AdMob on iPhone Apps: It's Mostly about 'the Head'

AdMob's latest mobile metrics report (based on usage they see on their network) takes a look at apps distribution on the iPhone and the number of users for those apps. Depending on how much you've bought into the "long tail" meme you may or may not be surprised to discover that most of the action is on the top 5% of all iPhone apps -- "the head." 

Here's AdMob's breakdown of apps usage and adoption:

In other words, there are 116 iPhone apps that have 100K users or more (again this is on AdMob's network vs. the entire apps store). From the highlighted items in the report:

• Few applications may reach this blockbuster of success, but there is also significant percentage of popular applications have built a strong base of tens of thousands of users; 14% of applications had between 10,000 - 100,000 active users.
• The long tail of applications that make up the majority of the App Store generated a minority of the total users; 54% of applications had less than 1,000 active users.  

The company also said that "44% of iPhone ad requests coming from the 3.0 OS" indicating that it's been widely installed; whereas 3.0 volumes are much less on the iPod Touch (because of the $10 upgrade fee).

There's also discussion of the age differences between iPhone (older) and iPod Touch (younger) users, laid out in the recent AdMob-comScore research:

The main finding is that iPod touch users are significantly younger than iPhone users.  26% of iPhone users are under 24, compared to 69% of iPod touch users.  Both devices are over 70% male and have a similar ethnic distribution.

Thus the iPod Touch emerges as a gateway device for potential future iPhone adoption. Apple is exposing and training a large, younger audience of users who then might upgrade to the phone later.

Adobe Flash and the HTC Hero

The new HTC Hero is interesting for a couple of reasons. First it's a new Android device that has a non-traditional Android interface called "Sense." In a way it makes the HTC Hero somewhat more like HTC Windows Mobile devices. And it shows the way toward differentiated Android phones, using proprietary interfaces like these combined with hardware improvements (e.g., 5 megapixel camera).

It's also the first Android device that runs Flash (the Skyfire browser runs Flash). Windows Mobile, Palm's WebOS, Symbian and Android are supporting or will support Flash while RIM and Apple currently do not. Obviously devices that can run Flash are closer to bringing the "real Internet" to mobile than devices that do not. Apple has been a holdout on Flash because of alleged performance issues (and because it would potentially allow developers to bypass iTunes). 

The pressure is on Apple now to add or allow Flash -- one might argue the CPU power of the 3GS will allow it to work reasonably well. But some are also contending that Apple is waiting for HTML5 to be more broadly adopted, potentially eliminating the need for Flash entirely. Despite Android support for Flash Google is also pushing HTML5 to enable richer apps development for the browser. 

Survey: Security Fears a Barrier to Mobile Transactions

There have been a flurry of announcements and activity surrounding mobile payments recently (i.e., Boku, Zong, Obopay, Visa + NeuStar, etc.). It's a segment that's gaining steam in the US and EU and already fairly well established in certain developing countries. Yet a recent online poll (n=1,800) conducted in May by Harris Interactive for messaging security firm Cloudmark found that a solid majority of Americans (2/3) are concerned about security on their mobile devices -- and these fears are potentially inhibiting them from conducting certain kinds of activities, namely financial transactions.

In addition, the poll found, "mobile spam is impacting a significant portion of wireless customers, with 44 percent of owners reporting that they have received mobile spam." Among the 44% of survey respondents who say they've received spam on their phones, this is what they report about it:

• 45% received messages from a known/unknown vendor asking them to call another number
• 42% received messages from a known/unknown vendor containing a link to another Website
• 29% received messages from a known/unknown vendor encouraging them to disclose personal information
• 26% received messages from a known/unknown vendor containing inappropriate content
• 24% received messages from a person/entity posing as a trusted contact/source

As text-based spam grows it poses a threat to the efficacy of SMS marketing. Here are some of the data from the rest of the survey about security fears:

On the flip side there are a healthy number of people who've "ever sent confidential information" through their phones. And one might also argue that this is like the early days of e-commerce, where people expressed (and still express) some of these same security concerns. However for most people those fears have been overcome. Therefore, of the two issues explored in the survey, spam and security, spam is the bigger issue and long-term threat, in my view. 

