Tablets are at the top of many holiday wishlists and smartphones aren't very far behind. Both are being aggressively promoted online and in stores this weekend in the US. Heavy price discounting should move a lot of Android tablets (and handsets). Laptop and PC sales generally may suffer as a result.
Below, for example, US wireless carrier Verizon is selling the Motorola Xoom 10" and Samsung 7" tablets for $199 and $149 respectively. Both require commitment to a two-year contract, something most US consumers have thus far shunned.
Online retail giant Amazon is featuring a broad range of discounted tablets, beyond its own Kindle line, with many under $300 and some falling under $100. So while the iPad has the overwhelming share of tablet-based traffic today it's almost certain that will be diminished after the holidays.
Aggressive price discounting has emerged as the key to driving non-iPad tablet sales (first the HP TouchPad and then Kindle Fire). But this is a very dubious blessing for Android tablet OEMs, who may find their margins on tablets reduced to almost nothing. Apple by contrast has not had to lower prices to get attention or maintain share. We'll see what happens after the holidays.
What we're seeing now is the bi-bifurcation of the tablet market. There's a higher-end segment ($500 and above) dominated by the iPad, with almost no competition, and a lower-end segment ($250 and below) dominated by Amazon's Kindle line and Nook. Other OEMs are getting squeezed in the middle, unable to compete on quality at the high end or price at the low end for the most part. There are some "no-name" tablets priced lower than Kindle.
This looks like the smartphone market, with inexpensive Android models driving rapid penetration across carriers and the iPhone appealing to higher-end consumers. There are obviously exceptions and some of the "flagship" Android devices have done well. Yet Android has not yet been able to establish the kind of brand identity and loyalty that the iPhone has enjoyed.
A recent survey by GFK found that:
GFK also found that content and apps were keys to device/operating system loyalty:
As consumers build digital ecosystems and their own world of content on handsets, the study shows that their loyalty to their smartphone brand increases with the number of apps and services they use. The research reveals that the tipping point for loyalty is when a consumer uses seven or more services on their device.
Consumers in the US are the most likely to use seven or more services (61%), followed closely by China (56%) and Brazil (53%). In comparison to this, European countries use fewer services on their smartphone; France and Italy (46%), Germany (45%), Spain (43%) and the UK (42%)
This survey also reveals the uphill battle that Windows Phones now face as they try to "break in," although more than 50% of the market still don't have smartphones -- which remains a substantial opportunity.
I've not had my hands on an Kindle Fire but the reviews are generally fair to negative, except in the context of its price: "a good tablet for the price" is the consensus. And consumers are responding to that price in large numbers. Amazon will sell millions of Kindle Fire tablets to existing Kindle owners and to some would-be iPad buyers seduced by the $199 price and the assurances of the Amazon brand.
Amazon is also intending to release a larger version of the Kindle Fire next year, though it won't be quite as large as the iPad. Putting aside the Nook and hypothetical Windows tablets, Amazon's Kindle Fire is instantly the most successful tablet after the iPad by a huge margin.
Until someone else comes along with a cheaper, better Android tablet Amazon owns the market. So when the dust settles early next year after holiday sales are over it will effectively be a two tablet market: Apple vs. Amazon. I say "Apple vs. Amazon" because Amazon has effectively obscured all Android (and Google) branding. Most people buying a Kindle Fire don't know or care that they're buying an "Android device."
It's possible that Samsung or HTC will build a competitive tablet featuring Android 4.0 ("Ice Cream Sandwich"). But the current crop of Gingerbread and Honeycomb tablets simply "blow" (as they say in the vernacular) by comparison to the iPad. It would also be very challenging for any Android tablet maker to match Amazon's pricing given that the company is effectively taking a loss -- sellig the device for less than it costs to make on the assumption that it will increase product and content sales for Amazon.
There is a scenario where wireless carriers give away some future, stellar Android tablet in exchange for two year contract commitments. However, consumers are basically loathe to enter into a second set of wireless contracts beyond the ones they already have for their smartphones. WiFi tablets are more popular than carrier-subsidized tablets. It's therefore a much longer shot.
