Windows Phones Now on Sale in US, Sell out in Germany

Windows Phones are now on sale in the US market. In Germany apparently the handsets -- the HTC HD7 specifically -- have sold very briskly (initially sold out) and demand has been quite strong, exceeding expectations. According to WMPoweruser.com:

The high demand is not just confined to the HTC HD7 either. Vodafone Germany, who will be carrying the HTC Mozart and the Samsung Omnia 7 reports pre-orders are “exceeding expectations”, and were ordering increased quantities to satisfy customers.

Assuming the German experience is not atypical, Microsoft may have a hit on its hands. Certainly the distinctive UI will get attention and the smart media campaign ("get a life") has generated awareness of the new handsets. They're priced competitively -- even aggressively. You can get one for $149 through T-Mobile and, reportedly, $99 on Amazon with a contract (though I couldn't find that price). 

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Report: Tablets Stifling Netbooks, RIM Playbook Beats Galaxy Tab

ChangeWave's latest consumer survey (n=3,108) this month shows some interesting things and confirms that the iPad has had an significant impact on the market and consumer expectations. Demand for laptops is stable according to the survey but consumer interest in netbooks, probably because of tablets, has waned:

[O]ne area that’s come down drastically from a year ago is consumer interest in Netbooks. Just 14% of those who plan on buying a laptop in the next 90 days say it will be a Netbook – 10-pts below our peak reading for Netbooks back in June 2009.

Nearly 3/4 of respondent-owners of the iPad say they're very satisfied:

[T]hree-quarters of current iPad owners (72%) say they’re Very Satisfied with their device and another 23% say they’re Somewhat Satisfied – world class satisfaction ratings for the Apple Tablet.

Finally, and very interestingly, demand for the RIM tablet appears to be greater than for the Galaxy Tab. This is probably based on the brand strength of BlackBerry rather than any substantive knowledge about the device on the part of consumers. 

In addition, the massive interest/demand gap between the iPad and other tablets will be hard to surmount for most of the companies that seek to compete in the segment. 

Nielsen: Smartphones Now 28% of US Market but Lags EU

Nielsen says that 28% of all US mobile subscribers now have smartphones. This estimate is running behind Nielsen's earlier projection, which said that smartphones would constitute about 31% of the market in Q3 2010. And the growth expectation was that by the end of Q4 2010 the US smartphone penetration number would be 35%.

It's unlikely that the 35% will happen until perhaps Q2 of 2011 or maybe even Q3, when Nielsen had said we were supposed to cross the 50% threshold. It will now likely be Q4 of 2012 when that 50% figure is reached. Regardless of whether it's a "year late" that day will certainly come, driven in part by carrier handset subsidies, cultural change and low-cost Android devices. 

Yesterday we saw numbers from NPD and Canalys that showed Android as the top OS in Q3, while the iPhone was crowned the top handset. Those were Q3 only figures however. Nielsen offers holistic market numbers showing that Apple is just behind RIM in terms of smartphone share (see graph), while Android is surging and now almost 20% of the overall market. 


Among the smartphone platforms Android has the largest percentage of younger (under 35) users: 


In Europe, smartphone penetration is greater as a percentage of the overall market (though markets are much smaller in absolute terms). According to Nielsen:

Compared to Europe, this puts the U.S. on a par with the U.K., which has a similar smartphone penetration rate, but well behind Spain, which boasted a smartphone penetration rate of 37 percent last quarter, and Italy, which had a smartphone penetration rate of 33 percent last quarter.  According to Nielsen’s new Global Smartphone Report, Symbian is the most popular smartphone operating system in Europe.

Regardless of which handset or OS is winning in the US, the rapidly growing penetration of smartphones holds major implications for consumer behavior and marketing opportunities as the population mobilize -- and people take the Internet2Go. 

Apple Owns Global Tablet Market As Galaxy Tab Arrives

The Samsung Galaxy Tab goes on sale in a couple of weeks in the US. Will it sizzle or will it fizzle? My guess is something in between.

Here's what Steve Jobs had to say about the forthcoming bunch of tablets, led by the Galaxy Tab:

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 trade off. The seven-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.

[The] iPad now has over 35,000 apps on the App Store. This new crop of tablets will have near zero . . . and [ ] our potential competitors are having a tough time coming close to iPad's pricing, even with their far smaller, far less expensive screens.

