Europe

Surprise: Nokia Developed "Forked" Android Device, Will It Survive?

I've argued a number of times in the past that had Nokia from the beginning embraced Android it wouldn't have had to sell to Microsoft. It turns out that Nokia had/has developed an Android handset, apparently code-named Normandy. It uses a customized or "forked" version of Android much like what Amazon has done with Kindle devices, taking them out of the realm of Google standards and control. 

Reportedly it's a low-end device designed for emerging markets, where Nokia has had some success with its pseudo-smartphone Asha devices. Other details are scarce.

Microsoft bought Nokia's hardware business (for $7.2 billion) for multiple reasons. One of them was clearly defensive; it wasn't only about "bringing hardware and software together." 

Nokia sells most (80% or more) of the Windows Phones on the market today. The continuing strength of the Nokia brand in Europe is responsible for Windows Phone's roughly 10% market share there now. Had Nokia embraced or "diversified" its lineup with Android devices Microsoft might have felt the potentially negative sales impact as Nokia split its focus and marketing. 

The conventional wisdom is that Microsoft will kill the Normandy device when the acquisition formally closes -- it has been approved by regulators. Some are making the argument, however, that Microsoft might not immediately terminate the project because the version of Android being used is outside Google's control. 

That remains to be seen. Yet the existence of Normandy lends further credibility to the theory that Microsoft bought Nokia's phone business to prevent it from turning to Android.  

China Mobile Gets the iPhone, US Smartphone Growth and 'Nokisoft' Approved

Yesterday the Wall Street Journal reported that China Mobile and Apple had struck a long-anticipated deal to offer the iPhone to China Mobile's massive customer base (estimated by the publication at 7X Verizon Wireless). Neither company has confirmed the deal.

China Mobile is the largest carrier in the world's largest mobile and internet markets. The company has more than 750 million mobile subscribers. According to several estimates Apple has about 5% of the Chinese mobile market. Various flavors of Android are by far the dominant mobile platform in the country, with nearly 80% share. 

Many financial analysts think that the iPhone 5s and 5c are too expensive for China. However there appears to be a meaningful appetite for Apple's devices there. Apple's "greater China" revenue this past quarter was $6.8 billion. That number could easily double through the China Mobile deal -- if it's confirmed. 

October OS share

Back in the US comScore released September smartphone market share data. The firm estimated that 149.2 million American adults now own smartphones. Comscore's figures put smartphone penetration at or just under 64%, generally in agreement with Nielsen's estimates. 

Apple, Samsung and Motorola were the top three smartphone OEMs in the US. HTC and LG lost share and BlackBerry is out of the top five. Android is the top OS, gaining nearly half a point. Apple and Windows Phone also gained modestly. 

I was surprised not to see more of a bump for the iPhone given all the discussion of iPhone sales momentum. However it hasn't really materialized in comScore's data.

In the US Windows Phone share is 3.2%, growing but very small. By contrast, in Europe, Windows Phones now enjoy a 10% share across the EU5 (driven by UK, France and Italy) according to Kantar survey data.

Windows Phone's success in Europe is due almost entirely to Nokia and it's continued brand strength, which doesn't equally exist in North America. Nokia sells the overwhelming majority of Windows Phones globally, which is why Microsoft bought the company -- also to prevent it from starting to make Android handsets. 

That largely defensive acquisition has now been approved by US regulators, with European regulatory authorities likely to follow and permit the transaction. 

Study: 47% of Mobile Autos Lookups Lead to Purchase

Recently xAd and Telmetrics released more data from their UK "Mobile Path to Purchase" study conducted by Nielsen. This time the focus was on consumer behavior in the automotive vertical (car purchases and servicing). The big takeaway, once again, is how mobile devices now play a critical role in the pre-purchase research process.

The UK study is something of a mirror of the earlier US version, with some differences.