Recent consumer surveys from Retrevo, Nielsen and ChangeWave have shown increasing demand for tablets, with the iPad leading the group but with Kindle also in the clear second position.
As tablets replace PCs for some people the question of how other PC OEMs repond to the Apple-Amazon challenge becomes a major, strategic question. As Samsung, Dell and others have already shown, they can't (so far) match Apple on quality or hardware-software integration. And they can't match Amazon on price.
Thus until the forseeable future it's a two tablet race. And right now Amazon owns Android.
One of the big trends of the past few years has been the "consumerization of enterprise IT." This manifests in various ways, including the emergence of enterprise "social" tools that mimic consumer sites and user experiences (e.g., Salesforce's Chatter). Another way in which enterprise IT is changing is that workers now have more choice about the devices that they can use on the network.
RIM's stronghold and bulwark against irrelevance had been the corporate IT department, but that's no longer the case. The iPhone is now the top smartphone in the enterprise according to a new survey, the iPass 2011 Mobile Enterprise Report (based on 2,300 responses from workers at 1,100 enterprises globally).
Below are a selection of data presented in the survey report:
Current enterprise smartphone share:
Intention to buy smartphones in 2012:
Current tablet share in the enterprise:
Another interesting finding is that a growing number of workers (especially younger workers) leave their laptops at the office more frequently. Roughly 42% of workers said they left their business laptops at the office at least several days a week because they have alternative devices at home.
Question: Do you leave your business laptop at work on weekends/evenings and just use your smartphone or tablet?
In tandem with the above finding the survey discovered that roughly 25% of respondents said they were using their laptops less today than a year ago.
Local mobile ad network xAd has released its first quarterly report on local mobile user behavior and ads. I've done a general write-up at Search Engine Land. The company collected the data from its 10 billion monthly ad impressions and 90 million monthly local-search requests. The data in the report were captured between July and September.
A couple of highlights:
The top local search categories according to xAd data:
Most interesting to me was the discussion of ad performance and "secondary actions." CTRs on ads in apps were 8% vs. 5% for ads appearing in the browser.
When you consider that average online display ad CTRs are 0.09% you see that this performance is dramatically better. Indeed, InsightExpress and Dynamic Logic have both documented how mobile display outperforms online across all metrics.
In addition to browser vs. apps differences, xAd documents ad performance variations between iOS and Android. While CTR rates on the iPhone and Android are roughly comparable, "secondary actions" are greater on iOS: calls, map/directions lookups and review drill downs. Interestingly calls are happen more frequently in a browser context. But they're also the most popular "post-search" secondary action (62%) across the board, followed by maps and directions lookups (35%).
Previously xAd reported that its CPMs average $30. Other specialized US-based local-mobile ad networks include CityGrid, AT&Ti, Verve Wireless, Navteq, JiWire, LSN Mobile, Chitika, Marchex and Where.com.
According to Gartner, phones running the Android OS "sold" (read: shipped) at dramatically higher rates in Q3 than competing platforms. As the chart below reflects, Android's share of Q3 smartphone shipments more than doubled vs. last year. Nearly all others declined.
The iPhone was almost at parity with Symbian, which declined by more than 50% vs. 2010. RIM and Microsoft also declined.
Looking at overall mobile operating system share on a global basis, StatCounter shows Symbian still leading. Apple's iOS and Android are essentially tied about 10 points behind Symbian.
In the US, NPD Group said that in Q3 Apple had the top-two selling smartphones:
Appcelerator released its Q4 developer survey this morning (n=2,160 developers). It does the survey quarterly in conjunction with IDC.
There are a number of findings but the big ones are: Kindle Fire has rocketed past other tablets in terms of developer interest and Windows Phones similarly moved past RIM:
Despite their enthusiasm for Kindle Fire, developers expressed concern about increasing fragmentation in the Android universe.
