Although the Pew Internet Project was the first to report that at least 50% of US mobile phone owners had smartphones, Nielsen waited until today to make the same statement: "Almost half (49.7%) of U.S. mobile subscribers now own smartphones, as of February 2012." This compares with 36% a year ago.
However if smartphone ownership is segmented by age and income, the numbers are much higher than 50% for some categories.
Nielsen says that Android's share of smartphones in February was 48% while Apple's was 32%. However among 90-day recent buyers, the numbers are much closer (48% vs. 43%), reflecting the popularity of the iPhone 4S and its availability from mulitple carriers.
All others, including RIM and Microsoft are under 20% collectively. However the trend is away from these platforms among recent buyers. Microsoft is hoping to reverse that with the expensive and high-profile launch of the Lumia 800 at AT&T next month.
No more "early days" excuses will be possible if the Nokia (Windows Phone) Lumia 900 fails to deliver. The flagship Windows Phone will go on sale on April 8 from AT&T in the US for an aggressively discounted $99 (with a two-year contract). It will be the least expensive high-end smartphone on the market.
The price will help but it could still flop.
AT&T promises to support the launch with considerable marketing muscle. It's far from clear, however, that consumers will bite. Some no doubt will buy because of the $99 price. Aggressive pricing is key to Nokia's US market strategy.
The Lumia 710 has apparently done relatively well at T-Mobile (at either $49 or free). However, developer interest in Windows Phones remains muted. And without sufficient apps, Windows Phones simply won't be competitive.
Earlier this year I had predicted that Nokia-Windows Phone handsets would see modest but not spectacular uptake in the US market. If this launch is fumbled and fails to generate real momentum for Windows Phones it could be a serious blow to the outlook for the platform -- at least in the US market.
As a promotion Microsoft has mounted a Pepsi-Challenge like contest, inviting iPhone and Android users to take the $1,000 Windows Phone challenge and supposedly discover that Windows Phones are faster. But the PR value of the effort has already been compromised by a blogger named Sahas Katta.
Katta used his Galaxy Nexus and beat the challenge in a Microsoft store but was denied the $1,000 prize by store officials. He blogged about it and that post has now seen widespread attention.
Roughly one in four teens (23%) has a smartphone according to a new report from the Pew Internet Project. An equivalent number of teens have no phone at all. Therefore the actual number of smartphone teens is higher if considered only in the context of all mobile users. Rougly 54% of Pew survey respondents report having a conventional mobile phone or not knowing the type of their phone.
The survey was conducted in mid-2011, so some numbers might be different today.
Interestingly, unlike adults, "There are no differences in ownership of smartphones versus regular cell phones by race, ethnicity, or income." Older teens are more likely to have phones and smartphones in particular, with 31% of those aged 14-17 saying they owned smartphones.
The volume of texting for teens has gone up, but voice calling has declined. "[V]oice calling with friends on cell phones has declined in the past two years, from 38% of teens calling friends daily on cells in 2009 to 26% two years later," the report explained. This is apparently true for landline communication as well. One question to consider is: will this no-calling behavior carry over into the lives of these teens as they become adults?
Here are some additional findings from the survey:
Another interesting finding: "29% of all teens exchange messages daily through social network sites," which is more than the 19% who talk on landlines daily.
The chart above indicates the methods that teens use to get online. Roughly half (49%) had used a "cell phone" to access the Internet within the past month, while 16% had used a tablet.
On a conference call this morning discussing Apple's decision to issue a dividend and buy back $10 billion worth of shares, CEO Tim Cook said the following about iPad sales so far: “We had a record weekend and we’re thrilled with it.” He declined to discuss it further.
Some analysts and pundits over the weekend were arguing that sales were less than anticipated. However, according to AT&T (via CNN) the company said it saw record activations of the 4G iPad on its network:
On Friday, March 16, AT&T set a new single-day record for its iPad sales and activations, demonstrating robust demand for the new iPad on the nation's largest 4G network, covering nearly 250 million people.
We won't know what pre-order and initial weekend sales were unless or until Apple puts out a press release. Given AT&T and Tim Cook's remarks, however, I suspect the company will do so.
Update: And they did a little while ago. Apple said it had sold more than 3 million "new iPads" as of today: "Apple today announced it has sold three million of its incredible new iPad, since its launch on Friday, March 16."
According to a sweeping report from the Pew Reseach Center ("State of the News Media 2012"), 27% of the US adult population now gets its news on smartphones and tablets. The report says that "70% of desktop/laptop owners report getting news on their computers. Half of smartphone owners (51%) use their phones for news. A majority of tablet owners (56%) use the devices for news."
