Europe

Will Nokia Fall Further?

Nokia is the dominant handset maker in the world. But it has seen that position erode, especially in the smartphone market. For example, Symbian saw its global market share decline from 62.3% at the end of 2007 to 47% at the end of 2008. That number further declined to 45% as of the most recent (Q2) Gartner handset numbers.

Now an article at MarketWatch, playing off a report from investment firm Goldman Sachs, reflects that Nokia may be stumbling at a critical time:

Nokia has also taken too long to upgrade its main software platform, the Symbian Series 60, which is now deemed too bulky and complex by many users, in particular when it comes to the touch interface.

"Our experience with the N97 has convinced us that Nokia needs to start almost from scratch to create an attractive user experience, rather than following the complex menu structure of Series 60," Goldman wrote.

Nokia, however, has said that it remains "strongly committed" to Symbian. According to Dow Jones Newswires:

Nokia Corp., the world's biggest maker of cellphones by volume, said Wednesday it remains "strongly committed" to the Symbian mobile operating system.

The statement comes after the German edition of the Financial Times reported citing an unnamed source that Nokia will abandon the Symbian platform for its smartphone devices in favor of the Maemo operating system.

"We remain strongly committed to our current open OS software strategy for cellular devices, which is based on the world-leading Symbian OS...," Nokia said in a statement.

World leading indeed; but for how much longer? 

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Related: Image of the Nokia N97 "mini." So far in the US market at least the flagship N97, Nokia's smartphone comeback phone, has gone from being a potential iPhone "killer" to DOA.

Second Quarter Smartphone Sales Figures

Gartner released its Q2 handset sales figures today. Overall unit sales were down, though smartphone sales grew a very healthy 27%: 

Worldwide mobile phone sales totalled 286.1 million units in the second quarter of 2009, a 6.1 per cent decrease from the second quarter of 2008, according to Gartner, Inc. Smartphone sales surpassed 40 million units, a 27 per cent increase from the same period last year, representing the fastest-growing segment of the mobile-devices market

RIM/BlackBerry, Apple and HTC gained share, Apple most dramatically vs. Q2 2008. Nokia continued to lose share.  Here are the numbers according to the IT consulting firm:

Gartner Q2 handset sales

Regarding mobile OS share, Garnter said:

  • Symbian held 51 per cent share, down from 57 per cent a year ago, while RIM and Apple grew their shares year-on-year.
  • Android's share was just under 2 per cent of the market and more Android-based devices will come to market in the fourth quarter of 2009, intensifying competition in the smartphone OS market, particularly for Symbian and Windows Mobile.
  • Microsoft's share continued to drop year-on-year to account for 9 per cent of the market in the second quarter of 2009.

The firm also said the Pre only sold 205,000 units. 

Yellix: Facebook Becomes Caller ID for Your Smartphone

MobilePeople Alum Claudia Poepperl, has started a new company called adaffix. The company's first product is Yellix. It essentially turns Facebook into "caller ID 2.0" for smartphones (except the iPhone). Here's how Yellix describes what it does:

YELLIX is a free application for your mobile phone. Once installed, it will automatically display a pop-up showing you the up-to-date status, photo and other relevant content of your Facebook friends when they call you on your mobile.

Friends must install the Yellix Facebook app and then the Yellix app on their phones:

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Read the rest of this post on Screenwerk.

Slick Handsets Not Working for T-Mobile, Sprint

Last week T-Mobile USA reported Q2 earnings. Here are the highlights:

  • Service revenues . . .were $4.77 billion in the second quarter of 2009, in line with the first quarter of 2009, but down from $4.85 billion in the second quarter of 2008. 
  • OIBDA of $1.60 billion in the second quarter of 2009, up from $1.38 billion in the first quarter of 2009 and $1.58 billion in the second quarter of 2008. 
  • Contract churn was 2.2% in the second quarter of 2009, down from 2.3% in the first quarter of 2009 and up from 1.9% in the second quarter of 2008. 
  • In the second quarter . . .added 325,000 net new customers, down from 415,000 in the first quarter of 2009 and 668,000 in the second quarter of 2008.
  • Blended Average Revenue Per User (“ARPU” as defined in Note 1 to the Selected Data, below) was $48 in the second quarter of 2009, in line with the first quarter of 2009 but down from $52 in the second quarter of 2008.

