Consumers Have New-Phone Envy, iPhone Top Device

No matter what "flagship" Android device you have it will be obsolete in three to six months. Today's Android flagship is the Samsung Galaxy II, with impressive specs and performance. 

But there will be another more powerful handset by Thanksgiving. 

The competition among the group of OEMs releasing Android handsets -- Samsung, Motorola, LG and HTC chiefly -- is intensifying to the point where bigger and better Android devices are being released at least quarterly. Electronics site Retrevo said that it "counted more than 120 new smartphones from major vendors over the course of about a year."

Most of these are new Android handsets. 

Yet US carriers (other than Sprint) only permit upgrades once every two-year contract cycle. Sprint allows annual upgrades for "premier" high value customers. But generally the hardware releases are coming much faster than consumers are permitted to upgrade.

Retrevo asked its users whether they felt their smartphones were obsolete, given the pace of new handset releases. A large majority (62%) said yes. However, asked if they wanted to pay more for handsets to be permitted to upgrade annually, most said they would not. About 23% said they would pay either $100 (19%) or $200 (4%) for the privilege.  

Meanwhile NPD Group today issued a report that said Apple, buoyed by the success of the Verizon iPhone, became the "third-largest handset brand in the U.S., behind Samsung at 23 percent and LG at 18 percent." The iPhone 4 was the top-selling handset in the US despite the fact that Android handsets collectively outsold it and accounted for 50% of all US smartphone sales in Q1 2011.

According to NPD in Q1 here are the top-selling handsets in the US:

1. iPhone 4
2. iPhone 3GS 
3. Motorola Droid X
4. HTC EVO 4G
5. HTC Droid Incredibe

NPD also reported that RIM "lost ground, falling 5 points, to 14 percent" of sales. RIM confirmed that it is indeed losing share by issuing new financial guidance, saying that smartphone sales will be at the "lower end of the range." 

Mobile Shopping More Popular than on PC?

Yesterday ad network InMobi released preliminary data from a multi-country, 15,000 mobile user study, which found that shopping on mobile devices is now preferred to shopping on PC. 

InMobi said "half of shoppers still prefer hitting the stores (49%) but over a third are now comfortable with shopping from their pocket (35%) and only 16% prefer shopping from their PC or laptop." I have some skepticism about these figures and will seek out more information. 

The reason I say this is that only a small number of retailers and other enterprises have apps and/or have optimized their sites for mobile. The experience of looking at a PC website on a mobile phone is less than optimal and can be extremely frustrating. Companies such as Amazon and Target are exceptions to the larger rule that most retailers and companies generally are lagging consumer smartphone adoption and usage trends. 

According to the InMobil data, here are the most popular purchases from mobile devices in the US:

InMobi predicts the value of mobile commerce to grow to $9 billion in "the coming year." Google recently found that the median price of goods purchased via smartphones was $300. 

Tablets were not explicitly discussed in the release but I'm going to get some visibility on the research and see if tablets are in the study somewhere and, if so, where they may fall. I would imagine that tablets generate the highest satisfaction levels. I would have expected PC to then follow and lead mobile for the reasons I mentioned. But I'm going to follow up with InMobi to learn more. 

'Galaxy Player' Samsung's Most Appealing 'Tablet'

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. 

Android Free Apps Now Exceed Apple & How Many Apps Are Enough?

The lastest Distimo app store report for March raises the question: How many apps are enough? RIM has in excess of 26K applications, yet it felt compelled to embrace Android with its Playbook tablet because it didn't have enough apps to compete. While RiM can't market or brag about the number of apps it has compared with Android and iPhone it's probably more than enough as a practical matter. 

I attended AppNation yesterday, a conference substantially devoted to "app discovery." As everyone reading this knows, app discovery and app marketing has become a big challenge -- made more acute by the increasing number of apps. Therefore in some ways one might think "less is more" for both consumers and developers. 

The app stores have become a bit like search engines in several respects. Only the top-level/first page/top 10 are going to see download volume -- much like people only look at the first page of Google results. And several years ago Google and Yahoo were trading claims and arguing over who had "the biggest index" of pages. 

Who has the biggest app store has been an analogous discussion. Apple has been far ahead of everyone else. However no longer. 

According to Distimo, Android now has more free apps than iTunes. Distimo says the "Android Market eclipsed the Apple App Store for iPhone in terms of free applications and now has 134,342 free applications, while the Apple App Store iPhone has 121,845 free applications."

It remains to be seen whether Google seizes on this and tries to score some PR or marketing points against Apple on behalf of Android. From a developer perspective, the story is very different as Android developers continue to struggle to monetize apps other than through advertising.

