Where Do Mobile Users Get Their Deals and Coupons?

There's a relatively common perception that "daily deals are dead." What's more accurate to say is that the daily deals "bubble" has burst and consumers are burned out on push email marketing, where many of the deals are irrelevant to their interests or needs. But it would be inaccurate to say that "deals are dead." 

Coupons and deals remain popular among consumers and mobile users in particular. According to data from Nielsen, xAd and Telmetrics, the three top reasons that a mobile user would engage with an ad are the following:

1. The ad is locally relevant
2. There's a coupon or promotion
3. It features a familiar brand

Consistent with the findings above, "search for/receive mobile offers" (especially locally relevant ones) is one of the top three "mobile commerce" activities that users engage in according to 2012 data from the US Federal Reserve and JiWire. They also search for coupons on smartphones while in stores according to multiple surveys and behavioral studies. 

A new set of data from Nielsen tries to identify where mobile users get those deals and coupons. A majority get mobile vouchers from retailers directly (sites/apps), followed by deal of the day sites/apps.

Among the daily deal apps Nielsen found that the "usual suspects" were the most often used: Groupon, LivingSocial, Google Offers and AmazonLocal (LivingSocial). Amazingly, of those who have sought out daily deals on their smartphones, 91% have done so through the Groupon app. 

This shows that relatively few daily deal vendors have any brand awareness and usage beyond these major sites. But among them Groupon is far and away the leader. 

Apple Devices Most Desired by US Tweens -- Especially the iPad

Apple's products constitute four out of the top five most-requested gifts by US kids (under 13) according to a recent poll by Nielsen. Among those over 13 the iPad still ranks as the most desired object for the holidays.

In the 6-12 age group, "tablet other than the iPad" shows up in 8th position but Microsoft Surface specifically appears second from last on the list, just ahead of Apple TV. In the over-13 age group, non-Apple tablet is 3rd though Microsoft Surface and Kindle Fire are lower on the list. Microsoft Surface is again second from the bottom on the over-13 list with a lower percentage of respondents interested than in the under-13 cohort. 

The sample size wasn't disclosed and the question asked isn't technically about the holidays but about purchase interest or intent "in the next six months." However these requests will probably register in December. If parents comply it should be a very good quarter for Apple. Below are the full lists. 

Kids under 13:

Kids 13 and over: 

Opus is in the midst of a consumer survey asking about which tablet they intend to buy over the holidays. In our survey (still in process) 85% of respondents said they weren't planning to buy one now. However the age group most interested is 25-34; 21% say they plan to buy a tablet in the immediate future.

Overall, among those who've said they're planning to buy a tablet during the holidays, the ranking is as follows:

1. iPad/iPad Mini
2. Kindle Fire
3. Microsoft Surface
4. Nexus 7 

IAB: Smartphones Aggressively Used for Shopping, Not Commerce

The IAB just released its second mobile shopping report, including its ranking of the most "mobile savvy" cities in the US. Houston, remarkably, comes out on top for a second year. Houston is also the "fattest city in America" according to Men's Fitness magazine.

The mobile shopping study also found surprisingly high numbers of users who owned "connected devices" (tablet and/or smartphone). The numbers here are much higher than Nielsen and comScore figures for smartphone ownership. According to the data the San Francisco Bay Area had the highest smart device penetration at 78%. Among the top DMAs Detroit was lowest with 62%. I suspect these numbers are not entirely representative of the mobile subscriber population and a bit high -- though perhaps not radically so.

The IAB report, which draws from a variety of survey and data sources, confirms that smartphone users are aggressive and engaged mobile shoppers but they generally don't buy things on those devices (tablets are different). The IAB (citing comScore) reports that 86% of US smartphone owners visited retailer websites or used retailer mobile apps in July.

The graphic above doesn't entirely make sense (81% vs. 85.9%) but it makes the larger point that most smartphone owners are accessing retail information on their devices.

In stores smartphone owners use their devices to communicate with other people about intended purchases, check prices and product information and look for deals. However only 5% in this survey bought anything with their mobile handsets. 