The G1 has largely failed to ignite subscriber growth, just as the Pre has not really helped Sprint to attract higher value post-paid customers (unlike Boost which has grown on aggressive pricing in the pre-paid segment). Among smartphones, only the iPhone seems to have driving subscriber growth for AT&T. Verizon has grown at the expense of Sprint and other carriers and held its own against the iPhone.

At one point there was speculation that T-Mobile might try to buy Sprint, which itself just announced that it was acquiring VirginMobile. That company today announced quarterly results: profits were up though revenues were down amid 269,239 net subscriber losses. It ended the quarter with five million customers unchanged from a year ago. 

If these attractive handsets have failed to draw new subscribers -- and Android phones will be everywhere by 2010 -- what's left to drive carrier growth? Price competition and/or M&A. In particular, some of the smaller discount carriers will need to merge or will be acquired by T-Mobile and Sprint. 

Video of Improved Windows Mobile 6.5 in Action

From the UK-based Inquirer comes a video demo of Windows Mobile 6.5 in action on a HTC Touch Diamond 2. The entire experience looks to be dramatically (indeed radically) improved from WinMo 6.1.

Click here or on the image below to take a look at the video (it's about 10 minutes long). The interface has taken a cue from Zune according to the speaker. He explains, "6.5 will co-exist with [Windows Mobile] 7 when it comes out; 6.5 with be a breadth play, be a lower cost device. 7 will be a premium hardware experience." 

(In the US at least, $200 is the de facto ceiling [w/subsidy] for smartphones; will $99 then be the "lower-cost" device category he refers to?)

He says that Windows Mobile 7 will incorporate all the key user experiences in the current smartphone market including multi-touch, which to date only the Pre has (and the forthcoming Android Hero) among iPhone competitors. There's also "full flash support." Microsoft is also banking on multiple applications running in the background as a differentiator. 

There's also a discussion/demo of "My Phone," which is cloud storage for Windows Mobile devices, essentially the same as MobileMe from Apple. At the end there's a brief demonstration of "Microsoft Tag," a propreitary barcode reader/system that will be pre-installed on Windows Mobile phones. 

Windows Mobile 6.5

Partnership Puts 2D Barcodes on Bus Shelters in Paris 'Quartier Numérique'

French 2D barcode platform vendor MobileTag and outdoor advertising company JCDecaux have announced a deal to put 2D barcodes on 19 bus shelters throughout the area of Paris known as the "Quartier Numérique" primarily in the 2nd arrondissement. The area is WiFi enabled. The barcodes provide access to "practical, historical, cultural and entertaining content using flashcodes." According to the release:

To obtain content, users simply shoot one of the flashcodes (2D barcodes) located on either side of the bus shelter with their mobile phone's camera which then gives instant access to the mobile portal via their Internet connection.

The technology works with smartphones and feature phones (with a camera). However the technology is not so instant. MobileTag's software must be installed for the content to render on phones. This software/application download requirement is a barrier to widespread adoption of 2D barcodes. However, apps stores are conditioning smartphone users to download software so this may be less of a barrier over time.

Opera: Mobile Web Stats for June

Opera has released its State of the Mobile Web report for June. The company said it crossed a milestone with 10 billion page views on the Opera Mini browser globally in the month.

Here are some the top-level data from this latest report on top sites and handsets:

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Remember this reflects data from users who have downloaded the Opera browser and is not necessarily reflective of the mobile Internet as a whole. However it's likely to be directionally accurate. 

The success that Opera has enjoyed on the BlackBerry is partly attributable to the fact that the BlackBerry mobile browser experience is quite poor at the moment. 

Forrester: 13% of Western Europeans Access Mobile Internet

According to data from a recent Forrester survey of roughly 20,0000 Europeans (reported in Total Telcom), on average 13% of Western European consumers now access the Internet on their mobile devices, while and 50% know their phones are Internet capable. 

