Mobile Platforms

Siri-Fandango Tie-in Will Drive More Mobile Movie Ticket Sales

For users who updated their iOS devices to 6.1 yesterday Fandango is now the commerce partner for movie ticket sales via Siri. If you look up movies using Siri you get the Rotten Tomatoes powered list with an option to buy using Fandango. If you don't have the Fandango app on your device you'll be prompted to install it to complete the transaction. 

Fandango has reported that mobile now accounts for more than 30% of ticket sales. That will undoubtedly increase with Siri and iOS integration.

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There are many Siri critics out there but the process of looking up a movie and (now) buying a ticket is pretty compelling. In fact this may well become the primary way that many iOS users buy movie tickets in the future. Once a credit card is on file with Fandango it's going to be faster and easier than conducting the same transaction even on the PC.

In addition, there's Apple Passbook integration post purchase. 

This is yet another "mobile payments" point solution (it's really e-commerce on a mobile device) that will get people comfortable with the idea of using their phones to conduct transactions and pay for things. The convenience and value here are obvious to consumers.  

 

Yahoo Rebuilding in Mobile: Excerpts from the Q4 Earnings Call

Yesterday Yahoo reported Q4 2012 earnings and full-year results. In several respects company did better than expected in Q4, though display revenue was down 5%. Search revenue was up 14%. Display advertising is the single biggest source of revenue for the company. 

On the earnings call CEO Marissa Mayer discussed the company's strategy. Among other things, Mayer is focused on improving Yahoo's mobile sites, apps and products, branding them consistently and upgrading them in those areas where Yahoo wants to concentrate. Improved Yahoo Mail and Flickr apps were two recent product upgrades for mobile. 

Mayer is very focused on modernizing Yahoo user experiences and generating more usage and engagement accordingly. She believes that will bring more revenue opportunities including in mobile.  

Below are some of her verbatim remarks about mobile from the earnings call transcript:  

Yahoo! is focused on making the world's daily habits inspiring and entertaining . . . Essentially, we need to start a chain reaction . . . To start that chain reaction of growth, we've identified approximately a dozen products to focus on, each a daily digital habit. When taking multiple platforms into consideration for each product, desktops, mobile web, mobile apps and tablets, there's a lot of work to be done . . . 

Focusing more on the pure advertising and monetization standpoint, there's greater opportunity with the big 4: Search, Display, Mobile and Video . . .

In 2012, we saw our Mobile adoption grow to more than 200 million unique monthly users. From a monetization perspective, this is still a very nascent source of revenue for us. With any platform shift, revenue always follows users, and Mobile will be no different . . .

Obviously, we have a large mobile web offering and people tend to use things like Yahoo! Finance, omg! on their mobile browsers on their phone. They also tend to use some of our applications . . .[M]ost of our applications and our mobile web experiences have Yahoo! Search boxes . . .

In terms of having 50% of our engineering workforce on Mobile, I think that this is something that will ultimately happen. I think you start looking many years in the future, it's hard to imagine that there are going to be technology companies where that isn't true. To date, we have started to shift some of our engineering teams to be more focused on Mobile. We need to get to a critical mass on that.

Just a few years ago Yahoo was well ahead of Google in terms of mobile advertising and revenue. Today that's hard to believe. Cleary, however, Mayer "gets it" and is working with her team to address Yahoo's current mobile deficiences. And the 200 million monthly unique users is a very encouraging figure for the company. By constrast Facebook, Yahoo's biggest display rival, has 600 mobile uniques on a global basis. 

Even though Yahoo is building out its mobile assets, I would expect the company to make several mobile acquisitions -- perhaps on the consumer side but also of a mobile ad network or exchange.  In fact, I would be surprised if Yahoo didn't make a meaningful acquisition to bolster its mobile advertising business. 

What You Think You Know about Local-Mobile Advertising May Be Completely Wrong

I keep reading very aggressive projections about local-mobile advertising from BIA and others. Rather than grounded in reality today, these forecasts are built on a set of "optimistic" but simple assumptions about how the market will inevitably develop. For example, one assumption is that national ad dollars from brands and retailers that sell locally will pour into mobile and that their mobile ads will necessarily be geotargeted or localized.

While all forecasts must make assumptions about the future, my belief is that many of the assumptions being made about mobile are crude at best or simply incorrect. I'm a big proponent of location-based marketing and have written extensively about how geotargeted ads and ads with localized creative outperform conventional or "generic" national advertising. There's no question about consumer demand for local information. The question is whether and how advertisers can match or exploit that demand.

There remains a great deal of friction and many challenges to overcome before these big local-mobile forecasts can come true. There are also several "unexpected" things that may change the direction of the marketplace. I go into a few of those things below. In truth the majority of the localized mobile advertising today is happening in search. The platform is mature, the demand and the tools are there. The value is obvious to all involved. That's why Google is making the most money in mobile advertising today. (Facebook is also going to make a lot of money in mobile, some of which will be localized.) By contrast, local-mobile display is in its infancy.

