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Yesterday comScore released its US smartphone market share report for August. The interesting thing is that these data do not reflect the release of the iPhone 5s and 5c. Apple was the single most popular handset maker, with just under 41 percent of the market. Samsung was second with 23 percent.
In terms of operating system share, Microsoft gained 0.2 points while Android lost 0.8 points. The iPhone saw a 1.5 percent gain. It certainly will be interesting to see what the September numbers are, post iPhone 5s.
In the aggregate Android devices represent just over half the smartphone market in the US (now 64% of mobile users). However it appears that may be the ceiling for Android -- at least for the time being.
Depsite this it appears from comScore's data that Google has achieved nearly 100% (92%) smartphone reach in the US through a combination of apps and mobile search usage, though Facebook remains the top individual mobile app:
According to research conducted by investment bank Canaccord Genuity the iPhone 5s was the top selling mobile handset at each of the four major US carriers in September, with the 5c taking second place at AT&T and Sprint and third place at Verizon.
Notwithstanding its second place finish, the 5c is quite a bit less popular than the 5s. Hitwise (Experian) reported that search queries for the iPhone 5s were 4X more than the 5c in early September.
This basically mirrors our survey finding correctly predicting the enormous popularity of the 5s and lesser interest in the 5c:
Source: Opus Research, n=1,508 US adults (Sept 16 - 19 2013)
Elecontrics retailer Best Buy is offering a $50 instant discount on the 5c, which effectively cuts its contract-subsidized price to $50 for the entry level device. Wal-Mart by the same token has cut the 5c's price to $45 "permanently." This should help boost sales of the 5c considerably in the short term.
The T-Mobile-MetroPCS merger is now complete. The newly combined company, which is majority (74%) owned by Germany's Deutsche Telekom, debuted on the New York Stock Exchange today under the ticker symbol TMUS. The stock was up about 6% in early trading.
Post-merger, here are the most recent subscriber counts for the four major US wireless carriers:
That makes a total of 301 million accounts, not including smaller regional carriers.
There are approximately 312 million people in the US. Some percentage of the 301 million are obviously second accounts. Measurement firm comScore counts the total US wireless population at 235 million, whereas CTIA says that, as of Q2 2012, there are 321.7 million "wireless subscriber connections."
The "right" number is probably about 250 million. Smartphone penetration is 57% according to comScore and roughly 60% according to Nielsen. Accordingly the US market is closing in on 150 million smartphones. Total US internet penetration stands at 221 million according to comScore.
Within three years (perhaps 24 months) there will be more "mobile devices" and wireless internet penetration than PC internet users. Just under 40% of total media time is now spent on mobile devices (including tablets). However current mobile ad spending is only 9% of the US digital total according to the IAB.
Microsoft has talked a great deal about Windows Mobile being the "third ecosystem" in the smartphone universe. Of course BlackBerry would also like that distinction. And while some argue it's too little too late, it's also possible that Mozilla's HTML5-based Firefox OS will have a meaningful seat at the mobile platform table -- at least in selected markets.
Yesterday at Mobile World Congress, the company announced a wide range of mobile operators that had made a "commitment" to Firefox OS. Those carriers include: América Móvil, China Unicom, Deutsche Telekom, Etisalat, Hutchison Three Group, KDDI, KT, MegaFon, Qtel, SingTel, Smart, Sprint, Telecom Italia Group, Telefónica, Telenor, TMN and VimpelCom.
Mozilla announced that the first group of FOS handsets will go on sale in Brazil, Colombia, Hungary, Mexico, Montenegro, Poland, Serbia, Spain and Venezuela. Hardware makers Huawei, LG, ZTE and Sony have all embraced the platform -- though Samsung has publicly said it isn't interested.
While it's unlikely to appeal to existing high-end smartphone users, it's quite possible that FOS could displace Android at the smartphone entry level in developing markets. Many carriers and OEMs are hungry for Android alternatives, which partly explains the long list of operators on board.
Related: Twitter said that it will support FOS with an HTML5 app.
Carrier backed US mobile payments initiative ISIS is finally live in two cities (Austin and Salt Lake City) this week after several delays. ISIS relies on near-field communications (NFC) and is very similar to rival Google Wallet, which also uses NFC technology. Like Google Wallet, ISIS will work at merchant locations with NFC-enabled POS terminals. There are approximately 300,000 such terminals in the US.