Mobile news consumers, especially users of news apps, are more engaged than their PC counterparts: "People spend more time per session with news on mobile devices than they do on computers, and read more articles per session and more articles per month."
The data were collected through various surveys earlier this year. They show that people are accessing news on multiple devices, more frequently. Mobile news consumption appears to generally be "additive" to consumption on the PC, although there's evidence that smartphone and tablet owners are shifting some of news reading to those devices.
Pew also says that "mobile news consumers are even more likely to turn to news organizations directly, through apps and home pages, rather than search or recommendations — strengthening the bond with traditional brands."
Although people are getting news on multiple devices, 82% of survey respondents get their digital news primarily on a computer. Pew adds, however, "But much of that may mainly come from the computer being their only digital option . . . 43% of all desktop/laptop owners [do not] own another device."
Pew observed that for people with multiple devices some amount of their news consumption is shifting, "[A]s we have seen with other technology shifts, consumers are drawn to newer forms and may even make them their primary mode, but they are not abandoning older forms altogether. Instead their news experience widens and deepens."
Smartphone owners who read news on their handsets are evenly split, "46% still get most of their news on the desktop/laptop; 45% get most on their smartphone." For iPad and Kindle Fire owners, "47% still get most of their digital news via desktops or laptops, while a third, 34%, have already transitioned to consuming most of their news on the tablet."
On the PC Web most news publishers were largely "disintermediated" by search (Google). Their brands were diluted and weakened as they were presented among hundreds of news sources for a given story. They were often out-maneuvered by aggregators and others more skilled at SEO. Mobile news apps and the move away from search as universal content gateway (in mobile) gives publishers an opportunity to reestablish a more direct relationship with the consumer -- and with that capture more digital revenue.
JD Power and Associates yesterday put out its 2012 handset customer satisfaction survey findings, covering both smartphones and non-smartphones. The iPhone won the smartphone category (for the "seventh consecutive time"); LG and Sanyo were at the top of the non-smartphone handset category.
HTC was second in the smartphone category. Android market leader Samsung was third but "below industry average."
JD Power used a range of criteria to measure satisfaction, which were slightly different in each category. For smartphones the weighted criteria were: performance (35%); ease of operation (24%); features (21%); and physical design (20%).
The iPhone rankings are not a surprise. The much more interesting aspect of these survey results is the low score of Nokia. On both lists it was second from the bottom.
If this survey were conducted in Europe or developing markets Nokia might get higher marks. But the low scores in the US survey reflect the poor performance of its existing products and the weakness of its brand. That brand weakness is further diminished by the scores themselves.
It will be very challenging, even with its new Lumia Windows Phones, for Nokia to "climb out of the basement." Indeed, the existing weakness of Nokia in the US/North American market creates a "deficit" for Lumia devices as both Nokia and Microsoft seek to market them to North American consumers.
Related: iPhone Grabs Camera Market From Sony
Today the iPad pre-orders arrive and the iPad becomes available in stores. Yesterday reviews of "The New iPad" come out and overall they're very positive. Based on the success of iPad pre-orders, financial analysts have boosted their estimates of iPad sales for 2012. Some are now saying that Apple may sell a combined total of 65 million iPads or more this year.
One question is whether this lead will be so overwhelming that rivals will be shut out. So far the only successful Android tablet is the Kindle Fire and that success is largely based on its price. It's an inferior product, whose sales could be affected by the reduced price iPad2 ($399).
Yet IDC has projected that the iPad will be overtaken by Android tablets in 2016. IDC estimated that Amazon sold 4.7 million tablets in Q4 of last year.
The chart above reflects "shipments" and not actual sales. The logic behind this forecast showing Android overtaking the iPad is based on a simplistic analogy to the iPhone, and Android's growth over a period of years to a dominant market-share position. However, as several others have pointed out, the better analogy might be the iPod, which established a dominant market share and was never challenged.
In the US, Apple maintained an exclusive iPhone relationship with AT&T for three years after launch. That allowed Android to develop huge momentum. People were more inclined to buy an altenative smartphone than change carriers. The iPad has no such carrier constraints.
There have so far been well over 100 Android tablets and all but the Kindle and Nook have fallen flat. It's unlikely there are any new tablets on the horizon that will have great success -- Google's rumored 7" inexpensive tablet could be an exception. As I've written before, Android tablet OEMs are "boxed in" on pricing by Kindle on the one end and the iPad on the other. The lower-priced iPad2 makes their lives even harder.
