Paradox: Android Sales Surging but iPhone Buyers Most Loyal

All the data indicate that Android is increasingly taking over in the US market and globally. Recent Nielsen survey data argue that 43% of US mobile phone owners have smartphones now. As an aside figure is quite a bit higher than comScore's 35% number. Nielsen also (confusingly) says that 43% of smartphone owners are Android users (43% of 43%).

Significantly, however, a dominant majority of recent smartphone purchasers are choosing Android devices. The iPhone represents 28% of smartphones -- and an equal number of recent purchases.  

Data released last week by ad network Millennial Media showed that Android dominated the sources of ad impressions on the company's network: 54% were from Android handsets, while iOS impressions had a 28% share -- exactly in line with the Nielsen survey data above.

Smartphones and "connected devices" (everything else) accounted for 86% of ad impressions on the network; feature phones delivered 14% of ad impressions vs. 33% in August of last year. 

Despite the Android surge, the iPhone remained the top device on the Millennial chart. Herein lies something of a paradox: the iPhone bar far and away the favorite individual device. Yet, in the aggregate, Android is overwhelming it. 

A recent survey conducted on behalf of UBS (confirming earlier ChangeWave surveys) shows that the iPhone has the highest loyalty and retention rates of any smartphone. While current customers of other smartphone OEMs are far less loyal, with especially bad news for RIM and Nokia (charts via GigaOm).

The iPhone's "implied retention rate" from this relatively small survey of just over 500 smartphone users is 89%, down somewhat from a year ago but much greater than competing handsets.

On the cusp of iPhone 5's release, there's considerable speculation about the device's impact on the market. It appears that Sprint will finally get the iPhone in the US, although it's less certain to come to beleaguered T-Mobile. This will give the device a boost but probably won't do much to stop Android from continuing its climb to mobile OS dominance. 

PayPal Brand Weakness Standing in Way of Otherwise Compelling Shopping Vision

PayPal, Google, Visa, Amex, Square, mobile carriers and others are competing in the rapidly developing world of mobile payments. NFC is one vision (though mass adoption is several years off if at all), while there are others such as Square and PayPal that are pushing NFC-free shopping concepts or tools.

Earlier this week PayPal laid out a very comprehensive and ambitious vision for the "future of shopping" and payments. It's a holistic concept that involves merchants, consumers and advertising; and it's built in part on recent acquisitions: Zong, Milo and Where. 

PayPal wants to bring together payments on any device (call it "cloud payments") with offers (demand generation), "local search" and store inventory data. It's a strong vision and being smartly knit together through acquisitions and PayPal's existing assets. Look for them to make more acquisitions.

PayPal has the resources and most of the assets to make a pretty successful run at this vision. One of its great strengths is that it doesn't require infrastructure upgrades to work: consumers don't need new NFC-enabled devices nor do merchants need new POS terminals. So adoption could be more immediate. But there's a problem in PayPal's brand clout. 

Visa, Mastercard, Amex, Google (even potentially Amazon) all have stronger brands than PayPal or eBay. And I think this is a major challenge for the company in getting merchants and consumers on board en masse. PayPal will also need to revamp and reduce its fee and commission structure to gain broader usage and adoption for all the scenarios envisioned in the video below. 

In my mind, however, the brand issue (strength, trust) is a profound obstacle standing in the way of the realization of this otherwise powerful vision. 

TouchPad Dumping Has Changed Tablet Pricing

The TouchPad "dumping" by HP ($99) set off a frenzy of buying and led HP to briefly reconsider its plan to discontinue the device. HP remains undecided about whether it will simply license WebOS to third parties or sell it outright. HTC is reportedly among those considering buying WebOS, if it's for sale, although Samsung has rejected the notion. 

Whether buying WebOS is smart or futile is the subject for another discussion.  

Regardless, the demand created for the lower-cost TouchPad may have been instrumental in convincing Amazon to price its forthcoming Kindle-Android tablet at $250 (the Nook Color is also $250). This pricing is speculation but pretty reliable speculation.

It may well be that just as there's a de facto $200 ceiling on smartphones (with carrier subsidy) there may now be a $300 or $350 ceiling emerging for non-Apple tablets. People haven't wanted "imitation" tablets that cost the same as iPads. Below is a chart from a ChangeWave survey about US consumer tablet demand. 

