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.
In 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).
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.
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."
Among the countries measured, the UK is seeing the highest share of internet traffic from tablets followed by the US and Canada.
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):
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.
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).
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.
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.
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.
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).
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.
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.
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:
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.
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.
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)
Top 10 Mobile Vendors (US)
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)
Top 10 Mobile Browsers (US)
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)
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.
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.
Mobile handsets already outnumber PCs across the globe. However, in terms of internet access (including apps) PCs could fall into third place after smartphones and tablets. That would represent a radical change from today, where PCs still represent the most common way that consumers in most developed countries access the internet.
Hardware monitor NPD Group is predicting that this year tablet shipments globablly will exceed notebooks (laptops). Here's the projection:
NPD also takes a stab at forecasting penetration of tablets by screen size. However this is somewhat less important than the fact of tablet adoption.
Rather than the cornucopia of screens displayed in the graphic above, we're likely to see standardization around three primary tablet screen sizes:
The general publisher response to the rise of tablets is probably going to be responsive web design, which has limitations. However tablets will further reinforce app usage among consumers, though surveys and behavioral studies show more mobile web usage on tablets vs. smartphones.
Tablet adoption also ends the reign of Microsoft as the most important company in the PC universe. Windows 8 and Surface adoption to date has been quite tepid. And the inevitable availability of Office for tablets removes yet another incentive to buy a PC.
The "big takeaway" here is the simple fact of more tablets than new PCs. PCs will remain prominent in the workplace and among business users. However for consumers they will see less and less "face time." Tablets and smartphones will become primary internet access points in the home, with PCs being used for more limited and specific things.
One of the challenging things for marketers these days is to figure out how to efficiently reach consumers on the growing array of screens they interact with. The growing complexity of consumer behavior and the interplay among devices is dizzying.
Last year Google did some terrific research about the parallel and sequential usage of smartphones, tablets and conventional PCs along the path to purchase. The company found that 90% of US adults surveyed used multiple screens during the day. It's really challenging to track this behavior in real time let alone create coherent, integrated campaigns to address it.
One of the central behaviors identified in the Google research was the multi-screen path to purchase. Consumers often start on one screen but complete transactions on another. The behavior wasn't random, however. Smartphones were found to be the most commonly used screen but people chose different screens depending on the context and nature of the task at hand.
Harris Interactive has released similar research that reflects different user preferences and behaviors depending on the particular screen and use case. Harris found overlapping usage scenarios but also consumer preferences for one screen vs. another in several instances.
The survey sample consisted of 2,383 adults, about 42% of which owned a smartphone. However that's lower than the US mobile average of 50%+. The data were collected in November 2012.
The question fielded was: "Thinking generally about your media and communication behavior on a smartphone versus on a computer, please indicate which of these actions you regularly perform on each." Multiple responses were permitted.
In some cases smartphones tended to be used more and in others PCs dominated. Unfortunately Harris didn't ask about tablets.
General activities (penetration/usage):
Social media usage (penetration/usage):
The presence of children in the home was correlated with increased smartphone activity across almost all categories of activity.
In looking at these data one can see that certain kinds of activities, better suited to smartphones (texting, map usage, checking in), are more often performed on mobile devices. However activities that require larger screens or where the mobile user experience is sub-optimal, favor the PC (e.g., product research, purchasing).
I had an interesting experience this past week with my 13-year old daughter, which illustrates the challenges but also the opportunity for Windows Phones. One of several smartphones I have is a blue/purple HTC 8X (Windows Phone). The phone offers Beats Audio integration. It's a very attractive handset and looks very much like a Nokia Lumia device, only not as heavy. (Nokia is not too happy about the close similarity.)
My daughter is currently a feature phone user and really wanted an iPhone 5, which my wife and I cruelly denied her. But she spied the 8X on my desk and really liked how it looked. She also had seen (on Hulu) the relentless Microsoft Windows Phone ads -- "as unique as you are" -- and was parroting some of the ad copy/dialogue to me almost verbatim. (The campaign must be working.)
