Yesterday RIM reported earnings that were below expectations. (Revenue was $4.9 billion, profit was $695 million and off almost 10%.) After months of denial about RIM's outlook by management it's all out in the open: RIM is on fire and not in a good way.
It's time for the RIM version of Nokia CEO Stephen Elop's now infamous "platform is burning" memo. That immediately preceded the abandonment of Nokia's Symbian OS and the adoption of Windows Phone as the company's future.
One potential bright spot from yesterday's earnings release is that the company "sold" 500,000 Playbook tablets. However this is a fake number; it represents the number of devices distributed to retailers, not bought by consumers. In my travels -- and recently they have been extensive -- I've not seen one Playbook in actual use (though I have seen many ads).
RIM's BlackBerry brand is still relatively strong and probably stronger outside North America now. That's where the company's growth is today.
Hypothetically, with the right mix of products, RIM could stabilize and get back on track globally. But it's not clear precisely what RIM can do to regain its competitiveness. There's no easy answer here.
If the company were to adopt Android as its platform it would become simply another Android handset OEM. And in that effort RIM would be soundly beaten by Samsung and HTC. Yet RIM's own software experience has been second-rate compared to the iPhone and Android devices (and Windows Phone).
RIM's stock is way down this year and investors are grumbling. RIM is planning a buy back to keep the stock from sinking further. Yet Co-CEOs Jim Balsillie and Mike Lazaridis are probably on the way out, or at least one of them. The company has also announced that it will lay people off, but it needs some major rethinking and retooling of its culture and processes to become competitive once again.
There is a diehard group of RIM loyalists out there -- and they number in the millions. However, at least in the US, they are an endangered species.
Related: Some see Verizon's hand in RIM's US decline after the company shifted its allegiance to Android.
To promote the launch of the Galaxy Tab 10.1 Samsung conducted an online consumer survey (n=1,000). The results show that a majority of US adults are potentially interested in buying a tablet in the future.
The press release makes the somewhat misleading statement: “The survey revealed that 90 percent of U.S. consumers either already own a tablet or would consider buying one.” It's misleading because only a small fraction of the population owns a tablet.
Among other things, the survey examined what people do with their existing (mostly iPad) tablets:
The iPad and iPad2 together constitute roughly 82% of all tablets sold in the US according to Nielsen. Apple said yesterday that it had sold 25 million iPads globally to date. I'm unable to find the breakdown of North American sales vs. international.
According to several sources tablet penetration in the US is about 4%-5%. So clearly most US adults don't have tablets and there's considerable room for growth. The Samsung survey suggests that the remaining well over 200 million US adults are interested in buying one.
Survey responses and behavior are often distinct things. But if the pro-tablet sentiment is as widespread as suggested by the survey it will mean huge tablet sales and potentially diminished PC sales over the next couple of years accordingly.
Apple is still doing the keynote at its developer conference. Apple's Scott Forstall is on stage and the iOS 5 announcement is happening right now.
Prior to launching into discussion of iOS 5 features, Apple released some figures for devices sold to date: 200 million iOS devices (all in) sold around the world. Of that number, 25 million are iPads according to Apple.
Very different than the comScore numbers that came out last week, here's Apple's statement about US smartphone OS market share:
Earlier today comScore released its "mobiLens" US mobile subscriber data for April. What it shows is the decline of all smartphone platforms except for Google and Apple. RIM is now a full 10 points (according to the comScore survey data) behind Android.
What a dramatic fall for the company that less than a year ago was still the market leader by a considerable margin. Windows (despite Windows Phone) also continues to lose share. However until a Nokia-Windows phone comes out we won't clearly know the operating system's outlook.
Below is the same data for September 2010 (9 months ago), with RIM in the lead by 13 percentage points.
Like Nokia RIM may be forced to make some dramatic changes to appease shareholders, who will want someone to blame for the decline of the platform and the brand. The perception that RIM is in decline doesn't help the company with developers who increasingly will focus on just iOS and Android. Microsoft is trying to argue that Nokia and it represent a "third ecosystem." However that remains to be seen.