___

Related: GSMA launches mobile money exchange community.

Push IM vs. SMS: Will IM Take Over Eventually?

The advent of push notifications and IM on iPhone 3.0 has raised the question (again) of how IM might impact SMS and related carrier fees. In 2007 we speculated about whether IM on mobile devices might one day take over vs. SMS:

[O]ver the long term IM could potentially replace SMS for mobile users, especially if people shift from text plans to Internet plans (unless they're bundled) as the mobile Internet becomes more important.

With a growing range of SMS alternatives such as Facebook, Twitter, mobile Skype, Google Latitude "shout outs" and various mobile IM clients (and aggregators) we're likely to see some shift in messaging volumes to IM from SMS. There's no immediate danger to SMS (and carrier fees) but that's certainly going to be the long-term trend. 

Turn by Turn iPhone Apps Spell the End of PND Market

Personal navigation and GPS-aided turn by turn directions are moving from hardware to software. Given that the new iPhone enables turn by turn navigation to be integrated into third party developer apps and that TomTom is going to be on the iPhone, the days of separate PND hardware devices are likely numbered.

While some such devices may continue to sell, consumers will see fewer and fewer reasons to buy them (and spend the additional cash) now that smartphones will be largely as capable as PNDs and have broader utility. Several next-gen navigation apps have already emerged in the post 3.0 iPhone world: 

• NIM's Gokivo (which uses Yahoo! search results) provides voice-guided navigation, but requires an in-app purchase of $9.99 for a one month subscription. (Pricing was just simplified; there were previously three options.)
• Navigon’s Mobile Navigator (Europe) app with NAVTEQ maps.
• Sygic for Australia, New Zealand and Southeast Asia.

The improvement of navigation on smartphones combined with the move of a group of companies to provide their software on the iPhone platform will mean that eventually the entire industry will move in this direction.

Recently RIM also acquired "connected" PND platform Dash. So one would assume that many of these same capabilities will shortly come to BlackBerry devices. (I was just reminded that MapQuest provides turn by turn directions on BlackBerry devices currently.)

iPhone Price Drop Potentially Significant for Holdouts

Our mantra is that cost is an under-appreciated driver or barrier when it comes to mobile behavior; cost is the single biggest inhibitor of mobile data plans and Internet adoption. That's what our surveys and those of third parties have consistently demonstrated.

Another set of US-based findings from a different NPD study (n=1,500) on the potential impact of the iPhone 3G price cut ($99) shows that it overcomes a key objection to buying one. Yet cost of data plans and consumers not wanting to change carriers remain meaningful barriers to wider adoption of the device:

• When it comes to the primary reasons consumers do not want to purchase an iPhone, “high price” was the second-leading reason (42 percent) after “lack of interest” (55 percent).
• Data plan pricing and exclusivity remain key obstacles for iPhone adoption. When it comes to their reasons for not purchasing an iPhone, 18 percent of consumers who have not purchased an iPhone cited the expense of the data plan, while 21 percent said they didn’t want to switch carriers.

Recall that Piper Jaffray found the potential pool of those willing to move to AT&T to get the phone is dropping:

• Among the 256 customers surveyed, 28% were switching carriers to AT&T, down from 38% last year and 52% in 2007.

____

Related: Here are two more iPhone related pieces of data . . .

According to Boingo Wireless data, the iPhone (89.2%) and iPod Touch (4.7%) represent 94% of all smartphone usage on its network. Overall the iPhone apparently constitutes 25% of the overall usage of Boingo's mostly airport WiFi network. 

Crowd Science has found much higher rates of iPhone loyalty and satisfaction than for competing handsets:

• 40% of Blackberry and other smartphone users would switch to Apple's iPhone, as their next smartphone purchase.
• Only 14% of non-Blackberry smartphone users would switch to a Blackberry for their next purchase. Meanwhile, a vast majority of iPhone users (82%) are loyal to the iPhone brand.
• Compared with Blackberry users, iPhone users report a significantly higher overall satisfaction level with their phone. In particular, iPhone users are more satisfied than other smartphone users with their phones' screen size, navigation, availability of add-ons, and video playback.