Recently Appcelerator exposed some of the developer concerns surrounding fragmentation in the Android ecosystem:

The following chart reflects Distimo's growth projection for each of the app stores. The firm sees Android catching the iPhone later in the year. Although with iPad factored in Apple still has a comfortable lead over Google.

As the chart indicates, however, the lagging platforms (Windows, RIM, Nokia) still have quite a few apps. When it comes to actual usage most people have fewer than 50 apps on their phones (per Nielsen). Theoretically then the numbers in the bottom three app stores are more than sufficient to actually satisfy consumers, provided that key apps (e.g., Netflix, Yelp, etc.) are present. 

The Key to Nook's Tablet Success: Its Price

Barnes & Noble's Nook eReader is becoming a more tablet-like device with an update to Froyo, better web browsing, email and third party apps. The 7" eReader is already a success but it could become one of the most successful Android tablets because of one particular feature -- it's $249 price tag.

General consumer audiences will be reluctant to spend $499, the entry level iPad price, on smaller (and otherwise inferior) tablets. The 7" Playbook, for example, starts at $499 and the Motorola Xoom was a flop in part because of its higher entry level price tag. 

However the $249 price tag for Nook is incredibly attractive. And as Nook becomes a more full-fledged tablet more people will buy one. The Nook will continue to represent itself as an "eReader" and not a tablet; it's an eReader with other features that just happen to include web (w/Flash), email and apps. 

Many people have speculated about Amazon eventually offering a full-blown Android tablet. Bet on it. This only makes it more likely.

Amazon will need to respond to the Nook's challenge on the eReader front and so the next-gen Kindle will probably have to offer color, apps and a better overall web experience. But to really "hit it out of the park" -- unless Amazon is going to directly compete with computer OEMs at the high-end, which I doubt -- the Amazon tablet will need to be smaller than 9" and cost less than $300 (say $299). 

The long-term threat to the iPad, just like the iPhone, comes from an army of cheap, "good enough" devices featuring Android. Two of those could come from Amazon and Barnes & Noble. 

Yahoo: 89% of Users on Mobile Internet at Home

On one level it's no surprise to find that a lot of mobile Internet usage is happening at home. Studies from InsightExpress, Performics and others have uncovered that lots of mobile searching and other mobile Internet activity is happening within the home.

Yahoo and Nielsen have just released data that affirm the earlier data and show almost 90% of mobile users are accessing the mobile Internet in the home. A slightly higher percentage use their devices "on the go" as well. The chart below shows precise locations in and out of the home where the mobile Internet is being accessed.

According to the data above mobile is the new "second screen," with 71% of respondents saying they use smartphones while watching TV. This is consistent with other studies.

It forcefully argues that advertisers and media channels must increasingly "be conscious" of the fact that people have mobile devices/smartphones/tablets at the ready and can immediately respond to messages, prompts and calls to action in other media. 

Mobile Only Households Now 27% of US

In a contest between the traditional landline and the cellphone it's easy to predict who's winning. People in the US are ditching their landlines to save money and/or because those phones are becoming superfluous.

The US Center for Disease Control (CDC) released its latest figures about "wireless substitution." As of June, 2010 26.6% of US households were wireless only, meaning there was no landline in the house. In some states the numbers were higher than the average and some lower. 

Rhode Island and New Jersey had the lowest rates of wireless substitution at 12.8%, while Arkansas had the highest at 35.2%. The data suggest that economics are the primary driver of the decision to abandon the landline. The chart below almost mirrors the presidential "red state vs. blue state" political map:

Even in states where large numbers of people retain their landlines the mobile phone is the "primary" phone for many people. If this additional statistic is added in the number of mobile households jumps dramatically.

For example in California 18.2% of households are wireless only. But the "wireless mostly" number is 20.8% according to the CDC. Combine those numbers and almost 40% of California households rely primarily or exclusively on mobile phones. In several states the combined figure approaches or exceeds 50% of the population: 

• Texas: 52.8%
• Arkansas: 50.9%
• Mississippi: 49.8%
• Arizona: 48.1%
• Nebraska: 47.3%

Another thing to consider is that the data are almost a year behind the market, so the actual numbers are probably higher.

iPad 2 Comes to Toys “R” Us As Other Tablets Regroup

As you've read I'm sure the iPad2 is now on sale at US toy retailer Toys R Us. Whether or not this distribution moves large amounts of inventory is an open question but it certainly positions the device as a costly birthday or holiday gift for teens and tweens. The New Jersey retailer operates 866 Toys“R”Us and Babies“R”Us stores in the United States and almost as many stores outside the US. 