Perhaps the most important finding, the UK study discovered that 30% of UK automotive researchers used mobile devices exclusively. Tablet owners were more likely to be at home when conducting research vs. smartphone users (82% vs. 41%). In addition to price comparisons (popular with with both smartphone and tablet owners), smartphone owners are more often seeking location and contact information for dealers and service locations whereas tablet owners were doing more review checking.

In order of popularity and volume here's what UK auto mobile users are looking for or researching:

  • New or used car purchases (72%)
  • Car servicing (28%)
  • Car parts (19%)

The following are some additional data and details from this slice of the UK study: 

  • UK mobile auto searchers are more price sensitive than US automotive buyers -- 53% of UK auto searchers conduct price comparisons vs. 43% in the US
  • 47% of smartphone lookups ultimately lead to a purchase; 41% of tablet searches 
  • The mobile web has greater reach with UK auto searchers; however "nearly half of smartphone searchers and 29% of tablet searchers have used an auto app"
  • 60% of UK automotive searchers plan to purchase within a month or longer. However 32% plan to purchase within a 24 hour period (the latter is probably service or parts related)

Location was a critical factor for mobile users: 40% sought or expected business locations within 5 miles. Finally only 30% of these automotive researchers knew specifically what they were looking for. Thus there's a significant opportunity for marketers to influence these consumers' purchases though mobile marketing and advertising.

Report: Windows Phone Continues to Gain Share in Europe

Kantar Worldpanel ComTech has released new smartphone market share data showing significant gains for Windows Phone in Europe. The research firm says that Windows Phone is now within a point of the iPhone in Germany and that its growth is outpacing Android across the Continent: 

Android remains the top operating system across Europe with a 70.1% market share, but its dominant position is increasingly threatened as growth trails behind both Windows and iOS. Windows Phone has hit double digit sales share figures in France and Great Britain with 10.8% and 12% respectively – the first time it has recorded double digits in two major markets.

Kantar also says that Apple is continuing to show momentum in the US: "Apple continues to grow strongly year on year and now makes up 39.3% of sales." These data do not include the recent 9 million handsets sold by Apple upon the debut of the iPhone 5s and 5c.

Windows Phone's strongest markets are France, UK, Germany and Italy, where Nokia's brand is still relatively strong. It continues to lag in the US and China, however. 

  

Microsoft Bought Nokia to Block Android Lumia Phones

Nokia's Lumia handsets represent about 80% of Windows Phone's sales. However Nokia was continuing to lose share to Android and iPhone in key markets across the globe. By the same token Windows Phones had failed to enable Nokia to re-enter the US smartphone market in any convincing way. 

Since the inception of the Microsoft-Nokia deal in early 2011, we had been arguing it was a serious mistake for Nokia to not offer an Android phone. However the terms of the agreement between the companies precluded that. In 2014 the deal was set to expire. But before that deal was renegotiated, Microsoft acquired Nokia's phone hardware business for roughly $7.2 billion.  

In the middle of last year we speculated that Microsoft might be compelled to acquire Nokia for defensive reasons. When the acquisition was announced a little over a week ago, I argued had Nokia embraced Android it would not have been so weakened and forced to sell itself. I also speculated this summer that Nokia would be compelled to come out with Android handsets if it wanted to survive:

My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral.

Now the NY Times is reporting that Android Lumia phones were in development: 

A team within Nokia had Android up and running on the company’s Lumia handsets well before Microsoft and Nokia began negotiating Microsoft’s $7.2 billion acquisition of Nokia’s mobile phone and services business, according to two people briefed on the effort who declined to be identified because the project was confidential. Microsoft executives were aware of the existence of the project, these people said.

There are two overlapping potential scenarios: Nokia was developing Android handsets in part to add leverage in negotiations with Microsoft (for renewal or acquisition); and/or Nokia was developing Android handsets in earnest and would have rolled them out -- forcing Microsoft to avoid that outcome through an acquisition.

