Operating Systems

Verizon Becoming Synonymous with Android

The allure of the iPhone at AT&T peaked and this past quarter. Verizon signed up more subscribers than its main rival: 665K vs. 496K.

And while talk of a Verizon iPhone continues it appears somewhat less likely than it did just a short time ago. In addition the carrier's Droid campaign is all about bashing the iPhone ("Droid Does" [i.e., the iPhone doesn't]).

This past weekend I was at a mall in Los Angeles and went in to the Verizon store to observe and play with the Droid X (impressive large screen but generally felt "insubstantial"). Verizon is very aggressively associating its brand with Droid handsets and has eclipsed T-mobile USA, which once positioned itself as the Android carrier. Given that history it's ironic that T-Mobile may become the first carrier beyond AT&T to get the iPhone

Verizon's focus on and marketing on behalf of Android is bad for RIM/BlackBerry and other handset OEMs. RIM in particular will suffer from the "second class status" it now occupies in the carrier's positioning. While RIM doesn't rely on one carrier -- it's broadly available from all the major carriers -- Verizon is the largest and most important. Bing, which struck a major "default search" deal with Verizon (except on Droids), also suffers by extension.

As an aside, as RIM rolls out BlackBerry OS 6 and more iPhone and Android-like touchscreen handsets (I assume), it risks straying from its "franchise" -- the text-friendly keypad. This is the dilemma for the Waterloo, Ontario-based company. 

I also observed the lonely Palm display in the Verizon store. Unless or until HP adds more handsets or revamps the software (which they've said they're going to do) Palm remains dormant. 

Making the iPhone available to Verizon is the shrewdest thing that Apple could do to blunt Android's rise and competitive challenge. But because of the investment that Verizon has made in "Droid" (and being anti-Apple) if Apple were to make the iPhone available it might be difficult for the carrier to accept the offer. 

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Related: BlackBerry’s Era May Be Ending

 

iPhone 4 World Tour: 17 More Countries Friday

Apple has announced that on Friday (July 30) the iPhone will be available in 17 more countries:

Australia, Austria, Belgium, Canada, Denmark, Finland, Hong Kong, Ireland, Italy, Luxembourg, Netherlands, Norway, New Zealand, Singapore, Spain, Sweden and Switzerland. iPhone 4 will be available for purchase through Apple’s retail and online stores and Apple® Authorized Resellers. 

Here's Apple CFO Peter Oppenheimer discussing iPhone 4 sales on last week's earnings call:

We were very pleased with iPhone sales of 8.4 million, including over 1.7 million iPhone’s 4s in the initial five countries where it was launched. This represents 61% year-over-year growth and is considerably higher than IDCs latest published estimate of 38% growth for the global Smart Phone market overall in the June quarter . . .

Recognized revenue from iPhone handset sales, accessory sales and carrier payments was $5.33 billion during the quarter compared to $3.06 billion in the year-ago quarter, an increase of 74%. The sales value of iPhones alone was about $5 billion, which yields an ASP of about $595.

At the end of the June quarter, we had iPhone distribution with 154 carriers in 88 countries. We continued to experience very strong year-over-year growth, particularly in Asia, Europe and Japan. Additionally, we continued to be very pleased with strong sales growth from both long-standing and new carrier partners. During the quarter, we surpassed cumulative sales of 100 million iOS devices.

During the earnings call Q&A there were questions about iPhone returns and "Antennagate." Here's the gist of what was said by Apple:

Gene Munster – Piper Jaffray

And just last question and I will turn it over. Since the issues with the antenna have you seen any changes in demand or what changes have you seen in demand for iPhone 4?

Tim Cook

We are, Gene, let me be very clear on this. We are selling every unit we can make currently.

Some people credit Apple with distracting from the iPhone's antenna design by roping other handsets into the controversy. While tech journalists and bloggers debate the validity of these comparisons the public doesn't seem as interested.

Anecodtoally I've heard a few consumers hesitate because of press accounts they've read or seen regarding the iPhone 4's antenna problems. But the sales figures apparently indicate that demand is still extremely high. But most of these sales happened before Antennagate. We'll see what happens internationally now.