The next test for the iPad will be the arrival of Windows 8 tablets, the first of which will probably show up for holiday shopping at the end of the year. But for at least three quarters the iPad will have little or no competition. That could enable Apple to sell 45 or 50 million more tablets.
Several years ago I met with someone working for PayPal and we talked about how the company could more deeply penetrate the small-business market. We talked about various ideas but everything seemed "hard." Cut to the arrival of Square; the solution is now obvious.
Square has blazed a trial that has been followed and copied by Intuit and now PayPal, with PayPal Here, a similar but triangular dongle that also fits into smartphones and iPads. In Q4 last year Square announced that it was processing $11 million in payments per day.
How will PayPal's service differentiate from Square? PayPal Mobile VP David Marcus (who came via the Zong acquisition) explained in a blog post:
So, you’re asking, how is this different from other small business mobile payment solutions? The key differentiator is that it comes from PayPal, a trusted brand in the online payments industry with more than 100 million customers around the globe and years of proven payment innovation, driving growth for millions of businesses globally. PayPal Here comes with our world-class fraud management capabilities, and our 24×7 live customer support. In addition to accepting more payment methods, PayPal Here offers a simple flat rate of 2.7% for card swipes and PayPal payments. Merchants are also given a business debit card for quick access to their funds and 1% cash back on eligible purchases – which means if you use the debit card, your fees are actually just 1.7%!
In other words:
Square's transaction fees currently stand at 2.75%. However I suspect Square will respond to PayPal's reduced rates.
Beyond the (somewhat smaller) transaction fees, if PayPal Here can deliver on its promises of security and customer support it could impact Square's growth opportunity. Yet Intuit has had a competitive solution for some time, and that hasn't really affected Square. More likely, PayPal's entry into the market will grow the overall payment-dongle market and affect banks and existing vendors that make money from merchant accounts and credit card processing.
Separately, payments startup BOKU received another substantial infusion of capital to focus more on the offline market. Companies like Zong and BOKU initially focused on virtual goods and online transactions. However the real action is offline -- a market that is many times larger than e-commerce and virtual goods.
The $35 million received by BOKU brings to roughly $75 million (per TechCrunch) the total funds raised to date. Spanish telco giant Telefonica is one of the investors in this latest round.
In the SMB segment, the growing number of payments options and startups will likely create confusion. PayPal and Square (and maybe Intuit) are the companies that will be able to rise above that noise given their brands. While Square doesn't have the same brand equity as Intuit and probably PayPal, it does have more momentum than either in the SMB mobile payments segment.
See related posts:
Today the Pew Internet Project put out some research arguing pretty unequivocally that consumers don't want to be tracked or targeted even if it might mean that the ads and content they see are more "relevant" or aligned with their interests. A survey released at the end of last month by Upstream and YouGov (US and UK respondents) also contains a warning of sorts to publishers and developers about advertising overload.
In this survey consumers expressed frustration over the volume ads and promotions they were receiving. Two-thirds said they received too many ads, while slightly less than a quarter of respondents said they saw the "right amount" of advertising.
Consumers found ads on their phones to be the "most unacceptable" vs. other media channels or devices. This is consistent with lots of survey data that show consumers are ambivalent or hostile to mobile advertising. However mobile ads typically outperform PC advertising, which is a paradox: people don't want it yet they respond to it.
Q: Which ONE of the following electronic devices would you find it MOST unacceptable to receive unwanted advertising on?
Interestingly these survey respondents were much less hostile to ads on their tablets. In fact, they more were accepting of ads on their tablets than they were ads on their PCs. However when a version of the question was asked in a more positive way, PC or laptop where the top choices.
Q: How you would prefer to receive an offer or promotion through an electronic device that you use / own?
In terms of positive features that consumers said would make them respond to advertising, the top answers were:
Q: Which, if any, of the following would make you MORE likely to respond positively to marketing messages?
In terms of ad units or types, email was the most favorably received among several categories that included SMS, paid search, display, QR codes and augmented reality. By implication email advertising was the least intrusive of the types presented to these respondents.
Q: Which, if any, of the following types of message would you be likely to respond positively to if you received these adverts or promotions?
In the Pew survey consumers were willing to sacrifice ad and content relevance to avoid tracking and targeting. Put another way, they declined the idea of improved relevance through tracking and personalization. In the YouGov survey respondents said they would be most inclined to respond to ads "clearly tailored to their personal interests" and that were specific to their locations.