Currently there are nine phones across T-Mobile, AT&T and Verizon that are compatible with ISIS. As many as 20 are expected by year end.
Google Wallet, which has been in the market for a little over a year, has seen very low levels of consumer adoption and usage. That's partly because there are relatively few available compatible handsets. Carriers have also not been entirely cooperative. Verizon in particular has blocked Google Wallet on its handsets, theoretically because of security concerns. However, ISIS is a direct competitor and were Google Wallet to succeed ISIS might not. As it is ISIS is a very long shot for the carriers.
Beyond this there is limited consumer awareness and interest in the US in NFC-enabled smartphone payments.
Recognizing that it must do something to broaden the appeal and potential adoption of Google Wallet, the company is preparing to relaunch it soon. The Google Wallet site says, "The next version of Google Wallet, coming soon. Request an invite."
As part of the invite request process the Google Wallet site asks whether users have an iPhone, Android or "other." As widely known, the iPhone is not currently NFC compatible. All this suggests that Google is partly moving away from NFC or, perhaps more accurately, broadening Wallet's capabilities so that many more people can use it without NFC handsets.
Currently there is no leader in mobile payments in the US market. However, there are early indications that Apple's Passbook is seeing some traction among iPhone users. While Passbook supports stored value cards it right now doesn't fully support mobile payments.
EU regulators have reportedly cleared the mobile payments joint venture between the three dominant UK carriers (Everything Everywhere [T-Mobile + Orange], Vodafone and O2) of competition concerns. The smallest of the UK carriers, Hutchison Whampoa-owned 3, had complained about the competitive implications of the service.
The joint venture, called Project Oscar, was supposed to be ready in time for the Olympics. The project had been in a bit of a state of limbo pending the European Commission’s approval, which has now been "unconditionally" granted.
In many respects Project Oscar is a mirror of the US's ISIS (AT&T, T-Mobile and Verizon). Unlike ISIS, however, Oscar doesn't preclude any of the UK carriers from developing their own mobile payments systems. ISIS by contrast is intended to be a consumer brand, which will prove challenging to build, and would compete with any individual carrier payment initiatives.
Like ISIS Oscar will use payment cards and not carrier billing. It will be accessible to third party financial institutions and retailers and is intended to work with all credit, debit and loyalty cards. Oscar will provide a payments infrastructure that can then be utizilized by the individual carriers involved (and potentially others) to create their own mobile payments services.
Oscar and the services it spawns will also compete with Google Wallet (eventually) and PayPal, among others.
Yesterday I posted data from Chetan Sharma (from US carriers) that reflected growing smartphone demand and waning demand for feature phones. However Gartner's latest handset sales data reflects a decline in smartphone sales from last quarter:
Worldwide sales of mobile phones to end users reached 419 million units in the second quarter of 2012, a 2.3 percent decline from the second quarter of 2011, according to Gartner, Inc. Smartphone sales accounted for 36.7 percent of total mobile phone sales and grew 42.7 percent in the second quarter of 2012.
Unlike other handset figures in the market these data represent actual handset sales vs. "shipments." Samsung is now the global market leader, followed by Nokia and then Apple. Nokia's share is now just under 20% of global handset sales. Half of Samsung's 90 million unit sales were smartphones according to Gartner.
By contrast the firm said that demand for the iPhone weakened, "as sales fell 12.6 percent from the first quarter of 2012, but grew 47.4 percent year on year." This was reflected in Apple's Q2 earnings, which missed expectations based on lower iPhone sales. The suggestion is that consumers are waiting for the next iPhone to be released.
In a related bit of data, gadget blog The Verge published results of a survey conducted by Apple at some point in the past (date unreported). The sample size was very small (n=89). The data are being exposed as part of the Apple-Samsung IP trial going on now. The survey asks why users chose an Android device over an iPhone.
Top reasons for buying an Android among those who considered an iPhone
The fact that the top reason for choosing Android is "wanted to stay with wireless service provider" indicates this survey was probably conducted before Verizon obtained the iPhone, which was in early 2011. The iPhone is now available from all major US carriers, except T-Mobile, as well as several pre-paid carriers. There's enormous pressure for Apple to deliver an exciting new piece of hardware when the next iPhone is announced in September.
