows' share of the smartphone market and will arrest Nokia's slide to some degree. 

I doubt whether it will be the "game changer" that both companies are looking for however. 

Related stories:

Opera's State of the Mobile Web January

Opera's state of the mobile web report is back. The company says that in January it had nearly 100 million users globally. It's interesting to note that no Android phone is in the top 10 in any of the three markets I present below. However this may only reflect Opera Mini and not Opera Mobile usage.

Nonetheless, it's curious that Android is now so large in the US but not among the top handsets for Opera. Opera Mini and Mobile are available on Android.

Does this reflect the sufficiency and general satisfaction with the Android browser or simply inertia on the part of Android users? 

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Short Lines for the iPhone?

So far the lines appear to be short or pretty reasonable for the first general day of iPhone availability (7am local time). The handset is available from Verizon, Wal-Mart, Best Buy and Apple stores. This mitigates some of the scarcity that resulted in long lines for prior iPhone launches. It may also be that the most eager Verizon customers ordered the handset online.

The 16GB model is $199 with a two-year agreement. Yesterday, as a retention tool vs. Verizon, AT&T began offering unlimited mobile-to-mobile calling, co-opting one of Sprint's big selling points:

Beginning Thursday, Mobile to Any Mobile will be available to new and existing AT&T customers with a qualifying voice plan who subscribe to unlimited messaging plans. Existing customers with an unlimited messaging plan can activate Mobile to Any Mobile by visiting www.att.com/anymobile. The URL will be available beginning Thursday.

“Mobile to Any Mobile is an exciting offer that will keep our customers connected to the people they want to talk to, when they want to talk to them, without the hassle of watching minutes,” said David Christopher, chief marketing officer, AT&T Mobility and Consumer Markets. “We’re giving customers more options and even better value.  And when you include Rollover Minutes, a benefit available exclusively from AT&T that lets customers keep their unused minutes for all domestic calls, including to landline numbers, it’s clear that AT&T offers the most flexibility in the industry.”

Unlimited messaging is available for $20 per month on an individual plan and $30 per month for a FamilyTalk Plan, which allows for up to five lines.

I'm sure there will be reports throughout the day and an overall assessment of the success of Verizon's iPhone launch this evening.  

Nokia's Windows Phone Announcement Imminent

It appears that Nokia will announce its new deal to offer Windows Mobile on Nokia hardware either this Friday or very soon thereafter in London. No surprises there. Windows is a much better mobile OS than it used to be but it doesn't have much visibility or traction among consumers. Microsoft hopes the world's largest handset maker can change that. And Nokia hopes that by going with an outside OS it can be competitive with Android and Apple.

The strategy should work better than the status quo for both companies. The question is: how many units will sell? 

The other question is: will Nokia do anything with Android? My guess is that Microsoft worked very hard to prevent that relationship from happening. A tweet noticed by TechCrunch from Google's Vic Gundotra suggests that there's no forthcoming Android-Nokia announcement. 

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Previously Android chief Andy Rubin said in a conference appearance that, in the wake of management changes at Nokia, the company might be open to building phones that run Android. Despite prior Nokia hostility toward Android, Rubin hinted Google and Nokia might already be talking about the hardware OEM using the Google OS: 

Asked pointedly whether Google has discussed Android with Nokia, Rubin answered: "I think the company has new leadership and ... they are evaluating what their options are ... I'm a big proponent of Android and I hope they adopt it."

About whether a meeting took place, Rubin only said: "I'm not going to talk in detail."

I would think that Nokia wouldn't completely rule out Android, especially if Nokia-made Windows Phones fail to catch on. However there may be some period of exclusivity that Microsoft has secured or negotiated. European carriers have also reportedly lobbied Nokia against using Android.

There may be a highly favorable Windows Phone licensing deal whose terms reduce the cost of licenses substantially for the Finland-based Nokia. That's pure speculation on my part. (I'm sure there's some financial incentive coming from Microsoft however.)

Either way, we'll know certainly by this time next week what Nokia's new direction is and whether it's going to release just Windows Phones or whether Android is in its future as well. 

Related posts: 

'Facebook Phone' Surfaces: INQ Cloud Touch

The new INQ "Cloud Touch" is getting a lot of play today. Unveiled yesterday this is an Android-based Facebook-optimized phone. INQ is a subsidiary of Hutchison Whampoa, which is based in Taiwan. HTC is also planning to introduce an Android phone that has a higher degree of Facebook integration.

INQ previously released a line of "social mobiles" that were social-networking optimized handsets. The Cloud Touch is the next generation of that line with an emphasis on Facebook in particular. 

What's most interesting to me from the video I've seen -- I haven't held the device in my hands -- is that the phone offers a new interface for Android and thus stands out from among the scores of generic-looking Android phones now in the market. It's the first really interesting new Android interface (Motorola's Motoblur and HTC's Sense interface are basically worthless).

According to the Financial Times, "users will only have to sign in to Facebook once, when setting up the device, allowing their credentials to be used automatically by third-party applications." That will help create some interesting user experiences; Facebook recenty introduced single sign-on for mobile. This is removes friction but also creates potential privacy issues. 

The Cloud Touch is also like Flipboard in a certain way in that it points to and reflects the media, links and content that are being shared; it's not all about the Facebook interface. The handsets also integrate streaming music service Spotify, which isn't in the US and may never be because of rights issues. 