The report also confirms that most tablets are not used "on the go," while shopping. However that may change with the advent of carrier-supported 7-inch tablets and the 5-inch Galaxy Note (also obnoxiously known as a "Phablet"). 

This is just one more set of data that underscore the importance of being "mobile ready" and fully understanding how mobile can be used for customer acquisition and customer service, even in stores. Mobile is an instrument of "showrooming" but it can also be an avenue for customer service and retention among traditional retailers. Yet most are simply not ready. 

Major Retailers, Etailers Unprepared for Mobile and Tablet Shoppers

Almost daily my inbox is hit with a new study or report that expresses a similar theme: businesses large and small aren't ready for mobile shoppers. However one would expect retailers to have invested and be prepared for the coming multi-screen holiday season. Not so, says an informal usability study from Keynote systems.

Keynote examined major retail and e-commerce sites on iPhones, Android devices and BlackBerry handsets. It found numerous problems and inconsistencies from device to device. The inference is that retailers aren't actually testing their own sites on the various platforms and operating systems.

Some of the problems Keynote identified are minor (copy not optimally presented) but some are major (broken search functionality). Furthermore many of the retailers didn't seem to be addressing the tablet audience. Keynote explained, "We also looked at Target on the iPad 3 and see that they probably haven’t been testing on a tablet and are content to delivering their desktop site to a tablet on good faith." 

Tablets drive actual online conversions, whereas smartphones are mostly used to check reviews, price information and locate and contact stores. Tablet conversions are as high or higher than on PCs and average order value from tablets is higher than on the PC. It's critical for retailers and etailers to address the tablet audience specifically. 

Most retailers appear to believe that their sites will "work" for tablet users. That's true in many cases but a tablet-optimized retail experience would almost certainly drive more online sales and increased user satisfaction.

According to Skava only 7% of retailers currently have tablet-friendly sites. Accordingly this year may turn out to be a missed opportunity for most retailers when it comes to mobile and tablet users. Here's Keynote's conclusion, which is simply common sense: 

Early testing of both mobile websites in preparation for the holiday season would have prepared these top retailers for the judgmental mobile shopper this season. With holiday shopping looming and ready to begin in just days, it seems that these top retailers are already running into hurdles that may affect their holiday sales goals.

Whites Lag in Smartphone Adoption

According to Nielsen, Caucasian/White Americans lag behind other groups when it comes to smartphone adoption. The data below are part of Nielsen's recent cross-media study (Q2 2012).

Based on data from many thousands of users, Nielsen reported that 70% of Asian American adults now own smartphones, while 62% of African Americans and 60% of Hispanics also do. By comparison "only" half of Whites own smartphones. 

Nielsen said, in September, that smartphones represent 56% of the US mobile market. ComScore also reported in September that the smartphone penetration number is 51%.

The year will probably end at or very close to 60% smartphone penetration in the US. That would mean something like 150 million smartphone users, most of whom would also be mobile internet users.

TV Remains King of Time Spent but Mobile More Effective Ad Medium

TV remains the king of all US media channels in terms of time spent -- but it's not necessarily quality time. Our attention is increasingly split; simultaneous media usage is growing. In addition there's considerable reason to believe that TV advertising is now less effective than mobile advertising.

As a real-world case-in-point that is representative of larger trends, my 13 year old never watches TV shows (on Hulu Plus) without a smartphone so that she can check Instagram and text friends at the same time (during commercials).

According to a new Nielsen "State of the Media" report, "The average American consumes nearly 39 hours of content each week on the TV set, on the computer and on mobile." The bulk of that time is with TV but roughly 40% of smartphone and tablet owners are watching TV at least once a day while using other devices (i.e., smartphones, tablets) simultaneously.

Nielsen found that simultaneous tablet and TV use skews older while simultaneous smartphone and TV use skews younger. This "second screen" usage may contribute to the diminishing effectiveness of TV advertising, which has been declining since that advent of the DVR.