She asked for the phone and I agreed that she could have it. I gave it to her to try at home on WiFi to make sure that she was really interested before I went through the trouble of changing carriers and so on. I suspected the OS might throw her; she's had an iPod Touch for several years and we've also had several Android phones. She's familiar with both operating systems but hasn't ever used Windows.
Another factor: she was intrigued by the Microsoft Surface tablet, which she saw at a friend's house. The colorful and different look of the UI appealed to her. The Windows "metro" design -- I can still use that term even if Microsoft cannot -- on both devices got her attention.
Then she started playing with the phone and found out that some of the key apps that she and her friends routinely use weren't there. She wasn't thrown by the metro UI and "live tiles," as I expected. Rather it was the fact that Instagram, Oovoo, Snapchat and other apps she uses were missing. She was particularly annoyed by the pseudo Instagram apps that appeared (e.g., Instagram blog). After discovering that these beloved apps were missing she rejected the phone.
Had those and a few other critical (in her mind) apps been present, she would have kept and used the phone. I told her that Instagram would eventually come to Windows Phones as would other missing apps. That didn't satisfy her.
Windows Phone now has 150,000 apps; however as indicated by the above it's still missing many key apps. For example, as part of its antitrust argument against Google Redmond says it's being unfairly denied access to YouTube metadata. It's makeshift YouTube app is deficient in fundamental respects:
Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.
If Microsoft can manage to get the key/top apps onto Windows Phone it will be able to attract buyers who like the different look of the UI and/or who may be attracted by the aggressive subsidies offered by carriers. The 8X is available for $49 with a two-year contract at Verizon, for example.
However until these apps (enough apps, key apps) are there would-be users, such as my daughter, won't bite. Microsoft can break the "catch-22" of Windows Phone app development through developer payments and incentives, which it's trying to do. The company needs to identify all the "necessary apps" and make sure those are built for Windows Phones.
Beyond this the current messaging isn't really successful in attracting buyers, notwithstanding my daughter's ability to parrot the commercials. Microsoft needs build messaging around three ideas:
Finally, ideally, there should be something about the hardware and software (beyond the UI) that is different. Microsoft argues there are already such things (e.g. Kids Corner). And the colorful phone cases offer an approach taken by Nokia and HTC. A better camera (i.e., Lumia) is another.
Yet these things aren't quite enough. There needs to be a highly visible feature or dimension of Windows Phones that truly isn't present on iPhone or Android handsets. Right now, nothwithstading the nicely designed metro UI, Windows Phones continue to seem like "wannabe" devices that are still playing catch up to other smartphones.
Earlier this week Appcelerator released its quarterly mobile app developer survey. The survey of more than 2,700 global developers found they were primarily focused on the iOS and Android operating systems, with Windows Phones, RIM and others relatively far behind. This reflects the "duopoloy" of iOS and Android (increasingly "Samdroid') sales in the global smartphone market.
The challenges of creating a strong developer ecosystem for Windows is partly what's holding the mobile OS back. Sales are relatively good in isolated EU markets (e.g, Spain, UK) but lackluster on a global basis and in North America in particular, where Windows continues to lose market share.
According to the survey, about 36% of developers indicated interest in building apps for Windows devices. However Windows Phone's modest market share is creating a kind of Catch-22 for the platform.
Without boosting the perception that Windows has app-parity (at least among the most important ones), there won't be more handset sales. Without more handset sales there won't be more consumer usage and without consumer adoption there are few incentives -- except direct payments from Microsoft -- to develop for the platform. The majority of developers, according to the Appcelerator survey, can only focus on two mobile platforms.