Source: ChangeWave (via Fortune) 

But consumers will buy non-iPad tablets if they're substantially cheaper -- as the TouchPad rush indicated. 

Interestingly the publisher of the Philadelphia Inquirer, Philadelphia Daily News and Philly.com is offering a $99 tablet provided users agree to a two-year digital newspaper subscription. Two things are interesting about this: the $99 price point and the effort to use a wireless carrier business model in the context of a newspaper. 

So far non-iPads have yet to sell very well. For example, the 7" Samsung Galaxy Tab reportedly sold only a fraction out of millions shipped. But that will change if prices come down far enough -- again below $350 or $300. Then we'll see these devices take off and probably more tablet apps for Android, which basically don't exist right now. 

Apple will probably continue to keep its iPad prices where they are unless we see dramatic sales increases for Android tablets. We're still at least six months to a year from an answer to that question.  

Android Now Number Two in Europe After Symbian

Comscore has released data this morning on smartphone usage across the "EU5," which encompasses France, Germany, Italy, Spain and the UK. Symbian-based smartphones remain the most prevalent. However they're in decline, while Android devices have now passed the iPhone to become the second most common smartphone type in these five countries. 

Comscore says there are roughly 88.4 million smartphone users in the EU5 (Spain and the UK have the greatest smartphone penetration). That compares to comScore's estimate of 81.9 million smartphone owners in the US. By contrast, Nielsen says US smartphone owners comprise 40% of the market or more than 93 million people. 

Microsoft mobile operating system handsets (including Windows Phones) are off almost 5%, which is an ominous sign for the coming Nokisoft partnership. However great hardware-software integration could give Europeans a reason to switch or upgrade from existing Symbian handsets. 

Below are lists of "mobile content" activities and penetration rates across the EU5, contrasted with the same data from the US market. With the exception of the UK market mobile app usage in Europe is considerably lower than in the US, while text messaging is lower in the US than Europe according to these data. 

Google Maps Most Popular App on Android Handsets

Nielsen is now measuring the penetration and reach of apps on Android and iOS handsets in the US. The idea is the measure "actual consumer behavior" (rather than survey responses) based on usage patterns of 5,000 US smartphone owners who've agreed to participate. 

Other data captured will be: frequency, duration, and size of total audience. Below are some of the data released by Nielsen to promote the new service, showing reach of various apps on Android smartphones: 

Between men and women there are some differences. For example, among female Android users, Facebook is the most heavily penetrated Android app after the Android Market itself.  

More Mobile than PC Web Users in 3 Years: Forecast

IDC is modeling mobile Internet adoption and growth and its model says that in essentially three years there will be more mobile Web users than those accessing the Internet on PCs. Here's what the firm forecast earlier this morning: 

By 2015, more U.S. Internet users will access the Internet through mobile devices than through PCs or other wireline devices. As smartphones begin to outsell simpler feature phones, and as media tablet sales explode, the number of mobile Internet users will grow by a compound annual growth rate (CAGR) of 16.6% between 2010 and 2015 . . . 

In addition IDC made the following predictions: 

• Worldwide, the total number of Internet user will grow from 2 billion in 2010 to 2.7 billion in 2015, when 40% of the world's population will have access to its vast resources.

• Global B2C ecommerce spending will grow from $708 billion in 2010 to $1,285 billion in 2015 at a CAGR of 12.7%.

• Worldwide online advertising will increase from $70 billion in 2010 to $138 billion in 2015, with its share of total advertising across all media growing from 11.9% to 17.8%.

This mobile Internet access forecast may turn out to be aggressive in terms of timing but it will certainly turn out to be true. And it should wake up some complacent companies that still believe they can afford to delay building apps and/or optimizing their websites for mobile. 

There are so many publishers and marketers that don't understand (or seemingly don't through their inaction) the poor user experience they present in the absence of a mobile website or smartphone app. Simply relying on mobile browsers to render their existing PC sites is insufficient. And everyone should dump Flash in the process of upgrading for mobile. (Tablets are a bit different because they operate more like PCs.)

Google previously indicated that 79% of its major advertiser-clients still don’t have an optimized mobile presence.

