Yesterday RIM reported Q1 results. Here's the thrust of the news:
Revenue for the first quarter of fiscal 2010 was $3.42 billion, comparable with $3.46 billion in the previous quarter and up 53% from $2.24 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 81% for devices, 13% for service, 2% for software and 4% for other revenue. During the quarter, RIM shipped approximately 7.8 million devices.
Approximately 3.8 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 28.5 million.
Almost 8 million BlackBerry devices and 3.8 million new subscribers. RIM remains firmly at the top of the US smartphone heap, its position well established in the enterprise as it tries to broaden its appeal to consumers with new models. One of the advantages that RIM has -- beyond its installed base -- is the corporate subsidy that many of its users get. It's like the Wall Street Journal to the iPhone's NY Times.
Notwithstanding the fact that the new iPhone is already proving to be a hit, although we'll have to wait for the "box office" numbers on Sunday, RIM is not going to be displaced by the iPhone. The question now for RIM is whether it can continue to broaden its appeal to consumers (partly by improving its mobile Internet experience) and whether the Pre or Windows Mobile phones can make inroads against the BlackBerry in the enterprise market.
In three years' time I wonder what the market will look like. Will we still have five viable smartphone platforms? Will Symbian be totally absent in the US market? Will the market share order be the same? Will Android have broken out in the consumer market given the anticipated flood of new devices?
Regardless, smartphones will occupy a larger chunk of the handset market in three years -- perhaps 20% to 25%. And with smartphones come bigger dataplans and more Internet engagement.
Four US Senators, led by John Kerry, called on the FTC to investigate whether exclusive deals such as the iPhone-AT&T deal were harming competition and stifling consumer choice in the wireless market. From Senator Kerry's letter:
We ask that you examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace. We ask that you consider the following factors in making this determination . . .
Whether exclusivity agreements are manipulating the competitive marketplace between commercial wireless carriers. Specifically, whether the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete . . .
The not-so-subtext here is the AT&T-iPhone relationship, but maybe also the Verizon-Storm and Sprint-Pre deals as well. One wonders whether some of the involved Senators want the iPhone and are not on AT&T.
Do these deals restrict consumer choice? -- absolutely. Do they harm competition? That's not as clear.
We have a very competitive handset and operator market in the US. But what you'd likely get if you had all handsets available to all consumers, as you do in many EU countries, is a race to the bottom in terms of cost/price. Some consumers would stay or go to the "best network," but most consumers would simply go with the cheapest plans.
The carriers know this and increasingly recognize that, as the smartphone segment grows, they're on the cusp of "dumb-pipe" status. Opening up the market further would accelerate this development, notwithstanding the promises of app stores, etc. Exclusive handset deals are one of the few things that differentiate them.
Telecoms are powerful enough to prevent any further opening up of the market. So don't expect any concrete action on Senator Kerry's letter. Or if there is an investigation, the conclusion will likely be that investment would be harmed and thus consumers . . . Plus ça change.
Update: Incoming FCC Chair (approved yesterday) Julius Genachowski made a statement today in which he said he would "act accordingly to promote competition and consumer choice." We'll see . . .
This should come as no surprise, but reportedly the Pre is not luring new subscribers to Sprint. According to Bloomberg on Wednesday:
A survey of retail sites showed that most buyers of the Pre are already Sprint subscribers, helping the carrier retain customers, Chicago-based Jennifer Fritzsche said in a report today. Palm began selling the Pre exclusively through Sprint in the U.S. on June 6.
The research suggests the Pre isn’t drawing customers away from larger rivals AT&T Inc. and Verizon Wireless, Fritzsche said. Sprint has lost more than 4 million contract customers in the past year as those carriers introduced more feature-heavy, Web-equipped phones, like the iPhone and the BlackBerry Storm.
As we previously speculated:
The Pre has prevented me, a Sprint subscriber, from defecting to AT&T to get the iPhone but it's unlikely to lure people from AT&T in anything like the numbers that the iPhone has driven for AT&T.
When the Pre comes to Verizon in 2010 -- if the iPhone hasn't by then -- it should see strong sales. So while the Pre will probably stop some of the subscriber bleeding for Sprint, it's not going to turn in big new subscriber gains. Discounting is proving to be a much more successful strategy for the carrier (i.e., Boost's $50 plan).