A weak software/developer ecosystem puts the platform in question at a heavy competitive disadvantage, which is why RIM has conceptually embraced Android apps on its tablet. Independent BlackBerry apps will probably go away at some point and be entirely replaced by Android on RIM devices.
Next week at Apple's developer conference in San Francisco we'll get some updated "real" numbers (rather than just share projections) about iPhones and iPads sold to date.
Handset maker Ericsson conducts research on consumer behavior and attitudes all over the globe with thousands of consumers. Not long ago it released findings from some early 2011 research about smartphones and tablets with a specifically US audience.
There are no dramatic findings or true surprises but each piece of research contributes to a more nuanced picture of the market and consumer behavior. The data reflect self-reported usage patterns with an emphasis on time of day. Here are two of the charts that show usage of smartphones throughout the day:
The following chart reflects the comparative "daypart" usage of the mobile Internet and GPS apps (probably maps in particular):
In terms of tablets, Ericsson found that demand was higher than for most other electronics and devices.
Finally the data show that tablet usage patterns parallel those of smartphones, rather than PCs, although tablets are "cannibalizing" PC usage to a degree. Other studies and data reflect different usage patterns for tablets, however.
In the non-iPad tablet category we now have RIM's Playbook, the forthcoming WebOS tablets, the Samsung Galaxy Tab(s) and a wide range of other Android-based tablets that are less well-known. Amazon is set to release multiple devices based on Android, according to a "stay tuned" remark made by Jeff Bezos in a Consumer Reports interview:
Asked today about the possibility of Amazon launching a multipurpose tablet device, the company's president and CEO Jeff Bezos said to “stay tuned” on the company’s plans. In an interview at Consumer Reports' offices, Bezos also signaled that any such device, should it come, is more likely to supplement than to supplant the Kindle, which he calls Amazon’s “purpose-built e-reading device.”
While Amazon could certainly build a terrific device (or devices plural) the truth is that, among the alternative tablets out right now, none rise above the level of iPad "wannabe" or imitator -- save the 7-inch devices. And that's all about the hardware not the UX, which also falls short. That's the inescapable conclusion of my informal experiences with each of them.
Somewhat paradoxically Google has made Honeycomb quite different than iOS. I would imagine this is partly a function of "organic" decisions about how Android should work on a tablet and partly a self-conscious effort to differentiate from iOS. But it makes using the new wave of Android tablets like learning a new language in a way; it's not very intuitive.
Generously Google gave away the forthcoming Samsung 10.1-inch Galaxy Tab to attendees of its developer event, Google I/O, which was held in San Francisco last week. I was there and excited to receive one and try it. I've since been attempting to use it regularly during my recent travels. I also have an iPad 2 with me, which often seduces me away from the Samsung tablet.
This isn't a review so I won't go into a lengthy discussion of features or compare the devices in detail. While the Samsung 10-inch "Tab" is quite thin and nice in many respects the overall user experience is weak compared to the iPad 2. Android tablets will become more competitive over time but currently they're not. However the 7-inch hardware makes for a differentiated form factor. (I also quite like the 5-inch Galaxy Player.)
As I've argued in the past, the smaller 7-inch devices are compelling because they're more portable than the 10-inch iPad or Android devices of comparable size. The 10.1-inch Samsung is long and wide (pictured above, right), making it perhaps good for watching wide-screen movies but otherwise "out of proportion" for viewing websites and many other uses.
Some proof of what I'm saying comes in the form of fairly strong 7-inch Galaxy Tab sales. That device, not yet equipped with Honeycomb, offers a large-screen version of the UX found on Gingerbread Android handsets. But people are buying it because they can take it with them in a way that they cannot with the iPad.