SnapTell Acquired by Amazon's A9

One might characterize A9 -- Amazon's erstwhile bid to compete in search -- as an innovative failure. The engine was the first with a "street view" product (called "block view") and innovative maps and local search tools. The experimental three-panel interface of A9 was also very innovative, as were other features. The problem, as with other would-be "Google killers," was nobody used it.

Amazon may now say that A9 was always an experiment or a way to help the company refine its own algorithms, but it was at one point an attempt at a consumer search engine that failed. 

Yesterday, however, A9/Amazon announced that it had acquired visual product search company SnapTell:

We are excited to join forces with a company that has innovated on behalf of customers for over a decade and is a pioneer in online shopping. Like Amazon, we believe there is a lot of innovation ahead for visual shopping and we are thrilled to join A9.com at this exciting time.

With this acquisition A9 (if that becomes the brand) may rise again. It's potentially quite significant for both SnapTell and Amazon. Amazon has the products and the capital to make SnapTell a leader in mobile "visual search" and barcode scanning, while SnapTell can potentially become a powerful search tool for Amazon and help drive e-commerce. 

Consider the use case: a shopper with an iPhone or Android device does a search (or barcode scan) on a product in store. She gets Amazon reviews and prices -- and potentially decides to purchase from Amazon. Even if she doesn't buy from Amazon, it reinforces her loyalty to the brand. Undoubtedly data will come or continue to come from other sources than simply Amazon (e.g., TheFind). 

Amazon also gets into mobile advertising or mobile marketing, if you prefer, with SnapTell, which has a range of ad-related or promotional deals with traditional publications. Accordingly it takes Amazon into new business areas. 

But it also underscores growing momentum for search tools that are alternatives to conventional search as represented by the Google search box. There's momentum building around the camera as a input tool and search vehicle. Google itself recently introduced barcode scanning for product search on Android devices. It's also placing more emphasis on voice and experimenting with other ways for users to discover and obtain content vs. conventional search.

I could be wrong but I think this acquisition for Amazon will pay big dividends in multiple ways. 

'Augmented Reality' Is Almost Here

From the "pretty cool" file: a new "augmented reality" browser called Layar developed by a Dutch company called SPRXmobile. Here's how it works:

Layar is derived from location based services and works on mobile phones that include a camera, GPS and a compass. Layar is first avaliable for handsets with the Android operating system (the G1 and HTC Magic). It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers. This makes Layar a new type of browser which combines digital and reality, which offers an augmented view of the world.

An iPhone version is reportedly in development. One thinks immediately of Google Street View and how that might evolve into a true "geobrowser" along these lines in the future. There are many different use cases one can imagine easily. Of course the data have to be there and accurate for the experience to be as impressive and useful as it has the potential to be. 

What it also illustrates is that there are going to be many other "search" modalities on mobile phones than the conventional search field. Here's Layar in operation (click the image for the YouTube video): 

Taptu Debuts iPhone Specific Search Engine

Mobile search engine Taptu, which calls itself an "alternative search machine," has launched an iPhone specific search engine. It crawls the web for pages and sites that are optimized for the iPhone and iPod Touch devices specifically. There are no links returned in search results. Instead you get preview "cards" or miniature pages that you can flick through or horizontally scroll through -- very much like the Palm Pre experience.

There's also a cascading menu to refine the search result by content source or to enable related searches. 

Here's a video showing Taptu in action on the iPhone.

Google Adds Voice to Maps, Twitter-Like Updates to Latitude

This morning the Google Mobile Blog announced a software update for Android's version of Google Maps:

You can now search Google Maps for Android using your voice, making it easier than ever to look up places while on the go . . .We also added transit and walking directions to Google Maps for Android. You can now get directions using public transportation in over 250 cities, including New York City and San Francisco.

[Google Latitude:] You may also notice a new experimental feature called Updates that lets you communicate with friends and post messages. Start Latitude and click the "Updates" tab to shout out updates at friends when they're at interesting locations, start a conversation when you're at your favorite restaurant, or just add more details to your Latitude location for your friends to see . . .