The two surveys taken together reflect that consumers want advertising and content that is relevant but doesn't rely on data mining. In mobile -- where consumers were least interested in ads -- there's a higher burden of relevance than on the PC. But that can be achieved in ways that don't require behavioral targeting or data mining but rely on location and context.
Marketers and publishers must be careful to respect user desires for privacy as they try and fulfill the demand for relevant and "tailored" information. This is a bit of a tightrope to walk. However the industry must walk it.
In two years, the iPad has gone from being a "frivilous" and "unnecessary" device to outselling PCs. Yesterday Apple unveiled the "3rd generation iPad" or "the new iPad," if you prefer. It boasted a range of upgrades, including the "retina display," 4G models, improved cameras, improved software and a new quad-core processor, among others.
Last week ad network InMobi surveyed North American users and found that 30% of respondents were interested in buying the new iPad (many would also buy an iPad2 at a reduced price). The following was a list of most desired features according to the survey:
Interestingly Apple delivered on almost all of these except "size & weight" (smaller, lighter iPad). On battery life the iPad already does incredibly well, better than any laptop or other tablet (except the original Kindle). So that was probably something of an unreasonable expectation. The fact that it was able to deliver 4G with a nine hour batter life is pretty remarkable actually.
Users also got the ability to buy the iPad2 at an entry level price of $399. Apple is going to sell a lot of those also. The price is close enough to Amazon's Kindle Fire that it could affect sales of that device.
It's not clear how many people pre-ordered a new iPad, although the initial batch of white 4G models may have sold out based on the absence of a March 16 delivery date on the Apple site.
During the press conference yesterday, Apple CEO Tim Cook showed what was perhaps the most significant slide of the event:
Amazingly the iPad outsold PC vendors in Q4 2011 -- not collectively but each individual vendor. And because consumer PC sales are flat this will likely continue to happen in the future. Tablets are an emerging "necessity," not just for gadget savvy consumers but for PC makers who could see their fortunes decline dramatically if the trend holds.
Thus all of the OEMs on this slide shown yesterday are compelled to enter the tablet market. They literally can't afford to ignore it now. They can choose from the Android OS or the forthcoming Windows 8. Dell is banking on Windows 8 to boost its fortunes.
Windows 8, which is supposed to be a cross-platform OS and which has received some favorable early reviews, remains a wild card. There's not going to be a Windows 8 tablet until Q4, if then. In the meantime Apple may have sold 20 - 30 million more iPads, including in the enterprise. (If Microsoft builds an iPad version of Office, that will partly undermine the case for Windows 8 tablets.)
Among the OEMs that have chosen Android, they confront the problem of competing without many specialized tablet apps and against the price pressure created by Amazon's Kindle Fire ($199) and the WiFi iPad ($499). In other words, if they try to price their tablets to create PC-like margins, they won't sell. If they price tablets aggressively (as they must) they may sell units but they won't make any money.
Next Wednesday Apple will reveal the iPad3 (and potentially a new Apple TV), with an improved display and Siri among other features. Mobile ad network InMobi released consumer survey data last week finding that 29% of respondents were intent on buying the new iPad, with half of those reporting they don't currently own a tablet. Many people (44% of those intending to buy one) also said they wouldn't consider another brand.
Whether or not these survey findings turn out to be accurate they reflect the momentum and mindshare of the Apple tablet, which has sold nearly 60 million units on a global basis. However, when the first iPad was introduced in Q1 2010 it was met with considerable skepticism and predictions of failure. It was seen as an "unnecessary" product, delivering a "watered-down" Internet experience; it was also "too expensive" and "wouldn't fit in your pocket."
A year later Dell also predicted that the iPad wouldn't succeed in the enterprise. However in Q3 2011 Apple reported that 93% of the Fortune 500 were testing or deploying the iPad. By comparison Dell recently announced that it's exiting the consumer PC business. This juxtaposition is essentially a metaphor for state the PC industry as a whole.
Increasingly, instead of buying a second computer or laptop, US (and non-US) households will choose tablets. While there's still growth in the enterprise PC market the consumer PC market is flat-to-declining. Many analysts expect Apple to sell 50-60 million iPads this year. When iPads are considered "PCs" (which they are not), Apple becomes the largest "PC" vendor surpassing HP.
