Hardware

Big Changes in Store for Nokia, Maybe RIM

Over the past few days there have been a flurry of articles and speculation about changes that may be coming to Nokia, as soon as the Mobile World Congress in a week:

Last year Microsoft and Nokia announced an alliance and now, with both companies struggling in mobile, it appears that alliance will become deeper and more strategic, with the world's largest handset maker adopting Windows for some or all of its new high-end smartphones.

I had anticipated that Nokia would build some Android phones for the US market and possibly Europe. But the Microsoft move is more logical given that Nokia CEO Stephen Elop is a former Microsoft executive himself and given the fact of their existing alliance. 

Microsoft's new OS is nicely designed (except for the home screen in my view) but lacks visbility and momentum. Being on Nokia handsets could bring both almost immediately or very quickly. There's also the risk that such a move would fail to halt Nokia's slide or sufficiently boost Windows. 

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Right now the iPhone and Android are absolutely sucking all the consumer attention out of the room for everyone else. It's still possible that Nokia would put out an Android phone or two beside Windows Phones; however Microsoft might try and prevent that as part of any strategic deal between the two. The enemy of my enemy is my friend.

One widely discussed scenario is the outright purchase of Nokia by Microsoft. The former is now worth just over $41 billion -- a costly pill to swallow. However the acquisition of Yahoo would have been worth $44 billion. So Microsoft is not above using its balance sheet when absolutely necessary.

Yet an acquisition would probably be unnecessary if a strategic alliance that put Windows on Nokia smartphones advanced penetration for the operating system. 

For its part RIM will also be compelled to do some radical things to reassert itself.

Its new QNX operating system on the Playbook tablet and later BlackBerry handsets will apparently be able to run Android applications helping RIM play catch-up on the apps front. However embracing Android apps will likely mean the end of the company's own BlackBerry App World; why would developers focus on it when Android apps could reach BlackBerry users?

Does the move to embrace Android apps also suggest that RIM will put out an Android handset? Probably not; RIM will likely maintain its proprietary OS in the wake of the QNX and TAT acquisitions. Regardless, RIM may continue to struggle and will probably see tablet sales disappoint vs. the iPad, Samsung,  Xoom and several others as the tablet market becomes increasingly "noisy." 

Report: 7" iPad 'Nano' Lives

There have long been rumors of a smaller iPad. However, some time ago on an Apple earnings call CEO Steve Jobs went on a tirade against 7" tablets (aimed primarily we assume at the Galaxy Tab). Here's what he said at the time:

First, it appears to be just a handful of credible entrants, not exactly an avalanche. Second, almost all of them use seven-inch screens as compared to iPad's near 10-inch screen . . . [The] screens on the seven-inch tablets are a bit smaller than the bottom half of the iPad display.

[E]very tablet user is also a smartphone user. No tablet can compete with the mobility of a smartphone, its ease of fitting into your pocket or purse, its unobtrusiveness when used in a crowd. Given that all tablet users will already have a smartphone in their pockets, giving up precious display area to fit a tablet in our pockets is clearly the wrong tradeoff. The seven-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.

Despite this apparent public rejection of the 7" format, Apple was and is working on a smaller (more portable) version of the iPad. According to iLounge:

While Apple apparently decided to scuttle the 7” version of the iPad it was working on last year, our source notes that a key iPad, iPhone, and iPod component provider has been asked by Apple to develop a part for use in a seven-inch iPad. Our source believes that this part is for a new version of the device that is still in development, and doesn’t know whether it will go into production. The request suggests, however, that Apple is continuing to keep the idea of a smaller-screened iPad alive despite having pooh-poohed competing 7”-screened devices as “tweeners.”

While this rumor must be cautiously received it makes sense. The smaller form factor is responsible almost entirely for the reported success of the Galaxy Tab (2 million sold, 16% returned). The high return rate further confirms the appeal of the form factor. The device is mediocre but people are drawn to it because of the smaller size.

