Nokia Tries to Regain US Marketshare

Nokia is the dominant handset maker in the world. It owns roughly 40% of the market. Yet it's US share has been in steady decline, from 20% a couple of years ago to about 7% today. However Nokia believes that's all about to change as it readies a range of US-specific handsets and is preparing to set Symbian free (open source).

I'm skeptical.

The company is building a poor-man's iPhone (literally) -- the "Tube" -- for release at lower price points in third world countries. It also has some higher-end iPhone-like phones (i.e., N95). But the absence of a software marketplace is likely to put these phones at a disadvantage. Their unsubsidized cost ($500+) also makes them less desirable.

And then there's the enterprise market, which is owned by RIM in the US. 

The US has now emerged as the most advanced "mobile Internet" market in the world and it's a critical one for Nokia as the company transforms from a hardware maker into a more diversified company (content, advertising). Nokia's dominance outside the US has perhaps set the company up to believe that it can quickly regain share in America. 

That's unlikely to be the case as competition intensifies. 


Related: The Nokia Media Network (built out of the fomer Enpocket) is expanding its reach internationally. In the US, it will also local targeting by DMA in 10 major metros on publisher sites. 

European Commission: Mobile Phones Continue Gains vs. Humans

According to the European Commission, mobile phones became more numerous than Europeans in 2006. That margin has continued to grow. Now there are roughly 112 wireless phones for every person.

In the US about 16% of households are mobile-only, in Europe it's now 25%; almost 40% in the East vs. about 20% in the West. (Nielsen Mobile has predicted the number of mobile only households will be 20% in the US by the end of 2008.) Nokia's home country of Finland has about 61% mobile-only penetration.

Cost is reportedly a big driver, as it always is, of the adoption of mobile at the expense of landlines. What this means for carriers is an imperactive to push for more data revenues across the board, as well as develop new revenue streams (e.g., advertising). 

Nokia's Tube on the Way

According to Reuters Nokia's much-anticipated touch-screen "Tube" will be unveiled next week at a press event in London:

Nokia said in July it would introduce its first touch-screen phone this year, and would sell it more cheaply than rival touch-screen models in order to tap into a higher-volume market.

Here's an apparent (and somewhat strange) commercial for the device. And here's a demo from Nokia. 

This is Nokia's response to the iPhone and (by virtual of timing) Android. If the phone is "good enough" it may capture a segment of people who would otherwise be attracted to subsidized iPhones. However, it's unlikely to be as compelling an experience as the iPhone in many respects, most notably in the absence of an applications and software marketplace.

The quote above suggests that Nokia is very consciously and literally positioning this as the "poor man's iPhone." 

Google Wireless Marketplace: Not Going to Happen Anytime Soon

As is being reported in a number of places now, Google has filed a patent application ("Flexible Communication Systems and Methods") to create what amounts to an open, competitive marketplace for wireless telecommunications and broadband services. It would theoretically permit users to move with their mobile devices (computers, phones, etc.) between networks and, essentially, always be assured of a connection at the best price.

Sellers of bandwidth, under the proposed marketplace system, would participate in a real-time auction to provide those connection services to end users. Here's how the patent application describes the invention:

A method of initiating a telecommunication session for a communication device include submitting to one or more telecommunication carriers a proposal for a telecommunication session, receiving from at least one of the one or more of telecommunication carriers a bid to carry the telecommunications session, and automatically selecting one of the telecommunications carriers from the carriers submitting a bid, and initiating the telecommunication session through the selected telecommunication carrier.

Here's a concrete discussion (from the application) of how it might work:

This document describes devices, systems, and methods for providing telecommunication access and applications to users in a flexible manner. Devices may operate on multiple networks, and may in certain circumstances seek out bids from telecommunication service providers. For example, a device such as a mobile telephone may have the capability to operate over multiple different networks, including a home network when in the home, to transition to a metropolitan network when outside the home but in a higher-density area (urban/suburban), and transition to a more traditional cellular network when outside such a higher density area. The connections may, in appropriate circumstances, be provided by different telecommunications providers, and may involve hand-offs of a particular communication session from one provider to another. 

The essence of all this is to create near continuous connections for people so as they move between networks they can remain "online" (laptop, mobile) and -- it almost goes without saying -- continue to use Google services. The vehicle for this continuous connectivity is an auction marketplace. Devices that operated on all wireless networks would need to come into being to take full advantage of its capabilities.