Regardless it appears that the idea of Nokia marketing both Android and Windows Phones was a potential disaster that Microsoft sought to avoid at great cost -- literally. As I've written elsehwere, however, it remains unclear that Microsoft's $7.2 billion have been well spent.

Nokia Sells More Lumia Handsets but Not in North America

Nokia's results this morning are something of a Rorschach test. You either see them as evidence that Nokia has stalled and Windows isn't going to save the company or you can see some momentum and success -- as a promise of more future success. 

Nokia's Q2 revenue was €5.7 billion ($7.5 billion), which was down vs. last quarter (3%) and last year (24%). Lumia sales were up 32% vs. last quarter to 7.4 million units. Overall the company sold 61 million phones, almost 90% of which are not smartphones however.

Nokia said the 7.4 million Lumia unit sales reflected strong demand for the Windows Phone based handsets. However in North America the company sold roughly 500,000 devices vs. 600,000 last quarter. Accordingly demand in North America is flat, while Windows remains under 5% in terms of market share. Nokia has had more success in Europe and other markets where its brand is stronger.  

Yet Nokia has now pulled into the number three smartphone slot after Android and iOS. BlackBerry reported selling 6.8 million phones last quarter. Becoming number three was an expressed goal when Nokia selected Windows as its exclusive OS. However the question now becomes can it do better?  

My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral. 

Update: The Verge reports that Nokia CEO Stephen Elop was concerned that if the company chose Android that it would lose to Samsung. Thus it chose Windows Phone as its exclusive OS. That has been a very mixed experience for Nokia, obviously. I believe that Nokia with its brand and marketing resources would have been in a position to challenge Samsung for Android dominance. 

But the early window of opportunity, so to speak, has now closed for Nokia. 

By Saying 'No' to Android Has Nokia CEO Elop Sealed His Fate?

There are some signs of progress for Windows Phones and Nokia's Lumia line of handsets that exclusively use the operating system. Especially in Italy and the UK Nokia seems to be making some headway. There were also some data showing an uptick in Windows Phones' market share in the US.

The following are two sets of survey-based market share data from comScore and Kantar. Kantar shows much greater growth in Windows Phone adoption in the US than comScore. Regardless, over the past 18 months Windows Phones have largely failed to make a dent in the smartphone dominance of Android and Apple devices. 

comscore March mobile market share 1

Kantar Worldpanel ComTech smartphone data

It's almost 100% certain that Nokia, with its well-reviewed Lumia hardware, would be selling more phones if there were an Android option. However Nokia CEO Stephen Elop has essentially refused to consider that option and is sticking to the company's Windows-only strategy. This comes amid intensifying investor pressure to adopt Android.

According to a recent WSJ article:  

Shareholders approved the dividend-suspension proposal, but appear to be losing patience as questions about Samsung and Apple loomed over Tuesday's session. One shareholder asked Mr. Elop why Samsung is achieving what the investor characterized as 10 times better results than Nokia, and another concluded a round of tough questions by saying that right now Nokia isn't displaying "the spirit and charisma" that Apple has.

Over the next 2 - 3 quarters, Nokia may see slightly better results but they won't show the kinds of growth desired by institutional investors. Unless or until Nokia adopts Android sales won't accelerate to any significant degree, to the increasing frustration of investors. 

One way or another Nokia will likely be developing Android devices by this time next year -- absent a Windows sales miracle. Either Elop will give in to investor calls for Android or, if he does not, he will be ousted by their calls for his head. And the first act of any successor CEO will be to fast-track Android handset development. 

Within 24 to 36 Months Mobile Internet Penetration Will Overtake the PC

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: 

  • AT&T -- 105 million
  • Verizon -- 99 million
  • Sprint -- 54 million
  • T-Mobile -- 43 million

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. 

Nokia Q1: Lumia Sales Up though Brand Dead in US Market

Nokia released Q1 earnings this morning. They were mixed. The company said that it sold 5.6 million Lumia handsets, which is up from 4.4 million in Q4 2012. Overall shipments of Nokia handsets were down more than 20% however. Sales also fell 20% YoY, to 5.9 billion EUR ($7.7 billion). As a consequence Nokia shares were down 12% this morning.