Google Q2 Earnings Call: Android Search Up 300% in 1H

Google released its second quarter 2010 earnings today. You can read the full release and see the earnings slides here. I'm going to focus only on the mobile comments made during the earnings call.

All of the remarks below are from Google SVP Jonathan Rosenberg:

On Android growth: 

  • We are now activating over 160,000 Android devices every day. This is up from 65,000 last quarter.
  • The Android market is also open of course, and now has over 70,000 apps. That was around 30,000 in April.

On mobile search growth:

  • Android search grew 300% in the first half of 2010. So, yes, search on Android devices is exploding.
  • The most popular app is a browser. And what do people do with the browser on these devices? They search an order of magnitude more than they have on any previous type of smartphones, which they had in years past. So, the combination of people browsing on these smartphones connected on very, very fast networks, and searching on them is basically the formula around how Google makes, how Google succeeds.

On click to call ad performance:

  • The click to call ads on the high end mobile phones are doing very well. The click through rates go up 6% when you put ads with a phone number, 8% when you put a local address. 

On mobile search not cannibalizing the PC:

  • I think there are also slightly different usage patterns across desktop and mobile. You tend to see more use of the mobile devices on weekends, which is not surprising but they don’t actually have any more specific data that proves those observations or that hypothesis. 

While mobile search volumes are growing from a small base, the numbers very quickly can become very large.

Citi's Mark Mahaney estimated that mobile search volumes are now roughly 10% of Google's overall monthly search queries in the US. That may be aggressive but if it's close that would mean more than a billion searches a month on mobile devices. And if we consider that the bulk of those are coming from smartphones (21% - 23% of the market), the growth potential is huge.

Nokia Should Fear Android More Than Apple

Apple and Google/Android have become the GM and Ford -- or Toyota and Honda, depending on what part of the world you're in -- of smartphones. Neither has the most unit sales or marketshare but they're both ascendant. Nokia, Microsoft, Palm (HP) and BlackBerry are either static or declining.

Nokia has largely focused on and been unfavorably compared to the iPhone and Apple by critics and investors. "Three years later the company still has no answer for the iPhone" is the refrain often appearing in Bloomberg or Reuters articles about the Finnish company. But in some sense Android may be a much larger threat to Nokia on a global basis. 

Take a look at the following chart showing smartphone marketshare distribution (based on AdMob network data). This doesn't exactly replicate the actual numbers in these countries but shows you generally where things stand.

Nokia/Symbian strongholds are Africa, Asia and Eastern Europe, Latin America to a lesser degree. The places where Nokia is strongest are largely developing countries in other words.

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The New York Times ran an article this weekend about Android's strategy for emerging markets. In it there was discussion of a range of new, cheap smartphones for these developing markets:

Smaller Chinese manufacturers, which account for about 10 percent of the global supply of mobile phones, are also adopting Android, seeking to gain market share with lower-priced devices.

Many pin their hopes on MediaTek of Taiwan, which supplies chips for lowcost phones sold in Asia, Africa and South America. The company has joined the Open Handset Alliance, the group that promotes Android, Google said. Devices based on MediaTek may cost carriers as little as $70 each . . . 

Apple can't and won't offer lowcost handsets to the market in these places; it's the premium brand and wants to ensure a uniform experience. Eventually we might see a single lower-cost handset from Apple (something like the iPhone Nano perhaps). But that won't be coming very soon, if ever. 

Google by contrast doesn't have any of those same brand-related concerns. If there are lousy Android handsets in the market it doesn't really diminish Android the OS as a whole. There's room for much more experimentation on Android.

Apple has charmed and captured the "high end" of the market. Google and its OEMs are competing there but can also compete at the lower end with lower price points as the Times article suggests. That's the area where Nokia is dominant. But for how much longer? 

