Hardware

Wearables: After High Interest, High Abandonment

There's a strong belief among tech insiders that "wearables" are an emerging hardware category that's here to stay and perhaps even a new marketing channel in the making. Nielsen consumer research asserts that 70% of US consumers are aware of “wearables" and roughly 15% currently own some form of the technology: 

  • Fitness wristbands -- 61%
  • Smartwatches -- 45%
  • Health tracking devices -- 17%

Nielsen also found that roughly half of its survey respondents were interested in the category: "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." Our survey data similarly found a fairly high level of interest: roughly 40% of smartphone owners said they were interested in smartwatches (generally of the same brand as their smartphones). 

A report by Endeavor Partners, published in January (based on Q3 survey data), throws some cold water on all the excitement. The firm says that an online survey of "thousands of Americans" found that 10% of US adults owned or had used an "activity tracker" (e.g., Fitbit, Fuel Band). It didn't address smartwatches as a stand-alone category. 

 

The study also reported high abandonment rates of activity trackers/fitness wristbands. Roughly a third of owners stopped using them within six months of initial ownership and half were no longer using them: 

Endeavour Partners’ research reveals that more than half of U.S. consumers who have owned a modern activity tracker no longer use it. A third of U.S. consumers who have owned one stopped using the device within six months of receiving it. 

This first Samsung smartwatch reportedly experienced 30% return rates. But that's probably a function of the poor design and usability of that device rather than a broad statement about the prospects for the smartwatch category. The Pebble smartwatch is apparently selling well. 

It's still early in the development of wearables and there will be a range of new products of increasing quality and refinement. Hopefully we'll see some "next generation" watches coming out of the Android Wear effort. Apple is also expected to introduce its rumored "iWatch" at some point.  

Yet the Endeavor data offer a sobering counterpoint to all the hype about the category and widespread perception that wearables are an inevitable boom in waiting.

Microsoft Formally Launches Its Personal Assistant -- Cortana

At its Build developer conference in San Francisco today Microsoft finally and formally announced Cortana, its personal assistant. The name is derived from a character in the game Halo.

For a time it was thought that there might be a female Cortana avatar (inspired by the game). However Microsoft (probably wisely) chose not to do that.

Cortana aims to go beyond both Siri and Google Now by being a more comprehensive way to interact with Microsoft devices. It entirely replaces the Bing search button on Windows phones and is powered by Bing and all its back-end capabilities. Users can input queries or questions by voice or through the keyboard (which Siri does not). 

Cortana_Collection_Travel03_16x9

I'm not at the developer event and so am only reacting to the announcement and some of the details trickling out. From what I can tell however Cortana combines most of the capabilities of Apple's Siri, Google Voice Search and Google Now.

Previously I asked, will Cortana be a breakthrough or a "me too" product? There doesn't appear (from a distance) to be a "wow" breakthough capability that would immediately differentiate Cortana/Windows Phones and tips the scales in favor of Microsoft. However Cortana might impress with subtle or refined capabilities and functionality. There's a lot going on here.

After I've had a chance to use Cortana I'll be able to render a better judgment about its competitiveness and utility. Basically Microsoft had to offer an assistant on Windows Phones if it hoped to remain competitive with Apple and Google. 

Cortana will launch on Windows Phones with 8.1 software in the US. It will expand to other non-US markets later. 

Early Nokia X (Android) China Success Hints at What Might Have Been

From the beginning, after Nokia announced that it was embracing a third party mobile operating system (Windows), I argued that Nokia should have also released Android devices. And in something of a surprise, we learned late last year, after the $7+ billion acquisition of the company's hardware division by Microsoft was announced, that Nokia had been secretly working on an Android handset.

Chinese and other Asian regulators have delayed the closure of the Microsoft-Nokia transaction, which has now been pushed to the end of April. But it still should be approved and close. 

Earlier this year we got to see the Nokia-Android handset, the Nokia X (and its kin). The company created a Windows Phone-like UI and overlaid it on top of a semi-forked version of Android. The idea is to bring low-end buyers into the Nokia fold with a Windows-like Android UX and Microsoft services and then upsell them into a true Windows-Phone experience.