Mobile display advertising outperforms PC display according to considerable research from InsightExpress and Dynamic Logic. Beyond this, ads on the iPad and other tablets further outperform conventional mobile dislay advertising. Engagement with tablets is higher than PCs and consumers have shown a willingness to buy things through tablets in far greater numbers than they have on smartphones. There's also mounting evidence that people are spending more time with mobile devices and tablets than on the PC Internet and even with TV (in some geographies), according to recent data from Flurry and InMobi.
The totality of all this data leads to the inevitable conclusion that PCs will be outnumbered by smartphones and tablets within a year or two. PCs and the PC-Internet experience will merely be one form of Internet access and not the primary way people access the Internet (except at work). We truly are in a "post-PC" era. (That was a Steve Jobs marketing slogan that is becoming factually true.) Microsoft hopes to change the trend with the introduction of Windows 8 of course. But Windows 8 will also work on tablets. Moreover its consumer success, however, is far from certain.
Publishers and advertisers that fail to recognize these trends and act on them in the near term will be at a significant disadvantage. (Flash should be abandoned right now, for example.) Indeed, publishers and advertisers should shift the bulk of their attention and development resources away from the "PC Internet" and toward smartphones and tablet-optimized sites. Mobile and tablet site design should guide PC website design (as recently happened with the redesign of Kayak.) This is especially true for certain categories such as retail and travel.
The notion that mobile is just an extension of the PC-centric Web, which still prevails in many companies, is completely misguided.
According to new data out this morning from Pew, the US mobile market has reached an important milestone: 50% smartphone owners. In fact Pew's survey data, which the polling firm says is representative of the US population, indicates 53% smartphone ownership.
By comparison, Nielsen says the number is 48% and comScore says it's 42%. Among select segments, however both Pew and Nielsen say smartphone penetration is considerably higher than 50%. According to Pew, for college graduates, 18-35 year olds and $75,000+ earners, smartphone ownership has crossed 60%. Nielsen says for some of those groups it's even higher (75%).
The graphic below is Nielsen's US smartphone ownership chart by age and income segment. For example, if those over age 55 are excluded from the sample, US smartphone penetration rises to roughly 75%. For people between the ages of 25 and 44 and making $100,000 or more per year, Nielsen says 77.5% own smartphones.
The Pew findings are qualified and explained, given potential consumer confusion over what qualifies as a smartphone:
--45% of cell owners say that their phone is a smartphone, up from 33% in May 2011
--49% of cell owners say that their phone operates on a smartphone platform common to the US market, up from 39% in May 2011
Taken together, just over half of cell owners (53%) said yes to one or both of these questions and are classified as smartphone owners.
Tracking smartphone adoption and penetration was/is really a surrogate for other things: mobile Internet access -- people with smartphones behave differently than feature phone owners -- and the mobile ad opportunity. We should now collectively shift our focus to mobile operating system share (which people are obviously tracking) and mobile Internet adoption and frequency.
We've known for several years how important and influential smartphones are in finding local business information, especially "on the go." However the latest Local Search User Study from Localeze, 15 Miles and comScore documents, among other things, the increasing role of tablets in the process of finding offline information.
Consistent with other consumer data in the market, the survey of 4,000 US adults found that the top reason for conducting a local business lookup on a mobile device/smartphone is the immediate need for information. Interestingly, the survey discovered that nearly half (49%) of smartphone and tablet owners were using apps for local business searches (e.g., Yelp, Urbanspoon, YP.com) vs browser-based search (e.g., Google).
The Local Search Study also found that while tablets were used "throughout the [local search] process," usage was concentrated in the early and middle stages (research + consideration) of the purchase process. This might be expected because of the analogy to PC usage. However comScore found that among the three groups (PC, smartphone, tablet users) tablet owners are the most engaged and active: "most tablet users conduct local business searches at least once a week . . . more frequently than PC/Laptop users and mobile phone users."
Another interesting finding: tablet owners had increased their usage of the devices over the past year. That wasn't equally true of smartphone owners. Part of the higher levels of tablet engagement can be attributed to the fact that tablets are more "immediate" than PCs but offer a larger display for "more complete information" -- as the graphic above reflects.
Consistent with this heightened engagement the study found that tablet owners were more likely to make purchases after local search activity (which in this case largely mean offline transactions) and spend more money on average.
ISIS, the as-yet-unlaunched US mobile payments inititative from T-Mobile, AT&T and Verizon has added new partners to its stable of credit card issuers and banks (BarclayCard, Capital One, and Chase), according to CNET. ISIS has been described as "Hulu for mobile payments."
