The app vs. mobile Web debate is over; there's a kind of detente in place. Google and others had originally expressed hope and the expectation that apps were transitional and HTML5 would supersede them over time. While that's still possible in the long term, the superior UX of apps, their sheer numbers and their revenue-generating capability mean that they're here to stay -- for at least the foreseeable future.
Yet apps remain optional for publishers, marketers and merchants, while an optimized mobile website is an absolute must now.
Today the app stores that matter are iTunes and Android. RIM's own App World will likely disappear over time as the company embraces Android apps, as it has done preliminarily with the Playbook tablet. Nokia-Microsoft is a bit of a wild card. Nokia has its own apps store in Ovi, which may atrophy over time as well.
Microsoft is aggressively courting iPhone developers and trying to make it easy for them to port their existing apps over to Windows Phones. It remains to be seen if this strategy succeeds. However apps are ultimately critical for near-term consumer appeal and the success of Windows.
IHS/iSuppli has estimated app revenues growing to more than $8 billion by 2014, with Apple dominating and Android growing fastest. Here's what the firm has said:
Total download revenue from games and other applications are projected to continue rising in the next few years, jumping to $5.6 billion in 2012, $6.9 billion in 2013 and $8.3 billion in 2014
Apple, according to these estimates, currently owns more than 75% of app-store revenues. However IHS projects faster growth by Android, with revenues reaching roughly $425 million this year.
Apple reported that iTunes revenues (which includes movies and music) were $1.4 for the first three months of 2011. Assuming no growth that would mean total 2011 iTunes revenues of $5.6 billion. IHS says Apple's app-related revenue in 2011 will be $2.9 billion vs. $1.8 billion last year.
One reason Apple has more app-store revenues vs others (beyond sheer app numbers) is that it has a higher proportion of paid to free apps and its users download more apps than other smartphone owners. In addition there's less friction (vs. Android) in buying paid apps in the iTunes app store. Below are data recently released by Nielsen, comparing app consumption.
The most appealing device in the Samsung "tablet" lineup may be its 5" "Galaxy Player" introduced at CES this year. I had read about it but hadn't seen one until yesterday. In fact I saw the full array of Samsung tablets at AppNation. (The Galaxy Player is on the left in the picture below.)
The larger tablets are much less appealing than the iPad, both in terms of hardware and software. The 7" Galaxy Tab is somewhat appealing because of its more portable "on the go" form factor. But I was surprised how drawn I was to the 5" device.
Supposedly an iPod touch competitor the WiFi Galaxy Player looks like a giant Galaxy S Android phone but the additional screen real estate offers a better user experience than comparable Samsung smartphones. It can also still fit "in your pocket" in a way that even the 7" device cannot.
My belief is that if it were to be made into a phone it would be the perfect all-in-one device, with a larger screen for apps and internet use but small enough to still functional effectively as a phone. (With a data plan one could use Skype as the phone.)
I was unable to get any pricing information out of the Samsung representatives I spoke to. However pricing is going to be a mess for the company with so many tablet devices. Ultimately perhaps only two or three sizes will survive and the others will fall away for lack of demand/sales.
If the 5" device were priced below $200 and marketed properly it could become very successful and could become a true challenger to the iPod Touch.
Apple issued three unrelated press releases this morning about the arrival of the mythic (and overhyped) white iPhone 4, the iPad 2 and its arrival in Asia and other countries and, finally, about the location-tracking controversy with a promise to fix the matter.
Apple today announced that the white iPhone 4 will be available beginning tomorrow. White iPhone 4 models will be available from Apple’s online store, at Apple’s retail stores, AT&T and Verizon Wireless stores and select Apple Authorized Resellers.
Apple today announced that iPad 2, the second-generation of its breakthrough post-PC device, will arrive in Japan on Thursday, April 28 and Hong Kong, Korea, Singapore and eight additional countries on Friday, April 29. iPad 2 will be available at Apple retail stores at 9 a.m. local time, select Apple Authorized Resellers, and online through the Apple Store beginning at 1 a.m. Additionally, iPad 2 with Wi-Fi will be available in China beginning Friday, May 6.
Here's the unusual Q&A press release verbatim:
1. Why is Apple tracking the location of my iPhone?
Apple is not tracking the location of your iPhone. Apple has never done so and has no plans to ever do so.