Intended to be highly affordable the Nokia X has now rung up 10 million pre-orders in China. These are not actual sales (yet) but reservations to buy the phone when it becomes available in the near future. This impressive level of demand indicates that had Nokia been building Android phones all along it might now be in a very different position and potentially wouldn't have had to sell to Redmond. 

Of course Microsoft, heavily dependent on Nokia, recognized its own vulnerability and essentially bought the Finnish company's devices division for defensive reasons. Had Stephen Elop made different OS choices, Nokia might today be vying neck-and-neck with Samsung for position as the top global Android OEM. 

Will Digital Advertising Work on Wearables?

Last week Google announced Android Wear, its smartwatch platform. Later in the week Nielsen released consumer research asserting that 70% of US consumers are aware of “wearables" and roughly 15% currently own some type of wearable technology today.

Among the 15%, Nielsen found the following breakdown: 

  • Fitness wristbands -- 61%
  • Smartwatches -- 45%
  • Health tracking devices -- 17%

The Nielsen survey probably overstates the number of Americans that actually own/use wearables currently; 15% of adults would translate into roughly 36 million people. Nielsen also found (I tend to believe this): "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." We found in our own research that roughly 40% of smartphone owners were interested in smartwatches. 

An article in Mashable speculates about the role that advertising might play on wearable devices. The article correctly notes that consumers will be far less accepting of "interruptive" ads on wearables. As much as smartphones are perceived to be "personal," this goes 2X for something like a smartwatch.

So-called "native" advertising may have a role to play in the context of a stream of news or other content, delivered on a smartwatch. But most if not all "advertising" on smartwatches will need to be opt-in marketing. These could take the form of location or time-based alerts or notifications (this could extend into indoor location and marketing as well). These types of marketing could prove to be very effective -- emphasis on the word "could." 

The bottom line is that all marketing on wearables (mostly smartwatches) will need to be highly sensitive to user privacy and almost entirely permission based.  

Webinar Today: Join Aisle411 and iInside for Indoor Case Studies

At 1pm Eastern/10 Pacific today we'll be hosting a new webinar: Indoor Location - Early Adopter Case Studies and Lessons Learned. It will feature Aisle411 co-founder Matthew Kulig and iInside EVP Jon Rosen. The emphasis is not on theoretical information but on what's actually occurring in the market -- today.  

Rosen will be talking about B2B case studies from current in-market deployments. He's going to cover:

  • Retailer KPIs
  • Measuring the impact of operations, merchandising and marketing on customer behavior in a specialty retail context 
  • Using indoor analytics to benchmark online marketing campaigns
  • Optimizing checkout selling in a grocery context
  • Using indoor analytics to measure and address showrooming 

Kulig will be discussing B2C cases, including the following:

  • Indoor app-based search and ad CTRs
  • Retailer monetization through branded in-app advertising
  • Location and intent based recommendations in store apps  

I'll be offering a general overview of the state of the market and offering attendees a free copy of our recent "Mapping the Indoor Marketing Opportunity" report (only available to real-time attendees). 

The webinar will be eye-opening and instructive to indoor neophytes and those with even considerable knowledge of this emerging market. Register now and show up later today.  

Alex and Ani Deploys iBeacon in All Its Retail Locations

Bluetooth iBeacons are definitely the indoor positioning technology with the buzz and momentum (though it's only part of the indoor location story). Today jewelry and accessories retailer Alex and Ani announced that it's deploying iBeacons in all its 40 US retail locations in partnership with Swirl.

Previously American Eagle announced it would also introduce iBeacons into its stores with ShopKick. However the Alex and Ani rollout is already complete. 

Swirl offers a consumer-facing app that adapts or changes depending on the store the customer visits. Swirl is also working with Timberland and Kenneth Cole. Alex and Ani doesn't yet have its own app but later plans to develop one using the Swirl SDK. Swirl installed the hardware in all the Alex and Ani stores. 

I was able to speak yesterday with Ryan Bonifacino, vice president of digital strategy for Alex and Ani. He comes from a venture capital background and is very focused on innovation and data usage. While most retailers and venue owners are still sniffing around the edges of indoor location Bonifacino said that Alex and Ani began testing iBeacons with Swirl in Q1 of last year in its New York and Boston stores. 

That's well before most people had heard of iBeacon.  

The data and insights the company gained during its two-store trial convinced Bonifacino that a full rollout was justified. Bonifacino said he was pleased with Swirl's ability to drive new customers into the company's stores, especially at times when regular foot traffic was generally lower. 