The iPad currently dominates the tablet market and because of its size most people use it at home:
But the smaller form factor, with potentially more aggressive pricing, is a perfect place where Android can play and establish a "beachhead." People will consider these smaller tablets because of their portability and right now Apple has no offering to compete with them and may not for the foreseeable future. We may see a larger iPod Touch come along at some point or a smaller iPad. But that's pure speculation at the moment.
Going directly after the iPad right now with comparably sized devices is fruitless because the overall Android tablet UX, though improved, is still not strong enough.
ComScore put out its now monthly estimate of mobile market share today (based on a user survey of 30K respondents). As with IDC's numbers released earlier, Samsung is the top overall hardware maker in the US market. Among smartphone operating systems Android is number one and has been since roughly January 2011.
Below is the smartphone breakdown for March 2011:
Microsoft continues to struggle and does not seem to be gaining traction with Windows Phones (although some have pointed out that the rate of decline has slowed). Palm is entering the Nokia zone in terms of near disappearance from the US market. And the iPhone is flat according to these data.
Seemingly contradicting the data above, comScore earlier put out metrics that showed iOS in the US and Europe to have a reach that greatly exceeds Android. The iPad and iPod Touch make all the difference it would appear.
For comparison purposes here's the same comScore smartphone market share data for July 2010:
In the roughly nine months in-between RIM's share of the smartphone market has dropped about 12 percentage points.
Below is another view of mobile OS market share in the US from StatCounter:
Google has continued to maintain that smartphone usage is entirely complementary to PC usage and is not cannibalizing it. However studies by Google and now Nielsen are showing something different when it comes to tablets -- they're being substituted for PCs in a variety of cases.
Nielsen conducted a Q1 survey of tablet owners and found the following:
Here's a breakdown of the the impact of tablet ownership on usage of other devices:
Here's data from Google also showing reduced PC usage after buying a tablet:
Source: Google/AdMob, March, 2011 (n=1,403)
Might the compact HP/Palm Veer be the OEM's comeback handset? It certainly could be but might not turn out to be in actuality if improperly positioned and marketed.
The HP Veer was previewed last year and availability was announced this morning. The handset will be exclusive to AT&T and out May 15. It will cost $99 with a two-year contract. There's both a white (pictured) and a black version.
Though AT&T is the largest US carrier exclusivity might be the first mistake. A limited period of exclusivity is OK but prolonged exclusivity will hurt the handset's chances with consumers.
White is good, but a rainbow of colors would have been better and made the phone a more distinctive product.
Another black smartphone, only distinguished by its size, is not going to sell a ton. But a "cute" smartphone that comes in blue, yellow, pink, green, etc. has a better shot.
This phone should be positioned as the "VW Beetle of smartphones." The campaign surrounding it should be about individuality, fun and personal style (kind of like Apple products). However I'm not sure that a company like HP thinks that way.
The most appealing device in the Samsung "tablet" lineup may be its 5" "Galaxy Player" introduced at CES this year. I had read about it but hadn't seen one until yesterday. In fact I saw the full array of Samsung tablets at AppNation. (The Galaxy Player is on the left in the picture below.)
The larger tablets are much less appealing than the iPad, both in terms of hardware and software. The 7" Galaxy Tab is somewhat appealing because of its more portable "on the go" form factor. But I was surprised how drawn I was to the 5" device.
Supposedly an iPod touch competitor the WiFi Galaxy Player looks like a giant Galaxy S Android phone but the additional screen real estate offers a better user experience than comparable Samsung smartphones. It can also still fit "in your pocket" in a way that even the 7" device cannot.
My belief is that if it were to be made into a phone it would be the perfect all-in-one device, with a larger screen for apps and internet use but small enough to still functional effectively as a phone. (With a data plan one could use Skype as the phone.)
I was unable to get any pricing information out of the Samsung representatives I spoke to. However pricing is going to be a mess for the company with so many tablet devices. Ultimately perhaps only two or three sizes will survive and the others will fall away for lack of demand/sales.
If the 5" device were priced below $200 and marketed properly it could become very successful and could become a true challenger to the iPod Touch.