Endgadget is out with its Galaxy Tab review. The gadget blog generally likes the hardware but says the device lacks app support. I haven't used one so I can't comment; however I think the pricing is wrong. It ranges from $399 for the two-year contract subsided version (Sprint, T-mobile) to $599 or $699 for the "unlocked" version of the device. 

Here's the problem. The contract version is $100 too expensive and can't (apparently) be used as phone, other than with VoIP providers. The unlocked versions are too expensive when compared with the larger-screen iPad. The right way to do this would have been to enable the device to be used as a smartphone substitute. Then the $399 price is more palatable.

But as Jobs suggested most Tab buyers will have a smartphone already. So they're not going to want to buy yet another carrier contract. They're likely to wait for the WiFi version and buy it unlocked. But then it's too expensive for a device that in most respects is inferior to Apple's tablet. 

My prediction is that when it becomes available in a couple of weeks there will be decent but not great sales for the Samsung device. If it had been priced more aggressively it might have flown off the shelves. Apparently the Galaxy Tab cost $200 to manufacture so a $300 price point cuts deeply into margins. But the right price for the (subsidized) Galaxy Tab would have been $299. 

By this time next year we should have several Android tablets in market, together with an HP WebOS tablet and a few windows-based tablets. RIM's Playbook will also be out. The market will be a great deal more interesting and potentially confusing as consumers try and navigate all the device choices and how to connect them all to the Internet in the most economical way.  (This is a huge issue: consumers want the best devices and unlimited connectivity at the cheapest prices; carriers want to thwart that objective.)

For the time being Apple owns 95% of the global tablet market according to Strategy Analytics:

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Q3 Data: iPhone Top Individual Handset, but Android King of Operating Systems

Two sets of data are out this morning from Canalys and NPD group measuring handset sales in Q3 2010. These are Q3 numbers only; not overall marketshare figures. They show directional momentum but not total marketshare or absolute number of units shipped.


Global: Apple had a 17% share of smartphones; RIM has 15% share this quarter. US: Apple had a 26% share, RIM fell behind Apple (as IDC and others have confirmed). Android phones  ("OHA" in the chart below) collectively captured the largest share of Q3 shipments at 43.6%.

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Here are the top selling US handsets in Q3 according to NPD; four out of five were smartphones:

  1. Apple iPhone 4 (smartphone)
  2. BlackBerry Curve 8500 series (smartphone)
  3. LG Cosmos (messaging phone)
  4. Motorola Droid X (smartphone)
  5. HTC EVO 4G (smartphone)

Android's growth was dramatic, moving from a 3% share in Q3 2009 to a 44% share in Q3 2010. Apple and RIM's share of shipments declined relatively speaking -- RIM's significantly. Here are the YoY Q3 numbers according to NPD:

  • Android: 3% --> 44%
  • iPhone: 29% --> 23%
  • RIM: 46% --> 22%

Again it must be emphasized that these numbers are Q3 only and don't reveal absolute unit sales or shipments. Clearly, however, Android -- with its several carrier relationships and multiple hardware OEMs -- has got tremendous momentum in the US. 

We'll see what happens when the iPhone finally goes on sale at Verizon. But it's probably about a year too late to slow Android's momentum. RIM, for its part, has got to be increasingly concerned that its momentum is in the wrong direction. 

Facebook Mobile Deals Coming on November 3?

As is now widely known Facebook is having a "mobile event" on November 3. There have been many rumors of a "Facebook phone." That would be pretty interesting and exciting but it's fairly unlikely. So what will be announced?

My guess is that Facebook will first rattle off some impressive mobile statistics. Here's where Facebook's mobile stats stand today:

  • There are more than 150 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

I'll guess that we'll hear that there are now more than 200 million active mobile users on Facebook among other juicy tidbits. 

I've long speculated that Facebook would eventually become a mobile ad network. The amazing thing, if it were to do so, is that it would have equal or greater reach than any mobile carrier and probably any other mobile ad network today. But Facebook isn't immediately concerned with making money in mobile; there's no internal pressure to monetize mobile. Some have estimated that Facebook is on track to do $2 billion in online ad revenue. 