Pew: 89% of Those under 65 Have Mobile Phones

The latest Pew Internet report tells us a good deal of information we already know about device ownership and penetration among US adults. Based on a Q3, 2010 telephone survey of roughly 3,000 US adults the chief value of the survey its demographic information and the historical tracking of the same questions and responses over time.

I've pulled out a few of the charts below. The first one shows the penetration and growth of various categories of devices during the past four years. The noteworthy data point here is the decline of the desktop PC.

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At this point mobile phone ownership among adults is at or above 90%. According to Pew, it's 89% on average among US residents under age 65. Among those under 35 the numbers are 95% or more (if teens were to be included). Unfortunately Pew stubbornly doesn't seem to ask about feature phone vs. smartphone ownership.

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There are roughly 238 million US adults according to the 2010 Census. If we extrapolate the Pew figures it means that just over 200 million US adults (using the 85% overall average) have mobile phones. However these figures are probably low.

CTIA puts the number (including teens) of wireless subscribers at 293 million. While it's true that some people have two phones (e.g., BlackBerry, iPhone) most people do not have multiple subscriptions.

The four major US wireless carriers report roughly 272 million subscribers according to their most recent filings (rounded):

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

The iPad/tablet findings are also interesting. There is a separate chart and question for eReaders like Kindle; these data don't include Kindle or other, comparable eReaders accordingly.

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A major caveat here is that these figures don't include Q4 2010 (holiday buying). About 15 million iPads have been sold globally to date, a majority of which are still in the US. 

iPhone 4 Sellout Puts Demand Question to Rest

Until yesterday we only had speculation and survey date to fuel estimates of the demand for the iPhone 4 at Verizon (and its potential impact on Android). Now we know that the demand is real and the impact on Android (read Motorola) and RIM (in particular) is likely to be very real. 

Verizon said early this morning that the online pre-ordering of the iPhone represented, "the most successful first day sales in the history of the company." According to the press release it took only two hours to sell out:

In just our first two hours, we had already sold more phones than any first day launch in our history. And, when you consider these initial orders were placed between the hours of 3 a.m. and 5 a.m., it is an incredible success story.

There are several surveys that suggest that existing Android and RIM users at Verizon will switch in potentially large numbers. One of these (n=700 smartphone users) found

54 percent of respondents who have an Android or BlackBerry smartphone on Verizon are either very likely (25 percent) or somewhat likely (29 percent) to purchase the Verizon iPhone when it arrives next week.

Furthermore Verizon is now spending money on iPhone ads, which has the double benefit of enhancing the iPhone brand in the market and minimizing or eliminating pro-Android/anti-iPhone ads: 

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Campbell's Soup: iAd Outperforms TV

For some time I've speculated that mobile might be a more compelling branding medium than TV. InsightExpress and Dynamic Logic have shown data multiple times that reflect higher brand lift and unaided recall from mobile vs. PC display ads. Now comes a study with the first solid evidence of my prediction, showing that iAds performed better than TV advertising.

Campbell's Soup, one of the early iAd adopters, conducted a study with Nielsen, measuring recall, intent to purchase, favorability and other metrics. According to a write-up of the study in AdAge:

Those exposed to one of Campbell's iAds were more than twice as likely to recall it than those who had seen a TV ad. Indeed the five-week study, conducted by Nielsen, showed that consumers shown an iAd remembered the brand "Campbell's" five times more often than TV ad respondents and the ad messaging three times more often.

IAd respondents said they intended to purchase Campbell's four times more than the TV group and that they liked the ad five times more. TV and mobile audiences were queried separately in mobile and online surveys. The TV audiences were part of Nielsen's panel, while mobile users were recruited within various apps.

Once again: "IAd respondents said they intended to purchase Campbell's four times more than the TV group." These people are not only potential purchasers of the product but they're social promoters. They'll potentially tell friends about the campaign so there's a likely secondary benefit or effect (which wasn't reported). 

This study will have a major impact on brands and agencies, which are adopting mobile marketing and advertising in earnest. It's unlikely to move much of the TV budget in the near term. But if these results are replicated and repeated it will send a shockwave through the big agencies. 

