Hardware

Siri and the Mainstreaming of the Speech UI

Companies like Google and Apple are "market makers." They may not be first with a technology but their inclusion or the use of a particular technology can have a dramatic impact on its acceptance and adoption. Siri, as we recently argued, is one such product (along with speech on Xbox). For all its imperfections, Siri has managed to mainstream voice and speech interfaces -- at least in terms of awareness.

Siri performs at a level that has reinforced its usage and focused considerable media attention on speech. As we said in the report "Siri and the New Speech Imperative": 

Voice on the Xbox and the emergence of speech as a front in the “smartphone wars” both create new momentum for voice interfaces and even a kind of “speech imperative.” At a recent search conference someone remarked, “Voice is the new touch.” In other words: a “sexy” new interface that, like touchscreens, could shape consumer expectations of how they should be able to interact with a range of devices and services going forward.

Siri's integration into the iPhone 4S has been well received by consumers and is at least partly responsible for the huge sales the iPhone 4S has reportedly enjoyed in Q4. 

 Screen shot 2012-01-12 at 11.45.31 AM

The New York Times today did a short roundup of companies at CES now building speech (and gesture) into consumer devices. On the heels of its indirect success with Siri (as the speech recognition front end) Nuance introduced Dragon TV at CES. Also at CES, Samsung debuted new TVs that allow voice and gesture-based control. Telematics, which offer varying degrees of voice control, are also getting a lot of attention at CES this week.

Apple TV (allegedly coming soon) is also supposed to integrate Siri. Indeed, there's a convergence of speech (and gesture) UIs with APIs and apps across an array of platforms: mobile, TV and in-car. The smartphone experience and its various metaphors are informing a host of consumer experiences beyond phones. 

Benefiting from decades of research and various false starts, Siri has become the breakthrough consumer product that has raised the public's awareness of speech interfaces and their potential. But Siri isn't just about speech it's about combining Nuance's speech capabilities with natural language understanding, which is the other half of it.

We're going to see more and more devices integrate speech as a UI, with all sorts of implications for enterprises across the board.

See related posts:

 

 

Smartphone Market: Apple vs. Samsung (Android) vs. Nokisoft?

It seems amazing to think that just a couple of years ago Samsung didn't really have a smartphone lineup. Now the South Korean company has become the dominant maker of Android handsets globally. Chief rivals HTC and Motorola (soon to be a part of Google) have been overshadowed by the larger company.

Hurt by competition (read: Samsung) last week HTC posted its first quarterly loss in the contemporary smartphone era. Motorola also said its quarterly results would be weaker than previously estimated, negatively impacted by smartphone competition (again Samsung). 

Samsung has done a ton of marketing in the US and around the world for its Galaxy line-up of smartphones. Some of that appears to be paying off. According to a December ChangeWave consumer survey (US, n=4,073) more consumers are saying they're going to buy a Samsung handset than rivals (other than the iPhone). 

ChangeWave smartphone buying plan survey

Source: ChangeWave

So if it's the iPhone vs. Android (increasingly Samsung), who will occupy the "third ecosystem" slot? Obviously it will either be RIM or Nokia-Microsoft. RIM is not yet in free-fall but nearly so. Meanwhile Microsoft has received a great deal of positive coverage in advance of the introduction of the Nokia Lumia 900. Many financial analysts are now bullish on Nokia and Microsoft's mobile prospects.

This weekend the New York Times had an extensive and favorable piece on the development of the Window Phone OS: 

Windows Phone, which began appearing in devices last fall, certainly stands out visually. It has bold, on-screen typography and a mosaic of animated tiles on the home screen — a stark departure from the neat grid of icons made popular by the iPhone. While most phones force users to open stand-alone apps to get into social networks, Facebook and Twitter are wired into Windows Phone. The tiles spring to life as friends or family post fresh pictures, text messages and status updates. 

The design of Windows Phones is both a strength and a weakness -- because they're different. While it's very beautiful in some "areas," parts of the Windows Phone UI are over-designed. But in general it's an impressive achievement for Microsoft. 

I saw and held the Lumia 900 last week; it's a very nice phone. Yet I don't believe that it will lure people at the "high end."

Those buying the iPhone 4S or the Galaxy Nexus are unlikely to switch allegiances. Nokisoft's best shot, in my view, is to capture those upgrading from feature phones and get them used to the unfamiliar Windows Phone UI. But that initial change from the iPhone look and feel (or Android which imitates it) will be somewhat jarring for many people.

The lack of apps is also a competitive disadvantage for Windows Phones. More apps will be developed over time, especially if consumers start buying Windows Phones. Another curiosity of Windows Phones: the IE browser doesn't seem to enable sites to detect a mobile device and show their mobile version. This is good in some cases but mostly a weakness. 

This year will be "make or break" for both Windows Phones and RIM, though more so for RIM. Both will battle for enterprise and consumer hearts and minds and for this third ecosystem slot. My guess is that Windows Phones (and Nokia) will probably win. 

Are Android Handsets the New Feature Phones?

It used to be that the "free" phones being given away by the carriers were very low-end feature phones. Not anymore. Now, with a two-year contract, you can get a range of no-cost Android smartphones from AT&T, Verizon or T-Mobile.