It turns out that mobile video advertising is more effective than TV. A Q2 study from Nielsen and AdColony "measured the brand and ad effectiveness of the exact same 15-second [CPG] video spot in live campaigns across TV, online and mobile." What the research found was that the same ad delivered better results in a mobile context than online or on TV. 

Relatively speaking mobile video ads are dirt cheap by comparison to TV. Below are the study results comparing performance of the same video unit in the three different contexts: 

Mobile video ads:

• 79% General Recall
• 58% Brand Recall
• 45% Message Recall

TV ads: 

• 49% General Recall
• 10% Brand Recall
• 6% Message Recall

Online video ads: 

• 29% General Recall
• 12% Brand Recall
• 8% Message Recall

In the study, the mobile ad dramatically outperformed the other screens across these traditional brand metrics. Some of this is undoubtedly the result of novelty but it's also the way in which mobile commands user attention in ways that TV and the PC internet have lost the power to do.

Report: Restaurants and Retailers Using Mobile to Drive Customers into Stores

This month's Millennial Media "SMART" report takes a closer look at the behavior and goals of mobile advertisers in the restaurants and retail vertical. Apparel retailers and fast food/national restaurant chains are the two largest categories of advertisers on the Millennial network in this segment.

Citing June comScore data Millennial reported that "Females spend nearly twice as much time on mobile Retail & Restaurant apps and mobile websites as men do."

The main campaign goal of both sets of advertisers was to drive foot traffic into local stores. Accordingly retail and restaurant advertisers were more interested than average in getting people to store locators and maps on landing pages, as well as exposing promotions (coupons). The were also interested in generating mobile commerce. However unless there's a stored credit card on file there will probably be no m-commerce.  

These restaurant and retail advertisers were much less interested than average in driving application downloads. This apparent lack of interest in getting apps onto the smartphones of their customers and prospects reflects a misunderstanding of the role apps can play in stimulating sales and improving retention and customer service.

Finally Millennial reported that restaurants and retail was the number three category in terms of ad spending on its network -- more than automotive, travel or CPG: 

Google Wallet 2.0: One Plastic Card to Rule Them All

Last week the Android Police blog received a tip and some screenshots that showed what Google will soon be unveiling in its ongoing quest to penetrate the payments segment: a plastic card. Google is moving forward by going back.

While it initially seems self-defeating -- Google Wallet is supposed to get rid of plastic -- it is both an innovation to broaden Google Wallet's apppeal and an interim step that now appears necessary in the transition from plastic to true next-generation payments systems.

Google Wallet (the NFC mobile payments tool) remains obscure to most US consumers, although it has been out and operative for well over a year. A plastic card would allow Google to dramatically extend the reach of Wallet without mobile carrier involvement, approvals or the need to do much consumer education. These are the considerable benefits of a plastic card for Google. 

Image Credit: Android Police

Below are some of the highlights of what was revealed in the screenshots (only a few of which are above): 

• The Google Wallet Card is designed to be used when/where Google's NFC Wallet won't work or isn't available
• It promises to work "where major credit cards are accepted"
• It features the ability to link any card or set of payment cards to Google Wallet and choose on a per-transaction basis which one to pay with
• Ability to send or withdraw money from a "Wallet Balance" (into a personal bank account or to a peer)

The benefits of the Wallet card being promoted in the third panel above are:

• The Google Wallet card can act as a substitute for all other plastic cards in your wallet (remains to be seen)
• Users will have access to unique offers and see them instantly redeemed at the POS
• If the Wallet Card is lost you just cancel Google Wallet and not all your credit cards

PayPal also has a plastic card, introduced earlier this year. The Google Wallet card is probably modeled pretty directly on PayPal's card and copies many of its key features. It appears, however, there may be some additional features unique to Google Wallet. I'm not sure from the information I've seen and Google is not ready to speak about the product. 

The logic behind Google's new plastic card is clear. Google was caught off guard by carrier resistance or hostility to Google Wallet. Among the major US carriers only Sprint has truly embraced Wallet. While AT&T isn't officially blocking it (Verizon is) the carrier doesn't promote Wallet either.

