Mobile Platforms

Study: Most Mobile Device Usage at Home

Late last week Google released data (captured and collected by Compete) about the role of digital media, mobile devices and video in US consumers' apparel shopping habits. Overall the data reflect the now many influences operating on consumer decision-making. It also shows how traditional media still play a meaningful role in purchase behavior: they create awareness and stimulate further research on digital devices. 

But rather than identifying "which 50%" of the media spend is truly effective, it seems that it is getting progressively more complicated for marketers and correspondingly difficult to correctly attribute sales or "conversions" to specific campaigns.

Q: How soon after the last time you saw or heard each of the following types of apparel ads did you look up the advertiser online to get more information?

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The Google-sponsored research, as mentioned, offers a range of findings. Below I examine some of the mobile-specific data.

Q: Which of the following online sources did you access on your mobile phone?

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The largest single category in the slide above is search. Google uses this data in part to impliedly make the case for mobile search advertising. But the more interesting interpretation of this slide is that search penetration on mobile devices (in this study and apparel category) is far less than on the PC where as much as 95% of the online population uses search engines. (There are other data showing greater mobile search usage.)

In the slide below, echoing lots of other data, most mobile consumers are comparing prices, looking for deals and reading product reviews on their phones (and tablets). 

Q: Which of the following did you do on your mobile device while researching or shopping for apparel?

 Screen Shot 2012-08-13 at 9.23.23 PM

One thing that's interesting about the findings of this Google-Compete study is the fact that most of the mobile usage happened at home vs. any other location. At least among apparel shoppers, fewer of them are using their devices in stores than other survey data have shown. In other surveys numbers have been as high as 80% - 90% of smartphone owners using devices while in retail stores for various purposes. 

Q: From which of the following locations did you use your mobile device(s) (e.g., mobile phone and/or tablet) to shop for apparel?

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The fact that tablets owners and tablet usage are included in these findings may account for the smaller in-store usage figures. In addition, the sample size was relatively small (n=161). Regardless, it's accurate to point out that a considerable amount of smartphone usage happens at home. Accordingly, marketers cannot and should not assume that smartphone users are always "out and about" when consulting their devices. 

Though not explored in this study, it's also generally true that mobile research is followed up by online or in-store (rather than mobile) purchases.

The Decline of Voice, WiFi Tablets and Other Carrier Data from 1H 2012

Mobile industry and carrier watcher Chetan Sharma has pulled together mostly carrier-published data for a mid-year update across a range of topics relevant to the wireless industry. I pulled four of his slides below; however you can see the full presentation here.

The first slide below shows increasing smartphone penetration in the US and abroad. No surprise here; this has been in the survey data for months. In Q2 smartphone sales exceeded 70% of new handset sales in the US.

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Outside the US smartphone penetration isn't rising quite as fast. However it will accelerate and US smartphone growth will start to slow over the next 12 to 24 months. Feature phone sales in the US are now clearly in the minority.

The next slide shows handset market share by manufacturer, with feature phone sales representing only about 30% of total handset sales this year.

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Particularly striking in the chart above are the following:

  • The rapid decline of feature phone sales since 2010 (orange)
  • The decline of RIM over the same period (green) 
  • The amazing growth of Samsung (purple), now dominating smartphone and Android sales in the US
  • The relative flatness of Apple's overall share (red)

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The graphic above shows the relative shares of voice and data on US carrier networks. Data, in red, now entirely eclipses voice. In 2009 the two were had nearly equal shares of traffic on carrier networks.

Finally, the following chart shows the ratio of WiFi-only tablets tablet sales with carrier network connections.

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I'm drawing a few inferences but it appears the data show consumers are avoiding additional carrier fees and service plans, preferring to run tablets on WiFi networks. Notwithstanding some of the new shared data plans it appears that carriers will not derive significant new revenues from the growth of tablets.

With nearly 50 million tablets in the US market, carrier-networked devices constitute roughly 8% of the total. The lure of discounted devices in exchange for two-year contract commitments isn't succeeding in getting customers to pay additional carrier fees. Beyond basic consumer resistance to new fees, the $199 Kindle Fire, Nexus 7 and potentially forthcoming 7-inch iPad, undermine the appeal of carrier discounts.    

Starbucks-Square and How "Point Solutions" Will Drive Mobile Payments

Yesterday Starbucks and Square made a big announcement. The deal is huge for Square and will make it the payments processor for US Starbucks locations. The coffee-lifestyle company also invested $25 million in Square at a $3.25 billion valuation. Starbucks CEO Howard Schultz joined the Square board as part of the deal.

Here are the basic terms: 

  • Customers will be able to use Pay with Square, Square’s payer application, from participating company operated U.S. Starbucks stores later this fall, and find nearby Starbucks locations within Square Directory
  • Square will process Starbucks U.S. credit and debit card transactions, which will significantly expand Square’s scale and accelerate the benefits to businesses on the Square platform, especially small businesses, while reducing Starbucks payment processing costs
  • Using Square Directory, Starbucks customers will be able to discover local Square businesses -- from specialty retailers to crafts businesses -- from within a variety of Starbucks digital platforms, including the Starbucks Digital Network and eventually the Starbucks mobile payment application
  • By accepting Pay with Square, Starbucks is giving millions of customers another way to enjoy a quick and seamless payment experience at approximately 7,000 Starbucks stores.