Taking the Latitude update first. There were some bug fixes in the new release of Google Maps for Android. However, the "updates" feature is quite significant. It's a Twitter-like feed that anyone in your network can see with location. When you open Latitude (from within Google Maps) on Android, you see two tabs: Friends and Updates, Friends is your Latitude contacts list and allows you to:

• Show on map
• Shout out to the contact (this is the Updates feature)
• Chat using Google Talk
• Send email
• Get directions (to the person's stated or identified location) 
• Hide from friend
• Share only city level location
• Remove 

Clicking over to Updates provides a real-time conversational feed from active contacts using Latitude. This is essentially Twitter with location. But it's only within Latitude for Android right now so usage is going to be small.

Back to Voice Search for Maps. What Google has done here is imported its voice search capability into Maps. Google now says Voice understands and works with British, Australian and US English accents. 

Once you launch Google Maps, you are able to call up the search field. It gives you the option to manually enter a query or speak one (the search field is also similarly presented on the Android home screen). The query results (if they're understood) appear on the map. Tapping or selecting an individual business/result then brings up three tabs: "Address," a details or profile page with contact information (including the option to see the business on Street View), "Details," which may include web links (e.g., to OpenTable), payment information and other data, and "Reviews" (if they exist). The reviews tab offers a nice graphic of the distribution of reviews by star rating on a horizontal bar chart.  

While a number of searches came back with results that were less than satisfying (because of the underlying data) the overall user experience is quite powerful. The use of voice on the front end for queries, integrated with all the Maps and directions information, as well as reviews, on the output side, makes for what used to be called a very "sticky" app. Google is trying in various ways to eliminate mobile barriers to searching. Voice is one of the key strategies. 

I would assume that most of this will make it to the iPhone in the near term.

ChaCha Announces Big Q&A Milestone

There are a wide range of companies that have been dancing around a user experience that combines search, machine algorithms and human editorial input. Companies such as Yahoo! (Answers), ChaCha, Mahalo, Mosio, Amazon (Askville), kgb, Vark -- and now arguably Facebook and Twitter -- among others are playing in this space. Whether we call it "social search," "social DA," "Q&A" or something else it's an effort to scale human discrimination and input into unstructured queries and questions over the Internet or mobile networks.

ChaCha, one of the pioneers in the space, just announced it had hit "150 million questions" since the January, 2008 launch of its mobile offering ChaCha Answers: 

ChaCha ranked among the top 10 short message services with the most traffic -- including Facebook, Twitter and American Idol -- according to the newly released Q1 Mobile Messaging Report from The Nielsen Company. Providing answers for the Sundance Film Festival to the history-making Presidential Election, ChaCha is growing faster than any other SMS answers service, including Google SMS and Yahoo! SMS. Since its launch 18 months ago, ChaCha has answered more than 150 million questions via mobile cell phones and the web . . .

ChaCha's audience extends to the web, too. According to Quantcast, www.chacha.com (http://www.chacha.com) ranks among the top web sites in the United States with more than 2.3 million monthly unique users. With more than 14 million searchable questions and answers and thousands of new answers published to the site every day in categories such as sports, entertainment, health, beauty and travel, ChaCha has increased its traffic 1,000 percent since its launch in January 2008.

Like all mobile marketing firms ChaCha is seeking to educate marketers about the value and ROI of mobile. The firm uses sponsorships, contextual and geotargeted advertising to monetize up to three SMS messages that a user may receive during an individual session.

Nielsen: iPhone Users Older, Richer than General Mobile Demo

The conventional belief about mobile phone and Internet users is that they're younger. Perhaps true as a broad generalization, it's not true for BlackBerry and the iPhone where data plans are costly and/or the devices come through the company or are used for work. Older demographics abound.

Indeed at our Internet2Go event earlier this year, the Yahoo!-Cramer-Krasselt keynote discussed how Porsche was able to reach more difficult-to-reach business types (prospects) through mobile, BlackBerry especially.

 Here's how the campaign performed online and in mobile (better across all metrics):

Source: Cramer-Krasselt

Nielsen does some demographic and behavioral analysis of iPhone users in the US and finds: 

• 40% have household incomes of $100K or more – twice the ratio among all subscribers (19%)

• 98% of iPhone users use the data features of their phone

• 88% use the [mobile] Internet (making them 4x as likely as the typical subscriber)

• 75% download apps (5x as likely as the typical subscriber)

• 72% used location based services (7x as likely as the typical subscriber)

Furthermore, 53% of the iPhone user base in the US is older than 35:

BlackBerry is going to show very similar demographics in terms of age and income distribution. 

