Operating Systems

The iPad2's 'Smart Cover' Is a Genius Branding Move

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." 

http://photos.allthingsd.com/photos/1203746729_vdj9k-S.jpg

Credit: AllThingsD

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. 

Screen shot 2011-03-02 at 4.19.22 PM

iPad 2 Day, Price Wars and Tablet Mania

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).

Android Outsold Apple in Q4 but App Monetization Is No Contest

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:

  • Apple: 82.7%
  • RIM: 7.7%
  • Nokia: 4.9%
  • Android: 4.7%

This again reflects the relatively poor monetization performance of paid apps in the Android market.

http://touchreviews.net/wp-content/uploads/2011/02/IHS-app-store-top-4.png

 Picture 16

Related posts: 

Group of Nokia Investors Want to Fire CEO Elop for Microsoft Deal

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":

  • Return  the company to a strategy that seeks high growth and high profit margins through innovation and overwhelmingly superior products with unrivaled user experience.
  • Maintain ownership and control of the software layer of the Nokia products. Software is where innovation, differentiation and shareholder value can most easily be created.
  • Avoid at all cost becoming a poorly differentiated OEM with only low margin, commodity products that is unable to attract top software talent and cannot create shareholder value though innovation.

 (Emphasis added.)

Here are some of their proposed "concrete actions" if they're elected to the board (not likely):

  • Immediate discharge of Stephen Elop from his duties as President and CEO of the company
  • Restructure alliance with Microsoft as a tactical exercise focused primarily at the North American market
  • MeeGo will be Nokia’s primary smartphone platform. Increase the lifespan of Symbian to a minimum of 5 years
  • Developer strategy based on Qt with primary focus on MeeGo, but providing a credible developer story for Symbian
  • End of distributed R&D; end of R&D outsourcing
  • Leadership team shakeup
  • Aggressively recruit young software talent from top universities

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.

Mobclix: iPhone Users More Valuable

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:

Picture 27

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: 

Picture 30

Is Apple's Subscription Program Self-Destructive?

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: 

  • Publishers may sell subscriptions to iPhone/iPad apps outside Apple's iTunes. There's no rev share in those circumstances
  • Publishers must, however, make in-app subscriptions available at the same price (or less). If the user comes through the app then there is a rev share to Apple 

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.

iPhone 'Nano' Rumor Upstages Many MWC Announcements

There are already dozens of announcements coming out of Barcelona and the Mobile World Congress. Many of them have to do with new devices (mostly tablets); there are a few acquisitions and partnerships being announced, many carrier-related announcements, some mobile payments activity and many chip and networks-related announcements. 

Several of the highlights include the following:

Last night Nokia CEO Stephen Elop went before reporters to further elaborate upon the Microsoft deal and deny that he was a "Trojan Horse" sent by Microsoft to secure this deal in particular. It also emerged that Nokia will receive "billions" in value from the Microsoft relationship in direct and indirect ways.

Essentially Microsoft appears to have "outbid" Google for the Nokia deal but the scales were also tipped by Nokia's fear that if it adopted Android it would become a commodity producer of Google devices and would have a diluted brand in the marketplace. (Arguably it should have embraced both Windows and Android.)

Intel will apparently go on with development of the open-source MeeGo despite the fact that Nokia has essentially abandoned it. It appears that Intel was blindsided by the Nokia-Microsoft announcement at the end of last week. Effectively MeeGo is now an "also-ran" OS.

Seeking to grab attention and divert it from rivals Apple strategically leaked information to the Wall Street Journal (earlier reported by Bloomberg) that it was developing a "nano" version of the iPhone, somewhat smaller and about 50% cheaper to better compete with Android at the low end. We discussed this last week when the first rumors surfaced. 

According to the Journal:

Apple Inc. is working on the first of a new line of less-expensive iPhones and an overhaul of software services for the devices, people familiar with the matter said, moving to accelerate sales of its smartphones amid growing competition.

One of the people, who saw a prototype of the phone late last year, said it is intended for sale alongside Apple's existing line. The new device would be about half the size of the iPhone 4, which is the current model.

The new phone—one of its code names is N97—would be available to carriers at about half the price of the main iPhones. That would allow carriers to subsidize most or all of the retail price, putting the iPhone in the same mass-market price range as rival smartphones, the person said.