The new handsets are coming to the UK market later this quarter (and probably Canada) but there's no word on a US release date. 

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The Android apps interface is in most respects a knock-off of the iPhone interface -- all touch-screen smartphones now in the market are derivative of the iPhone -- but this interface is innovative. It may mark the beginning of true differentiation among Android handsets. 

I suspect the INQ Cloud Touch will be quite popular when it's released. 

Related posts:

HP-Palm Announcing New Devices: Phones, TouchPad

Today is Palm's new device coming out day. Palm just announced its 9.7" TouchPad, the Pre3 and the Veer, a tiny credit-card sized phone with a slide-out keyboard. The TouchPad looks really nice but the Veer is probably the thing that will grab the most buzz.

The Veer looks slike a cross between the Pixi and the Pre. The Veer has a browser, runs Flash, has a 5 megapixel camera. It can also operate as a WiFi hotspot. (This will be a standard smartphone feature going forward.)

 Screen shot 2011-02-09 at 11.30.32 AM

There's more discussion of the new products and their specs on Techmeme. These devices look really cool, especially the Veer. The TouchPad is nearly identical in appearance to the iPad. 

Screen shot 2011-02-09 at 11.00.29 AM

Pricing will be critical to the success of these new devices. Earlier today I argued that HP should open-source Palm. The success or failure of these products will prove me right or wrong on that call. 

Update: The Veer turns out to be a mini-Pre for people with tiny hands and fingers. 

Nokia's 'The Platform Is Burning' Memo

By now many of you have seen or read Nokia CEO Stephen Elop's "Platform is burning" memo. At least one former Nokia executive believes it's a hoax. Regardless it's interesting. 

Here are some excerpts; I've edited it down quite a bit (the full memo is available via the link above):

In 2008, Apple's market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry's innovation to its core . . .

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind . . .

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market . ..

(Nokia has reportedly killed its MeeGo handset before launch.)

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren't taking our market share with devices; they are taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we've lost market share, we've lost mind share and we've lost time.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It's also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally.

Nokia, our platform is burning.

It doesn't read like a fake memo. But even if it were fake it correctly and soberly captures Nokia's challenges. The company is widely expected to announce a deeper strategic relationship with Microsoft in which it starts building Windows Phones essentially. There may also be some experimentation with Android, although European carriers are counseling Nokia against using Android

If this is genuine it would appear to be Elop's attempt to prepare "the troops" for some radical moves to come. 

T-Mobile Fights iPhone with Free Phones

Third place carrier Sprint is introducing the mutant Kyocera dual-screen Android phone in a bid to offer the market something new and unique and capture some attention. And T-Mobile is once again offering free handsets with a two-year contract. The company successfully did this before but has timed the promotion to try and preempt some Verizon iPhone switchers.

According to the T-Mobile release: 

On Friday, February 11 and Saturday, February 12, all T-Mobile phones, even the fastest 4G smartphones running on America’s largest 4G network, will be offered for free at T-Mobile retail stores with qualifying plan on two-year contract. 

The company has also enlisted "New York Times best-selling author and TV personality Khloé Kardashian" to help promote the offer, which includes the following phones: 

  • myTouch 4G
  • HTC HD7 (Windows Phone)
  • G2 with Google
  • Samsung Vibrant

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T-Mobile is the smallest of the four major US carriers, with about 34 million subscribers:

  1. AT&T: 95 million
  2. Verizon: 94 million 
  3. Sprint: 49 million
  4. T-Mobile: 34 million 

The company is stuck in fourth place. Giving away free smartphones is not really a growth strategy; it's more of a PR stunt that will generate a short-term spike in interest and subscriptions. Long term growth will require a combination of true 4G network investments, agressive data and voice pricing and access to the iPhone eventually. 

We'll see how well the "America's largest 4G network" claims went over in Q4 when the company reports earnings later this month.

Motorola Xoom Pricing Too High at $800

Fresh off its $3 million Super Bowl ad that parodies Apple's famous 1984 ad and ridicules Apple's legions of buyers as anonymous drones, the Motorola Xoom tablet is set to go on sale at Best Buy on February 24 for $799. The device has two cameras and "can be upgraded to 4G." Data plans are extra. 

The $800 pricetag is a strategic blunder by Motorola. The cheapest WiFi version of the iPad (with iPad 2 coming in March or April) is $499. The high price is likely to dampen sales, especially when the iPad is "the brand" and Motorola is the upstart/insurgent.

The Galaxy Tab was priced initially at $600, which was also too high. A better out-of-the-gate price for Xoom would have been $599 or maybe $699. At $799 people are going to think twice and with an iPad right there . . . opt for the iPad. 

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Aside from the few features Xoom has that iPad doesn't have (except Flash, to be equaled or bested by iPad 2), people are generally going to buy an iPad over a Xoom.

The Android OS that Xoom is based on, Honeycomb, is a dramatic improvement over Gingerbread, which the Galaxy Tab uses. However Honeycomb's features mostly play catch up with the iPad from what I can tell vicariously. Flash, however, matters more on a tablet than on a smartphone; that may be a selling point for Xoom. 

Again, we'll see what the initial demand and sales are after February 24 when the device finally hits the market.