Related posts:

Telmap Metrics Show Different Usage Patterns vs. US Data

Telmap, which provides LBS, search and navigation to a range of partners for mobile and in-car devices, released its first "metrics" report for Q4. The aggregated data are EU-centric and very interesting because they reveal some different patterns than have previously been reported in the US.

According to the report, here are the top "free text" and category or "POI" searches according to Telmap's data . . .

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By contrast, in the US, the top five mobile search categories (according to our data) are the following:

  1. Restaurants
  2. Banks/ATMs
  3. Hotels
  4. Gas stations
  5. Mobile phone-related services

Restaurants don't rank as highly in the mainly European data from Telmap; and hospitals is a curious number 1 in the POI category. Hospitals don't show up on our US-based list until number 15.

Telmap's data also show heavy usage during the middle of the day. Most companies (e.g., Google) tend to report that mobile usage complements PC usage: largely expressed on evenings and weekends. It may be that Telmap usage reflected in the chart below happens during work breaks or the lunch hour, etc. But it's an interesting contrast with what we commonly hear:

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The iPhone is the dominant device accessing Telmap data. 

As iPhone Comes to Verizon and Android Spreads Others Shift and Stir

Microsoft announced that it "shipped more than 2 million copies of the Windows Phone 7 operating system last quarter." But this doesn't represent consumer sales figures so we don't really know how the handsets are doing. The data can be spun as a positive start or a lackluster one for the new smartphone OS. For example, Gartner says that Microsoft's smartphone share stands at 2.8% in the US market.

The "battle" between the iPhone and Andoid is crowding out other handsets. At left (and here), eMarketer rounds up third party estimates of US smartphone share, though the figures don't explicitly show Microsoft's numbers. 

There's some evidence that the iPhone's presence at Verizon -- pre-orders begin next week -- will weigh on Android sales, as well as RIM. Anticipation of the device had a negative impact on Motorola's Q4 DROID sales. According to CNET's coverage of Motorola's earnings call yesterday:

During the fourth-quarter conference call with analysts and investors on Wednesday, Sanjay Jha, the CEO of Motorola Mobility, said the company saw a slowdown in sales during the fourth quarter due to anticipation of the iPhone at Verizon. He said he expects sales to be slightly down as the company will now compete head to head with the iPhone at its strongest carrier partner, Verizon Wireless.

In its final exclusive quarter with the iPhone AT&T reported strong revenues for Q4, including 2.8 million new subscribers and 4.1 million iPhone activations. AT&T and Verizon are set for a "cage match" as they compete for iPhone customers. One example Verizon is offering a trade-in program to try and get recent handset purchasers (read: AT&T iPhone owners) from other carriers.

Meanwhile Nokia lost more smartphone share and saw profit fall 21%. CEO Stephen Elop hinted that it's open to Android -- indeed it will be all-but-compelled to adopt Android for some handsets even though it angrily rejected such suggestions in the past. RIM may be considering something similar, or at least allowing its handsets and forthcoming Playbook tablet to run Android apps.

See related: Verizon iPhone Demand Could Hit Nearly 25 Million, Theoretically

 

Apple, NFC and You & Me

There's lots of buzz this morning about Apple incorporating NFC-payment capabilities into iPhone 5. Google has already done this with the new Nexus S. Here's the Bloomberg piece that caused the stir:

The main goal for Apple would be to get a piece of the $6.2 trillion Americans spend each year on goods and services, Crone said. Today, the company pays credit-card processing fees on every purchase from iTunes. By encouraging consumers to use cheaper methods -- such as tapping their bank accounts directly, which is how many purchases are made via PayPal -- Apple could cut its own costs and those of retailers selling Apple products. 

There is a great deal of debate on the outlook for NFC in the US as a basis for mobile payments and other types of "transactions." Apple has more than 160 million iTunes users with credit cards on file that would immediately support a payments infrastructure. 

Google isn't in the same position to "mainstream" NFC because it lacks a significant installed base of credit cards. Google's failure to push Checkout has now become a real problem with Android in several ways (but that's another story so to speak). 