Returning to the Gartner data, the firm said that Nokia is under pressure at both ends of the market. Low-cost Chinese OEMs are hurting the company's feature phone business, while its "Lumia devices continue to struggle to find a place in consumers' minds as a replacement for Android."
Mobile industry and carrier watcher Chetan Sharma has pulled together mostly carrier-published data for a mid-year update across a range of topics relevant to the wireless industry. I pulled four of his slides below; however you can see the full presentation here.
The first slide below shows increasing smartphone penetration in the US and abroad. No surprise here; this has been in the survey data for months. In Q2 smartphone sales exceeded 70% of new handset sales in the US.
Outside the US smartphone penetration isn't rising quite as fast. However it will accelerate and US smartphone growth will start to slow over the next 12 to 24 months. Feature phone sales in the US are now clearly in the minority.
The next slide shows handset market share by manufacturer, with feature phone sales representing only about 30% of total handset sales this year.
Particularly striking in the chart above are the following:
The graphic above shows the relative shares of voice and data on US carrier networks. Data, in red, now entirely eclipses voice. In 2009 the two were had nearly equal shares of traffic on carrier networks.
Finally, the following chart shows the ratio of WiFi-only tablets tablet sales with carrier network connections.
I'm drawing a few inferences but it appears the data show consumers are avoiding additional carrier fees and service plans, preferring to run tablets on WiFi networks. Notwithstanding some of the new shared data plans it appears that carriers will not derive significant new revenues from the growth of tablets.
With nearly 50 million tablets in the US market, carrier-networked devices constitute roughly 8% of the total. The lure of discounted devices in exchange for two-year contract commitments isn't succeeding in getting customers to pay additional carrier fees. Beyond basic consumer resistance to new fees, the $199 Kindle Fire, Nexus 7 and potentially forthcoming 7-inch iPad, undermine the appeal of carrier discounts.
Almost nobody in the mobile handset business is making money right now except Samsung and Apple. Nokia and RIM, the former smartphone leaders, have almost seen the bottom drop out of their businesses over the past year or so. RIM hired bankers recently to consider its options. The company is almost in free fall.
Nokia had hoped that Microsoft would save it but that's not happened. The most optimistic discussions of Lumia sales indicate they're "mixed." Furthermore, existing Nokia Lumia phones won't be getting Windows Phone 8 upgrades. They'll have to settle with Windows Phone 7.8.
This fact, once made known to the general public, will essentially kill sales of current Lumia smartphones (unless carriers give them away). People will want the new and improved version of Windows Phones -- which won't be coming out until much later this year. That leaves two more quarters of weak sales for Nokia. Moreover, Nokia will be just one of several OEMs to be releasing Windows Phone 8 smartphones.
It doesn't look good.
The Sunday Times in the UK reported that RIM was contemplating either selling its handset business or seeking an outside investor such as Microsoft. Nokia also looks like a takeover target as its fortunes continue to decline. And with both of these companies struggling the likelihood that Microsoft will own at least a part of a hardware OEM grows more and more likely. Amazon is also a potential investor or acquirer mentioned in the article.
One now has to wonder whether, if Nokia had gone with Android, things would be any different at this point.
There were discussions between Google and Nokia before the latter went with Windows. According to a source I spoke with, Google was unwilling to agree to a co-mingling of Google Maps and Nokia Maps or substitution of Nokia Maps on the back end. It's unclear whether that was the dealbreaker or one of several issues that prevented a Nokia-Android deal. Microsoft did agree to use Nokia Maps and in fact Nokia does replace Bing Maps in the new Windows Phone 8 OS.
It is likely that Nokia would have sold more Lumia phones to date if they were powered by Android. That probably wouldn't have fundamentally altered the company's predicament but it would have made it marginally better. Yet HTC is building some very nice Android devices but being overwhelmed by the Samsung Android juggernaut all the same. The Taiwan-based company is struggling to remain profitable and recently abandoned the Brazilian market.
If that continues HTC could be another takeover candidate by early 2013. And if that's so it will dilute the value of Nokia and RIM as they seek "strategic options" to survive.
I was recently speaking with a friend who said that he and his wife had eliminated their landline. I was surprised because this friend is successful and it's not a financial issue. Cost is often cited among younger people who've jettisoned their landlines.
"We were tired of getting all these telemarketing calls," he told me. In other words, his landline had become a "spam line."