There are two mobile ad networks generating and syndicating a large percentage of the local display inventory that you're likely to encounter: xAd and YP. CityGrid is out there and so are Verve, LSN, Telenav/ThinkNear and a couple of others. Marchex is there too with pay-per-call; however much of that is driving mobile callers to national call centers. Among the major ad networks Millennial, JumpTap and AdMob (Google) all offer local targeting. Often that targeting doesn't extend beyond state or DMA-level precision.

The emerging exchanges and RTB platforms all offer location as part of a laundry list of targeting capabilities. Indeed, location is likely to simply become one of many targeting variables on most networks and exchanges.

Coaster Another 'Point Solution' That Will Drive Mobile Payments Adoption

Some people have described the competition for business owners in the mobile payments segment as a "race to the bottom" in terms of credit card processing fees. Indeed, there are now at least 10 mobile payments or POS vendors targeting small businesses that are undercutting traditional credit card processing fees. The include LevelUp, Groupon, Square, PayPal Here, GoPago and others. 

Just yesterday Coaster introduced an iPad POS app that charges bar owners zero credit card fees -- zero. It makes money off charging consumers a small amount for the "premium service." 

Clearly this is not the company's long-term strategy. It's trying to create more bar "inventory" for consumers in the hope of driving app adoption and expanding beyond San Francisco, it's only current market. However the zero credit-card processing fee is a major incentive for bars to sign up and use the system. 

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Coaster is another example of something I've written about multiple times: vertical or point solutions that offer self-evident value to consumers and will drive adoption of mobile payments. My favorite example is mobile parking payments but Coaster is a pretty good example.

By using Coaster smartphone owners can order, pay and tip at bars without giving over their credit cards directly or waiting in line. I've not yet used the app myself. However Coaster offers concrete and obvious value for bar patrons (and bar owners).

These kinds of vertical scenarios or "point solutions" will educate consumers and get them comfortable with mobile payments, paving the way for broader adoption of "horizontal" solutions such as Google Wallet. Exposure to a positive veritcal payments experience will tend to accelerate broader payments adoption. 

By contrast people often don't see the reason or need for "mobile wallets" in the abstract. 

How interested are you in using your mobile phone to pay for things, and replace cash or your credit cards?

Survey: mobile payments

Source: Opus Research (August, 2012; n=1,501 US adults)

Yandex Launches Voice-Powered 'Wonder' Search App, Amazon Buys Its Siri

Russian-based search engine Yandex this morning released a new mobile app called "Wonder." It's currently only available for the US market and right now only on iOS. It uses speech recognition from Nuance and social data from Facebook, Instagram, Foursquare and Twitter to provide search results refracted through social networks.

The kinds of queries Wonder envisions are those such as "tech news stories liked by my friends" or "restaurants near me visited by my friends." The app can only be used in landscape mode. It offers a visually polished UI but generally poor search and user experience (it would be better on the iPad). Unless there are some dramatic changes it won't be widely adopted by consumers. 

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Indeed, Wonder is no substitute for Google or Yelp or Facebook's new local and general search capabilities. What's interesting and significant is that it does illustrate broader adoption of social data as a filter and mechanism to personalize search results. The app is also consistent with the embrace of voice as a primary UI and capability.

Wonder offers a hint of a personality there but it's not a full blown "assistant" like Siri or Speaktoit. However Amazon's acquisition of text-to-speech specialist Ivona is a move to bring a Siri-like assistant feature to Amazon's Kindle tablet devices. (Amazon previously purchased speech provider Yap.)

Amazon already had text-to-speech for Kindle but Ivona offers a smoother, human-sounding voice capability that can be deployed for a range of purposes and use cases. And like Wonder it reflects the degree to which speech has become a critical "must-have" function on mobile devices.

By itself, however, speech is not enough. Increasingly there must also be a "personality" (assistant) to go along with the raw speech-processing capability. This is the impact of Siri on the broader marketplace. 

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My colleague Dan Miller brings a different perspective to the Ivona acquisition. He sees it in the larger context of speech-industry consolidation.

Update: TechCrunch says that Facebook has blocked Wonder's access to its user data while the companies negotiate about access. 

Failure to Properly Value Mobile Clicks Leads to Google CPC Decline

Yesterday afternoon Google announced Q4 2012 earnings. In almost every respect it was a spectacular holiday quarter for the company. Consolidated revenues (which include Motorola) were $14.42 billion, an increase of 36% over 2011.

Google made $50.2 billion for the full year, crossing that revenue threshold for the first time. That compares with $37.9 billion the company made in 2011. 

Google revenues 2012 

However the average price that avertisers paid Google per click (CPCs) decreased 6 percent vs. Q4 2011. That was a smaller decline than in the past, which could be seen as a positive.

The CPC YoY drop is because more clicks are now coming from mobile devices and advertisers are paying less for those clicks. According to a report released yesterday from marketing firm The Search Agency, CPC prices for paid-search ads appearing on smartphones are well below comparable ads appearing on tablets and PCs (see graphic below).