Everyone needs to get used to the idea that in less than a decade smartphones, tablets and other mobile devices will be the primary way the majority of people access Internet content. And, as IDC says, when that happens the Internet will become a very different place. 

Nielsen: Smartphones 40% of Handsets, Android in High Demand

According to new data from Nielsen, smartphones now represent 40% of handsets in the US (comScore says it's 35%). Among those smartphones the market share ranking by operating system is as follows: 

• Android -- 40%
• iPhone -- 28%
• RIM -- 19% 
• Windows Mobile --7% (Windows Phone -- 1%)
• Other (WebOS, Symbian, etc.) -- 5%

Here are the most recent comparable numbers from comScore:

What's perhaps more interesting is how demand for Android devices is now roughly equivalent to Apple's iPhone, according to Nielsen: 

Here are the blended averages from the data above regarding smartphone-buyer demand for the various operating systems:

• Android -- 35.6%
• iPhone -- 31.4%
• RIM -- 7.8% 
• Windows -- 5.4%
• Other (WebOS, Symbian, etc.) -- 2.2%
• Not sure -- 17%

As you can see from the chart above there are lots of undecideds among the late majority and late adopters. RIM's current share is about 20%. But to what degree are these figures predictive of future market share? If they are, they don't bode well for RIM.

As always in these iPhone vs. Android surveys I wonder if people are truly interested in "Android" devices per se or whether they're responding to particular handset models (e.g., Samsung Galaxy, Motorola Droid). 

At one point last year Nielsen predicted that we'd cross the 50% smartphone threshold by Q4 of this year. It looks more like that will happen in Q2 next year. At 50% we'd have more than 100 million smartphone users in the US. 

Apple's Publisher Data Restrictions May Drive Them to HTML5

In a high profile and closely watched case, Apple and the Financial Times have failed to come to terms over the latter's ability to access customer-subscriber data through its iOS apps. Accordingly the publisher has pulled its FT iPad app from the iTunes app store. Apple also wants a cut of any subscriptions generated through the appstore. 

According to Reuters FT is more upset about lack of access to customer data than the 30% revenue share with Apple:

The Pearson-owned FT and Apple had been in negotiations for months but ultimately failed to reach a compromise, an FT spokesman said on Wednesday...

An FT spokesman said the company was encouraging subscribers to migrate to the Web-based app, which uses the open HTML5 standard that can be read by any browser, and is already being used by most mobile subscribers.

The spokesman described the disagreement with Apple as "amicable" and said the FT still planned future apps for the Apple App Store including one for the FT's luxury weekend magazine 'How To Spend It' as early as September.

This would be funded by advertising, however, not subscriptions, so there would be no conflict with Apple over who owns the subscriber data.

Apple's position on subscriber-customer data is wrong and it will drive more publishers to go HTML5 exclusively if there isn't a compromise. Amazon is also trying to migrate iPad users to its HTML5-based "cloud reader" because its Kindle app is no longer permitted to link to the Kindle store. Walmart's Vudu is equally promoting an HTML5 web app as opposed to an iPad app. 

App usage has gained in the recent past with Nielsen reporting that apps trump mobile web in terms of time spent:

The average Android consumer in the U.S. spends 56 minutes per day actively interacting with the web and apps on their phone. Of that time, two-thirds is spent on mobile apps while one-third is spent on the mobile web.

Consumers want apps, which offer a better user experience, and publishers want to build them -- but not at any cost.

Many pundits early on predicted that the complexities of platform fragmentation would cause developers and publishers to choose the mobile web over apps. They've been wrong to date. But Apple's unreasonable publisher-data retention policies may wind up unintentionally driving them to the mobile web after all. 

However It Looks Apple iPhone 5 Needs to Be a Hit

Not a day goes buy without at least five or 10 stories being written about the iPhone 5 based on this "leak" or that rumor. Today's hearsay and conjecture is that the new handset will have a smaller than 4-inch screen. However earlier rumors said the opposite: that it would feature a larger screen, possibly with an "edge to edge" display larger than 4 inches. 

One way to reconcile these two stories/rumors is by invoking yet another Apple rumor -- that there will be not one but two phones coming out: one for the post-paid and one for the pre-paid markets. It seems unlikely that there will be two new iPhones. Regardless the "flagship" probably isn't going to have a screen smaller than 4 inches. 