On Wednesday this week we'll get to hear officially how many iPad2 devices were sold to date. The number has been the subject of considerable speculation.

The original iPad sold roughly 3 million units in 90 days at an accelarating pace. Demand for iPad2 is greater than the original according to various surveys published. Apple may have sold as many as 7 million (or more) iPads in its recent fiscal quarter. Meanwhile the news is very mixed for non-iPad alternative tablets.

The RIM Playbook, which was the subject of very mixed reviews last week, is now being called DOA by some. Though the smaller form factor (7") is smart vs. the iPad the price is pegged to the larger device: $499. That price for a smaller package plus the negative reviews will probably doom the Playbook in the consumer market -- unless substantial improvements are made quickly. 

In addition, Android tablet makers are repricing their devices to try and undercut the entry level WiFi iPad: 

A ViewSonic GTablet, originally priced at $499, is now available on Amazon.com for $279.99. Acer's Iconia A500 Tab is priced starting at $449 and will ship later this month. The starting price for Asus' upcoming Eee Pad Transformer was listed at $399.99 on Best Buy's website, but the page has now been removed. 

But so far sales for non-iPad tablets remain slow. Sales for the Motorola Xoom, the "flagship" Android tablet (so far), are reportedly weak. 

However the falling prices of Android tablets may attract some buyers, according to a recent consumer survey by Compete. As an abstract matter, the survey found that 65% of smartphone owners wanted to pay $400 or less for a tablet and feature phone owners were even more price sensitive. 

The Compete survey also found resistance to additional fees for connectivity from wireless carriers. Just over 80% of smartphone owners said they wanted to pay $25 or less per month for on-the-go internet access. And most of them wanted to pay considerably less; the largest single group said it would pay "nothing" and only use the WiFi version. 

While Android tablets are not yet competitive from a UI/UX standpoint with the iPad, aggressive early pricing to win attention and consumer purchases may consign Android tablet OEMs to low margins over the long term because they'll condition users to expect inexpensive tablets.

It will be next-to-impossible for them to raise prices over the long term. 

Barcode Scanning Growing, but NFC Clouds Future

ScanLife yesterday released its latest mobile-barcode scanning trends report, showing dramatic growth in consumer usage and traffic. According to the company:

• Traffic increased over 800% from this time a year ago
• 2D barcodes saw more scans than 1D (upc codes) for the first time since Q2, 2010

There were also interesting category and demographic data released in the report:

• The iPhone was the top individual scanning device (Android the top OS)
• NYC was the top scanning US city
• Food/Drink was followed by Health as the top categories (traditional UPC codes)
• The dominant profile of the mobile scanner was male, 25-34, making less than $50K per year

NFC is still years away as a mainstream phenomenon and scanning/2D barcodes has yet to be fully exploited in the market. However the buzz and attention surrounding NFC may cause some doubts about the longevity of 2D barcodes. It's not unlike those who overlook SMS as a marketing or advertising medium in favor of mobile Web and app-based marketing. 

T-Mobile's New 'Unlimited' Plan an Unintended Argument Against 'AT&T-Mobile'

There's lots of skepticism about AT&T's effort to acquire T-Mobile USA and its consumer benefits. But T-Mobile may have just unwittingly given critics ammunition against the deal.

T-Mobile just announced a cheaper "unlimited" plan. It's $79 with a two-year contract:

T-Mobile’s new Even More unlimited plan allows customers to save more than $350 per year on an unlimited smartphone plan, compared to similar plans from AT&T, Verizon and Sprint.  Additionally, T-Mobile customers continue to receive high-quality 4G experiences where they live, work, and play – America’s Largest 4G Network now reaches 167 markets and more than 200 million people nationwide.

That's $20 cheaper than Sprint per month. (On the pre-paid side you can get unlimited for as little as $50 per month from Boost.) Unlimited isn't exactly unlimited however; T-Mobile will slow things way down if you exceed 2GB of usage in a billing month: 

Consumers exceeding 2GB of usage in a billing month will still have access to unlimited data at reduced speeds until their new billing cycle starts. On average, T-Mobile 4G smartphone customers consume about 1GB of data per billing month.

AT&T now has no unlimited data plans. To get equivalent value from AT&T a mobile subscriber would need to pay $119 per month (4G coverage), $40 dollars more per month or $480 per year.

While AT&T has promised to honor T-Mobile contracts it's extremely unlikely that AT&T would maintain T-Mobile's aggressive pricing beyond the minimum term of the T-Mobile customer contracts.