2. Then why is everyone so concerned about this?
Providing mobile users with fast and accurate location information while preserving their security and privacy has raised some very complex technical issues which are hard to communicate in a soundbite. Users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date.
3. Why is my iPhone logging my location?
The iPhone is not logging your location. Rather, it’s maintaining a database of Wi-Fi hotspots and cell towers around your current location, some of which may be located more than one hundred miles away from your iPhone, to help your iPhone rapidly and accurately calculate its location when requested. Calculating a phone’s location using just GPS satellite data can take up to several minutes. iPhone can reduce this time to just a few seconds by using Wi-Fi hotspot and cell tower data to quickly find GPS satellites, and even triangulate its location using just Wi-Fi hotspot and cell tower data when GPS is not available (such as indoors or in basements). These calculations are performed live on the iPhone using a crowd-sourced database of Wi-Fi hotspot and cell tower data that is generated by tens of millions of iPhones sending the geo-tagged locations of nearby Wi-Fi hotspots and cell towers in an anonymous and encrypted form to Apple.
4. Is this crowd-sourced database stored on the iPhone?
The entire crowd-sourced database is too big to store on an iPhone, so we download an appropriate subset (cache) onto each iPhone. This cache is protected but not encrypted, and is backed up in iTunes whenever you back up your iPhone. The backup is encrypted or not, depending on the user settings in iTunes. The location data that researchers are seeing on the iPhone is not the past or present location of the iPhone, but rather the locations of Wi-Fi hotspots and cell towers surrounding the iPhone’s location, which can be more than one hundred miles away from the iPhone. We plan to cease backing up this cache in a software update coming soon (see Software Update section below).
5. Can Apple locate me based on my geo-tagged Wi-Fi hotspot and cell tower data?
No. This data is sent to Apple in an anonymous and encrypted form. Apple cannot identify the source of this data.
6. People have identified up to a year’s worth of location data being stored on the iPhone. Why does my iPhone need so much data in order to assist it in finding my location today?
This data is not the iPhone’s location data—it is a subset (cache) of the crowd-sourced Wi-Fi hotspot and cell tower database which is downloaded from Apple into the iPhone to assist the iPhone in rapidly and accurately calculating location. The reason the iPhone stores so much data is a bug we uncovered and plan to fix shortly (see Software Update section below). We don’t think the iPhone needs to store more than seven days of this data.
7. When I turn off Location Services, why does my iPhone sometimes continue updating its Wi-Fi and cell tower data from Apple’s crowd-sourced database?
It shouldn’t. This is a bug, which we plan to fix shortly (see Software Update section below).
8. What other location data is Apple collecting from the iPhone besides crowd-sourced Wi-Fi hotspot and cell tower data?
Apple is now collecting anonymous traffic data to build a crowd-sourced traffic database with the goal of providing iPhone users an improved traffic service in the next couple of years.
9. Does Apple currently provide any data collected from iPhones to third parties?
We provide anonymous crash logs from users that have opted in to third-party developers to help them debug their apps. Our iAds advertising system can use location as a factor in targeting ads. Location is not shared with any third party or ad unless the user explicitly approves giving the current location to the current ad (for example, to request the ad locate the Target store nearest them).
10. Does Apple believe that personal information security and privacy are important?
Yes, we strongly do. For example, iPhone was the first to ask users to give their permission for each and every app that wanted to use location. Apple will continue to be one of the leaders in strengthening personal information security and privacy.
Apple says that "sometime in the next few weeks" the company will issue a software update that:
It also says the "next major iOS software release" will encrypt the location data cache on the iPhone.
Apple has been sued (as usual) for the alleged involuntary tracking and storing of user location data. However there are arguably no damages at this point. As the Q&A above indicates Apple denies user tracking and, in accordance with the bullets above, says it will implement more privacy controls soon.
I was in a conference session yesterday when Apple's fiscal Q2 results came out. They've been widely covered but they're worth repeating:
Verizon said this morning that it activated 2.2 million iPhones during Q1.
By almost all measures this was a dramatic quarter for Apple. The mystery is the iPad, which "underperformed" (almost 5 million sold for $2.8 billion in revenue) in the context of the perhaps overheated expectations associated with the product.