Nielsen released new survey data for Q1. The measurment firm now says that more US smartphone buyers are looking at Android than Apple handsets. In terms of those planning to buy a smartphone, here's how the survey data break down:
Among those who had bought a smartphone in the past six months, Nielsen said 50% bought Android devices, 25% bought an iPhone and 15% bought BlackBerry phones.
Finally, in terms of current smartphone market share, Nielsen said the market now looks like this:
For a larger context and comparison look at comScore's recent iOS vs. Android analysis, which showed iOS reach to be greater in the US and Europe if iPad and iPod Touch devices are included.
There's something that's not clear from the top-line data released by Nielsen. That is, do people seek out "Android" devices or are they looking at particular OEM phones (Droid, Atrix, Optimus, EVO, Inspire, etc.)? My theory is that people are interested in particular OEM handsets from their carriers and that Android the OS has limited consumer awareness.
I could be wrong. But I'm interested to see data or research around this question.
Barnes & Noble's Nook eReader is becoming a more tablet-like device with an update to Froyo, better web browsing, email and third party apps. The 7" eReader is already a success but it could become one of the most successful Android tablets because of one particular feature -- it's $249 price tag.
General consumer audiences will be reluctant to spend $499, the entry level iPad price, on smaller (and otherwise inferior) tablets. The 7" Playbook, for example, starts at $499 and the Motorola Xoom was a flop in part because of its higher entry level price tag.
However the $249 price tag for Nook is incredibly attractive. And as Nook becomes a more full-fledged tablet more people will buy one. The Nook will continue to represent itself as an "eReader" and not a tablet; it's an eReader with other features that just happen to include web (w/Flash), email and apps.
Many people have speculated about Amazon eventually offering a full-blown Android tablet. Bet on it. This only makes it more likely.
Amazon will need to respond to the Nook's challenge on the eReader front and so the next-gen Kindle will probably have to offer color, apps and a better overall web experience. But to really "hit it out of the park" -- unless Amazon is going to directly compete with computer OEMs at the high-end, which I doubt -- the Amazon tablet will need to be smaller than 9" and cost less than $300 (say $299).
The long-term threat to the iPad, just like the iPhone, comes from an army of cheap, "good enough" devices featuring Android. Two of those could come from Amazon and Barnes & Noble.
Ad network InMobi released its latest Mobile Insights Report: Global Edition March 2011. Based on 31.9 billion monthly impressions generated by 220 million consumers, the latest report shows phones running the Android OS overtaking Apple's iPhone. This is consistent with most other data in the market.
The report continues to show Nokia as the global smartphone leader but, like other sources, indicates a decline in its overall share. Strikingly, InMobi says "Nokia lost -3.9 share points in just 90 days, while Samsung (+1.6 share pts), Apple (+1.9 share pts) and HTC (+2.8 share pts) gained share."
Another striking data point: "35% of all mobile ad impressions now occur on smartphones."
In North America, as with the Millennial data just released this morning, the Verizon iPhone has helped Apple but that has not been enought to slow Android's momentum. But for quarter, according to InMobi, Apple's growth outpaced Android's in North America. RIM also grew.
Globally Android, iOS and RIM grew while others declined according to the report. Below, compare the most recent IDC numbers (global estimates for year-end 2011) and those from comScore (US) representing the most recent quarter.
The IDC numbers for Android above are quite aggressive vs. what InMobi show. IDC's numbers are projections based on existing sales and additional assumptions about future consumer purchase behavior. ComScore's data are based on consumer surveys.
Millennial Media's device report, "Mobile Mix," is out for March. Here are some bullets from the data released:
The chart immediately below reflects the top 20 phones (not devices overall) on the Millennial network in March. Microsoft devices still haven't made an appearance (or perhaps "haven't yet"). And because this is US data, Symbian is also missing.
Sixty-four percent of mobile devices on the Millennial network were smartphones in March. Of that smartphone segment 48% ran the Android OS.