It's important to keep in mind that these findings are based on perception and not an indication of actual market share; however they're correlated with consumer adoption in many cases. Developers are excited about the Kindle Fire's low price point and perceived demand. It also appears that developers have largely given up on RIM. However if new RIM devices showed consumer traction we'd see these figures change again. Consumer adoption and audience size are the key drivers of developer interest followed by capacity to monetize their apps.
Another finding of the report is that there's relatively little developer interest in "connected TV" (e.g., Google, Apple TV) -- at least until consumers show interest at scale.
By almost all measures Android tablets have been a flop so far. The most "viable" of the Android tablet family, Samsung's Galaxy Tab line, offers a weak software experience and poor hardware-software integration. But the Kindle Fire -- and to a lesser degree the Nook line -- may vindicate Android in tablet form.
However the success of those devices has little or nothing to do with Android. This is especially true with Kindle Fire. (Amazon has probably compensated for the software shortcomings of Android on tablets with its own layer on top of the OS.)
The apparent popularity of the Amazon device is about two things: its $199 price tag (the major driver of sales) and the Amazon brand. The latter gives consumers confidence that it will likely perform as promised and builds on Amazon's successful track record with Kindle.
According to Retrevo survey data, there's a sizable group who might substitute the Kindle Fire for the iPad during the holidays.
While there have been other cheap Android tablets in the past, the difference here is that the Amazon brand and promise of content through Amazon Prime gives people confidence to buy it sight unseen. Amazon Prime would otherwise cost $79 per year. Indeed, with that factored in as "opportunity cost," Amazon is going be losing money on Kindle Fire. We should thus see the device more broadly as a marketing vehicle and loyalty play for Amazon. It will help Amazon sell more stuff in general.
The survey also found that a meaningful number of people may add a second tablet to their growing inventory of gadgets. Here the 7" form factor and perceived benefits of having the Amazon device may cause people to buy a Kindle Fire if they already have an iPad.
The anticipated success of the Kindle Fire tablet could light a fire under the 7" tablet segment more broadly but not unless those devices are priced competitively. Those 7" tablets (e.g., from HTC, Samsung) that cost more than $250 will probably sit on the shelves. And those 10" Android tablets that cost $499 or more will be seen largely as copies of the iPad and sit on shelves as well.
The strength of the Amazon brand, the success of earlier Kindle devices and the aggressive pricing (including Amazon Prime) will create success where other Android tablets have failed. The Android "brand" may even be something of a liability in the tablet segment right now. And most Kindle Fire prospects and early buyers probably have limited or no awareness of the device's operating system at all.
Earlier my colleague Dan Miller wrote up the news that Amazon had acquired speech provider Yap yesterday. So begins a ridiculous "Siri Killer" meme.
What's more interesting however is how Siri, less than a quarter out in its current form, is already reshaping the calculus of what features and capabilities mobile devices must have or offer their users. Call it the "speech interface."
Dan Miller, who is probably the foremost analyst-authority on voice and speech services, has much deeper knowledge of speech recognition and its related manifestations than I. However in my more limited experience I can tell you that Siri offers the best speech user-experience I've encountered to date. (Nuance provides the voice recognition for Siri.)
As a long-time Android user I've had good experiences with Google's voice search and voice actions and I've had very frustrating ones. Siri (+Nuance) is better. And the way that Siri is integrated into the iPhone 4S (with more to come) is much more compelling than a voice overlay. Siri's "personality" matters as well. It's not only driving engagement and usage it has become a major differentiator and sales-driver for what was otherwise a less-than-compelling product release.
Sure Android has "voice actions." But Apple has "Siri." You get the difference.
Google and Microsoft already have considerable speech assets but both will need to "up their game" to compete more effectively. Accordingly we can expect more acquisitions in the voice segment as these companies (and others) create their own versions of the speech interface. This will eventually extend to TVs, cars and other "appliances."