Here are some iPad and Android-related comments from the earnings call. Regarding Android RBC analyst Mike Abramsky poses the question: isn't Android like Windows PCs and the iPhone like Mac?
Apple CFO Peter Oppenheimer:
We sold 4.7 million iPads during the March quarter, launching iPad 2 in U.S. on March 11 and in 25 additional countries on March 25. Customer enthusiasm has been tremendous for iPad 2 and we're working hard to get it into the hands of customers as quickly as possible.
Including both the original iPad and iPad 2, we had distribution in 59 countries by the end of the March quarter. Given the very strong customer demand and despite the increased geographic distribution, iPod (sic) [iPad] channel inventory declined by 400,000 from the beginning of the quarter, implying sell-through of about 5.1 million. This resulted in ending channel inventory of below 850,000, which was below our target range of 4 to 6 weeks. We sold every iPad 2 that we could make during the quarter and would have liked to end the quarter with more channel inventory. Recognized revenue from sales of iPad and iPad accessories during the quarter was $2.8 billion.
Employee demand for iPad in the corporate environment remains strong and CIOs continue to embrace iPad in an unprecedented rate. In just over a year since its debut, 75% of the Fortune 500 are testing or deploying iPad within their enterprises . . .
We're extremely pleased with customers' response to iPad 2 and are working hard to get it into the hands of customers as fast as we can.
Most financial analyst questions were directed at trying to figure out why Apple sold fewer iPads than they had forecasted. COO Tim Cook said that the company was backlogged with orders and it was trying to meet demand as fast as it could. Japan was not a factor.
Mike Abramsky - RBC Capital Markets, LLC:
It may not be a perfect analogy but just wondering with the rise of Android, what might be some of the similarities and differences you see versus the rise of Windows PCs in the 1990s versus Mac? And I'm just wondering if you think in the U.S., particularly Android, could become a possible headwind to your U.S. smartphone business, and how do you maintain such incredible growth in the space of that shift?
Apple COO Tim Cook:
On a worldwide basis, we just did 18.6 million iPhones, which is up 113%, which is materially faster than the market rate of growth. And we launched the iPad 2 and sold everyone of them that we could make. As we've said before, we're gaining traction in Enterprise on both the iPhone and iPad with astonishing 88% and 75%, respectively, of the Fortune 500 companies deploying or testing these. We've got the largest App Store with over 350,000 apps for iPhone and over 65,000 iPad-specific apps on iOS versus what appears to be fewer than 100 on Android. And so we feel very, very good about where we are and we feel great about our future product plan. We've also paid over $2 billion to developers, and we've had well over 10 billion applications downloaded. And so our business proposition is very, very strong.
As we've said before, we continue to believe and even more and more everyday that iPhone's integrated approach is materially better than Android's fragmented approach, where you have multiple OSs on multiple devices with different screen resolutions and multiple app stores with different roles, payment methods and update strategies. I think the user appreciates that Apple can take full responsibility for their experience, whereas the fragmented approach turns the customer into a systems integrator and few customers that I know want to be a systems integrator.
Cook's answer doesn't really address Abramsky's analogy. To many observers it does appear that Android will dominate the market vs. the iPhone just as Windows did vs. the Mac in the 1990s. However the iPad and iPod touch are two devices that extend Apple's reach and defy the analogy to a degree.
There has yet to be a really compelling Android tablet to challenge the iPad -- though eventually one or more will probably emerge. It will probably be smaller than 10" (probably 7" - 8"), "good enough" and priced at less than $400 (w/o carrier subsidy).
While there are dozens of forecasts out there, most of them with aggressive predictions of growth, no one knows really how big the tablet market will be. Much of that will depend on pricing. Regardless, tablets are not a fad and there's considerable evidence that they're starting to impact PC usage for their owners. (Smartphone usage still generally seems to be "additive" to PC usage.)
The latest tablet usage data to come out is from AdMob (Google), based on a March 2011 survey (n=1,430) in the US market. Google doesn't break it out by device, but respondents were probably more than 90% iPad owners.
According to the findings, "77% of respondents reported that their desktop/laptop usage decreased after getting a tablet" and 28% now call their tablet their "primary computer." In a related finding "43% of respondents spend more time with their tablet than with their desktop/laptop."