While Apple's OS had a 31% OS share on Millennial's network in March it generated 47% of the revenue vs. 36% for Android devices. So in terms of revenue iOS is outperforming its share and Android is still under-performing relative to share.
For comparison purposes, here are data from June, 2010 showing smartphones at 46% of the device mix and Android at only 15% of smartphones:
The top two phones were iPhone and BlackBerry Curve in June 2010, identical to the March 2011 data. Another striking thing about this chart below is that there's more handset "diversity" reflected than in the similar chart above.
Over time the relationship between Google's Chrome OS and Android has become more complex and awkward. Originally Chrome OS was supposed to be for netbooks, while Android was for mobie devices. But when it launched Chrome OS, Google didn't predict the rise of tablets, nor did the company predict the stunning popularity of Android.
Android has all but crowded out Chrome as the "go to" OS for Google devices. Google TV, for example, was build with Android and not Chrome.
When the laptop prototype "Cr-48" was released last year the netbook market was all but dead. Google stopped saying that Chrome was for "netbooks" and substituted "notebooks."
There were/are a range of big-name hardware partners that were supposed to release Chrome PCs for "holiday 2010." But that deadline came and went. Now Acer, Asustek, Sony and Samsung are supposedly releasing Chrome-based notebooks in 2H this year.
In the meantime Google is reportedly developing a tablet version of Chrome OS. This makes a great deal of sense. The Cr-48 notebook experience, together with its apps, is very tablet-like already. Google may also be able to bridge the divide between PC and tablet that exists today, and which makes tablets less than a full replacement for laptops.
However for the time being the focus remains on Honeycomb/Android, as dozens of new Android tablet devices roll out. Key to their success, as I've mentioned is aggressive pricing. The Xoom and to some degree the Galaxy Tab before it have proven that Android OEMs will have to at least match or undercut Apple's pricing to be competitive.
That means they'll have to cut their margins on the entry level devices to almost nothing or even subsidize them in some cases. Samsung has gotten that message and has repriced its tablets accordingly.
IT consulting firm Gartner is even more bullish on Android than IDC. The company says that by 2015 that almost 50% of the world's smartphones will be Android devices. This is partly because of the "open OS" and because of greater pricing flexibility with Android (vs. the iPhone).
Also like IDC Gartner expects Windows Phones' share to exceed iOS by 2015:
Here's what the company says about Apple, RIM and Windows:
Provocative and well-reasoned though they may be these predictions are unlikely to play out exactly as forecast.
The mobile market is so dynamic that current trends cannot be expected to continue as they are today. Specifically though Nokia has bet the farm on Windows Phones (and they're good devices) it's unlikely that the marriage without more -- like more improvements, apps and aggressive marketing/pricing -- will boost Windows Phones' share to the anticipated levels.
Android will run into major regulatory and anti-trust problems if its dramatic gains continue to the point where 50% of all smartphones run the Google OS (as smartphones gain more share relative to feature phones). It will be the Europeans before the Americans that would lead the charge by forcing Google to make it a truly open platform independent of Google's authority and control.
Finally I believe that Apple is likely to try and address the "lower end" of the market in some way with an entry level or "nano" device.
The 7" Samsung Galaxy Tab is the best-selling non-iPad tablet to date and it's basically a flop. Samsung inflated sales numbers and then had to recant when confronted by press. Apparently Motorola's much-hyped, full-sized Xoom is flopping too. One estimate argues that the tablet has sold only 100,000 units so far.
Samsung is due out with a next-gen 7" and 8.9" set of tablets. However their release dates are uncertain (later this year).
Meanwhile the 7" HTC Flyer, which will be available from Sprint (as the EVO View), is coming out in the next couple months. It will feature Honeycomb (rather than Gingerbread like the Tab) and uniquely has a pen/stylus that allows users to annotate screen captures. The pen feature is both interesting and awkward. I've only seen demos but not used it myself.