Separately, IHS iSuppli released a full-year, 2012 estimate of global smartphone market share. The calculation is based on the untrustworthy "shipments" metric. However, the company shows Nokia dropping to third position, Apple in second and Samsung-Android now leading iOS "decisively":
Samsung and Apple ended 2011 in a neck-and-neck battle for leadership in the smartphone market, with only 1 percentage point of market share separating them. However, entering the 2012 year, Samsung moved ahead decisively ahead of Apple with a wide range of Android smartphone offerings. Samsung made significant gains in both the high end as well as the low-cost market with its Galaxy line of smartphones. This diversified market approach has allowed Samsung to address a larger target audience for its phones than Apple’s limited premium iPhone line.
The Samsung and Apple duopoly represents the dominant force in the smartphone market, with the two companies accounting for 49 percent of shipments in 2012, up from 39 percent in 2011. While Nokia and Canada’s Research in Motion (RIM) also held double-digit shares of the market in 2011, Samsung and Apple remain the only two players that will each command a double-digit portion of the smartphone space in 2012.
As Google-owned Motorola, LG and HTC struggle for consumer attention and handset sales, Samsung becomes more and more identified with Android in the consumer mind. RIM's forthcoming BlackBerry 10 OS is truly the company's "last hope." Nokia too will likely need to do something fairly radical if it is to remain viable (i.e., adopt Android) in the smartphone market.
You can't turn on the TV, Internet or open a publication without encountering an ad for Windows Phones. And there are conflicting data about whether it's working and the corresponding strength of Windows Phone sales.
Several data sources continue to indicate tepid demand in North America but there is also some evidence that Windows Phone sales may be going reasonably well in certain parts of the world. The blog WMPoweruser identifies growth in the usage of Facebook apps for Windows Phones and extrapolates an increased sales trend on that basis:
Using the number of Monthly Active Facebook users as a guide, we can see around 627,000 MAU of the built-in Facebook app has been added since the 1st October 2012, the start of the quarter.
Last year over the same period less than 150,000 was added by the 15th December, possibly hinting at the source of Steve Ballmer’s statement that “Windows Phones are so far selling at four times the rate of the same time last year” Last year according to Gartner, who claims to measure units actually sold to end users rather than shipments, said 2.759 million Windows Phones were sold in Q4 2011.
The data suggests already 7 million Windows Phones were sold so far this quarter, and we may finally be heading to a + 10 million Windows Phone quarter.
If in fact Windows Phones were to sell 10 million units to end users it would indeed be a breakthrough for the beleaguered platform. However there's other data to suggest that Windows Phones are not doing as well as that. For example, the most recent comScore US mobile market share data show that Windows continues to lose overall share to iOS and Android:
There are also recent sales data from Kantar Worldpanel that show Windows Phones losing share in accordance with the comScore data above:
However in Europe Windows Phones are making some inroads, probably as a result of Nokia's promotional efforts and legacy brand strength. While the EU5 shows a 4.7 percent market share (growth of 1.7% vs. a year ago) individual countries vary widely.
In Italy, Spain and the UK Windows Phones have performed better than in Germany and France. In Italy in particular Windows Phones have gained almost 8 points and now stand at an 11.7 percent share of recent sales according to Kantar. Again, this is probably on the strength of the Nokia brand in Europe.
Elsewhere around the world Windows Phone sales appear to be modest. However in "urban China" Kantar says Windows Phones contstitute 4.2% of all recent smartphone sales.
It is possible that all these sales combined represent several million units around the world. But while there does seem to be momentum in certain countries it doesn't yet appear that this is a 10 million unit "breakthrough quarter" for the operating system.
Former Morgan Stanley financial analyst, now KPCB partner, Mary Meeker did one of her patented blizzard of stats/data dump presentations at Stanford University the other evening. The slides (available here) are essentially an updated version of a presentation given earlier this year.
You know most of the material by now. However, below are the most interesting slides I culled from a much longer set. They go to device adoption and mobile ad revenue projections.
The noteworthy thing about the above chart is that it argues there are 172 million smartphone subscribers in the US. If that's true it would mean a smartphone share of something like 68% or 73% depending on the base used. This is undoubtedly high. But it's not unreasonable to argue that there may be 60% smartphone penetration by the end of Q4 in the US (or early Q1).