I suspect "virtual assistant" Vlingo will be acquired, because it provides the "assistant" capability as well as speech recognition. (However litigation between Vlingo and Nuance operates as something of a cloud over any potential takeover.)
In a presentation I gave on a range of topics yesterday at the Local Social Summit in London I said Siri is to voice commands and “voice search” what the iPhone was to smartphones in 2007: a breakthrough experience that forces competitors to respond. I guess Amazon just did.
Amazon, which doesn't have a smartphone, will clearly be integrating voice control and commands into Kindle Fire. Siri isn't yet available for the iPad but that's probably one of the new features that will be bundled into iPad 3.
I would argue that Android owes its success directly to the iPhone. Putting aside the claims that Android "stole" the iPhone's look and feel, carriers and hardware OEMs had no response to the iPhone in 2007 other than Android. Hence the carrier and OEM embrace of the Google OS. It was something of a marriage of convenience.
Despite the incredible success of Android, handset makers' relationships with the platform might be described as "ambivalent." They want to avoid becoming merely "commodity producers" of Android devices and reduced to the fate of their desktop brethren, which essentially became vendors of nearly indistinguishable "gray boxes" running PC Windows. Accordingly HTC, Samsung and Motorola have tried to develop, unsuccessfully I would argue, proprietary software on top of Android to differentiate from one another.
While the new Windows Phone OS represents an alternative to Android, none of the hardware makers other than Nokia has enthusiastically embraced it. If it sells well for Nokia we might see that change. But there are those who also argue that Microsoft risks alienating other hardware OEMs with its Nokia favoritism.
All this makes me wonder if the market wants yet another open-source OS as an alternative to Android. Reportedly Mozilla, maker of the Firefox browser, is working on a mobile operating system "based on the Web, as opposed to what the project’s wiki calls 'proprietary, single-vendor stacks.'” But this doesn't appear to be viable in the near term as an Android alternative.
What about WebOS? HP was going to kill it. But since the abrupt replacement of CEO Leo Apotheker with Meg Whitman many of his decisions are being reversed. The fate of WebOS is unclear right now and may be decided this year or early next. But what about making WebOS an open-source Android competitor?
I'm not a developer or engineer but WebOS was and is positively regarded by the developer community; it has just been mismanaged and poorly marketed. But my view is that if HP were to turn it into an open-source mobile operating system there would be takers and it could gain new life. My suspicion is that makers would be interested in a high-quality alternative to Android to further diversify their handset lineups and give themselves some additional leverage vis-a-vis Google.
WebOS's app ecosystem is paltry by comparison to iOS and Androids but that could be rectified over time.
I think an open-source WebOS is intriguing; however HP doesn't have a direct way to benefit from it as Google benefits from Android with advertising. Whatever it decides about the fate of WebOS I hope HP doesn't kill it outright.
At 1pm Eastern time we'll know how many of the iPhone 5 rumors are true. We'll learn whether Sprint has "bet the company" on the new iPhone and whether it's getting some form of exclusivity. (Extended exclusivity would be foolish for Apple.)
We'll know whether there are two devices or one and whether one of those is a different (larger) form factor than the iPhone 4. A larger screen is very much in demand, especially with Android devices now routinely exceeding 4 inches.
We'll also hear more about the anticipated "Assistant," built on the earlier Siri acquisition. Some people have called it a "game changer" but that very much remains to be seen. Siri itself was novel and sometimes useful but not a "game changer."
We'll also discover whether the new iPhone (or iPhones plural) run on both CDMA and GSM networks. The new device(s) won't be 4G enabled, however, according to the WSJ. This is certainly a disappointment to many.
Surveys have shown "unprecedented pent-up demand" for the next iPhone, leading some financial analysts to anticipate or predict that sales records to be "shattered." It will all be contingent on what Apple actually delivers.
Although many others don't agree, I believe that the iPhone(s) being introduced today is/are critical for Apple, which now has a less-than-annual refresh cycle. If there's only a "4S" device or one that doesn't reflect obvious improvements it will fail to generate sales that live up to the outrageous expectations that have grown up around the launch.
