Google: 46% of Holiday Shoppers Used Smartphone for Research Before Buying Offline

Earlier today Google released data from two related studies of US consumer shopping behavior during Q4 2011. The studies were both conducted online and fielded in January 2012. In both cases just over 600 consumers were surveyed. Both studies claim to be representative of their respective populations -- essentially e-commerce buyers who own smartphones (and tablets).

There were a great many datapoints in the material released. However, the bottom line is that consumers are now fully engaged with smartphones (and increasingly tablets) as part of their "online" shopping. Marketers and brands need to reach consumers in appropriate ways in each context -- mindful of the overall movement of users from platform to platform.

As a foundational matter, the internet was used as a shopping tool or research medium more widely than any other according to this research. 

However "the internet" is not a single channel any more. Google and its research partner Ipsos found that consumers shopped and purchased via multiple device categories. 

Beyond this basic insight the patterns quickly get very "non linear." The slide below reflects multiple categories of shoppers, some of whom start online and finish offline and some of whom visit the store only to purchase online or via mobile ultimately.

Google also said that 42% of respondents used more than one internet device simultaneously, while 68% started on one type of device or machine and then kept going or concluded on another (e.g., tablet-->smartphone). Interestingly, the content viewed on each category of device (PC, tablet, mobile) was basically consistent.

There were some differences in behavior, however. In this sample people used PCs much more than other devices to do price comparisons and to look for deals or coupons. And they were more likely to contact a retailer via smartphone.

Though not reflected above, video was heavily used by shoppers for product reviews/ratings, demos and to generally learn about products. But if you want to make video accessible to mobile or tablet users Flash must be avoided of course.

In addition these respondents used both apps and the mobile web to conduct research and to shop. 

I could go on with more but the larger points are made already. People use PCs, smartphones and tablets to shop and buy. Brands must be prepared to interact with consumers at every point in the purchase "funnel," or perhaps more precisely: purchase continuum. That means being aware of how consumers use and interact with devices and offering device-friendly content and user experiences accordingly.

Mobile is no marginal or experimental experience for anyone any longer. Today, Forrester predicted that by 2016 there would be 1 billion smartphones on the planet. At that point the PC will be simply one of several ways that people get online.

And in the not-too-distant future hierarchy of devices and internet access methods it could well rank third out of three. 

Google Building a Cross-Platform, 360-Degree View of Its Users

Earlier this week Google brought the Chrome browser to Android handsets (Android 4.0 only). It's reportedly faster than the current Android browser. Beyond this it promises consumers a number of benefits. Among them integration with the PC version of Chrome -- if you're signed in to your Google Account. 

This was the vision for mobile Firefox, before the arrival of mobile Chrome: tabs and bookmarks on the PC browser would automatically be available on your smartphone. But Firefox mobile has very limited adoption in mobile. A full version of the Firefox browser isn't permitted on the iPhone and Chrome is likely to marginalize its chances for adoption on Android handsets. 

The integration of PC and mobile browsers clearly offers convenience for consumers. It also offers competitive and strategic value for Google, as well as powerful potential features for Google advertisers. 

A parallel development, Google has changed its privacy policy to simplify a bunch of disparate policies and make them more coherent (going into effect on March 1). A byproduct of this change, and the availability of Chrome as a mobile browser, is that Google will have a nearly "360-degree" view of its users. 

All Android owners must have Google accounts. All Google account holders are being required to create profiles online. And Google is increasingly seeking to connect the dots. 

In the wake of the new privacy policy, Google will collect and associate all user activity on Google properties with registered Google Accounts. The information Google collects and analyzes will include but not be limited to the folowing:

• Mobile device information
• Search queries and sites visited 
• Cookie and pixel data 
• Your physical location at any time
• Name, email, credit card information (if provided) 
• Telephone numbers called and call duration

According to Google's new privacy policy:

We may collect device-specific information (such as your hardware model, operating system version, unique device identifiers, and mobile network information including phone number). Google may associate your device identifiers or phone number with your Google Account.

While Google says that nothing has effectively changed, the new privacy policy says that Google will potentially be mining much more data from its user base.