In a certain way this is like an uber-roaming plan. However, it would be challenging to build the billing and payments (and related agreements) infrastructure for this marketplace in my mind. Then there are the "political" objections of US mobile carriers and others who wouldn't want to be subject to a bidding marketplace for their services -- that Google administered or "owned."

The Way to Think about Android/GPhones

I discovered a nice and fairly extensive video: "G1 Android Walkthough" from Gizmodo. It demonstrates most if not all the features of the software and OS. The G1 has received generally positive, if mixed reviews from those who've used/seen it. And while people are mostly busy comparing the G1 to the iPhone, I think the more important discussion is how the G1 contributes to a growing smartphone market in the US and beyond. 

For some context, here's AdMob data (August) on smartphone usage and traffic by handset/OS (from AdMob's network):

  • Smartphones accounted for 25.8% of worldwide traffic in August, up 3.4% since May.
  • The numbers were almost identical for the US: 23.7% of US traffic in August, up 3.5% since May 2008.

The charts are from AdMob:


 regional data

Global marketshare

Compare Q4 global smartphone shipments (per Canalys): smartphone shipments

United States:

US market share

US traffic

US smartphone requests AdMob

The important point is about the momentum that all these phones, now including Android, help build collectively for the smartphone segment. Apple and now Google are raising the profile in the US and abroad of smartphones (certainly Nokia is doing that too as the global market leader).

Smartphone owners use the mobile Internet with greater frequency and intensity than feature phone users (here's the comScore data slide I've now shown many times):

smartphone internet usage

 Source: comScore/M:Metrics (Q1, 2008)

While feature phone users are driving huge SMS volumes in the US and abroad, the future of the "mobile Internet" is on smartphones, which is the growth sector of the market. By creating more competition and better user experiences, Apple and Google are helping grow the entire sector. 

The G1/GPhone vs. the iPhone story misses this larger point.


Multiplied Media Launches Video Streaming for BlackBerry Bold

The IM and mobile platform Poynt (from Multiplied Media) added video streaming for the BlackBerry Bold, not yet available in the US.

Right now this is primarily about movie trailers. But as video advertising (esp. for local businesses) becomes more pervasive online, it becomes available to high end mobile devices such as the Bold, iPhone or Android.

RIM to Remain Dominant Smartphone in US Enterprises

In the wake of the T-Mobile Android launch today there's the expected speculation about whether it will affect iPhone sales or the sales of other smartphones. Android is and will remain primarily a consumer device for some time. It's likely that RIM will remain unchallenged as the leader of the enterprise segment of the smartphone market.

According to a survey from J Gold Associates, a survey of 400 large and small enterprises suggests that RIM's BlackBerry will remain the center of enterprise mobility. The survey asked which smartphone platform is "primary" today and which one would be so in the next three years?

Here are the data, as reported by SAI:

  • RIM will remain in first place in three years with a 59.3% "primary platform" market share, down from 65.5% now.
  • Microsoft's Windows Mobile will gain share in three years to 28.6%, up from 22.5% today.
  • Apple's iPhone will account for about 16% of the market in three years, up from about 10% now.
  • Google's Android will account for about 4.8% of the market in three years, behind Palm (9.1%) and others.

RIM has increased its share in the US smartphone segment because it's already firmly entrenched there, and a large percentage of smartphone users are business customers today. However the iPhone, which will make some gains in the enterprise, has motivated RIM to build better products from a consumer perspective. 

Ironically that competitive pressure will likely help RIM maintain its strong position in the enterprise market for the foreseeable future.

T-Mobile G1 Now Out in the World

It's not the "GPhone," it's the "G1" (for "Google").

Walt Mossberg has given the G1 a largely positive review and says it's the first real compeition for the iPhone:

[T]he G1 is a powerful, versatile device which will offer users a real alternative in the new handheld computing category the iPhone has occupied alone.

I've only seen the videos and the press conference. But the phone looked pretty strong. It's a great PR move for T-Mobile, which probably has a six month jump on other US carriers in offering the Android-based phone. That will help the company gain more visibility and "buzz" as well as some switchers (probably from Sprint). It also retains T-Mobile customers who might have been considering moving to AT&T the iPhone. 