Others have pointed out the "chicken and egg" problem with NFC: there must be widespread infrastructure and acceptance before consumers adopt; consumers must adopt before many merchants will install NFC-based contactless payment systems. (NFC can be used for all sorts of marketing purposes in addition to payments.)

The larger point here is not whether Apple or Google (or someone else) will win the NFC race. The larger point is that we're starting to see an acceleration of the "mobile wallet." Initiatives from carriers, developers, retailers, credit card issuers and handset OEMs make widespread mobile payments inevitable now.

A recent CNN piece gets it partly right when it says "The end of credit cards is coming." The end of plastic may be coming but not credit card accounts which will remain the basis for mobile payments, though embedded within the phone.

Another point to make is that marketing really opens up in new ways when smartphones can simultaneously be used to receive marketing or loyalty messages and essential become the "point of sale" with a single wave/click/touch/etc. 

The "era of mobile payments is almost here" and there's a lot at stake for incumbents, which can be disrupted and have their empires overturned. 

See related posts:

Survey Reaffirms iPhone Tops Loyalty Stack, Shows Weakness of Nokia, Windows & Palm

A globaly survey of roughly 1,500 mobile users by Zokem shows what many other similar surveys in the past have also shown: the iPhone and then Android have the highest loyalty and lowest churn of the smartphone platforms. The data also reflect the "vulnerability" of Nokia, Windows and WebOS devices. It's not clear, however, whether any of the new Windows Phones were considered in this survey. 

What the two figures immediately below reflect is the relative loyalty that consumers show toward the platforms included and their corresponding propensity to abandon them for other competing platforms. The order is generally inverted. In the first chart users show the greatest loyalty to the iPhone with Android second and Nokia's Maemo last. In the second chart respondents expressed a low likelihood of churn from the iPhone. The Pre and Symbian S60 showed the highest consumer inclination to churn. 

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The bottom chart shows the inclination to buy the same type of handset in the future. Here Android beats the iPhone by a narrow four percentage points. Symbian S60 owners show the lowest inclination to buy another Symbian S60 device followed by Palm Pre owners, only 15% of whom would buy another Pre. There's little new "news" here but it's interesting to see more evidence of the OS hierarchy out there. 

Fig 3 Repurchase Behavior

Facebook Pushes Growth on Feature Phones with New App

Facebook is the top free iPhone app of "all time" (so far). The site is also the top site or the number two site in most countries around the world according to Opera's regular reporting. The company has more than 200 million mobile users who are the most active of Facebook's more than 600 million global members. According to the most recently published public numbers from the social network:

  • There are more than 200 million active users currently accessing Facebook through their mobile devices
  • People that use Facebook on their mobile devices are twice as active on Facebook than non-mobile users
  • There are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products 

Facebook also operates the "0.facebook.com" site to reach users on non-smartphones. But yesterday Facebook announced a new feature-phone app from Snaptu. The idea is to drive global penetration and usage even further, recognizing the strategic importance of mobile to the future of the business.

Smartphones will be in the majority in the "West" across the board at some point in the next five years. But around the world, inexpensive feature phones or not-quite-smartphones will remain dominant for the foreseeable future. This new app will help provide a better user experience than the 0.facebook mobile Web/Wap experience. 

Simultaneously Facebook is reportedly working with mobile-handset manufacturer INQ Mobile Ltd on a couple of Android-based quasi-branded smartphones. Facebook also recently launched Connect and single sign-on for mobile phones. In short the company is trying to penetrate and conquer the entire mobile ecosystem from top to bottom, from apps to hardware. 

What it doesn't (yet) have is mobile advertising. This will come without question. And when it does, Facebook will be largest mobile ads network/platform on the globe. 

Related posts: 

How Many iPads Will Apple Sell This Year?

In 2010 Apple sold 14.79 million iPads around the world. The iPad is now available in 46 countries. It started the year as a US-only product. According to IDC estimates Apple controls almost 90% of the tablet market at the moment, while the stand-alone eReader market is somewhat more competitive with Amazon controlling just over 40%.