To receive the full benefits of mobile Chrome, users will have to be signed in. This will allow Google to see their movements from PC to mobile and all the corresponding activity on each platform. That data will provide Google with an incredible trove of information.

Google search and display advertisers will be granted a never-before-available cross-platform view of users and be able to target them as they move between screens. Users who begin product research on the Web and continue on smartphones in stores would be largely invisible to the majority of sites and online advertisers. But under the new system Google (and by extension its advertisers) will be able to "see" that movement, and consider the larger context and history in deciding which ads to serve. 

Clearly the targeting and tracking capabilities of a cross-platform view of consumer behavior are very powerful. They may result in a better experience for many users but may also "creep out" others. It will also be difficult for competing ad networks and platforms to duplicate the data and targeting that Google will be able to deliver. Facebook is the only other entity, perhaps, with the capacity to match this personalized, cross-platform view of its users.

Survey Shows Amazon Kindle Fire Subsidy Paying Off in Sales

According to various analyses of Kindle Fire hardware production costs, Amazon is actually subsidizing the cost and taking a small loss on the sale of each device. This was undoubtedly a contributor to Amazon's "disappointing" Q4. The company said it sold millions of Kindle devices without providing any concrete figures.

However the company's strategy has been to use Kindle as a platform or tool to sell other content: e-books, video, music and apps. These are high margin products for Amazon. 

A new survey (including 254 Kindle Fire owners) from ChangeWave argues that the company's Kindle Fire strategy is already paying off. Kindle Fire owners reported that they'll be spending more through Amazon in the next quarter than non-Kindle owners: 

The relatively low cost of the device ($199) was shown to be the biggest driver of sales and the most "liked" feature of the product: 

The chief "dislikes" were: no hardware volume button and no camera. The short battery life was also a complaint. Generally speaking, however, Kindle Fire users seem to be quite satisfied -- though not as satisfied as iPad owners.

Google has vowed to "fight" Kindle Fire and its bid to control the Android tablet market with its own "higest quality" tablet, which may be even more aggressively priced than Kindle. 

Related stories: 

• Samsung Being Marginalized by Amazon in Android Tabletland
• Kindle Fire: A Template That Will Burn Google? 
• Kindle Fire Won't Kill the iPad, but It May Kill Other Android Tablets
• Amazon Might Own Android Tablet Market

Payments: T-Mobile Boosts Square, Apple Preps for NFC with iPhone 5 (Probably)

Square continues to forge ahead in its remarkably successful run up to either a multi-billion dollar acquisition or IPO. Today, T-Mobile announced that Square credit card readers will be available for SMB customers in select stores in the US. It's the first wireless carrier to offer the mobile payments system to small business customers: 

Today, T-Mobile USA, Inc. reiterated its commitment to small business as the first wireless carrier to offer Square credit card readers from San Francisco-based Square, Inc. in select retail stores. When T-Mobile’s fastest 4G smartphones running on America’s Largest 4G Network are combined with Square, small businesses can accept credit card payments in the U.S. nearly anywhere, anytime, with the money from transactions sent for deposit into their bank accounts the next business day. This easy-to-use solution, paired with T-Mobile’s affordable small business plans, aggregated business applications, equipment financing and trade-in services, and in-store support, allows small businesses to maximize their wireless investment and transform their business.

Square has several competitors using a similar smartphone-plug-in credit card reader for small businesses, including Intuit and the newly launched Payfirma. PayPal also targets the SMB market but doesn't offer a comparable smartphone or iPad card reader. 

Meanwhile MasterCard's Ed McLaughlin may have spilled the beans on Apple's potentially impending move into payments. The next iPhone is widely expected to support NFC and an eWallet. Nokia, RIM and selected Android phones currently support NFC. Google Wallet has so far seen limited adoption because it's only available on one phone through one carrier in the US.

In an interview with Fast Company magazine McLaughlin said the following:

I don't know of a handset manufacturer that isn't in process of making sure their stuff is PayPass ready."

So that would include Apple then?

"Um, there are...like I say, [I don't know of] any handset maker out there," McLaughlin says. "Now, when we have discussions with our partners, and they ask us not to disclose them, we don't."