Verizon was especially aggressive during the holidays; and this morning I counted no fewer than six pretty decent Android handsets available for free from T-Mobile with a two-year contract. These kinds of promotions have helped power Android's rise. The operating system now represents about 47% of all US smartphones according to comScore. 

I don't have and haven't seen data about upgrade patterns from feature phones. But my guess would be that most smartphone upgraders are going to Android, partly because of the "free" promotions as well as the selection and ubiquity of these devices. 

InsightExpress not long ago pointed out that all smartphone owners aren't the same. They can be segmented by engagement and activity level. And while I haven't seen any data on the behavioral differences between Galaxy Nexus owners (Android flagship) and those who own an LG Optimus (entry level Android handset), there likely are some. 

How else does one explain the NetApplications data now making the rounds. These data, showing browser usage across millions of sites, reveal iOS with more than 3X the mobile browsing share of Android in December (iOS includes tablets here). 

  1. Apple/iOS: 52.1%
  2. Java/J2ME: 21.3%
  3. Android: 16.3%
  4. Symbian: 5.8%
  5. RIM: 3.5%
  6. Other: 1.1%

Given the comScore numbers above these data from NetApplications are fairly dramatic -- and curious. However, the gap isn't nearly as large in StatCounter data (global and North America below): 

Screen shot 2012-01-03 at 6.02.50 AMScreen shot 2012-01-03 at 6.03.31 AM

In North America, Apple's lead is considerably less than in the NetApplications data; and if one looks at "mobile browser" share -- the data above reflect "mobile operating system" -- Android is ahead of iOS in North America and globally. It's not clear how to explain these differences between the data sets. 

Another piece of data: last month an online and mobile shopping study found that iOS devices accounted for 92% of all non-PC sales. In other words Android users aren't very active in m-commerce. In addition the study reported that "Apple mobile devices also have a larger AOV compared to other mobile platforms ($123 for Apple vs. $101 for Android in December 2011) – and far outstrip desktop orders ($87)." 

Last year Nielsen posted some demographic data on iPhone and Android users and found them more similar than different. But in 2011 the recommendations site Hunch conducted a user survey (n=15K) and found some meaningful differences between Android and iPhone users. Chief among these differences were levels of education and affluence; iPhone users were generally older, more urban, better educated and had higher incomes according to the self-reported data.

Back to the comScore data above. Clearly Android is a more "mainstream" smartphone than the iPhone. Almost twice as many people own Android handsets in the US than the iPhone. However, looking at the rest of the data above, iPhone users are more engaged and active than their Android-owning counterparts on the whole.

As we move from a market still dominated by feature phones to one controlled by smartphones, by the end of this year, we'll see most people embrace Android as they upgrade. Apparently, however, this doesn't mean that they'll immediately begin displaying radically different behavior, though it does mean at least incremental changes.

Accordingly it might be fair to say that the lower-end Android handsets are becoming "the new feature phones." 

2012: End of the Mayan Calendar -- and Maybe RIM Too

Next year will be decisive for the "tier two" smartphone players: RIM, Nokia and Windows Phone. Specifically, if Windows and Nokia haven't gained meaningful traction a year from now their mutual strategy will largely be deemed a failure. And RIM has become a long, slow train wreck without much turnaround potential.

During the most recent quarter the company reported that it sold many millions of handsets outside the US market: "RIM shipped approximately 14.1 million BlackBerry smartphones and approximately 150,000 BlackBerry PlayBook tablets." RIM also claims 75 million users around the world.

Blackberry phones The company slightly beat lowered analyst estimates but further lowered guidance for Q4 (a quarter when Android and iPhones are doing very well). It also said that its BlackBerry (OS) 10 smartphones won't be out until “the latter part" of next year (read early Q4). Investors promptly sold RIM, causing the stock to decline to its lowest point since 2004. 

But RIM's shares have bounced back somewhat on talk that there were several suitors circling the company: Amazon, Microsoft and/or Nokia. However Amazon publicly disavowed the rumor.

It would be problematic for Nokia to buy RIM for several reasons. While the Finnish company would gain a stronger brand in North America and carrier relationships the value of RIM's brand is rapidly declining and its other assets are of limited value to Nokia. Similarly Microsoft would inherent a troubled company and put itself in a competitive position vis-a-vis handset partners including Nokia. 

But would Microsoft be all but compelled to buy RIM if its current relationship with Nokia doesn't bear fruit?

Early reports from Europe in October suggested that the new Windows powered Lumia phones were selling quite well in the UK and Germany. However a more recent UK report argues that the Lumia 800 is not selling and represents only 0.17% of November handset sales in the UK. 

The truth is probably somewhere in the middle: sales are mixed; not as successful as Nokia and Microsoft would have hoped but better than the dire scenario presented above. Lumia phones are coming to the US early next year. However it will take a herculean effort to get consumers to turn away from Android and iPhones (though some survey evidence suggests many US consumers are open to Windows Phones). 

My prediction is that a year from now Nokia and Microsoft will have improved their respective positions somewhat but not dramatically. Nokia will be compelled to consider building a few Android handsets and Microsoft might have to look again at RIM as a way to gain market share. For its part, RIM will have to look at developing Android handsets itself (and perhaps experimenting with WebOS) to supplement BlackBerry 10. 

Regardless, the outlook for RIM is fairly bleak. In the end the company will probably have to sell itself. And at the moment the outlook for Nokia and Microsoft's Lumia phones is not terribly much brighter (at least from what we can tell at this point).