AT&T doesn't need that pricing to help it compete in the market; it's not a "value" carrier. T-Mobile's (and Sprint's) pricing is intended to attract and retain customers in view of market dominance by larger rivals AT&T and Verizon. 

While AT&T argues that consumers would benefit from the acquisition through increased spectrum/services, prices are a greater concern to a majority of US consumers vs. 4G network coverage. Indeed, antitrust statutes are intended to protect the market from monopolistic or cartel-like control that would enable a single company or a small number of companies to control prices. 

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%) 

Chrome OS Comes to Tablets, Where It Belongs

Over time the relationship between Google's Chrome OS and Android has become more complex and awkward. Originally Chrome OS was supposed to be for netbooks, while Android was for mobie devices. But when it launched Chrome OS, Google didn't predict the rise of tablets, nor did the company predict the stunning popularity of Android.

Android has all but crowded out Chrome as the "go to" OS for Google devices. Google TV, for example, was build with Android and not Chrome. 

When the laptop prototype "Cr-48" was released last year the netbook market was all but dead. Google stopped saying that Chrome was for "netbooks" and substituted "notebooks."

There were/are a range of big-name hardware partners that were supposed to release Chrome PCs for "holiday 2010." But that deadline came and went. Now Acer, Asustek, Sony and Samsung are supposedly releasing Chrome-based notebooks in 2H this year. 

In the meantime Google is reportedly developing a tablet version of Chrome OS. This makes a great deal of sense. The Cr-48 notebook experience, together with its apps, is very tablet-like already. Google may also be able to bridge the divide between PC and tablet that exists today, and which makes tablets less than a full replacement for laptops. 

However for the time being the focus remains on Honeycomb/Android, as dozens of new Android tablet devices roll out. Key to their success, as I've mentioned is aggressive pricing. The Xoom and to some degree the Galaxy Tab before it have proven that Android OEMs will have to at least match or undercut Apple's pricing to be competitive. 

That means they'll have to cut their margins on the entry level devices to almost nothing or even subsidize them in some cases. Samsung has gotten that message and has repriced its tablets accordingly.

iAd Gallery Is a Great Move by Apple

In an effort to promote its iAds product, Apple has released iAd Gallery. It showcases current iAd campaigns and the agencies that created them. You see the ad creative and get the full functionality of the ad as though you'd encountered it "in the wild."

It's a great idea and will offer a one-stop shop of sorts to see the latest in mobile display ad creative -- on demand.

Previously you had to hunt for these ads and it was almost a matter of serendipity to find one. The iAd Gallery makes it very easy to discover and compare ads side by side. You can browse the campaigns, see those that are "favorited" by users or search for particular ads. It will also provide a way for agencies to compare work. 

This is ads as content. It's not that far-fetched to imagine some sort of annual ranking (viewers choice) or other creative award coming from this . . . 

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: 

• Report: 7" iPad 'Nano' Lives
• Mystery: Galaxy Tab a Top Android Device on Millennial's Network
• What Does the Galaxy Tab's Success Say about the Outlook for Android Tablets? 
• Galaxy Tab's Million Unit Sales Suggest Popularity of Smaller Form Factor
• Galaxy Tab's Strangely Polarized Reviews

Handicapping the Mobile Payments Competitors

It seems that a day doesn't go by without news of some new company getting into mobile payments. It has all gotten quite noisy and confusing. Here's a quick roundup of what's going on and the outlook for these companies. 

Amazon: is said to be considering a near-field-communications (NFC)-based mobile payments platform for local stores and retailers. The key here is that Amazon has millions of stored credit card numbers and is a trusted brand. That puts the company ahead out of the gate. 

Apple: is rumored to be providing NFC support within iOS 5. However there are mixed signals on this question. In addition Apple has more than 200 million credit cards accounts on file at iTunes. Those stored credit cards are a huge advantage, though it's more of a stretch for Apple to become a broad payments platform than Amazon. 

Google: has already built-in NFC support in its "Gingerbread" OS update (Android 2.3). In addition the company is reportedly working on conducting an NFC payments test in New York and San Francisco with several retailers. 

Microsoft: a future version of Windows Mobile/Windows Phones' software will feature NFC support. 

Visa: has several mobile payments initiatives going. The splashiest is a 2012-Olympics-related NFC partnership with Samsung. It will require a Visa-enabled SIM card (and maybe a new phone). Visa is sure to be a "player" in mobile payments because of its consumer relationships -- if it can get the user-experience right. 