That's also the case for me and probably most of the people reading this. Our mobile numbers are for the people we need and want to talk to, landlines are for spam and others we don't really care about. Most of the calls we receive at home are telemarketers or fundraising calls in one form or another.
I looked up the latest CDC statistics (.pdf) on mobile only households and found that just under 30% (29.7%) of American households are mobile only and have no landline. According to the data, "nearly one of every six American homes (15.7%) received all or almost all calls on wireless telephones." Accordingly 45.4% of US homes are mostly mobile or mobile exclusively.
This is staggering in a way. Just under half of American households are without a landline or simply ignore their landlines. For that 16% who basically ignore their landlines it's only a matter of time before they cancel. This was my friend's situation; he had considered canceling his landline for a couple of years before he actually did it.
It's worth pointing out these data are from 2010. These numbers are likely to be higher now. They're positively correlated, I would imagine, with smartphone adoption as well.
There are all sorts of implications of these figures, for telemarketing (no robodialing allowed) and political polling (no longer representative if landline centric) -- to name just two areas.
There are some countervailing forces that may slow the abandonment of landlines. Among them the carrier move toward tiered data plans; calls will be part of data relatively soon. People using only their mobile phones to talk could be subject to overages accordingly. In addition, businesses will retain landlines in many cases. Some bundling of landlines with other serivces (e.g., cable "triple play") will also retain landlines for some. However they will be increasingly ignored.
Regardless, the next tranche of CDC data will likely show that mostly mobile and mobile only homes have crossed the 50% threshold in the US.
There have been rumors of a "Facebook phone" for at least two or three years. Facebook clearly needs to figure out mobile, so it's logical that Facebook would be talking again about a branded device. According to the New York Times over the weekend:
One engineer who formerly worked at Apple and worked on the iPhone said he had met with Mark Zuckerberg, Facebook’s chief executive, who then peppered him with questions about the inner workings of smartphones. It did not sound like idle intellectual curiosity, the engineer said; Mr. Zuckerberg asked about intricate details, including the types of chips used, he said. Another former Apple hardware engineer was recruited by a Facebook executive and was told about the company’s hardware explorations.
It's worth mentioning that there have already been quasi-facebook phones, from INQ and HTC (Status). The Status had the distinction of being the first phone with a "dedicated share button." By most accounts these phones are not huge successes. The Status appears to be an outright failure.
Presumably the model for any coming Facebook phone is the Kindle Fire, a highly customized version of Android. Facebook could then have an app store, develop mobile advertising, have a mobile browser and so on. The logic is clear.
The problem is that a Facebook phone is likely to fail. Most people would not want to "commit" that fully to Facebook and would likely be concerned about privacy and how their contacts and other data were being used or exploited by the software. By the same token, the availability of Facebook apps on major smartphone platforms is going to be sufficient for the overwhelming majority of people.
There will be a small slice of the population that would appreciate deep integration of Facebook into a handset (those might be younger users). But it will be a minority.
We may ultimately see a "Facebook phone" but I don't think it would be competitive with the iPhone and other Android handsets -- at least not in North America.
Mobile payments provider Boku has now completed a deal with Sprint, making it the final major US carrier to enable carrier billing through Boku. The startup operates in more than 60 countries and claims to process "hundreds of millions" in payments accordingly. It has relationships with more than two hundred mobile carriers around the world.
Companies like Zong (now part of PayPal) and Boku got started to enable online users (mostly younger people) to purchase virtual goods in a simple and secure way. They evolved to enable purchase of physical goods offline. While Zong was acquired Boku and smaller payments companies like it risk being marginalized in North America and Europe by banks, credit card issuers and others (e.g., Google, PayPal, Square), which are reaching out to a broader population of users that already have credit cards.
In developing countries carrier billing may be an effective approach for users and merchants in the absence of a more conventional credit card infrastructure. However in developed countries -- with carrier bills already very high -- few individuals (except those without traditional platic cards) will want to load up their carrier statements with additional costs. You may dispute me on this but I firmly believe that in the US, for most adults with existing credit, carrier billing is going to be a non-starter.
Boku cites a Strategy Analytics survey that argues, "consumers are twice as interested in operator billing as using traditional credit/debit cards." I simply don't accept these findings as valid. Another survey (US only) by electronics site Retrevo found the opposite in June of last year:
Companies such as Boku need to branch out into physical goods and move outside of carrier billing to withstand the onslaught from other players with greater brand recognition and momentum. Indeed, earlier this year Boku did an NFC payments deal with Mastercard in the UK as part of an effort to do so.