In Q4 mobile search clicks were worth less than 50% of what marketers paid for PC search clicks according to the data. Why are marketers paying much less for mobile clicks when mobile consumers are often much better prospects and customers than PC users? 

There's less competition currently for mobile clicks than there is for PC search clicks. Because Google's ad system is an auction that necessarily affects pricing. But more than that many advertisers are unwilling to pay more for mobile clicks because they don't trust them and/or can't calculate a mobile ROI.  

CPCs - tablets, PCs, smartphones 

Source: The Search Agency 

Many search marketers, especially brands and large advertisers, rely on automated systems that calculate paid-search ROI based on some pre-defined conversion event. Those conversions can be a variety of things but frequently they're e-commerce transactions or, in some cases, phone calls. 

PC ROI calculations are generally flawed because they usually don't or can't capture online-influenced offline buying. Accordingly the system and the marketer only see online events but not the far larger collection of offline purchases and activities (e.g., store visits) that are driven by online and paid search advertising. The problem is even more pronouced for mobile, however. 

Because there are relatively few mobile commerce transactions -- though there are plenty of phone calls from mobile devices -- marketers simply don't see the "latent" conversions that happen in the real world or later on another screen, such as in the case where someone does research on a mobile device and later buys on a PC or tablet. 

As a result of this varied, multi-screen consumer behavior marketers aren't able to correctly perceive or attribute ROI and accordingly value mobile clicks. While this represents a "buying opportunity" for advertisers that know the true value of mobile the majority of advertisers are undervaluing mobile clicks. And that's reflected in the average CPC declines that Google has been reporting. 

Facebook's Q4 Mobile Ad Revenue Likely to Be around $260 Million

Independent analyst Ben Evans has teased out a range of Facebook mobile usage and user data, partly derived from the company's own public statements and partly from his own calculations. You can read what he says here. Below I use some of his data and one of his charts. 

Mobile users as of Q3 2012 (mostly public numbers): 

  • 1.07 billion total users globally
  • 604 million total mobile users globally 
  • 470 million users of mobile apps/smartphone apps
  • 134 million users impliedly accessing Facebook via mobile web and not apps 

Screen Shot 2013-01-07 at 12.39.14 PM

Accordingly, roughly 44% of Facebook's global user base doesn't access the site on mobile according to the company's own data. However that figure is likely to get smaller over the next 12 - 24 months and become a very small minority.

Evans estimates the following smartphone app usage for Facebook (based on Q3 data above):  

  • 140 million people globally using the iPhone app
  • 176 million using the Android app 

Below is a chart from Evans showing the relative growth of Facebook access on the various mobile platforms from September 2011 to September 2012: 

Screen Shot 2013-01-07 at 12.30.12 PM

Assuming these numbers are accurate you can see the reversal of positions of the iPhone and Android since last year, which makes sense. However the larger point is that a majority of Facebook users now access the site via mobile. 

Facebook has argued that mobile is ultimately a much larger revenue opportunity than the PC. The following verbatim Facebook remarks come from the Q3 earnings call transcript: 

  • Mobile will give us the opportunity to reach way more people than desktop . . .
  • Somebody who uses only our desktop product has only a 40% likelihood of using Facebook on a given day, but someone who uses mobile has a 70% likelihood of using Facebook on a given day . . .
  • After just six months of ramping up our mobile ad business, we’re already at a point where 14% of our ad revenue this quarter is from mobile. That’s about $150 million . . .

Social and paid-search ad platform Kenshoo came out with data today that argue the percentage of ad revenue coming from mobile is now up to 20.3%. 

Facebook is expected to generate roughly $1.5 billion in overall revenue in Q4. Not all of it is ad revenue, however. Roughly $260 or so million would be attributable to mobile if the 20.3% figure holds and the forecast is correct. 

Google sees lower CPC prices on mobile paid search ads but better performance on mobile devices vs. the PC. However Facebook is experiencing the opposite phenomenon, according to Kenshoo. It sees higher mobile prices but lower engagement vs. the desktop. 

 

Daughter Shows Challenges (and Opportunity) for Windows Phones

I had an interesting experience this past week with my 13-year old daughter, which illustrates the challenges but also the opportunity for Windows Phones. One of several smartphones I have is a blue/purple HTC 8X (Windows Phone). The phone offers Beats Audio integration. It's a very attractive handset and looks very much like a Nokia Lumia device, only not as heavy. (Nokia is not too happy about the close similarity.)

My daughter is currently a feature phone user and really wanted an iPhone 5, which my wife and I cruelly denied her. But she spied the 8X on my desk and really liked how it looked. She also had seen (on Hulu) the relentless Microsoft Windows Phone ads -- "as unique as you are" -- and was parroting some of the ad copy/dialogue to me almost verbatim. (The campaign must be working.) 

She asked for the phone and I agreed that she could have it. I gave it to her to try at home on WiFi to make sure that she was really interested before I went through the trouble of changing carriers and so on. I suspected the OS might throw her; she's had an iPod Touch for several years and we've also had several Android phones. She's familiar with both operating systems but hasn't ever used Windows. 

