Other Mobile Devices

Tablets Cannibalizing PC and Laptop Usage

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:

  • Playing games (84%)
  • Searching for info (78%)
  • Email (74%)
  • News (61%)
  • Access social networks (56%)
  • "Consuming entertainment" (51%)
  • Shopping (42%)
  • Reading "ebooks" (46%) 

 Picture 27Picture 29

Picture 30

Picture 32

Seven-Inch HTC Flyer Tablet Poised for Takeoff

The 7" Samsung Galaxy Tab is the best-selling non-iPad tablet to date and it's basically a flop. Samsung inflated sales numbers and then had to recant when confronted by press. Apparently Motorola's much-hyped, full-sized Xoom is flopping too. One estimate argues that the tablet has sold only 100,000 units so far.

Samsung is due out with a next-gen 7" and 8.9" set of tablets. However their release dates are uncertain (later this year).

Meanwhile the 7" HTC Flyer, which will be available from Sprint (as the EVO View), is coming out in the next couple months. It will feature Honeycomb (rather than Gingerbread like the Tab) and uniquely has a pen/stylus that allows users to annotate screen captures. The pen feature is both interesting and awkward. I've only seen demos but not used it myself.

Apple has said it's not ceding any product category to competitors. But the 7" (or smaller than 10") tablet segment is where Apple has no product (though rumors persist) and where Android's tablet-related deficiencies are less obvious and compensated for by the more "mobile" nature of the form factor. 

I predict the Flyer/View will be a success. However much depends on pricing.

Consumers generally don't want to buy additional data plans from carriers for their tablets, but non-subsidized pricing makes these smaller devices more expensive than the WiFi iPad. The right "unlocked" price for the 7" device is $299. But that's likely to be the two-year contract price -- unfortunately. 

Related posts: 

Average CTR on Mobile 5X Higher than PC: Report

Investment firm Macquarie captured a bunch of mobile data presented, in part by Google, during and an AMA sponsored webinar on the mobile paid
search market. Most of this has been released or mentioned before but it's a nice collection of stats pertaining to mobile search and the mobile market in general: 

  • Google projected that 15%-30% of site traffic will be from mobile within 18 months  (me: Yelp has already said its number is 35%)
  • Mobile-only campaigns saw 11.5% higher CTRs vs. PC campaigns; CPCs were 30% lower on mobile vs. desktop but CTRs 5x higher (me: this isn't true across the board)
  • 33% of mobile queries have "local intent" (per Google, MSFT: 53%) 
  • After searching for a local business on a smartphone, 61% of users called the businesses and 59% visited the business
  • Tablet conversion rates are equal to or higher than desktop and tablet users spend 50% more than PC users (eBay/Shopatron research)
  • Tablet conversion rates are equal to or higher than on PCs (eBay/Shopatron research)

Picture 56

Google's NFC Payments Push Not Just about Payments

The Wall Street Journal is reporting that Google has joined forces with MasterCard and Citigroup (in addition to POS provider VeriFone) on NFC and mobile payments. This follows up on a Bloomberg story last week about Google and VeriFone launching a limited test of NFC-enabled payments in which Google was paying for the installation of new POS hardware at selected stores:

The company will pay for installation of thousands of special cash-register systems from VeriFone Systems Inc. (PAY) at merchant locations, said one of the people, who requested anonymity because Google’s plans haven’t been made public. The registers would accept payments from mobile phones equipped with so-called near-field-communication technology.

According to the WSJ story, the Google effort is about much more than developing mobile wallets. It's equally about consumer analytics and ad targeting:

The Internet giant is aiming to make mobile payments easier in a bid to boost its advertising business. The planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores, these people said. Google isn't expected to get a cut of the transaction fees.

The project, which is in its early stages, would allow holders of Citigroup-issued debit and credit cards to pay for purchases by activating a mobile-payment application developed for one current model and many coming models of Android phones. The idea is to turn the phones into a kind of electronic wallet.