____

Related: Forrester has similar (but somewhat contradictory) data about iPhone users:

Digital OOH Company Danoo Adds Mobile to Mix

Danoo refers to itself as a place-based media network. The company puts screens (1,000+) in local stores, airports, retail sites and cafes, providing content and advertising to those locations. There are other companies doing this as well. But Danoo recently added mobile marketing to the mix -- or rather is using its screens to validate their worth as well as get people to take action (i.e., downloads) with their mobile devices.

According to the press release:

 Danoo, which delivers relevant, entertaining and localized media to highly mobile, upscale audiences in coffeehouses, cafes and airports, announced the results of its first mobile content download campaigns. Initial trials were conducted in 39 venues in Los Angeles, with each advertiser leveraging Danoo’s web-connected HD screens to drive discovery of and engagement with a mobile content download opportunity. Visitors to Danoo locations viewed video content on Danoo’s digital screens accompanied by an on-screen prompt to download exclusive content such as sneak peeks and ringtones from their Bluetooth or Wi-Fi-enabled devices via the Danoo network.

Results show that Danoo’s audience is particularly receptive to downloading content to their mobile phones while in a Danoo venue. On average, 10% of Danoo’s audience had their mobile device set to “discoverable”, nearly one-third above the national average, and of those viewers, 28% opted-in to receive the mobile content download. These numbers translate into to a net download rate of nearly 3% of total venue traffic, which could result in more than 200,000 downloads per two-week campaign as this product rolls out to the rest of the Danoo network.

Again, Danoo can report on action rates and advertisers get immediate response. ADCENTRICITY and Impact Mobile recently partnered to bring mobile and digital OOH together as well. Other companies such as HipCricket are using SMS with traditional media (radio, TV) to both measure and extend the value of the traditional media buy. 

This combining of media types, especially with mobile as a metrics tool and extender, will become more and more common in the next couple years and may be one of the primary ways that agencies and traditional brands enter mobile marketing. 

Some time ago I wrote about Danoo and place-based media at Screenwerk. 

PNDs Must React to TomTom's Move

We've been arguing for some time that PNDs are an endangered species, as smartphones gain turn-by-turn navigational capabilities and offer a great deal more than PNDs can. Indeed, RIM just bought DASH and may do some interesting things with the platform, which had failed to gain consumer adoption. But it's the TomTom announcement for the iPhone that should strike fear into the rest of the market.

In becoming an app, TomTom may at once be protecting and promoting itself while hastening the demise of the larger PND market. Other PND firms will need to push more aggressively now into software for existing smarthphone platforms unless the TomTom app totally bombs. 

Although it will be expensive (perhaps near $100), TomTom's move will underscore the point that if people need to choose between devices it will be a smartphone that people will choose. Garmin defensively built the Nuvifone in recognition of the way the market is going. 

Here's a promotional video for TomTom's app (you can bet Apple will do lot's of free promotion for the company).

Broadband2Go From Virgin Mobile (USA): No Contract? No Problem!

Also, in the category of disruptive pricing arrangements, Virgin Mobile (USA) has introduced a service that provides nationwide access to wireless broadband on a pay-as-you-go basis to subscribers who purchase wireless EV-DO modems (the MC760 from Novatel Wireless), that carry a suggested price of $149 exclusively at Best Buy at the end of June.

Customers can by "Virgin Mobile Top-Up cards" for as little as $20 which is designed to be good fro 30 days and 250MB, which the company estimates to be "roughly 12 hours of Web browsing." There are other data plans for $10, $40 or $60, for which any Virgin Mobile pre-paid card can be used.

The Mainstreaming of Smartphones

Everyone who reads this blog or pays attention to trends in the mobile market knows that smartphone users -- iPhone users in particular -- are much more engaged with the mobile Internet than conventional mobile phone users. Replacement cycles are also getting shorter, causing more people to turn in their "feature phones" for these higher end devices.