He explained that the new Swirl-driven customers actually spent more time in the store but purchased at levels that were comparable to Alex and Ani's regular customers. Indoor location was also able to provide greater visibility into who these new customers were. 

One of the things that Bonifacino is looking forward to most is the ability to collect data about in-store behavior and to test and optimize merchandising and displays. Beyond this, Bonifacino wants to provide a better in-store customer experience and believes that indoor location can help accomplish this.  

We spoke at some length about Alex and Ani's use of data in its marketing efforts and how data captured in stores would contribute to improving or refining those efforts. Bonifacino, however, was quick to say that the company is highly respectful of privacy and looking only at aggregate customer behavior. 

Alex and Ani also sells its jewelry and accessories through major retailers such as Bloomingdales and Nordstrom. Even though those retailers are separately examining indoor location Alex and Ani is helping educate them, says Bonifacino. The company hopes to use indoor location to promote its products and attract customers to its displays in those larger retail partner stores later this year. 

New Entrants in Indoor Location: Sensorberg and Datzing

The buzz around iBeacons continues this week with a couple new hardware and software technology vendors entering the market for indoor location.

Hardware startup Sensorberg, based in Berlin, Germany, has secured $1 million in funding from Technologie Holding GmbH and undisclosed angel investors. Sensorberg offers various packages to retailers that combine setting up Beacon sensors in stores to deliver mobile marketing campaigns and location features via software developer kits and management dashboards. The prices range from as low as $120 (€89) that includes 3 mini-beacons and an SDK to connect apps to an unlimited package that offers developer resources and enterprise support.

Founded in 2013, Sensorberg began as a startup in the Microsft Ventures Accelerator in Berlin and plans to use the new funding to further develop its platform and build an extensive iBeacon network.

Meanwhile, in Los Angeles, CA, Datzing is positioning itself as a new competitor to Apple's iBeacon with an Android platform for indoor location technology. Profiled this week at The Verge, Datzing is a software-based startup with patent-pending technology to turn a Bluetooth or Wi-Fi device into a beacon. Datzing doesn’t require purchasing any special hardware to set up an access point. The company plans to launch an Android beta app in March and doesn't rule out the possibility of an iOS option down the line.

While iBeacon is getting more than its fair share of press -- notably, a partnership between ShopKick and American Eagle (AE) Outfitters to outfit 100 U.S. stores with iBeacons and Apple's chain-wide deployment of iBeacons last year -- the push for in-store marketing and indoor location is still in its infancy. This year should present a good opportunity to see how the market plays out.

Pay with iTunes: Apple (Finally) Declares Intention to Enter Mobile Payments

For the past several years there's been speculation about whether and when Apple might throw its hat into the mobile payments ring. A new patent application (filed in Q3 2012 and discovered by Patently Apple) indicates that Apple is ready to move and introduce an iWallet. 

Here's the abstract, which indicates use of two or more technologies to enable the transaction:

A commercial transaction method is disclosed. The method first establishes a secure link over a first air interface by a purchasing device. This secure link is between the purchasing device and a point of sale device. The method further identifies a second air interface, which is different from the first air interface, and the second air interface is used to conduct a secure commercial transaction.

Multiple technologies are discussed, including Bluetooth Low Energy (behind iBeacons), near-field communications (NFC) and RFID The failure to incorporate NFC into the iPhone was regarded generally as a rejection of the technology by Apple in favor of others (e.g., BLE). However the patent application suggests that future iPhones (and iPads) would potentially be compatible with it.  

Apple's failure to build NFC into the iPhone is one reason it has stalled in the US. However, as the patent application suggests, NFC in the US may not be dead after all. We'll see.

The precise technologies and methodology described in the application are less important than the existence of the application itself. Mobile payments for offline services or goods are starting to happen but generally not in a "horizontal" context. They're happening today in very specific scenarios (e.g., Uber, Starbucks, parking apps, dining). Google Wallet and carrier-backed Isis, which are broad "horizontal" payments platforms, have largely failed. 

Given its installed base of users and credit cards on file Apple could potentially spark widespread adoption of payments by consumers. Apple has more than 600 million consumer credit cards registered. That's quite a bit more than even Amazon and more than PayPal as well.