A majority (68%) of users spend at least an hour a day with their tablets, while most tablet usage is at home, at night, during the week. In terms of activities, here's what the survey revealed about most and least popular:
Microsoft released some new Windows Phone numbers a year after the new OS was first previewed to the public. Here are some of them:
IDC predicted, probably inaccurately, that Windows Phone would surpass the iPhone in terms of global market share by 2015. While 2015 is a long time away and anything could happen, the prediction is based on the assumption that the Nokia relationship will propel Microsoft's OS. Nokia and Microsoft would certainly be happy if that happened.
It's still not entirely clear how many Windows Phones have been sold to the public. The OS seems to be doing better in Europe than the US. In the US market Microsoft continues to lose share:
There are claims that Microsoft has sold roughly 3 million Windows Phones since launch. Microsoft said in January that it sold 2 million handsets. However these numbers refer to shipments and not necessarily to consumer purchases.
The main way that Google argued its mobile operating system, Android, was superior to Apple's was its "openness." Google was merely the anchor of an open ecosystem of developers, OEMs and others. However that was never exactly true and it's less and less true today.
An article in Bloomberg BusinessWeek reveals the degree to which Google is taking over Android to prevent "fragmentation," as well as advancing other goals and interests. The company sees the operating system as a strategic key to its future -- even though there's little direct revenue associated with it. Yet Android devices are Google search and advertising devices and the company has quickly come to dominate mobile advertising, in part because of Android's early success.
Here's an excerpt from the article:
Google says its procedures are about quality control, fixing bugs early, and building toward a "common denominator" experience, says John Lagerling, director of global Android partnerships at Google. "After that, the customization can begin."
Over the past few months, according to several people familiar with the matter, Google has been demanding that Android licensees abide by "non-fragmentation clauses" that give Google the final say on how they can tweak the Android code—to make new interfaces and add services—and in some cases whom they can partner with. Google's Rubin says that such clauses have always been part of the Android license, but people interviewed for this story say that Google has recently tightened its policies.
Facebook, for example, has been working to fashion its own variant of Android for smartphones. Executives at the social network are unhappy that Google gets to review Facebook's tweaks to Android, say two people who weren't comfortable being named talking about the business. Google has also tried to hold up the release of Verizon Android devices that make use of Microsoft's rival Bing search engine, according to two people familiar with the discussions.
The problem is not Google's efforts to ensure quality or establish standards. It's the rhetoric of openness and the apparent reversal of that now, as detailed in the article. There's also a perception of capriciousness on Google's part around Android.
The wide and enthusiastic embrace of Android by third parties is responsible for its popularity and success. However when the iPhone emerged Android was effectively the only place to turn for Motorola, HTC and other OEMs. Symbian wasn't competitive and neither was Windows Mobile at the time.
HTC, Motorola and Samsung bet big on Android. That's partly why it will capture the top smartphone OS spot this year, according to IDC. Had Android not started out as an "open" platform, with the promise of third party "tweaks" and modifications, it probably wouldn't be where it is today.
There are indications that when Google is threatend or unhappy with a development in the Android ecosystem it will intervene to protect its own self interest. This is the gist of the BusinessWeek article. However there's a darker version of this in the facts alleged in a lawsuit filed by Skyhook Wireless.
There, Google allegedly used its control over Android to disrupt economic relationships Skyhook had with two major Android handset OEMs. If true the case is very disturbing and directly contradicts Google's efforts to cast itself as the benevolent shepherd of an "open" software platform.
Meanwhile Samsung and Motorola, key Android partners, are contemplating ways to lessen their dependence on Android. Samsung has a homegrown mobile OS (Bada) and Motorola is contemplating developing one as a hedge against too much reliance on Android. However neither of these is likely to succeed at the level that Android has.
As Google control over Android grows some partners have become upset, prompting complaints to the US Justice Department, the article reveals. The Justice Department (or FTC) may take up a near-term investigation but almost certainly the Europeans will at some point. They're currently conducting an antitrust investigation about Google's dominance of search on the PC. However Google is even more dominant in mobile search.
I first (somewhat radically) predicted in December that Google would eventually be separated from control over Android. Given the information in the BusinessWeek piece, absent renewed "restraint" by Google, I'm increasingly led to believe my prediction will come true.
The huge error that the Motorola Xoom made at launch was its $799 price tag. RIM is coming out on April 19 at $499, which matches the iPad 2's entry level WiFI price.