Apple is also considering making its cloud-storage service MobileMe free. Currently it costs $99 per year.

The purpose of the leak was to generate coverage, discussion and speculation about Apple's products during the MWC event and upstage other OEMs that are showcasing their competing devices. Apple has done similar things in the past in conjunction with CES, another show it doesn't attend. 

So far, the strategy appears to be paying off

How Many VZW iPhones Have Already Been Sold?

Search network Chitika launched an "iPhone tracker" showing the distribution of iPhone-generated traffic on its network. In just over 48 hours since its public launch the Verizon iPhone in the US is responsible for 3.6% of the traffic that Chitika is seeing on its network. 

But how many phones is that? Chitika research director Dan Ruby estimated that the traffic was coming from roughly 900K Verizon iPhones. 

The crowds that turned out for Thursday's in-store launch of the iPhone were relatively light. There were several potential explanations, including the weather, the online pre-orders and the prospect of an iPhone 5 this summer.

Many Verizon customers who really wanted the iPhone ordered it online. Verizon said last week that it had "record sales" of the iPhone over the Internet, exceeding previous first day sales totals. 

 Picture 39

AT&T has been doing a number of things to keep its iPhone customers from jumping ship: including rewarding them with 1000 minutes and offering a broad, new free mobile to mobile calling plan. These tactics, combined with general "inertia" seem to be working. 

According to a pre-iPhone launch Forbes article, relying on anecdotal information from electronics reseller Gazelle, more existing Verizon customers appear to be ditching their Motorola Droid phones than AT&T customers defecting to Verizon:

Gazelle, which has retail partners but primarily operates through its website, says it has received thousands of Droids following Verizon’s Jan. 11 announcement. The recent shipments have doubled the volume of Droid phones the company usually gets, according to Gazelle President and Chief Executive Israel Ganot. Droid trade-ins climbed even higher in the past week when Verizon began accepting pre-orders for the iPhone, says Ganot. Gazelle expects the pace to accelerate more once Verizon opens iPhone orders to the general public on Feb. 10.

Gazelle has seen a smaller bump–around 20%–in the number of AT&T iPhones coming in over the past few weeks, says Kristina Kennedy, the company’s senior manager of branding.

While the relentless introduction of new and better Android handsets makes buying one ever more challenging -- the new "flagship" will be out next month -- that sort of thinking may now be weighing on the iPhone. It's hard to know how much the "inside baseball" rumors and tech coverage permeates the public consciousness. But it appears that some people are waiting for the next iPhone.

Certainly I'm not going to buy an iPhone 4 on Verizon when iPhone 5 is probably coming in a few months.

RIM Turns to Android Apps to Compete

RIM is hedging. Its new tablet the Playbook will cost the same as Apple's lowest-priced iPad. Given all the tablet competition however it's going to have a very tough time. RIM is be hoping its enterprise legacy will give the new tablet a leg up among corporations vs. others.

Now in a bid to overcome the weakness of its own apps ecosystem the QNX-based Playbook will reportedly run Android apps. This may help boost the appeal of the device for some people. QNX is to be the basis for BlackBerry devices going foward -- across the board.

What that probably means is that RIM handsets will also eventually run Android apps. In turn that will likely mean the end of BlackBerry's own App World. If developers can gain access to RIM's users by creating Android apps, they'll have no incentive to separately develop BlackBerry apps. Even the perception that Android apps will eventually run on BlackBerry handsets will kill interest in App World. 

A Q1 developer survey from Appcelerator and IDC found flat interest in BlackBerry as a platform (although there was some interest in the PlayBook):

 Picture 34

Now that Microsoft and Nokia are aligned we may see interest in Windows increase because of anticipated market reach. Windows will become a third contender after the iOS and Android. As I said, I assume that BlackBerry as an independent apps platform will go away. 

Picture 35

The embrace of Android apps is like RIM adopting Android without really adopting Android fully. We'll have to wait and see whether it emerges as a half measure, too little too late, or is a shrewd move that enables BlackBerry to remain competitive in the future.