Millennial Seeing 'Hundreds of Millions' of Kindle Fire Ad Impressions

Millennial Media is out this morning with its latest "Mobile Mix" devices report. The report reflects the distribution of devices and corresponding operating systems on Millennial's network. Over time the percentage of smartphones on Millennial's network has grown dramatically and now stands at 70%. By contrast smartphone penetration in the US is about 44% according to the latest Nielsen figures. The other 30% of devices on the Millennial network are feature phones (14%) and so-called "connected devices" (16%): iPod Touches, Kindles, iPads and other tablets.

Connected devices are the main focus of Millennial's newsletter this time, in particular the Kindle Fire. Millennial confirms the popularity and apparently significant sales of the Kindle Fire, saying that the company is seeing a "monthly run rate of hundreds of millions of impressions":

Since its release in mid-November, the Kindle Fire has made an impact on the connected device market right out of the gate with early signs of strong consumer adoption.

On the Millennial Media platform, impressions from the Kindle Fire have grown at an average daily rate of 19% since its launch several weeks ago. We’re not just seeing millions of impressions, we’re seeing a monthly run rate of hundreds of millions of impressions.

The Kindle Fire’s impression growth on our platform has slightly outpaced that of the iPad when the iPad launched in early 2010. Though the Kindle Fire has been introduced into a more mature tablet market than the market which greeted the original iPad, the integration of Amazon’s robust digital entertainment library and the $199 price point may also have helped drive this early use by consumers. (emphasis added.)

The question raised in the excerpt above is whether "the $199 price point may [ ] have helped drive this early use by consumers." It's pretty clear the answer is "yes." The Amazon brand has certainly been critical, but it's mainly the $199 price that is responsible for the device's huge sales. The iPad created the new market for tablets and Kindle unlocked demand among those who we're more price sensitive and resisted buying "no-name" lower-priced Android tablets. 

Among the smartphones on Millennial's network, 50% are Android based handsets. However, save the Nook and Kindle Fire, Google/Android tablets have had almost no success for reasons of price and quality.

http://www.retrevo.com/content/files/images/misc/pulse_11Dec15_chart2.jpg

Retrevo presented some interesting survey data yesterday showing consumer tablet demand is greatest for the iPad, followed by the Kindle Fire and then the B&N Nook. Retrevo shows that there is a market for Android tablets -- the Kindle Fire has already confirmed that -- provided the price is right and at least $100 less than the iPad. 

http://www.retrevo.com/content/files/images/misc/pulse_11July13_1.jpg

Putting aside quality for a moment -- Android Honeycomb was a major disappointment from a UX perspective -- price is the major variable that consumers are responding to in Kindle Fire (but with the confidence of the Amazon brand behind it). The problem is that it's almost impossible for most tablet OEMs to get prices low enough to make any margin on them and be price-competitive.

If they match the iPad pricing they're perceived as imitators (e.g., Motorola Xoom, Samsung Galaxy Tab). But mobile carrier subsidies, which bring down the prices of smartphones, have not worked so far stimulate Android tablet demand -- mainly because consumers don't want another two-year carrier contract and the associated data fees. They're buying WiFi tablets instead. 

Android-based tablets that have been priced at or below $200 in the past have been made by companies that are unfamiliar to consumers and received poor quality ratings from experts and consumer reviewers alike. Even though Kindle Fire has had its share of problems and disappointed many reviewers, consumers know and like Amazon.

It was also shown that Amazon was taking a loss on the sale of every Kindle Fire, to establish a beachhead in the tablet market and because the company figured it could make up the loss and much more on content sales. 

There are rumors that Apple will introduce a 7" tablet next year to compete with the Kindle Fire, just as Amazon will go "up market" and deliver a 10" tablet.

Google, for its part, has suggested that it will respond to lagging Android tablet sales by bringing its own "higest quality" tablet to market next year. We'll see whether this is with an OEM partner or Google-branded (i.e., Chrome or Nexus tablet). Google is clearly another company -- one of the very few -- that could offer the combination of brand-instilled consumer confidence and subsidized pricing.  

Most Mobile Shopping Happening at Home

I've now written a number of posts, yesterday most recently, that point out most mobile shopping and purchase activity is not happening in stores or "on the go," but at home. Data vendor Compete last week released some findings from its most recent smartphone user survey that confirm this. 

What Compete found is that mobile "shopping" (not buying) was largely performed in the home or, to some degree, at work. What's significant here is that people are choosing to use mobile devices (smartphones typically) when they likely have access to a PC. 

A significant minority of people (34.5%) used their devices in stores (price checks, reviews, coupons) and another sizable group (28.6%) shopped while killing time. 

Below are the most common mobile shopping activities. Note that the largest category is "store information" (people preparing to visit a store location). According to Compete "made a purchase" just missed the list with 31.8% of people reporting making a purchase on mobile devices. 

http://blog.compete.com/wp-content/uploads/2011/12/mobile-shopping-activities.png

How Soon Will We See Smartphones with 'Special Offers'?

The notion of ad-subsidized smartphones or mobile service has existed for years. Way back in 2006 then Google CEO Eric Schmidt argued that mobile phone service could be entirely subsidized by advertising. A couple years later in the UK Blyk brought the idea to life, providing free service to its youthful audience as an MVNO.