Why is this important and what's important about it? Clearly it's a massive win for Square, which becomes the undisputed "mobile payments" leader in the US with this deal. It brings, scale, prestige, brand recognition and revenue to Square. 

However there's nothing actually new here for Starbucks from a consumer experience standpoint. Starbucks has offered mobile payments through its smartphone apps for some time. That will continue.

Square's "Pay with Square" consumer app and local business directory will also become an accepted form of payment at Starbucks. This will give a significant boost to the app, which hasn't been widely adopted.

I've described Starbucks before as "The American Idol of mobile payments." That's because it's in a nearly unique position to educate consumers and introduce them to mobile payments in a specific context, where they can experience the efficiency and convenience of paying without using cash or physically swiping their credit cards. 

I've also recently written that it's this type of "point solution" experience that's going to be the driver of mobile payments rather than abstract, "horizontal" apps such as Google Wallet. Ultimately, however, Google Wallet and others may be the beneficiaries of the Starbucks-Square partnership and the "education" it brings to the market. 

The high profile nature of this deal may motivate similar deals or the acceleration of mobile payments at other fast-food and "fast causal" eating establishments. I wouldn't be surprised, for example, if McDonald's initiated a mobile payments pilot of some sort in the very near future. 

GoPago Courts Small Merchants with Free POS-Tablet Terminal

Being a payments startup is hard, even for one funded by megabank JP Morgan Chase. The Chase-backed GoPago, which launched a mobile app in late February this year, has struggled for awareness and consumer adoption in a crowded market where most people don't even recognize the need for mobile payments.

In addition to mobile payments the consumer-facing GoPago app also provides a range of additional services, including online ordering and a number of small-business marketing capabilities. Before launching the company developed a cloud-based POS system that interfaces with established POS systems. GoPago sought to create a kind of self-contained marketplace for local businesses and consumers not unlike PayPal's mobile marketing and payments strategy. 

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But that didn't work -- at least not yet. Now the company is using its cloud-based infrastructure to go after SMB merchants, who are also aggressively being courted by Square, PayPal, Intuit, Groupon and others.

GoPago this morning introduced a POS terminal called "GoPago Live," which goes much further than its competitors. Rather than being simply an iPad and software (it uses an Android tablet), GoPago Live offers a complete POS system, a cash box, receipt printer, card reader and 4G Internet access -- all for free. There's also 24 hour customer support.

In return GoPago takes 2.85% per transaction, which is competitive with PayPal and Square. Payment processing is provided by Chase Paymentech. Interestingly GoPago even shields merchants from Amex's higher transaction fees. It will allow merchants to accept Amex for the same 2.85% fee. 

Assuming it all works as advertised, I haven't seen a demo, this is a pretty compelling package for local merchants. GoPago told me that the company is targeting neighborhood businesses with revenues in the "low six-digit range."

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The challenge once again is rising above all the "noise" in the market. But the substantial cost savings available to merchants using GoPago Live (perhaps between roughly $5K and $15K per year) should help drive word of mouth and general SMB awareness. And while the Chase connection didn't help very much in getting consumers to adopt the mobile app, GoPago may have more success using Chase to drive awareness and adoption on the merchant side.

ShopKick Kick's eBay's Mobile Butt in Time Spent with App

Nielsen has identified the top mobile shopping apps for June in the US market. The list is as follows:

  1. eBay Mobile
  2. Amazon Mobile
  3. Groupon
  4. Shopkick
  5. LivingSocial
  6. Walgreens
  7. Target
  8. RedLaser (eBay)
  9. Out of Milk Shopping List
  10. SavingStar Grocery eCoupons

While eBay and Amazon have been on top of this list since its inception, ShopKick and Walgreens are a bit of surprise to me. However it's not clear precisely how Nielsen defines the "shopping" category. 

While eBay had a little over 1 million more users than Amazon (13.16 vs. 12.12 million) the time spent with the eBay app was much more than Amazon users (1:04 vs. 18 minutes). The discrepancy can likely be explained in the fact that Amazon users are probably much more directed, looking up prices, reviews and product availability while eBay users probably browse and look at many more pages. 

Beating both by a mile was ShopKick, with three hours, 19 minutes (3:19) on average June. That kind of engagement is truly impressive. 

Nuance's Nina: "My Password Is My Voice"

Last night Nuance Communications took the wraps off Nina, a virtual assistant for enterprise mobile customer service apps. The comparisons to Siri are immediate and obvious. However Nina doesn't directly compete with Siri; it's not a consumer app. Rather Nina extends Siri-like "conversational" interactions to enterprise mobile apps -- in the hope and expectation of delivering better customer care experiences. 

Dan Miller has written up the announcement and what it means for mobile customer service on the Opus Research blog. The first announced enterprise to take advantage of Nina is bank USAA (launching next year). Nuance is offering a developer SDK and APIs and is enabling customization, extending to the persona/voices. Consequently one enterprise's version of Nina can look and sound very different than other's. 