The numbers in the chart below vary by country and the data tend to change when you ask users about daily or monthly frequency, but in the US/Canada, the percentage of mobile Internet users is north of 20% (depends on the survey). Our figure is about 27% - 29% for the North American market (excluding Mexico).

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There are two very clear variables that drive mobile Internet usage: the price of data and smartphone adoption. As data prices (and handset prices) come down more people will opt for smartphones and unlimited data plans. This is very analogous to the early days of the Internet on the PC where dial up gave way to unlimited broadband and usage grew dramatically. 

Mobile is a more accelerated market. But things that may further speed up adoption, like carrier price wars, cannot be easily predicted. Overall, the cost of data and WiFi access should still come down over time, although smartphone handset prices will likely remain between $99 and $199 in the US. 

Most mobile Internet ad revenue forecasts are tied to smartphone growth and penetration as a proxy for Internet access and usage. In general, I would tend to agree, but there's more nuance within the category because all smartphone owners don't equally access the Internet: iPhone and Android owners do more than BlackBerry or Windows Mobile owners for example. 

New (Local) Mobile Ad Forecast from Kelsey

There are probably a dozen mobile ad forecasts (or more) in the market. Kelsey just expanded theirs to include Western Europe. Here are their numbers (forecast period 2008-2013):

Western Europe

  • Mobile search ad revenues: €39 million to €2.3 billion
  • Local mobile search ad revs: €18 million to €1.4 billion
  • Mobile display €14 million to €1.1 billion

US:

  • Mobile search ad revenues: $39 million to $2.3 billion
  • Local mobile search ad revs: $20 million to $1.3 billion
  • Mobile display $21 million to $567 million

That adds up to roughly $7.8 billion in mobile ad revenues overall for both markets. Previously I was critical of the firm's emphasis on the local segment driving "more than half" of mobile ad revenues.

In light of what we know today, the earlier Opus/LMS mobile ad forecast for Western Europe and North America was somewhat crude and perhaps too bullish at $5 billion by 2012.

Shortly, we'll be publishing a roundup of third party forecasts together with our own numbers that take a more granular look at mobile ad revenues and factor in fill rates, the shift from CPM to CPC models, SMS, mobile apps, user response rates and generally decling ad pricing.

AdMob: Where iPhone/iPod Touch Users Live

Ad network AdMob issued its June 2009 Mobile Metrics Report this morning. It focuses on the geographic distribution of iPhone and iPod Touch owners (Apple said in its recent earnings report that there are 45 million globally.) Here are the top-level findings from the June report:

  • 54 percent of iPhone and iPod touch users are in the United States
  • Following the U.S., France, Germany and the UK each had more than five percent of all iPhone and iPod touch devices
  • iPod touch users represent 38 percent of total iPhone OS devices in North America
  • Requests from the Android OS increased 25 percent month over month. Android has five percent worldwide OS share and is slightly ahead of Windows Mobile for the first time

Here are some charts from the report:

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All of this must be qualified by the fact that this data comes from AdMob's network, which is not identical to the mobile Internet as a whole. However it's a large network and directionally consistent with mobile Internet trends more broadly.

The distribution of iPhone/iPod Touch ownership and usage is interesting to be sure but the bombshell in here is the data that Android-based usage is now bigger than Windows Mobile, this despite only one device (effectively) in the market for Android. This underscores the competitive urgency for Microsoft to get WinMo 6.5 and 7 into the market.

Mobile-Related Comments from the Yahoo! Q2 Earnings Call

Here are mobile-related comments from Yahoo! CEO Carol Bartz made on the Yahoo! earnings call yesterday (bold text is my emphasis):

General strategy:

Beyond the numbers this past quarter we have three themes. One, we put a great leadership team in place. With Tim coming on board we are essentially solidifying my staff and we are closing in on someone to head our international region. Two, we continue to define our audience priorities. This includes identifying our most important vertical experiences like the Homepage, mail and our media properties as well as the capabilities that support all of them like open, social, video, mobile and more . . .