Another reasonable guess is that we'll see the debut of "Facebook Deals," which may be partly tied to Facebook Places. It may also have an entirely independent existence on the PC. Right now Facebook Places doesn't offer any "reason" for users to check in -- unlike other LBS services that offer badges or coupons. I've seen estimates recently that Facebook Places has "7X" the check-ins of Foursquare, which now boasts about 4 million users. 

A deals product could offer a check-in incentive and a nice advertising vehicle for brands and SMBs alike. Regardless of what gets announced next Wednesday, Facebook is a kind of "sleeping giant" in mobile and LBS. Anything it does in these realms has the potential to shake up (or accelerate) the industry. 

Survey: Price Comparisons, Coupon Searching Top Mobile Shopping Activities

Online commerce vendor ATG sponsored a survey (n=1,002) about consumer shopping behaviors online and on mobile devices. The top-level findings are written up here. Basically search engines are most widely used resource, followed by email and then "word of mouth." In this post, however, I'll focus on the survey's mobile data.

There are no startling findings or revelations. The data do show how consumers are increasingly using their handsets to get product information in stores and on the go and how they're becoming more comfortable making purchases through their phones. 

Previously InsightExpress reported that 82% of mobile phone owners in the US used mobile phones (in one way or another) in stores, which includes voice calls to friends and family. In the ATG data the numbers aren't quite as impressive though "about 41% of consumers aged 18-34 are using their mobile device to complete purchases of products and services with varying frequencies."

Unfortunately there's no handset segmentation in the report but we can assume that most of the action is happening on smartphones. According to the survey:

  • 37% of survey respondents (across alll age categories) "said they are using their mobile devices to browse or research products and services." This is reportedly 10 points greater than the previous survey, which was only four months before -- a significant gain. 
  • 27% of "shoppers surveyed had used their mobile device for broader shopping-related activities  . . . such as searching for coupons, comparing prices between stores, receiving text message notifications of sales, and getting ratings and reviews." This number jumped to 46% among 18-34 olds.

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For which of the following activities do you use your mobile device? (Select all that apply)
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How often do you complete a purchase transaction directly on your mobile device?

 Picture 33


  • 27% in the 18-34 age group say they are using a tablet device
  • 13% are using it on the go in place of a laptop computer.
  • 5% of those over age 45 are using a tablet.
  • 25% in the 18-34 segment said they use a tablet device for shopping-related activities. 

As I said no great or startling revelations but solid evidence of how mobile devices are gaining as shopping tools.

Opera State of Mobile Web for September

Opera has released its latest "State of the Mobile Web" report. Through data compression the company says its Opera Mini browser "saves consumers worldwide more than 2.2 billion USD each month on their mobile data bills . . . Consumers in the United States and Nigeria benefit the most from Opera Mini’s unique compression technology, which reduces the size of web pages up to 90 percent (%). Using prevailing metered rates, United States consumers could save 141 USD on average each month . . ."

Here are charts for China, the US and UK based on Opera Mini users' online behavior patterns. The top sites and leading handsets have remained relatively stable for months. 

 Screen shot 2010-10-27 at 6.35.55 AMScreen shot 2010-10-27 at 6.35.39 AM

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Sprint Prices Galaxy Tab Right: $399

After a price of $599 from Verizon and BestBuy's rebate-free $499, Sprint comes in with the right price for the Galaxy Tab: $399. The catch is that it requires a two-year agreement. Data plans start at $29.99. According to the release:

It will cost $399.99 (taxes not included) with a new line or eligible upgrade and two-year service agreement on a 3G Tablet Mobile Broadband plan. Sprint customers will have two rate plans to choose from for their Samsung Galaxy Tab: a 2GB data plan with unlimited messaging for $29.99 per month or a 5GB data plan with unlimited messaging for $59.99 per month (plus taxes and surcharges).

The device in California will cost an addition $50 or so because it's taxed a full price, not the subsidized price. Beyond this, now with tiered pricing, nobody really understands what these levels (2GB, 5GB) mean as a practical matter. 

But Sprint is getting the price right in my opinion. It appears that it can be used as a phone, although pricing for voice + data isn't present on the Sprint site. Clearly one could use a VoIP service like Skype (or eventually Google Voice) for this device. 