The roughly 25% improvement in Lumia sales was encouraging but far from a turnaround. Nokia's lower-end device sales were down, offsetting the Lumia gains and depressing overall sales figures. 

Since turning to Windows Phone in 2011, Nokia has sold 19.9 million total units. While this isn't outright failure -- and there's growth projected -- Windows isn't going to save Nokia or make it competitive with Android and iOS (enough time has passed to draw that conclusion). Nokia will have to turn to Android to diversify in the near term.

Nokia reported Lumia sales increases in all geographic regions except the US/North America. That's largely because Nokia's brand remains relatively strong in Europe and other places. However its brand is effectively dead in the North American market. Qarterly shipments of Lumia devices were down 33% vs. Q4 (400K vs. 700K) in North America. 

This not only reflects the weakness of the Nokia brand but equally the indifference of much of the US public to Windows Phones. Not only will Nokia have to aggressively discount it will need to develop new devices for the US market and may still fail (absent an Android strategy). 

During its Q1 earnings call Nokia was dismissive of Android. However if the company hopes to compete again in North America and indeed globally in the top tier of OEMs it will have to develop Android handsets beside Windows. In the US Windows Phones are driving less than 2% of mobile internet traffic; their US market share is roughly 3%. 

Survey Shocker: Mobile Media Beats TV Around the Globe

Move over TV, your time at the top of the media hierarchy is coming to and end -- at least outside the US. Last week ad network InMobi released its Q4 "insights" report. The document is based on survey data drawn from more than 14,000 respondents in multiple countries around the world. However many questions don't include answers from US and UK mobile users.

The "big finding" is that around the world (US, UK excluded) time with mobile has surpassed TV. In fact time with mobile beats all other media channels. The chart below reflects aggregate findings from 12 countries, though not the US and UK. 

Screen Shot 2013-03-04 at 5.23.05 AM

The survey also discovered that 62% of respondents "engage in mobile activity" during TV watching. Accordingly TV ads in general see diminished attention because of mobile (beyond ad skipping). However this also represents an opportunity for marketers to use mobile devices to measure their TV ads' effectiveness or to generate concrete actions in response to TV ads. 

Screen Shot 2013-03-04 at 5.24.36 AM

Another "big" finding is that internet users are now going online through mobile devices in numbers equal to the PC internet or primarily use mobile to go online. This phenomenon is most pronounced in developing markets, as one might imagine. But it's also true in the US according to the InMobi data. 

According to the survey 38% of US respondents "mostly" use mobile to go online. This finding (and others) may well be biased because the survey respondents were found through the InMobi ad network: "Recruited via InMobi global mobile ad network between August and November 2012." This is therefore going to tend to be a more mobile-centric audience than the US internet population as a whole. 

Screen Shot 2013-03-04 at 5.26.15 AM

Another interesting result, this respondent pool says that it rarely clicks ads unintentionally. In contrast to some of the estimates and data floating around in the market (e.g., 40% of mobile ad clicks are "inadvertent") only a small minority said that mobile ad clicks were mistaken more than 10% of the time.

Screen Shot 2013-03-04 at 5.28.22 AM

Though these findings may not be entirely representative of internet users or perhaps even US mobile users as a whole they're still striking in multiple ways.

Back to the TV vs. mobile time spent: most marketers' ad spending and behavior fails to recognize the profound shifts in the market captured by and reflected in these data. The idea that mobile now dominates TV in terms of time spent or that mobile captures attention from TV even during TV time will be unsettling -- if not shocking -- to most brand marketers.

And most right now will have no idea what to do about it. 

Samsung Introduces 8-inch Phone, HP Debuts $170 Android Tablet

Two more developments from Mobile World Congress yesterday that are noteworthy: HP's new 7-inch Android tablet and Samsung's Galaxy Note 8.0 tablet, which also makes calls. Yes, it's a giant 8-inch phone. 