For purposes of this post, however, I want to focus more narrowly on one piece of the Nina experience: password voice authentication. This is unlikely to draw much coverage and will be overshadowed by the Siri comparisons and discussion. 

Password voice authentication for mobile devices is a technology that has existed for some time. But there's no mainstream implementation of this capability really until now. There's also beta product called Kivox, available for Android handsets but not through the Google Play or Amazon markets. It has to be downloaded directly in a convoluted process that will elude mainstream users.

It's very painful to enter passwords manually (password and username) on a smartphone. And it has to be done again and again. While Safari and Chrome offer to remember passwords that doesn't always work. By contrast voice biometrics for password entry is an elegant solution to the small screen problem. It could also eliminate the need to create conventional passwords entirely. There would be nothing or very little to remember or write down. You'd just speak your "passphrase." 

The voice authentication capability is actually part of a separate module that Nuance offers. It can be integrated into apps without the full Nina integration. I'm not an expert on voice biometrics -- Opus' Dan Miller is the leading expert on voice biometrics and chairs the VoiceBioCon event -- but this is the part of the Nina announcement that I was most excited about.

Assuming it works well, it relieves a major headache for me in dealing with passwords on mobile sites and smartphone apps. While Nina will undoubtedly be widely adopted and successful, voice authentication has the potential to be equally transformative of the user experience. So would voice-initiated payments and transactions, but that's entirely different post.

Below is a video showing a demo of Nina

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Point Solutions Like Parking Apps Will Drive Mobile Payments Adoption

Yesterday I spoke with yet another company in the mobile payments space. It faces challenges of awareness and adoption, like most competitors in this segment. Also yesterday Google Wallet upgraded to enable any credit or debit card to be used in conjunction with the app. The problem is there are only six phones in the US, operating on the Sprint network, that are compatible with Google Wallet. Verizon, AT&T and T-Mobile either don't have Google Wallet-enabled phones or aren't permitting its use right now (i.e., Verizon).

Today TechCrunch reports on new funding and a new CEO for QuickPay, a mobile parking app. In addition to QuickPay, I have two other parking apps on my iPhone: Parkmobile and PayByPhone. I love these apps because they enable me to pay for parking very efficiently, without relying on coins or even a credit card (which was a great innovation at parking meters until mobile apps came along). With these apps I can also extend time remotely, which means I don't physically have to go back to the meter. 

The superiority of the experience afforded by these apps vs. the old way of paying for parking is dramatic. This is the kind of scenario (point solutions with specific use cases) that will drive consumer adoption of "mobile payments," which won't be seen by consumers as "mobile payments" (with all the corresponding security fears) but simply as a great convenience instead.  

Once consumers have become accustomed to using mobile payments point solutions such as parking apps, they'll be much more comfortable with mobile payments generally and embrace mobile wallets such as Google Wallet -- provided there's merchant adoption and general availability. 

Mobile to Be 25% of E-Commerce in Five Years? Not So Fast

ABI Research is projecting that mobile devices will account for just under one quarter (24.4%) of all e-commerce by 2017. If "mobile" is defined to include tablets, then maybe. But if we're talking about smartphones largely or exclusively there's a long way to go before that happens.

Despite the fact that the data now show a majority of smartphone users have made purchases on their devices, most people don't routinely engage in e-commerce via smartphones. Security fears and the problem of entering credit card numbers are major barriers to so-called "m-commerce." Tablets by contrast are driving lots of purchase behavior. 

A majority of smartphone owners (80% to 90%) use their devices in stores to check prices and get reviews and product information. However most don't go on to buy -- unless it's through eBay or Amazon. 

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As a general matter, if people are going to buy "online," they later go to their PCs and make purchases. Nielsen data, compiled by eMarketer, show that a minority of users (5% of smartphone owners) are buying things directly through mobile devices -- in this case in response to a mobile ad. But these data are also reflective of the general fact that most people don't buy on smartphones. 

According to Nielsen the top mobile "shopping" apps are the following

  1. eBay Mobile
  2. Amazon Mobile
  3. Groupon
  4. ShopKick

Amazon and eBay in particular have invested hugely in mobile and it has paid off -- literally. Amazon in particular has your credit card on file and can enable a mobile transaction with a single click.

By contrast, most e-commerce sellers lag far behind these leaders. And to drive the kind of shopping volume that ABI is projecting the "credit card problem" needs to be solved. Large retailers with whom shoppers have direct relationships (e.g., Target, Macys, Wal-Mart) can store credit cards on file and remove friction accordingly. 

However "no-name" e-commerce sellers are not going to be able to participate in smartphone-based commerce unless they address the payments problem, which could be via PayPal or using a solution such as the one offered by Card.io. Indeed, it's far from clear that the ABI prediction will come to pass.

We're probably looking at a situation for the medium term foreseeable future where smartphones are aggressively used by consumers for research and price comparisons but generally not used for conventional e-commerce transactions except in select situations such as I've described. 

Microsoft's Metro UI an Opportunity and an Obstacle

Microsoft did a nice job in reinventing its mobile OS with the advent of Windows Phones. There are ways in which the "Metro UI" is beautiful and strikingly different than iOS and Android. However the UI also represents the greatest barrier to adoption of Windows Phones.