Homepage-mobile integration:

The new Homepage makes it much easier for users to bring together their online world in a single destination. Users can put virtually anything on their new Homepage in just a click or two whether it is content from Yahoo! or anywhere on the web. Starting next week they can synch their desktop with their mobile phone to get the same experience wherever they go . . .

Mobile reach and partnerships:

While we have been talking about creating the best, most complete online experience on the PC, mobile devices are just as important. Mobile momentum is so strong I want to spend a moment on it. When it comes to global reach our numbers are very impressive. The new Yahoo! mobile experience is available in 17 countries across 400 devices. We have teamed with more than 100 carriers and OEM’s globally to ensure Yahoo!’s services are front and center whenever users access the mobile web. Our leading position in so many vertical categories and markets attract top tier mobile partners all over the world.

These partners clearly recognize the power and draw of Yahoo!’s services on their devices and networks. For example, we recently announced a leading telecom service provider in Taiwan to bring our mobile search to their users, replacing Google. Our partners aren’t just distributing our services. Many partners around the globe, especially in Asia, are proactively promoting our search and other mobile services because the experience is that good.

Handset News: Nokia Profit Way Down, Sony Posts Loss, iTunes Disabled for Pre

In earnings news both Nokia and Sony Ericsson posted losses. For Sony Ericsson it was the fourth consequtive quarterly loss, although somewhat less than expected:

Sony Ericsson posted a EUR213 million net loss for the three months to June 30, down from a EUR6 million profit the previous year but better than analysts' expectations for a EUR298 million loss, partly on lower restructuring charges.

The report marks Sony Ericsson's fourth consecutive quarterly loss, although the result improved on the EUR293 million net loss in the first quarter.

Nokia, for its part, saw a drop of 66% in Q2 earnings:

Net profit was euro380 million (US$535 million), down from euro1.1 billion in the same period a year earlier. Sales tumbled 25 percent to euro9.91 billion . . .

Nokia shipped 103 million mobile devices in the quarter, down 15 percent from a year earlier but slightly better than some analysts had expected. 

Nokia's global market share is about 38% (down from 40% the previous quarter) though in North America Nokia sold 3.2 million devices in the second quarter, a decline of 30% from the same period the prior year. Generator Research is predicting that Apple will surpass Nokia in handset shipments by 2013. That may not be entirely accurate -- it seems quite aggressive -- but it illustrates the opposite fortunes of the two companies at the moment.

And finally Apple's iTunes update disables the capacity of the Pre to sync with the online media store. That (expected) news has apparently sent shares of Palm down this morning. However, iTunes syncing is a very marginal consideration for most people interested in the Pre. 

Free 411 Offering Long Distance, Int'l Calls to Generate Usage

God bless 'em, Jingle Networks (800-Free-411) is supposed to be profitable but neither it nor the "free DA" providers have broken out of obscurity. Several years ago I had thought that free DA would be widely used by mobile consumers, especially feature phone owners, as an alternative to search in some cases and that there was a strong ad opportunity accordingly.

While the ads convert well, the call volumes haven't continued to grow and the overwhelming majority of mobile users don't call DA at all, let alone the free services. Among the free services Jingle's 800-Free-411 is the best known. But it remains somewhat mysterious as to why more consumers aren't using them. The quick answer is lack of promotion. Answering the question of why depends on whose service you're discussing: carriers, independents, search engines. 

Now in a bid to gain some new attention and usage (and ad inventory accordingly) Jingle is offering free long distance and international calls:

Callers from the continental United States can place a five minute call through 1-800-FREE411 to reach out and connect with loved ones no matter how far away they may be. To place a free long distance call, callers dial 1-800-FREE411 and listen to the main menu prompts where they can select "free call."

After entering the phone number that they wish to call, including a country code, they will be connected free of charge for five minutes. Callers have to listen to two short advertisements and there is no limit on the number of calls they can make in a day. Mobile phone callers may still be charged for minutes by their service provider. 

This move will generate some usage but it won't solve the free DA segment's main problem: lack of consumer awareness.