Earlier this year NPD group found that handsets with screens measuring 3.5 to 3.9 inches had flat sales volumes (other than the iPhone). But those handsets with screens larger than 4 inches saw significant gains in market share in Q4 2010. According to NPD, the five best-selling handsets with screens over 4 inches were the following:

1. HTC EVO 4G
2. Motorola Droid X
3. Samsung Fascinate
4. Samsung Captivate
5. Samsung Vibrant

The iPhone currently has a 3.5 inch screen. So I suppose it's possible to increase the screen size and still come in below 4 inches.

Regardless, of the precise dimensions of the screen, the iPhone 5 needs to be a meaningful improvement over iPhone 4. There are too many Android phones coming out all the time for iPhone 5 to be merely a modest, incremental update -- given that it's only updated once a year.

Tim Cook & company don't have the luxury of messing up this one. They need to "hit it out of the park."

Price Will Be Driver of Amazon Tablet Sales

Forrester Research has released a report ("delayed a week out of respect for Steve Jobs") that argues Amazon's forthcoming Android tablet(s) will potentially sell 3-5 million units in Q4. This report, in "the works for months," can be boiled down the following:

Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market. If Amazon launches a tablet at a sub-$300 price point—assuming it has enough supply to meet demand—we see Amazon selling 3-5 million tablets in Q4 alone.

The analysis can be further distilled into two points that argue Amazon's got a shot at success:

• Amazon's brand strength and marketing muscle
• A sub-$300 price point 

I agree that Amazon's brand and marketing capabilities will give its tablet(s) a head start. But it's really price that will be the driving factor here. That's the lesson of the TouchPad buying frenzy: people are willing to buy an iPad imitator at the right price. In that case it was $99 and HP took a major loss on the inventory.

I own the Samsung Galaxy Tab 10.1 and the user experience is woefully inadequate compared to the iPad. I won't enumerate the ways but the device doesn't hold a candle to the iPad (Apple shouldn't be so afraid of it). 

Any tablet Amazon sells under its own brand, based on the Android OS, will also be inadequate by comparison. There are no tablet apps on Android, for example. Accordingly it will have to be very aggressively priced to succeed. 

The most expensive "regular" Kindle is sub-$200. The larger "Kindle DX" is $379. Pricing a color Android tablet that doubles as an eReader (which they will have to) at less than the cost of a DX kills the DX. 

If Amazon were to price a 10-inch Android tablet at $499 it would suffer nearly the same fate as all of Apple's tablet rivals to date: failure. If it goes down to $300 or $299 it will sell (especially with 3G built in). However, given the poor quality of the Android tablet experience in general at this point, it's far from certain that it will sell as many units as Forrester predicts. 

We'll have to wait for the device and see how "good" it is. Regardless, price is going to be nearly the lone determinant of success or failure for Amazon. 

Related: Changing demographics of tablet owners. 

Steve Jobs Resigns CEO Post, Tim Cook Will Replace Him

Just like that the "Steve Jobs" era is over at Apple. Institutional investors have been asking for a succession plan for a long time. Instead they got instant succession.

However it should be business as usual for Apple on the day to day level. It's unclear whether Jobs will play much of a role going forward and how that will impact Apple's product vision and pipeline. The abrupt resignation (which was some time in coming) suggests that Jobs' health may not be improving.

It's probably the right move, but nobody can replace him. The impact on Apple's stock could be immediate but perhaps short lived. Here's the full text of the press release: 

CUPERTINO, Calif.--(BUSINESS WIRE)-- Apple’s Board of Directors today announced that Steve Jobs has resigned as Chief Executive Officer, and the Board has named Tim Cook, previously Apple’s Chief Operating Officer, as the company’s new CEO. Jobs has been elected Chairman of the Board and Cook will join the Board, effective immediately.

“Steve’s extraordinary vision and leadership saved Apple and guided it to its position as the world’s most innovative and valuable technology company,” said Art Levinson, Chairman of Genentech, on behalf of Apple's Board. “Steve has made countless contributions to Apple’s success, and he has attracted and inspired Apple’s immensely creative employees and world class executive team. In his new role as Chairman of the Board, Steve will continue to serve Apple with his unique insights, creativity and inspiration.”

“The Board has complete confidence that Tim is the right person to be our next CEO,” added Levinson. “Tim’s 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does.”