Another factor: she was intrigued by the Microsoft Surface tablet, which she saw at a friend's house. The colorful and different look of the UI appealed to her. The Windows "metro" design -- I can still use that term even if Microsoft cannot -- on both devices got her attention. 

Then she started playing with the phone and found out that some of the key apps that she and her friends routinely use weren't there. She wasn't thrown by the metro UI and "live tiles," as I expected. Rather it was the fact that Instagram, Oovoo, Snapchat and other apps she uses were missing. She was particularly annoyed by the pseudo Instagram apps that appeared (e.g., Instagram blog). After discovering that these beloved apps were missing she rejected the phone. 

Had those and a few other critical (in her mind) apps been present, she would have kept and used the phone. I told her that Instagram would eventually come to Windows Phones as would other missing apps. That didn't satisfy her. 

Windows Phone now has 150,000 apps; however as indicated by the above it's still missing many key apps. For example, as part of its antitrust argument against Google Redmond says it's being unfairly denied access to YouTube metadata. It's makeshift YouTube app is deficient in fundamental respects:

Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.

If Microsoft can manage to get the key/top apps onto Windows Phone it will be able to attract buyers who like the different look of the UI and/or who may be attracted by the aggressive subsidies offered by carriers. The 8X is available for $49 with a two-year contract at Verizon, for example. 

However until these apps (enough apps, key apps) are there would-be users, such as my daughter, won't bite. Microsoft can break the "catch-22" of Windows Phone app development through developer payments and incentives, which it's trying to do. The company needs to identify all the "necessary apps" and make sure those are built for Windows Phones. 

Beyond this the current messaging isn't really successful in attracting buyers, notwithstanding my daughter's ability to parrot the commercials. Microsoft needs build messaging around three ideas:

  • All the apps you want are here (once they in fact are) 
  • Windows Phones are cheap(er) and offer comparable functionality vs. Android flagships and the iPhone
  • The designs and UI are different, making you more of an individual in owning one (this is a slightly different statement than the current customization messaging) and a version of Apple's past Think Different argument.

Finally, ideally, there should be something about the hardware and software (beyond the UI) that is different. Microsoft argues there are already such things (e.g. Kids Corner). And the colorful phone cases offer an approach taken by Nokia and HTC. A better camera (i.e., Lumia) is another.

Yet these things aren't quite enough. There needs to be a highly visible feature or dimension of Windows Phones that truly isn't present on iPhone or Android handsets. Right now, nothwithstading the nicely designed metro UI, Windows Phones continue to seem like "wannabe" devices that are still playing catch up to other smartphones. 

Nielsen: Smartphones Now 56% in US, 32MM iPhone Maps Users

As part of a year-end release of data Nielsen indicated that 56% US mobile subscribers owned smartphones as of Q3. By contrast, comScore says smartphone penetration currently stands at 52%. And Pew said earlier this year that it was 53%. 

In the smartphone segment, the following are Nielsen's data regarding US mobile operating system share (again, end of Q3):

  • Android: 52%
  • iOS: 35%
  • RIM: 7% 
  • Windows Phone: 2%
  • Others: 5% 

Here are similar data from comScore's for comparison purposes (November, 2012):

  • Android: 53.6%
  • iOS: 34.3%
  • RIM: 7.8% 
  • Windows Phone: 3.2%
  • Others: 0.6%  

Below are Nielsen's lists of top apps for 2012 for both the iPhone and Android devices. While the lists are different there are several apps that appear on both: Faceobook, YouTube, Pandora, Twitter and "weather."  Screen Shot 2012-12-20 at 2.11.33 PM

Google's Gmail and search apps are at the top of the Android list but absent from the iPhone list.

Nielsen is also reporting that there are an average of 32 million Maps users on the iPhone each month. That's more usage than Facebook or YouTube, which both have huge mobile audiences in the US.

It's also a significant loss of traffic for Google. However because there were very few ads on the iOS 5 version of Maps it's not a revenue loss for Google.

Year Ends with Mixed Outlook for Microsoft & Nokia

Earlier this week Appcelerator released its quarterly mobile app developer survey. The survey of more than 2,700 global developers found they were primarily focused on the iOS and Android operating systems, with Windows Phones, RIM and others relatively far behind. This reflects the "duopoloy" of iOS and Android (increasingly "Samdroid') sales in the global smartphone market.  

The challenges of creating a strong developer ecosystem for Windows is partly what's holding the mobile OS back. Sales are relatively good in isolated EU markets (e.g, Spain, UK) but lackluster on a global basis and in North America in particular, where Windows continues to lose market share.

According to the survey, about 36% of developers indicated interest in building apps for Windows devices. However Windows Phone's modest market share is creating a kind of Catch-22 for the platform.  

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Without boosting the perception that Windows has app-parity (at least among the most important ones), there won't be more handset sales. Without more handset sales there won't be more consumer usage and without consumer adoption there are few incentives -- except direct payments from Microsoft -- to develop for the platform. The majority of developers, according to the Appcelerator survey, can only focus on two mobile platforms. 