The payments segment will consolidate in the next 12 to 24 months and there will be a number of additional acquisitions by the major players for technology or to remove competitors from the market. 

Ultimately mobile payments -- paying with smartphones for goods or services in the physical world -- will shake out as follows: mass-market/horizontal mobile wallets dominated by a few major players: potentially Apple, Amazon, PayPal, potentially Square and maybe Google. Banks are a wild card. 

Otherwise individual apps (including retailers) will offer to store consumer credit card information for faster checkout or frictionless offline payments. But the payments giants will also likely be options within these app/vertical contexts as well (e.g, PayPal, pay with Amazon, pay with iTunes). 

iBeacon Surging but a Hybrid Approach to Indoor Location Will Prevail

In partnership with ShopKick, American Eagle (AE) Outfitters is outfitting 100 US stores with iBeacons to power deal notifications when shoppers enter stores. ShopKick also has a similar but much more limited partnership with Macys.

Right at-the-door notifications are the full extent of the ShopKick-AE indoor marketing functionality. But later it will become more precise by area or zone within the store. 

Outside of Apple's own chain-wide deployment of iBeacons this is the largerst and most visible iBeacon launch to date. Clearly Apple's credibility and support of BLE and iBeacons is propelling the technology. However it's important to point out that iBeacons don't work with older iPhones and it only work with a few Android phones currently.

Over time that will change. But iBeacon is not a stand-alone or complete solution. 

The rise of iBeacon argues that it will potentially be one of several "winning" indoor location technologies. But there won't be a single technology standard that emerges. Retailers and others will need to employ a layared or hybrid approach to provide store coverage and accuracy. 

WiFi and closed circuit TV are the foundational in-store analytics and location technologies -- but WiFi in particular. Acousitc, LED lighting and magnetic may also make gains as retailers and venue owners come to see they need multiple approaches for success. For example, Rouse Properties has adopted acoustic technology from Sonic Notify to power indoor location awareness and marketing within its network of 34 malls in the US. 

While indoor analytics are driving the market, companies are quickly stepping up with consumer-facing solutions -- such as ShopKick-AE. And while consumers widely use their smartphones in stores and are generally interested in things such as deals and personalization, retailers will need to be careful about annoying or spamming consumers with too many messages. 

For example, research from ISACA suggests that an education process and gradual roll out of indoor marketing are in order. Too much, too soon may have the opposite of the desired effect:

targeted marketing 1

Location Analytics Provider Euclid Throws Down Gauntlet, Makes Product Free

Euclid is one of the better known indoor-analytics providers in a new but increasingly competitive and crowded segment. There are well over 150 companies involved directly or indirectly in "indoor location," most of which have some sort of analytics component.

While some companies are closely identified with a particular technology (e.g., Estimote with BLE), most companies can use or do use multiple technologies to gain access to indoor smartphone positioning. It's not unusual to find companies using at least two or three technologies such as WiFi + BLE. Euclid still relies on WiFi exclusively but will likely be expanding in the future to include BLE (assuming it continues to gain momentum). 

This is comparable to how outdoor positioning and mapping relies on GPS, cell tower and WiFi triangulation as a hybrid approach to compensate for the limitations of each technology.  

Today Euclid took a bold step by introducing a free indoor analytics product aimed at the mid-market (e.g., specialty retailers). It's called Euclid Express and it's mostly a self-service offering. Euclid co-founder Will Smith told me that during the beta period his company has enrolled more than 400 new customers. Competitors will undoubtedly see it as a "land grab." 

The product assumes an existing WiFi "infrastructure" in the store locations. If not Euclid will provide a low-cost WiFi set up.

The objective of Euclid Express is to remove friction and barriers to adoption -- including price. It offers a range of indoor analytics data, including:  

  • Average duration of shopper visits
  • Number of unique visitors
  • Daypart concentration of visits
  • Shopper recency and frequency

All this data is provided in real-time. 

Euclid's advanced product has more features and costs $100 per month per store location. The Euclid Express dashboard offers users the option to upgrade to the advanced product. Euclid's Smith also touts his company's privacy practices (anonymous, aggregate data) and argues that privacy is now a product differentiator for the company. 

Below is video from the Place Conference in October: Digital Analytics for the Real World. 