There are lots of estimates out there, some very large, about how many tablets will sell in 2011. Also entering the market this year are Android 3.0 tablets (e.g., Xoom), a WebOS tablet and the RIM Playbook, among others. So the market will be full of choices. Price will be a driving factor of purchase decisions, so will size in a number of cases. I've argued that the smaller 7" segment is up for grabs because Apple has declined to offer an "iPad nano."

IDC is projecting 44.6 million tablets will be shipped/sold in 2011. On a global basis that number could turn out to be low. It's very likely that Apple will sell between 25 million (on the low end) and 35 million (on the high end) iPads by the end of 2011. If the IDC global tablet projection is correct and I'm not wildly off then Apple would have between 60% and 80% of the tablet market at the end of this year.

I can't comment on the viability of the WebOS tablet or the RIM Playbook, neither of which I've used. However, unless relatively less inexpensive (sub-$500), it's unlikely that Android tablets will make significant inroads (beyond 15%-20%) in the 9-10" tablet category. Where they're likely to sell well is the 7" category. Running Flash is not going to be a significant competitive advantage for Android tablets. 

It's worth mentioning that the Playbook is a 7" device, which gives it an opening it might not have had as a 10" device.  The iPad2 is rumored to be on the way in April. 

Apple Earnings Romp Recap

You've already seen the numbers. But if you haven't here's the top-line recap of Apple's impressive fiscal Q1 (holiday): 

The company reported revenue of $26.74 billion and net quarterly profit of $6 billion (both records). It sold the following number of units: 

  • iPhones: 16.24 million 
  • iMacs: 4.13 million
  • iPods: 19.45 million 
  • iPads: 7.33 million

Here the previous record quarter (Q4) figures for comparison purposes:

  • iPhones: 14.1 million 
  • iMacs: 3.89 million
  • iPods: 9.05 million 
  • iPads: 4.19 million

Simultaneously the iTunes store reached 10 billion app downloads. iTunes revenue for the quarter exceeded $1.1 billion. 

A few more tidbits:

  • There are now a total of 160 million iOS devices globally out in the market. 
  • Revenue grew $11 billion vs. the same period a year ago
  • iPhone sales were up 86% year-over-year; iPod touch sales were up 27%
  • Revenue from iPhone sales alone was more than $10.1 billion.
  • China stores generated the highest revenue among Apple's entire fleet of stores  . . . with revenue exceeding $2.6 billion.

On the earnings call COO Tim Cook was dismissive of Android tablets and Windows-based tablets. While Apple may "own" the larger 9" and 10" tablet category it doesn't have an offering in the 7" category where Android may find success, suggested by the positive sales numbers of the Galaxy Tab.

Overall a massive quarter.

Android Surging, Potential iPhone Switching

On the heels of Verizon's embrace of the iPhone and speculation over how it may impact Android handset sales, ad network Millennial Media released December data showing that ad requests coming from Android handsets were now generating more impressions (and revenue) on Millennial's network than the iPhone.

This is consistent with sales data from comScore and Nielsen showing that Android has surged among recent smartphone purchasers. It's the first time that Android has collectively surpassed iOS devices on Millennial's network. However the iPhone remained the top single device, followed by the BlackBerry Curve.

Screen shot 2011-01-13 at 4.45.08 PM

Android's growth represented a 13% increase quarter-over-quarter, according to Millennial. Since January, Android has grown a massive 3130%. Smartphones now represent 60% of devices on Millennial's network (compared to 48% in May, 2010).

Simultaneously ChangeWave released some survey findings about potential switching to a Verizon iPhone. 

The chart above indicates the percentage of mobile subscribers who plan to switch carriers without regard to any particular device. However the chart below shows that 16% of AT&T customers are stongly considering a switch to Verizon for the iPhone. Another 23% are ambivalent. The chief reasons for considering leaving AT&T were "poor reception" and "dropped calls." 

If we interpret "don't know" in the chart above as "maybe," it suggests that almost 40% of AT&T customers surveyed may leave for the iPhone. If even the 16% make good on their impulse it would be significant. 

The early evidence is that people are quite excited about the Verizon iPhone and we're likely to see high initial sales figures. A not-so-hidden benefit in all this for Apple is that a VZW iPhone blocks or will dilute some of the Android brand advertising.