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Separately, IHS iSuppli released a full-year, 2012 estimate of global smartphone market share. The calculation is based on the untrustworthy "shipments" metric. However, the company shows Nokia dropping to third position, Apple in second and Samsung-Android now leading iOS "decisively":

Samsung and Apple ended 2011 in a neck-and-neck battle for leadership in the smartphone market, with only 1 percentage point of market share separating them. However, entering the 2012 year, Samsung moved ahead decisively ahead of Apple with a wide range of Android smartphone offerings. Samsung made significant gains in both the high end as well as the low-cost market with its Galaxy line of smartphones. This diversified market approach has allowed Samsung to address a larger target audience for its phones than Apple’s limited premium iPhone line.

The Samsung and Apple duopoly represents the dominant force in the smartphone market, with the two companies accounting for 49 percent of shipments in 2012, up from 39 percent in 2011. While Nokia and Canada’s Research in Motion (RIM) also held double-digit shares of the market in 2011, Samsung and Apple remain the only two players that will each command a double-digit portion of the smartphone space in 2012.

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As Google-owned Motorola, LG and HTC struggle for consumer attention and handset sales, Samsung becomes more and more identified with Android in the consumer mind. RIM's forthcoming BlackBerry 10 OS is truly the company's "last hope." Nokia too will likely need to do something fairly radical if it is to remain viable (i.e., adopt Android) in the smartphone market. 

Despite Android Market Share Lead, iOS Devices Dominate InMobi Network

Global mobile ad network InMobi has released its latest "Insights Report" for the US market. Interestingly it finds Apple devices generating the majority of ad impressions despite their smaller overall hardware market share.

Apple's iOS devices have a 46% share of impressions on the InMobi network, compared with Android's collective 43.6% share. Here are the top five devices that InMobi sees on its network:

  • iPhone -- 27.5%
  • iPod -- 11.5%
  • iPad -- 7.0%
  • Amazon Kindle Fire --  2.8%
  • Motorola Razr -- 2.2%

While there is almost no Android presence in the top five (Kindle Fire is a quasi-Android device) the network says that Android growth is outpacing that of the iPhone. Compare InMobi's data to other ad networks, which show Android with a greater share of impressions. 

Jumptap (July, 2012): 

Screen Shot 2012-12-13 at 10.36.56 AM

Millennial Media (November, 2012): 

Screen Shot 2012-12-13 at 10.37.29 AM
The Millennial numbers above correspond almost exactly to comScore's market share data regarding handset penetration (October, 2012):

  • Google: 53.6%
  • Apple: 34.3%
  • RIM: 7.8%
  • Microsoft: 3.2%
  • Symbian: 0.6%

Nearly 40% of Smartphone Owners See Mobile Payments in Less Than Five Years

Last week eBay reported that it will realize "more than $10 billion in mobile volume for the year from its mobile apps and PayPal expects to transact more than $10 billion in mobile payment volume." Those are big numbers. If we visit some of the mobile payments forecasts the numbers get much bigger. 

Yet consumer surveys in the US and elsewhere reveal consumer ambivalence and even indifference to mobile payments. It does vary by age however, with younger users indicating greater interest than older people.

A survey we fielded in August (n=926 US adults) found that roughly 29% of respondents had varying degrees of interest, whereas 71% were "not at all interested" in mobile payments.

"How interested are you in using your mobile phone to pay for things as a replacement for cash or your credit cards?" 

  • I'm not at all interested: 71.3%
  • I have limited interest: 14.8%
  • I'm fairly interested: 7.2%
  • I'm extremely interested: 6.8%

In our survey people under 45 years of age were considerably more interested than people who were older. A new survey from Harris Interactive is more bullish on the outlook for mobile payments however, with smartphone owners reflecting much greater interest in mobile payments: 

“How interested are you in being able to use your smartphone to process in-person payments via tapping a special receiver, rather than using cash or payment cards? 

  • Very interested in using my smartphone instead of cash or cards: 8%
  • Somewhat interested in using my smartphone instead of cash or cards: 19%
  • Not very interested in using my smartphone instead of cash or cards: 12%
  • Not at all interested in using my smartphone instead of cash or cards: 43% 

In other words 27% were "Very" or "Somewhat Interested" while 57% were "Not Very" or "Not at All Interested." This was the full sample population. The following were the smartphone-only responses: 

  • Very interested in using my smartphone instead of cash or cards: 16%
  • Somewhat interested in using my smartphone instead of cash or cards: 28%
  • Not very interested in using my smartphone instead of cash or cards: 16%
  • Not at all interested in using my smartphone instead of cash or cards: 30% 

Thus "Very" or "Somewhat Interested" came out to be 44%, while "Not Very" or "Not at All Interested" was 47%. Quite a bit more interest accordingly. 

Smartphone owners in the 18-47 age range were most interested in mobile payments according to the Harris survey. In addition, 38% of smartphone owners saw mobile payments replacing card-based transactions "for a majority of purchases" within five years.  