Jobs submitted his resignation to the Board today and strongly recommended that the Board implement its succession plan and name Tim Cook as CEO.

As COO, Cook was previously responsible for all of the company’s worldwide sales and operations, including end-to-end management of Apple’s supply chain, sales activities, and service and support in all markets and countries. He also headed Apple’s Macintosh division and played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

Related: Here's Jobs' letter (very short) saying that he "no longer meet my duties and expectations as Apple''s CEO."

Millennial: Windows Phones a Rowboat on the Android Sea

The iPhone vs. Android meme is getting very tired yet it persists. That's the thrust of the coverage surrounding Millennial Media's "Mobile Mix" report for July 2011. Among other data, it ranks handsets and market share on the Millennial network by device type and operating system. Here are the "quick facts":

• iOS and RIM impressions were relatively flat month-over-month
• Android impressions grew 31% month-over-month
• Symbian impressions grew 11% month-over-month
• Windows Phone 7 impressions grew 71% month-over-month

The Windows Phone growth is noteworthy for the fact that that there is growth/life. By contrast comScore shows Windows/Microsoft losing share month over month. However high percentage growth from a very small base is, in actual handset numbers, not particularly meaningful. Several months of such growth would be significant however. We'll need to wait for the first Nokisoft phones to appear to see whether Windows will "make it" as an OS.

Unfortunately Millennial doesn't put much historical context into its individual reports. So I always like to take a look at the data from several months or a year ago to compare the figures. Accordingly here are several charts from this month's report and July 2010:

Top handsets on the network (7/10 then 7/11):

The iPhone has maintained its top position and RIM is holding on with three handsets in the top 20 vs. four a year ago. But otherwise it's all Android.

Operating system share (7/10 then 7/11):

As you can see smartphones have grown from 49% to 68% on the network. In the US market smartphones are about 40% of all handsets now according to Nielsen. As you can also see, the relationship between iOS and Android has flipped in a year with Android handsets now representing 61% of all impressions. 

In terms of monetization and revenue, however, Android continues to underperform its share while Apple devices outperform their relative share. 

Finally, as PaidContent has pointed out, one of the more interesting pieces of data surrounds "carrier" usage. Over the past year WiFi access has grown from 26% to 33%. This is probably a direct result of the use of "connected devices" (e.g., the iPad) more than any other variable. 

However as carriers eliminate unlimited data and throttle speeds on their networks, on the go users will increasingly seek alternatives that offer cheaper and/or faster access to their applications and the mobile Internet.

Placecast ShopAlerts Now App-Ready

Placecast announced today the availability of ShopAlerts push notifications for retailer mobile apps. Previously Placecast ShopAlerts enabled geographically relevant SMS or MMS messages after a consumer opt-in. This new announcement means that geofenced alerts can be integrated into existing retailer apps to boost the effectiveness of those apps.

In the conventional scenario, users need to launch a retailer app and affirmatively search or browse for content. The new program enables consumers to receive LBS alerts that use promotional messages to direct consumers to the nearest local store or outlet, once inside the geofenced area. It's not clear whether the app-based ShopAlerts would require explicit consent to LBS notifications. (On the iPhone notifications require acceptance in general.) Best practices suggest at least a disclosure if not an opt-in. 

Push notifications aren't new but this combination of app + alerts could prove effective for retailers and help boost app usage. Examples of companies already working with Placecast ShopAlerts include North Face, Subway, Kohl’s, Kmart, Starbucks and JetBlue, among several others.

The efficacy of geofenced ShopAlerts has been demonstrated in the UK with O2 and in various tests and trials in the US.

Related Placecast posts: 

• Placecast Opens Up Geofenced Marketing to Self-Service
• Placecast Launches Geo-SMS 'ShopAlerts'
• UK Carrier O2 Teams with Placecast for LBS Opt-In Marketing to a Million Consumers
• UK Carrier O2 Seeing Success with LBS Offers

Lessons of the TouchPad Frenzy and the Future of Tablet Pricing

Looking to move unsold inventory over the weekend, HP chopped TouchPad pricing down to $99.99 and $149.99 from $499 and $599. It ignited a well-documented buying frenzy that melted the HP servers. BestBuy and other stores are now sold out.