Until people have a chance to use and familiarize themselves with Windows Phones they won't buy them because of the perceived unfamiliarity. Agressive discounting in the US may convince some to do so however. But as long as there are relatively few Windows Phones "out in the world" the impulse to buy them will also be limited.

It's Microsoft and Nokia's version of the "chicken and egg problem." Targeting new smartphone owners is probably the best strategy to gain share for the companies in the near term. Once they have some users they can upsell them to more expensive and high-powered phones. 

Among developers however, Appcelerator has discovered that there's an increasing appreciation for the Metro UI. In a survey of more than 2,000 mobile developers, 44% of them characterized the metro UI as "different and beautiful" compared with iOS and Android. 

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That 44% hasn't yet translated into a belief that Windows Phones will succeed -- even in the enterprise, where Microsoft has had historical advantages over competitors. Developers in this survey do think that BlackBerry is essentially dead in the enterprise (which would mean death for the company overall) and thus by default that Windows will be the "third ecosystem." 

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Speaking purely for myself, the Windows Phone homescreen is a barrier to adoption. While the "live tiles" are supposed to facilitate quick access to content and enable us to "get back to our lives" I find them awkward and off-putting. I think the modifications of Windows Phone 8 make it worse.

The "inside" of Windows Phone is much better and more pleasing. Regardless, I think the outlook for Windows Phones (and by extension Nokia) remains very mixed at best. Unless or until Microsoft and Nokia can get these phones in people's hands they'll have trouble winning share.

Facebook Phone Smart or Destined to Fail?

Just like Amazon, Facebook is building a phone. This rumor has been around perhaps for two years but Bloomberg seems to confirm it. The hardware maker is said to be the struggling HTC. Previously HTC released the ChaCha (pictured at right), with a dedicated Facebook button. 

The ChaCha was a failure. Will a dedicated "Facebook phone" equally bomb? The chances are very good that it would see limited demand. 

From Facebook's perspective the logic of its own device is understandable: 

  • Mobile is increasingly important to Facebook's future
  • It doesn't control a mobile platform or OS
  • By controlling the OS (or the presentation layer on top of the core Android OS) Facebook could do a great deal with apps and ads
  • A mobile phone would allow for the integration and extension of its online app store into mobile 
  • Facebook would have more mobile advertising options on its own mobile platform
  • The company could integrate users' networks with the dialer, as well as doing interesting things with chat and mobile video

The problem is that iPhone and Android devices have dedicated Facebook apps. This will be sufficient for all but the most dedicated Facebook users.

The additional integrations and "cool things" that Facebook could do with its own version of Android won't be enough incentive for most people to buy the device. Younger users and first-time buyers making the switch from feature phones to smartphones might be enticed to buy such a device if the price were right. 

The other major issue is privacy and data-mining. I'm making a bunch of assumptions when I say that a Facebook phone would likely collect even more data about individuals and their behavior (calls with contacts, sites visited, apps used, physical movements) than the existing mobile apps or online experience do. Thus concern that "your phone is watching/tracking you" would cause many to stay away and could even lead to regulatory investigations -- depending on how aggressive Facebook wanted to be with tracking/monitoring. 

However I know that Facebook is more cautious about privacy these days and so it might be more restrained. 

Although the rumors have been around for a long time, Facebook probably saw Amazon's success with Kindle and Kindle Fire and decided there was little or nothing to lose in making its own device. I just don't think many people will be very interested. 

Update: On the Facebook Q2 earnings call this afternoon CEO Mark Zuckerberg said that it didn't make a lot of sense for Facebook to create its own phone. But we'll see early next year. 

EU Request for Google Mobile Changes May Go to Heart of Jelly Bean Innovations

One of the chief innovations Google is bringing to its "Jelly Bean" Android update involves local search and related functionality through Google Now. I've written fairly extensively already about these new features on my Screenwerk blog and Search Engine Land. In short, the new Android OS offers information "cards" (structured data) in response to a range of query types, especially local.

This is at once an evolution of the Google search experience for mobile devices and an effort to better compete with Apple's Siri. The information (search result) is more attractively presented and substitutes for the traditional page of search results, which still can be found by scrolling to the bottom. In addition to the image above right, below are a few example screenshots:

 Screen shot 2012-07-24 at 6.36.06 AM

This new presentation is more consistent with what mobile users want ("answers") and offers a better experience overall than a conventional page of "blue links." The potential problem for Google is that this approach goes much further in the direction of substituting "Google's own content" for third party information, which is at the center of Europe's antitrust dispute with Google.

The issue of of Google showing its "own content" at the top of search results or in a preferential position is one of four "concerns" raised by the EU in May along with an invitation to settle. Because it goes to the heart of Google's control over the search results page and the company's ability to experiment and innovate with new content presentations, it's one of the most potentially challenging issues for Google to negotiate with the EU. 

Google has been trying to avoid a formal antitrust action by European regulators. But just as it was negotiating to settle the case, EU Competition Commissioner Joaquin Almunia, last week, asked Google to make "broad changes" to its mobile services. While it's not clear specifically what he is asking for, the path adopted by Jelly Bean -- which completely marginalizes third party content in a range of cases -- exacerbates one of the EU's fundamental "concerns" about Google.