That Was Fast: R.I.P. KIN

According to this story in the Todd Bishop's blog on TechFlash (Seattle), Microsoft has officially stopped marketing the Kin, its brand of mobile phone launched, with much fanfare, a scant six weeks ago. The brief, publicly-released statement from Microsoft said simply:

We have made the decision to focus on our Windows Phone 7 launch and we will not ship KIN in Europe this fall as planned. Additionally, we are integrating our KIN team with the Windows Phone 7 team, incorporating valuable ideas and technologies from KIN into future Windows Phone releases. We will continue to work with Verizon in the U.S. to sell current KIN phones

The major conclusion to be drawn is that unit sales through Verizon Wireless's channel were so dismal that the phone could not serve as a showcase for Microsoft's "mobile/social" experiment. To review the chronology, Microsoft held a major press event to introduce the world to the Kin, and play up its ability to support search, communications and photo sharing among a social graph that mainly included attractive 18-30 somethings. It was a radical enough effort to differentiate that I sensed a lot of fundamental market research went into quantifying the propensity of that particular demographic to (1) buy a special purpose mobile device and (2) carry out all the hip, participatory activities that are depicted in the Kin's introductory video.

If anything, the failure of Kin and its attendant features and services, proves that you can't manufacture a social graph and you sure can't use that non-existent group to promote sufficient sales of what turned out to be a single-purpose device. Even the Danger Hiptop (aka T-Mobile Sidekick) sought to leverage the addictive nature of text messaging in a new form factor. The Kin, by contrast, seemed to limit the options of a generation of users who like to share their stuff (location, photos, check-ins) on popular services which they pick-and-choose from diverse sources through appstores or browsers.

Let's hope that the product managers for Kin learned what they needed to from the alleged 500 people who bought the device and join the Windows 7 team with the same enthusiasm they had for social/mobile activity. It is an area that is poised to heat up, but cannot be partitioned into a small, self-identifying group of people who happen to own the same device.

Google Trying to Blur Apps, Mobile Web

The truth is Google doesn't really like apps, not just because Apple promotes them as an alternative to search but because they fragment the mobile world. Google is all about scale and scalability across (mobile) platforms. Thus the company is pushing for a future in which HTML5 overcomes that fragmentation and helps make mobile websites look and operate more like apps.

People continue to debate the "apps vs. mobile Web" question. The answer is that both will co-exist -- and the mix of apps vs. mobile will be different on different platforms. However "web apps" have emerged as a third category in the mix. There is nothing especially new here. But in certain cases these Web apps are getting better and better, and very close to native apps in their functionality. 

The new GMail for the iPad is an example of that -- improved usability for composing messages. It's a small change, but useful and it makes the GMail site on the iPad much more like using GMail through the iPad's mail app. 

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We'll see these three content categories co-exist into the future: apps, traditional PC Internet sites, which don't really work on mobile but work well on the iPad, and "Web apps." 

Apple's iOS 4 Updgrade Out Today

Apple's software upgrade to iOS 4 is out today. Here's what Apple says about compatibility:

iOS 4 works with iPhone 4, iPhone 3GS, and iPhone 3G. Not all features are compatible with all devices. For example, multitasking is available only with iPhone 4 and iPhone 3GS.

It also works with second and third-generation iPod touch devices.

iOS 4 adds a range of new features, including multi-tasking (not for all devices), digital camera zoom, email improvements, folders and bluetooth keyboard support:

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Android, iPad Grow in Latest 'Mobile Mix' Report

Mobile ad network Millennial Media is now putting out two reports on a regular basis: one about mobile advertising (SMART) on its network and the other about devices (Mobile Mix) on its network. Consistent with other networks and data vendors in the market, Millennial has seen considerable Android growth. But the iPad is also growing dramatically.

According to Millennial:

  • Android requests grew 15% month-over-month, and have now grown 338% since January.
  • The Apple OS remained the leading operating system on the Millennial network, but it had a month-over-month decrease of nearly 14%
  • iPad requests grew 160% month-over-month
  • For individual manufacturers, HTC received the largest share increase month-over month for the second consecutive month

Below are some of the report's charts, showing the hierarchy of devices and operating systems on Millennial's network. In addition, the company shows the percentage breakdown of developers working on the various smartphone operating systems.

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Compare AdMob's most recent mobile metrics report (April, 2010) in terms of devices and operating systems on its network:

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Other than the iPhone and the top three Android phones, there's a different array of devices on both lists. The top Android device on Millennial's list, the Nexus One, doesn't event show up on the AdMob list. The AdMob list shows no RIM devices among the top group, whereas the BlackBerry Curve is the number two phone over at Millennial. 