The Most Interesting Mary Meeker Slides about Mobile

Former Morgan Stanley financial analyst, now KPCB partner, Mary Meeker did one of her patented blizzard of stats/data dump presentations at Stanford University the other evening. The slides (available here) are essentially an updated version of a presentation given earlier this year. 

You know most of the material by now. However, below are the most interesting slides I culled from a much longer set. They go to device adoption and mobile ad revenue projections. 

Screen Shot 2012-12-04 at 11.57.33 AM

The noteworthy thing about the above chart is that it argues there are 172 million smartphone subscribers in the US. If that's true it would mean a smartphone share of something like 68% or 73% depending on the base used. This is undoubtedly high. But it's not unreasonable to argue that there may be 60% smartphone penetration by the end of Q4 in the US (or early Q1). 

From the chart below: there may not in fact be 5 billion individual mobile phone users around the world. There are "only" 7 billion people on the planet. It's probably more accurate to assert there are something like 5 billion subscriptions/SIM cards (there are some dual subscriptions). Still the global smartphone growth opportunity is massive. 

Screen Shot 2012-12-04 at 11.58.14 AM

The following chart is based on Pew survey data, showing that 29% (as of earlier this year) of US adults owned a tablet or eReader. Tablets are going to be the number one electronics gift item this year. We could be looking at 80 million total tablets in the US in Q1 2013. 

Screen Shot 2012-12-04 at 11.58.37 AM

What's most interesting about the slide below is that it projects tablet ownership to pass PC ownership by the end of next year; in other words: more tablets than PCs. This may be a aggressive forecast but it's not out of the question. 

Screen Shot 2012-12-04 at 12.00.05 PM

The final slide is about mobile advertising and app revenue. There are many sources behind this projection. It envisions a $20 billion global market by the end of the year, with mobile advertising around $6 or so billion. 

Screen Shot 2012-12-04 at 11.59.17 AM

US mobile advertising was worth roughly $1.2 in the first half and is on track to be somewhere between $2.6 and $2.8 billion for the full year 2012. Globally mobile ad revenues will probably reach between $5.5 and $6 billion by the end of Q4 this year.

GM to Incorporate Siri into Two 2014 Chevrolet Models

As part of General Motors' MyLink in-dash telematics system (GM's answer to Ford's Sync), the Chevrolet division is incorporating Siri access into two 2014 models: Spark and Sonic vehicles.

Users with iPhones will be able to use Siri to execute a number of commands: 

  • Make calls to contacts
  • Play music on iTunes
  • Send a text message
  • Access calendars 
  • Answer several categories of questions 

Siri's full capabilities won't be incorporated at this point however. Anything that requires a visual display of data won't be available so as not to create safety hazards while driving. Siri and the iPhone connect to the MyLink system via Bluetooth. 

MyLink is designed to be broadly integrated with iPhone and Android devices. The console operates very much like a small tablet device embedded in the dash.  

The MyLink "infotainment" console is already modeled on the smartphone apps metaphor. MyLink also has a built in virtual assistant, which will operate in those models that don't enable Siri access. It will also remain available to drivers in the Siri-enabled Spark and Sonic vehicles as well for a broader array of functions than what Siri will permit.

What's perhaps more interesting than the integration of Siri is the adoption of the concept of the virtual assistant more broadly. My colleague Dan Miller is about to publish a report on "PVAs" (personal virtual assistants) and their impact on a range of use cases including enterprise customer care. Built on decades of speech processing research and technology development, as well as advances in "AI," virtual assistants are changing the way we "search" and interact with devices and technology. 

The following video demonstrates MyLink's features.

M-Commerce Cyber Weekend Gains & the Android Paradox

There's lots of news today about the role mobile is playing in the just-started holiday shopping season. Most notably IBM reported a couple of days ago that on "Black Friday," mobile buying "soared with 24 percent of consumers using a mobile device to visit a retailer's site, up from 14.3 percent in 2011. Mobile sales exceeded 16 percent [of online commerce], up from 9.8 percent in 2011."

But even more noteworthy than the increasing role that mobile is playing in holiday shopping, is the discrepancy between iOS and Android in terms of web traffic and user purchase behavior.

Source: IBM

Call it the "Android paradox." In the US Android handsets represent 52.5% of smartphone market. Apple's iPhone holds 34.3%. The share that is controlled by iOS is larger when the iPad is factored in but Android is the dominant OS in the US and globally. 

When you look at mobile internet visits, however, the relationship shifts -- with the iPhone and iOS driving much more web traffic than Android. Apple's devices also generate much more in the way of e-commerce sales vs. Android. Website Fab.com reports that 95% of its mobile sales are coming from iOS devices. 

IBM reported that 58% of consumers (of the 16% who bought something on a mobile device) used smartphones to shop for deals, while 41 percent used tablets. Here's how the traffic distribution broke down on Black Friday in the US:

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Source: IBM

The iPhone and iPad combined for the bulk of mobile shopping, while on the tablet side the iPad generated 88% of the traffic in its category. There's something very strange about the fact that iOS users generate much more internet traffic and mobile buying than their Android peers -- given that there are more Android users out there. 

