Hardware

What Retail Can Learn from the Hotel Industry about Using Technology

The challenge of "showrooming" has been met by traditional retailers with either indifference and inaction or its opposite: aggressive price matching. Best Buy and Target are examples of the latter approach. They decided in February to match any price on Amazon year round.

However this strategy lacks "depth."

Price matching alone will not successfully address showrooming; it will in fact encourage it as more smartphone shoppers check Amazon and other sources to see if in-store prices are the best they can do -- and to demand a lower price in store if they find one online. 

Signs like the one below invite someone to go to Amazon (if they weren't thinking about it already) and compare prices. 

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It may be necessary to price match in selected categories such as electronics. But price matching is not a panacea. Instead the retail industry can take a lesson from the hotel industry, which is doing some very creative things with technology. 

The New York Times ran a story today about how hotels are using technology to improve the customer experience (including personalization) and lower costs in many instances: 

Hotels around the world are using technology in new ways, with the goal of speeding up or personalizing more services for guests.

David-Michel Davies, president of the Webby Media Group, said he visited Internet companies around the world each year for the Webby Awards, which honor excellence on the Internet. He said he had found that hotels were using technology as a substitute for human hospitality.

Instead of the staff at the front desk offering advice on where to go for dinner, guests may be lent an iPad loaded with maps and suggestions for local restaurants and sightseeing. A hand-held device in the room might control the television, blinds and temperature, replacing the role of the bellman who would describe how the features in the room work when he dropped off a guest’s luggage. “Hotels are transforming service into a digital concept,” Mr. Davies said.

There are an enormous number of ways that technology, and mobile technology (apps) in particular, could improve the in-store retail experience. Personalization, notifications, offers, product information and reviews, loyalty, payments and other use cases, if creatively implemented, could make the in-store experience richer, more fun and more rewarding for shoppers.

This creative, "diversified" approach to mobile and the in-store experience holds great promise against showrooming. Retailer size and resources would affect the scope of what might be pursued -- but every brick and mortar retailer could do something more interesting and creative than simple price matching. And the hospitality industry points the way. 

Apple Sells More iPhones, iPads than Wall Street Expected

Apple has just released earnings. The company reported quarterly revenues of $43.6 billion. Second quarter revenues in 2012 were $39.2 billion. Total 1H 2013 revenues were $98 billion. 

There were better-than-expected iPhone and iPad sales in the quarter. Gross margins came in at 37.5%. This compared to 47.4% last year.

Now the device numbers:

  • iPhone: 37.4 million (vs. 35.1 million a year ago)
  • iPad: 19.5 million (vs. 11.8 million a year ago)
  • Macs: "Just under 4 million" sold last year (vs. 4 million a year ago)
  • iPods: (5.6 million; iPod Touch represents 50%+ of sales)
  • iTunes: $4 billion (new sales record) 

On cheaper devices: There were lots of questions during the earnings call about Apple's competitive position and ability to compete in markets around the world. CEO Tim Cook repeated several times that an aggressively priced iPhone 4 is the crux of Apple's strategy to attract first time smartphone buyers in developing markets. 

This is a product, however, that's two generations old. While Apple says it won't make "cheap products" it's very likely that Apple will develop a less expensive iPhone to compete in those markets where "first time buyers" can't afford the state-of-the-art iPhone. 

On mobile payments: Tim Cook was asked about getting into mobile payments. Cook responded that the market was in its infancy, implying that Apple would be waiting to enter it in earnest (if at all). 

On the prospect of a larger iPhone screen: One of the financial analysts asked about a larger iPhone display. Cook respondend, " The iPhone 5 has the absolute best display in the industry." However he acknowledges that "some customers" value screen size. He explained that larger displays require trade-offs in quality. He then said that the company won't ship a larger iPhone display "while these trade-offs exist." That in turn implies that a larger display may be on the iPhone 6 or a later model. 

Report: Samsung Sees Almost 70% of Android Ad Impressions

Samsung is the undisputed ruler of the Android roost. On a global basis it's the dominant handset OEM and there's no real challenge in sight -- other than the iPhone. Samsung continues to eclipse fellow Android manufacturers LG, HTC and Google's own Motorola in terms of sales and market share. 

In that context one might expect Samsung to dominate Android-based advertising. Indeed it does. Mobile ad platform Velti has released data that show that Samsung mobile devices see nearly 70% of all Android ad impressions in the US market. This refers to display advertising but it probably extends to search impressions as well.