We'll now see if Steve Jobs' prediction that the 7" tablets won't sell comes true. He argued that they're neither large enough to provide a great "larger screen" experience nor small enough to fit in your pocket. I'm guessing Sprint's Galaxy Tab is going to be pretty popular, however. 

It will be available on November 14. 

Verizon Q3 Growth All about Android

Verizon reported Q3 results this morning. The company said it had revenues of $26.5 billion, down 3% vs the same quarter a year ago. Here are the wireless results:

  • 997,000 total net customer additions: 584,000 retail postpaid net customer additions . . . 
  • 93.2 million total customers
  • 6% increase in total revenues from 3Q 2009

The company said that smartphones (read: Android) were driving wireless growth. Verizon said that 60% of smartphone contracts during the quarter were upgrades who were new to the category. The company also said that 23% of its post-paid subscribers now have smartphones. 

Screen shot 2010-10-22 at 7.37.10 AM

AT&T earlier this week said that it activated 5.2 million iPhones in the quarter and added 745,000 contract customers -- more than Verizon -- against 2.6 million new wireless subscribers overall. Accordingly AT&T still seems to be benefiting from the iPhone.

Once Verizon gets the iPhone later this year or early next year it will be interesting to see the impact is on Verizon's new subscriber acquisitions and the corresponding sales impact on Android phones. 

Verizon will also be selling both the iPad and the Galaxy Tab. However the Galaxy Tab is being (mistakenly) priced at $599. That might have worked if there were a contract version priced at $399. However at the higher price point I suspect the Samsung device won't sell as well as it might have or as well as the iPad will at Verizon. 

Windows (7) Phones Get Mixed Reviews but Establish a Mobile Beachhead for MSFT

The fact that Windows Phones are getting mixed reviews is a victory for Microsoft after the disaster of Kin. While many reviews say the phones are not entirely competitive with the iPhone and Android they are celebrated in a number of ways. But this is generation one and help Microsoft establish a beachhead in the mobile market that it can improve upon and advance later.

Had Windows Phones been a total failure it might have meant the end of Steve Ballmer's tenure at the top of Microsoft. Now everyone can breathe a sigh of relief -- they have a competitive product. There's absolutely no chance it's going to "bury" the iPhone or Android, as the bizarre funeral ritual last month in Redmond argued. But some people will buy them and more people will buy them in the future as they improve. 

Here's a representative excerpt of reviews that came out today: 


My conclusion is that Microsoft has used its years in the smartphone wilderness to come up with a user interface that is novel and attractive, that stands out from the Apple and Google approaches, and that works pretty well. Instead of multiple screens filled with small app icons, or the occasional widget, Windows phones use large, dynamic tiles that can give you certain information, like your next appointment, at a glance.  . . .

Overall, I can’t recommend Windows Phone 7 as being on a par with iPhone or Android—at least not yet. Unless you’re an Xbox Live user, or rely on Microsoft’s SharePoint corporate Web-based document system, it isn’t as good or as versatile as its rivals.


Microsoft has done an outstanding job with lots of aspects of this UI, particularly when it comes to navigation and ease of use -- but there are holes here as well. It still feels like the company is a good year behind market leaders right now, and though it's clear the folks in Redmond are doing everything they can to get this platform up to snuff, it's also clear that they're not there yet.

But that isn't -- and shouldn't be -- a deterrent to taking a close look at the handsets being offered. Microsoft isn't walking away from Windows Phone 7 anytime soon, and the company has created an incredibly promising base set of features to build off of. With terrific Zune and Xbox Live integration, a fast and smart method of getting around the OS, great Office and email experiences, and a genuinely beautiful and useful user interface, Microsoft has definitely laid the foundation for the next several years of its mobile play. 


Like Android in its infancy, Windows Phone 7 still needs to grow up a bit. Not as much as the iPhone or Google’s mobile platform but you’re still going to be missing some features you’d expect from a top-shelf smartphone.

Xbox and Office integration, the interface and Maps and Navigation were singled out for kudos. And the most enthusiastic review that I saw was at Compterworld: 

Good writers borrow, great writers steal, or so the saying goes. Microsoft's new Windows Phone 7 (WP7) operating system borrows heavily from Apple's iOS and Google's Android but then takes the interface and navigation in an intriguing new direction, offering a user experience that at least equals and in some ways surpasses them.