I argued before that Microsoft should take a hard look at buying Palm and largely replace Windows Mobile with Palm's WebOS. It could maintain both of course. It's unlikely that Redmond will make a bid for Palm given that that would amount to an admission WinMo is in big trouble. There's also the hope that 7 remedies some of the complaints about the the OS.
As I've argued before however, Apple and Android are on the consumer left, BlackBerry is on the enterprise right with the Pre somewhere in-between. Notwithstanding LG and HTC's commitment to WinMo, enterprises can opt for BlackBerry and consumers will be inclined to choose other handsets, but for aggressive discounting.
As for Sprint, it will be time to take a hard look and further dataplan and voice discounting if it hope to reverse direction and start growing its main business. Let the price war begin anew!
The forthcoming T-Mobile Android G2/Ion/Magic will be apparently be formally called "myTouch 3G" according to the Wall Street Journal. It will go on sale at some point in the next couple of months and be the first of an anticipated deluge of Android-based devices to hit the US market.
The forthcoming myTouch 3G has no physical keyboard unlike the new Samsung Bigfoot (Android), which will also be sold by T-Mobile in the US at some point this summer.
Google itself stole some of T-Mobile's thunder around the G2 by giving it away to hundreds of people at its recent developer conference. As a consequence there have been a number of reviews of the device on popular tech blogs and news sites. I have one and like it very much but find the overall experience to not match the iPhone's, although there are some features that are more desirable.
These many soon-to-arrive Android devices will be appealing to consumers who want an "Internet phone" but who don't want to switch to AT&T to get the iPhone. Android isn't yet in a position to compete with Windows Mobile or BlackBerry for enterprise customers. But Windows Mobile phone consumer sales may be most vulnerable as more Android phones roll out.
Finally, as many more Android device hit the market and extend the reach of Android Market, its appeal to developers will grow accordingly. Apple is clearly (in my mind) making a mistake by staying with AT&T and may find itself with the "cadillac" device but with a de facto cap on its market share because of its carrier exclusivity.
AdMob and comScore just put out results of a study (n=7,300 US mobile users over 13) that contains a lot of interesting demographic and behavioral data about the similarities and differences between iPod Touch and iPhone users. However, by far the most important finding of the study -- consistent with what we've been arguing around here -- is that 40% of those users are going online more often on those mobile devices than through a PC (see graphic below).
While this is self-reported data, it points toward a near-term future when growing numbers people use their smartphones as primary and their PCs as secondary ways to access the Internet. (See also, here and here for more confirmation of this.) This phenomenon is already true in many developing nations, where mobile phones are outstripping PCs for Internet access -- and where search volumes on mobile devices are approaching or exceeding the PC accordingly.
That single 40% data point alone is the answer to the "why" question of mobile marketing -- not the "4 billion phones vs. 1 billion PCs" statement that one often hears in the first couple slides of a presentation. Another striking finding: "5 in 10 consumers on both iPhone and iPod touch devices use the mobile Web more frequently than they read printed newspapers." Indeed, we just posted "Smartphones are the new print."
Below are slides showing the percentage of iPhone/iPod Touch users who use mobile more than the identified medium:
One could argue that the smartphone is the everything media device: a newspaper, magazine, TV, radio, PC rolled into one. But wait, there's more . . .
And now for the demographic information (verbatim from the release):
Boosters and critics of the new Palm Pre want to compare it to the iPhone, which makes sense. But is it more appropriate to compare it to BlackBerry devices? Palm's original Treo traction was among business users, many of whom subsequently adopted BlackBerry.
Forbes discusses the business outlook for the new Palm device (which I'm going to get this weekend or die in the attempt):
Traditional "Palm shops" or companies that have long worked with Palm will have a built-in interest in the Pre, says Alves. That could include corporations that support Palm's Treo line, but want to upgrade to a newer Palm phone. Not all of these companies are likely to migrate, however, as the Pre is a radically different device running on a brand-new operating system, webOS.
WebOS could be its own selling point, says Alves. Some corporations may be intrigued by the operating system's new ideas, he contends. Palm created webOS to toggle between several open applications and streamline multiple calendars and e-mail accounts--features that should appeal to professionals as well as other users.
Of course the distinction between business users and consumers is blurred on its way out, as BlackBerry has broadened its appeal to consumers and the iPhone continues to add features that appeal to business users' IT departments (e.g., exchange support, encryption). The Pre also will have "crossover appeal" in both categories.