Most US and European consumers are well versed in plastic payment card culture but they typically have no idea whether their phones carry an NFC chip.

PayPal announced a few months ago that the reach of its plastic card is being dramatically expanded through a deal with Discover and use of the latter's financial network. The Google Wallet information revealed above suggests that Google has or is negotiating a comparable (and perhaps broader) deal with credit card processors. 

As mentioned US consumers have not indicated a burning desire for NFC-powered mobile wallets or the ability to pay with their phones. A Google Wallet card could serve to introduce them to the Google Wallet service, while enabling them to pay in a familiar way: with a plastic card. Over time consumers' willingness to experiment and pay with mobile devices would presumably grow as their comfort with and trust in Google Wallet increased.

A plastic card would also enable Google to completely go around the gatekeeper-carriers and appeal directly to consumers, where its strength lies. 

From a merchant point of view there would be no new infrastructure investment required, as there is with NFC point-of-sale terminals. There are currently about 300,000 NFC enabled terminals in the US.

When I first heard about this Google Wallet card I thought that consumers would be confused and not see a reason to adopt it. But the promise of carrying fewer plastic cards, the security features, potential offers and the ability to manage multiple payment cards in the cloud will be intriguing or appealing to many people.

It's analogous to Google Voice. Google Wallet is essentially being used to "forward" a debit for payment to any account or credit card in the same way Google Voice forwards and routes calls to designated phone numbers. 

Thus for both PayPal and Google it would appear plastic cards are a "necessary evil" on the incremental path to "payments 2.0."

Report: People More Comfortable Doing Commerce Research on Smartphones in the Home

JiWire released its Q3 audience insights report earlier today. There are a number of interesting survey findings. However, it's important to note that JiWire's audience isn't necessarily representative of mobile users in the US and UK, or consumers more generally. The JiWire audience is large but generally more "mobile savvy" than average mobile subscribers. 

One of the headlines is that the number of people using smartphones in stores for product research has grown significantly since last year. 

The things that people are doing or researching on their smartphones in stores has remained pretty consistent: price comparisons, product reviews, deals. 

JiWire also found that 65% of its smartphone-owning respondents also own a tablet. This is higher than tablet penetration in the population at large. The company also asked about behaviors on both categories of devices.

JiWire found that smartphone and tablet owners generally engaged in the same activities at the same relative levels. However a higher percentage of tablet owners was active in each category, chiefly because of the larger screen I would imagine. 

Perhaps the most interesting data, however, has to do with so-called "m-commerce." For most people a semi-arbitrary $99 or $250 were the top amounts they were willing to spend in a mobile commerce transaction. There's nothing safer or more secure about a $99 transaction vs. a $500 transaction however. 

Perhaps there's an irrational belief that smaller transaction amounts bring less exposure. Overall, however, the numbers of people willing to engage in m-commerce have grown over last year. 

Interestingly (and perhaps again irrationally) JiWire survey respondents appear to be more comfortable researching a $100 product (on their smartphones) in their own homes vs. other locations. This is really interesting and may indicate something about the psychology of many smartphone users.

However, once again, there's not necessarily anything more secure in being at home compared to being on cell or WiFi networks outside the home. 

An alternative explanation might be: more users simply have time to do research in the home and that's the most common location for smartphone usage. But I don't think that entirely explains the data in the chart below. 

Seven-Inch Tablets May Become Dominant

This morning Apple announced that it sold "3 million iPads in 3 days." However it didn't specifically break out the number of iPad Minis it sold, as opposed to iPad 4s. My guess would be that more than 50% of those three million tablets were iPad Minis. 

Also today device tracker IDC released new Q3 figures for tablets. The company measures "shipments," not sales to end users, so its numbers may not be an accurate reflection of actual market share. However the IDC data show Android tablets finally gaining against the iPad. 