Google is not going to want to be locked into any specific search results page in mobile. It will demand the ability to change the look and feel of the page and to innovate around the way it presents content. But to the extent any such innovations don't involve equal exposure of third party information the Europeans will probably have strong objections.

The next couple of weeks should determine whether Google will be able to negotiate a settlement or whether the company will face a formal antitrust action (and potentially billions in fines) from the EU. 

Outlook for Amazon Smartphone Murky

The rumor that Amazon was going to build a smartphone has been around for some time. However it has returned and gained new momentum of late, with the recent acquisition of 3-D mapping service UpNext. And an article last night from Bloomberg seems to confirm that Amazon will introduce a handset or handsets -- made by Foxconn, the company that makes the iPhone and iPad:

Foxconn International Holdings Ltd., the Chinese mobile- phone maker, is working with Amazon on the device, said one of the people, who asked not to be identified because the plans are private. Amazon is seeking to complement the smartphone strategy by acquiring patents that cover wireless technology and would help it defend against allegations of infringement, other people with knowledge of the matter said

Let's now assume that Amazon is making a smartphone -- a Kindle smartphone -- what is the outlook for such a device? One would assume, like Kindle Fire, that it will be built on a highly customized version of Android, with the same type of Amazon content integration as seen on the Amazon tablet. 

The Kindle Fire was a sales success because of the strength of the Amazon brand and channel and the inexpensive price tag ($199). Amazon's brand won't be as much of a factor in the smartphone arena. An Amazon smartphone will have to compete on the strength of its features and on price. It's hard to imagine that Amazon will be able to compete on price because many Android phones are already very cheap or free (carrier subsidized).

Content (as in Amazon books, movies and music) also doesn't factor as significantly as a differentiator on smartphones it as potentially does on a 7-inch tablet. What matters on smartphones is the availability of apps. There's already a Kindle app for iPhone and Android; so users already have access to much of Amazon's content (though not cloud-based music or movies). And the Amazon app store is an incomplete version of Google Play (the Android market). In other words, the competitive advantages that helped drive Kindle Fire sales don't exist at all or won't exist to the same degree in a smartphone context. 

The only way I could see an Amazon smartphone succeeding vs. other Android phones or the iPhone is if the phone were absolutely top-of-the-line and Amazon were practically giving it away (sub-$100). Otherwise I think we'll see a tepid response by consumers.

Beyond this, depending on what kind of finally shows up, I'm sure Amazon will be pulled into the maelstrom of mobile patent litigation. 

Marketers Confused about Mobile, but Increasingly Building Sites and Apps

Despite all the promises of digital marketing, data and analytics most marketers remain confused about how to manage the increasing complexity of digital channels, devices and tactics -- let along integrate them coherently. In particular, two recent surveys from email marketing services provider StrongMail and IBM show that marketers and CMOs conceptually embrace mobile marketing but are generally stumped by tactics.

The IBM survey was conducted in 2012 and had a sample size of roughly 350 "marketing practitioners." The StrongMail survey was conducted in Q1 and had 802 respondents, described as "business leaders." Just under half (46%) of the StrongMail respondents technically qualify as small businesses, with fewer than 100 employees. The IBM survey was more representative of enterprises and had respondents from multiple countries.

Among StrongMail survey respondents, only 55% had an existing mobile presence or were engaged in any form of mobile marketing. And 57% said they'd been doing it for only a year or less. Although 43% of those without a mobile presence or strategy planned to implement one within the next year. 

What did they plan to do? In roughly equal numbers the StrongMail respondents planned to build mobile sites (30%) and mobile apps (26%), followed by SMS/MMS marketing (15%). Impressively, 70% of StrongMail survey respondents planned to increase their mobile budgets in the next 12 months. But there's a difference between "talk" and action. 

For those still not doing anything, the top three answers to the question "Why aren't you leveraging mobile marketing?" were the following:

  • We see value in mobile but haven't yet determined the right strategy: 37%
  • Lack of resources/staff: 22%
  • Lack of funding/budget: 12%

Confusion over strategy and tactics similarly plagues the marketers at the larger organizations surveyed by IBM. In answer to the question, "Which three of the following market factors will be the biggest challenge for your organization over the next 3 to 5 years?" they responded that the proliferation of channels and devices was the biggest challenge: 

Screen shot 2012-07-05 at 11.31.35 AM

Like the marketers in the StrongMail survey, the emphasis in the IBM survey was on mobile sites and apps. In response to the question, "Which of the following mobile marketing tactics is your company using or planning to use?" they said: 

Screen shot 2012-07-05 at 11.05.42 AM

In this case, however, mobile email, SMS and local ad targeting were also being (at least conceptually) embraced. In the StrongMail survey the top current marketing methods reported were the following:

  • Mobile websites: 70%
  • Mobile apps: 55%
  • QR codes: 49%
  • SMS/MMS: 40% 

Interestingly only 13% of the mostly small business respondents in the StrongMail survey said they were using "location-based mobile marketing." And among those not currently doing any mobile marketing, only 3% indicated they were planning to implement it. 