I have been openly skeptical of the carriers' ability to mount a successful mobile payments intiatitive. But ISIS may turn out to be the tortise to Google Wallet's hare. The latter has been met with carrier resistence (which may be anticompetitive), security problems and limited consumer availability.
Google has been ahead of the market somewhat. But there are now also rumors that Google is internally disappointed with its Wallet initaitive and may be putting less effort into it. If so, it would be premature to "give up" on Google Wallet.
In two related mobile payents developments, PayPal (through its Zong acquisition) is launching what it calls PayPal Carrier Payment Network; and InMobi and Opera have joined for digital goods payments. The PayPal effort is designed to build on top of the Zong-carrier infrastructure (eBay acquired Zong last year) and expand carrier billing to encompass more types of transactions and larger dollar amounts:
Historically, carrier payment has been utilized primarily by online game developers and publishers to provide a fast and easy way for users to purchase goods directly in-app or in-game. While convenient for consumers, this method of payment has inherent challenges for other digital goods merchants – such as digital books, music, dating and content – to adopt as a primary payment method. Among the challenges is the cost of doing business – sometimes upwards of 40 percent – since transactions are processed through the carrier, merchants must share part of their revenue.
Similary InMobi and Opera announced that the latter will integrate InMobi's payments platform to enable virtual goods payments and purchases through Opera:
InMobi SmartPay will enable Opera users to pay seamlessly for digital goods in key markets around the globe, when they make purchases with some of the leading publishers that partner with InMobi. The two companies are committed to providing choice to consumers, mobile content developers and app developers, by building viable third-party monetization solutions in the mobile browsing and computing space.
Most US consumers have no experience with mobile payments and still need be educated about their benefits. However, large numbers of smartphone owners will eventually adopt mobile payments over time. Four tenents of success will be: simplicity, ubiquity, rewards and security.
The convenience of not having to sign credit card slips will be a welcome imrovement in the retail and restaurant worlds. The abandonment of signature requirements for transactions under $25 in many places has created demand and some experience with a simplified transaction experience. Merchants have incentives to adopt mobile payments as well for greater efficiency at the point of sale and, if don't correctly, greater security too.
Almost all of these mobile payments systems and platforms back onto a credit card. However, it's still early to pick winners and losers. As I indicate above, Google could wind up a loser and ISIS a winner -- though that's a bit counter-intuitive (given the challenges carriers face in execution generally). There are still others (e.g., Apple) that could enter the race at any point.
Today the smartphone world is essentially divided up between Apple and Google, much like Spain and Portugal divided up the known world in 15th century Europe. Right now, it's not clear whether Nokia-Microsoft will become a viable third platform. Palm's WebOS, though it has been open-sourced, is effectively dead and one could convincingly argue that Blackberry is dying as an OS.
Now Mozilla has emerged to challenge Apple but more specifically Android, with a new "truly open" mobile platform: Boot to Gecko (B2G). In many ways not unlike Google's browser-based ChromeOS for PCs, it was formally announced in Barcelona at Mobile World Congress. Deutsche Telekom and Telefonica are on board:
This week Mozilla is previewing open Web apps and Mozilla Marketplace, enabling the creation and distribution of apps powered by open Web standards like HTML5, CSS and JavasScript. We are also previewing Persona, the first identity system truly of the Web, including Browser ID. Each offering represents the latest tools available to developers and users to take control of their online lives.
Since the beginning, it has been our mission as an organization to develop and bring about a completely open and standards-based Web as a platform for innovation. Mozilla’s latest innovations are being proposed to the W3C for standardization, helping us move the needle to advance the Web and make it a more people-centric experience for all.
There are lots of questions about whether Mozilla can make this a viable platform; however the support of two global carriers lends immediate credibility to the initiative. It also shows that there's an appetite for alternatives to Android, which was itself initially embraced as an alternative to the iPhone.
Now Android is on its way to becoming the dominant smartphone platform. It was quickly embraced by carriers and handset OEMs who had no immediate response to the iPhone when it launched. Android became the de facto alternative, driving huge penetration and adoption. Now that Android is the dominant smartphone platform, demand is emerging for alternatives.
B2G is one potential alternative, especially for lower-end handsets. There are, however, many questions about whether Mozilla will be able to make B2G a viable, alternate smartphone platform. Microsoft sees Windows Phone as the true third alternative; however there's evidence of only modest Windows Phone success thus far (including the Nokia handsets).
While there's enormous momentum around iOS and Android the smartphone race is far from over and, especially at the lower end of the market, B2G could become an attractive alternative to Android.