Most of this Android tablet growth has come in the 7-inch category, where the Kindle Fire (a quasi-Android device) and the ASUS-made Nexus 7 have done very well. In other parts of the world, though not in the US, Samsung has done relatively well with its Galaxy Tab devices. 

According to ASUS its Nexus 7 is selling nearly a million units a month. The success of Kindle Fire and the Nexus 7 has everything to do with their $199 entry level price. While the first Kindle Fire is a mediocre device at best the Nexus 7 is a terrific smaller tablet for the price. The iPad Mini is indisputably the best 7-inch tablet on the market now, but its $329 price makes the Nexus 7 a very attractive "second best" choice for many people. 

This holiday season, tablets will be the consumer electronic gift of choice, much more than smartphones and PCs.

Microsoft's new Surface RT will be going up against Android-powered tablets and the iPad. The recently released Samsung-made Android Nexus 10 has, according to Google, the highest resolution screen on the market. However it's  surprisingly a big disappointment in several ways (I have one). Indeed, it's unlikely Apple will face much competition in the 10-inch tablet category, even from Surface. 

However the 7-inch tablet category is a different story. It will be intensely competitive with price vs. quality being the main calculation in most buyers' minds. Amazon/Kindle Fire will vie with Nexus 7 for those users who are more budget conscious. The iPad Mini will be the clear choice for those who are not concerned about spending more. For those in the middle, however, the Nexus 7 does the best job of reconciling price and quality.

In many respects, because of its portability, the 7-inch tablet is more desirable than the 10-inch version. It may in fact become the most common type of tablet in the market from a unit-sales perspective. Regardless, the "establishment" of the 7-inch tablet as a new category of device (4 inch smartphone, 7 inch tablet, 10 inch tablet) creates new opportunities and challenges for marketers.

Only Apple has a meaningful number of tablet apps -- though that will likely change over time. Accordingly most mobile websites and apps treat the 7-inch device as though it were a big smartphone, which leads to awkwardness in several respects, especially when it comes to ads.

And just when you thought people couldn't own more mobile devices . . .  We're moving into a period when affluent consumers have a smartphone, a small tablet, a larger tablet and a PC in their homes. That makes everything more complicated for publishers and marketers, though not the consumer. It also means the PC will continue to be the loser of this diversifying consumer-device marketplace.

Google Brings More Speech to Voice Search for iOS

Earlier today Google released an update for its iOS search app, which had been in iTunes approval limbo for seemingly several months. The new app works on the iPhone, iPad and iPod Touch. At first it doesn't appear to be much different from the previous version. However there are two major changes and improvements: voice search with spoken answers and knowledge "cards."

While earlier versions of the Google search app for iOS had speech-to-text input, the new app includes the Siri-like spoken results that Google introduced for Android devices months ago. If Google has a structured result from its "Knowledge Graph" database, the female assistant voice will read it back. If not, Google will simply provide a more traditional list of web links.

Typically these structured results are presented as "cards." They can include images and other rich information and constitute "answers," where Google is confident of the result. Google introduced this "assistant-powered" voice search capability and knowledge cards in Android 4.1 in early Q2 (we're now up to 4.2). Accordingly the differences between the Google experience on iOS and Android are now less pronounced -- so to speak. 

The one missing piece from the new iOS app (which Google probably cannot execute on iOS) is Google Now. Google Now is the company's predictive search capability that combines users' search histories, time of day, location, calendar information and other signals to provide personalized and other contextually relevant information (e.g., traffic, flight times, nearby restaurants) -- without requiring the user to affirmatively conduct a search.

It doesn't always work. But when it does it's very impressive.

Google is the dominant mobile search provider across platforms, with a nearly 95% share in the US market. In a Q2 consumer survey about mobile search, conducted by Opus (n=503 US iPhone 4S owners), 19.3% of respondents indicated they used the Google search app. The remaining majority (roughly 70%) of users either entered queries in the search box in the Safari toolbar (where Google is the default) or they went to Google.com to search the mobile web. 