Mobile World Congress: CES Redux

Next week's Mobile World Congress in Barcelona is a gargantuan event that will feature a kind of soup-to-nuts inventory of what's happening in mobile: advertising platforms, developers, carriers and handset OEMs will all convene to promote themselves. The press releases are already flying fast and furious. 

Even though it's not a hardware show exactly, most of the focus will be on handsets and tablets. There will likley be little genuine news of interest and mostly PR about mobile. Probably the biggest news of the event happened today with the announcement of the Nokia-Microsoft deal

Microsoft's Steve Ballmer will keynote but there will be little new information. He will likely re-iterate the new world that Nokia's adoption of Windows opens up for Microsoft. Yahoo's Carol Bartz will speak. Twitter will be represented in a keynote. RIM co-CEO Jim Balsillie will be there. All the chipmakers and carrier CEOs are there.

Everything to say will already have been said in various forums: mobile is huge, disruptive and so on. 

I was actually seeking to go this but the absence of available hotel space thwarted my effort. Nonetheless I'm on the press list and will be receiving all the news. I will be blogging about the things I find most interesting but certainly not providing anything like comprehensive coverage. 

Apple will apparently have no official presence (just like CES) but will cast its long shadow over the event as Europe's most popular smartphone. 

MWC is like a mashup of CTIA (carriers) and CES (devices).

Nokia Makes Its Choice: Windows Phone

All over the technosphere this morning is the news of Nokia's deal with Microsoft: Nokia will compete with the iPhone and Android by using Windows to power its smartphones.

This came as no surprise and had been speculated about for months. Here are the high-level bullets and general outline of the deal:

  • Nokia would adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.
  • Nokia would help drive the future of Windows Phone. Nokia would contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.
  • Nokia and Microsoft would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.
  • Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services.
  • Nokia Maps would be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience
  • Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.
  • Microsoft development tools would be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.
  • Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience.

Nokia chose Microsoft's operating system in part because it was credible and because Nokia CEO Steven Elop is a former Microsoft employee and has a good relationship with the company. He may have also been offered "hundreds of millions" in support from Microsoft (and to not adopt Android):

Most Nokia smartphones run on the much-criticized Symbian operating system. To get Nokia to switch, Google and Microsoft are offering hundreds of millions of dollars worth of engineering assistance and marketing support, according to a person who has done consulting for the company and was told of the talks. 

Android might have been a better choice for Nokia from a consumer standpoint; Android has more traction, more apps and bigger developer ecosystem and so on. However adopting Android would have turned Nokia into "a commodity" provider of Android devices. It would have diluted Nokia's brand. With Windows Nokia can retain some measure of "proprietary uniqueness."

It will be very interesting to see how Asian Windows Phone partners (e.g., HTC, Samsung) react. My guess is that Windows Phones have not sold well for them vs. Android. This move may alienate them somewhat. I'm speculating. 

The Nokia-Microsoft deal is probably better for Microsoft than it is for Nokia as my comments above suggest. However the interests of the two companies are well-aligned; they sink or swim together. I suspect, in the end, this will marginally boost Windows' share of the smartphone market and will arrest Nokia's slide to some degree. 

I doubt whether it will be the "game changer" that both companies are looking for however. 

Related stories:

'Facebook Phone' Surfaces: INQ Cloud Touch

The new INQ "Cloud Touch" is getting a lot of play today. Unveiled yesterday this is an Android-based Facebook-optimized phone. INQ is a subsidiary of Hutchison Whampoa, which is based in Taiwan. HTC is also planning to introduce an Android phone that has a higher degree of Facebook integration.

INQ previously released a line of "social mobiles" that were social-networking optimized handsets. The Cloud Touch is the next generation of that line with an emphasis on Facebook in particular. 

What's most interesting to me from the video I've seen -- I haven't held the device in my hands -- is that the phone offers a new interface for Android and thus stands out from among the scores of generic-looking Android phones now in the market. It's the first really interesting new Android interface (Motorola's Motoblur and HTC's Sense interface are basically worthless).

According to the Financial Times, "users will only have to sign in to Facebook once, when setting up the device, allowing their credentials to be used automatically by third-party applications." That will help create some interesting user experiences; Facebook recenty introduced single sign-on for mobile. This is removes friction but also creates potential privacy issues. 