These phone users also would be able to get targeted ads or discount offers, which Google hopes to sell to local merchants. They also could manage credit-card accounts and track spending through an application on their smartphone, the people said.

While advertising or couponing based on consumer purchase history is nothing new in the "offline" world, this "closed loop" capability would raise major privacy concerns simply because Google is involved.

The WSJ cites a Federal Reserve report (citing third party data) that estimates an existing infrastructure of 70 million "contactless devices" (cards) and 150,000 readers in the US. The WSJ report also says that Wal-Mart confirmed that it had discussions with Google about NFC payments but didn't say anything beyond that.

There's lots of jockeying for position right now among carriers, credit card issuers and to a lesser degree hardware makers as everyone tries to line up to get a piece of what is expected to be a very substantial mobile payments market. 

More stories about mobile payments:

RIM Readies Playbook Launch for April 19

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. 

Mystery: Galaxy Tab a Top Android Device on Millennial's Network

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:

  • The VZW iPhone "represented 4.5% of all U.S. iPhone impressions on our network in the first two weeks following the launch"
  • Samsung's Galaxy Tab appeared as a "Top 30 Mobile Device," the first Android "connected device" on the chart
  • In terms of tablet's/connected devices more broadly Apple's iOS had 80% of the impression share; Android had 17% 
  • Android is the largest Smartphone OS on Milliennial's network for the third month
  • The iPhone remains the top single device followed by the iPod Touch

Picture 35

Moving on, there are a number of interesting observations to be made from the "Top 30 Mobile Devices" chart below.

Picture 36

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. 

Picture 37

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. 

Nearly 50% Get Local News on the Go

According to Pew, based on a new survey (n=2,251) that is part the 2011 State of the News Media Report, "nearly half of all American adults (47%) report that they get at least some local news and information on their cellphone or tablet computer." This is not a surprise and confirms earlier survey data from multiple sources, including earlier Pew data.

News is one of the leading mobile content categories and breaking news in particular is accessed via mobile increasingly. For example, according to a 2010 Handmark survey (n=300,000):

Mobile has pulled ahead of the desktop web as the preferred medium to access breaking news information. More than 30% of respondents surveyed feel mobile is the most important medium to access breaking news, compared to 29% who prefer the desktop web, 21% who prefer television, and a mere 3% who chose newspapers as their the most important medium for breaking news.  

Screen shot 2011-03-14 at 10.17.02 AM

The broad takeaway from the Pew findings is that news distribution and consumption is increasingly digital and it's never going back. Indeed, when respondents were asked, “If your local newspaper no longer existed, would that have a major impact, minor impact, or no impact on your ability to keep up with information and news about their community?” they said the following:

  • 28% said the loss of the newspaper would have a major impact on their ability to keep up with local information
  • 30% said the loss of the newspaper would have a minor impact
  • 39% said the loss of the newspaper would have no impact

In other words, 69% said there would be little or no impact from the loss of the print newspaper in their lives. This is because they've replaced print with digital and mobile access to news.

Screen shot 2011-03-14 at 9.43.31 AM

On the issue of paying for digital news, a sizable minority are willing to do it but they're still in the minority: 

  • 23% of survey respondents say they would pay $5 a month to get full access to local newspaper content online
  • 18% said they would pay $10 per month
  • Only 5% currently pay for online local news content
  • Overall 36% of adults say they pay for local news content in some form (including print, online, mobile) 

Screen shot 2011-03-14 at 10.17.13 AM

Over the weekend Apple reportedly sold nearly 1 million iPad 2 units. Tablet penetration will only fuel and accelerate the trends identified above.

There's quite a bit more data about usage and the demographics of local-mobile news readers. You can read the full report here.

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." 


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).