Related: According to a report in AllThingsD, a JP Morgan Chase analysis estimates that Palm has so far shipped 100K Pre units.
The conventional belief about mobile phone and Internet users is that they're younger. Perhaps true as a broad generalization, it's not true for BlackBerry and the iPhone where data plans are costly and/or the devices come through the company or are used for work. Older demographics abound.
Indeed at our Internet2Go event earlier this year, the Yahoo!-Cramer-Krasselt keynote discussed how Porsche was able to reach more difficult-to-reach business types (prospects) through mobile, BlackBerry especially.
Here's how the campaign performed online and in mobile (better across all metrics):
Nielsen does some demographic and behavioral analysis of iPhone users in the US and finds:
Furthermore, 53% of the iPhone user base in the US is older than 35:
BlackBerry is going to show very similar demographics in terms of age and income distribution.
Related: Forrester has similar (but somewhat contradictory) data about iPhone users:
The media survive on drama. Accordingly they are playing up competition in the smartphone market: Pre vs. iPhone vs. Android vs. RIM (with little mention of Windows Mobile or Symbian lately). For example, Fortune's Jon Fortt writes:
[T]he [smartphone]landscape has changed dramatically. Suddenly Palm appears to have a potential hit with its new Pre, and Google is showing off slimmer second-generation (G2) Android phones. (I've used both the Pre and the G2, and they're pretty darn nice.) All of this new competition is good for consumers, but probably not for Apple's profit margins.
Also the NY Times writes:
But smartphone shopping has suddenly grown more complicated. BlackBerry’s new app store, App World, is good, and growing. Virgin Mobile and Boost recently debuted smartphones good enough to serve budget-minded technophiles. And Palm’s new Pre is very nearly the iPhone’s equal . . .
For people in the market for a high-end phone and willing to bear the payments, the market really isn't that complicated. It's true that Apple now has rivals that offer devices better than they once were -- and perhaps "good enough" for those who want to remain with Verizon or Sprint. However, the Pre, the G2 and BlackBerry at this point don't rival the iPhone's total user experience. They don't.
The "I want a keyboard" objection that one hears, favoring the Pre or the G1, is based generally on perception and not experience. (The BlackBerry is almost in a category by itself on that front.) As I've said in the past I had that bias until I got used to the virtual keyboard on the iPod Touch. Now I wouldn't return to a physical keyboard and find it awkward. Indeed, while it may facilitate texting, the prospect of using the keyboard to enter search queries or URLs on the Pre is very awkward (as was flipping the phone into landscape mode for the G1 before the cupcake update).
Very heavy text messenging users and those who have become habituated to BlackBerrys through their jobs will probably still prefer a physical keyboard, but that's not the bulk of users out there. The G2/Ion, HTC's successor to the G1, eliminates the physical keyboard entirely. I have one and have been using it daily. It's a very nice phone but it's still no iPhone. For example the virtual keyboard on the iPhone beats the HTC virtual keyboard on a number of fronts.
A valid objection to the iPhone (beyond price and AT&T-related objections) is the fact that more than one app still can't run at one time. You can't listen to Pandora while answering email, for example. We could also critically discuss battery life (now improved) or the poor quality of the iPhone's phone. And one could go down the list of phones comparing them feature by feature. Each one has its selling points but none holistically matches the iPhone user experience. I don't have an iPhone and I won't switch to AT&T, the weak link in the overall iPhone experience. But I've been using the iPod Touch for well over a year as well as other devices side by side.
While the competition is getting better -- good news for users who don't want to move to AT&T -- the marketplace still isn't that competitive or confusing, despite what the press may be reporting.
We've got two contradictory but seemingly parallel trends going on in the US mobile market: consumers upgrading from feature phones to smartphones (an related data plans) and users looking for cheaper plans and options. For discussion of the first trend, see: The Mainstreaming of Smartphones.
On the other side of the spectrum we've had a price war going on in the pre-paid segment that has yet to break through to post paid (I'm keeping my fingers crossed). Boost, Virgin Mobile and MetroPCS have been trying to match each other with aggressive pricing on all-you-can-eat voice and data plans. Most aggressive among them is Boost's "all-in" plan for $50 per month. That plan has been terrifically successful for parent Sprint.