The new HP Slate-7 Android tablet looks and acts very much like Google's (ASUS-made) Nexus 7. The device itself is unremarkable. What's significant is that HP has created a new low price point for 7-inch Android tablets.

The Kindle Fire and Nexus 7 retail for $199. The new HP tablet will cost $169.

While there have been lower-priced Android tablets in the past they've all come from "no name" device makers and had little success with the North American public. The HP brand and low price of the Slate 7 should make it a big hit and put pressure on both Google and Amazon to further lower prices to match it.

Apple opted-out of price competition for the iPad Mini when it priced the device at $329. That decision, which was heavily criticized, now looks smart as Android OEMs crank out devices whose margins will be essentially non-existent. We'll probably see ZTE and Huawei make even cheaper Android tablets in the near future. 

Samsung also released a new tablet yesterday except, as mentioned, that it's also a phone. The Galaxy Note 8.0 joins a growing range of tablets and giant phones being put out by Samsung under the Galaxy brand. Pricing hasn't been released but it probably will not be much higher than the iPad Mini. If that's correct it could potentially successfully compete with the iPad Mini, with the phone part as the differentiator ("best of both"). 

Many people are mocking the device for being a phone (and thus ridiculous held up to your ear). However there is a segment of the population that wants the combination -- and would probably use a headset to talk on the phone.

Nokia Shows Momentum but Needs Android More than Ever

Yesterday Nokia announced "better than expected" Lumia sales. Overall the company said (in these preliminary results) that it sold just over 86 million mobile devices. Among them were 16 million smartphones, including 4.4 million Lumia handsets. The remainder were legacy Symbian devices and new lower-end Asha devices

Asha phones are somewhere between a feature phone and a true smartphone. They're designed to be low cost and intended for emerging markets such as India. They would see little or no success in developed markets like North America or Europe. Indeed, they're not directed toward those markets. 

In Q2 and Q3 2012 Nokia sold a combined total of 6.9 million Lumia handsets. The troubled-company's stock was up yesterday and this morning, having seemingly beaten a very grim Q4 forecast. And some financial analysts are hailing the results as the beginning of Nokia's long-hoped-for turnaround. 

Any celebrations are premature however. According to Kantar Worldpanel Comtech research demand for Windows Phones is uneven and limited. 

In the US Windows Phones continue to lose share and have failed to capture consumer interest. The story is somewhat different in Europe, however, in part because of the legacy of Nokia's strong brand. In the five major EU countries Windows saw aggregate growth of 1.7%. 

The markets where Windows Phone gains have been meaningful are Italy, Spain and the UK, according to the Kantar data. In Italy, for example, Windows Phones gained almost 8 points and now have an 11.7 percent share of the smartphone market.

While there may continue to be modest growth for Nokia with Windows Phones, it's fairly clear that they are unlikey to power a full recovery. What Nokia really needs to ignite growth is to add Android devices to its lineup.

Remarks earlier this week by Nokia CEO Stephen Elop suggested that the company could be open to using Android: 

In the current ecosystem wars we are using Windows Phone as our weapon. But we are always thinking about what's coming next, what will be the role of HTML 5, Android... HTML5 could make the platform itself -- being Android, Windows Phone or any other -- irrelevant in the future, but it's still too soon [to tell]. Today we are committed and satisfied with Microsoft, but anything is possible. 

Contractual agreements with Microsoft probably would make Android "diversification" unlikely in the near term unless Windows Phones sales fell below a certain threshold. Given the modest momentum around Microsoft's OS Nokia will probably stick with Windows. 

Yet if the company were to offer both Android and Windows devices it would see its fortunes improve more rapidly -- much more rapidly. 

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%.