As Tablets Hit the Market Casualties to Mount

Several of the eReaders have already "gone down." Most prominently the Plastic Logic's Que eReader was killed last year following the success of the iPad. (Kindle will probably be the lone, surviving eReader when the dust clears.) Now the highly funded and much-hyped dual-screen student tablet the Kno appears to be headed in the same direction. According to a report in AllThingsD:

Kno–the much-funded and high-profile Silicon Valley start-up aimed at making tablet computers focused at students–is considering selling off the entire hardware part of the business and is in talks with two major consumer electronics manufacturers to do so, according to sources close to the situation.

The company behind Kno is now going to focus instead on software for the iPad and presumably Android tablets -- if they catch on. The enterprise is a bit of a greener field than the consumer market. An article in the NY Times Sunday discusses how many of the iPad's rivals will try to win the enterprise as a differentiation strategy:

Companies as diverse as General Electric, Wells Fargo, Mercedes-Benz and Medtronic are putting Apple’s iPad to work in their offices. And as a string of devices tailored for the office enters the market — from the likes of Motorola, Research In Motion, Samsung and Hewlett-Packard — tablets are all but certain to flood America’s workplaces . . .

The new tablets are also expected to give the iPad, which has had the market largely to itself, a run for its money. R.I.M., which makes BlackBerry phones, and H.P. have long relationships with corporate technology buyers. For its part, Apple is hoping to stay ahead of competitors with a new version of the iPad, which may be unveiled as soon as next month . . .

The company, which sold nearly 15 million iPads in the nine months after the release of the device, won’t say how many were bought by businesses. But during a conference call with investors and analysts in January, the company said more than 80 percent of Fortune 100 companies were using or testing the iPad, an increase from 65 percent three months earlier. Among those companies, said Peter Oppenheimer, Apple’s chief financial officer, are JPMorgan Chase, Sears Holdings and DuPont.

It's very difficult to know at this point which of the iPad rivals will succeed. But at the end of the year we'll have a much better sense of the viable non-iPad tablets. HP-Palm has produced a very iPad-like device (pictured). It's targeted to the enterprise. The RIM PlayBook will also get a look from enterprises (though probably not consumers) and Samsung and Motorola's (and maybe LG's) Android tablets will be taken seriously in the enterprise if not by consumers. 

Other than the RIM PlayBook, most of the iPad's competitors are priced higher -- putting them at a disadvantage as new market entrants. I'm guessing there will also be some very inexpensive, $300 Chinese-made Android tablets that catch on mainly because of their price. The market probably has room for three to five successful full-featured tablets (both consumer and enterprise markets) and probably a couple of really cheap ones. There will be two form factors: 10" and 7".  

I also believe that at some point this year we'll see a tablet based on the Windows Phone OS. I'm guessing here but stubborn insistence that tablets can equally run Windows 7 is likely to mean that Microsoft will be completely shut out of this new computing platform. The company will probably recognize that in Q3 this year. 

Xoom Tablet Priced Way Too High

Previously it appeared that Motorola's Xoom tablet would cost $800, arguably too expensive vs. the iPad and others such as the HP-Palm tablet. But now Engadget seems to have found a BestBuy ad that indicates the Xoom may retail for $1,199. What?

If that pricing is acurrate it's a major strategic blunder for Motorola. No matter how fast/cool/sexy Xoom is, it won't move many units when iPad 2 is available. iPad remains "the brand;" Android tablets are insurgents that have to establish superior value and utility before they win customers. 

With pricing at over $1K, Motorola won't be winning too many consumers over -- regardless of how interesting their advertising may be.



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).

HP-Palm Announcing New Devices: Phones, TouchPad

Today is Palm's new device coming out day. Palm just announced its 9.7" TouchPad, the Pre3 and the Veer, a tiny credit-card sized phone with a slide-out keyboard. The TouchPad looks really nice but the Veer is probably the thing that will grab the most buzz.

The Veer looks slike a cross between the Pixi and the Pre. The Veer has a browser, runs Flash, has a 5 megapixel camera. It can also operate as a WiFi hotspot. (This will be a standard smartphone feature going forward.)