The PR and advertising around these plans, together with "organic" interest because of the recession is driving online research and search behavior. Research firm comScore just put out some interesting data showing consumer visits and search behavior around these pre-paid carriers and their plans are way up:
Also interesting is the fact that more, older consumers are looking at these pre-paid options as a way to save money (probably vs. current carrier plans):
Reportedly, "organic" clicks to carrier sites are way up, while paid search clicks (ads) are down. To me that indicates that consumers have heard about deals (via other media or WOM) and are seeking them out directly via search engines.
Everyone who reads this blog or pays attention to trends in the mobile market knows that smartphone users -- iPhone users in particular -- are much more engaged with the mobile Internet than conventional mobile phone users. Replacement cycles are also getting shorter, causing more people to turn in their "feature phones" for these higher end devices.
While price (handsets, data plans) is often the main driver of these buying decisions (witness the $99 iPhone), culture has a powerful if less tangible influence on consumers. The NY Times covers the latter aspect of the phenomenon:
For a growing swath of the population, the social expectation is that one is nearly always connected and reachable almost instantly via e-mail. The smartphone, analysts say, is the instrument of that connectedness — and thus worth the cost, both as a communications tool and as a status symbol . . .
Smartphone ownership hovers around 13%-14% of the US mobile handset market. Recently, we asked consumers who didn't currently own smartphones whether they intended to upgrade in the near future:
n=603, April, 2009
Our guess is that we'll hit 25% smartphone penetration in the next several years. That still leaves lots of less smart phones where SMS assumes a much greater share of the activity.
Related: The Yankee Group projects that 41% of US consumers will upgrade to a smartphone as their next mobile device. The firm also claims that by 2013 smartphones will represent 38% of the market.
I think this latter number is aggressive, but if pricing (handsets, plans) is right it could be approached. I would say it's probably closer to 30% of all handsets (up from 14% this year) on the aggressive end.
I don't know what time frame is being used regarding the 41% number above (next handset purchase). But if you look at the LMS/Opus chart above, you see that 41% are planning on buying smartphones -- in agreement with the Yankee figure -- with only 20% saying it will happen in the next year.
According to a post on CNET, quoting Tim Donahue, vice president of business marketing for Sprint, the company said the the Pre had broken sales records over the weekend:
"We experienced our best one day of sales and single weekend sales for any phone we've launched in our history," he said. "We sold out of the device over the weekend in most of our store locations. And it happened at a much faster rate than we had planned on."
I had made an online appointment at a relatively large and busy local Sprint store early Saturday (for Monday, first one available) to try and get the phone. I indicated that I wanted a "handset upgrade" and that I was interested in buying the Pre. There was no email indicating whether or not (in fact) I would find the phone at my store.
When I called yesterday before my scheduled appointment I asked: "I want to buy the Pre, do you have any in stock?" The torpid sales rep on the other end said, "no." Period. He didn't say "I'm sorry we don't have any but we'll put you on a list." Nor did he offer to contact me when some come in or direct me to a store that might still have one.
By playing "hide the ball" with Pre supplies Sprint got to claim a sell-out but sold fewer Pre phones than it might have otherwise. Furthermore, Sprint is blowing it by not making it easy for me -- a loyal Sprint customer for years with two unlimited plans ($200+ per month) -- to find one of these phones. They should have made them available to loyal customers to buy online in advance or buy online and pick up in local stores. That would have satisfied customers like me and added incremental sales.
But I guess nobody thought of that.
Wall Street woke up Monday morning to stories and reports of a generally successful Palm Pre launch over the weekend. Then at around 1pm Eastern a Steve Jobs-less Apple took the stage and demo'd a range of new and pretty well-received upgrades: iPhone (3Gs), a $99 version, improved battery life and a range of new features and capabilities, including MMS and video. Some of these were predicted, some were not. Voice control turns out to be more extensive and elegant (from afar) than imagined. And video is a sexy and much in demand feature.
Here's how the two companies' stocks performed today:
What this indicates to me is that the market is a bit confused regarding how to interpret the news: will the Pre impact iPhone sales? Will the iPhone upgrades blunt Pre demand?
I will still be pursuing a Pre (despite my unsuccessful effort so far). But I believe that Palm and Sprint made a big mistake by not making more available during their weekend window. Now the media coverage will largely shift to the new iPhone until the device ships in two weeks.