What's not apparent to most non-tech-insiders is that RIM's Playbook is 7". In one way of looking at it the Playbook is more expensive than the iPad. No doubt, if the 7" version succeeds a 10" version will appear later.
Psychologically the $499 entry level price point is critical for iPad competitors, in the same way that smartphones priced above $199 (w/contract) are essentially DOA. Consumers will now be willing to consider the Playbook at $499 and then will discover it's smaller.
Somewhat paradoxically, though it makes the device more expensive in some respects, the 7" size gives the Playbook a fighting chance vs. the iPad because it's more portable. A 10" competitor from RIM out of the gate would likely fail in the same way that Xoom is failing to build momentum.
Many enterprises will probably give the Playbook serious consideration and the smaller form factor will be appealing to many consumers as well. The Galaxy Tab sold on the strength of its smaller size -- not the UI/UX, which was crappy.
Like a Hollywood movie the Playbook will get a wide release on April 19, going on sale at more than 20,000 stores in the U.S. and Canada. Among them are BestBuy, RadioShack and Staples, in addition to carrier stores.
Battery life has been a rumored issue for the Playbook. But given the strength of RIM's brand and its price point, I would imagine the Playbook will be a modest hit when it comes out.
As you've seen Amazon's Android Appstore launched this morning. Reportedly it has 3,800 apps at launch, a far cry from the nearly 200,000 now in Google's Android Market. But the fact that this is Amazon and that it has stored credit cards on file should give Google a real "run for its money" -- literally.
The online version of the Android Market is an improvement over the mobile version of the store. And the over the air downloads from the PC are great. However Amazon is likely to do a much better job with the overall user-experience and helping consumers discover Android apps. It's also likely over time to sell more paid apps for developers than Google itself will.
Google has struggled in the past to sell apps because of friction around billing, primarily because of a lack of Google Checkout adoption and inconsistent options across countries and carriers. Amazon alleviates those challenges for developers because it has millions of consumer credit cards on file. One-click buying will apply here just as it does across Amazon on more conventional goods.
Amazon will be using its vaunted, if imperfect, recommendations algorithm and collaborative filtering to help users learn about apps based on purchase and browsing history. It will also be doing some additional things to promote apps: giving away a "free app a day" and allowing users to "test drive" apps online before they buy. They'll get access to an online simulator that will show them what the app is like.
My experience in buying a couple of apps this morning was relatively easy. However the first time you download an app (and the Amazon Appstore app itself) it's a pretty non-intuitive process. That's a criticism I have of Android in general. Thereafter it becomes much simpler.
Amazon's trusted brand, stored credit cards and more user-friendly online experience should make the appstore a big success. It will be very interesting to see how Google reacts if my prediction is correct and Amazon becomes a bigger seller of paid apps than Google itself.
The tech/telecom world is still focused on AT&T-Mobile and its prospects this morning. Meanwhile Sprint has gone "all in" with Google Voice. The carrier also introduced the Google Nexus S (Samsung) 4G handset with NFC capability.
In terms of the Google Voice integration, Sprint and Google Voice users can:
It's a little bit confusing at first blush. In the former case Google Voice number becomes your Sprint mobile number (this is number porting). In the latter scenario, the existing Google Voice number is replaced by the Sprint phone number.
This is another step toward Google as "carrier 2.0" and the mainstreaming of Google Voice. For users the benefit of this is more control over how calls are received and routed. Google explains how it works:
Sprint customers will be able to use their existing Sprint mobile number as their Google Voice number and have it ring multiple other phones simultaneously. So now, calls to your Sprint mobile number can easily be answered from your office or your home phone, or even your computer through Gmail. Calls from Gmail and text messages sent from google.com/voice will also display your Sprint number. This basically gives Sprint customers all the benefits of Google Voice without the need to change or port their number.
Alternatively, Google Voice users can choose to replace their Sprint number with their Google Voice number when placing calls or sending text messages from their Sprint handset. This feature works on all Sprint phones and gives Sprint users all the benefits of Google Voice without the need for an app.
In either event Google Voice will replace Sprint voice mail. There are international calling benefits (via Google Voice) as part of the deal as well.
Millennial Media's "Mobile Mix" report for February is out. It reflects device usage on Millennial's ad network, which the company says (per IDC) is the largest "independent" network, after Google and Apple. Among the stats offered by the company:
Moving on, there are a number of interesting observations to be made from the "Top 30 Mobile Devices" chart below.