One version of what may happen is that iPhone sales are hurt somewhat by G1. But it could also help further accelarate smartphone sales in the US more generally. (The device goes on sale in the UK in November and the EU in 2009.)

In the US, Palm and Windows Mobile may be vulnerable to the RIM, iPhone and Android onslaught. While in Europe Symbian may suffer from the iPhone-Android punch. It's anybody's guess at this point. I predict however that it will be T-Mobile's best selling phone immediately. 


I blogged the press conference here. Here's more from the Google Blog and the Google Mobile Blog -- and a short video promoting the Google products on the G1 phone. 

Note the "with Google" branding on the back of the phone (photo credit: Engadget):

Google T Mobile G1

All About Android Today: T-Mobile G1 'with Google'

At 10:30 US Eastern time today the Android announcement will be made and we'll finally get to see the phone and its features. The Boy Genius Report has some screens (not a ton to see), while the New York Times offers a relatively in-depth look at Taiwan's HTC corp., the company making the phone and apparently making a bigger brand push with it. (There's also the prediction and rumor that Amazon's music and video store will work on Android, per VentureBeat).

HTC has developed some nice new phones (ie, Touch Diamond). However my relatively new HTC 6800 ("Mogul") is a piece of junk compared with the iPhone. Beyond the clunky hardware, the Windows Mobile 6.1 OS and interface don't compare. Reportedly there are many improvements in store with Windows Mobile 7 (though it will be delayed a year). But Windows Mobile in the US will be under some pressure in an increasingly crowded smartphone market. 

HTC has been one of the major manufacturers of Windows Mobile phones. If Android turns out to be a big hit, expect more and more of those phones to run Android's OS. In addition, BlackBerry and the iPhone (of course) don't run Windows Mobile and they're the leading smartphones in the US. 

Stay tuned for more exciting adventures. 

UPDATE: The press conference is going on now


Forecast: Android Phones Will Hit 4% of US Smartphone Sales in Q4

Strategy Analytics is predicting that HTC Android-based phones will constitute roughly 4% of total smartphone sales in the US market this year. The firm forecasts that Google will sell ".4 million units" (400K) in Q4. The iPhone is expected to sell approximately 11 million 3G units by the end of the year and at least double that next year.

The smartphone segment is the fastest growing part of the US handset market. But the market is becoming more competitive with RIM, Apple, Windows Mobile, Symbian, Palm and soon Android battling for visibility and sales. Venerable smartphone maker Palm reported earnings yesterday:

Smartphone sell-through for the quarter was 1,029,000 units, up 49 percent year over year. Smartphone revenue was $333.8 million, up 10 percent from the year-ago period.

However the company's net loss widened amid this growing competition. 


Nielsen: One in Five US Homes 'Wireless Only' by Year End

The US Center for Disease Control has been tracking the decline of landlines in US homes for several years. Earlier this year the agency said "During the last 6 months of 2007, more than one out of every seven adults lived in wireless-only households" and mobile only homes had become nearly 15% of the total population. (There are breakdowns by race, gender, age and education here.)

 CDC Mobile Only HHs

Nielsen just put out findings that argue "one in five U.S. households could by wireless only by the end of 2008":

[M]ore than 20 million U.S. telephone households (17 percent) are wireless substitutors—homes without landlines that rely solely on a mobile phone for their home telecommunications. The new research ... suggests that one in five U.S. households could be wireless-only by the end of 2008.As the U.S. economy tightens and consumers look for ways to cut household spending, many are eyeing that landline phone bill, which averages $40 per month per landline household.

In addition to the universe of U.S. wireless substitutors, Nielsen’s study reports that:

  • U.S. cord cutters tend to have lower income-levels; 59 percent have household incomes of $40,000 or less
  • Smaller households, with just one or two residents, are more likely to cut the cord than larger households
  • Moving or changing jobs are the biggest life events associated with cord cutting: 31 percent of cord cutters moved prior to cord cutting and 22 percent changed jobs
  • Wireless substitutors tend to use their mobile phones more than their landline peers, 45 percent more per phone, but still save an average $33 per month in a household of one subscriber, less $6.69 for each additional wireless resident, when they cut the cord

Carrier landline revenues have been declining steadily for the past several quarters. The Nielsen data suggest that that the bad economy is accelerating the trend landline abandonment among certain user populations.