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However on the tablet side, Samsung is second behind Amazon in the US market. There Samsung has had much less success and has yet to product a breakthrough device -- although its Note "phablet" has done well.

The following chart shows Android market share by ad impressions. 

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Yet when it comes to ad impressions on tablets the iPad and iPad Mini control more than 95% of the market according to Velti's network data. Chitika, another mobile ad network, puts the iPad's traffic share at about 82%, significantly lower though still dominant.

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There has been some "cannibalization" of the iPad by its younger and smaller sibling. The Mini is less expensive and has lower margins than the iPad. Indications that the larger iPad's sales have declined in favor of the Mini have, to some degree, contributed to investor anxiety about today's Apple earnings (coming up shortly) .

Nokia Q1: Lumia Sales Up though Brand Dead in US Market

Nokia released Q1 earnings this morning. They were mixed. The company said that it sold 5.6 million Lumia handsets, which is up from 4.4 million in Q4 2012. Overall shipments of Nokia handsets were down more than 20% however. Sales also fell 20% YoY, to 5.9 billion EUR ($7.7 billion). As a consequence Nokia shares were down 12% this morning.

The roughly 25% improvement in Lumia sales was encouraging but far from a turnaround. Nokia's lower-end device sales were down, offsetting the Lumia gains and depressing overall sales figures. 

Since turning to Windows Phone in 2011, Nokia has sold 19.9 million total units. While this isn't outright failure -- and there's growth projected -- Windows isn't going to save Nokia or make it competitive with Android and iOS (enough time has passed to draw that conclusion). Nokia will have to turn to Android to diversify in the near term.

Nokia reported Lumia sales increases in all geographic regions except the US/North America. That's largely because Nokia's brand remains relatively strong in Europe and other places. However its brand is effectively dead in the North American market. Qarterly shipments of Lumia devices were down 33% vs. Q4 (400K vs. 700K) in North America. 

This not only reflects the weakness of the Nokia brand but equally the indifference of much of the US public to Windows Phones. Not only will Nokia have to aggressively discount it will need to develop new devices for the US market and may still fail (absent an Android strategy). 

During its Q1 earnings call Nokia was dismissive of Android. However if the company hopes to compete again in North America and indeed globally in the top tier of OEMs it will have to develop Android handsets beside Windows. In the US Windows Phones are driving less than 2% of mobile internet traffic; their US market share is roughly 3%. 

Low Awareness, Lack of Interest Plague BlackBerry, Nokia

It turns out that despite lots of media coverage and celebrity personality Alicia Keys as "creative director" most North Americans don't know about the launch of BB10. That's according to a survey commissioned by MKM Partners. The poll of 1,500 adult consumers (conducted during the past three weeks) asked about device adoption and future purchase intentions. It found, consistent with other data, much higher recognition and interest in Apple and Samsung. Others generally fared poorly.

The survey found that 51% of respondents owned smartphones, with 39% saying they bought their in the last six months.

Ownership breakdown by handset OEM: 

  1. 33% Apple
  2. 28.3% Samsung
  3. 9.9% LG
  4. 9.3% HTC
  5. 9.3% Motorola
  6. 4.4% other
  7. 3.4% BlackBerry
  8. 1.6% Nokia 

Current mobile OS:

  1. 55.1% Android
  2. 31.3% iOS
  3. 6.4% Windows Phone (higher than other surveys)
  4. 3.4% not sure
  5. 3.1% BlackBerry

Future purchase intentions:

  1. 44.5% “not sure” of next phone
  2. 19.6% said Samsung (Android)
  3. 17.7% iPhone
  4. 5.9% BlackBerry
  5. 4.4% Motorola
  6. 3.7% HTC
  7. 3.1% LG
  8. 0.7% Nokia

Asked about BlackBerry 10, 83% of respondents indicated they weren't aware of the launch. Asked about Windows Phones, 61% lacked awareness of the OS. When asked about interest in BB10/BlackBerry or Windows Phones the majority of respondents indicated indifference.

Not interested:

  • 68% not interested in BlackBerry
  • 63.9% not interested in Windows Phone

Separately investment firm Piper Jaffray conducted another wave of its research among US teens about device ownership and future intentions.

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Notable findings include the following: 

  • 51% of surveyed teens owned a tablet
  • 50% owned smartphones

In both cases iOS was dominant. However Android has made slight gains in both smartphone and tablet categories since the previous survey was conducted last fall. And aggressive pricing, especially in the tablet category, may drive Android penetration up vs. iOS among younger users.