The Cloud Touch is also like Flipboard in a certain way in that it points to and reflects the media, links and content that are being shared; it's not all about the Facebook interface. The handsets also integrate streaming music service Spotify, which isn't in the US and may never be because of rights issues. 

The new handsets are coming to the UK market later this quarter (and probably Canada) but there's no word on a US release date. 

 Picture 2

The Android apps interface is in most respects a knock-off of the iPhone interface -- all touch-screen smartphones now in the market are derivative of the iPhone -- but this interface is innovative. It may mark the beginning of true differentiation among Android handsets. 

I suspect the INQ Cloud Touch will be quite popular when it's released. 

Related posts:

HP Should Open-Source WebOS

From the time that Palm introduced WebOS and the Pre to the point at which HP bought the company many developers and those with technical knowledge that exceeds mine said that WebOS was the only other smartphone OS that was truly competitive with Apple's. Android has since continued to improve, however.

HP promised tablets and new smartphones, based on WebOS, this year. However none of them have emerged to date. Meanwhile Palm's market share continues to decline. Soon Palm could simply be irrelevant, unless the promised tablet is magnificient (capital G) and rises above other non-iPad tablets. 

Palm was at a disadvantage vs. the iPhone because it failed to line up developers ahead of time or appreciate the critical nature of apps to the mobile user experience. The lack of apps and some poor hardware choices doomed the Pre and Palm simply never recovered. 

Now I think that HP should open-source WebOS and make it an Android competitor. HP is unlikely to do that given that the company spent $1.2 billion on Palm -- mainly for WebOS. However the market wants a viable Android competitor, especially one that's open source and I think it could be quite successful for HP in longer-term ways. It would be easier to build an ecosystem for example. 

As I said I don't think it will happen but I think it's probably the only way to save Palm/WebOS from total obscurity, unless HP surprises with some absolutely stellar devices. But I won't hold my breath. 

T-Mobile Fights iPhone with Free Phones

Third place carrier Sprint is introducing the mutant Kyocera dual-screen Android phone in a bid to offer the market something new and unique and capture some attention. And T-Mobile is once again offering free handsets with a two-year contract. The company successfully did this before but has timed the promotion to try and preempt some Verizon iPhone switchers.

According to the T-Mobile release: 

On Friday, February 11 and Saturday, February 12, all T-Mobile phones, even the fastest 4G smartphones running on America’s largest 4G network, will be offered for free at T-Mobile retail stores with qualifying plan on two-year contract. 

The company has also enlisted "New York Times best-selling author and TV personality Khloé Kardashian" to help promote the offer, which includes the following phones: 

  • myTouch 4G
  • HTC HD7 (Windows Phone)
  • G2 with Google
  • Samsung Vibrant

Picture 4

T-Mobile is the smallest of the four major US carriers, with about 34 million subscribers:

  1. AT&T: 95 million
  2. Verizon: 94 million 
  3. Sprint: 49 million
  4. T-Mobile: 34 million 

The company is stuck in fourth place. Giving away free smartphones is not really a growth strategy; it's more of a PR stunt that will generate a short-term spike in interest and subscriptions. Long term growth will require a combination of true 4G network investments, agressive data and voice pricing and access to the iPhone eventually. 

We'll see how well the "America's largest 4G network" claims went over in Q4 when the company reports earnings later this month.

Big Changes in Store for Nokia, Maybe RIM

Over the past few days there have been a flurry of articles and speculation about changes that may be coming to Nokia, as soon as the Mobile World Congress in a week:

Last year Microsoft and Nokia announced an alliance and now, with both companies struggling in mobile, it appears that alliance will become deeper and more strategic, with the world's largest handset maker adopting Windows for some or all of its new high-end smartphones.

I had anticipated that Nokia would build some Android phones for the US market and possibly Europe. But the Microsoft move is more logical given that Nokia CEO Stephen Elop is a former Microsoft executive himself and given the fact of their existing alliance. 

Microsoft's new OS is nicely designed (except for the home screen in my view) but lacks visbility and momentum. Being on Nokia handsets could bring both almost immediately or very quickly. There's also the risk that such a move would fail to halt Nokia's slide or sufficiently boost Windows. 