Yet more affluent consumers are also very mobile centric. According to the recent Ipsos Mendelsohn survey of US consumers with income of more than $100K, the higher the income the more likely to use cell phones to access the Internet:

Affluents and cell usage for internet

GPhone Ready for Its Closeup (and Launch)

The details are emerging about the precise date for release of the new HTC-made, T-Mobile Google Phone. According to the Wall Street Journal (and others) the phone will cost $199 with a two-year contract (identical pricing to the iPhone). It will actually go on sale in mid-October (although it be announced on Sept. 23).

It will have both a large touch screen and a full keyboard -- the absence of which is the iPhone's Achilles Heel. And it will have an Apps Store/marketplace. We've already seen some of the software applications, which appear impressive.

Unless the phone is flawed, it's poised to do fairly well because of the AT&T exclusive relationship with Apple in the US. The public is hungry for more capabile phones; the iPhone has primed the pump. Indeed, the iPhone is the device (rather than BlackBerry) that the Android phone will be most directly measured against of course. 

But most interesting to me is the branding. According to the Wall Street Journal: "it will showcase the Google brand." Unlike Windows Mobile, which gets third billing on its phones, Google will get top billing.

When Google launched Android the company said this wasn't a "GPhone," it was an operating system and software stack. However, out of (marketing) necessity, T-Mobile is all but compelled to position it as a Google Phone. Google is the only one of the three involved players (T-Mobile, HTC and Google) with a truly strong consumer brand. The brand "Android" has no resonance with the public either.

When others start selling Android-based phones, which they will quickly want to do if this initial phone is successful, they will face a similar branding dilemma, which will be quite interesting to watch unfold. 

So whether Google intended it or not, the "GPhone" (that won't be the official branding) is here. 

Skyhook Tracking Location-Based iPhone Apps

Skyhook Wireless, which provides location awareness technology (GPS, WiFi, cell tower) to the iPhone and other devices, is keeping track of the growth of location-based applications on the iPhone. Here are some charts the company sent me, reflecting the current state of things with location aware apps:






Looking at the Skyhook data it appears there are roughly 275 location-aware applications for the iPhone, with a slight majority on the paid side. We did a review of the location-aware apps when the iPhone Apps Store first launched in July. At the time there were about 55 by our count. 

Earlier in the week, Centrix (based in Canada) introduced software, NetworkLocation, for the Mac. It uses Shyhook's WiFi positioning capabilities to automatically adjust network settings based on location:

NetworkLocation allows users to customize their Mac OS X settings, such as launching an iTunes playlist, enabling Airport, or iChat message status based on location . . . "We developed NetworkLocation to address an annoyance we all come across to varying degrees – the tedious routine of getting our laptops into a comfortable and productive state,” said Richard Fillion, co-founder of Centrix.ca. "Everywhere we go, we want our computers to behave a certain way - from lowering the volume at the library, to changing the default printer or mail server. With NetworkLocation, it just happens.”

Centrix.ca has integrated WPS from Skyhook Wireless to determine user location. "With Skyhook, NetworkLocation can position a user automatically indoors, where people use their Macbooks most,” said Kate Imbach, director of developer relations at Skyhook Wireless. "Network Location shows how location-aware software can optimize user experience based on environment-specific requirements.”

Once any software determining location is on the desktop, both content and advertising can be automatically targeted to users in a more geographically specific way. Google, for example, is integrating location (its cell-tower database) into its Chrome browser, which will eventually enabled AdWords campaigns that offer much more geographic precision.

Android's Rubin: We Don't Get a Second Chance to Make a First Impression

Google's first Android OS-based phone is expected to be formally announced next week -- an HTC phone (Dream) on T-Mobile's network. Google's Andy Rubin, one of Android's co-creators, is feeling opening-day jitters. Reuters interviews Rubin:

"We're in the final stages and having lots of sleepless nights," he said in an interview. "We're very happy with the results," said Rubin, who worked previously at Apple and a number of Silicon Valley start-ups . . .

After two years of speculation, Google is under pressure to deliver a product sufficiently different from Apple's iPhone and the myriad copycats that have appeared since it was introduced last year . . . Rubin said Google chose to "put our blinders on" and make sure the first phones impress consumers.