The Galaxy Tab is the number 7 device on the list. In January Samsung announced that it had sold two million of the devices. However it was later forced to clarify that those were not sales to consumers but sales to distributors. The actual consumer sales figures are significantly less -- perhaps less than half the announced number. Indeed, while I've seen them in stores, I have not seen one in use in the world by an actual person.
Take a look at the "Google Insights for Search" chart below. This is for the last 30 days but it looks very similar going back. There is effectively no demand, as reflected in search volume, for the "Xoom" or the "Galaxy Tab." Accordingly, given all the available evidence, we can safely assume that almost all consumer sales of the Galaxy Tab have stopped or declined to a trickle.
There are likely relatively few Galaxy Tabs actually in the market. This probably means that to be in the seventh position on Millennial's chart those few devices are getting very heavy usage -- especially in comparison to other Android smartphones.
Alternatively it could mean that sales of those devices below the Tab on the chart were fewer than the Tab itself. That would probaby be an incorrect interpretation however. More likely the data reflect that the Tab is being used much more than other Android devices and all the BlackBerry handsets, for mobile Web access.
This brings to mind InsightExpress' comment in its recent consumer insights report that there's a new "a middle category" of mobile users who technically own smartphones but don't engage with them as fully as, for example, iPhone owners. InsightExpress equally observed that this middle group doesn't act like feature phone owners either.
Extrapolating from the position of the Galaxy Tab vs. other Android devices on Millennial's network it would appear that a large percentage of Android users fall into this new middle category.
As the cliche goes: you don't get second chance to make a first impression. And that appears to be true for the already beleagured Motorola Xoom. Hailed as the "iPad Killer" it's proving to be anything but with sales that are reported to be "weak" according to some financial analyst.
The Motorola Xoom received mixed but generally favorable reviews when it was released in late February. But consumers generally aren't buying the device. This is in part because of the anticipated arrival of the iPad 2, which is now either sold out or almost sold out of its initial supply. But equally inhibiting consumers is Xoom's $799 price tag. (There have also been reports that Honeycomb is buggy.)
Despite the fact that the Xoom has been called "bloated" and "obese" next to the thinner iPad 2, it's the pricing decision that has hampered initial sales of Motorola's first generation tablet. Much has been written about Apple's economies of scale and retail distribution advantages in keeping prices down. However it was pure hubris on Motorola's part to introduce the device at a price point $300 higher than the WiFi version of the iPad.
While a comparably equipped iPad is closer to the Xoom's price, it doesn't matter. There's one Xoom and it costs $800. You can get an iPad 2 for $500. The marketing and psychological impact of that gap is quite significant. (You can get Xoom for $599 with a 2 year contract from Verizon; however the majority of iPad sales were the WiFi only device.)
The higher Xoom price might be OK if the Xoom were truly and obviously a superior product. The opposite is true however. The Xoom's battery life is shorter and inconsistent according to various reviewers who've been testing the device. In addition new performance benchmark tests just released, the iPad 2 outperformed Xoom across the board. Cumulatively this is all bad news for Motorola.
When Xoom's pricing was first announced earlier this year I wrote:
The $800 pricetag is a strategic blunder by Motorola. The cheapest WiFi version of the iPad (with iPad 2 coming in March or April) is $499. The high price is likely to dampen sales, especially when the iPad is "the brand" and Motorola is the upstart/insurgent.
The Galaxy Tab was priced initially at $600, which was also too high. A better out-of-the-gate price for Xoom would have been $599 or maybe $699. At $799 people are going to think twice and with an iPad right there . . . opt for the iPad.
In order to salvage Xoom 1.0 Motorola will need to cut the price by $200 (for the unlocked version), which would mean little or even no margin on the device. Alternatively Motorola might focus on the 7" tablet category, which is still open to competition because Apple doesn't have a product there (yet).
Notwithstanding some early sexy commercials and claims by Motorola, it was almost always clear that Android tablets would compete on price and Xoom has failed to defy that prediction. Now Motorola must lower Xoom's price or pin its hopes on the next tablet.
Microsoft watcher Mary Jo Foley points out that a Nokia Securities and Exchange Commission filing states that "transition to Windows Phone as its 'primary smartphone platform' will take 'about two years.'"