 Picture 13

Right now the iPhone and Android are absolutely sucking all the consumer attention out of the room for everyone else. It's still possible that Nokia would put out an Android phone or two beside Windows Phones; however Microsoft might try and prevent that as part of any strategic deal between the two. The enemy of my enemy is my friend.

One widely discussed scenario is the outright purchase of Nokia by Microsoft. The former is now worth just over $41 billion -- a costly pill to swallow. However the acquisition of Yahoo would have been worth $44 billion. So Microsoft is not above using its balance sheet when absolutely necessary.

Yet an acquisition would probably be unnecessary if a strategic alliance that put Windows on Nokia smartphones advanced penetration for the operating system. 

For its part RIM will also be compelled to do some radical things to reassert itself.

Its new QNX operating system on the Playbook tablet and later BlackBerry handsets will apparently be able to run Android applications helping RIM play catch-up on the apps front. However embracing Android apps will likely mean the end of the company's own BlackBerry App World; why would developers focus on it when Android apps could reach BlackBerry users?

Does the move to embrace Android apps also suggest that RIM will put out an Android handset? Probably not; RIM will likely maintain its proprietary OS in the wake of the QNX and TAT acquisitions. Regardless, RIM may continue to struggle and will probably see tablet sales disappoint vs. the iPad, Samsung,  Xoom and several others as the tablet market becomes increasingly "noisy." 

Google: Click2Call Ads Generating 'Millions of Calls'

Last Thursday was Google's earnings call. The remarkable $8.4 billion dollar quarter was totally overshadowed by the news that CEO Eric Schmidt was being replaced by co-founder Larry Page. I was immediately consumed by that news and its implications for the company.

I'm "circling back" now to revisit the earnings call. There were interesting details revealed in the Q&A about the state of things on the local and mobile fronts for Google. Here are some selected excerpts (emphasis mine).

Product SVP Jonathan Rosenberg:

In Local, over 5 million businesses have claimed their Google place pages. And we recently started testing a new ad product, which we called Boost, and that gives businesses a really easy and fast way to promote themselves online and to connect with the people who are searching for them . . .

I think it's probably easier to talk about initially how tablets and smartphones are similar, right? Both of them are growing at a terrific pace. As is the case of Mobile, what we see on these devices is that search usage on the tablets tends to peak on the weekend and it dips on the weekdays, so it's generally complementary to desktop, which we've talked about before. What does that suggest? Maybe, the people are using them more for personal usage as opposed to business. We do see on tablets the weekend peak is a little bit more pronounced than it is on phones. I think that's probably the case because people pretty much always carry their smartphone during the week. Some of the bigger differences, the tablet users tend to search more for things like news and they tend to do more shopping-related topics when you compare them to smartphone users.

Sales SVP Nikesh Arora:

The other thing we've done in Local is the way I think local is sometimes synonymous with smaller advertisers and smaller territories. And towards that end, we have created the most simplistic set of products around Tags and Boost, which is more amenable to the advertisers. They don't have to do a lot of work. Sometimes they don't even have their own websites

Product SVP Jonathan Rosenberg:

[The] Click-to-Call ads are generating millions of calls every month. A lot of advertisers are running these campaigns. I think one you can see if you tried is DirectTV. We did launch a call-only option where the only clickable link in the ad is actually a phone number, which not surprisingly substantially increases the click through rates on mobile devices. And we've extended some of the desktop formats pretty successfully to Mobile. Sitelinks is one. If you try a query on Oakley, you'll see one, if you seller ratings on something like running shoes . . . At the moment, I don't have any specific comments on NFC other than to go back to the statements that I've made in previous calls, which is when people are completing transactions with these devices, it becomes much more trackable and obviously significantly more valuable.

Facebook Pushes Growth on Feature Phones with New App

Facebook is the top free iPhone app of "all time" (so far). The site is also the top site or the number two site in most countries around the world according to Opera's regular reporting. The company has more than 200 million mobile users who are the most active of Facebook's more than 600 million global members. According to the most recently published public numbers from the social network:

  • There are more than 200 million active users currently accessing Facebook through their mobile devices
  • People that use Facebook on their mobile devices are twice as active on Facebook than non-mobile users
  • There are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products 

Facebook also operates the "0.facebook.com" site to reach users on non-smartphones. But yesterday Facebook announced a new feature-phone app from Snaptu. The idea is to drive global penetration and usage even further, recognizing the strategic importance of mobile to the future of the business.