In our most recent research (n=707, 4/09) 79% of survey respondents said they simply did not call DA/411 from their mobile phones. Among the 20% that did, 46% of that group called it once a month or more frequently. But 86% of those who did call DA on their mobile phones only called it "a few times a year." There are some claims of higher usage rates in the market, but in several surveys over the past two years we have consistently seen ignorance or lack of consumer awareness regarding the free DA services.

Google is using Goog 411 primarily to train Voice Search; the carriers don't want to cannibalize their cash cow 411 businesses and Jingle doesn't have the money to run TV ads and so relies on PR and promotions like the one above. But without awareness advertising this segment will limp along or disappear as more people turn to search and app-based alternatives on their mobile devices. 

Gartner (Wrongly) Predicts Increase in Subscription LBS

IT research firm Gartner says that consumer subscription-based LBS services (e.g., navigation/friend finders) will double and continue to grow. According to the company's release:

Worldwide consumer location-based services (LBS) subscribers and revenue are on pace to double in 2009, according to Gartner, Inc. Despite an expected 4 per cent decrease in mobile device sales, LBS subscribers are forecast to grow from 41.0 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.

Gartner defines LBS as services that use information about the location of mobile devices, derived from cellular networks, Wi-Fi access points or via satellite links to receivers in (or connected to) the handsets themselves. Examples are services that enable friends to find each other, parents to locate their children, mapping and navigation. Location-based services may be offered by mobile network carriers or other providers. They are also known as location-aware services.

Correctly the company qualifies all this by saying that free LBS services will gain and eat into LBS subscription revenues. But the company doesn't take that far enough.

Those that are willing to pay for PND devices and navigation subscriptions will be a tiny minority in a very short period. Free (assuming a not-free data plan) will all but destroy the paid market unless those consumer fees are one-time payments or truly nominal monthly subscriptions. 

Too many folks will be offering maps and turn-by-turn directions for free (e.g., Google, MapQuest) and there will be a number of free friend finder products that will replace the paid "family locator" subscription products in the market today. In short absent some super-compelling, unimaginably fantastic applications (which Gartner is counting on), the paid LBS market is going to get smaller and smaller . . . not bigger.

Orange Gets the Pre in UK

UK carrier O2, owned by Spain's Telefónica, has won an exclusive deal for Palm's Pre in the UK market, according to the Guardian. The carrier is also the exclusive source of the iPhone in the UK.

O2 is the UK's leading carrier by market share, followed by Vodafone, Orange and T-Mobile and finally Hutchison's 3.

There have been persistent rumors that Deutsche Telekom is looking to sell its UK T-Mobile unit. The leading contender is reportedly Vodafone, although Telefonica may also be interested to preserve its market-leading position. That may create a bidding war for the T-Mobile unit. 

Opera's State of the Mobile Web for May

Opera Software released its "State of the Mobile Web" report for May. The report places an emphasis on trends in Southeast Asia: "Growth rates in Southeast Asia remain high: Vietnam leads the top 9 countries with 412.9% growth in users this year, followed by the Philippines (353.6% growth) and Malaysia (249.6% growth)." However it also presents data for the range of coutries in North America and Europe that have Opera users.

Remember this is not the entire mobile Internet, nor does it represent a true view of smartphone users (other than perhaps on BlackBerry, which has a poor browser currently). Rather these data are from handsets where users have downloaded and installed the Opera browser. They offer a view of a different segment of mobile users than we're used to hearing about, given the industry's focus on smartphones -- which remain in the minority. 

Here are some of the data for the US and UK:

 UK may

UK search

US may

US search

Note the "average number of search portal page-views" in the data: 35.7 for the US, 21.4 for the UK. This is not necessarily eqivalent to query volume per user but it's probably directionally eqivalent. These numbers are much higher than 2008 "official" averages (per Nielsen) of 8 searches per user. Our data also show much higher volumes, though not quite as high as the Opera numbers suggest.

Turn by Turn iPhone Apps Spell the End of PND Market

Personal navigation and GPS-aided turn by turn directions are moving from hardware to software. Given that the new iPhone enables turn by turn navigation to be integrated into third party developer apps and that TomTom is going to be on the iPhone, the days of separate PND hardware devices are likely numbered.