The first Nokia-made Windows Phones were supposed to be out later this year (October). However the companies have previously said that mass availability of Nokisoft phones wouldn't happen until next year. The "two years" in the filing implies something even later -- 2013.
Nokia is really in a tough spot if this is true. The company says it continues to be committed to Symbian; however Symbian is not competitive. Nokia has also abandoned MeeGo, its other mobile OS developed with Intel. Prior to the release of Windows Phones there's likely to be stagnation in Nokia handset sales, except at the very low, price-conscious end of the market.
Microsoft has several OEM partners building Windows Phones but those partners also build Android handsets and thus far are seeing much greater success with Android devices. Thus their motivation to push Windows Phones, except as a kind of "hedge" against Android dependency, is limited.
In this smartphone market "two years" is like ten. And given the trajectory that Android is on Nokia could easily forfeit its top position in global smartphone rankings -- ceding the spot to Android (and Google). Code red: neither Microsoft nor Nokia has two years to mess around.
There have been a flurry of reports from Nielsen and comScore that have now consistently established Android outselling the iPhone. But now Google has become the clear dominant smartphone platform in the US.
Last Friday when Nielsen put out mobile market share numbers showing that Android had topped RIM and Apple, comScore rushed out a chart showing something similar. However today comScore released its more complete mobile marketshare data:
The impact of the Verizon iPhone is still not reflected here -- the iPhone is flat on a percentage basis -- but Android's momentum continues to grow impressively. And look at RIM; it's slide continues.
Immediately below is December data for comparison purposes:
The following is comScore's data on mobile content usage, which is all pretty flat:
In the chart app usage is growing faster than browser usage, though browser penetration remains greater by a little under 2 points.
It would be interesting to discover whether these Android users are upgrading from feature phones or BlackBerry devices. It's curious to me that we have all these new Android handsets in the US market but not that much more mobile Internet usage.
Today Apple announced what it was pretty much expected to announce: a lighter, faster and thinner device with front and rear-facing cameras. Pricing remains largely the same (except that the original iPad is now $399). There are other performance improvements and some new apps (iMovie, Garage Band, Photo Booth and of course Face Time).
The device doesn't leapfrog other tablets (most of which aren't yet out) but it eliminates any feature gaps and it reasserts Apple's position as the "brand," while Android and others are "clones" or "followers."
The metaphor for all of this is the simple yet brilliant Smart Cover:
The innovative new iPad 2 Smart Cover provides protection for the iPad screen while maintaining its thin and lightweight profile. Designed with a unique self-aligning magnetic hinge that makes it easy to attach and remove, the new iPad 2 Smart Cover automatically wakes iPad 2 when it’s opened and puts it to sleep when it’s closed, and has a soft microfiber lining to help keep the screen clean. The Smart Cover also folds into a stand for typing or viewing videos and is available in vibrant polyurethane for $39 or rich leather for $69 in a range of colors, including a (PRODUCT) RED one which helps support the Global Fund to fight HIV/AIDS in Africa.
This clever, multifunction accessory offers personalization and a differentiated look to the Apple tablet vs. others in the market, which now resemble "gray boxes" (like Windows machines). It's another stroke of marketing and product design genius.
Steve Jobs, who appeared at the event, confirmed that 15 million iPads had been sold in the 9 months since launch (April to December), for a total of $9.5 billion in revenue. Reportedly iPad 3 will be announced later this year.
Unless you're just getting back from your trip to the outer reaches of the galaxy, you know that Apple is set to reveal its highly anticipated iPad 2 today around 1pm Eastern. Thinner, faster and with a better speaker and cameras, the new device is an interim upgrade for the highly popular tablet.
Those improvements bring it to feature parity with some of the newest Android tablets like the Motorola Xoom, which at present appears to be the "flagship." LG, RIM, Samsung, HTC, HP, and others all announced and are soon releasing competitive tablets, most based on Android; however WebOS in the case of HP-Palm and QNX in the case of RIM. (RIM will run Android apps as a way to stay relevant given the limitations of its own "App World.")
The Xoom has been reasonably well reviewed but, despite many of its superior features, (vs. "iPad Classic") has not been pronounced superior overall. Part of the problem with Xoom is its $799 price (lower with carrier subsidy). Most of the tablets now coming out are trying to match similarly equipped iPad pricing. But Xoom has made a serious pricing error and will see lost sales as a result.