In the regular torrent of data and reports streaming across my desk there were a number of interesting findings recently that indirectly addressed the issue of mobile consumer price sensitivity. The first came from Google's recent consumer study with Compete about how mobile phone buyers shop for handsets and what influences those purchase decisions.
Google found that after carrier network quality/reliability the primary consumer considerations were the cost of data and voice plans and the price of handsets.
Source: Google-Compete (Q3 2011)
Then came Chetan Sharma's latest Global Mobile Market Update, which is trove of charts about a range of mobile issues: smartphone adoption, carrier revenues and mobile IP among others. He underscores the now familar point that carrier voice revenues are flat to declining while data is driving growth. Partly as a consequence, most carriers have moved away or are trying to retreat from unlimited data plans.
Sharma asserts that mobile phone plan fees now represent "50% of the [consumer] household IT budget." That was quite striking to me. Also in the "household IT" category are landlines, cable TV and Internet access. Carriers want to drive up fees; consumers want to hold them down.
Another interesting, related piece of data from Sharma's slides is one that shows how most consumers that have bought iPads or other tablets have opted for WiFi only devices (63%) -- undoubtedly a cost saving move. Even a majority of those who've bought carrier-enabled devices have not activated those carrier plans. In other words, according to the data, only 12% of tablets are running on carrier networks.
Source: Chetan Sharma April 2012
This choice is absolutely about minimizing fees that consumers are paying for Internet access. They're paying for access at home, they're paying for access on their smartphones -- and many families have multiple people on data plans. It thus makes sense that they'd say "no" to a third Internet access tariff for tablets.
Verizon in the US is rumored to be readying a multiple device family data plan. We'll have to see how much data it allows and how much it costs. In theory it's a compelling solution.
However the carrier imperative to extract more data charges and fees from consumers as other revenues decline will bump up against consumer price sensitivity and resistance to price increases. Market competition will also limit the carriers' ability to raise prices in the future.
The iPad 4G may prove itself an exception, however Chetan Sharma's latest report on data consumption and carrier revenues shows that US consumers continue to shun carrier contracts when it comes to buying tablets. The reasons are very rational:
Indeed, tablet data plans offered by the carriers are quickly used up -- in just a few hours -- by video consumption on the iPad in particular.
Consumers want to be free of carrier data plan restrictions and associated costs. However, as voice and text revenues decline, carriers will increasingly look to data plans for revenue growth. Carriers will need to be very creative because users will be seeking to escape their efforts to extract more data fees from consumers.
Singapore Telecommunications Ltd. (SingTel) announced earlier today that it will buy Amobee for $321 million. Amobee, which is based in Silicon Valley, will remain intact and headquartered there. The acquisition is a bid to become a global player in mobile advertising and generate new sources of revenue, at a time when traditional telco (even wireless) carrier revenues are flattening and even stagnating.
Rather than a mobile "ad network," Amobee is a mobile advertising marketplace not unlike Velti.
SingTel has an office in Silicon Valley and has been making investments in US companies for some time.
Along with the acquisition, SingTel announced that the company would be reorganized into three groups, focused on consumers, "digital life" and communications technology. SingTel has mobile customers in 25 countries. It also has 36 offices in 19 countries throughout Asia Pacific, Europe and the United States. The company claims over 400 million subscribers globally.
ISIS, the as-yet-unlaunched US mobile payments inititative from T-Mobile, AT&T and Verizon has added new partners to its stable of credit card issuers and banks (BarclayCard, Capital One, and Chase), according to CNET. ISIS has been described as "Hulu for mobile payments."
I have been openly skeptical of the carriers' ability to mount a successful mobile payments intiatitive. But ISIS may turn out to be the tortise to Google Wallet's hare. The latter has been met with carrier resistence (which may be anticompetitive), security problems and limited consumer availability.
Google has been ahead of the market somewhat. But there are now also rumors that Google is internally disappointed with its Wallet initaitive and may be putting less effort into it. If so, it would be premature to "give up" on Google Wallet.