However the company changed its model and is no longer in the MVNO business. One could readily see the pivot as an admission of the limited opportunity associated with providing ad-supported cell service. However in an adjacent market (eReaders/tablets) Amazon has had great success with its ad-supported Kindles.

After the Kindle Fire, which is the top-selling device on Amazon, the bestselling electronics are all Kindles "with special offers" (ads).

Screen shot 2011-12-04 at 7.40.24 AM

Ads on Kindles appear in the form of idle homescreen ads and banners. The idea of idle homescreen advertising on mobile phones has been around for a long time in the halls of mobile marketing. Mobile Posse has implemented it with some evidence of success. However the practice is far from mainstream. 

In a recent article in DM News Bizo CEO Russell Glass, seemingly unaware of prior history, says: "Look for the first completely ad-supported 
cell phone in the next 12 months and dozens to follow in the coming few years." Putting aside Blyk and Mobile Posse's mixed track records the Amazon example may be paving the way for such an opportunity. 

While it's very unlikely that we'll see "completely ad-supported" mobile phones any time soon, we may see Amazon-style ad-subsidized hardware or phone service. The latter is a much more likely scenario given how heavily subsidized the hardware already is. And this is where carriers might get involved in mobile advertising in a bigger way. (I still think that a parallel opportunity exists in the model of the Placecast-AT&T or O2 relationships.)

One can imagine that many people would jump at reduced monthly charges in exchange for ads on their idle/home screens, as Amazon seems to have shown with hardware discounts. And carriers could potentially develop fairly large ad networks in short order. Execution is a major problem for carriers but the concept has now become more interesting and viable. 

Women Outnumber Men As Smartphone Owners

In the US market there are now more female smartphone owners than men according to recent data from Compete (n=535). The percentage breakdown of women to men is 53% to 47%. Men were early adopters of smartphones and now women have more than caught up. 

Indeed, while men are a valuable audience target in mobile, the "smartphone mom" may be the true prize for marketers. 

Smartphone Owners: Men vs. Women (US data)

Compete also released some other gender breakdowns, such as smartphone activities. Men watch more movies on smartphones, while women do more of almost everything else:

 Smartphone Owners: Activities by Gender (US data)

smartphone activities

It's not clear that there are any immediate tactical takeaways from this, except that targeting smartphone owners of either gender is increasingly important for marketers. 

On a related note, comScore released smartphone marketshare data today, showing that Android now how more than 46% US market penetration. 

Why an Amazon Smartphone Could Work and a Facebook Phone Might Fail

In the world of rumors the Facebook phone has played peekaboo over the past couple of years. Now it's been revived, with the claim that it will be made by HTC. The idea here is deep integration of Facebook and its various social features into a modified Android handset.

However there have already been a number of "Facebook phones": 

None of these handsets sold particularly well as far I'm able to tell. And with the wide availability of Facebook apps and a good mobile website, there's really no reason to buy a "Facebook phone," unless it's got some really compelling features or is super cheap.

It's difficult for me to imagine what those features might be. I'm over 40 but for younger audiences, the idea of a phone deeply integrated with Facebook might be exciting. Privacy and tracking would be another potential concern for me with a Facebook phone. 

Radically cheap would also be the main reason to buy an Amazon smartphone. With Kindle Fire as the model, one could imagine the e-tailer aggressively subsidizing its handset to the point of zero consumer cost up front (one could also imagine an ad-subsidized model). That would be the reason it could potentially succeed: if it were extremely inexpensive or free, combined with Amazon's content and storage offerings. 

However if it were to compete without such near-total subsidies, on equal footing with other Android handsets, the outlook for the Amazon smartphone is considerably diminished. 

Another, radical scenario for Amazon would involve it becoming an MVNO (on the Sprint network) with dramatically reduced data plans paired with its hypotehtical phone.  

Low-Priced Android Tablets Abound, iPhone Loyalty Exceeds

Tablets are at the top of many holiday wishlists and smartphones aren't very far behind. Both are being aggressively promoted online and in stores this weekend in the US. Heavy price discounting should move a lot of Android tablets (and handsets). Laptop and PC sales generally may suffer as a result.

Below, for example, US wireless carrier Verizon is selling the Motorola Xoom 10" and Samsung 7" tablets for $199 and $149 respectively. Both require commitment to a two-year contract, something most US consumers have thus far shunned.

Screen shot 2011-11-25 at 9.22.21 AM

Online retail giant Amazon is featuring a broad range of discounted tablets, beyond its own Kindle line, with many under $300 and some falling under $100. So while the iPad has the overwhelming share of tablet-based traffic today it's almost certain that will be diminished after the holidays.

Aggressive price discounting has emerged as the key to driving non-iPad tablet sales (first the HP TouchPad and then Kindle Fire). But this is a very dubious blessing for Android tablet OEMs, who may find their margins on tablets reduced to almost nothing. Apple by contrast has not had to lower prices to get attention or maintain share. We'll see what happens after the holidays. 

http://royal.pingdom.com/wp-content/uploads/2011/11/ipad-web-browsing.0011.jpg

What we're seeing now is the bi-bifurcation of the tablet market. There's a higher-end segment ($500 and above) dominated by the iPad, with almost no competition, and a lower-end segment ($250 and below) dominated by Amazon's Kindle line and Nook. Other OEMs are getting squeezed in the middle, unable to compete on quality at the high end or price at the low end for the most part. There are some "no-name" tablets priced lower than Kindle. 