Low-Cost Tablets to Accelerate Decline of PC Market

Last week there was a Reuters report asserting the next Google-ASUS Nexus 7 will have an improved screen and may cost as little as $149. The current entry level Nexus 7 is $199. Reuters also said that if it's not the new Nexus 7 than the existing tablet's price may be reduced. The current entry level Kindle Fire from Amazon (with ads) costs $159.

As this all indicates there's a kind of "race to the bottom" going on that may radically depress margins on Android tablets. Furthermore we're likely to see a decent $99 7-inch Android tablet in the next year.

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The growth of smartphones and the emergence of these reasonable-quality low-cost tablets such as the Nexus 7 are accelerating a trend toward mobile device adoption at the expense of PCs and further extending PC replacement cycles. In developing countries PCs will likely never reach penetration levels seen in North America or Europe.

In its latest device forecast Gartner joins the party, affirming what we already know about PC erosion in favor of smartphones and tablets on a global basis. In its projection Gartner sees Android as the big winner, effectively replacing Microsoft as the dominant OS on tablets and smartphones.  

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The particulars and timing of this forecast will undoubtedly turn out to be wrong. However the direction of the forecast is probably accurate. With its resistance to matching price competition (probably wisely) Apple iPads will not reach tablet penetration levels of low-cost Android based tablets (though the company is considering a lower-cost iPhone).

So far, Microsoft's "2.0" efforts in mobile, Windows Phone and Surface tablets, have only made modest gains in selected markets. However Microsoft still makes money from Android OEMs via patent licensing fees. If it has to rely on licensing the company's future will be pretty grim.

If these figures are anywhere near accurate tablets are poised to become the primary computing (and advertising) platform. Yet we're likely to see quasi-converged devices (i.e., tablets with keyboards like the Surface Pro) become laptop replacements in the near term.  

Device Forecast Sees Longer PC Replacement Cycles

Earlier this week IDC issued its new projections regarding hardware "shipments" through 2017. The bottom line is: continued growth for smartphones and especially tablets ("connected devices") but negative growth for PCs.

IDC said that in 2012 tablet shipments "surpassed 128 million" and sees increasing demand across markets. While "shipments" is often an inaccurate and misleading metric for market-share purposes, it does indicate the "directional" trend in the market. 

Even in emerging, immature markets PCs will only see "moderate single-digit growth" according to the forecast.

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The company said that replacement cycles are getting much longer for PCs as tablets and smartphones make more frequent replacement unnecessary. However IDC does continue to forecast laptop growth. I suspect that projection may turn out to be optimistic at least in non-emerging markets. 

Device penetration drives internet usage patterns. And while online publishers and marketers "intellectually" understand what's happening they have been generally slow to adapt their strategies and tactics to match the radical changes taking place in the market. 

Would People Buy a 'Facebook Phone'?

Facebook is the leading app on the iPhone. But does that popularity as an app mean that Facebook would have success with its own branded handset? 

Next week on April 4 Facebook seems poised to introduce some version of the long-rumored "Facebook phone." The speculation is that it will be an HTC-made handset carrying a "forked" version of Android. We'll see. But I'm extremely skeptical that anything like can succeed at scale.

HTC previously made two Android handsets in 2011 with deeper Facebook integration: the ChaCha and the Salsa. They both flopped. INQ has also made social-media-centric handsets since 2009, which have not done especially well. 

Let's assume that everything on the hypothetical HTC handset is deeply integrated with Facebook: contacts, dialer, camera, maps, apps, messaging and so on. Let's also assume that everything works elegantly. It's highly unlikely that there will be mass-market demand for this phone. 

Most people are not so involved with Facebook that they would turn over this most important piece of personal technology to the company. There will also be the inevitable privacy questions and concerns ("Is Facebook tracking me?"). Most people I know are quite content to use a Facebook app on their smartphones. The notion of an entire handset devoted to Facebook seems excessive and unnecessary. 

Perhaps the phone will offer some unique and impressive functionality or be priced extremely aggressively. Perhaps "younger people" will be interested. I remain very doubtful, however, that the majority of users will want to buy a smartphone so closely aligned with a single social network. 

BlackBerry Z10 Is Merely a 'Stop the Bleeding' Phone -- if That

BlackBerry CEO Thorsten Heins recently got a lot of coverage, in anticipation of the BlackBerry Z10 launch, for the remark that the iPhone was now outdated.