In two related mobile payents developments, PayPal (through its Zong acquisition) is launching what it calls PayPal Carrier Payment Network; and InMobi and Opera have joined for digital goods payments. The PayPal effort is designed to build on top of the Zong-carrier infrastructure (eBay acquired Zong last year) and expand carrier billing to encompass more types of transactions and larger dollar amounts:
Historically, carrier payment has been utilized primarily by online game developers and publishers to provide a fast and easy way for users to purchase goods directly in-app or in-game. While convenient for consumers, this method of payment has inherent challenges for other digital goods merchants – such as digital books, music, dating and content – to adopt as a primary payment method. Among the challenges is the cost of doing business – sometimes upwards of 40 percent – since transactions are processed through the carrier, merchants must share part of their revenue.
Similary InMobi and Opera announced that the latter will integrate InMobi's payments platform to enable virtual goods payments and purchases through Opera:
InMobi SmartPay will enable Opera users to pay seamlessly for digital goods in key markets around the globe, when they make purchases with some of the leading publishers that partner with InMobi. The two companies are committed to providing choice to consumers, mobile content developers and app developers, by building viable third-party monetization solutions in the mobile browsing and computing space.
Most US consumers have no experience with mobile payments and still need be educated about their benefits. However, large numbers of smartphone owners will eventually adopt mobile payments over time. Four tenents of success will be: simplicity, ubiquity, rewards and security.
The convenience of not having to sign credit card slips will be a welcome imrovement in the retail and restaurant worlds. The abandonment of signature requirements for transactions under $25 in many places has created demand and some experience with a simplified transaction experience. Merchants have incentives to adopt mobile payments as well for greater efficiency at the point of sale and, if don't correctly, greater security too.
Almost all of these mobile payments systems and platforms back onto a credit card. However, it's still early to pick winners and losers. As I indicate above, Google could wind up a loser and ISIS a winner -- though that's a bit counter-intuitive (given the challenges carriers face in execution generally). There are still others (e.g., Apple) that could enter the race at any point.
Today the smartphone world is essentially divided up between Apple and Google, much like Spain and Portugal divided up the known world in 15th century Europe. Right now, it's not clear whether Nokia-Microsoft will become a viable third platform. Palm's WebOS, though it has been open-sourced, is effectively dead and one could convincingly argue that Blackberry is dying as an OS.
Now Mozilla has emerged to challenge Apple but more specifically Android, with a new "truly open" mobile platform: Boot to Gecko (B2G). In many ways not unlike Google's browser-based ChromeOS for PCs, it was formally announced in Barcelona at Mobile World Congress. Deutsche Telekom and Telefonica are on board:
This week Mozilla is previewing open Web apps and Mozilla Marketplace, enabling the creation and distribution of apps powered by open Web standards like HTML5, CSS and JavasScript. We are also previewing Persona, the first identity system truly of the Web, including Browser ID. Each offering represents the latest tools available to developers and users to take control of their online lives.
Since the beginning, it has been our mission as an organization to develop and bring about a completely open and standards-based Web as a platform for innovation. Mozilla’s latest innovations are being proposed to the W3C for standardization, helping us move the needle to advance the Web and make it a more people-centric experience for all.
There are lots of questions about whether Mozilla can make this a viable platform; however the support of two global carriers lends immediate credibility to the initiative. It also shows that there's an appetite for alternatives to Android, which was itself initially embraced as an alternative to the iPhone.
Now Android is on its way to becoming the dominant smartphone platform. It was quickly embraced by carriers and handset OEMs who had no immediate response to the iPhone when it launched. Android became the de facto alternative, driving huge penetration and adoption. Now that Android is the dominant smartphone platform, demand is emerging for alternatives.
B2G is one potential alternative, especially for lower-end handsets. There are, however, many questions about whether Mozilla will be able to make B2G a viable, alternate smartphone platform. Microsoft sees Windows Phone as the true third alternative; however there's evidence of only modest Windows Phone success thus far (including the Nokia handsets).
While there's enormous momentum around iOS and Android the smartphone race is far from over and, especially at the lower end of the market, B2G could become an attractive alternative to Android.
IHS iSuppli released estimates for tablet market share (using shipments as the operative metric). However in the case of Apple and Amazon shipments is the same as sales to consumers.
Apple previously announced that in Q4 it had sold 15.4 million iPads and a total of 55 million to date. But we didn't know the number of Kindle Fire devices that had sold. Some analysts estimated it was between 4 and 4.5 million. Now iSuppli estimates it was 3.9 million.