This looks like the smartphone market, with inexpensive Android models driving rapid penetration across carriers and the iPhone appealing to higher-end consumers. There are obviously exceptions and some of the "flagship" Android devices have done well. Yet Android has not yet been able to establish the kind of brand identity and loyalty that the iPhone has enjoyed. 

A recent survey by GFK found that:

  • 84% of iPhone owners would remain with Apple next time
  • 60% of Android owners said they would stay with Android
  • 48% said they would remain with RIM

GFK also found that content and apps were keys to device/operating system loyalty:

As consumers build digital ecosystems and their own world of content on handsets, the study shows that their loyalty to their smartphone brand increases with the number of apps and services they use. The research reveals that the tipping point for loyalty is when a consumer uses seven or more services on their device.

Consumers in the US are the most likely to use seven or more services (61%), followed closely by China (56%) and Brazil (53%). In comparison to this, European countries use fewer services on their smartphone; France and Italy (46%), Germany (45%), Spain (43%) and the UK (42%)

This survey also reveals the uphill battle that Windows Phones now face as they try to "break in," although more than 50% of the market still don't have smartphones -- which remains a substantial opportunity. 

Windows Phones: Apps Gaining, Awareness Growing, Outlook Uncertain

There are three pieces of data recently out that paint a modestly upbeat, if mixed, picture for Windows Phones. Though Nokia's Lumia phones are not being released in the US until next year, awareness and potential demand for the Microsoft-powered devices in the US are rising (with Samsung and HTC models available).

According to recent survey data from The NPD Group, among those seeking to buy a smartphone within the next six months, a meaningful percentage of would-be smartphone buyers are considering a Windows Phone. Here are a few survey highlights: 

  • Android holds greater interest than other mobile OS (among 63% of respondents)
  • However 44% "of smartphone owners, and those who intend to buy one, are considering purchasing a Windows Phone 7"
  • Yet 45% of surveyed consumers are "still not aware of Windows Phone 7" 
  • Among those not interested in Windows Phones, 21% said the were "too invested" in another OS (iPhone, Android).

The availability of apps is critical to the near and long-term success of Windows Phones. To that end Distimo, which tracks app store inventories and downloads, released data showing strong growth of apps in the Windows Phone 7 Marketplace:

  • The Windows Phone 7 Marketplace is the fifth largest OS application store worldwide
  • The most popular category in the Windows Phone 7 Marketplace is Games. Other popular categories are Tools & Productivity, Entertainment and Travel & Navigation.
  • Paid applications in the Windows Phone 7 Marketplace have grown continuous [sic] with almost 1300 new paid applications every month. Free applications have increased on average by 1650 new free applications month-over-previous month.
  • The number of publishers has consistently grown since the launch of the Windows Phone 7 Marketplace with 700 new publishers per month.
  • Nearly 50% of all applications are available in the 17 countries in which the Windows Phone 7 Marketplace was originally accessible. One-third of all applications are available in all 35 countries.
Windows Phone Marketplace stats

Overall the Windows Phone Marketplace now has roughly 40,000 apps according to All About Windows Phone. While this is a fraction of what's in the iTunes app store or Android market, The Windows Marketplace is just a year old this month. Microsoft is currently running a promotion where they give new Windows Phone buyers $25 to spend on apps.

This positive momentum is tempered by a widely covered "downgrade" of the new Nokia Windows Phones. An analyst at Pacific Crest Securities cut his forecast for Nokia Windows Phone sales by 75% (from 2M to 500K). This was based on his view that Nokia Windows Phones were not sufficiently differentiated and were without "breakthrough innovation." He also believed they were not aggressively enough priced to generate significant demand. 

However Nokia has said it will use price to compete. One must also recognize that this is one person's judgment based on preliminary information. Yet if this prediction comes true and another year of Nokia-Windows phones goes buy with unimpressive sales (and Nokia's share continues to decline) it will signal a major problem (even panic time) for both Nokia and Microsoft. 

Amazon Might Own Android Tablet Market

I've not had my hands on an Kindle Fire but the reviews are generally fair to negative, except in the context of its price: "a good tablet for the price" is the consensus. And consumers are responding to that price in large numbers. Amazon will sell millions of Kindle Fire tablets to existing Kindle owners and to some would-be iPad buyers seduced by the $199 price and the assurances of the Amazon brand.

Amazon is also intending to release a larger version of the Kindle Fire next year, though it won't be quite as large as the iPad. Putting aside the Nook and hypothetical Windows tablets, Amazon's Kindle Fire is instantly the most successful tablet after the iPad by a huge margin.

Screen shot 2011-11-21 at 10.41.56 AM

Until someone else comes along with a cheaper, better Android tablet Amazon owns the market. So when the dust settles early next year after holiday sales are over it will effectively be a two tablet market: Apple vs. Amazon. I say "Apple vs. Amazon" because Amazon has effectively obscured all Android (and Google) branding. Most people buying a Kindle Fire don't know or care that they're buying an "Android device." 