AT&T-Mobile & Verizon: AT&T, T-Mobile and Verizon have teamed up with Discover Card (and others) to introduce a "Hulu for payments," called ISIS. Like the others it's also an NFC-based system. AT&T also has relationships with Boku, Zong and BilltoMobile. In that context, payments are made with a PIN and the charge shows up on the consumer's AT&T bill. 

Sprint: is independently working on an NFC-based payments system and hopes to make it operational this year, before ISIS can launch. Sprint currently also offers a mobile wallet, based on a stored credit card number not dependent on NFC. However that product is a non-starter at this point. 

PayPal: is well ahead of most others on this list in mobile payments, saying that it will do more than $2 billion dollars in total transaction volume this year. It relies on the current PayPal infrastructure translated into mobile apps and doesn't require NFC-enabled phones or terminals in stores. 

Square, Intuit: both enable small merchants to take credit cards, with reduced fees, through mobile devices. Square in particular plugs into the iPhone and Android handsets. Merchants don't need a merchant account just a Square account to accept credit card payments. 

Boku, Zong, others: Along with PayPal these companies were first-in with mobile payments. However most use carrier billing (mostly for virtual goods). Carrier billing is not going to be the center of activity for mobile payments for several reasons. The efforts of these companies are being overshadowed by the initiatives of larger and more established players. These startups will likely be acquired in the next 18-24 months by companies seeking to jump start their entry into mobile payments. 

The irony of all this is that consumers are well behind the technology companies in terms of their thinking about NFC. There's almost no awareness of NFC or "wave and pay" systems and most consumers have no experience with current deployments. Accordingly tt might be years before NFC-based smartphone payments hit the mainstream.

Systems like PayPal's are more accessible and familiar to users -- hence the sales volume. That model, where a stored credit card can be accessed on the phone, is an interim step toward NFC-based payments systems. However most companies on the list are skipping interim steps and racing to be first with NFC payments.

Regardless, companies that consumers have trusted, existing relationships with are in a better position to become viable payments platforms than those that do not. Thus Visa or Amazon are in a stronger position than the carriers, Google or Microsoft, which are in turn in a stronger position than the payments startups like Boku. However better usability and execution can overcome some or all of that trust and familiarity gap. 

Below is a global iSuppli forecast of handsets with NFC capability:

These numbers now emerge as conservative because the next generation of smartphones will all have NFC capability. But there are big questions surrounding consumer education and adoption. I have no doubt that mobile payments will become desirable to consumers and eventually mainstream. However it may take several years longer than the companies above anticipate. 

Are Consumers Just Bored with the iPhone?

Over the weekend there was considerable discussion about comScore's most recent handset and mobile OS market share numbers. What they appear to show is Android clobbering all challengers, including the iPhone whose share remains largely flat. Although the Verizon iPhone was the most popular individual handset in February, the "Android Army" is winning the OS war. 

This morning Apple Insider argues that by several measures, iOS is still ahead of Google's operating system, in terms of engagement, app store growth and revenues. Indeed, StatCounter, which presumably is a better reflection of actual consumer behavior than comScore's survey data, shows iOS well ahead of Android usage.

But there's no denying the growth of Android and its seemingly unstoppable momentum. I had a thought the other day about why iPhone may not be growing to the same degree (beyond its more limited availability and more rigid pricing): consumer boredom.

There is only one iPhone (although there are previous models still in circulation). By contrast there are dozens and dozens of Android handsets out there, with different hardware features. This creates constant marketing buzz around the "latest Android flagship" or release of the newest inexpensive Android handsets. 

If the iPhone were toothpaste it would be Crest, while Android would represent 20 different flavors. In order to reclaim consumer attention and generate new excitement, Apple may need to do to the iPhone what it did to the iPod several years ago: create different models and colors. 

Apple has declined so far to put out a "nano" model, although there have been rumors to that effect. Cupertino needs to address both the lower end of the market (and not just with last-year's model) and create some new excitement around the product -- and not just through software updates.  

Windows Phones Developer Ecosystem Growing

Microsoft released some new Windows Phone numbers a year after the new OS was first previewed to the public. Here are some of them: 

• 1.5 million developer tools have been downloaded 
• 36,000 developers in the Windows Phone developer community; MSFT says 1,200 are being added each week.
• 11,500 total apps, of which 7,500 are paid apps. The company claims its "ecosystem generated 10,000 apps faster than anyone else, without padding the stats."
• Windows Phone customers download an average of 12 apps each month.

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. 

Android "Closing Down," Investigations Coming Next?

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.