Smartphones will be in the majority in the "West" across the board at some point in the next five years. But around the world, inexpensive feature phones or not-quite-smartphones will remain dominant for the foreseeable future. This new app will help provide a better user experience than the 0.facebook mobile Web/Wap experience. 

Simultaneously Facebook is reportedly working with mobile-handset manufacturer INQ Mobile Ltd on a couple of Android-based quasi-branded smartphones. Facebook also recently launched Connect and single sign-on for mobile phones. In short the company is trying to penetrate and conquer the entire mobile ecosystem from top to bottom, from apps to hardware. 

What it doesn't (yet) have is mobile advertising. This will come without question. And when it does, Facebook will be largest mobile ads network/platform on the globe. 

Related posts: 

Appcelerator 'Tools Up' with Aptana Acquisition

There’s a recombinant quality to the platforms that mobile developers can employ to build new applications and services. A case in point is Appcelerator’s acquisition of Aptana, which represents a definite upgrade by adding an “integrated development environment” (IDE) specifically for Web applications.,

Appcelerator has already lured over 1.5 million developers to use its flagship Titanium “enterprise-grade, cross-platform development solutions” to power more than 10,000 apps – which run “natively” on the most popular smartphones (meaning Apple’s iOS and Android-based devices) and desktop (meaning MacOS, Windows and Android). The acquisition of Aptana anticipates a shift from a three-tiered approach (where apps running on devices interact with apps and data residing “in the cloud”) to a two-tiered approach where apps running in the cloud are delivered “as a service” to mobile subscribers though a browser (most likely conforming to HTML5).

The rest of this post is on the Opus Research blog

People Are Scanning but Are They Succeeding?

Scanning and image-based input are great, but we're still in the "1.0" era. Scanning works well only part of the time for me and that's what I hear from others as well. Often the scanner can't get a fix on the code or if it does there may not be any data to provide an answer. Yet lots of people are scanning away, according to data released by Scanbuy.

The underlying scanning technology is open-source and it's getting better. Plus the datasets are improving too. In a couple of years the promise of visual search and barcode scanning will be realized I'm sure. For now it's a mixed experience at best.

In the meantime here are some of the more interesting data from the latest ScanLife Mobile Barcode Trend Report:

 Picture 11

Picture 13

Picture 12

Barcode scanning will very soon be a commodity; so features and data will become the critical differentiators among scanning apps.

AdMob Now Seeing 2B Daily Ad Requests

Now that AdMob is part of Google we're not getting the great monthly data and reports that we used to see from the company. But Google has just put out some new data on impression growth. The headline (literally) is that AdMob is seeing 2+ billion ad requests per day (on a global basis).

Here's more: 

  • Ad requests have grown 4X in the past 12 months
  • More than 100 million unique Android and iOS devices requested an ad each month, nearly doubling over the last six months.
  • Nine countries in the AdMob network generated more than a billion monthly ad requests in December 2010, up from just one country a year ago.
  • The strongest regional growth in monthly ad requests over the past year has come from Asia (564%), Western Europe (471%) and Oceania (363%)

Google previously said that it had a $1 billion mobile advertising run rate. I did a quick analysis of how that billion might break down, assuming that mobile ad revenues were distributed along the same lines as paid-search revenue generally speaking.

IDC's revised US mobile ad numbers show Google as totally dominant over the rest of the field in terms of market share.

  • Google: 59%
  • Apple: 8.4%
  • Millennial: 6.8%
  • Yahoo: 5.6% 
  • Microsoft: 4.3%
  • Other: 15.9%

These figures below include search, which is 56% of mobile ad revenue in the US according to the firm. Almost none of the competing mobile ad networks and platforms have search ad revenue, which is why it's so lopsided in Google's favor. Just looking at display the IDC numbers look somewhat more balanced:

  • Google: 19%
  • Apple: 18.8%
  • Millennial: 15.4%
  • Yahoo: 10.1%
  • Jumptap: 8.4%
  • Microsoft: 7.8% 
  • Others (including AOL, Nokia): 20.5%