Android is now dominant in terms of sales and market share, though Net Applications data reflect that iOS dominates all other mobile operating systems combined in terms of Internet access.
Regardless Apple's early multi-year commitment to AT&T exclusivity in the US was a strategic mistake, allowing Android OEMs to establish momentum with "good enough" copies of the iPhone. However now, larger Android screens, 4G capabilities and other features make Android handsets preferable for many people. And for this reason and others, a Sprint-exclusive iPhone 5 won't cause many (or any) to change carriers.
Android phones are now strong enough that Apple's brand strength is not enough if the next iPhone doesn't "wow." The pressure is on the company and new CEO Tim Cook. There are only a couple more hours to wait.
Earlier this morning Microsoft announced it had negotiated a far-reaching patent licensing deal with Samsung. Here's what the company's General Counsel Brad Smith said in a related blog post about the deal:
The Samsung license agreement marks the seventh agreement Microsoft has signed in the past three months with hardware manufacturers that use Android as an operating system for their smartphones and tablets. The previous six were with Acer, General Dynamics Itronix, Onkyo, Velocity Micro, ViewSonic and Wistron.
Together with the license agreement signed last year with HTC, today’s agreement with Samsung means that the top two Android handset manufacturers in the United States have now acquired licenses to Microsoft’s patent portfolio. These two companies together accounted for more than half of all Android phones sold in the U.S. over the past year. That leaves Motorola Mobility, with which Microsoft is currently in litigation, as the only major Android smartphone manufacturer in the U.S. without a license.
So that makes Samsung, HTC, Acer, General Dynamics Itronix, Onkyo, Velocity Micro, ViewSonic and Wistron. Next up Motorola Mobility?
Ironically Motorola is in part being acquired by Google ($12.5 billion) for its patents. However, if Microsoft succeeds in its litigation against the company it will have extracted fees from all the major Android OEMs. And it would be getting fees directly from Google (as the owner of Motorola). The rumor is that Redmond is trying to charge between $5 and $12.50 per Android handset.
Let's do some simple math. If there are 550K handsets activated daily and Microsoft secures fees from effectively all the major OEMs, the company could earn $1 billion or more annually from Android licenses. The more Android's market share increases, the more money Microsoft gains from Android OEMs.
This emerges as a major "insurance policy" if Microsoft's Windows Phones fail to take off with the Nokia partnership. The company is rolling out the long-awaited "Mango" update now, which offers a broad range of feature upgrades. However it's not clear that Mango will substantially boost demand in the near term for Windows Phones.
A combination of more hardware OEM participation and better software will almost certainly boost market share but the question is by how much? For the foreseeable future however Microsoft will probably make a great deal more money off its IP licenses around Android devices than it will its own mobile operating system.
All the data indicate that Android is increasingly taking over in the US market and globally. Recent Nielsen survey data argue that 43% of US mobile phone owners have smartphones now. As an aside figure is quite a bit higher than comScore's 35% number. Nielsen also (confusingly) says that 43% of smartphone owners are Android users (43% of 43%).
Significantly, however, a dominant majority of recent smartphone purchasers are choosing Android devices. The iPhone represents 28% of smartphones -- and an equal number of recent purchases.
Data released last week by ad network Millennial Media showed that Android dominated the sources of ad impressions on the company's network: 54% were from Android handsets, while iOS impressions had a 28% share -- exactly in line with the Nielsen survey data above.
Smartphones and "connected devices" (everything else) accounted for 86% of ad impressions on the network; feature phones delivered 14% of ad impressions vs. 33% in August of last year.
Despite the Android surge, the iPhone remained the top device on the Millennial chart. Herein lies something of a paradox: the iPhone bar far and away the favorite individual device. Yet, in the aggregate, Android is overwhelming it.