The range of apps and apps-related features demo'd by Apple today made the Pre look limited and lacking by comparison. However the iPhone did not come through with the ability to run multiple apps at once. That's either a philosophical position or a battery life issue -- or both.
While there will be a bunch of side-by-side iPhone 3Gs vs. Pre comparisons, the next big media opportunity the Pre will get (unless there's a big marketing campaign) will be when it launches on Verizon next year.
Mobile apps pre-date the iPhone but the iPhone made the market. Now there are a growing number of startups that are focused on building mobile apps -- and not the PC Internet. The just-launched Pre is apps poor right now, although (among others) a couple of high profile mobile companies have launched apps for the Pre: Zumobi and uLocate (Where).
What's starting to become clear is that mobile apps are a critical success factor for any platform that wants to remain competitive over time. According to a new study from a firm called GravityTank (reported in the NY Times), mobile users are heavily engaged with mobile apps:
But there's also the PinchMedia data that show rapid abandonment of apps by users after a short usage period.
Android has plenty of apps but I would argue it's a platform focused on mobile Internet browsing. Apps are largely perceived by Google as an interim step. Vic Gundrota, Vice President of Engineering at Google, made the point at the recent Google developer conference that publishers wouldn't want to build apps for multiple platforms and so would focus their efforts on the (mobile) Internet more broadly. That's a simplification of his comment but it reflects that Google is betting on the mobilization of the Internet longer term. However it does have a display ad product for apps as well.
I think what we're seeing is the emergence of a kind of hierarchy in mobile usage: favorite apps trump the browser, bookmarks on the browser trump search as a navigational tool. All this is subject to change and evolution but that's what I observe in my own behavior and in the behavior of others.
Whether apps developers take to the Pre will impact its long term success. Right now, as mentioned, there are reportedly few apps available (and limited developer interest) but if sales continue to grow (especially after the Verizon launch of the Pre next year) apps developers will probably port their apps over to the new WebOS platform.
If there are truly five mobile apps platforms that remain standing after a couple of years -- iPhone, RIM, WinMo, Symbian and WebOS -- then there will be more demand for products such as those offered by Rhomobile, which enables enterprises to build "native apps" for each of the major smartphone platforms through a "write once, publish everywhere" software framework.
Sprint's forced Pre shortages seem to have paid dividends. Various financial analysts estimate the device sold around 100K (or so) units across the US over the weekend and sold out in most places. According to the NY Times:
Jennifer Walsh Keifer, a Sprint spokeswoman, said late Saturday that Sprint had sold out of Pre phones at a number of locations around the country and that the company was doing its best to restock stores.
This is all bogus because Sprint wanted to create shortages to make a sellout more likely. The company accordingly wanted to create the strong perception of demand to avoid negative coverage today had it not sold out. As a Sprint customer I received at least five emails on Saturday from Palm and Sprint alerting me to the fact that the Pre went on sale. But there was no specific information about where I could buy the phone. I want the Pre but I resent the manipulation of supplies for PR/marketing purposes.
However the Pre's moment in the sun may be over as media outlets eagerly await new iPhone related announcements this morning at the Apple WWDC in San Francisco. I won't reproduce all the rumors here, there are many. If you're interested, there are a range of places online to see live blogging of the Phil Schiller keynote, including on the NY Times site.
There are two proclaimed advantages that the Pre has over the iPhone in its current state: a physical keyboard and the ability to run multiple apps at the same time. The first one is actually not an advantage. It's a perceived advantage.
I was initially very critical of the iPhone's on-screen-only keyboard until I got my iPod Touch and gained experience using it. Now I wouldn't want a physical keyboard. The Android G1 was also touted as better in some respects because of the fact of a physical keyboard. Interestingly, the forthcoming G2/ION has only a virtual keyboard. The Pre has no virtual keyboard. And although I don't have one in my hands yet, I can imagine the awkwardness of inputing queries on the Pre.
The "cupcake" update for Android added a virtual keyboard to the G1 to rectify similar awkwardness on that device.
The Apple keynote begins at 10 a.m. Pacific/1 Eastern. If Apple's 3.0 software update doesn't allow multiple apps to run simulatenously (don't recall if it does) then the Pre (and Android) will still have bragging rights. But I suspect there will be enough new stuff to reduce the Pre to another wannabe.