 Screen shot 2011-02-09 at 11.30.32 AM

There's more discussion of the new products and their specs on Techmeme. These devices look really cool, especially the Veer. The TouchPad is nearly identical in appearance to the iPad. 

Screen shot 2011-02-09 at 11.00.29 AM

Pricing will be critical to the success of these new devices. Earlier today I argued that HP should open-source Palm. The success or failure of these products will prove me right or wrong on that call. 

Update: The Veer turns out to be a mini-Pre for people with tiny hands and fingers. 

Motorola Xoom Pricing Too High at $800

Fresh off its $3 million Super Bowl ad that parodies Apple's famous 1984 ad and ridicules Apple's legions of buyers as anonymous drones, the Motorola Xoom tablet is set to go on sale at Best Buy on February 24 for $799. The device has two cameras and "can be upgraded to 4G." Data plans are extra. 

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. 

Picture 31

Aside from the few features Xoom has that iPad doesn't have (except Flash, to be equaled or bested by iPad 2), people are generally going to buy an iPad over a Xoom.

The Android OS that Xoom is based on, Honeycomb, is a dramatic improvement over Gingerbread, which the Galaxy Tab uses. However Honeycomb's features mostly play catch up with the iPad from what I can tell vicariously. Flash, however, matters more on a tablet than on a smartphone; that may be a selling point for Xoom. 

Again, we'll see what the initial demand and sales are after February 24 when the device finally hits the market. 

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." 

What Does the Galaxy Tab's Success Say about the Outlook for Android Tablets?

Very little; it says more about the popular size of the Galaxy Tab (7") than anything else. I have now used the Samsung Galaxy Tab multiple times. The device is clearly inferior to the iPad. But Samsung has sold over 2 million units, despite this inferiority and pricing that put the device about $100 above what it should cost.

New data from Strategy Analytics now asserts that Android tablets have 22% of the overall tablet market; most of this is the Galaxy Tab: 

Android devices captured 22 percent of global tablet shipments in the three months to Dec. 31, up from 2.3 percent in the preceding quarter, the Boston-based researcher said in a statement today. The iPad accounted for 75 percent of shipments in the period, down from about 95 percent, it said.

Apple’s iPad, which has sold more than 14.8 million units worldwide since its introduction in April, faces intensifying competition from Android tablets made by Samsung Electronics Co., Motorola Mobility Holdings Inc. and Acer Inc. Google gives away Android for free to boost revenue from services such as mobile advertising and expand the market for its search engine.

I've argued that the success of the Galaxy Tab is about its size and that Apple is leaving a hole for competitors in the 7" tablet category. Cupetino has criticized the 7" tablet as offering a poor user experience because of the smaller screen. But people want more portable tablets and 10" is too large to "walk around with." Data show that most iPads are used at home. 

Motorola's Xoom tablet is set to direclty take on the iPad with a 10" screen and Android 3.0 (optimized for tablets). Like Android phones, there may be technical capabilities that improve upon the iPad (more RAM, dual-cameras) but it's hard to image the holistic experience being better -- especially given how inferior the Galaxy Tab is. One concession on my part: the absence of flash on the larger screen device is more of an issue than on smartphones with their smaller form factor. 

As with Android smartphones there will be scores of Android tablets in the market by Q4 of this year. Most of them will be poor imitations of the iPad but one or two of them may be bona fide competitors. In the "nano" category the field is more wide open as I mentioned. 

Price and size will be the drivers of Android tablet success (or failure). Cheap tablets will succeed and really sophisticated competitors to the iPad may also sell well if priced well. My belief, however, is that Apple is leaving money on the table without a smaller iPad -- unless it builds a larger screen iPod Touch or iPhone. I suspect we'll see one from the company next year, especially if Android sales continue to gain strength. 