A recent survey conducted on behalf of UBS (confirming earlier ChangeWave surveys) shows that the iPhone has the highest loyalty and retention rates of any smartphone. While current customers of other smartphone OEMs are far less loyal, with especially bad news for RIM and Nokia (charts via GigaOm).
The iPhone's "implied retention rate" from this relatively small survey of just over 500 smartphone users is 89%, down somewhat from a year ago but much greater than competing handsets.
On the cusp of iPhone 5's release, there's considerable speculation about the device's impact on the market. It appears that Sprint will finally get the iPhone in the US, although it's less certain to come to beleaguered T-Mobile. This will give the device a boost but probably won't do much to stop Android from continuing its climb to mobile OS dominance.
PayPal, Google, Visa, Amex, Square, mobile carriers and others are competing in the rapidly developing world of mobile payments. NFC is one vision (though mass adoption is several years off if at all), while there are others such as Square and PayPal that are pushing NFC-free shopping concepts or tools.
Earlier this week PayPal laid out a very comprehensive and ambitious vision for the "future of shopping" and payments. It's a holistic concept that involves merchants, consumers and advertising; and it's built in part on recent acquisitions: Zong, Milo and Where.
PayPal wants to bring together payments on any device (call it "cloud payments") with offers (demand generation), "local search" and store inventory data. It's a strong vision and being smartly knit together through acquisitions and PayPal's existing assets. Look for them to make more acquisitions.
PayPal has the resources and most of the assets to make a pretty successful run at this vision. One of its great strengths is that it doesn't require infrastructure upgrades to work: consumers don't need new NFC-enabled devices nor do merchants need new POS terminals. So adoption could be more immediate. But there's a problem in PayPal's brand clout.
Visa, Mastercard, Amex, Google (even potentially Amazon) all have stronger brands than PayPal or eBay. And I think this is a major challenge for the company in getting merchants and consumers on board en masse. PayPal will also need to revamp and reduce its fee and commission structure to gain broader usage and adoption for all the scenarios envisioned in the video below.
In my mind, however, the brand issue (strength, trust) is a profound obstacle standing in the way of the realization of this otherwise powerful vision.
Comscore has released data this morning on smartphone usage across the "EU5," which encompasses France, Germany, Italy, Spain and the UK. Symbian-based smartphones remain the most prevalent. However they're in decline, while Android devices have now passed the iPhone to become the second most common smartphone type in these five countries.
Comscore says there are roughly 88.4 million smartphone users in the EU5 (Spain and the UK have the greatest smartphone penetration). That compares to comScore's estimate of 81.9 million smartphone owners in the US. By contrast, Nielsen says US smartphone owners comprise 40% of the market or more than 93 million people.
Microsoft mobile operating system handsets (including Windows Phones) are off almost 5%, which is an ominous sign for the coming Nokisoft partnership. However great hardware-software integration could give Europeans a reason to switch or upgrade from existing Symbian handsets.
Below are lists of "mobile content" activities and penetration rates across the EU5, contrasted with the same data from the US market. With the exception of the UK market mobile app usage in Europe is considerably lower than in the US, while text messaging is lower in the US than Europe according to these data.
Nielsen is now measuring the penetration and reach of apps on Android and iOS handsets in the US. The idea is the measure "actual consumer behavior" (rather than survey responses) based on usage patterns of 5,000 US smartphone owners who've agreed to participate.
Other data captured will be: frequency, duration, and size of total audience. Below are some of the data released by Nielsen to promote the new service, showing reach of various apps on Android smartphones:
Between men and women there are some differences. For example, among female Android users, Facebook is the most heavily penetrated Android app after the Android Market itself.
Forrester Research has released a report ("delayed a week out of respect for Steve Jobs") that argues Amazon's forthcoming Android tablet(s) will potentially sell 3-5 million units in Q4. This report, in "the works for months," can be boiled down the following:
Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market. If Amazon launches a tablet at a sub-$300 price point—assuming it has enough supply to meet demand—we see Amazon selling 3-5 million tablets in Q4 alone.