With strong Kindle Fire sales in Q4, Amazon zoomed past Samsung to become the number two player in the tablet market. Overall in 2011 Samsung "shipped" more tablets; however shipments does not equal sales to end users. Below are iSuppli's global tablet estimates, showing Amazon with 6% of the market at the end of Q4.
I simply don't believe that Samsung has actually "outsold" Amazon. It may have "shipped" more devices but those devices have largely sat on retailer shelves. Furthermore, Samsung's recent announcement of the Galaxy Tab 2 (7"), with Android 4.0, may be another miscalculation. While it appears to be a nice device, a reported $400+ price tag all but guarantees it won't sell. At that price people will opt for iPads.
As I've repeatedly argued in the past no 7" tablet maker can charge more than about $250 now and expect to compete with Kindle Fire. Samsung would likely be taking a loss if it were to do so. Another way to potentially compete and still preserve margins is to get carriers to subsidize tablets. However this strategy has not worked and consumers have largely shunned carrier-subsidized tablets in favor of WiFi-powered devices. (People simply don't want to give any more money to carriers.)
One of the interesting observations that iSuppli makes is that in Q4 people may have been choosing between the iPhone 4S and iPad. In other words, more iPads would have sold if the 4S hadn't just been released. If that's correct some number of people who actually wanted to buy an iPad may have opted instead for the Kindle Fire because of price sensitivity. Indeed, the Kindle Fire is a vastly inferior device but that inferiority is masked to a degree by Amazon's content ecosystem.
In a related piece of news, Nielsen released some survey data on how parents and kids use tablets: games, education, entertainment in that order.
This morning Groupon and Deutsche Telekom announced a "strategic partnership" that will deliver Groupon deals to Deutsche Telekom customers throughout Europe. The deal is significant for both parties. Deutsche Telekom has a presence in 10 European countries.
According to the release:
The partnership marks the first time Groupon will partner with a multi-national service provider to distribute its products and services across a wide international network. It is also significantly enhances Deutsche Telekom's position as a leading provider of the latest applications for its customers.
Using a wide range of marketing and sales tools, varying from promotion activities to deeply integrating Groupon services in selected fixed and mobile services, Deutsche Telekom will offer Groupon services directly to its customers. Scheduled to be available in the first half of 2012 Deutsche Telekom mobile customers will enjoy Groupon's mobile services on their devices without the need for a separate download providing easy access to the best local deals in their area.
To those who dismiss Groupon as a business without a future, this deal is a powerful reminder of the strength of the Groupon brand and its near-global footprint.
The key to success will involve two things: deal coverage and execution. How much inventory is offered and how well presented are the deals?
Groupon Now, the company's mobile offering, in the US has so far not been a success. Accordingly that experience raises questions about how this might play out in a mobile context with Deutsche Telekom's subscribers. However it will not be limited to mobile.
By contrast UK carrier (Telefonica) O2's opt-in "O2 More" partnership with Placecast to deliver local coupons/deals has proven to be very successful. So there is a precedent that shows this could play out in a very successful way for both companies if well executed.
Starbucks issued a press release this morning that proclaimed the company the "mobile payments leader," which is probably not incorrect. Here are some of the numbers exposed in the statement:
These are impressive numbers and Starbucks is likely doing more to popularize and educate people about mobile payments than any other entity in the US. The company plans to expand its apps/mobile payments program internationally as well.
In a related story, VentureBeat reported this morning that US carrier Verizon, the first to gain access to an Android 4.0 handset (Galaxy Nexus), is effectively blocking Google Wallet. The Galaxy Nexus is the second US Android handset to include NFC capability. The blog received a statement from a Google representative confirming that “Verizon asked [Google] not to include this functionality in the product."
The motivation for the carrier's move is obvious: it has a competing mobile wallet/payments offering in ISIS, a joint venture with AT&T and T-Mobile. It's not clear how much "outrage" this will generate among consumers, given that most have not tried mobile wallets and are conceptually ambivalent about them according to several surveys.
According to a Retrevo survey, carriers are less trusted than Google or Apple to provide mobile payments functionality:
I'm very skeptical that carriers will be able to provide a good and highly functional mobile payments experience. Google is in a much stronger position to do so than the carriers (in the US or internationally). I've got a note in to Google and will update this post if I'm able to talk to them.