There are two interesting questions: 1) how many units will sell when these phones start to show up later this month (in Europe) and early next month in the US? and 2) which OS or company will they impact most? 

Nokia Q3: Doing Well, Except in US

Earlier today Nokia announced Q3 earnings, which beat financial analysts' estimates. The company sold slightly more devices than the same time a year ago, a massive 110 million. It reported €10.3 billion in revenues ($14.4 billion).

However look at the chart below. In contrast to most regions the company sold a comparatively anemic 3.2 million devices in North America, which actually represents growth. But it also indicates weak demand for Nokia (the devices and the brand) in this important smartphone market. While Nokia has a trusted brand around the world, the brand is very weak here. 

Nokia Q3 sales by region:

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One could argue that Nokia is just "a phone away" from having a hit in North America.

One really compelling handset could reverse the company's fortunes in the US. However given its software development and product-vision challenges that breakthrough handset is probably not immediately in the pipeline. Nokia is at least a year -- and perhaps two years -- away from potentially being competitive again in the US. I've argued that Nokia's North American strategy should focus on low-cost smartphones rather than trying to compete at the high-end, which it cannot at the present moment.

The company also announced that it would cut 1,800 jobs this morning in order to start to streamline the bureaucracy that is endemic to the Nokia corporate culture

Nokia has today communicated to its employees the company's plans to accelerate its transformation and increase effectiveness. The plans include simplifying operations in product creation in Nokia's Symbian Smartphones organization, as well as Nokia's Services organization and certain corporate functions. The plans are expected to result in a reduction of up to 1800 employees globally.

Nokia can be hugely successful without North America, in Europe, Africa, Asia and China in particular. But it shouldn't walk away from the US and North America because there would be a ripple effect in other regions.

I've argued in the past that Nokia's true competitor isn't the iPhone, which won't sell at the levels that Nokia does -- ever. Rather it's Android, which can be made to compete on price with the cheapest Nokia phones in some cases. Android is the platform that Nokia really needs to worry about globally. 

Which Tablet Will You Buy for the Holidays, Mrs. Nesbitt?

Despite the boffo $20 billion quarter Apple enjoyed, the iPad sold fewer units than some analysts were anticipating. It's not entirely clear whether this "under-performance" was attributable to supply constraints or less robust demand, though many believe it's the former.

Nonetheless, we heard on the Apple earnings call why Steve Jobs thinks that the iPad will continue to lead the category for some time: screen size, apps/software and price. Here's an edited portion of the earnings call transcript where Jobs discusses tablets: 

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.

[The] iPad now has over 35,000 apps on the App Store. This new crop of tablets will have near zero . . . and [ ] our potential competitors are having a tough time coming close to iPad's pricing, even with their far smaller, far less expensive screens.

The 7' Galaxy Tab appeared to be the first viable iPad competitor; however it has received some mixed (though mainly postive reviews). The big question will be how much does it cost? Much of the information available suggests that the contract-subsidized price will be $399 and the full price will be above $600 without the subsidy. 

(Jobs all but confirmed with his criticism of the 7" model that there won't be an "iPad nano.")

That Galaxy Tab pricing may not be sufficiently aggressive relative to the iPad, whose entry level pricing is just $100 more. While I see some appeal in the 7" device -- though I admit I haven't used one -- I can see Jobs' point about screen size and diminished user experience. We'll see if the public agrees. His remark that 7" is too small to compete with the iPad and too large to replace a smartphone may be accurate. However, I could imagine some people using the Galaxy Tab as a smartphone replacement. 

Beyond the Samsung device there don't really seem to be any truly viable iPad competitors ready for the upcoming, all-important shopping season. If that proves to be true the iPad could well have what may be one of the hottest gift categories out there -- tablets -- all to itself. Plus the availability of the device from Wal-Mart, Target and BestBuy may mean spectacular US sales over the holidays. 

Google's much-hyped and much-anticipated ChromeOS notebooks were supposed to appear in Q4 this year. So far none have. But the changed landscape (read iPad) could mean those devices have somewhat diminished appeal -- unless they're very affordable (read: less than $300). 