"If we come out with a dud, people will go, 'Well, that was a waste of time," said Rubin. . . Google has worked almost exclusively with Taiwan's High Tech Computer Corp (HTC) and T-Mobile for the first Android phone, he said.

I'm not sure that Google gets only one shot to make a first impression. Apple's iPhone 1.0 was great but had weaknesses. That device has been improved several times with hardware and software upgrades. However, the press and mobile analysts will certainly pronouce judgment on the first Android device, which is probably impressive but will likely leave room for improvement.

BlackBerry is the dominant smartphone in the US market and is rapidly improving, under pressure from Apple. But Apple's decision to go with an exclusive carrier relationship has probably limited its market potential. Those unwilling to switch to AT&T (and not on BlackBerry, which has limited consumer appeal) would probably welcome a new, consumer-friendly device with capabilities and software comparable to the iPhone.


Here's more from the Wall Street Journal, which says the phone will actually go on sale in October. 

Dial Directions, Tellme Offer Voice for Dash

This past week both Dial Directions and Tellme announced speech for Dash mobile devices. Here's how it works: Users register their cellphones and then the system recognizes that they have a Dash device when they call. Dial Directions users call 1-DIRECTIONS (1-347-328-4667) and identify an address or intersection they're going to. The spoken destination is sent from the cellphone instantaneously to the Dash Express and consumers can use the device's routing. Here's a video demo.

In a similar scenario, Tellme also allows users to call its phone number (1-800-555-Tell) and ask for a specific business listing or conduct a category search (e.g., sushi, San Francisco). Once the desired result is obtained it similarly goes automatically to the Dash device for routing, etc. The search results in this case come Microsoft Live Search. 

While the Tellme capabilities extend beyond directions to business search, both integrations illustrate a fascinating trend toward connected devices. The idea here is that the phone is tied to the PND, which may in turn be tied to the PC (as in Send2Dash). This is part of the broader movement toward "the cloud."

Users increasingly want access to "their content" wherever that may be -- on the desktop, on their phones and in the car. Rather than seeing these services as independent silos, they become just input and output locations or modalities depending on where the user is and the circumstances (driving, walking, etc.). This is a vision that Tellme has been nurturing for some time. 

Teens: I'd Die without My Cell Phone

CTIA and Harris Interactive released findings last week, in connection with the San Francisco CTIA event, about US teens' attitudes toward cellphones and their mobile lifestyles: "Teenagers: A Generation Unplugged." The online survey sample consisted of 2,089 teenagers across the US who have cell phones. Respondents were between the ages of 13 and 19. The press materials point out that "this is the first generation to grow up in a mobile world since the first commercial cell phone service was activated on October 13th, 1983."

Here are some of the data from the survey (all charts, except where stated, are from the executive summary prepared by CTIA):

Things teens like about text messaging (top 3):

Picture 5 

Mobile Internet content types accessed via cellphone:

Picture 8
The 28% figure above is consistent with the relatively high 29% mobile Internet access figure we found in our consumer research on US adult mobile subscribers.

Frequency of mobile social networking visits:
Picture 9

In an earlier Opus survey (n=1022), we found that only 6% of adults had accessed a social networking site on their mobile phones. It makes sense that a higher number of teens are visiting social networking sites on their mobile devices, given that social networks are heavily populated with younger users. Still, 81% had not in the Harris-CTIA Survey. We anticipate that social networking will become a significant category for mobile users -- over time. 

Teen receptiveness to mobile advertising and areas of interest:

Picture 10

In our most recent LMS survey of mobile consumers we found surpsingly strong receptiveness to mobile ads, when controls and choice we're put around the proposition:

Mobile ad interest

Back to the Harris-CTIA survey data . . .

Giving up privacy for ads/offers:
Picture 11

Consistently teens appear willing to give up privacy and personal information more than other age groups.  It remains to be seen in future years whether this is a cultural shift or simply a function of age.

U.S. Smartphone Sales Up; RIM Widens Lead

According to an NPD survey, 9 million smartphones were sold in the U.S. between January and July of this year, representing an 84% increase from the same period a year ago. Smartphone revenue increased 71% to nearly $1.7 billion.

The survey showed 19% of all handset purchases were smartphones compared to just 9% for the same period last year. RIM’s Blackberry led the way followed by Apple, Palm, Samsung, and Motorola. Market share for specific manufacturers was not tallied and the survey did not include sales of corporate mobile phones.