From the chart below: there may not in fact be 5 billion individual mobile phone users around the world. There are "only" 7 billion people on the planet. It's probably more accurate to assert there are something like 5 billion subscriptions/SIM cards (there are some dual subscriptions). Still the global smartphone growth opportunity is massive.
The following chart is based on Pew survey data, showing that 29% (as of earlier this year) of US adults owned a tablet or eReader. Tablets are going to be the number one electronics gift item this year. We could be looking at 80 million total tablets in the US in Q1 2013.
What's most interesting about the slide below is that it projects tablet ownership to pass PC ownership by the end of next year; in other words: more tablets than PCs. This may be a aggressive forecast but it's not out of the question.
The final slide is about mobile advertising and app revenue. There are many sources behind this projection. It envisions a $20 billion global market by the end of the year, with mobile advertising around $6 or so billion.
US mobile advertising was worth roughly $1.2 in the first half and is on track to be somewhere between $2.6 and $2.8 billion for the full year 2012. Globally mobile ad revenues will probably reach between $5.5 and $6 billion by the end of Q4 this year.
Numbers are everywhere as we head into the final month of 2012 -- an undisputed "year of mobile" -- and many sources have released loads of market share and device penetration figures over the past week. Some of those numbers are meaningful and some are not.
Among them ad network Millennial Media put out some monthly device figures this morning, based on ad impression share on its network. I'll take a quick look at those numbers and then discuss some of the other recent device data in the market, with an emphasis on tablets.
The iPhone is the single most prevalent device (and has been so for several years) on the Millennial Network. It generated 16% of all the ad impressions in Q3, while iOS devices in total generated 31% of all Millennial's ad impressions. Collectively Samsung devices (phones, tablets) were responsible for 24% of impressions; the second most prevalent device OEM.
RIM devices were responsible for 7% of ad impressions, which is now basically on par ith the company's overall market share in the US. There are no Windows Phones in the top 20 on Millennial's network. Windows Phones (Lumia in particular) has sold reasonably well in select countries in Europe (i.e., Spain, UK, Italy). However they have not sold well in the US.
While Apple is the leading manufacturer and has the leading device on the Millennial network, Android devices dominate collectively -- with 52% of all impressions, compared with 34% for iOS. This share breakdown is almost identical to comScore's September US smartphone market share data.
Finally Millennial ranks the top tablets on its network (see graphic above). The iPad leads, followed by the Samsung GalaxyTab, Kindle Fire and others. Tablets will clearly be one of the most popular holiday gifts and the top electronics item sold in Q4.
It's curious to see the Acer and Motorola tablets on Millennial's list. From a sales and traffic standpoint there are now effectively three tablets in the market: the iPad (and Mini), Google's Nexus tablets (mainly the Nexus 7) and Kindle Fire devices. While the Nook and Galaxy Tab have some market presence they're essentially "also-rans" at this point. The Galaxy Tab has had greater success in Europe.
A new report from ABI Research claims that the iPad's share (of shipments) fell to 55%, down 14 points in Q3. Lower-priced tablets from Google-ASUS and Amazon are driving a lot of sales to be sure. Indeed, Amazon made the claim earlier this week that Kindle device sales more than doubled over last year.
But collectively we need to get rid of "shipments" as a market-share metric. It's widely used because it's easier for analyst firms to track than actual sales. However it's not meaningful in any sense. As an industry we need to shift to actual device sales or even other metrics such as web traffic/transactions. This past weekend's data have shown this.
What do sales matter if devices aren't widely used or are used for very limited purposes. For example Kindle Fire devices, though they're selling well, are essentially used to consume Amazon content. They don't show up very often on internet traffic reports. And while the impact of Nexus devices has yet to be fully felt, the broader notion (promoted by the ABI report) that Android tablets now constitute nearly half the devices in the market is misleading.