Millennial: iOS on Top but Android Revenue Growth Beats iPhone

Millennial Media's MobileMix report is out this mornng and it has some interesting data points. The story is mostly the same as previous months: iOS devices lead but Android is fastest growing collection of devices. The data also suggest that RIM is holding its own in an increasingly competitive smartphone landscape.

Here are the top data-points, followed by some charts from the report:

  • Android ad requests grew 26% month-over-month. Since January, Android has grown 1,283%.
  • Apple ad requests increased 10% month-over-month. Since January, Apple has increased 18%. iPad ad requests grew 63% month-over-month.
  • RIM ad requests increased 16% month-over-month. Since January, RIM has increased 143%.
  • This month, for the rst time, Android revenue exceeded iPhone-only revenue on our network amidst strong raw iOS impression growth.

Picture 31

Compare March 2010 Millennial data, showing smartphones with a 45% share and Apple with a 70% share of that segment: 

Screen shot 2010-09-28 at 11.44.37 AM

 Now back to the current month:

Picture 30

Picture 28

Picture 29

What do we take away from all this? Apple's iOS suite of devices remain the market leader (though the iPhone is far less dominant), with Android gaining. And good ol' RIM is alive and kicking, showing some growth in this report. 

Update: Millennial ads some "color" to the numbers released this morning in a blog post

One of our key observations was the continued growth of Android Smartphones on our network. Though we’ve predicted that Android would eventually overtake iPhone in revenue, we didn’t anticipate it to happen this soon.  In September, Android revenue exceeded iPhone-only revenue.  However, impressions from iOS still outpace Android impressions.  So how is it that Android could see fewer impressions, but come out ahead in revenue?  Here are a few reasons:

  1. Devices versus operating systems – We are only comparing iPhone and Android devices, not operating systems. iOS includes not only iPhone, but also iPad and iPod Touch. Currently, Android only consists of Smartphones on our network.  Of course, as Android-powered tablets and other consumer electronic devices hit the marketplace in the near future, that will certainly change.
  2. Less inventory coupled with soaring demand – We saw higher average fill rates, click-through rates and prices on Android applications and mobile web inventory than on iPhone inventory last month. Why?  We believe this occurred because there are fewer applications available on Android than on iPhone (though the gap is narrowing), and the mix of applications available on Android is still different than the mix on iPhone.   This means less inventory to meet current advertiser demand, resulting in higher fill rates and prices.
  3. Reaching a diverse set of Smartphone buyers – Many Android users are often first-time Smartphone buyers.  We believe some advertisers are paying a premium to reach those users early in their Smartphone experience.   Our advertisers have also shared that Android allows them to reach a diverse set of consumers across all major carriers, making the platform highly desirable and increasing demand for the platform.

When we consider all of these elements together, it helps us see how Android overtook the iPhone on a revenue basis on our network in September.  With more advertiser demand per each available impression on Android, it resulted in more revenue per impression.

Apple Results: 14 Million iPhones, 4.2 Million iPads, $20bn Revenue

Apple just released its quarterly results. It's the company's first $20 billion quarter. Without hyperbole or shouting, here are the highlights and the numbers:

  • Revenue: $20.34 billion; net quarterly profit of $4.31 billion
  • Macs (vs. year ago): 3.89 million (up 27%)
  • iPhones: 14.1 million (up 91%)
  • iPods: 9.05 million (down 11%)
  • iPads: 4.19 million (below consensus, but contributed about $2.7 billion in revenue)

There are now more than 125 million iOS devices in the market according to the company's earnings call. In something of an unfortunate move, there was a poke in the eye for RIM in Apple CEO Steve Jobs' press release quote:

“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs, Apple’s CEO. “iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.” 

(Emphasis added.)

The company offered semi-aggressive guidance for the holiday shopping season: "we expect revenue of about $23 billion." Read all about it on Techmeme

Pew: 85% of US Adults Have Mobile Phones, One in Ten (High Earners) Own Tablets

Pew has just released some new survey data (n=3,000) -- a kind of gadget census -- that shows 85% of Americans own cell phones (vs. PCs (59%) or laptops (52%)). Three-fourths of teens have mobile phones and a whopping 96% of 18-29 year olds own mobile phones.

The total US population today is 310,480,361 people according to the US Census Bureau. There are about 225 million adults over age 19 in the US (based on 2008 data). If 85% of them (which doesn't include teens) own mobile phones that means 191,250,000 adults in the US today, using the Pew data.