The much-hyped Z10 is now available in the US from AT&T (soon from Verizon) and a range of carriers in international markets. I went into an AT&T store this weekend to take a look at and get a "hands on" sense of the device. Unimpressive. 

It was immediately clear that this handset may keep some number of BlackBerry customers from "defecting" to the iPhone or Android. However it's not sufficiently exciting to lure existing iPhone and Android users to the BlackBerry platform. The UI and software are not entirely intuitive for iPhone and Android users. In addition, the collection of apps is limited.

The phone resembles an HTC device and is generally unremarkable otherwise. Indeed it has a "generic smartphone" quality.

Much has been made that AT&T employees haven't been trained to promote the phone. That seemed evident in my visit. In the store I entered there was not only a lack of promotional signage but the phone was placed in a far corner almost as an afterthought. It was simply there among a row of competing smartphones -- not highlighted in any way. I had to ask store salespeople multiple times where it was to locate the phone.

It's almost 100% certain this device will not be the engine of new growth for BlackBerry and that the device maker will continue to fall out of favor in the US market. 

iPhone Tops in Satisfaction Again, Nokia Beats Samsung

As Apple reportedly prepares to release a less expensive, plastic version of the iPhone to boost sales in the developing world, it's trying to strike a balance between cost and quality. It will simultaneously have to make the phone appealing (perhaps with a slightly different design and color) while not cannibalizing its flagship.

The perception of higher quality is one of the few remaining advantages that the device has over Android rivals, who over the past three years have dramatically closed the quality and features gap. Despite these gains, the iPhone has consistently beaten its smartphone competitors in customer service ratings from JD Power. The latest survey is no exception. 

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JD Power surveyed nearly 10,000 US smartphone owners. The satisfaction criteria, in order of importance, were the following:

  1. Performance
  2. Physical design
  3. Features
  4. Ease of operation

This is the ninth consecutive time that the iPhone has ranked #1. JD Power said the Apple device did particularly well in the areas of design and ease of operation.

In a bit of a surprise, Nokia edged Samsung in the survey. However Nokia has many fewer users (by an order of magnitude) than Samsung, whose Galaxy smartphone line is the best-selling Android handset in many markets around the world.

It's interesting that LG performed so poorly given the success of the LG-made Nexus 4, which repeatedly sold out and to date remains overall best Android handset on the market. In contrast, among feature phone OEMs, LG performed best, which is somewhat curious. 

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Report: iPhone Traffic Still Roughly 2X the iPad in North America

Recently there have been several reports starting to show that tablet (iPad) traffic is beginning to overtake smartphone traffic. For example, a report last week from Adobe found that, on a global basis, tablet traffic now exceeds smartphone web traffic (8% to 7%).

A new report from ad network Chitika, however, says that at least in North America the iPhone still generates roughly 2X the web traffic of the iPad. The iPad dominates tablet-only traffic with more than 80% market share. 

In late February, Chitika looked at traffic distribution from "250,000+ publisher websites." The company found that "iPhone users still generate more than two times the traffic of [ ] iPad users."

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The iPhone was responsible for 61.5% of North American web traffic from iOS and the iPad for just under 31%. The iPod Touch drove roughly 8% of iOS-generated web traffic according to Chitika. 

The Chitika report didn't look at engagement or time on site. The earlier Adobe report found that "on aver­age inter­net users view 70% more pages per visit when brows­ing with a tablet com­pared to a smartphone."

As tablet penetration grows, we should see its share of iOS and all web traffic commensurately grow. The interesting question is whether tablets are substituted in the home for smartphones or PCs. A recent Google-Nielsen report found that 77% of smartphone search activity happened at home or in the workplace (when people typically have ready access to PCs).

Samsung Debuts 'Life Companion' S4, Apple Compelled to 'Go Big' by Galaxy's Success

Last night in New York Samsung formally announced its much anticipated Galaxy S4 follow-up to its hugely successful S3. The hardware update was relatively modest: a somewhat larger high-resolution AMOLED screen, more CPU power and thinner body. It will be challenging to tell the S4 from the S3 without a close look. 

Much of the evening was about software though decidedly not about "Android" or "Google." Android got a single mention and Google was never mentioned.