Update: the Samsung Galaxy Tab sales figures are bogus. Plus: Galaxy Tab has high returns rate.

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.

How Many iPads Will Apple Sell This Year?

In 2010 Apple sold 14.79 million iPads around the world. The iPad is now available in 46 countries. It started the year as a US-only product. According to IDC estimates Apple controls almost 90% of the tablet market at the moment, while the stand-alone eReader market is somewhat more competitive with Amazon controlling just over 40%.

There are lots of estimates out there, some very large, about how many tablets will sell in 2011. Also entering the market this year are Android 3.0 tablets (e.g., Xoom), a WebOS tablet and the RIM Playbook, among others. So the market will be full of choices. Price will be a driving factor of purchase decisions, so will size in a number of cases. I've argued that the smaller 7" segment is up for grabs because Apple has declined to offer an "iPad nano."

IDC is projecting 44.6 million tablets will be shipped/sold in 2011. On a global basis that number could turn out to be low. It's very likely that Apple will sell between 25 million (on the low end) and 35 million (on the high end) iPads by the end of 2011. If the IDC global tablet projection is correct and I'm not wildly off then Apple would have between 60% and 80% of the tablet market at the end of this year.

I can't comment on the viability of the WebOS tablet or the RIM Playbook, neither of which I've used. However, unless relatively less inexpensive (sub-$500), it's unlikely that Android tablets will make significant inroads (beyond 15%-20%) in the 9-10" tablet category. Where they're likely to sell well is the 7" category. Running Flash is not going to be a significant competitive advantage for Android tablets. 

It's worth mentioning that the Playbook is a 7" device, which gives it an opening it might not have had as a 10" device.  The iPad2 is rumored to be on the way in April. 

RIM Buys Usability and UI Shop TAT

Although many will disagree, one of the great weakness of the BlackBery universe is the UI and overall user experience. I'm sure no one could successfully argue that on other than the keyboard front RIM beats the iPhone or even Android at this point.

To remedy that RIM has acquired interface design and usability experts The Astonishing Tribe. The purchase price wasn't disclosed.

It's an important -- even urgent -- move for RIM in the company's bid to remain one of the top smartphone purveyors and grow their business internationally. There are mixed signals about RIM's sales performance and outlook.

Screen shot 2010-12-02 at 9.37.24 AM

Generally speaking the company is on the defensive and not expected to maintain its leadership position in North America -- although one report found that RIM devices had overtaken iPhone on the mobile Web in the US. I remain quite skeptical of that however. 

Regardless this is a good move for RIM. Now Waterloo needs to give TAT maximum flexibility to design next-gen user experiences for the venerable platform. 

600K Units: Galaxy Tab Off to Decent Start

The Galaxy Tab, the first viable Android tablet, is to the iPad as the first Android handset was to the iPhone: clunky and awkward in most respects. If the iPad didn't exist it would be pretty impressive. However the iPad does exist and the Galaxy Tab is inferior in almost every respect. What's compelling about it is its 7" size. 

On a global basis, it has apparently sold 600,000 units, which is pretty good -- and enough for Samsung to trumpet initial sales as a success. Subsequent versions will be better. 

Another "problem" with the Galaxy Tab is its price; it's at least $100 too expensive. At $600 for an unlocked version it just doesn't make sense when a larger and more functional iPad is $100 cheaper. 

For the holidays it will be the Galaxy Tab vs. the iPad; it doesn't appear that there will be many more tablets out in time. But next year, just as with Android handsets, there will be dozens and dozens of new tablets of different sizes. Once Android becomes "tablet-ready" they should become more competitive with the iPad. 

One interesting question to consider -- because there's clearly demand for a smaller tablet -- is whether Apple will build one. It has publicly said that the smaller form factor compromises the user experience too much. But if these smaller tablets take off there may be pressure to compete at that level. 


The RIM Playbook is due out in Q1 next year. My sense, despite its capabilities, is that it will have limited consumer appeal.