Of course Verizon will continue to promote Android devices but without the hard-charging and almost offensive ads that attacked the iPhone as "feminine."

Assessing the Impact of a Verizon iPhone

Verizon is really, finally getting an iPhone of its own -- about a year too late perhaps. On Tuesday Verizon is holding a press event in NYC that will announce the device according to the Wall Street Journal. And some believe that Apple's Steve Jobs will be on hand.

There are a few questions that arise in my mind about all this:

  1. Is it simply an announcement of the iPhone 4, CDMA edition, or is there more to it?
  2. How will it impact Android sales at Verizon?
  3. Will it draw AT&T iPhone users to Verizon for a perceived superior network?
  4. What impact will the announcement have on Sprint and T-Mobile?

Some people have speculated that the mythical white iPhone would be announced on Tuesday. I can't imagine that the announcement will simply be: now we have the iPhone. Might it be an LTE-capable iPhone? We'll see.

My view has always been that Android sales (at least at the high end of handsets) would be negatively impacted by the presence of a VZW iPhone. Despite surging Android sales there is some evidence that were the iPhone more broadly available, beyond AT&T, some number of people would be buying that instead. I rounded up some of this data, from mid-2010, in an earlier post

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There's also evidence from some of this survey data that a percentage of AT&T customers would migrate to Verizon. 

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However, many of these people many not entirely understand that they'd have to buy a new iPhone because their devices aren't compatible with VZW's CDMA network. Contract-breaking penalties will also keep many would-be switchers at home. 

In terms of the potential impact on Sprint and T-Mobile: I do think there will be one. Sprint and T-Mobile will see little or no subscriber growth unless they continue with aggressive pricing. That will be the only way to retain and potentially grow subscribers. 

A CDMA iPhone would mean it could potentially come to Sprint but Verizon may now get some period of quasi-exclusivity. So I would guess it will be at least a year (if then) that the "tier-two" carriers will get access to the iPhone. 

Because VZW will now be seen as the carrier offering the most options on the "best network," Sprint and T-Mobile will suffer. Simply saying "we've got all these Android phones" will not be enough. They'll have to more aggressively discount their data plans, as VZW and AT&T seek to migrate customers to usage-based pricing. 

Pre-paid carriers with heavily discounted pricing (including Sprint's Boost, VirginMobileUSA) will continue to thrive because there are lots of people still who don't want to get into contracts, are looking for the best deal and don't need a high-end smartphone. 

Those are the predictions, let's see what happens.

As a final note, there were rumors in December of a late February Apple event. It's not clear if the VZW announcement on Tuesday is that event or whether there will be a separate event to launch the widely anticipated iPad2.

Nuance's FlexT9: Most Complete Android Keyboard Replacement

Best known for speech solutions, Nuance has introduced "FlexT9." It's an Android replacement keyboard that offers four diverse methods to input text: speech, "trace," write and "tap" text prediction. The app costs $4.99 but is well worth the money. I've been using it for the past two weeks and find that it's highly accurate and provides more flexibility -- hence the name -- than other, competing keyboards. 

The "trace" functionality, enabling users to glide over letters, is most closely associated with Swype. I had not downloaded Swype but it mysteriously showed up on my device one day probably through an over-the-air software update. However the Nuance "trace" capability is at least as easy and accurate as Swype in my comparison of the two. Swype is currently free, though my understanding is that there will be a charge at some point.

I found FlexT9's "tap" predictive text capability to be good but not as impressive as another Android keyboard, SwiftKey ($3.99). I had been using SwiftKey as my primary keyboard and really like it. As users type SwiftKey offers up the anticipated next word in the sequence, minimizing the number of keystrokes required. Both Swype and SwiftKey enable speech input using the built-in Android capability. However FlexT9's speech recognition was more accurate than Google's built-in capability in my "field testing."

A novel feature of T9 is the capacity to draw letters or symbols directly on the touchscreen. I didn't have too much occasion to use this feature in my daily interactions with the keyboard but the capability is unique to T9. Indeed, FlexT9 is the most "complete" of all the available keyboards for Android and gives users the most input choices and options. 