Comparing operating system share on the network also reflects the differences between Millennial and AdMob. Below is AdMob's US operating system share graph for April:

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Millennial (top four):

  • iPhone: 48%
  • RIM: 19%
  • Android: 15%
  • Other: 8%

AdMob (top four):

  • Android: 46%
  • iPhone: 38%
  • RIM: 9%
  • Palm: 3% 

Each of these company specific reports needs to be taken with some caveats and caution. The discrepancies and differences between the networks illustrate this. However, both companies show similar trends: the growth of Android handsets, which makes sense give how many there now are, and the rise of the iPad (AdMob discussed that last month).

ComScore Releases More Mobile Data

Interestingly comScore has been releasing more mobile data recently. Today they put out some new US hardware OEM numbers, together with high-level mobile user activity data. Most of the data are flat vs. numbers they put out just a month ago.

Top US handset OEMs (total market, not smartphones): 

  • Samsung -- 22.1%
  • LG -- 21.8%
  • Motorola -- 21.6%
  • RIM -- 8.4%
  • Nokia -- 8.1%

Activity, comparing April with March release:

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Here's a recap of recently released comScore data on mobile app and browser usage by content category:

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Finally here's recently released Nielsen data showing the hierarchy of apps utilized on US smartphones and feature phones:

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Is Palm Going to Become HP's Netscape?

Is Palm going to become the equivalent of Netscape for HP? I'll explain in a minute.

I read a comment from HP CEO Mark Hurd, reportedly made at a Bank of America Merrill Lynch technology conference yesterday. According to ZDNet, Hurd said that the company wasn't going to make smartphones but instead would make a range of "connected devices":

We didn't buy Palm to be in the smartphone business. And I tell people that, but it doesn't seem to resonate well. We bought it for the IP. The WebOS is one of the two ground-up pieces of software that is built as a web operating environment...We have tens of millions of HP small form factor web-connected devices...Now imagine that being a web-connected environment where now you can get a common look and feel and a common set of services laid against that environment. That is a very value proposition.

There are a couple of responses to this. The first is that many small, connected devices can easily become phones with Skype. So the distinctions between a small tablet or other comparable device and a smartphone are increasingly less meaningful. 

Hurd might be shrewd and smart, figuring that Palm couldn't build meaningful share in the smartphone market so just avoid that entirely. But it might also be a strategic blunder to not build smartphones. Here's where the Netscape analogy comes in. 

When AOL bought dominant Web browser Netscape in 1998 (for $4.2 billion) it didn't continue to invest (or even use Netscape on its own AOL network) and Netscape essentially languished. Its browser share declined quickly as did the value of the Netscape brand and the investment overall, until there was almost nothing left and AOL turned Netscape into a cheap dial-up ISP. 

Palm still has considerable brand equity and goodwill. But will HP's strategy turn Palm and WebOS into something far less valuable that it is today? 

One could argue that to preserve the value of the investment as well as to fully realize the potential of WebOS HP needs to continue to make smartphones. The Pre failed partly because of the software -- and miscalculations about the importance of apps -- but also because of the hardware. HP (and Palm with hindsight) could fix that in a range of new and interesting smartphones. 

HP could potentially build a number of interesting tablet devices that are a hit with consumers -- maybe -- but the category will be very crowded very quickly. And without the smartphone visibility and distribution to keep app developers interested in WebOS those HP tablets are less likely to compete successfully with the iPad and Android, unless they're dirt cheap. 

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Update: Apparently HP will be making smartphones after all. 

Not Quite a Browser, Firefox to Launch 'Home' on iPhone

After Apple permitted the launch of the Opera Mini browser on the iPhone, the question was: would Firefox follow? For several technical reasons a number people argued it would not. However Firefox is apparently about to launch an application called "Firefox Home."

Not quite a browser it syncs with Firefox online and provides access to tabs and bookmarks (based on Firefox Weave, now Sync) from the PC. It's a clever workaround Apple's technical restrictions.

According to a Mozilla blog post:

Firefox Home for iPhone is part of a broader Mozilla effort to provide a more personal Web experience with more user control. For devices or platforms where we’re unable to provide the “full” Firefox browser (either technically or due to policy), we aim to provide users with “on the go” instant access to their personal Firefox history, bookmarks and open tabs on their iPhones, giving them another reason to keep loving Firefox on their desktops.

Why is this useful?