The way that people snapped up these devices reveals that for other than iPads consumers are highly price sensitive. As we argued early on and often, the way to compete with Apple's device was on price.  (I also earlier argued that smaller tablets could succeed as well, though have reconsidered that position.)

Amazon is about to enter the tablet fray and it may be able to succeed where others have not. However to date all of Apple's main competitors (RIM, Samsung, HP, MOTO, HTC) have failed to generate more than token sales of their tablets. Part of the reason for that is that these non-Apple devices perceived as imitators. So far they also generally offer a poorer quality user experience -- this includes the Samsung devices -- and have priced their tablets at or above (e.g., Xoom) the cost of Apple's iPad.

E-readers Kindle and Nook have succeed in part because they are single-purpose devices, though the Nook has broadened its scope, and they're relatively cheap (sub-$250). It remains to be seen what Google can do for Android tablets after it acquires Motorola. Right now, however, it appears that nobody selling a $499 tablet is going to make inroads against Apple.

While the HP TouchPad $99 frenzy may not immediately impact the market, over the long term it will probably mean that Android and other tablets (regardless of size) will have to come in under $400 without carrier subsidies and much less with them (sub-$250). That also means that non-iPad tablets are likely to become very low margin commodity products -- like PCs today.

And that's not a very attractive market. 

Could WebOS Become the 'New Android'?

Last Monday, when I was out on vacation, Google dropped a bomb on the mobile ecosystem: it entered into an agreement to buy Motorola Mobility for $12.5 billion. Everyone is more than familiar with the story and there's been a ton of analysis in the intervening seven days.

Here's the crux of that analysis:

1. Google was compelled to buy MOTO because of its IP (17,000 patents) after competitors attacked Android with bigger patent portfolios 
2. Microsoft was after MOTO as well 
3. Google wanted more control over the final product and Apple-like hardware-software integration 

The response to all of this is yes and yes. While I don't know the actual truth of the Microsoft acquisition rumor (I believe it) all of these motivations likely played a role. Now regulators must approve the deal, which I suspect they will do.

Google said that the acquisition shouldn't change anything among its other hardware partners or the Android ecosystem generally (Samsung, HTC, LG, etc). Here's the quote from the press release:

Our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.

But it clearly does change things. Hardware OEMs will be taking a harder look at Windows now to "hedge" and "diversify." But what about WebOS? 

The other bombshell last week was HP's announcement that it's getting out of the PC business and potentially going to unload WebOS. In April last year HP (under a different CEO) bought Palm for $1.2 billion, chiefly to get WebOS. Now it may sell the software assets and it's possible to imagine several parties being interested.

It has been suggested by some that Facebook should buy WebOS. But one could imagine HTC, Samsung (even with Bada), LG and others -- including Nokia -- being interested the platform if the price were right. But what if HP were to hold onto WebOS and open-source it or license it on very friendly terms? Indeed, HP is now saying or clarifying that it will hold on to WebOS and continue to support and even license the software.  

The platform, which was early on regarded as platform most competitive with iOS, could gain new life as an alternative to Android for nervous handset OEMs. With a post-MOTO Google competing with its partners in a new, more direct way the market could well be ready for a new "open-source" Mobile platform. It's a long-shot and HP could still sell Palm/WebOS to a single buyer. If that were to happen WebOS would likely continue to languish and ultimately disappear.

However open-sourcing the platform or offering friendly, low-cost licenses to various hardware makers could give WebOS new vitality and a future. 

Disruption Diary: Google to Buy Motorola Mobility for $12.5 billion

Google's purchase of manufacturing partner Motorola Mobility is about to establish itself as the most favored hardware platform for the Android operating system. Even though Google CEO asserts (in a press release) that the join endeavor "will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers," it is a tacit acknowledgement that today's status quo for Android provides a user experience that is uneven at best. Some of the work by its developer network is brilliant, but thanks to its free-wheeling approach to application development and delivery (when compared to Apple's terms and conditions for its App Store) the overall experience falls short of "amazing."

Google is paying a 63% premium over the current stock price for Motorola Mobility. It is a statement that the company expects direct ownership of the manufacturer to accelerate scales and promote proliferation of the Android OS. But Google's management is underestimating the impact of its action on other manufacturers who have endorsed and support Android as they must now regard Google/Moto as a direct competitor and not just a benign endorser of an "open" OS. 