Here are the S4's major "specs":

  • Screen: 5 inch HD Super AMOLED (1920 x 1080) display, 441 ppi
  • Processors: 1.9 GHz Quad-Core Processor / 1.6 GHz Octa-Core Processor
  • OS: Android 4.2.2
  • Camera: 13MP (rear), 2MP (front) 

With its splashy, Broadway inspired show last night Samsung entered Apple's "big launch" turf. It also perhaps unwittingly emulated Apple's "incremental" handset update cycle. Indeed, we might call the S4 the "S3s" because of its "evolutionary" changes over the S3. 

There were tons of software updates and new additions to the handset; many of them related to the camera and many of them were impressive seeming. However today several outlets are reporting that the Samsung software didn't always work as promised. In fact the S4, which will undoubtedly be popular, has received some quite mixed reviews -- especially from Gizmodo last night, which called it a "missed opportunity." 

Samsung has taken a bit of an "A/B testing" or shotgun approach, if you prefer, to developing mobile devices. Over the past three years it has released a wide range of tablets and handsets vs. Apple's much more deliberate and controlled pipeline. Yet through its experimentation with larger screens and a range of devices (as a differentiation strategy) it has helped cultivate in consumers an appetite for larger smartphone screens. 

But for that shift in the public's appetite, Apple wouldn't have made the "taller" iPhone 5. Yet there's considerable pressure to make still larger iPhones. 

A larger screen has become one of the key hardware features and differences between the first-tier Android handsets (especially from Samsung and HTC) and the iPhone. Thus Apple will be rolling out an even bigger iPhone (probably at 6). Apple would do well to bring that larger phone this summer and not wait another full year to do so.

Apple is not used to compensating and being on the defensive. It normally leads the market with design. But it has been playing catch-up recently.

The unexpected success of smaller tablets forced it to create the iPad Mini. And the unanticipated development of giant-screened smartphones (Note II, S4) forces Apple to offer a larger iPhone, thereby betraying Steve Jobs' "single hand" operation philosophy. In addition the need to sell more iPhones in developing markets (vs. less expensive Androids) has given rise to rumors of a cheaper, "more plastic" iPhone. 

Samsung clearly emulated, imitated or copied (take your pick) the iPhone's look and feel at the outset. But the Korean company has now gone beyond it in several ways -- including in the hyperbolic claim that the S4 is a "life companion." And, ironically, Apple is now being compelled by the Galaxy line's success and by public demand to make the iPhone much more like Samsung handsets. 

Report: Tablets Mostly Beat Smartphones for Ad (CTR) Performance

Many of the Q4 reports released by the ad networks and major agencies showed the growth of tablet-related ad spending. That's a trend that will further accelerate under Google's new "Enhanced Campaigns" regime in which tablets are grouped with PCs for paid-search advertising purposes. In other words, marketers cannot separate PC and tablet paid-search campaigns. 

Last week Adobe reported that tablets had passed smartphones for share of global traffic.  

13926_di_global_traffic_deviceIn many ways tablets are the new PCs, taking their place for many at home use cases. Tablet owners tend to behave more like PC shoppers, including displaying a greater willingness to covert online. By contrast, smartphone owners typically don't convert on the small screen making ROI harder to track for marketers targeting those devices. 

Because online conversions are more likely and prevalent for tablet users, the "danger" is that marketers will neglect smartphones or that smartphones will be "ghettoized" and considered good for only a limited number of purposes. In fact mobile/smartphone advertising is great for both DR and branding purposes. 

Mobile DSP Adfonic now offers data that show, across most categories, tablet advertising appears to outperform smartphone ads in terms of CTRs (though ultimate influence on conversions isn't measured).

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As the chart above reflects, "tablets achieve especially strong CTRs for advertisers in the Style & Fashion, Lifestyle & Health, Entertainment & Media, and Travel verticals." Smartphones are stronger in other categories such as retail and automotive. People tend to use tablets in the evenings and on the weekends. 

Over time marketers will determine which devices are better suited to which types of advertising. However companies need to have a comprehensive strategy that recognizes the "multi-screen" consumer, who will move from device to device before converting. 

Although Kindle Fire and Nexus 7 are gaining, Apple tablets continue to dominate web traffic. The following chart shows North American traffic over the past three months, comparing the top-three devices on Chitika's ad network.
Changes in tablet traffic Chitika

Tablets Pass Smartphones In Global Website Traffic, Will Marketers Respond?

According to Adobe's marketing group tablet growth is outpacing that of smartphones. This trend also showed up in several Q4 reports from other online marketing firms such as Marin Software. 