  1. Left work in a hurry? You can pick up where you left off with access to the list of tabs you just had open on your desktop.
  2. Need those directions to that restaurant you were just reading about on your desktop? The confirmation code for your flight? Just start typing in the Awesome Bar and those pages will be right at your fingertips.
  3. Does it drive you crazy to have  to enter the full URL on your iPhone that you’ve visited several times from your desktop? You won’t need to anymore with this app.

This PC-->mobile sync feature is highly valuable and a competitive advantage for Firefox, which is now battling Google's Chrome browser for mindshare among the early adopter crowd. Mobile Firefox is important, though perhaps not absolutely critical, to the ongoing health and success of Firefox overall. The Android Platform should permit the launch of a full Firefox browser. Frankly I'm surprised it's not out yet. 

Here's a video that shows a bare bones demo:

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Apple's Market Cap Symbolic of New Mobile Era

A number of blogs and media outlets have trumpeted the fact that Apple surpassed Microsoft's market capitalization earlier today. According to the NY Times' report:

As of Wednesday, Wall Street valued Apple at $222.12 billion and Microsoft at $219.18 billion. The only American company valued higher is Exxon Mobil, with a market capitalization of $278.64 billion. The revenue of the two companies are comparable with Microsoft at $58.4 billion and Apple at $42.9 billion.

 

But Microsoft is sitting on far more cash, $35.7 billion to Apple’s $23 billion, which makes the value assigned by the market to Apple — essentially a bet on its future prospects — all the more remarkable.

 

It may not stay that way for long -- especially if investors are disappointed by the announcements at Apple's forthcoming developer conference on June 7. But the relative market capitalizations of the two companies is symbolic of the changing of the guard and of a transition from the fixed Web to wireless devices and the mobile Internet. 

We are in an era of cloud computing and mobile devices, where consumers bounce easily from PCs and laptops to smartphones and now tablet devices. This is the idea behind "Internet2Go."

As Google's Vic Gundotra said last year in discussing some of Google's mobile initiatives: "We're at the beginning of the beginning of a new era in computing."  

New Android 'Pads' Ready to Challenge Apple

A slew of Android-based tablets are ready to challenge Apple's ascendant iPad. The challengers will compete on one or both of two fronts: they will run Flash and most of them will be cheaper than the $499 entry level Apple tablet.

Digital photo frame maker Pandigital announced a 7-inch color screen eReader, with Barnes & Noble in tow. Barnes & Noble also offers its own eReader: Nook. Another company, Taiwan-based Via Technologies said that it will come out with Android tablets in the $100 to $150 price range later this year. 

Beyond these two there are probably a dozen other companies at least that will release Android tablets. Most of them are unlikely to measure up to the iPad; however if they're cheap enough or otherwise "good enough" they will likely succeed. 

More broadly tablets are here to stay. Apple has validated the market. Apple's myriad competitors, who were burned by the iPod and later the iPhone, are much quicker now to copy and release their own clone devices. Apple no longer has the 1-3 year lead time it once did. 

How will tablet sales affect netbooks and mobile phones? That remains to be seen, although there are suggestions that netbook sales are being affected already by the iPad and the impending flood of tablets.

Amazon, one of the two original eReader makers, is now trying to develop its own iPad-like color-screen device. The ultimate tablet market will probably be bifurcated: low-end, inexpensive devices used primarily as eReaders but which also allow Internet access and more full-featured devices that are used for a wide array of functions -- represented by the iPad. 

Palm for Sale: Now It Gets Interesting

Bloomberg reports this morning that Palm is putting itself up for sale and seeking bids "as early as this week":

The company is working with Goldman Sachs Group Inc. and Frank Quattrone’s Qatalyst Partners to find a buyer, said the people, who declined to be identified because a sale hasn’t been announced. Taiwan’s HTC Corp. and China’s Lenovo Group Ltd. have looked at the company and may make offers, said the people. 

The venerable company's market capitalization is less than $1 billion though the company has almost $600 million in cash on hand. So I'm guessing a purchase price would be in the $2 to $4 billion range. Keeping the price down is the fact that the company's real asset is WebOS, which itself isn't worth billions. It's sad in a way that the company that pioneered mobile computing is meeting this fate. Whether the Palm brand survives will depend on the particular buyer and its position in the market: a mobile OEM will kill the brand a PC hardware OEM will likely keep it.