It's possible that Samsung or HTC will build a competitive tablet featuring Android 4.0 ("Ice Cream Sandwich"). But the current crop of Gingerbread and Honeycomb tablets simply "blow" (as they say in the vernacular) by comparison to the iPad. It would also be very challenging for any Android tablet maker to match Amazon's pricing given that the company is effectively taking a loss -- sellig the device for less than it costs to make on the assumption that it will increase product and content sales for Amazon.

There is a scenario where wireless carriers give away some future, stellar Android tablet in exchange for two year contract commitments. However, consumers are basically loathe to enter into a second set of wireless contracts beyond the ones they already have for their smartphones. WiFi tablets are more popular than carrier-subsidized tablets. It's therefore a much longer shot.

Recent consumer surveys from Retrevo, Nielsen and ChangeWave have shown increasing demand for tablets, with the iPad leading the group but with Kindle also in the clear second position.

As tablets replace PCs for some people the question of how other PC OEMs repond to the Apple-Amazon challenge becomes a major, strategic question. As Samsung, Dell and others have already shown, they can't (so far) match Apple on quality or hardware-software integration. And they can't match Amazon on price.

Thus until the forseeable future it's a two tablet race. And right now Amazon owns Android. 

The Decline of RIM and 'Consumerization' of IT

One of the big trends of the past few years has been the "consumerization of enterprise IT." This manifests in various ways, including the emergence of enterprise "social" tools that mimic consumer sites and user experiences (e.g., Salesforce's Chatter). Another way in which enterprise IT is changing is that workers now have more choice about the devices that they can use on the network.

RIM's stronghold and bulwark against irrelevance had been the corporate IT department, but that's no longer the case. The iPhone is now the top smartphone in the enterprise according to a new survey, the iPass 2011 Mobile Enterprise Report (based on 2,300 responses from workers at 1,100 enterprises globally).

Below are a selection of data presented in the survey report:

  • 95 percent of mobile workers now have smartphones, up from 85 percent in 2010
  • 91 percent use their smartphones for work, compared to 69 percent in 2010
  • Tablet ownership has grown to 44 percent of mobile employees, up from 33 percent in Q2 of 2011
  • The iPhone is now the top smartphone in the enterprise with 45 percent market share among mobile workers, up from 31 percent in 2010.
  • Only 28 percent of mobile workers are given no choice when it comes to smartphone selection; the majority of enterprises offer their employees some choice (62 percent) – 44 percent can select from a list of smartphones, and an additional 19 percent can use any device they choose to access corporate resources.

Current enterprise smartphone share:

 Screen shot 2011-11-17 at 9.21.01 AM

Intention to buy smartphones in 2012:

 Screen shot 2011-11-17 at 9.07.17 AM

Current tablet share in the enterprise: 

 Screen shot 2011-11-17 at 9.07.37 AM

Another interesting finding is that a growing number of workers (especially younger workers) leave their laptops at the office more frequently. Roughly 42% of workers said they left their business laptops at the office at least several days a week because they have alternative devices at home. 

Question: Do you leave your business laptop at work on weekends/evenings and just use your smartphone or tablet?

Screen shot 2011-11-17 at 9.08.01 AM
In tandem with the above finding the survey discovered that roughly 25% of respondents said they were using their laptops less today than a year ago. 

Android Dominates Q3, iPhone Top Device

According to Gartner, phones running the Android OS "sold" (read: shipped) at dramatically higher rates in Q3 than competing platforms. As the chart below reflects, Android's share of Q3 smartphone shipments more than doubled vs. last year. Nearly all others declined.

The iPhone was almost at parity with Symbian, which declined by more than 50% vs. 2010. RIM and Microsoft also declined. 

 Screen shot 2011-11-15 at 5.53.38 AM

Looking at overall mobile operating system share on a global basis, StatCounter shows Symbian still leading. Apple's iOS and Android are essentially tied about 10 points behind Symbian.  

Screen shot 2011-11-15 at 5.59.53 AM

In the US, NPD Group said that in Q3 Apple had the top-two selling smartphones: 

  1. iPhone 4
  2. iPhone 3GS (now free)
  3. HTC EVO 4G
  4. Motorola Droid 3
  5. Samsung Intensity II

Windows Phones Will Be Most Directly Competing with Android

Windows Phone (especially after the 7.5 "mango" update) has received positive reviews -- some extremely positive. I have one of the Samsung Windows Phones and have been using it periodically for several weeks and can attest to some of the accolades. The browser for example is very fast. I also like the operation of email on the handset.

Some of the various reviews assert that the Microsoft OS has "caught up" to Android and iOS. And with the release of the first Nokisoft phones, the future looks much better for Microsoft's mobile efforts (and maybe for Nokia) than it did a year ago.

However, right now at least, the best prospects for Windows Phones are feature phone users upgrading to a smartphone. These are people who generally speaking haven't been living with and become "acculturated" to an iPhone or Android device -- although the iPod Touch and iPad expose non-smartphone users to iOS.

There's almost zero chance that an iPhone user is going to switch to a Windows Phone at this point. By the same token the chance that an existing Android user will switch is low, though not as low as with the iPhone. iPhone owners display greater loyalty than Android owners. By my logic, then, Windows Phones are most likely competing for attention from those individuals considering upgrading from a feature phone to an Android handset. (Although the iPhone 4 is now $99 with a contract.)