There have been various attempts to explain this traffic and commerce discrepancy, chief among them the theory that Android owners are less sophisticated, affluent and engaged. While there's clearly some validity to this theory it doesn't entirely explain what's going on. 

IAB: Smartphones Aggressively Used for Shopping, Not Commerce

The IAB just released its second mobile shopping report, including its ranking of the most "mobile savvy" cities in the US. Houston, remarkably, comes out on top for a second year. Houston is also the "fattest city in America" according to Men's Fitness magazine.

The mobile shopping study also found surprisingly high numbers of users who owned "connected devices" (tablet and/or smartphone). The numbers here are much higher than Nielsen and comScore figures for smartphone ownership. According to the data the San Francisco Bay Area had the highest smart device penetration at 78%. Among the top DMAs Detroit was lowest with 62%. I suspect these numbers are not entirely representative of the mobile subscriber population and a bit high -- though perhaps not radically so.

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The IAB report, which draws from a variety of survey and data sources, confirms that smartphone users are aggressive and engaged mobile shoppers but they generally don't buy things on those devices (tablets are different). The IAB (citing comScore) reports that 86% of US smartphone owners visited retailer websites or used retailer mobile apps in July.

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The graphic above doesn't entirely make sense (81% vs. 85.9%) but it makes the larger point that most smartphone owners are accessing retail information on their devices.

In stores smartphone owners use their devices to communicate with other people about intended purchases, check prices and product information and look for deals. However only 5% in this survey bought anything with their mobile handsets. 

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The report also confirms that most tablets are not used "on the go," while shopping. However that may change with the advent of carrier-supported 7-inch tablets and the 5-inch Galaxy Note (also obnoxiously known as a "Phablet"). 

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This is just one more set of data that underscore the importance of being "mobile ready" and fully understanding how mobile can be used for customer acquisition and customer service, even in stores. Mobile is an instrument of "showrooming" but it can also be an avenue for customer service and retention among traditional retailers. Yet most are simply not ready

Major Retailers, Etailers Unprepared for Mobile and Tablet Shoppers

Almost daily my inbox is hit with a new study or report that expresses a similar theme: businesses large and small aren't ready for mobile shoppers. However one would expect retailers to have invested and be prepared for the coming multi-screen holiday season. Not so, says an informal usability study from Keynote systems.

Keynote examined major retail and e-commerce sites on iPhones, Android devices and BlackBerry handsets. It found numerous problems and inconsistencies from device to device. The inference is that retailers aren't actually testing their own sites on the various platforms and operating systems.

Some of the problems Keynote identified are minor (copy not optimally presented) but some are major (broken search functionality). Furthermore many of the retailers didn't seem to be addressing the tablet audience. Keynote explained, "We also looked at Target on the iPad 3 and see that they probably haven’t been testing on a tablet and are content to delivering their desktop site to a tablet on good faith." 

Tablets drive actual online conversions, whereas smartphones are mostly used to check reviews, price information and locate and contact stores. Tablet conversions are as high or higher than on PCs and average order value from tablets is higher than on the PC. It's critical for retailers and etailers to address the tablet audience specifically. 

Most retailers appear to believe that their sites will "work" for tablet users. That's true in many cases but a tablet-optimized retail experience would almost certainly drive more online sales and increased user satisfaction.

According to Skava only 7% of retailers currently have tablet-friendly sites. Accordingly this year may turn out to be a missed opportunity for most retailers when it comes to mobile and tablet users. Here's Keynote's conclusion, which is simply common sense: 

Early testing of both mobile websites in preparation for the holiday season would have prepared these top retailers for the judgmental mobile shopper this season. With holiday shopping looming and ready to begin in just days, it seems that these top retailers are already running into hurdles that may affect their holiday sales goals.

Whites Lag in Smartphone Adoption

According to Nielsen, Caucasian/White Americans lag behind other groups when it comes to smartphone adoption. The data below are part of Nielsen's recent cross-media study (Q2 2012).

Based on data from many thousands of users, Nielsen reported that 70% of Asian American adults now own smartphones, while 62% of African Americans and 60% of Hispanics also do. By comparison "only" half of Whites own smartphones. 

Nielsen said, in September, that smartphones represent 56% of the US mobile market. ComScore also reported in September that the smartphone penetration number is 51%.

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The year will probably end at or very close to 60% smartphone penetration in the US. That would mean something like 150 million smartphone users, most of whom would also be mobile internet users.

Google Wallet 2.0: One Plastic Card to Rule Them All

Last week the Android Police blog received a tip and some screenshots that showed what Google will soon be unveiling in its ongoing quest to penetrate the payments segment: a plastic card. Google is moving forward by going back.

While it initially seems self-defeating -- Google Wallet is supposed to get rid of plastic -- it is both an innovation to broaden Google Wallet's apppeal and an interim step that now appears necessary in the transition from plastic to true next-generation payments systems.