As I mentioned this weekend, it's been quite clear to us from almost the launch of the Pre that the company would ultimately be sold to a larger player. As suggested, the list of potential buyers includes all the major computer hardware OEMs (with Dell and Lenovo as lead candidates), Nokia and Microsoft as possibilities. Microsoft is less likely to bid today given Windows Mobile 7 and Nokia may feel with MeeGo (Intel + Maemo) that it doesn't need a new (third) mobile OS to work with. In my view Nokia would be smart to grab Palm. 

Chief Executive Officer Jon Rubinstein has been quoted several times saying that the market has room for five smartphone players. That may be true on a global basis, but in the US it's really more like three or four (maybe). Right now those three are Apple, RIM and Android.

A company with greater financial muscle could help propel WebOS into that list of successful smartphone contenders. HTC is really interesting to consider here; the company has been seeking to establish its own brand but remains overshadowed to some degree by Android. While it's probably not going to be the ultimate buyer it would shake up the market and might impact Android, as the leading Android OEM. 

However if I had Nokia CEO Olli-Pekka Kallasvuo's ear I'd say: dump Symbian, buy Palm and shift 2011 smartphones to WebOS. 

A Verizon iPhone Would Blunt Android's Rise

Android is a good operating system, getting better all the time. Its success in the US (it now has 9% of the smartphone market) has been built on a few key factors: millions of dollars in promotion by Verizon ("Droid Does"), lots of handsets from multiple OEMs and a few features (mainly multi-tasking) that the iPhone didn't offer.

Meanwhile the iPhone's growth in the US appears to have stalled -- largely because it's only available through AT&T. 

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Verizon would clearly welcome the iPhone, but there are questions about whether this will happen before 2011.

It's not clear what agreements, promises and "quid pro quos" exist between Apple and AT&T. It's possible that a CDMA iPhone could still arrive at Verizon later this year. Apple should be aggressively seeking that relationship. Making the iPhone available on Verizon's network in the US would serve two goals:

  • It would make the device available to the largest US carrier and to many who would otherwise buy Android devices because they don't want to switch carriers
  • It would stop Verizon's aggressive anti-iPhone ad campaigns

Some number of Verizon Android buyers -- I'm going to speculate that it's greater than 50% -- would buy the iPhone if it were available on Verizon. In my speculative scenario the market would likely see renewed iPhone adoption and subscriber growth and a corresponding flattening of Android's growth.

But for whatever reason Apple is holding back (at least for the foreseeable future) -- to its detriment and Android's direct benefit.

Palm in Turnaround?

My colleague Dan Miller speculated a few days ago about Chinese PC maker Lenovo as a potential purchaser of Palm for its WebOS. In my view that's a great guess of who the potential buyer could be. And if not Lenovo then other similarly positioned hardware OEMs are candidates: HP, Dell, Acer, etc.

The mobile Internet is here so is true "personal computing" with the advent of the iPad. These "old line" PC makers all know they've got to diversify and reposition for the future -- a future when people spend less time with PCs and more time with mobile devices. Owning a great mobile OS thus makes sense.

Meanwhile Palm's CEO continues to argue that the company is just at the beginning of its turn around road map. In a Q&A interview with Fortune's Adam Lashinsky, CEO Jon Rubenstein said:

Clearly we've hit a speed bump. No question about it. It’s really disappointing, and it's frustrating. But, the company has tremendous assets.  We've got a great team we've built over the last couple of years.  Remember this whole thing was a transformation story.  It  wasn't like we took something that was working and didn't run it well.  We started off with a company that had no future, and we have been transforming it. We have arguably the best mobile operating system out there. It’s clearly the easiest to use and has the most intuitive user interface. We've got good products that get critical acclaim.  It's in its early stages still, but we've got great quality of apps, and new apps coming all the time.  By the time you get this published, we'll have commerce going in Europe, which is a big milestone for us.  We've got good relationships with carriers.

We've got all those things going for us, and what we need to do is get more commercial success and get to scale.  And that's going to take longer than we'd hoped, obviously, but that doesn't mean we can't get there.  We do have $590 million in the bank, and we have a plan that carries this company forward. Now, we need to be frugal and we need to invest in those areas that have the best return for us, but when I read that we're going out of business or our stock is worth zero or those kinds of things, it defies logic to me.