The analysis can be further distilled into two points that argue Amazon's got a shot at success:
I agree that Amazon's brand and marketing capabilities will give its tablet(s) a head start. But it's really price that will be the driving factor here. That's the lesson of the TouchPad buying frenzy: people are willing to buy an iPad imitator at the right price. In that case it was $99 and HP took a major loss on the inventory.
I own the Samsung Galaxy Tab 10.1 and the user experience is woefully inadequate compared to the iPad. I won't enumerate the ways but the device doesn't hold a candle to the iPad (Apple shouldn't be so afraid of it).
Any tablet Amazon sells under its own brand, based on the Android OS, will also be inadequate by comparison. There are no tablet apps on Android, for example. Accordingly it will have to be very aggressively priced to succeed.
The most expensive "regular" Kindle is sub-$200. The larger "Kindle DX" is $379. Pricing a color Android tablet that doubles as an eReader (which they will have to) at less than the cost of a DX kills the DX.
If Amazon were to price a 10-inch Android tablet at $499 it would suffer nearly the same fate as all of Apple's tablet rivals to date: failure. If it goes down to $300 or $299 it will sell (especially with 3G built in). However, given the poor quality of the Android tablet experience in general at this point, it's far from certain that it will sell as many units as Forrester predicts.
We'll have to wait for the device and see how "good" it is. Regardless, price is going to be nearly the lone determinant of success or failure for Amazon.
Related: Changing demographics of tablet owners.
Looking to move unsold inventory over the weekend, HP chopped TouchPad pricing down to $99.99 and $149.99 from $499 and $599. It ignited a well-documented buying frenzy that melted the HP servers. BestBuy and other stores are now sold out.
The way that people snapped up these devices reveals that for other than iPads consumers are highly price sensitive. As we argued early on and often, the way to compete with Apple's device was on price. (I also earlier argued that smaller tablets could succeed as well, though have reconsidered that position.)
Amazon is about to enter the tablet fray and it may be able to succeed where others have not. However to date all of Apple's main competitors (RIM, Samsung, HP, MOTO, HTC) have failed to generate more than token sales of their tablets. Part of the reason for that is that these non-Apple devices perceived as imitators. So far they also generally offer a poorer quality user experience -- this includes the Samsung devices -- and have priced their tablets at or above (e.g., Xoom) the cost of Apple's iPad.
E-readers Kindle and Nook have succeed in part because they are single-purpose devices, though the Nook has broadened its scope, and they're relatively cheap (sub-$250). It remains to be seen what Google can do for Android tablets after it acquires Motorola. Right now, however, it appears that nobody selling a $499 tablet is going to make inroads against Apple.
While the HP TouchPad $99 frenzy may not immediately impact the market, over the long term it will probably mean that Android and other tablets (regardless of size) will have to come in under $400 without carrier subsidies and much less with them (sub-$250). That also means that non-iPad tablets are likely to become very low margin commodity products -- like PCs today.
And that's not a very attractive market.
Last Monday, when I was out on vacation, Google dropped a bomb on the mobile ecosystem: it entered into an agreement to buy Motorola Mobility for $12.5 billion. Everyone is more than familiar with the story and there's been a ton of analysis in the intervening seven days.
Here's the crux of that analysis:
The response to all of this is yes and yes. While I don't know the actual truth of the Microsoft acquisition rumor (I believe it) all of these motivations likely played a role. Now regulators must approve the deal, which I suspect they will do.
Google said that the acquisition shouldn't change anything among its other hardware partners or the Android ecosystem generally (Samsung, HTC, LG, etc). Here's the quote from the press release:
Our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.
But it clearly does change things. Hardware OEMs will be taking a harder look at Windows now to "hedge" and "diversify." But what about WebOS?
The other bombshell last week was HP's announcement that it's getting out of the PC business and potentially going to unload WebOS. In April last year HP (under a different CEO) bought Palm for $1.2 billion, chiefly to get WebOS. Now it may sell the software assets and it's possible to imagine several parties being interested.