While price (handsets, data plans) is often the main driver of these buying decisions (witness the $99 iPhone), culture has a powerful if less tangible influence on consumers. The NY Times covers the latter aspect of the phenomenon:

For a growing swath of the population, the social expectation is that one is nearly always connected and reachable almost instantly via e-mail. The smartphone, analysts say, is the instrument of that connectedness — and thus worth the cost, both as a communications tool and as a status symbol . . .

Smartphone ownership hovers around 13%-14% of the US mobile handset market. Recently, we asked consumers who didn't currently own smartphones whether they intended to upgrade in the near future:

n=603, April, 2009

Our guess is that we'll hit 25% smartphone penetration in the next several years. That still leaves lots of less smart phones where SMS assumes a much greater share of the activity. 

___

Related: The Yankee Group projects that 41% of US consumers will upgrade to a smartphone as their next mobile device. The firm also claims that by 2013 smartphones will represent 38% of the market. 

I think this latter number is aggressive, but if pricing (handsets, plans) is right it could be approached. I would say it's probably closer to 30% of all handsets (up from 14% this year) on the aggressive end. 

I don't know what time frame is being used regarding the 41% number above (next handset purchase). But if you look at the LMS/Opus chart above, you see that 41% are planning on buying smartphones -- in agreement with the Yankee figure -- with only 20% saying it will happen in the next year.

comScore: Lo-Mo Content Audience Up 51%

This afternoon comScore put out a press release showing significant growth in local content access on mobile devices vs. a year ago -- across the browser, apps and SMS. Local here is defined as "maps, movies, directories or restaurants."

Local information on mobile devices, according to comScore, is most often accessed via the mobile browser. However, the strongest growth is coming from apps, "which grew 83 percent versus year ago, followed by SMS at 72 percent."

Here are their numbers (from March):

• Browser: 20.7 million users
• SMS: 11.7 million
• Apps: 11.3 million

That would be 43.7 million users of local content on mobile devices out of a total US mobile Internet audience of approximately 65 million. Some of that audience, however, is going to be duplicated (e.g., iPhone users who access both the browser and apps). Remember that this is not all content on mobile devices; it's local content as defined by comScore above.

Local content by access category:

Growth by local content category:

The release ends with a discussion of yellow pages apps and related mobile distribution efforts.

These data present a directionally accurate but incomplete picture of local content access on mobile devices. For example, there are other categories of local content not reflected here (e.g., shopping, weather) and directory assistance lookups/calls don't appear. It also seems that "search" is not part of this analysis, although search may be factored in as a way that users nagivate to local content via the browser. 

These data are also not segmented by device type (i.e., smartphone vs. feature phone). My guess is that we'd see browser and apps use concentrated in the smartphone category, while SMS would dominate on feature phones. In addition apps usage would probably be highest on the iPhone, which makes sense given the fact that most apps developers have focused on the platform and not been as prolific for other smartphones to date. 

Here's the apps count as reported yesterday by Apple:

• Apple: 50K
  Android: 5K
  Nokia/Symbian: 1K
  RIM: 1K

Our most recent research show the following types of content accessed via mobile devices: 

1. Email
2. Weather information
3. Games
4. Search engines
5. Maps and driving directions
6. News and sports information
7. Local business search
8. Social networking
9. Movies, show times
10. Local restaurants and reviews
11. Product information shopping
12. Financial information
13. Adult content
14. Other types of content

iPhone 3Gs: Location in the Browser

The new iPhone 3Gs is a lot more location savvy. For example: 

• TomTom is now an app
• It's got a new compass function that orients the map view to the user's direction/position
• It allows turn-by-turn directions
• Third parties can embed maps in their apps
• Location is now available to the Safari browser (this will be true of Android's browser going forward as well)

In particular, on the last point, location in the browser means that publishers and websites can localize their content, functionality and potentially ads through the browser. They no longer have to build apps to capture the phone's location awareness. This is a big deal for both the user experience and for publishers/marketers potentially.

Users will still need to opt-in to share their location. However the experience will be simple as with the current "X would like to use your location" message for apps. 

Rather than driving or boosting "local search" this will allow location to be more seamlessly integrated across mobile sites and into the broad user experience.