But as the owner of a Pre (I know I've said this before) there may be a great OS inside but the overall execution and user experience is inferior. Palm got a bunch of "little things" wrong, making the device more difficult to use and far less intutitive than the iPhone or even Android.

Some have argued that Palm should come out with new devices -- the underpowered Pixi emerges as more "viable" than the Pre -- and I would agree. Perhaps use a Treo body with a WebOS interior; get a few new devices into the market. Maybe get a tablet out there too. That would be very interesting. 

But continuing to bank on the Pixi and the Pre is futile. While the Pixi might sell to younger users and the crowd in transition from feature phones to smartphones, these devices aren't really going to bring Palm the coveted "scale" Rubenstein is looking for.

In Hollywood when a movie project is taken out of pre-production and basically cancelled it's called "turnaround" -- the project is done, toast. That's what Palm is now facing, a promising launch gone awry. Radical moves are necessary -- not patience -- if the company wants to remain independent. 

More likely however is an acquisition, which we've been talking about almost since the launch of the Pre (intitially re Microsoft or Nokia). The problem with the acquisition scenario is that the WebOS is worth less -- and a buyer wants to pay less -- than for the entirety of Palm, its good will and related overhead. Palm shareholders will want more money than a potenital buyer, primarily interested in WebOS, will likely be willing to pay.

Lenovo Contemplating Palm Purchase on the Eve of iPhone 4.0 and Project Pink's Debut

Spring has sprung and industry thoughts naturally turn to mobile operating systems. Just a day before Apple's "sneak peak" at OS 4.0 (which is expected, at a minimum, to add multi-tasking and improved ways to handle and display mobile advertising), Microsoft indicated that it is ready to launch its long-awaited mobile phone/media player combo, called "Project Pink". While everyone was distracted by these developments, a group of investors bid up Palm Inc.'s stock price, fueled by speculation that Chinese OEM, ODM and laptop aficionado Lenovo has eyes on the WebOS prize. Before day's end on Wednesday, Palm's stock price jumped 20% to $4.62 per share.

Given Lenovo's distribution channels and reputation for making and supporting the ThinkPad line of laptop and mobile computers, the prospective acquisition would be a good move for both parties. Although it's early in the game, Apple's iPad has, at a minimum, sparked heightened interest in the mobile tablet as a complement, substitute or replacement for netbooks and laptops. What's more, the iPhone's new operating system is expected to be just as important in its role is software platform for the iPad as well.

Lenovo has proven to be a great steward for ThinkPad, a brand and product line it acquired from IBM in 2004. At the time ThinkPad got high marks for industrial design and product innovations, even though it was never going to be a monster money maker for Big Blue. Palm is a little different. Both the Pre and Pixi have failed to capture market share in the smart phone market, where they have suffered from a certain lack of support in the carriers' retail channel. Meager sales all but destroyed WebOS's prospects to rival alternative smartphone application platforms, especially the iPhone and Android OSes. Its appeal was predicated on its ability to run a multiplicity of applications designed for predominant standards and quasi-standards, like HTML5, Java and Flash. At a minimum, it could have given Windows Phone and RIM's Blackberry an interesting run for their money.

As a standalone, single-product company, Palm is just too small to take on and capture share versus Apple, Google, Microsoft and RIM. Lenovo has a chance to integrate Palm's smartphones and the WebOS into a coherent set of complementary products spanning desktops, laptops, netbooks, tablets and smartphones. Even if the acquisition turns out to be "only a rumor", it is a tantalizing one.

CTIA Offers LBS Guidelines, Are They Needed?

In conjunction with its big Las Vegas trade show CTIA has come up with some new rules guidelines for use of location information in the delivery location-based content and advertising. The document is called "Best Practices and Guidelines for Location-Based Services." Below are a few excerpts:

The Guidelines primarily focus on the user whose location information is used or disclosed. It is the user whose privacy is most at risk if location information is misused or disclosed without authorization or knowledge.

The Guidelines apply whenever location information is linked by the LBS Provider to a specific device (e.g., linked by phone number, userID) or a specific person (e.g., linked by name or other unique identifier). 