While some such devices may continue to sell, consumers will see fewer and fewer reasons to buy them (and spend the additional cash) now that smartphones will be largely as capable as PNDs and have broader utility. Several next-gen navigation apps have already emerged in the post 3.0 iPhone world: 

  • NIM's Gokivo (which uses Yahoo! search results) provides voice-guided navigation, but requires an in-app purchase of $9.99 for a one month subscription. (Pricing was just simplified; there were previously three options.)
  • Navigon’s Mobile Navigator (Europe) app with NAVTEQ maps.
  • Sygic for Australia, New Zealand and Southeast Asia.

The improvement of navigation on smartphones combined with the move of a group of companies to provide their software on the iPhone platform will mean that eventually the entire industry will move in this direction.

Recently RIM also acquired "connected" PND platform Dash. So one would assume that many of these same capabilities will shortly come to BlackBerry devices. (I was just reminded that MapQuest provides turn by turn directions on BlackBerry devices currently.)

'Augmented Reality' Is Almost Here

From the "pretty cool" file: a new "augmented reality" browser called Layar developed by a Dutch company called SPRXmobile. Here's how it works:

Layar is derived from location based services and works on mobile phones that include a camera, GPS and a compass. Layar is first avaliable for handsets with the Android operating system (the G1 and HTC Magic). It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers. This makes Layar a new type of browser which combines digital and reality, which offers an augmented view of the world.

An iPhone version is reportedly in development. One thinks immediately of Google Street View and how that might evolve into a true "geobrowser" along these lines in the future. There are many different use cases one can imagine easily. Of course the data have to be there and accurate for the experience to be as impressive and useful as it has the potential to be. 

What it also illustrates is that there are going to be many other "search" modalities on mobile phones than the conventional search field. Here's Layar in operation (click the image for the YouTube video): 

Will Carriers Get a Piece of the Mobile Ad Pie?

Yesterday there was an article from IBD about how Vodafone aims to not only build an apps store but get deeply involved in the mobile ad ecosystem:

A new mobile online store is part of Vodafone's ad strategy. So are location-based advertising and text-messaging ad formats . . . By year-end, Vodafone plans to open an online store where mobile phone users can download games and other software applications, aiming to duplicate the success of Apple . . .

Vodafone also hopes to generate dollars from ads that are inserted within some applications. 

Vodafone plans to expand a text-messaging ad service, called "Please call me," to more markets this year. Developed by Vodafone's South African subsidiary, Vodacom, the service lets prepay customers send a free, ad-funded text message to someone asking them to call back.

Vodafone also seeks to make money on mobile TV.

AT&T and Verizon have announced apps stores in the US. (Vonafone owns part of Verizon.) However I'm extremely doubtful that carrier apps stores can succeed like Apple has. There's a possibility of modest success perhaps, but apps are directed to smartphones and all the device OEMs have their own apps stores and so does Microsoft. 

Carriers didn't/couldn't get the mobile Internet experience right for their users in the past. It's unlikely they can create an apps store experience to equal, let alone rival the OEMs. 

Carriers might be able to succeed at the lower end by creating apps for users not on the major smartphone platforms. In addition they can gain a piece of ad revenue by partnering with ad networks around opt-in demo and location targeting. That's a trickier proposition; and very soon they'll start to be marginalized in terms of ad network revenues -- unless they buy the mobile ad networks.

The Microsoft-Verizon ads deal, however, will be one to watch and may represent a model for carriers going forward -- if it's successful. 

Opera Speeds Up Browsing, Passes Safari

Last week, StatCounter reported that Opera (Mobile/Mini) passed Apple's Safari in May as the most popular mobile browser. In light of the Apple claim this morning that 65% of all mobile Internet browing is happening on the iPhone, there's reason to be somewhat suspicious of the StatCounter numbers. However comScore previously said that 70% of those accessing the mobile internet are doing so on "feature phones." Enter the Opera Mini.

StatCounter reported the following market share in May:

  • Opera: 24.6%
  • iPhone: 22.3%

The Opera Mobile 9.7 browser uses compression of files on the server side to accelerate display of mobile pages. Here's a video demo showing performance:
Opera