As widely discussed earlier this week, the iPad is the only tablet right now that appears to matter in a "real world" sense. According to this weekend's e-commerce data from IBM, the iPad generated 88% of tablet traffic on Black Friday and more than 90% on Cyber Monday.
In Q2 ad network Chitika found that the iPad was responsible for almost 95% of the tablet traffic on its network. Other publishers and e-commerce sellers report similar results: so far the iPad is the only tablet that matters.
E-commerce site Fab.com has said that 95% of its mobile sales come from iOS devices. And tablet content platform Onswipe has said that the iPad is responsible for a remarkable 98% of all tablet-based traffic to the company's publisher partner network. Based on global web traffic data from Q2 this is what actual usage market share looks like:
Despite Android's dominance in terms of device penetration the majority of mobile web traffic in the US (not to mention transactions) is coming from iOS devices. And when it comes to tablet traffic alone, there is no Android surge.
There may be a lot of Android tablets out there but engagement and usage levels are far below the iPad.
As part of General Motors' MyLink in-dash telematics system (GM's answer to Ford's Sync), the Chevrolet division is incorporating Siri access into two 2014 models: Spark and Sonic vehicles.
Users with iPhones will be able to use Siri to execute a number of commands:
Siri's full capabilities won't be incorporated at this point however. Anything that requires a visual display of data won't be available so as not to create safety hazards while driving. Siri and the iPhone connect to the MyLink system via Bluetooth.
MyLink is designed to be broadly integrated with iPhone and Android devices. The console operates very much like a small tablet device embedded in the dash.
The MyLink "infotainment" console is already modeled on the smartphone apps metaphor. MyLink also has a built in virtual assistant, which will operate in those models that don't enable Siri access. It will also remain available to drivers in the Siri-enabled Spark and Sonic vehicles as well for a broader array of functions than what Siri will permit.
What's perhaps more interesting than the integration of Siri is the adoption of the concept of the virtual assistant more broadly. My colleague Dan Miller is about to publish a report on "PVAs" (personal virtual assistants) and their impact on a range of use cases including enterprise customer care. Built on decades of speech processing research and technology development, as well as advances in "AI," virtual assistants are changing the way we "search" and interact with devices and technology.
The following video demonstrates MyLink's features.
One of the most eagerly sought electronics products this year is the tablet. We should see millions of them bought over the holidays. Indeed, tablets will be an enormously popular gift item. But which one(s) will be successful and which ones will fade?
Today, for "Cyber Monday," Amazon is promoting the upgraded Kindle Fire (with special offers) for $129 vs. its normal $159 (reduced from last year's $199). This should generate quite a few sales.
However the Kindle Fire is not as popular on Google as the company's own Nexus 7 or the iPad Mini. According to data released by Google earlier today the following are the Top 10 Google Search Shopping Queries (today):
Meanwhile PriceGrabber shows a somewhat different list of "most searched" electronics products:
Both of the above lists indicate the Nexus 7 is the most "searched for" tablet out there -- even the most popular product. However, over at Amazon Kindle Fire and other Kindle devices dominate the electronics bestseller list.
Finally, a recent consumer survey Opus conducted (n=1,048 US adults) asked "Are you planning to buy a tablet computer this holiday season?" Here were the results:
In our survey Nexus 7 was the least desired of the tablets and iPads were the most popular. All this data seems to suggest that iPad, Nexus 7 and Kindle Fire will do well, while Surface, Nook and other "no name" tablets will generally be ignored and suffer.
Apple's products constitute four out of the top five most-requested gifts by US kids (under 13) according to a recent poll by Nielsen. Among those over 13 the iPad still ranks as the most desired object for the holidays.
In the 6-12 age group, "tablet other than the iPad" shows up in 8th position but Microsoft Surface specifically appears second from last on the list, just ahead of Apple TV. In the over-13 age group, non-Apple tablet is 3rd though Microsoft Surface and Kindle Fire are lower on the list. Microsoft Surface is again second from the bottom on the over-13 list with a lower percentage of respondents interested than in the under-13 cohort.