Xmas Numbers Roundup: 48% of Traffic Mobile, Chromebook's 20% Enterprise Surprise

Much like US retailers relentlessly pumping out marketing emails before, during and immediately after Xmas, marketing companies and data vendors didn't rest either. Below I've rounded up some of the recent data they released immediately before and after Xmas.

Chromebooks saw impressive sales gains in 2013 according to NPD Group. The Google OS laptops took a surprising 21% of all US enterprise notebook sales in 2013. NPD reported that overall Windows and Mac sales were down, while Chromebooks and Android tablets were up. 

 

It remains to be seen if these numbers are accurate, based on actual usage data. Regardless, the low cost and nearly disposable nature of Chromebooks is starting to put pressure on Windows at the low end of the market. I wrote about Microsoft getting squeezed from both ends earlier this month on Screenwerk. However I would not have predicted the apparent enterprise success of Chromebooks. 

When the smoke clears after January 1 we'll hear that millions of tablet devices were purchased and delivered as gifts in Q4, with iPads being the overall winner despite the higher price tag. StatCounter data show 79% of tablet-based US internet traffic coming from iPads vs. 14% from Android tablets. 

Continuing an established pattern, tablets were responsible for more than twice the volume of online sales vs. smartphones. That's according to IBM which also reported that on Xmas day e-commerce sales from "iOS [devices were] more than five times higher than Android."

The company also said that on Xmas mobile devices generated 48% of all US online traffic. That's a massive number and probably where the entire internet is headed by 2015. Currently StatCounter reports that 26% of North American traffic is coming from mobile devices. We should see that number grow to 40% or more a year from now. 

Finally, as indicated above, many people were deluged by promotional email on Xmas itself (e.g., "buy something for yourself"). Holiday e-commerce overall was up roughly 10% over last year with a few $1+ billion days. However e-commerce growth and spending were less than anticipated this season and something of a disappointment. 

Happy New Year.  

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. 

Report: Big Increase in iPads After Black Friday Weekend

There has been a near avalanche of shopping data released over the past several days, much of it documenting the rise of mobile devices in driving traffic and e-commerce purchases. Various estimates ranged from 23% to nearly 40% of traffic coming from mobile over the course of the weekend. 

One of the clear winners of the Black Friday weekend shopping bonanza was the iPad. Apple and other retailers offered gift cards as incentives to buy the devices. In combination with general consumer demand that strategy seems to have paid off for Apple. 

According to Localytics, which looked at over one million devices before and after Black Friday weekend, the iPad Air in particular saw very strong growth: 51% vs. the week before. So did the Mini and iPhone 5c. Admittedly the iPad Air is growing from a smaller base, although the device had a very strong launch

The data in the chart above also don't reflect iPads purchased as holiday gifts and not yet opened/activated. So there are probably many more that were purchased than what's represented on this chart. 

The top Android tablet was the Kindle Fire, which saw its own aggressive $50 discount from Amazon. The only other Android tablet to show growth is the Galaxy Tab 2, which was heavily discounted online and at several retail stores.

In October Apple announced that 170 million iPads had been sold to date. Given the momentum being reported, it's very likely that Apple will sell 20 million iPads (collectively) in the holiday quarter. 

HP Tablet Will Be $89 on Black Friday

Reportedly Wal-Mart will be offering the HP Mesquite 7” Tablet for $89 on Black Friday. This is a "3.5 star" tablet but should sell out, given the HP brand and the aggressive price.

There are dozens of sub-$150 and even a surprising number of sub-$100 tablets now available. Most of them are "no name" brands and thus may hold US consumers back. That's why the HP brand matters at this price point.

Many of the low-cost Android-based tablets will be bought by parents for kids this holiday season. But the flood Android tablets, of varying levels of quality, inevitably means that the iPad's market share, with its much higher price points, will decline. That doesn't mean that iPad users won't still generate most of the traffic. Currently the iPad is responsible for more than 80% of US tablet traffic. 

The tablet race in the US is between Apple, Samsung, Google/ASUS and Amazon. A quick search on Amazon for tablets reveals page after page of inexpensive Android tablets

It's not clear right now how these aggressively priced Android tablets will impact the market, beyond bringing more users into the tablet realm (to the likely detriment of PC replacement cycles). But will they cut into iPad sales? Perhaps at the margins. Someone buying the $89 HP tablet is probably not in the market for an iPad Air or Mini, however. Such low-cost Android tablets are more likely to impact other Android OEMs such as Samsung or Kindle (Amazon doesn't classify Kindle Fire as an Android OS device). 