Screen Shot 2012-10-25 at 3.46.52 PM

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

Nokia Q3: Lumia Sales Not Happening

Nokia announced Q3 earnings yesterday. The company lost 969 million euros or $1.27 billion. It reported sales of 2.9 million Lumia smartphones during the quarter, which was down from 4 million in Q2. CEO Stephen Elop attributed the sales decline to the announcement and impending arrival of Windows 8 and a delay in consumer purchases accordingly. 

Nokia sold 3.4 million Symbian handsets for a total of 6.3 million overall smartphone sales in Q3. However Symbian has been discontinued as the company focuses exclusively on Windows Phones. Nokia CFO Timo Ihamuotila said the following about Nokia device sales in Q3:

Our Smart Devices net sales decreased 37% sequentially due to lower Lumia and Symbian net sales. This was partially offset by higher overall Smart Devices ASPs. Looking at our Lumia volumes in more detail, we saw a sequential decrease in shipments to 2.9 million units, with declines in all regions except for Middle East and Africa. From a product-level view, we saw sequential growth in the lower-priced Lumia offering, more than offset by declines elsewhere in the Lumia portfolio.

The evidence suggests that Nokia continues to have success at the lower end of the market but at the higher end it's struggling. Nokia's Elop promises this will change with the release of the Nokia Lumia 920, its first Windows Phone 8 smartphone. 

In the US AT&T will reportedly have an exclusive for six months on the handset. Presumably that was in exchange for aggressive promotion and placement in AT&T stores. We'll see if that helps but I'm quite skeptical. 

I don't think there's any reason to believe that Nokia will sell a great many more Lumia 920 handsets than it has sold of earlier models this past year. The company should have pursued a dual path with Android and Windows Phones. Of course Microsoft wouldn't have permitted that and still been willing to turn over hundreds of millions of dollars to Nokia in support. 

Nokia has lost in excess of 4 billion euros since it announced its partnership with Microsoft. And it doesn't appear that the hemorrhaging is over yet. 

EU Clears UK Mobile Payments JV 'Project Oscar'

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. 

Nokia and Others Form 'In-Location Alliance' to Promote Indoor Positioning

Nokia is spearheading what's being called "The In-Location Alliance." The purpose of the new quasi-trade group is to "drive innovation and market adoption of high accuracy indoor positioning and related services." The assumption is that more accurate indoor positioning will create new markets and new revenue opportunities.

According to the press release out this morning: "The Alliance will focus on creating solutions offering high accuracy, low power consumption, mobility, implementability and usability. It will create an ecosystem that stimulates innovation, enhances service delivery, and accelerates the adoption of solutions and technologies that optimize the mobile experience."

There are 22 companies listed as founding members: Broadcom, CSR, Dialog Semiconductor, Eptisa, Geomobile, Genasys, Indra, Insiteo, Nokia, Nomadic Solutions, Nordic Semiconductor, Nordic Technology Group, NowOn, Primax Electronics, Qualcomm, RapidBlue Solutions, Samsung Electronics, Seolane Innovation, Sony Mobile Communications, TamperSeal AB, Team Action Zone and Visioglobe.

The release also indicates the alliance will promote open standards and systems to allow for broad participation by non-member vendors and third parties.

There are a number of companies already operating in the indoor positioning segment, including Google, Microsoft, Wifarer, Point Inside, Aisle411 and others. Interestingly none of them are on the list above. No carrier is part of this inagural group either. However, the alliance is inviting any and all interested parties to join. 

Notwithstanding the promise of new business models, that's one of the central questions: how will some of these companies make money? The superficial response is "deals and advertising." Privacy is also another major issue. However I suspect that can be addressed with an opt-in approach, much in the way that Apple does with iPhone apps requesting to use location. 

PayPal in Mobile Ordering/Payments Test with McDonald's France

As reported by Reuters late last week PayPal is in a pilot with McDonald's France to test mobile ordering and payments:

McDonald's is testing a mobile payments service featuring PayPal at 30 of its restaurants in France. Earlier this year, McDonald's ran demonstrations of a broader PayPal mobile payments service at its franchisee conference in Orlando, Florida.