Apple has said it's not ceding any product category to competitors. But the 7" (or smaller than 10") tablet segment is where Apple has no product (though rumors persist) and where Android's tablet-related deficiencies are less obvious and compensated for by the more "mobile" nature of the form factor.
I predict the Flyer/View will be a success. However much depends on pricing.
Consumers generally don't want to buy additional data plans from carriers for their tablets, but non-subsidized pricing makes these smaller devices more expensive than the WiFi iPad. The right "unlocked" price for the 7" device is $299. But that's likely to be the two-year contract price -- unfortunately.
I recently bought an Android LG optimus V on VirginMobile (one of Sprint's prepaid carriers) to see how good the phone and the experience were. The phone is pretty good, though vastly inferior to my HTC EVO. As an aside, the EVO is still better than the latest Android "flagship," the Samsung Nexus S.
The more important point is that users can get a $60 all you can eat plan with that phone on Virgin (no contract), compared to the more than $100 I pay monthly for essentially the same plan on Sprint. Sure I get access to 4G but the speed isn't that much better than Sprint's 3G network.
Now Sprint's other prepaid carrier Boost is offering a lower-end Samsung Android phone, the Prevail. The phone costs $179; I got the Optimus V for $129 on sale (at Target). But the plan is incredible.
The unlimited Boost talk and data plan starts at $50 and declines to $35 after 18 months, as a loyalty incentive. That means that a consumer could have a very decent Android phone with an "everything plan" on the Sprint 3G network for $35. That would be a $70 per month savings over what I'm paying for comparable service.
The Virgin plan is good but the Boost plan is amazing. Accordingly, we should see people migrating toward these lower-cost deals -- to the extent that they're publicized by the carriers -- as more Android handsets become available with prepaid plans.
Over the weekend there was considerable discussion about comScore's most recent handset and mobile OS market share numbers. What they appear to show is Android clobbering all challengers, including the iPhone whose share remains largely flat. Although the Verizon iPhone was the most popular individual handset in February, the "Android Army" is winning the OS war.
This morning Apple Insider argues that by several measures, iOS is still ahead of Google's operating system, in terms of engagement, app store growth and revenues. Indeed, StatCounter, which presumably is a better reflection of actual consumer behavior than comScore's survey data, shows iOS well ahead of Android usage.
But there's no denying the growth of Android and its seemingly unstoppable momentum. I had a thought the other day about why iPhone may not be growing to the same degree (beyond its more limited availability and more rigid pricing): consumer boredom.
There is only one iPhone (although there are previous models still in circulation). By contrast there are dozens and dozens of Android handsets out there, with different hardware features. This creates constant marketing buzz around the "latest Android flagship" or release of the newest inexpensive Android handsets.
If the iPhone were toothpaste it would be Crest, while Android would represent 20 different flavors. In order to reclaim consumer attention and generate new excitement, Apple may need to do to the iPhone what it did to the iPod several years ago: create different models and colors.
Apple has declined so far to put out a "nano" model, although there have been rumors to that effect. Cupertino needs to address both the lower end of the market (and not just with last-year's model) and create some new excitement around the product -- and not just through software updates.
The latest comScore data, based on consumer surveys (n=30,000), show that the Android surge continues. While the Verizon iPhone was reportedly the most popular individual handset in February, the Android collective -- supported by the top three OEMs -- has now overtaken RIM too. ComScore says that 29% of US mobile subscribers have smartphones -- a number that is now probably low -- vs. Nielsen's 31% estimate.
In part benefiting from Android growth (and vice versa) Saumsung was the most popular handset OEM in the US. While Android gained 7% during the three-month period former smartphone leader RIM was off almost 5%.
Now compare the same charts from a year ago (February, 2010):
Apple's iOS has remained constant, as a percentage of the overall market, according to comScore's figures. Android's success vs. the iPhone is based in part on its wide availability from a range of characters and price points. The iPhone remains available from just two US carriers and is restricted to contract customers.