According to comScore there are 212.6 million PC Internet users (August, 2010). When cell-phone owning teens are included (30.2 million) there are 221.5 million mobile phone owners in the US. Mobile Internet penetration varies based on handset type (feature phone, smartphone, iPhone). But the aggregate Nielsen mobile Internet number is now 80 million people in the US. 

Globally JP Morgan and others have predicted mobile Internet penetration and access will be greater than PC Internet access by 2014. In North America we may see the crossover happen a couple of years later -- but it will happen. 

Here's the demographic breakdown of mobile phone ownership, according to the Pew study: 


The Pew data also discuss tablets and eReaders as a growing category. According to Pew, "Around one in ten Americans with annual household incomes of $75,000 or more own a tablet PC or e-book reader, while fewer than 5% of households earning less than $50,000 per year contain one of these devices."


Windows Phone Launch Demo Shows Competitive Device -- But How Competitive?

I don't have a Windows Phone so let me get say that up front. The demo at the launch this morning from New York was impressive in several respects though I'm not among those who think that the "OS is beautiful." I like the bold appearance of many of the pages and appreciate the design is a departure from what already exists (read: iPhone) but I do not like the layout of "live tiles" on the homescreen.

This is one of the key features of the new OS and it struck me as a more fully realized version of what Motorola and HTC are trying to do with their proprietary software on top of Android, which I don't think is successful in either case. I don't like the largely monochromatic look (Green, Red or Blue) of the Windows Phone live tiles or the scrolling. We'll see how consumers respond. The pages beneath "live tiles" are much nicer to look at. 

Kin, released earlier this year, was a major bomb. And that failure hangs over Windows Phones. But these devices appear to be better all the way around, with a large number of hardware and carrier partners out of the gate: 60 mobile operators in 30 countries offering 10 different handsets to start.

Here's the global carrier list and corresponding devices at launch:

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What's interesting is that there was no Internet Explorer mobile demo at this morning's press conference. There were search results displayed and Bing Maps but we didn't see any sites rendered on the device (although I gather the mobile Internet experience is pretty good). Indeed, there are a number of unanswered user-experience questions that will only be answered when users can play with Windows Phones and see how they stack up against the iPhone and Android. 

There are also very few actual reviews from people who've been using the device. Robert Scoble wrote something very incomplete and vague about the user experience last night. There were previous demos and quasi reviews from Engadget and CNET's Ina Fried that were generally complementary. I would have expected several high profile reviews to come out today (Baig, Mossberg, Pogue) to help build buzz for the device. I haven't seen them. I'm sure there will be some in the next few weeks, however. 

Here's a promo video showing the user experience: 

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Initial sales will be critical. Like a movie opening the first weekend will be important. If sales are good, you'll see headlines like "Microsoft is back." If not . . . people will be writing the device's epitah and comparing it to Kin. Yes, that's all very premature either way but that's the way tech journalism is now. 

Microsoft is very conscious of this and so is supporting the device with, according to some estimates, hundreds of millions of dollars in advertising and merchandising. If early sales are good carriers will continue to promote and support the device. If they fail to sell well and Windows Phone is perceived to be weak that will impact carrier enthusiasm and future sales accordingly. Witness the Pre -- or perhaps more appropriately the Kin. 

What defines success here? Windows Phones will be bench-marked against the iPhone and Android. That will be a tall order and very challenging for Microsoft to match -- unless it truly does deliver the "breakthrough" experience that was promised this morning. 

Publishers Hedge with Galaxy Tab, $599 Price May Be Too High

The Wall Street Journal is reporting that many major newspaper publishers are preparing apps for the forthcoming Galaxy Tab (although presumably their existing Android apps would work). It characterizes these efforts as something of a hedge and diversification effort vs. exclusive reliance on the iPad:

Several major news organizations are lining up behind a new tablet device from Samsung Electronics Co. built on Google Inc. software, in order to broaden mobile readership beyond owners of Apple Inc. popular iPad.

New York Times Co. and News Corp.'s Wall Street Journal will offer software applications for Samsung's Galaxy Tab, which goes on sale later this year, according to people familiar with the matter. Gannett Co.'s USA Today also is developing a software application, the publisher said.