This post by long-time industry follower Mike Cane captures the probable outcome in the simple statement: "Google pulls a Zune." He refers to Microsoft's decision to begin making its own MP3 player after spending a few years endorsing and supporting the PlaysForSure digital rights management platform. Musicians and publishers who believed that Microsoft would stay "hardware agnostic" dealt with the news by understandably abandoning the product. HTC, Samsung and the other manufacturers in the Android camp must be looking more closely at alternatives. 

I agree with Mike Cane that this will lead other manufactuers to evaluate their OS strategy. It is a disruptive move that could benefit HP, for example. I very much like the idea of it creating a new market for WebOS as a licensed product for manufacturers who are now concentrating on boosting their Android sales. Market share projections under the old regime are almost meaningless.

Burned by Android 'Imitators,' Apple Being (Too) Aggressive on Tablets

Some financial analysts expect that Apple's iPad will dominate the tablet market through 2020. Competitor after competitor, including Motorola, HP, RIM and Samsung, has launched tablets only to see disappointing sales to date. So why then is Apple so aggressively pursuing legal remedies against tablet OEMs? 

Everyone reading this is aware that Apple has obtained a preliminary injunction in Germany (and throughout most of Europe) that effectively prevents the sale of the Samsung Galaxy Tab 10.1. It's also pursuing Motorola over the Xoom on the same IP/legal theories. 

I believe that Samsung essentially copied the "trade dress" or "look and feel" of the iPhone with its Galaxy smartphones and the Galaxy Tab 10.1 tablet. However I also think that Apple is going too far with its attempt to bar sales of competing devices. By extension the question arises: would any tablet device that broadly resembled the iPad be vulnerable? 

If so Apple would effectively be eliminating competition in this new computing category -- and that would be a very bad thing. I'm sure Apple sees it differently and would simply argue it's protecting its designs and IP.

What I believe is going on is the following: Apple feels that Android and its gaggle of OEMs have simply ripped off the iPhone and its app store and have reaped the benefits accordingly. As I just posted, Gartner estimated that Android devices gained a 43% share of the smartphone market globally in Q2 vs. 18% for iOS. The company feels badly burned by these "imitators" and probably vowed to not let that happen in the tablet market. 

In addition Apple's profitability and sales are much more dependent on these mobile devices than even a year ago. However the case illustrates the problems and challenges of current patent law. There's a need to protect IP owners' rights but competitors must be able to make and sell their products. What degree of product and feature similarity should be prohibited?

I certainly understand Apple's viewpoint and the rationale behind its actions. But in seeking to ban the sales of competitive tablets Apple is simply going too far.

Will Amazon's Cloud Reader Open the HTML5 Floodgates?

Much has quickly been written about the just launched Amazon HTML5 "Cloud Reader." It's a "web app" that could be used to replace the native Kindle iPad and iPhone apps. It's being widely read as a response to Apple's more restrictive App Store terms about in-app purchases/subscriptions. (Amazon has removed the button linking to the Kindle store from the most recent version of its iOS apps.)

I agree with John Gruber and others who believe this has been in the works for longer than Apple's more restrictive terms around in-app purchases. Cloud Reader does, however, completely side-step Apple and its App Store terms. The Financial Times and Walmart's Vudu also recently did something similar. More publishers and developers will follow, who don't want to give money to Apple or simply don't want to worry about Apple's rules. 

An added benefit is compatibility with all mobile platforms. However developing native apps is relatively easy these days because, unless/until Windows Phones break out or BlackBerry stops its slide, only two operating systems matter: iOS and Android. 

In contrast to some of the rapturous reviews I've seen Cloud Reader is not as strong as the Kindle native app. It works well and allows users to read books offline (e.g., on the iPad). But it's not as responsive or fast the native app.

Yet for certain types of sites or publications HTML5 will be fine and quite usable. However for higher functionality a native app is better, even necessary (e.g., games).

But now that several companies have "validated" the HTML5 strategy will we see the migration from apps to HTML5 that the industry has always anticipated? Not exactly. I think what we'll see is continued development of native iOS, Android (later maybe Windows Phone) apps and HTML5 from everyone else. However Apple doesn't help its cause with all its rules and restrictions.