Amazon threw down the pricing gauntlet for tablets when it introduced the original Kindle Fire for $199. Now there's increasing price pressure on 7-inch tablets (other than Apple) to enter the market at $150 or less. If this HP tablet and similarly priced others prove to be successful that $150 price point may become "institutionalized" for 7-inch Android devices.

Profits be damned.

Can Apple Make a Bigger Screen iPhone but Preserve One-Hand Control?

One of the maddening things about the cult of iPhone news coverage is that immediately upon the release of this year's product the cycle of rumors and speculation begins about next year's product. So it was and is with the iPhone 5s.

Essentially the day after the iPhone 5s was announced the iPhone 6 rumors began. Part of that was fueled by disappointment about the iPhone 5s' current 4-inch screen and anticipation of a larger-screen in the iPhone 6 (or "Air" as it's now being called). 

Indeed, one feature that most US -- perhaps all -- current and would-be iPhone buyers want from the device is a larger screen -- though longer battery life might be a close second. One of the primary ways that Android handsets have successfully competed with the iPhone is by offering larger and high-resolution displays.

Many iPhone owners now have what might be called "screen envy."

Yet Apple has set a very difficult task for itself. It wants to offer a larger screen on the next iPhone -- speculative reports have asserted that there are 4.7-inch and 5.5-inch models being tested -- but the company still prizes "one-handed control." 

That would seem out of the question for a 5.5-inch device; but it might be possible with a 4.7-inch screen. It's difficult to imagine what a one-handed, 4.7-inche phone would look like.

Might it be even "taller" than the 5s, which lengthened but didn't proportionally widen the screen? Most larger-screen Android models (4.8-inch and above) can't be entirely operated by one hand. But they preserve proportionality, which in my view is lacking in the "tall" 5s.

The largest a smartphone screen can stretch before it becomes a "phablet" is about 5-inches. Apple's next phone needs to reach about 4.7 or 4.8 inches to be competitive; 4.5 won't cut it. And despite rumors of curved displays it's not clear how Apple is elegantly going to attain that objective and still make one handed control possible. 

Moto G Set to Shake Up the Smartphone Market with Rock-Bottom Pricing

Android is the world's dominant mobile operating system. In Q3 IDC estimated that Android represented 81% of all smartphone shipments globally.

Android's lead may further expand if the forthcoming Moto G smartphone from Google is as successful as I suspect it will be. The phone carries fairly strong specs, including a long battery life and 4.5-inch display. But it's the price that will drive sales volume.

Pre-empting Amazong and poking a finger in Samsung's eye, the unlocked phone will cost $179 (8GB) or $199 (16GB). Google must be planning to sell the phone at cost or even at a loss. We'll find out when the iFixit people get a look. 

 comscore Sept smartphone share

Motorola has continued to lose market share over the past few years. The Moto X was the first phone designed by Motorola after Google's $12.5 billion acquisition of the company. However its sales have been lackluster. Absent some major flaw the Moto G looks like it could be an antidote for Motorola's brand and sales woes.

Moto G's low low pricing also puts pressure on Amazon (as well as everyone else). The latter had been rumored to be building a low-cost Android handset. But it will be challenging for Amazon to match Moto G's price and apparent quality without losing money. 

The fact that Moto G is unlocked and so inexpensive could change the broader dynamics of the market -- motivating more people to buy pre-paid carrier plans and get away from contracts (which is a broader trend anyway).

Apple is unlikely to try and answer the handset's pricing but other Android OEMs may be forced to. That's potentially bad news for Samsung and especially bad news for HTC, which is under tremendous pressure and may be forced to sell itself (or into bankruptcy) eventually.  

Mobile Impacting Retail Design -- Just Don't Forget Indoor Location Data

A provocative article in Mobile Marketer this morning discusses how the aesthetics and layout of retail spaces are changing to accommodate the mobile shopper. Here's a representative excerpt:

AT&T recently unveiled a new store format intended to reflect customers’ mobile lifestyle where café-style learning tables replace cash registers.