In addition, Windows Phones are probably not competing with the top-of-the-line Android handsets (e.g., Samsung Galaxy, HTC Rezound, Moto Razr). They'll be competing more at the entry level, although Nokia's Lumia handsets are not positioned as entry level devices. To win buyers, however, they'll need to be priced as though they were entry level smartphones.

Windows Phones must generate sales to show that the platform has traction in order to make their case to developers. Without developers and a sufficient supply of desirable apps, Windows Phone will remain a second-tier OS. For higher-end users, Microsoft also needs to "answer" Siri with some compelling voice capabilities in future updates. 

There's no word on precisely when the new Nokisoft handsets will be available in North America. They'll come first to Europe and then perhaps Asia and the developing world before the US market. This makes sense because Nokia's brand is much stronger in Europe and developing markets, where the company is known for cheap devices. 

To compete in the US these Nokia handsets -- and Windows Phones in general -- must be priced at or below $150, and probably $99, with a two-year contract. That's chiefly because they don't have the apps ecosystem to compete with Android. Until they do this is a major deficiency and competitive disadvantage. That's why price is key. But Microsoft knows all this.

If I were a US-based marketing executive for Windows Phones I would secure carrier relationships that allowed pricing at $99 (with a contract). Then I would target smartphone upgraders (low-end Android buyers) and make the case that the Nokia-made devices are better.

I would also be very aggressive with developers. For example, I would pay them to port over their most popular apps to Windows, which appears to be what Microsoft is doing. And I would allow them to keep 100% of the proceeds of app sales for the first year on the platform -- maybe the first two years. 

All of this positioning advice is just based on my instincts and market observations (rather than survey data). But Microsoft and Nokia need to "get it right" or potentially miss a window of opportunity. And without some initial success and perceived momentum, both developers and carriers will be less interested going forward. 

Why Kindle Fire Will Do Well: Price, Brand

By almost all measures Android tablets have been a flop so far. The most "viable" of the Android tablet family, Samsung's Galaxy Tab line, offers a weak software experience and poor hardware-software integration. But the Kindle Fire -- and to a lesser degree the Nook line -- may vindicate Android in tablet form.

However the success of those devices has little or nothing to do with Android. This is especially true with Kindle Fire. (Amazon has probably compensated for the software shortcomings of Android on tablets with its own layer on top of the OS.)

The apparent popularity of the Amazon device is about two things: its $199 price tag (the major driver of sales) and the Amazon brand. The latter gives consumers confidence that it will likely perform as promised and builds on Amazon's successful track record with Kindle.

According to Retrevo survey data, there's a sizable group who might substitute the Kindle Fire for the iPad during the holidays. 

 

While there have been other cheap Android tablets in the past, the difference here is that the Amazon brand and promise of content through Amazon Prime gives people confidence to buy it sight unseen. Amazon Prime would otherwise cost $79 per year. Indeed, with that factored in as "opportunity cost," Amazon is going be losing money on Kindle Fire. We should thus see the device more broadly as a marketing vehicle and loyalty play for Amazon. It will help Amazon sell more stuff in general. 

 

The survey also found that a meaningful number of people may add a second tablet to their growing inventory of gadgets. Here the 7" form factor and perceived benefits of having the Amazon device may cause people to buy a Kindle Fire if they already have an iPad. 

The anticipated success of the Kindle Fire tablet could light a fire under the 7" tablet segment more broadly but not unless those devices are priced competitively. Those 7" tablets (e.g., from HTC, Samsung) that cost more than $250 will probably sit on the shelves. And those 10" Android tablets that cost $499 or more will be seen largely as copies of the iPad and sit on shelves as well. 

The strength of the Amazon brand, the success of earlier Kindle devices and the aggressive pricing (including Amazon Prime) will create success where other Android tablets have failed. The Android "brand" may even be something of a liability in the tablet segment right now. And most Kindle Fire prospects and early buyers probably have limited or no awareness of the device's operating system at all. 

The 'Speech Interface' Now a Must-Have on Phones (and Tablets)

Earlier my colleague Dan Miller wrote up the news that Amazon had acquired speech provider Yap yesterday. So begins a ridiculous "Siri Killer" meme.

What's more interesting however is how Siri, less than a quarter out in its current form, is already reshaping the calculus of what features and capabilities mobile devices must have or offer their users. Call it the "speech interface."

Dan Miller, who is probably the foremost analyst-authority on voice and speech services, has much deeper knowledge of speech recognition and its related manifestations than I. However in my more limited experience I can tell you that Siri offers the best speech user-experience I've encountered to date. (Nuance provides the voice recognition for Siri.) 

As a long-time Android user I've had good experiences with Google's voice search and voice actions and I've had very frustrating ones. Siri (+Nuance) is better. And the way that Siri is integrated into the iPhone 4S (with more to come) is much more compelling than a voice overlay. Siri's "personality" matters as well. It's not only driving engagement and usage it has become a major differentiator and sales-driver for what was otherwise a less-than-compelling product release. 

Sure Android has "voice actions." But Apple has "Siri." You get the difference. 

Google and Microsoft already have considerable speech assets but both will need to "up their game" to compete more effectively. Accordingly we can expect more acquisitions in the voice segment as these companies (and others) create their own versions of the speech interface. This will eventually extend to TVs, cars and other "appliances."

I suspect "virtual assistant" Vlingo will be acquired, because it provides the "assistant" capability as well as speech recognition. (However litigation between Vlingo and Nuance operates as something of a cloud over any potential takeover.)