Motorola Mobility CEO Sanjay Jha said that Xoom sales have gone "relatively well" (read: disappointing). However if iPad 2 matches its features, as expected, you can expect that any sales momentum that Xoom has to abruptly end -- unless Motorola cuts prices.
Only a small number of "high-end" Android tablets will exist by the end of this year. The market will support several winners but not a dozen. The iPad will likely capture much of the high end of the market as Apple has historically with Macs. There may be several viable tablets at the sub-$300 price range that can survive on price competition alone. It will be interesting to see if "good enough" Android tablets at the low end put pressure on the higher end Android tablets to cut prices themselves.
We'll see what Apple shows up with later today and how it's priced.
Apple surprised everyone when the original iPad was introduced with a WiFi-only "entry level" version for $499. That pricing helped propel interest in the iPad and generate over 15 million unit sales to date (we'll hear an update on those numbers today I'm sure).
In Q4 and for the past six months Android handsets have outsold Apple's iPhone. However Apple still commands leadership in several areas, including mobile Web OS share in Europe and the US. And if you look at mobile app revenues the gap between iOS and Android is staggering.
The headline being trumpted today is "Android app store revenues grow 861 percent." But take a look at the 2010 actual share of revenues generated by the various app stores:
This again reflects the relatively poor monetization performance of paid apps in the Android market.
Nokia has found itself on the defensive since announcing its company changing deal with Microsoft on Friday. Now a group of self-described "nine young Nokia shareholders" who have organized under the moniker "Plan B" are planning a revolt at Nokia's Annual General Meeting on May 3, 2011.
They loathe the Microsoft deal and want to remove CEO Stephen Elop. It's not clear how many shares they collectively own; however I'm sure their complaints will resonate with some Nokia shareholders.
Here is part of their "agenda":
Here are some of their proposed "concrete actions" if they're elected to the board (not likely):
Nokia's bureaucratic culture and slow decision making put it in the bind it's in now. MeeGo and Symbian are not competitive; it's not clear how long it would take to make them so. Elop's decision was "rational," although arguably he probably should have remained open to Android as well.
Yet the investors' fears that Nokia will devolve into a "a poorly differentiated OEM with only low margin, commodity products" are not entirely unfounded. This was the reason Elop asserted for shunning Android but it might also happen with Windows Mobile too.
Velti's Mobclix put out some data a couple of days ago that shows iPhone users are more "valuable" than Android users. Some apps categories are more valuable than others. But across the board, iPhone users buy more and spend more than Android users on apps. Part of that is the lack of a widely penetrated and easy to use payments infrastructure for Android however.
Here's the Mobclix "infographic" showing the differences in value between iPhone and Android users in various app categories:
Once again, it's iTunes that is largely the explanation behind the discrepancy here.
As a kind of related aside, I've seen it reported in several places that Android users "click more" than iPhone users. Mobile ad mediator/exchange Smaato reports on the display ad CTRs of the users of the various operating systems. (Note: CTR is the wrong metric to use to evaluate the efficacy of display ads.)
In December Smaato found that iOS users clicked much more than Android users. But mid-2010 data shows the opposite. Has Smaato has changed its methodology? Are iAds responsible for higher clicks/engagement on iPhones? Or, as Android has grown have CTRs simply become diluted?
It's a curious change. All the operating systems are in roughly the same position except iPhone and Android users, which changed places:
This morning Apple formally announced its long-awaited subscription program. What has been contentious and feared is the requirement that any subscriptions generated via apps themselves trigger a 30% rev share with Apple, in accordance with the normal rev share. Here's what the release says:
Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases . . .
Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.
Here's what it means as a practical matter:
Apple doesn't want publishers punishing Apple with higher pricing to ensure outside subscriptions.
Apple could have reduced the rev share to a smaller percentage for subscriptions but it chose to have a consistent policy. The "workaround" that allows publishers to sell iPad subscriptions outside of iTunes is a bit of a concession to publisher complaints. But many will still be unhappy.
That will likely mean that publishers will either do everything they can to grab iPad subscribers outside of iTunes or they will avoid the iPad altogether and place their bets on the forthcoming Google newsstand instead.