While there are lists circulating that show which Best Buy retail stores will carry the Palm Pre, the Best Buy website shows that it's not yet available and will carry an $800+ price tag without a two-year contract with Sprint. That will effectively kill all non-Sprint related buys. Meanwhile the Google Mobile Blog reflects that Google will have a very prominent place on the Pre:
Palm Pre phone's webOS works great with Google Search, Google Maps, and YouTube, which are built into the device. You can also easily sync your Gmail, Google Calendar, and Google Contacts to Palm Pre.
We're big fans of Palm Pre phone's universal search feature. Just start typing a query from the home screen (no need to launch the browser). If your query doesn’t match any contact info or the name of an application on your phone, you’ll be prompted to search either the web with Google, local places on Google Maps, articles on Wikipedia, or Twitter.
But the Pre apps store apparently is quite limited right now in its offerings. This was a point of negative criticism among otherwise generally positive reviews from several device pundits over the past couple of days. Sprint and Palm are apparently not concerned believing that now that they have built it the developers will come. (If it sells the developers will probably come.) Yet there's still reason to question that assumption. Recall Skyhook's developer survey:
56% of all developers surveyed will port their app to other platforms. Developers are most interested in Android. 58% of non-Android developers plan to port to that platform, while 40% of non-iPhone developers plan to port an app to that platform. 26% will port to RIM, and 20% will port to Windows Mobile.
Developers are least interested in Palm and Symbian, with only 8% and 9% of developers planning to port their applications to those platforms, respectively.
And CNET offers more anecdotal evidence of the same attitude:
"My sense is that this will lead to Apple increasing their lead in the market even more," said Bart Decrem, CEO of Tapulous, a small developer that creates applications exclusively for the iPhone. "It will be a tremendous challenge for Apple's competitors that are trying to build their own application stores to get traction with developers, because we're in no rush to work on other platforms."
Without a healthy selection of apps the Pre probably cannot be competitive with the iPhone long term.
If we had to assign a letter grade to the early reviews of the Pre, it would be a strong "B" or "B+". The early Boy Genius review, the David Pogue (NYT) review and now the Walt Mossberg (WSJ) review published today all offer good and bad. Mossberg and Pogue are mostly positive, saying the Pre is a "credible challenger" to the iPhone and and "elegant contender." In fact, Mossberg blesses the device as the "best competitor" to the iPhone that he's seen so far.
The Palm app store is a weak link that Mossberg focuses on especially as a deficiency vs. the iPhone. But the Pre is unique among iPhone challengers in that it has the same "multitouch" on screen experience, which could violate Apple's IP/patent (but that's a decision for others).
Much is made by keyboard lovers of the Pre's physical QWERTY keyboard. However, what's interesting is that the same was said of the G1 and now the HTC G2/Ion/Magic, which is an advance but still no iPhone, has eliminated the physical keyboard. I too was a virtual keyboard detractor until I lived with the iPhone Touch for awhile. Now I wouldn't go back to a phone with a physical one.
But wait, I will be going back . . . I'm going to try and get a Pre as a Sprint customer. Indeed, the Pre has keep me from jumping ship to AT&T for the iPhone. I hope that Sprint's strategy to create fake scarcity (to build buzz and demand) doesn't prevent me from getting my hands on one in the next couple weeks. My loyalty to Sprint is thin.
USAToday's Ed Baig offers another positive review of the Pre.
The much touted Nokia response to the iPhone, the N97, went on sale (pre-order) today in the US market -- without a carrier and the all important carrier subsidy. The phone, which costs more than $700, has received high marks, lots of horsepower (32GB) and functionality. But without a carrier subsidy it's pretty much DOA as a mainstream device.
I've argued in the past that no subsidized smartphone can consider pricing itself above $200 given:
While all these devices would cost much more if purchased without a contract and carrier subsidy, almost nobody will be doing that. Consequently, you're not going to see people buy the N97 when so many other strong choices exist -- and are much cheaper.
Rather than a super high-end phone as a way back into the US market, a better strategy for Nokia is to sell cheaper smartphones that offer good user experiences for less. It has toyed with this idea. Nokia could potentially own the lower end of the market and better compete that way.