By contrast the larger companies represented in the IBM survey were more interested and bullish about location. This is almost the opposite of what you might expect. SMBs could be expected to be more interested in location-based mobile marketing while one would anticipate that enterprises would be more skeptical. But the opposite appears to be true, drawing inferences from the data in these two surveys. 

Monetate: Non-PC Devices to Grab 25% of Traffic in Less than a Year

E-commerce optimization firm Monetate has published its latest "E-commerce Quarterly" report. The report addresses a number of issues including social commerce. For purposes of this post, I'll focus on the mobile and tablet findings.

The data in the report are drawn from "analyzing a random sample from over 100 million online shopping sessions on 100-plus major e-commerce websites." Here are some of the major findings: 

  • 88% of website visits now come from PCs, down from 92.1% in the prior quarter.
  • Tablet traffic increased 348% in one year, while visits from smartphones increased 117% during the same time period.
  • More than 6% of all website visits now come from tablet users; 95% of this traffic is from iPads.

Website Traffic Sources

Screen shot 2012-07-02 at 8.30.13 AM

Q1 2012 Conversion Rates by Device Category

Screen shot 2012-07-02 at 8.30.34 AM

Compare similar data from Marin Software. Directionally they're almost identical to the Monetate findings.

http://searchengineland.com/figz/wp-content/seloads/2012/03/Screen-shot-2012-03-26-at-5.10.22-AM-600x238.png

What both the Marin and Monetate conversion findings lack, however, is data about offline conversions. If those were tracked and factored in I suspect we'd see mobile conversion figures outstrip the PC and potentially tablets.

Monetate's focus is strictly on e-commerce conversions. But most people don't buy conventional products on their smartphone, though they may do things like banking transactions or buy apps or rent movies. 

The use cases for smartphone are different than PCs and tablets, which are mostly used at home and often as a substitute for the PC. According to Monetate's report:

It seems clear that smartphone users are either doing more comparison shopping or are dissatisfied with the user experience. In fact, a recent study from comScore Inc., Shop.org, and The Partnering Group revealed that 43% of smartphone owners have used their mobile device while in a store for a shopping purpose.

Monetate also argues, despite that at-home usage of tablets, that there's a different user expectation vs. the PC experience:

With increases in website traffic from devices such as the iPad and Kindle Fire, e-commerce businesses must treat customers using tablets as a unique audience segment. Tablet users expect a different experience that takes advantage of their devices’ features, such as touch/swipe functionality and screen rotation.

This argues in favor of tablet apps as well as a tablet-optimized HTML5 site. Finally, the firm predicts that at current growth rates, "website traffic from PC users will dip below 75% in less than one year" -- meaning that smartphones and tablets will represent 25% of site traffic. 

RIM, Nokia Contemplate Futures Amid Dramatic Market Changes

Almost nobody in the mobile handset business is making money right now except Samsung and Apple. Nokia and RIM, the former smartphone leaders, have almost seen the bottom drop out of their businesses over the past year or so. RIM hired bankers recently to consider its options. The company is almost in free fall.

Nokia had hoped that Microsoft would save it but that's not happened. The most optimistic discussions of Lumia sales indicate they're "mixed." Furthermore, existing Nokia Lumia phones won't be getting Windows Phone 8 upgrades. They'll have to settle with Windows Phone 7.8.

This fact, once made known to the general public, will essentially kill sales of current Lumia smartphones (unless carriers give them away). People will want the new and improved version of Windows Phones -- which won't be coming out until much later this year. That leaves two more quarters of weak sales for Nokia. Moreover, Nokia will be just one of several OEMs to be releasing Windows Phone 8 smartphones. 

It doesn't look good. 

The Sunday Times in the UK reported that RIM was contemplating either selling its handset business or seeking an outside investor such as Microsoft. Nokia also looks like a takeover target as its fortunes continue to decline. And with both of these companies struggling the likelihood that Microsoft will own at least a part of a hardware OEM grows more and more likely. Amazon is also a potential investor or acquirer mentioned in the article. 

One now has to wonder whether, if Nokia had gone with Android, things would be any different at this point.

There were discussions between Google and Nokia before the latter went with Windows. According to a source I spoke with, Google was unwilling to agree to a co-mingling of Google Maps and Nokia Maps or substitution of Nokia Maps on the back end. It's unclear whether that was the dealbreaker or one of several issues that prevented a Nokia-Android deal. Microsoft did agree to use Nokia Maps and in fact Nokia does replace Bing Maps in the new Windows Phone 8 OS.

It is likely that Nokia would have sold more Lumia phones to date if they were powered by Android. That probably wouldn't have fundamentally altered the company's predicament but it would have made it marginally better. Yet HTC is building some very nice Android devices but being overwhelmed by the Samsung Android juggernaut all the same. The Taiwan-based company is struggling to remain profitable and recently abandoned the Brazilian market. 

If that continues HTC could be another takeover candidate by early 2013. And if that's so it will dilute the value of Nokia and RIM as they seek "strategic options" to survive. 

Google to Announce $199 7-inch Tablet This Week

The long-anticipated Google (Nexus) tablet is set to debut this week at Google's developer conference, Google I/O. Gizmodo Australia has specs and apparent pictures of the device. CNET has additional information.