Google Wallet (the NFC mobile payments tool) remains obscure to most US consumers, although it has been out and operative for well over a year. A plastic card would allow Google to dramatically extend the reach of Wallet without mobile carrier involvement, approvals or the need to do much consumer education. These are the considerable benefits of a plastic card for Google. 

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Image Credit: Android Police

Below are some of the highlights of what was revealed in the screenshots (only a few of which are above): 

  • The Google Wallet Card is designed to be used when/where Google's NFC Wallet won't work or isn't available
  • It promises to work "where major credit cards are accepted"
  • It features the ability to link any card or set of payment cards to Google Wallet and choose on a per-transaction basis which one to pay with
  • Ability to send or withdraw money from a "Wallet Balance" (into a personal bank account or to a peer)

The benefits of the Wallet card being promoted in the third panel above are:

  • The Google Wallet card can act as a substitute for all other plastic cards in your wallet (remains to be seen)
  • Users will have access to unique offers and see them instantly redeemed at the POS
  • If the Wallet Card is lost you just cancel Google Wallet and not all your credit cards

PayPal also has a plastic card, introduced earlier this year. The Google Wallet card is probably modeled pretty directly on PayPal's card and copies many of its key features. It appears, however, there may be some additional features unique to Google Wallet. I'm not sure from the information I've seen and Google is not ready to speak about the product. 

The logic behind Google's new plastic card is clear. Google was caught off guard by carrier resistance or hostility to Google Wallet. Among the major US carriers only Sprint has truly embraced Wallet. While AT&T isn't officially blocking it (Verizon is) the carrier doesn't promote Wallet either.

Most US and European consumers are well versed in plastic payment card culture but they typically have no idea whether their phones carry an NFC chip.

PayPal announced a few months ago that the reach of its plastic card is being dramatically expanded through a deal with Discover and use of the latter's financial network. The Google Wallet information revealed above suggests that Google has or is negotiating a comparable (and perhaps broader) deal with credit card processors. 

As mentioned US consumers have not indicated a burning desire for NFC-powered mobile wallets or the ability to pay with their phones. A Google Wallet card could serve to introduce them to the Google Wallet service, while enabling them to pay in a familiar way: with a plastic card. Over time consumers' willingness to experiment and pay with mobile devices would presumably grow as their comfort with and trust in Google Wallet increased.

A plastic card would also enable Google to completely go around the gatekeeper-carriers and appeal directly to consumers, where its strength lies. 

From a merchant point of view there would be no new infrastructure investment required, as there is with NFC point-of-sale terminals. There are currently about 300,000 NFC enabled terminals in the US.

When I first heard about this Google Wallet card I thought that consumers would be confused and not see a reason to adopt it. But the promise of carrying fewer plastic cards, the security features, potential offers and the ability to manage multiple payment cards in the cloud will be intriguing or appealing to many people.

It's analogous to Google Voice. Google Wallet is essentially being used to "forward" a debit for payment to any account or credit card in the same way Google Voice forwards and routes calls to designated phone numbers. 

Thus for both PayPal and Google it would appear plastic cards are a "necessary evil" on the incremental path to "payments 2.0."

Report: People More Comfortable Doing Commerce Research on Smartphones in the Home

JiWire released its Q3 audience insights report earlier today. There are a number of interesting survey findings. However, it's important to note that JiWire's audience isn't necessarily representative of mobile users in the US and UK, or consumers more generally. The JiWire audience is large but generally more "mobile savvy" than average mobile subscribers. 

One of the headlines is that the number of people using smartphones in stores for product research has grown significantly since last year. 

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The things that people are doing or researching on their smartphones in stores has remained pretty consistent: price comparisons, product reviews, deals. 

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JiWire also found that 65% of its smartphone-owning respondents also own a tablet. This is higher than tablet penetration in the population at large. The company also asked about behaviors on both categories of devices.

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JiWire found that smartphone and tablet owners generally engaged in the same activities at the same relative levels. However a higher percentage of tablet owners was active in each category, chiefly because of the larger screen I would imagine. 

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Perhaps the most interesting data, however, has to do with so-called "m-commerce." For most people a semi-arbitrary $99 or $250 were the top amounts they were willing to spend in a mobile commerce transaction. There's nothing safer or more secure about a $99 transaction vs. a $500 transaction however. 

Perhaps there's an irrational belief that smaller transaction amounts bring less exposure. Overall, however, the numbers of people willing to engage in m-commerce have grown over last year. 

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Interestingly (and perhaps again irrationally) JiWire survey respondents appear to be more comfortable researching a $100 product (on their smartphones) in their own homes vs. other locations. This is really interesting and may indicate something about the psychology of many smartphone users.

However, once again, there's not necessarily anything more secure in being at home compared to being on cell or WiFi networks outside the home. 

An alternative explanation might be: more users simply have time to do research in the home and that's the most common location for smartphone usage. But I don't think that entirely explains the data in the chart below. 

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