In one sense Apple is in a race against time, as well as competitors such as Android, BlackBerry, Palm and Windows Mobile. If it retains its exclusive deal with AT&T it maxes out its addressable market -- those AT&T subscribers willing to upgrade to the iPhone and those non AT&T subscribers willing to switch for the iPhone. Meanwhile those other competitors continue to improve their products and push more devices into the market. There's a point at which they become good enough or better in specific areas to preempt potential iPhone demand.
Bernstein Research analysts have issued a note that argues that addressable market would expand dramatically (double) if Verizon were to get access to the iPhone or some similar Apple-made handset in the future. This is what I argued some time ago in less precise terms. However Apple has reaffirmed its near-term commitment to AT&T (but there are suggestions of talks between Verizon and Apple).
Since Google's developer conference I've been using the G2/Ion they gave away. It's a significant (hardware and software) improvement over the G1. Here's a preliminary mostly postive review from Wired.
I'm not doing any systematic testing, rather just using it in my daily life. What I've found so far is that the virtual keyboard is considerably harder to use (for me) than the iPhone's. And the screen and Internet experience are not as "crisp" as on the iPhone. Still, in the absence of the iPhone it would be very impressive and probably the best handheld Internet device in the market.
I would put the G2/Ion in the good enough category. And the Storm 2 will probably satisfy some of that iPhone envy (that the Storm did not) among Verizon users. Finally the Pre has already prevented me from switching to AT&T to get the iPhone. We'll see once I get my hands on one whether it keeps me there.
Related: ZDNet compares the Pre to the G1.
Acer, maker of the popular Aspire netbook, has said it will release an Android-powered netbook in the US in Q3. According to Reuters:
Acer was the first PC vendor to officially announce that it was making Android PCs, weeks after it said it planned to launch smartphones -- mobile phones packed with advanced computer-like capabilities -- on the same platform later this year.
There's already a Chinese Android netbook apparently. But this would be the first major OEM to offer one and in a Western market. The fact that Android is open-source means that the computer could be cheaper than comparable Windows XP-based netbook. However, carrier subsidies (AT&T and Verizon) are driving down the cost of netbooks to $99. In the UK mobile operator O2 offered a netbook for free with a service contract.
We'll have to wait and see how it stacks up performance-wise against Windows. If it does it will represent a strong challenge to Microsoft in this emerging and fast-growing segment of the market. As the conventional laptop and PC desktop markets have suffered in the recession so have Microsoft's profits. However the company says that it today owns about 90% of the netbook market, which is actually more than its PC OS share according to Net Applications.
In the context of discussing a range of "major announcements" that we would be hearing about this year involving Android devices, Google CEO Eric Schmidt previously said (during the Google Q1 earnings call):
On the netbook side, there are a number of people who have actually taken Android and ported it over to netbook or netbook-similar devices. So we think that’s another one of the great benefits of the open source model that we’ve used. We’re excited that that investment is occurring. And again, largely outside of Google, which we think is great.
Google is banking on the browser and The Cloud as a replacement for desktop software. At the Google I/O event last week the company talked at length about HTML 5 and the impressive capabilities it brought to the browser.
Research firm ChangeWave has done an analysis that shows the iPhone to be a critical factor in AT&T's success and in its ongoing battle with Verizon. Absent the iPhone AT&T would probably not be holding up quite as well. Below are some charts supporting the thesis. Look at the higher future intent to switch to AT&T in the first chart compared with lower customer satisfaction for AT&T in the second (vs. Verizon):
Part of the explanation may reside in the difference between populations answering the questions (existing customers who have experience with the carrier vs non-customers who do not). But it's got to be about the iPhone.
In contrast to AT&T's satisfaction numbers, among so-called smartphones the iPhone is highest rated according to JD Power & Associates. Here's what ChangeWave has to say:
Note that dating back to the period just before the original Apple (AAPL) iPhone rollout, AT&T has managed to stay in first place in terms of future demand.
A coincidence? Not likely.
But the big question going forward is how long can AT&T keep its exclusivity agreement with Apple and ride the iPhone’s coattails? While the current deal is set to expire next year, AT&T is in talks with Apple to extend it until 2011.
Apple has affirmed its relationship with AT&T publicly. However there are also suggestions promoted by Verizon itself that the iPhone or an Apple handset might make its way to the carrier in the next year or so.
Verizon is fighting back with the BlackBerry Storm (and within six months the Pre).