A McDonald's spokeswoman confirmed the France tests and said the PayPal demonstration at its conference was part of a booth that features "technology coming within the next 24 months or so."

The concept is that people would order on their mobile handsets and then pick-up that order in a McDonald's location via an express line. However the idea that this system might be coming "in the next 24 month or so" is problematic for PayPal. As the article points out the company is in a kind of land grab or race with other payments vendors but especially Square, which established a major beachhead with its recent Starbucks deal

In the past this probably would have been PayPal's deal. It now legitimizes Square as a viable alternative to PayPal for larger enterprises.

PayPal has existing in-store payment relationships with Home Depot and Office Depot. Several months ago I used the PayPal system at Home Depot and was unimpressed. There was no real benefit vs. a conventional card swipe. It also didn't expedite the transaction. 

However PayPal has international scale, which at the moment Square does not. It's also true that there won't be a single winner in the mobile payments segment. Multiple consumer-facing companies and apps will likely co-exist.

Unlike the Home Depot-PayPal arrangement, which offered no apparent benefit or time savings, the McDonald's trial does offer convenience and time savings to end users. 

Getting a payments relationship in place is only the first step. Once these payments systems are in place they become a source of data and a basis for marketing and CRM initiatives. 

EU Request for Google Mobile Changes May Go to Heart of Jelly Bean Innovations

One of the chief innovations Google is bringing to its "Jelly Bean" Android update involves local search and related functionality through Google Now. I've written fairly extensively already about these new features on my Screenwerk blog and Search Engine Land. In short, the new Android OS offers information "cards" (structured data) in response to a range of query types, especially local.

This is at once an evolution of the Google search experience for mobile devices and an effort to better compete with Apple's Siri. The information (search result) is more attractively presented and substitutes for the traditional page of search results, which still can be found by scrolling to the bottom. In addition to the image above right, below are a few example screenshots:

 Screen shot 2012-07-24 at 6.36.06 AM

This new presentation is more consistent with what mobile users want ("answers") and offers a better experience overall than a conventional page of "blue links." The potential problem for Google is that this approach goes much further in the direction of substituting "Google's own content" for third party information, which is at the center of Europe's antitrust dispute with Google.

The issue of of Google showing its "own content" at the top of search results or in a preferential position is one of four "concerns" raised by the EU in May along with an invitation to settle. Because it goes to the heart of Google's control over the search results page and the company's ability to experiment and innovate with new content presentations, it's one of the most potentially challenging issues for Google to negotiate with the EU. 

Google has been trying to avoid a formal antitrust action by European regulators. But just as it was negotiating to settle the case, EU Competition Commissioner Joaquin Almunia, last week, asked Google to make "broad changes" to its mobile services. While it's not clear specifically what he is asking for, the path adopted by Jelly Bean -- which completely marginalizes third party content in a range of cases -- exacerbates one of the EU's fundamental "concerns" about Google.

Google is not going to want to be locked into any specific search results page in mobile. It will demand the ability to change the look and feel of the page and to innovate around the way it presents content. But to the extent any such innovations don't involve equal exposure of third party information the Europeans will probably have strong objections.

The next couple of weeks should determine whether Google will be able to negotiate a settlement or whether the company will face a formal antitrust action (and potentially billions in fines) from the EU. 

Will Microsoft Be Forced to Buy Nokia?

We can now say that the Microsoft-Nokia partnership isn't working for either company. Nokia's woes are well documented: more job cuts, more losses, more deterioration in the core business. Lumia sales are weak on a global basis, especially in North America where Nokia was plotting its comeback. The company is in an accelerating state of decline, much like RIM now. 