Nielsen now says US smartphone penetration is at 48% (of mobile subscribers). This data and estimate are based on a survey of 20,000 US respondents in January. However Nielsen goes on to segment the data by age and income to find penetration figures that are well over 50%.
As one might expect smartphone penetration goes up with income. But younger users are also more likely to own smartphones than older consumers, if income is removed from the equation. In addition, recent buyers are also much more likely to have purchased smartphones than others. For example, 73% of those between ages 25 and 55, who bought a handset in the past 90 days, purchased a smartphone.
If survey respondents over age 55 are excluded, overall smartphone penetration rises to roughly 75%. And looking at those between 25 and 44 making $100,000 or more per year, Nielsen says 77.5% own smartphones.
As the figures above show smartphone penetration is much higher among key audiences and demographic segments. It's simply not true that feature phones are the majority any longer for these groups.
In this context, the delay in optimizing websites, building apps and using mobile advertising is effectively a kind of "malpractice" for many agencies and marketers.
IHS iSuppli released estimates for tablet market share (using shipments as the operative metric). However in the case of Apple and Amazon shipments is the same as sales to consumers.
Apple previously announced that in Q4 it had sold 15.4 million iPads and a total of 55 million to date. But we didn't know the number of Kindle Fire devices that had sold. Some analysts estimated it was between 4 and 4.5 million. Now iSuppli estimates it was 3.9 million.
With strong Kindle Fire sales in Q4, Amazon zoomed past Samsung to become the number two player in the tablet market. Overall in 2011 Samsung "shipped" more tablets; however shipments does not equal sales to end users. Below are iSuppli's global tablet estimates, showing Amazon with 6% of the market at the end of Q4.
I simply don't believe that Samsung has actually "outsold" Amazon. It may have "shipped" more devices but those devices have largely sat on retailer shelves. Furthermore, Samsung's recent announcement of the Galaxy Tab 2 (7"), with Android 4.0, may be another miscalculation. While it appears to be a nice device, a reported $400+ price tag all but guarantees it won't sell. At that price people will opt for iPads.
As I've repeatedly argued in the past no 7" tablet maker can charge more than about $250 now and expect to compete with Kindle Fire. Samsung would likely be taking a loss if it were to do so. Another way to potentially compete and still preserve margins is to get carriers to subsidize tablets. However this strategy has not worked and consumers have largely shunned carrier-subsidized tablets in favor of WiFi-powered devices. (People simply don't want to give any more money to carriers.)
One of the interesting observations that iSuppli makes is that in Q4 people may have been choosing between the iPhone 4S and iPad. In other words, more iPads would have sold if the 4S hadn't just been released. If that's correct some number of people who actually wanted to buy an iPad may have opted instead for the Kindle Fire because of price sensitivity. Indeed, the Kindle Fire is a vastly inferior device but that inferiority is masked to a degree by Amazon's content ecosystem.
In a related piece of news, Nielsen released some survey data on how parents and kids use tablets: games, education, entertainment in that order.
Once allies, now enemies, Google and Apple are finally confronting one another in court. That result has come about via this week's approval of Google's $12.5 billion acquisition of Motorola Mobility, which happened yesterday. Both the European Commission and the US Justice Department gave their OKs (with some caveats and reservations) to Google to acquire the struggling hardware maker.
Google partly bought Motorola Mobility for its patent portfolio and partly to own a hardware company that would allow it do develop a range of new products and user experiences.
Motorola, prior to the approvals, had won a couple of patent victories in Germany against Apple. Subsequently Motorola demanded just over 2% of Apple's sales in exchange for licensing several "essential" mobile patents. As a practical matter that would mean turning over billions to Motorola -- now Google (Steve Jobs is rolling in his grave). Apple rejected that demand.
Apple recently filed suit against Motorola in the US with an eye toward the German litigation:
Apple sued Motorola Mobility in a U.S. court on Friday in an attempt to stop Motorola from asserting some patent claims against Apple in Germany, according to the lawsuit.
The suit, filed in a San Diego federal court, argues that Motorola's German lawsuit against Apple breaches terms of a patent licensing agreement between Motorola and Qualcomm . . .
In the latest lawsuit, Apple says that as a Qualcomm customer, Apple is a third-party beneficiary of Motorola's agreement with Qualcomm. Under that agreement, Motorola's rights under certain patents are exhausted, Apple argues.
Samsung had been Apple's chief proxy for Android/Google but now Apple gets to slug it out with Google directly.