Meanwhile, IDC says that RIM accounted for more than half of the smartphones sold in the U.S. in the second quarter of this year, as iPhone and Palm both lost market share.

The IDC numbers show that RIM, maker of the wildly popular BlackBerry wireless device, held 53.6 percent of the U.S. market for smartphones in the second quarter, up from 44.5 percent in the first quarter. IDC's numbers show that Apple's share of the U.S. smartphone market tumble to 7.4 percent in the second quarter, from 19.2 percent in the first quarter. Palm saw its market share fall to 10.8 percent in the second quarter, from 13.4 percent in the first quarter.

Competition between the BlackBerry and iPhone has been heating up as RIM attempts to add features and functionality that appeals to consumers.

Smartphones Are to Mobile As Broadband Was for the Desktop

Most of the "disruptive" consumer behaviors we're seeing -- disruptive of traditional media -- didn't really kick in until broadband ("always on") Internet access reached critical mass about three or so years ago. There's a direct correlation between Internet usage frequency and engagement and broadband adoption. That's old news.

In the mobile segment the analogy is smartphones. You might argue, "no wait," the analogy in mobile is 3G. (3G subscribers are gaining in the US and around the world.) I would argue that smartphones are actually more analogous. 

Whereas consumers actively sought out high speed Internet for their homes, they aren't necessarily doing that in mobile (iPhone 3G is an exceptional circumstance). Generally consumers are ignorant of the network speeds of their mobile devices. It's much more "opaque" for consumers in mobile than for desktop Internet subscribers where the contrast was dial-up vs. always on.

Consumers are attracted to smartphones, and smartphones are increasingly part of 3G (and later 4G) networks. Gartner previously forecast handset sales as follows:

  • Asia/Pacific: 472.5 million units in 2008, a 17.9 per cent increase from 2007.
  • Japan: 47.7 million units, a 9.1 per cent decrease from 2007.
  • Western Europe: 188 million units, a 1.5 per cent decline from last year
  • North America: 185.7 million in 2008, a 5.3 per cent increase from 2007. 

As people look to replace their old handsets, they will increasingly be upgrading to smartphones -- which are becoming cheaper and more popular. And with smartphones, come data plans and wildly different behavior: 

smartphone internet usage
Source: comScore/M:Metrics (2008), n=31,389


Nokia Lowers Outlook, Symbian Phones Down

Finnish mobile hardware giant Nokia said that it was lowering its handset outlook for Q3 and would see a lower market share:

Nokia now expects its mobile device market share in the third quarter 2008 to be lower than in the second quarter 2008 . . . Nokia expects the overall mobile device market in 2008 to be impacted by the weaker consumer confidence in multiple markets. However, Nokia continues to expect industry mobile device volumes in 2008 to grow 10% or more from the approximately 1.14 billion units Nokia estimated for 2007. Nokia also continues to expect industry mobile device volumes in the third quarter 2008 to be up sequentially.

The full-year outlook for the company was generally upbeat (the stock is down on the warning). In addition, shipment growth in phones with the Symbian OS declined (to 5%), the company reported this week. In the first quarter, the annual growth rate for Symbian was 16.5%. Last year, growth was faster than that. Overall, at a time when smartphone growth is gaining, Symbian appears to be slowing -- in opposition to the trends in the broader market. Growth for smartphones is 16% annually according to Gartner. Symbian is mostly run on Nokia phones.

The following is data from our recent survey of North American mobile phone users, showing market share of various devices:

 mobile market share

Source: Opus/LMS/Multiplied Media, 8/08, n=789 (US and Canadian adult cellphone users)

Adoption of 3G Devices Growing in U.S.

Thanks in part no doubt to the release of the iPhone 3G, the U.S. has seen an explosive growth in mobile subscribers with 3G-enabled devices in the past year.

According to comScore:

The United States has caught up with Western Europe in the adoption of 3G with 28.4 percent of American mobile subscribers having 3G devices versus 28.3 percent in the largest countries in Europe. The number of U.S. subscribers with 3G enabled devices has grown 80 percent to 64.2 million during the past year.

A look at the top subscribers in U.S. versus Western Europe:

3G Growth

3G Growth