Gizmodo reports an 8GB model will cost $199, matching Kindle Fire, and a 16GB model will carry a $249 price tag.

Google's tablet announcement comes on the heels of the Microsoft Surface announcement last week. However Surface pricing wasn't disclosed. Rumors argue that the lower-end RT model will not come in below $599, with the higher end Pro costing at least $700.

Unless Microsoft can get the RT price down to $499, as I and others have argued, Surface is unlikely to compete with or impact the iPad very much. Rather it will likely affect competing Windows laptop sales. 

The new Google Nexus tablet will probably have an immediate -- and potentially dramatic -- impact on Kindle Fire sales. The Kindle Fire is a nice upgrade from regular Kindle reading devices but a lousy tablet overall for other than accessing Amazon's content universe. The Nexus tablet is likely to be a much better device for Internet browsing with a larger app library. Android non-tablet apps will look better on a 7-inch device than they did on the 10.1-inch Android Galaxy Tab. 

Those not loyal to Amazon will be inclined to choose Google's tablet over the Kindle Fire -- all things being equal. However we may see Amazon respond with a price cut, which would be very interesting since the company already looses money on every Kindle Fire sold (but makes it back on content and other sales). 

Siri and Voice UIs Are Reshaping Consumer Expectations

Ever since Siri was released with the iPhone 4S last Fall -- although it seems much longer than that now -- it has been reshaping expectations both among consumers and to some degree in the enterprise. Few people are aware of all the work going on around virtual assistants and customer care in the enterprise. It's a very dynamic segment and Siri has become a reference point. 

In addition to Siri there are dozens of voice-based intelligent assistants for Android. There are also Siri competitors in the iTunes store, including Assitant (Speaktoit), Evi (TrueKnowledge) and Kngine. But there are probably about 12 - 15 more apps that present themselves as voice tools or intelligent assistants. 

Having a voice UI and/or intelligent assistant is now becoming a strategic capability for smartphones -- even "table stakes." Witness Samsung's new "S-Voice." However, while the Samsung GS III has received rave reviews, S-Voice has emerged as its weak link. LG is also introducing a voice capability for its handsets. It's not clear why they're doing this because Google's speech recognition and voice actions are baked into the Android OS.

Some of the smaller consumer-facing "assistant" companies and startups (e.g., Speaktoit) become near-term takeover targets as carriers and OEMs recognize the new importance of voice as a UI and, beyond voice, the need to offer an intelligent assistant capability to match Siri and fulfill the new expectations it's creating.

Google and Microsoft have yet to move beyond pure voice input and embrace the "personal assistant" metaphor, though Google has been working on something for some time -- often referred to as "Majel," after Star Trek creator Gene Roddenberry's wife. Nuance, which powers Siri, has Vlingo and Dragon Go!, which sit between what Google and Microsoft offer and Siri in terms of capabilities. 

Notwithstanding intelligent keyboards such as Swype (another Nuance product now) and Swiftkey, voice will emerge over the next year or two as the primary interface for most tasks on smartphones. Most iPhone users use only limited functionality on Siri and Apple has been trying to educate them about its full capabilities. By contrast, keyboards are likely to become secondary tools or used in very specific situations: entering numbers or correcting typos. 

As one colleague put it late last year, if speech is the "new mouse" then voice is the new touch.

What Exactly Is Microsoft Surface and What Impact Will It Have on the Market?

No doubt you've already read a great deal about Microsoft's new hybrid tablet-PC, Surface. It's being described as Microsoft's challenge to the iPad. Some have already called it a "game-changer." But that remains to be seen. It's also probably more of a challenge to Microsoft's own hardware partners than to the iPad.

Surface is a "new family of PCs." There will be at least three versions of the computing device, sporting slightly different specs and features. The screens apparently will all be 10.6 inches. All will come with a version of Windows 8. Perhaps the most compelling feature of the device is a "smart cover" that also operates as a keyboard. 

Unfortunately at yesterday's press conference, which I was not present for, the company provided no release date or pricing information. The latter is critical. However Microsoft said that Surface devices would be competitively priced. In the case of Surface for Windows 8 Pro, the company said it would be priced “on par with Ultrabook-class PCs." Right now Ultrabooks run from about $700 to $1,000

If Microsoft hopes to compete with the iPad, the lesser Windows RT version will have to start at $499. 

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There are some who believe that Microsoft took the bull by the horns in creating Surface, frustrated that its partners were not building compelling hardware while the iPad increasingly stole PC sales. It may well be that this will be the "kick in the pants" that Dell, HP, Acer and the rest need to start developing sexier machines. 

However it's more likely that this device -- provided it works well and delivers against its promise -- will compete with those same hardware partners. It could well capture sales that might have gone to Ultrabooks. I would also imagine that enterprises will adopt these machines, it's not as clear that consumers will. That's where price comes in. 

Another factor is Windows 8 and the public response to the new OS and UI. Microsoft is no longer in the position it has enjoyed for the last 15 years: when it released an OS update people bought it (until Vista). Now Android tablets and iPads do provide a viable alternative for those not doing heavy duty Office-oriented PC content creation.