Related: Google now says that there are in excess of 700,000 Android mobile apps. That number is now at or near parity with Apple. 

iPhone vs. Android Is Quickly Turning into: Apple vs. Samsung

The battle between Apple and Android is quickly turning into a face off between Apple and Samsung as the latter obliterates all other Android competitors. This morning Samsung announced massive Q3 profit, while IDC estimated that the Korean conglomerate had shipped just under 57 million smartphones in the quarter.

By comparison Apple sold just under 27 million iPhones in its fiscal Q4, which ended September 30. 

A noteworthy aside related to the chart above, Nokia is gone from the ranks of the top global smartphone vendors.

In contrast to Samsung, HTC, which had been one of the early leaders with Android, is now really struggling. The company saw a nearly 50% decline in revenue for Q3. In part because it's getting squeezed out of the Android market by Samsung's success, HTC has turned its attentions back to Windows in an effort to diversify revenues. 

However, unless or until Windows Phones start to gain share, the smartphone landscape is really about Apple and Samsung. Everyone and everything else is just an "also-ran."

Opera: North America Sees 70% of Global Ad Requests

A few years ago Opera bought mobile ad mediator AdMarvel. Today the company released its Q3 State of the Mobile Web report, which focuses on advertising. It features some great data about platforms, revenue categories and CPM rates. All the data are drawn from Opera's global network of publishers and advertisers representing 40 billion ad impressions per month.

One of the major findings is that 70% of mobile ad impressions are happening in North America (mostly the US). Asia is next and then Europe. 

 Distribution of ad impressions globally

Opera also reported eCPM rates by region. The global average eCPM was $1.31, with the US average slightly higher at $1.37 and Europe lower at $1.13:

• US eCPM -- $1.37
• EU5 eCPM -- $1.13
• Rest of World -- $0.73

Opera reported on ad revenue by smart device. The company said that iOS devices generated more revenue and higher eCPM rates than competing devices: 

Once again, this quarter, iOS leads the pack in monetization performance with an average eCPM of $1.64. This outperforms the global average eCPM of $1.31 by over 25%.

The iPhone and iPad in particular saw higher eCPM rates than other devices. Interestingly, despite the much larger number of Android phones, the iPhone generates roughly 2X Android revenue for Opera. 

The company also pointed out that while RIM/BlackBerry is losing share in global markets its position remains strong in the UK. 

Opera said that the category "Business, Finance & Investing" generates more ad revenue than any other in its network. It also said that 73% of Opera's mobile ad revenue is coming from apps (vs. mobile Web).

You can review the full report here. 

Pew: Democrats Morely Likely to Make Digital/Mobile Campaign Contributions

Based on a survey of 2,010 US respondents, the Pew Internet Project found that about 1% of mobile phone owners had made a presidential campaign contribution through their mobile phones. This compares with 13% of all US adults who've made a contribution (using any method) to one of the presidential candidates in 2012.

By comparison, roughly 10% of US adults "have made a charitable donation of any kind using the text messaging feature on their cell phone." Among the 13% who've made a presidential campaign contribution, Pew says:

• 67% donated "offline" (in person, over the telephone, or through the mail)
• 50% donated online (including via email prompt)
• 10% donated by sending a text message from their mobile phones or using a mobile app

Regarding party affiliation and contributions, Pew found that "16% of Democrats and an identical number of Republicans have made a contribution to a presidential candidate . . ." However most Republicans make their contributions "offline," while Democrats "are much more likely" to make a digital contribution:

• 57% of Democratic campaign donors have contributed online or via email, compared with 34% of Republican donors.
• 15% of Democratic campaign donors have contributed via text message or cell phone app, compared with 6% of Republican donors.

Earlier data from 2012, generated through surveys from UC Berkeley, Google and IPSOS, show that between 20% and 35% of US adults have made purchases (of one sort or another) on their mobile phones. It's not clear, however, whether these numbers include buying music or mobile apps -- probably yes.

Over time more and more people will simply use mobile devices to do what they would otherwise do on a PC, including making political contributions. In addition, people will become increasingly comfortable using stored credit card data to buy things with their phones. 