It has been suggested by some that Facebook should buy WebOS. But one could imagine HTC, Samsung (even with Bada), LG and others -- including Nokia -- being interested the platform if the price were right. But what if HP were to hold onto WebOS and open-source it or license it on very friendly terms? Indeed, HP is now saying or clarifying that it will hold on to WebOS and continue to support and even license the software.
The platform, which was early on regarded as platform most competitive with iOS, could gain new life as an alternative to Android for nervous handset OEMs. With a post-MOTO Google competing with its partners in a new, more direct way the market could well be ready for a new "open-source" Mobile platform. It's a long-shot and HP could still sell Palm/WebOS to a single buyer. If that were to happen WebOS would likely continue to languish and ultimately disappear.
However open-sourcing the platform or offering friendly, low-cost licenses to various hardware makers could give WebOS new vitality and a future.
Google's purchase of manufacturing partner Motorola Mobility is about to establish itself as the most favored hardware platform for the Android operating system. Even though Google CEO asserts (in a press release) that the join endeavor "will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers," it is a tacit acknowledgement that today's status quo for Android provides a user experience that is uneven at best. Some of the work by its developer network is brilliant, but thanks to its free-wheeling approach to application development and delivery (when compared to Apple's terms and conditions for its App Store) the overall experience falls short of "amazing."
Google is paying a 63% premium over the current stock price for Motorola Mobility. It is a statement that the company expects direct ownership of the manufacturer to accelerate scales and promote proliferation of the Android OS. But Google's management is underestimating the impact of its action on other manufacturers who have endorsed and support Android as they must now regard Google/Moto as a direct competitor and not just a benign endorser of an "open" OS.
This post by long-time industry follower Mike Cane captures the probable outcome in the simple statement: "Google pulls a Zune." He refers to Microsoft's decision to begin making its own MP3 player after spending a few years endorsing and supporting the PlaysForSure digital rights management platform. Musicians and publishers who believed that Microsoft would stay "hardware agnostic" dealt with the news by understandably abandoning the product. HTC, Samsung and the other manufacturers in the Android camp must be looking more closely at alternatives.
I agree with Mike Cane that this will lead other manufactuers to evaluate their OS strategy. It is a disruptive move that could benefit HP, for example. I very much like the idea of it creating a new market for WebOS as a licensed product for manufacturers who are now concentrating on boosting their Android sales. Market share projections under the old regime are almost meaningless.
Much has quickly been written about the just launched Amazon HTML5 "Cloud Reader." It's a "web app" that could be used to replace the native Kindle iPad and iPhone apps. It's being widely read as a response to Apple's more restrictive App Store terms about in-app purchases/subscriptions. (Amazon has removed the button linking to the Kindle store from the most recent version of its iOS apps.)
I agree with John Gruber and others who believe this has been in the works for longer than Apple's more restrictive terms around in-app purchases. Cloud Reader does, however, completely side-step Apple and its App Store terms. The Financial Times and Walmart's Vudu also recently did something similar. More publishers and developers will follow, who don't want to give money to Apple or simply don't want to worry about Apple's rules.
An added benefit is compatibility with all mobile platforms. However developing native apps is relatively easy these days because, unless/until Windows Phones break out or BlackBerry stops its slide, only two operating systems matter: iOS and Android.
In contrast to some of the rapturous reviews I've seen Cloud Reader is not as strong as the Kindle native app. It works well and allows users to read books offline (e.g., on the iPad). But it's not as responsive or fast the native app.
Yet for certain types of sites or publications HTML5 will be fine and quite usable. However for higher functionality a native app is better, even necessary (e.g., games).
But now that several companies have "validated" the HTML5 strategy will we see the migration from apps to HTML5 that the industry has always anticipated? Not exactly. I think what we'll see is continued development of native iOS, Android (later maybe Windows Phone) apps and HTML5 from everyone else. However Apple doesn't help its cause with all its rules and restrictions.