Windows 8 has so far received mixed to negative reviews. While its Windows Phone OS has been critically praised, the devices aren't selling. This is partly because the UI and OS are unfamiliar to smartphone owners who've already become accustomed to the look/operation of iOS and Android. There are also too many competing options. Android has taken Microsoft's place in the smartphone world; it has become the alternative-to-Apple software supplier.

If consumers find Windows 8 jarring they may delay buying or avoid it. That's why price is so important. Surface is a sexy little device that must be priced very aggressively to get consumer attention. Otherwise, Surface could go the way of the Zune or the even shorter-lived Kin.

Survey: 74 Million Tablets in Use in US Today

The Online Publishers Association followed up its 2011 tablet users survey with the release of an encore study (n=2,540 online adults). It contains a rich trove of data about US tablet usage among adults. According to the survey Android and the iPad have roughly equal shares of the US tablet market. This finding is contradicted by other data sources that show more than 90% of all US tablet traffic comes from the iPad. 

The survey found that 31% of the Internet audience (vs. all US adults) owned a tablet today -- or 74.1 million users. Here are a selection of other findings: 

  • 90% of tablet users are "very satisfied" or "satisfied" with their tablets
  • 60% of tablet owners use the device several times a day, 14 hrs per week on average
  • Home is the dominant use location; majority of usage comes between 5pm and 11pm
  • Top usage categories: accessing content/information, Internet and email
  • 85% of tablet owners are two-screen multitaskers; 66% are three-screen multitaskers.
  • 61% of tablet owners have purchased content

Screen shot 2012-06-18 at 8.12.46 AM Screen shot 2012-06-18 at 8.13.10 AM

Tablet owners have bought plenty of apps but they prefer ad-supported free apps if given the choice. Below is the list of paid-content categories, according to the survey: 

  • Magazines -- 10%
  • Entertainment -- 8%
  • Sports -- 6%
  • Weather -- 6%
  • Shopping -- 5%
  • Newspapers -- 5%
  • Fitness and Health -- 5%
  • News -- 4%
  • Business/professional -- 4%
  • Fashion/Beauty -- 4%
  • Travel -- 4%
  • Finance -- 4%
  • Lifestyle -- 3%
  • Reference -- 3%

The following were the top product-research categories on tablets:

  • Consumer Electronics -- 37%
  • Restaurants/Fast Food -- 36%
  • Media and Entertainment -- 35%
  • Retail and Apparel -- 35%
  • Food and Beverage -- 30%
  • Sports/Recreation/Hobbies -- 30%
  • Travel Service -- 30%
  • Personal Care and Beauty -- 28%
  • Automotive (incl. Parts) -- 25%
  • Health, Healthcare and Pharma -- 24%
  • Fin.Services, Insurance, Real Estate -- 23%
  • Telecom., B2B/B2C Services -- 22%
  • Home Furnishings -- 21%

Generally speaking attitudes and response to advertising are positive among tablet owners, with large numbers using the devices for research and buying. According to the survey, tablet owners spent an average of $359 buying products on tablets in the past year. 

There are also plenty of indications in the survey that people prefer their tablets to other devices for the various activities they're engaged in. 

Screen shot 2012-06-18 at 8.01.16 AM

Will Microsoft Be Forced to Buy Nokia?

We can now say that the Microsoft-Nokia partnership isn't working for either company. Nokia's woes are well documented: more job cuts, more losses, more deterioration in the core business. Lumia sales are weak on a global basis, especially in North America where Nokia was plotting its comeback. The company is in an accelerating state of decline, much like RIM now. 

For Microsoft, which gave Nokia preferential treatment and established a special relationship, Nokia's fall has to be particularly disconcerting. Redmond is already providing billions to Nokia in support and marketing help. Just like the struggling economies of Europe, Nokia needs a bailout. The company is now a takeover target

That raises the question: Will Microsoft be forced to buy Nokia, defensively? Most of the Asian handset makers have favored Android over Windows Phones. Indeed, Nokia should consider adding Android phones to its lineup -- unless precluded by its agreement with Microsoft. And that's probably the case. 

Right now Nokia has about $12 billion in cash in the bank. Absent a takeover, that cash will prevent the company from disappearing any time soon. But it can't continue to operate in the current manner. Its exclusive relationship with Windows/Microsoft simply hasn't worked. Enough time has passed to make that statement. 

There's almost no chance, given the current state of things, that Windows Phones will become the number two smartphone OS, as predicted by Gartner and IDC. Those forecasts were largely based on the reach and perceived brand strength of Nokia. That brand strength doesn't exist in North American and it's declining in other markets.

The chances are growing that someone will bid for Nokia. Rumors are circulating that it could be Samsung (denied by the company) or China's ZTE. However Microsoft will probably be forced to buy Nokia if it comes to that. By default the company would then be following the advice of several tech bloggers who suggested the same to compete with Apple with a more holistically integrated device. 

Microsoft's Bing Maps also rely increasingly on Nokia's data and backend, another reason Microsoft may want to acquire the company. Nokia also holds valuable patents that enhance the takeover value of the Finnish company (and Android licensing value for Microsoft). 

There will likely be some radical change to Nokia (sale or replacement of CEO Elop) by Q4 of this year if sales don't dramatically improve -- and they're not likely to with the iPhone 5 and Galaxy S III coming.