As I tried to move between Swype, SwiftKey and FlexT9 in my testing I found it challenging to change keyboards. This goes to Android's usability rather than any of the individual keyboards however; most users won't have multiple keypads on their handsets and so won't face this problem.

The built-in Android keyboard is considerably weaker than these replacements and one of the major weaknesses of the user experience (vs. the iPhone for example). Going back to the native keyboard after using T9 (or SwiftKey, Swype) feels like a step backward. But replacing the keyboard dramatically improves the Android handset experience. 

The aesthetics of each of the three keyboards discussed above is slightly different and users may have a preference for one vs. another. However with Swype one doesn't get the impressive text prediction offered by SwiftKey. And those users who prefer Swype's trace functionality won't find that on SwiftKey. Nuance's T9 has both and offers the widest array of capabilities. For those interested in a flexible keyboard that provides a truly "multi-model" input capability this is the choice. 

Nielsen: Android Momentum Continues, iPhone Barely Leads, RIM in Decline

Nielsen put out some new US smartphone data showing Android's continued momentum, especially among new smartphone buyers. The iPhone is flat and RIM is in decline according to these data. There are two storylines here: "Android is unstoppable" or one that recognizes that everyone who's going to buy the iPhone from AT&T has already done so. In the latter storyline, it's Android vs. RIM across the three other carriers.  

Both however are true to some degree. My view is that these numbers would be different if the iPhone and Android were equally available from all US carriers. We would see quite a bit less demand across the board for Android devices. That theory will be put to the test when the iPhone finally becomes available through Verizon. 

However Apple's prolonged exclusive relationship with AT&T has clearly hurt the iPhone and given Android a chance to develop this momentum. Had the iPhone been more widely available it's very unlikely that we would see these same numbers. Yet the Android platform has matured. It is now a strong, competitive OS that excells in certain areas (e.g., voice actions, navigation).

Compare share among recent smartphone buyers (top) to smartphone share overall (below), where the field is much tighter. 

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Here are the most recent US smartphone share data from comScore for comparison. They show RIM still comfortably out front, with Apple and Google in a virtual tie. 

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Sumsung Gunning for Top Android Spot, Android in Spotlight at CES

Samsung has reportedly sold more than 10 million "Galaxy S" Android handsets globally (in seven months), according to several reports. The company is selling roughly 1.4 million units per month. The largest market is North America, followed by Europe and South Korea.

Late to the smartphone party, Samsung is on pace to become the dominant Android OEM globally. Motorola would seem to be the most vulnerable of the OEMs to the Korean electronics giant's Android gains.

Below are the most recent global and US OEM sales and market share figures according to Gartner and comScore:

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 Screen shot 2011-01-03 at 4.20.08 AM

Of course the Consumer Electronics Show is this week and we're going to see lots of Android devices. Verizon is set to announce the first 4G Android handsets for its LTE network. There will also apparently be a million and one Android tablets on display, from Lenovo, Toshiba, Motorola, Vizio and others.

As with Android handsets it will be a battle to differentiate on hardware features and price. Most of the new Android tablets will run Honeycomb, making the Samsung Galaxy Tab obsolete unless it gets the software upgrade. (Samsung says it has sold 1.5 million Galaxy Tabs, largely because of the smaller form factor; the UX is mediocre compared to the iPad.) One thing to keep an eye out for is sub-$200 tablets of reasonable quality. 

The Verizon iPhone apparently won't be announced at CES and will instead be presented at a special Apple press event in February. At that time the company may also introduce its anticipated iPad 2 to respond to the Android tablet tsunami. 

We're not attending CES and because it's such a "noisy" show, we'll only be selectively reporting on announcements coming out of it. 

Story of the Day: The Explosion of Cheap (Android) Smartphones

A story getting a lot of comments and play this morning is last week's Fortune article: 2011 will be the year Android explodes. The story is about how cheaper chips will likely bring down prices of smartphones to under $100 and Android handsets in particular. The story, using analyst and OEM estimates, argues that Android growth next year will be explosive. 