The Guidelines do not apply to location information used or disclosed:

  • as authorized or required by applicable law (e.g., to respond to emergencies, E911, or legal process);
  • to protect the rights and property of LBS Providers, users or other providers of location information;
  • for testing or maintenance in the normal operation of any network or LBS; or in the form of aggregate or anonymous data.

The CTIA document goes on to discuss consent for the use of location and revocation of that consent by users, among other related issues. One thing it sidesteps is subject of illegal government survelliance of mobile subscribers. It says those involved with "legal process" don't implicate consumer notice or consent. (That implies warrants for surveillance, which the government hasn't felt it needs to obtain in the recent past re accessing telco records.)

The reason I wrote the headline above the way I did is that opt-in consent for LBS is already widely used on the dominant smartphone platforms, and in particular the iPhone. There are undoubtedly others that need this education and these guidelines (for the mobile Web) but best practices are arguably already pretty well established by existing systems and methods in use today.

For its part the MMA hasn't yet opined on the matter. In September of last year the trade group said:

The MMA recognizes the need to provide guidelines for location based advertising. However, models for using location currently vary, and do not allow identifying the most appropriate guidelines at this point in time. MMA’s mobile advertising committee has started exploring the opportunities of using location in advertising and plans to come up with guidelines for location based advertising. In the meantime, MMA encourages experimentation in this space and invites companies to share best practice with the MMA mobile advertising committee.

The MMA will feel some pressure to get its guidelines out now. Either they will mirror (or simply duplicate) those promulgated by CTIA or they'll vary. If they vary at all will that create confusion among marketers and publishers? Probably. But we'll have to wait and see what emerges.

iPad Coming to Stores on April 3

Yesterday I said the good folks at Gartner were effectively clueless about whether or not the iPad would sell in quantity this year. But soon we'll find out what the preliminary (early adopters, fanboy) demand will be.

Apple announced this morning that pre-orders will happen on March 12 and the "magical and revolutionary" device will become available on April 3:

Apple® today announced that its magical and revolutionary iPad will be available in the US on Saturday, April 3, for Wi-Fi models and in late April for Wi-Fi + 3G models. In addition, all models of iPad will be available in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the UK in late April.

Beginning a week from today, on March 12, US customers can pre-order both Wi-Fi and Wi-Fi + 3G models from Apple’s online store (www.apple.com) or reserve a Wi-Fi model to pick up on Saturday, April 3, at an Apple retail store.

There's lots of conflicting speculation and survey data on demand. Pre-orders and early sales will give the market a pretty good sense of whether this is going to be another hit or not. Price, which could be reduced, will also play a role. The "low-end" iPad, which will be the most successful of the many options, comes in at $499. This price was the big surprise at the launch event and much cheaper than the speculated $800-$1,000. 

If you recall once the iPhone gained its subsidy sales took off. I think there's no question that at the right price, which for the iPhone was sub-$200, this device will sell well. 

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As this device moves into the wild, it will be interesting to see how people use it. AT&T CEO Randall Stephenson doesn't believe he'll get a lot of 3G subscriptions off the device. And I would agree; the "use case" is going to be at home, in hotels and other places that have WiFi (maybe in the car for kids and movies/games). In addition the people that buy this will have smartphones already for access to the mobile Internet "on the go." 

Windows (7) Phone: Where Is Voice?

I saw most of Steve Ballmer's Windows 7 keynote at Mobile World Congress this morning. Most of the phone's features were demonstrated and there are some cool ones. Mostly the phone looks different than other things in the market, even as it borrows certain elements from Apple and Google.

However, one of Microsoft's core mobile competencies -- voice and voice search -- was not on display in the demo. I would have expected deeper integration of Tellme's technology into 7 and that this would be one of the differentiators or would-be differentiators for the company. Yet it was nowhere in evidence. 

I'm sure that voice search will be available for Bing; but will it be available at a deeper level in the way Google is trying to integrate voice on the Nexus One? That wasn't the case today and it's not clear how and whether Microsoft will use voice as the devices roll out late this year. If the company is smart it will seek to voice-enable as much as possible on the device.

Here's a quick demo of local search from MobileCrunch on the scene in Barcelona: 

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