To get more of the "lowdown" on mobile payments come see my panel at the Open Mobile Summit in San Francisco on November 7. The session is "Wallet wars: Mobile payments from theory to practice" and will feature speakers from PayPal, Google, HomeDepot and Visa.

Surface Receives Mixed Reviews Likely to Be Overshadowed by iPad, Android in Q4 Sales

Yesterday the first reviews of Microsoft's Surface RT tablet came out. (RT is the iPad competitor starting at $499; a more laptop-like Windows Pro tablet will debut later at higher cost.) There were some positive reviews, a bunch of mixed reviews and a few that were largely negative. Here's a sampling of comments:

• Wired (positive): This is a great device. It is a new thing, in a new space, and likely to confuse many of Microsoft’s longtime customers. People will have problems with applications — especially when they encounter them online and are given an option by Internet Explorer to run them, only to discover this won’t work. But overall it’s quite good; certainly better than any full-size Android tablet on the market. And once the application ecosystem fleshes out, it’s a viable alternative to the iPad as well.
• Mossberg (mixed): Microsoft’s Surface is a tablet with some pluses: The major Office apps and nice optional keyboards. If you can live with its tiny number of third-party apps and somewhat disappointing battery life, it may give you the productivity some miss in other tablets.
• Gizmodo (negative): Should you buy it? No. The Surface, with an obligatory Touch Cover, is $600. That's a lot of money. Especially given that it's no laptop replacement, no matter how it looks or what Microsoft says. It's a tablet-plus, priced right alongside the iPad and in most ways inferior.

Many of the reviews argue and hope that the RT tablet will improve over time and that a second or third generation version of the device will be significantly better after Microsoft addresses some of the weaknesses, bugs and criticisms. 

Surface RT had appeared to be off to a good start, selling out pre-orders. However one tech blog, critical of the device and calling it dead on arrival, suggests that the majority of the pre-order sales were to Microsoft itself for employees:

I've heard that Microsoft made 250,000 initial Surface RT tablets, half of which (125,000) were the now sold-out 32GB model. But of those 125,000 tablets, a full 80,000 were purchased by Microsoft itself for employees. That means only 45,000 consumers and corporate IT managers have plunked down for Surface RT.

It's hard to know how much credibility to assign to such a claim. If it's true however it indicates either a lack of public awareness or a lack of interest. 

While Windows Pro tablets will compete with higher-end laptops (at similar higher prices), RT competes with the iPad and the larger Android tablets. In that context, given the mixed reviews, Surface RT will probably struggle. Accordingly the first generation device probably will only see modest sales, suffering essentially the same fate as Windows Phones have suffered to date. 

The broader Windows 8 operating system has received many positive reviews but some very mixed ones as well. Microsoft is praised for boldly overhauling the PC OS but dinged for creating potential confusion for consumers. There have been a few Microsoft observers who have even predicted "disaster" for the company.

The Windows 8 handsets are shortly to be released as well. The Nokia Lumia 920 has been lauded for its design but the device is no blockbuster or savior for Nokia or Microsoft in the mobile arena. 

With potential consumer confusion over Windows 8 (the OS) and the probability that Microsoft powered handsets and tablets will be overshadowed by Apple and Android devices in holiday sales, the company is unlikely to get the immediate sales boost it needs. Indeed, the new Microsoft tablets and Windows Phone 8 devices were supposed to reset the company for the new multi-platform era. However so far it appears that Microsoft has right now only made a kind of down payment on potential future gains. 

ISIS Finally Launches, New Google Wallet Coming Soon

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.

Yahoo Probably Compelled to Buy a Mobile Ad Network

Yahoo used to be one of the leading mobile ad networks. And it used to be ahead of Google in terms of innovation and mobile ad revenue. But that now feels like a lifetime ago.