If the prices do in fact come down to $100 or less -- or handsets are fully subsidized by carriers -- we will see huge growth as the article suggests. Unless AT&T and (soon) Verizon are willing to be extremely generous with their subsidies, the iPhone will not be able to compete for the low-end of the market with Android -- although today you can get a refurbished iPhone 4 from AT&T for $99 and 3GS models for as little as $44. 

Nielsen has long predicted that 2011 (now Q4) will be the year that smartphones cross the 50% threshold in the US. Morgan Stanley famously predicted earlier this year that 2014 would see mobile Internet access surpass PC access.

If nothing else this blog is dedicated to the idea that there are radical implications flowing from these developments and we've been discussing and speculating about many of them for that past few years. We also argued that Nokia, the dominant handset maker in the developing world, had much more to fear from Android than from Apple's iPhone:

Apple can't and won't offer low cost handsets to the market in these places; it's the premium brand and wants to ensure a uniform experience. Eventually we might see a single lower-cost handset from Apple (something like the iPhone Nano perhaps). But that won't be coming very soon, if ever. 

Google by contrast doesn't have any of those same brand-related concerns. If there are lousy Android handsets in the market it doesn't really diminish Android the OS as a whole. There's room for much more experimentation on Android.

Apple has charmed and captured the "high end" of the market. Google and its OEMs are competing there but can also compete at the lower end with lower price points. That's the area where Nokia is dominant. But for how much longer? 

Nokia may wind up adopting Android itself, but that remains to be seen. 

Android is the "Windows of the mobile world." Apple is, well, the Apple: a premium brand that seeks to maintain higher price points and margins accordingly. Just as there are lots of generic and "crappy" PCs we're going to see plenty of crappy low-end Android handsets. The image above is of the Samsung Intercept, one of these lesser Android devices. But to someone coming off a flip phone it's a revelation. 

If these low-cost Android handsets flood the market and become widely available, we'll see people trying to pair the best of lower-end Android handsets with the cheapest plans (i.e., Boost, Virgin). The only way for carriers to maintain the prices of their plans will be to limit the availability of the best handsets to their post-paid subscribers. Lesser phones on slower networks will be available to pre-paid subscribers. 

Regardless, there's enormous room for growth in the US market from non-smartphone users. If we accept the Nielsen figure that 28% of US mobile phone subscribers have smartphones that means (of course) that 72% do not. Cheap smartphones paired with cheap data plans will drive a huge number of that 72% into the smartphone -- and mostly Android -- camp over the next two years. 

One can never overestimate the impact of price on markets and consumer behavior. 

Why Swype When You Can 'Swift'

Some have dubbed alternative keyboard and input mechanism Swype a "killer app" for Android. To me, however, learning to use Swype is like learning the early Palm Pilot language "graffiti." A much more natural and better keyboard experience for Android, without the learning curve, comes in the form of SwiftKey.

SwiftKey uses word order prediction to minimize the need to type letters. I rarely have to type more than two letters to get the appropriate word and sometimes I'm just selecting words from the menu and not typing on the keypad at all. 

When SwiftKey launched in public beta I wrote about it at Screenwerk. To all those considering joining the Swype beta I'd recommend purchasing SwiftKey instead.

Palm graffiti alphabet:

Picture 29

SwiftKey demo video

Picture 31

MSFT: 1.5 Million Windows Phones Sold in Six Weeks

Microsoft has finally revealed some Windows Phones sales figures and they're good: "We are pleased that phone manufacturers sold over 1.5 million phones in the first six weeks, which helps build customer momentum and retail presence."

However this apparently doesn't reflect the numbers of actual handsets sold to consumers. It's phones sold from OEMs to carriers. Some commentators have expressed total skepticism that consumers are buying the phones. I'll withhold judgment for now. 

There are also reportedly 4,000 apps in the Windows Marketplace, another reasonably good start. 

So this isn't the disaster that Microsoft's silence suggested. Yet the absence of direct consumer data doesn't tell us the true level of consumer demand but the initial data are potentially promising for Microsoft.