Adobe says that on a global basis, mobile devices (smartphones + tablets) generated 15% of all internet traffic. Of that 15%, tablets edged smartphones with 8% of traffic. The company also says that tablet users spend much more time and are much more engaged than smartphone users: "on aver­age inter­net users view 70% more pages per visit when brows­ing with a tablet com­pared to a smartphone." 

13926_di_global_traffic_device

13926_di_visit_depth

Among the countries measured, the UK is seeing the highest share of internet traffic from tablets followed by the US and Canada. 

13926_di_mobile_traffic_country

ComScore previously reported that about 36% of total US internet time is being spent on mobile devices, even though they're generating less than that in terms of overall traffic. Part of the reason for such a discrepancy may be apps, which are often not measured but where "9 out of 10" mobile minutes are spent. 

While 6 and 7-inch tablets exist somewhere between a smartphone and a full-sized tablet (i.e., iPad Classic), tablets are increasingly replacement devices for PCs. PCs still have the largest installed base and a home in the enterprise, among business users and for more selected purposes in the home. But the centrality of the PC as the gateway to the internet is over.

Using Gartner data, USAToday chronicled the decline of PC sales (which aren't coming back): 

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The "problem" with tablets is that many marketers treat them like PCs (including Google AdWords) and don't give them special attention. A study released in Q4 last year found, for example, that only 7% of retailers' websites were tablet friendly.

Yet tablet-app mobile ad creative can be very effective. In general tablet ads (in apps) are much more engaging than smartphone ads right now.

As tablets continue to gain momentum as PC replacements we may see a very odd situation develop. That is: smartphones might be given perfunctory treatment as an ad platform or otherwise neglected in favor of tablets with their larger "canvas." However, as suggested, the bulk of marketers may treat tablets like PCs and not address them with specialized ad units.

Accordingly, as mobile devices take more and more consumer time and engagement "online advertising" could become considerably weaker than it is today. 

Jumptap: Samsung Will Control 60% of US Android Market This Year

New US smartphone figures came out today from comScore for January. According to the comSumer survey Android had 52.3% of the market, while Apple was at 37.8%. Those numbers represent a jump for Apple and a dip for Google since October, the comparison period. 

Apple is the top smartphone OEM in the US followed by Samsung. Their relative shares are 37.8% to 21.4%. However Samsung is the dominant Android handset OEM by far, though LG did experience an uptick because of the extremely popular Nexus 4 (the best Android handset currently on the market). 

comScore mobile subscriber data Jan

Today also mobile ad network Jumptap released its latest MobileSTAT report for February. In that report Jumptap says that from 2011 to 2012 Samsung's share of Android handsets on its network grew from 42% to 56%. Jumptap is predicting that Samsung's share will continue to grow, perhaps beyond 60% of the US Android handset market this year. 

Weaker or fading rivals HTC, LG and Motorola will have a much smaller share: no greater than 11% in any individual case according to the Jumptap prediction. The chart below illustrates the degree of Samsung's dominance in the US smartphone market. The comScore numbers above are not quite as severe.  

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Operating system share will remain relatively stable in 2013 according to Jumptap. Accordingly, Windows Phones and BlackBerry are stuck in the basement with a combined 4% share. Indeed, 2013 will be the year that Nokia needs to make a decision about whether it wants to "diversify" with Android. If these numbers hold it will be all but compelled to do so. 

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Tablets will take mobile browsing share from smartphones according to another Jumptap prediction. The firm believes that tablets will grow to capture 29% of mobile traffic while smartphones will generate 70% of mobile traffic. The tablet impact on PCs is not discussed.  

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According to an earlier report from comScore mobile now represents 36% of internet time vs. 67% on the PC. I believe tablets will continue to take meaningful share from PC usage even has they cannibalize some share from smartphones (chiefly in the home).  

Samsung Introduces 8-inch Phone, HP Debuts $170 Android Tablet

Two more developments from Mobile World Congress yesterday that are noteworthy: HP's new 7-inch Android tablet and Samsung's Galaxy Note 8.0 tablet, which also makes calls. Yes, it's a giant 8-inch phone. 

The new HP Slate-7 Android tablet looks and acts very much like Google's (ASUS-made) Nexus 7. The device itself is unremarkable. What's significant is that HP has created a new low price point for 7-inch Android tablets.