While the company still has decent reach and, presumably, mobile revenue it has fallen way behind market leader Google as well as some of the independent mobile ad networks such as Millennial Media and JumpTap. Millennial Media is now a public company with a market cap of $1.15 billion and JumpTap has secured roughly $120 million in multiple investment rounds. The latter is rumored to be contemplating either a sale or an IPO.

Both companies, among a few others, are now Yahoo acquisition candidates.

Yahoo just announced Q3 2012 revenues, which showed about 2% growth. Display revenue was the largest contributor to revenues but basically flat YoY. Search grew 11% (on a non-GAAP basis). Google "owns" mobile search so display represents the greatest area of opportunity for Yahoo in mobile.

Indeed, mobile is one of the cornerstones of new Yahoo CEO Marissa Mayer's strategy. However, the company's mobile capabilities need to be substantially beefed up. On today's earning call Mayer said the following: "At some point in the future, Yahoo will have to become a predominantly mobile company. By that I mean that at least half of our employees will be working on mobile." She added that Yahoo will be doing a great deal of hiring in mobile.

Beyond its own mobile properties and sites, Yahoo needs to be able to deliver ads to third party apps and the mobile web if it's going to see truly meaningful mobile ad revenue. This leads almost inexorably to an acquisition, which could take the form of one of the leading independent mobile networks or a mobile ad exchange, which would mirror its acquisition of the Right Media online ad exchange several years ago. 

Mayer has been busy assembling her leadership team (many former Google executives) and the thought is that she'll announce some sort of major acquisition in the near term. I had previously thought it would be a consumer facing site such as Foursquare. However I think a mobile ad network now is also a good possibility.

If she wants to hit mobile and local at the same time, she could acquire xAd.  

Revisiting My 2012 Mobile Predictions

For several reasons I had occasion to look back at some of the mobile predictions I made in January. At the risk of sounding self-important or boastful many of them have come to pass. In fact I was somewhat surprised by the number, which is why I'm posting about it now.

For review, here are the original predictions from January:

1. 2012 ends with 65% smartphone penetration in the US
2. Android reaches 60%+ smartphone penetration by the end of 2012
3. Voice search: Siri expands its reach to many more third party services; Google and Microsoft beef up their competitive voice offerings
4. Apple launches its own mapping service for iOS
5. RIM’s co-CEOs resign in 1H 2012
6. Windows Phones see modest but not huge success in North America, greater success in Europe/Asia
7. Major smartphone security (hacking/virus) event happens this year (most likely on Android handsets)
8. Mobile payments see continued growth but 2012 isn’t the “breakthrough” year
9. Tablets galore: 100 million tablets in market by the end of 2012 (globally). The iPad represents 65% of the market
10. Google announces mobile ads “run rate” of $4 billion (in Q4)
11. Facebook launches mobile advertising in 1H 2012
12. Amazon buys a mobile ad network (Millennial or Jumptap)

Here are my comments and updates on each item:

1. The smartphone penetration number (per Nielsen) right now is 55%; we'll probably end the year close to 60%
2. Android smartphone market share in the US is 53% now (per comScore), probably going to 55% - 57% by the end of Q4 2012
3. Siri has been beefed up and its structured data sources expanded. Google has answered to some degree with "Google Now" and related voice assistant; however Microsoft hasn't done anything significant in this arena beyond its core voice search. 
4. Apple Maps launched of course
5. RIM’s co-CEOs both resigned in the first half
6. Windows Phones have continued to lose share in the US market (per comScore) but have seen some modest success in other markets
7. Android malware has dramatically increased but there has been no single cataclysmic event 
8. Mobile payments and wallets continue to make incremental gains (see Apple Passbook) but 2012 isn't the "breakthrough year" 
9. The iPad's market share is about 68% on a global basis today. Roughly 84 million iPads have been sold to date and many millions of other non-iOS tablets. I suspect the 100 million threshold will be crossed by the end of Q4 if it hasn't been already
10. Google announced a mobile run rate of $8 billion, with probably 70% to 75% of it being ad revenue. 
11. Facebook did launch mobile advertising 
12. Amazon has not (yet) bought a mobile ad network

Not bad . . .