It's an understatement to say that the entire mobile patent litigation situation is "out of control." Perhaps the direct confrontation between Google and Apple will accelerate some sort of broader settlement so that everybody can move on.
The problem is that firms not directly making money from device sales are using IP litigation and licensing as an alternative way to generate revenue. So far this has proven quite successful for Microsoft, which makes considerable money off of Android sales even as its smartphone share continues to decline.
A flurry of hardware-growth projections have recently come out and, though I seem to repeat myself frequently on this point, their implications are quite profound. Accordingly, here are some of the numbers being pumped out . . .
Forrester projected this week that there would be 1 billion smartphones globally by 2016. The company also estimated that there will be 126 million tablets in the US by the same date. NPD said this morning that Android handsets with sub-$150 USD price tags will claim 80% of the smartphone market in Africa, India and China by 2015.
Cisco recently estimated that by 2016, "one-quarter of mobile users [on a global basis] will have more than one mobile-connected device, and 9 percent will have three or more mobile-connected devices."
Meanwhile the general PC market is likely to remain flat, especially in the consumer segment according to various estimates released in the past several months. Finally below are the Gartner 2011 mobile device and Q4 smartphone sales figures. Android's share is a little more than double that of the iPhone according to the IT consulting firm, although Apple had the top-selling smartphone in Q4. Microsoft lost share but the expectation is that it will still be one of the "big three" when the dust settles.
Though tablets are alternately classified as PCs and mobile devices by different firms, they are not traditional PCs. And given their reliance on apps and the absence of a traditional keyboard they're more like smartphones than PCs in most respects. Regardless, the proliferation of "mobile" Internet devices is accelerating. It thus won't be long (3 years) before PC Internet access is something of a sideshow or secondary tool for large numbers of people.
As mobile devices reach parity and then exceed PCs for Internet access, the cross-platform fragmentation described by Google in recent Q4 survey data (written up here) will be quite common. In other words, consumers will be using multiple devices throughout the day and week. It will be more complicated to track and market to those customers.
Source: Google-Ipsos (Q4 2011 survey data)
Most advertisers and marketers are, still tinkering in mobile, are ill-equipped to confront a future where the primary exposure to their brands and products is via smartphones or tablets and their PC websites are merely a secondary, "utilitarian" resource.
Earlier today Google released data from two related studies of US consumer shopping behavior during Q4 2011. The studies were both conducted online and fielded in January 2012. In both cases just over 600 consumers were surveyed. Both studies claim to be representative of their respective populations -- essentially e-commerce buyers who own smartphones (and tablets).
There were a great many datapoints in the material released. However, the bottom line is that consumers are now fully engaged with smartphones (and increasingly tablets) as part of their "online" shopping. Marketers and brands need to reach consumers in appropriate ways in each context -- mindful of the overall movement of users from platform to platform.
As a foundational matter, the internet was used as a shopping tool or research medium more widely than any other according to this research.
However "the internet" is not a single channel any more. Google and its research partner Ipsos found that consumers shopped and purchased via multiple device categories.
Beyond this basic insight the patterns quickly get very "non linear." The slide below reflects multiple categories of shoppers, some of whom start online and finish offline and some of whom visit the store only to purchase online or via mobile ultimately.
Google also said that 42% of respondents used more than one internet device simultaneously, while 68% started on one type of device or machine and then kept going or concluded on another (e.g., tablet-->smartphone). Interestingly, the content viewed on each category of device (PC, tablet, mobile) was basically consistent.
There were some differences in behavior, however. In this sample people used PCs much more than other devices to do price comparisons and to look for deals or coupons. And they were more likely to contact a retailer via smartphone.
Though not reflected above, video was heavily used by shoppers for product reviews/ratings, demos and to generally learn about products. But if you want to make video accessible to mobile or tablet users Flash must be avoided of course.
In addition these respondents used both apps and the mobile web to conduct research and to shop.
I could go on with more but the larger points are made already. People use PCs, smartphones and tablets to shop and buy. Brands must be prepared to interact with consumers at every point in the purchase "funnel," or perhaps more precisely: purchase continuum. That means being aware of how consumers use and interact with devices and offering device-friendly content and user experiences accordingly.
Mobile is no marginal or experimental experience for anyone any longer. Today, Forrester predicted that by 2016 there would be 1 billion smartphones on the planet. At that point the PC will be simply one of several ways that people get online.
And in the not-too-distant future hierarchy of devices and internet access methods it could well rank third out of three.