The Galaxy Tab is appealing because of it's 7" size, some of its specs and the potential (I believe) to be used as a phone. However it won't fit in your pocket. It remains to be seen how "good" the device is and whether it truly does compete with the iPad. Given the strength of the Galaxy S Android phones it probably will be a strong competitor. 

Yet the price -- a rumored $399 with two-year contract and $599 without -- may turn out to be too high to drive mass adoption. I'm guessing here of course. It depends on the device but I suspect most people will not want to buy another two-year contract and so would go for the "unlocked" version. But the $600 price point, $100 more than the low-end iPad. 

The smaller form factor and less "elegant" Android OS may cause people to see less value in the smaller but more expensive device. A $399 unlocked price point would have been more like it. 

Related: Leap to sell prepaid Android tablet next year


WSJ: Verizon iPhone Certain, More webOS Devices Coming Too

The Wall Street Journal is reporting that iPhone 4 is coming to Verizon in early 2011. The publication is also saying that the hypothetical iPhone 5 wil be a "new form factor":

Apple Inc. plans to begin mass producing a new iPhone by the end of 2010 that would allow Verizon Wireless to sell the smartphone early next year, said people briefed by Apple . . . The phone, for which Qualcomm Inc. is providing a key chip, is expected to be released in the first quarter of next year, according to the same people . . .

Separately, Apple is also developing a new iPhone model, said people briefed on the matter. One person familiar with the new iPhone plan said the fifth-generation iPhone will be a different form factor from those that are currently available.

It's not clear whether a CDMA iPhone 4 would also be available through the other US CDMA carrier Sprint. The limited availability of the iPhone through a single US carrier (AT&T) has hurt iPhone sales and enabled Android phones, available from all four major US carriers, to recently outsell the Apple handset. 

Separately Reuters is reporting that more than one new webOS/Palm handset will be introduced in early 2011. It remains to be seen whether these devices can compete in the market. The Palm Pre, the first webOS device, offered an elegant industrial design aesthetic but also some major flaws in terms of usability. 

Mobile Payments (and Next-Gen Banking) Picking Up Momentum

There have been a number of mobile-payments related announcements and news items in the past few days that collectively reflect the growing momentum of the mobile phone as wallet and remote ATM. In brief here they are:

Telefonica, which owns O2 in the UK, is testing a NFC mobile payments system that the company wants to have deployed for the 2012 Olympics in London.

Visa (and MasterCard) are testing contactless payments -- "paywave" -- for mass transit in CA and NY. The video below demonstrates the technology in NY subways in the form of an iPhone app.  

Screen shot 2010-10-06 at 6.37.11 AM

The next iPhone will have RFID integrated in a way that will facilitate and enable mobile payments. According to a piece in Fast Company discussing an Apple patent filing: 

The patent shows how an RFID loop, powerful enough to act as both RFID tag or a tag-reader, can actually be built right into the complex layered circuitry of the iPhone (or iPod Touch) screen. 

There are lots of other related things (re marketing and loyalty) that can happen if RFID payment systems take hold.

Chase and now PayPal allow (via the iPhone) allow users to take pictures of checks for deposit into their accounts. This capability will spread to other mobile banking apps and will (eventually) become extremely popular. 

Boku has teamed up with Vodafone in the UK to enable small mobile transactions. Boku and direct competitor Zong are both very near-term acquisition candidates. 

Finally TabbedOut just raised a little over $2 million to expand its reach. The app enables secure smartphone-based payments in restaurants and bars. We previously wrote about it here. If the company gets to scale it will be acquired -- potentially by OpenTable. But there would be others interested too. 

Technology is not the issue in any of these initiatives; it's consumer confidence, security and usability. We're also on the cusp of a land grab as providers try to get distribution and consumer mindshare. That's going to be particularly difficult for independent companies such as TabbedOut, though not impossible. 

The current major (and potential) competitors vying for reach and mindshare -- and the would-be buyers of third party payment apps/platforms -- include credit cards, mobile carriers, PayPal (eBay), Amazon, Apple, Google. 

Mobile wallets and contactless payments have been discussed for years but these initiatives are now seeing traction. All of them are grounded in traditional credit card accounts. But the credit card itself will be less and less necessary as the mobile handset takes over.