For Microsoft, which gave Nokia preferential treatment and established a special relationship, Nokia's fall has to be particularly disconcerting. Redmond is already providing billions to Nokia in support and marketing help. Just like the struggling economies of Europe, Nokia needs a bailout. The company is now a takeover target

That raises the question: Will Microsoft be forced to buy Nokia, defensively? Most of the Asian handset makers have favored Android over Windows Phones. Indeed, Nokia should consider adding Android phones to its lineup -- unless precluded by its agreement with Microsoft. And that's probably the case. 

Right now Nokia has about $12 billion in cash in the bank. Absent a takeover, that cash will prevent the company from disappearing any time soon. But it can't continue to operate in the current manner. Its exclusive relationship with Windows/Microsoft simply hasn't worked. Enough time has passed to make that statement. 

There's almost no chance, given the current state of things, that Windows Phones will become the number two smartphone OS, as predicted by Gartner and IDC. Those forecasts were largely based on the reach and perceived brand strength of Nokia. That brand strength doesn't exist in North American and it's declining in other markets.

The chances are growing that someone will bid for Nokia. Rumors are circulating that it could be Samsung (denied by the company) or China's ZTE. However Microsoft will probably be forced to buy Nokia if it comes to that. By default the company would then be following the advice of several tech bloggers who suggested the same to compete with Apple with a more holistically integrated device. 

Microsoft's Bing Maps also rely increasingly on Nokia's data and backend, another reason Microsoft may want to acquire the company. Nokia also holds valuable patents that enhance the takeover value of the Finnish company (and Android licensing value for Microsoft). 

There will likely be some radical change to Nokia (sale or replacement of CEO Elop) by Q4 of this year if sales don't dramatically improve -- and they're not likely to with the iPhone 5 and Galaxy S III coming. 

Survey Suggests Limited Demand for Lumia Phones

AT&T has said that Lumia 900 sales have "exceeded expectations." Gizmodo checks seem to confirm brisk sales (with some qualifications). The Lumia appears to be selling well on Amazon in the US. Yet reports from Europe suggest carriers have soured on the device:

Skeptics among operators say the sleek, neon-coloured phones are overpriced for what is not an innovative product, cite a lack of marketing dollars put behind the phones, and image problems caused by glitches in the battery and software of the early models . . .

"No one comes into the store and asks for a Windows phone," said an executive in charge of mobile devices at a European operator, which has sold the Lumia 800 and 710 since December.

The other day on the WP Central blog there was a poll of readers indicating some iPhone and Android users were abandoning their handsets for Lumia. That poll inspired me to create one myself on Google Consumer Surveys.

I asked "What will be your next mobile phone?" The survey had just over 1,500 US adult respondents. The responses (below), which are allegedly statistically significant, suggest very limited demand for the Lumia handset and Windows Phones in general in this market. 

What will be your next mobile phone? 

 Screen shot 2012-04-18 at 1.07.19 PM

N=1,504 (Opus Research using Google Surveys)

The survey respondents were drawn from news and reference sites and almost evenly divided between men and women and across age groups. The questions were randomized so as to not bias the results. 

In terms of the "Other" responses (33%), some are probably intended Android buyers that aren't looking at Samsung models. They may also be non-smartphone buyers as well. This is suggested by the fact that when segmented by age, "Other" is the top category for those over 45. 

Those in the 35-44 age group were much more interested in the Windows/Lumia handset than other age groups (5.4% vs. 3.5% overall). Demand was strongest for Windows/Lumia phones in the South and US Midwest. Demand for BlackBerry phones was strongest in the Northeast. 

Interestingly Windows/Lumia demand was stronger than the norm among those earning at least $75,000 per year. This is a bit counter-intuitive because the phone is aggressively priced at $99, presumably to generate demand at all income levels. However, among those making less than $75,000 per year demand for Windows/Lumia was less than the survey norm above. These findings suggest that Nokia may not have needed to target the phone below $150 or $199 (with contract). 

We'll find out definitely over the next two quarters, as Nokia discloses sales figures, whether the Lumia handsets are selling well or not. But the survey I conducted appears to confirm my earlier prediction that they'll see only modest adoption in the US.