The Kindle Fire and Nexus 7 retail for $199. The new HP tablet will cost $169.

While there have been lower-priced Android tablets in the past they've all come from "no name" device makers and had little success with the North American public. The HP brand and low price of the Slate 7 should make it a big hit and put pressure on both Google and Amazon to further lower prices to match it.

Apple opted-out of price competition for the iPad Mini when it priced the device at $329. That decision, which was heavily criticized, now looks smart as Android OEMs crank out devices whose margins will be essentially non-existent. We'll probably see ZTE and Huawei make even cheaper Android tablets in the near future. 

Samsung also released a new tablet yesterday except, as mentioned, that it's also a phone. The Galaxy Note 8.0 joins a growing range of tablets and giant phones being put out by Samsung under the Galaxy brand. Pricing hasn't been released but it probably will not be much higher than the iPad Mini. If that's correct it could potentially successfully compete with the iPad Mini, with the phone part as the differentiator ("best of both"). 

Many people are mocking the device for being a phone (and thus ridiculous held up to your ear). However there is a segment of the population that wants the combination -- and would probably use a headset to talk on the phone.

Report: Mobile Now More than One Third of Digital Media Time

Metrics firm comScore is out with a couple of "Digital Future in Focus" reports. They collect the company's data from 2012 into a narrative about marketplace trends. In terms of mobile much of what's in there is familiar: smartphone penetration crossing 50%, tablet ownership growth, Android growth, the rise of apps and so on.

One stat, however, that caught my eye is in the graphic to the right: 37% of digital media time is now spent on smartphones and tablets. By contrast 63% is on the PC. This one data point shows how dramatic the shift to mobile/personal devices has been, in a relatively brief time frame. Most marketers have not fully caught up however.

Top 25 sites

Another interesting chart (above), previously released, is comScore's Top 25 digital properties. It shows PC vs. mobile usage (uniques) for the top sites, as well as the incremental lift provided by the mobile audience. The table also reflects substantial overlapping usage. However in selected cases (i.e., Pandora, Weather.com) there's a major boost in audience via mobile. 

In the report comScore also documents the erosion of PC usage in select "mobile centric" categories. In other words, there's a shift to mobile usage for some part of the audience: 

We have begun to see a marked shift in usage patterns on the traditional desktop-based web. While most mobile content usage remains incremental to existing web behavior, certain content categories particularly well-oriented to mobile usage have witnessed material softness in top-line usage from desktop computers. Over the past two years, categories such as Newspapers (down 5 percent), Maps (down 2 percent), Weather (down 12 percent), Directories (down 23 percent), Comparison Shopping (down 4 percent) and Instant Messengers (down 52 percent) have seen declines despite a 5-percent increase in the total U.S. internet population over that time.

Again the categories that have seen some or substantial migration to mobile: 

  • Instant messengers (PC traffic is down 52% YoY)
  • Directories (23%) -- this category isn't fully defined in the document
  • Weather (12%)
  • Newspapers (5%)
  • Maps (2%)
  • Comparison Shopping (4%)

With Its $12 Billion Marketing Budget, Samsung Now 'Owns' Android

I've written here and elsewhere about the fact that Samsung is increasingly the dominant global Android OEM. Samsung has ridden the Android wave to huge profits and near-global domination of the smartphone market. However the company is ambivalent about Android.

As Benedict Evans points out Samsung isn't promoting the Android brand and doesn't really mention Android in its multi-billion dollar "Next Big Thing" marketing campaign. Accordingly Evans contends that Samsung's Galaxy brand has greater recognition than Android itself. This conclusion is based on Google Trends search data, which may or may not be accurate as a reflection of actual brand recognition or demand.

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There's plenty of other evidence in the market to support Evans' argument, however, including the above Android OEM comparison chart from ad network Millennial Media. Another data set from AppBrian also supports the same conclusion: 

With the possible exception of Huawei all the other Android OEMs are in decline (re market share) including and especially HTC, which is shifting its strategy to focus on emerging markets because it can no longer compete effectively in North America and Europe. 

What happens when Samsung so totally dominates the Android landscape that it can start using that leverage against Google or creating its own "forked" version of Android independent of Google (as Amazon has done with Kindle Fire)? That's presumably why Google is working on the "X-phone" through Motorola -- to try and create a viable rival to the Galaxy. But will Google be willing to go toe-to-toe with "partner" Samsung in terms of marketing dollars? 