The sample size wasn't disclosed and the question asked isn't technically about the holidays but about purchase interest or intent "in the next six months." However these requests will probably register in December. If parents comply it should be a very good quarter for Apple. Below are the full lists.
Kids under 13:
Kids 13 and over:
Opus is in the midst of a consumer survey asking about which tablet they intend to buy over the holidays. In our survey (still in process) 85% of respondents said they weren't planning to buy one now. However the age group most interested is 25-34; 21% say they plan to buy a tablet in the immediate future.
Overall, among those who've said they're planning to buy a tablet during the holidays, the ranking is as follows:
According to Nielsen, Caucasian/White Americans lag behind other groups when it comes to smartphone adoption. The data below are part of Nielsen's recent cross-media study (Q2 2012).
Based on data from many thousands of users, Nielsen reported that 70% of Asian American adults now own smartphones, while 62% of African Americans and 60% of Hispanics also do. By comparison "only" half of Whites own smartphones.
The year will probably end at or very close to 60% smartphone penetration in the US. That would mean something like 150 million smartphone users, most of whom would also be mobile internet users.
This morning Apple announced that it sold "3 million iPads in 3 days." However it didn't specifically break out the number of iPad Minis it sold, as opposed to iPad 4s. My guess would be that more than 50% of those three million tablets were iPad Minis.
Also today device tracker IDC released new Q3 figures for tablets. The company measures "shipments," not sales to end users, so its numbers may not be an accurate reflection of actual market share. However the IDC data show Android tablets finally gaining against the iPad.
Most of this Android tablet growth has come in the 7-inch category, where the Kindle Fire (a quasi-Android device) and the ASUS-made Nexus 7 have done very well. In other parts of the world, though not in the US, Samsung has done relatively well with its Galaxy Tab devices.
According to ASUS its Nexus 7 is selling nearly a million units a month. The success of Kindle Fire and the Nexus 7 has everything to do with their $199 entry level price. While the first Kindle Fire is a mediocre device at best the Nexus 7 is a terrific smaller tablet for the price. The iPad Mini is indisputably the best 7-inch tablet on the market now, but its $329 price makes the Nexus 7 a very attractive "second best" choice for many people.
This holiday season, tablets will be the consumer electronic gift of choice, much more than smartphones and PCs.
Microsoft's new Surface RT will be going up against Android-powered tablets and the iPad. The recently released Samsung-made Android Nexus 10 has, according to Google, the highest resolution screen on the market. However it's surprisingly a big disappointment in several ways (I have one). Indeed, it's unlikely Apple will face much competition in the 10-inch tablet category, even from Surface.
However the 7-inch tablet category is a different story. It will be intensely competitive with price vs. quality being the main calculation in most buyers' minds. Amazon/Kindle Fire will vie with Nexus 7 for those users who are more budget conscious. The iPad Mini will be the clear choice for those who are not concerned about spending more. For those in the middle, however, the Nexus 7 does the best job of reconciling price and quality.
In many respects, because of its portability, the 7-inch tablet is more desirable than the 10-inch version. It may in fact become the most common type of tablet in the market from a unit-sales perspective. Regardless, the "establishment" of the 7-inch tablet as a new category of device (4 inch smartphone, 7 inch tablet, 10 inch tablet) creates new opportunities and challenges for marketers.
Only Apple has a meaningful number of tablet apps -- though that will likely change over time. Accordingly most mobile websites and apps treat the 7-inch device as though it were a big smartphone, which leads to awkwardness in several respects, especially when it comes to ads.
And just when you thought people couldn't own more mobile devices . . . We're moving into a period when affluent consumers have a smartphone, a small tablet, a larger tablet and a PC in their homes. That makes everything more complicated for publishers and marketers, though not the consumer. It also means the PC will continue to be the loser of this diversifying consumer-device marketplace.