The store layout highlights products and services in three different thematic areas. In the Connected Experience, shoppers can see how solutions can be used in their everyday lives. The Community Zone features an open and interactive space where customers can test products. In the Explore Zone, there are digital monitors to highlight AT&T’s lineup.

This sort of "customer experience" was largely inspired by or modeled on Apple retail stores -- especially the replacement of cash registers with free-roving sales associates. However beyond improving the "flow" and "engagement" of retail spaces there are other considerations to be factored in. 

The article doesn't at all discuss how data gathered from indoor analytics can help retailers do a better job with layout and usability of their stores. Indoor location data and usage patterns should be included in the "aesthetics" and layout discussions because they will lend empirical grounding to what is otherwise a relatively speculative discussion.

How do consumer actually behave in stores? How are they interacting with displays? These sorts of data are readily available and can inform the broader debate about how to reconfigure retail environments.

Another interesting angle here is how mobile payments will be affected by retail store redesign. My belief is that low-skilled and poorly paid store (and QSR) cashiers will be increasingly replaced by mobile payments and self-checkout kiosks.

Loyal store customers will increasingly have a mobile app with stored credit card information. That scenario will become increasingly prevalent in stores. For those customers without a retail/payment app, Apple-style mobile in-store checkout will prevail.  

Apple Makes Incremental US Share Gains Against Android

Earlier this afternoon comScore reported its September US smartphone market share numbers. Nielsen has said that 64% of US adults now carry smartphones; however comScore asserts the number is 62%.

Android continues to be the dominant operating system, followed by the iPhone. However Android lost some ground this month though Samsung gained share. All the other Android OEMs are basically a diminishing sideshow to Samsung. 

 comscore Sept smartphone share

Microsoft also saw a small bump for Windows Phones. It has had considerable success in Europe because of the continuing strength of the Nokia brand but little success to date in the US market. Perhaps that will improve as BlackBerry users are forced to change platforms as they upgrade.   

The numbers above probably still do not reflect sales of the iPhone 5s and 5c, which went on sale on September 20 in the US. The October figures should better reflect the iPhone 5s/c impact on the market. 

comscore Sept smartphone share

Perhaps most interesting is the data about leading mobile apps and web properties. Overall Google has the greatest mobile reach, although Facebook continues to have the single most popular app. This is very analogous to the iPhone and Android, where Facebook is like the iPhone in this example.

Google Maps saw some unexpected loss of usage and reach vs. last month, dropping from the fifth most popular app to eighth position.  

. top mobile properties September 2013

To Succeed Surface Pro Must Become True Laptop Replacement

Microsoft will reportedly spend north of $400 million this holiday season on marketing in the hope of selling 16 million Surface tablets. It will likely have trouble because the Surface Pro tablet is neither a true PC replacement nor does it offer as good a tablet experience as the iPad

Surface Pro 2 also starts at $899, making it considerably more expensive than the entry level iPads and even many Windows PCs. The argument in favor of Surface Pro is that it has Office and offers greater productivity than the iPad. However it's not clear that consumers are seeking a unified device for all their computing needs. 

According to data from app marketing platform Fiksu, the iPad Air had a powerhouse opening weekend. The device "is seeing five times the usage the iPad 4 did two days after launch - and more than 3 times that of the iPad mini," explains Fiksu.

iPad Air launch

Stellar reviews and early momentum indicate the iPad Air may have a very good Q4. The new iPad Mini "Retina" launches later this month, which could either divert some iPad Air sales or simply generate more tablet "shelf space" for Apple. That would be potentially bad news for Microsoft, which is competing directly with the iPad.

On the Android side in the US market it's really Kindle vs. Nexus 7 (Samsung has more of a presence in Europe). Between the two Kindle has the stronger brand and greater distribution through Amazon. But the Nexus 7 is probably the better device overall. In the 9 - 10 inch category the Air really doesn't have any competition from an Android tablet. 

In order to see more than token sales, Microsoft will have to truly make the Surface Pro (RT is RIP) a laptop replacement, with a longer battery life and better typing experience. Surface Pro 2 is not that device; so we'll need to wait for Surface Pro 3. That won't be out until next year -- if then.

That means Microsoft, no matter how much it spends on marketing for the holidays, is unlikely to meet its ambitious sales goals for Surface. That is, unless it starts cutting prices very aggressively, with a capital "V."