No is the short answer. Samsung reportedly spends roughly $12 billion annually on marketing its mobile devices. That fact alone makes it hard for any other Android OEM, even Google-Motorola, to compete. Only Apple is really in a position to compete with Samsung. 

Apple the OEM Now Driving Most Mobile Internet Traffic Globally and in US

Amid all the hand wringing over Apple's "impending decline," it's interesting to note new traffic metrics from StatCounter that show Apple driving more mobile Internet traffic than any of its rivals. This is partly a product of the iPhone 5's success during the holiday quarter. 

The StatCounter data reflect mobile OEM market share based on actual Internet traffic. This stands in marked contrast to most smartphone and tablet market share estimates (from IDC, Gartner, comScore and others) that are based on shipments or consumer surveys. There are a few actual traffic measurements out there (e.g., Chitika) but not many.

That's why StatCounter's data (as a reflection of actual user behavior) are so interesting. Shipments is an inherently flawed metric that may or may not correspond to actual sales to end users. 

The "headline" being used along with this new StatCounter OEM data is that Apple has overtaken Nokia as the company driving the most Web traffic on a global basis. Samsung is third. In the US Apple is much farther ahead of rivals, including Samsung. Nokia by comparison drives just over 3% of mobile Web traffic in the US market.

Top 10 Mobile Vendors (Global)

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Top 10 Mobile Vendors (US)

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It's interesting to compare the above numbers to "mobile OS" and mobile browser figures from StatCounter. The vendor and OS numbers are essentially identical in Apple's case, as they should be. The browser numbers are not. They suggest that roughly 10% of iOS users in the US market are using browsers other than Safari. 

Top 10 Mobile Operating Systems (US)

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Top 10 Mobile Browsers (US)

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On a global basis the Android OS has a greater share of traffic in the aggregate than iOS: 37% to Apple's 26%. 

Top 10 Mobile Operating Systems (Global)

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It's not clear to me whether StatCounter captures and includes apps in its traffic estimates -- I believe it's just conventional Web traffic. Regardless, traffic is a much better metric to discuss than handset or device shipments in terms of the influence and importance of the competing mobile platforms.

Nokia Shows Momentum but Needs Android More than Ever

Yesterday Nokia announced "better than expected" Lumia sales. Overall the company said (in these preliminary results) that it sold just over 86 million mobile devices. Among them were 16 million smartphones, including 4.4 million Lumia handsets. The remainder were legacy Symbian devices and new lower-end Asha devices

Asha phones are somewhere between a feature phone and a true smartphone. They're designed to be low cost and intended for emerging markets such as India. They would see little or no success in developed markets like North America or Europe. Indeed, they're not directed toward those markets. 

In Q2 and Q3 2012 Nokia sold a combined total of 6.9 million Lumia handsets. The troubled-company's stock was up yesterday and this morning, having seemingly beaten a very grim Q4 forecast. And some financial analysts are hailing the results as the beginning of Nokia's long-hoped-for turnaround. 

Any celebrations are premature however. According to Kantar Worldpanel Comtech research demand for Windows Phones is uneven and limited. 

In the US Windows Phones continue to lose share and have failed to capture consumer interest. The story is somewhat different in Europe, however, in part because of the legacy of Nokia's strong brand. In the five major EU countries Windows saw aggregate growth of 1.7%. 

The markets where Windows Phone gains have been meaningful are Italy, Spain and the UK, according to the Kantar data. In Italy, for example, Windows Phones gained almost 8 points and now have an 11.7 percent share of the smartphone market.

While there may continue to be modest growth for Nokia with Windows Phones, it's fairly clear that they are unlikey to power a full recovery. What Nokia really needs to ignite growth is to add Android devices to its lineup.

Remarks earlier this week by Nokia CEO Stephen Elop suggested that the company could be open to using Android: 

In the current ecosystem wars we are using Windows Phone as our weapon. But we are always thinking about what's coming next, what will be the role of HTML 5, Android... HTML5 could make the platform itself -- being Android, Windows Phone or any other -- irrelevant in the future, but it's still too soon [to tell]. Today we are committed and satisfied with Microsoft, but anything is possible. 

Contractual agreements with Microsoft probably would make Android "diversification" unlikely in the near term unless Windows Phones sales fell below a certain threshold. Given the modest momentum around Microsoft's OS Nokia will probably stick with Windows. 

Yet if the company were to offer both Android and Windows devices it would see its fortunes improve more rapidly -- much more rapidly.