In a presentation I gave on a range of topics yesterday at the Local Social Summit in London I said Siri is to voice commands and “voice search” what the iPhone was to smartphones in 2007: a breakthrough experience that forces competitors to respond. I guess Amazon just did. 

Amazon, which doesn't have a smartphone, will clearly be integrating voice control and commands into Kindle Fire. Siri isn't yet available for the iPad but that's probably one of the new features that will be bundled into iPad 3. 

Does the Market Want Another Open OS to Compete with Android?

I would argue that Android owes its success directly to the iPhone. Putting aside the claims that Android "stole" the iPhone's look and feel, carriers and hardware OEMs had no response to the iPhone in 2007 other than Android. Hence the carrier and OEM embrace of the Google OS. It was something of a marriage of convenience.

Despite the incredible success of Android, handset makers' relationships with the platform might be described as "ambivalent." They want to avoid becoming merely "commodity producers" of Android devices and reduced to the fate of their desktop brethren, which essentially became vendors of nearly indistinguishable "gray boxes" running PC Windows. Accordingly HTC, Samsung and Motorola have tried to develop, unsuccessfully I would argue, proprietary software on top of Android to differentiate from one another. 

While the new Windows Phone OS represents an alternative to Android, none of the hardware makers other than Nokia has enthusiastically embraced it. If it sells well for Nokia we might see that change. But there are those who also argue that Microsoft risks alienating other hardware OEMs with its Nokia favoritism. 

All this makes me wonder if the market wants yet another open-source OS as an alternative to Android. Reportedly Mozilla, maker of the Firefox browser, is working on a mobile operating system "based on the Web, as opposed to what the project’s wiki calls 'proprietary, single-vendor stacks.'” But this doesn't appear to be viable in the near term as an Android alternative.

What about WebOS? HP was going to kill it. But since the abrupt replacement of CEO Leo Apotheker with Meg Whitman many of his decisions are being reversed. The fate of WebOS is unclear right now and may be decided this year or early next. But what about making WebOS an open-source Android competitor? 

I'm not a developer or engineer but WebOS was and is positively regarded by the developer community; it has just been mismanaged and poorly marketed. But my view is that if HP were to turn it into an open-source mobile operating system there would be takers and it could gain new life. My suspicion is that makers would be interested in a high-quality alternative to Android to further diversify their handset lineups and give themselves some additional leverage vis-a-vis Google. 

WebOS's app ecosystem is paltry by comparison to iOS and Androids but that could be rectified over time. 

I think an open-source WebOS is intriguing; however HP doesn't have a direct way to benefit from it as Google benefits from Android with advertising. Whatever it decides about the fate of WebOS I hope HP doesn't kill it outright.

Samsung Might not Be Smartphone Leader for Long -- IDC

With the caveat that these numbers are focused on "shipments" and not sales, IDC confirms other hardware-tracking firms' estimates showing that Samsung took the global smartphone crown from Apple in Q3. However, the firm said that the iPhone 4S should challenge the Korean company's newly established leadership position.

Samsung and Apple are engaged in an increasingly bitter, global legal dispute over patents, which has just become an EU anti-trust investigation as well. Amazingly, Samsung remains one of Apple's major suppliers. 

According to the IDC data, Taiwan-based HTC also experienced triple-digit growth on the strength of its Android device sales. 

Screen shot 2011-11-04 at 6.34.32 AM

In the chart above, Nokia is off nearly 40%. But this is "BW," before Windows Phones. The firm just released its first Microsoft-based phones, which have received positive but not spectacular reviews.

In the "others" category presumably is Windows Phones generally. In the US, Microsoft's mobile market share stands at either 7% or 5.7% percent according to Nielsen and comScore respectively. 

US Smartphone Share Over 50% for Younger Users, Half Have Apps

Earlier this morning Nielsen released its latest smartphone data for the US market:

  • 43% smartphone penetration overall
  • Android: 43%
  • iPhone: 28%
  • RIM: 18%
  • Windows: 7%
  • Others: 4%

By comparison comScore says that 36% of mobile phone owners have smartphones. However the most recent comScore data show a comparable share distribution for Android and the iPhone (43.7% vs. 27.3%).

Nielsen also reported that smartphone ownership for those under 45 is much greater than the overall population: 54%. It goes even higher (62%) for those 25 to 34 years old.

The Pew Internet Project said in May of this year that 42% of US mobile users own smartphones. And in a release of new survey data yesterday, Pew found that 50% of all mobile phone users have downloaded apps (vs. 43% in May 2010). However, as we know, downloads and usage are not synonymous.

Figure 7: Among those with apps, most report using five or fewer on a regular basis

 

 

 

 

 

 

 

 

 

 

 

 

 

As the chart above indicates, 51% of mobile phone app downloaders use between 1 and 5 apps weekly. A substantial minority (31%) use 6 or more apps per week. Average weekly app usage is higher among tablet owners.

The following chart shows the general categories downloads by populatirty/penetration according to Pew. Curiously the most popular app download category, games, doesn't appear on this list. This is probably a flaw in Pew's survey question design. 

Figure 10:  What types of apps do adults download?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finally, Pew says that just under half (46%) of all app downloaders have paid for apps at some point, with most spending less than $5.  

Figure 13: How many adults pay for apps?