Apple has millions of credit card accounts on file. Every iTunes user must provide a credit card when an Apple mobile device is activated. That means effectively that in excess of 300 million people around the world have given Apple their credit card numbers, forming the basis for a payments program. Apple said on its last earnings call that there are now 315 million iOS devices in market, with 62 million sold in the last quarter alone. 

Previously Retrevo found that Apple was more trusted than credit card issuers to provide a mobile payments solution. 

Source: Retrevo (Q4 2011)

Other surveys have argued that 2012 will be a "breakthrough year" for mobile payments and NFC. I think 2012 will see an acceleration but not yet a consumer breakthrough. 

See related: Obama and Romney Campaigns Adopt Square for Funding

Samsung Being Marginalized by Amazon in Android Tabletland

Confirming what we've seen from a number of data sources in the past several weeks, Flurry Analytics shows how Kindle Fire has become the leading Android tablet in the space of about a month or so. Samsung has vowed to fight back with new devices, but Kindle's Success is about low pricing, content and the strength of the Amazon brand.

Samsung is outmatched when it comes to content and brand strength (at least with US consumers). It also probably can't match Amazon's loss-leader pricing. 

Flurry had this to say about the chart below:

On the left, in November, we see that Samsung Galaxy Tab dominated application session usage on Android, with the Kindle Fire only having recently launched. At that time, the Samsung Galaxy Time was widely considered the only viable competition to the iPad, though a distant second.  In January, after the holiday boom in devices and in apps, we see that strong adoption of Kindle Fire, combined with significant downloads driven from the Amazon App Store, resulted in a massive surge in session usage that just edges out the Galaxy Tab. 

In some ways the Kindle Fire is less an Android tablet than it is an enhanced Kindle eReading device.

Sales estimates of the Kindle Fire, for Q4, now range from under 4 million to 6 million. 

Related posts: 

• Nokia Sells a Million Windows Phones, AT&T's 7.6 Million iPhones and Fake Android Tablet Numbers
• Kindle Fire: A Template That Will Burn Google? 
• Millennial Seeing 'Hundreds of Millions' of Kindle Fire Ad Impressions
• Why Kindle Fire Will Do Well: Price, Brand
• Kindle Fire Won't Kill the iPad, but It May Kill Other Android Tablets
• Amazon Might Own Android Tablet Market

PayPal Starts to Socialize In-Store Payments with Users

I have been fairly skeptical about PayPal's ability to win in the mobile payments space. However the methodology the company is using doesn't require any new devices, next-gen infrastructure or much consumer behavioral change. Today I received an email from PayPal telling me I could use PayPal to pay in stores (HomeDepot).

This is the first direct communication that PayPal/eBay has made to customers. There are two payment approaches being offered: a card and a user's mobile number + a security pin. Either can be used in the alternative. I wasn't previously aware of the card part; here's how PayPal explains it:

The PayPal payment card is one of the ways you can pay at any participating store locations accepting PayPal. It's a store only spending card linked directly to your PayPal account. The PayPal payment card can’t be used online or as a credit card.

You do not need the PayPal payment card to complete Store Checkout activation. We will automatically mail it to your home address 2-4 weeks after you activate Store Checkout.

The PayPal card isn't required and probably won't be widely used -- maybe it's a "training wheels" transitional product to get users comfortable with the system. The primary method is clearly the mobile + pin approach.

The following are the payment methods that can be associated with a PayPal account: 

• PayPal Balance
• Instant transfer from your bank account (if eligible)
• PayPal Credit (Bill Me Later, PayPal Extras Card, or PayPal Smart Connect)
• Debit card
• Credit card
• eCheck (a delayed transfer from your bank account - may result in significantly slower shipping by seller)

 Here's the list of HomeDepot Stores that are now accepting PayPal (as well as others outside California):

Associating bank accounts and credit cards with PayPal is somewhat painful in the beginning. But if the accounts are already set up then this is a convenient and more secure way to pay than allowing a store clerk to swipe your card at the point of sale. 

I haven't used it yet, but my perception is that it's pretty straightforward. Accordingly it could enable PayPal to gain faster consumer adoption than an NFC-based payments system like Google Wallet. We're in a bit of a land rush period right now, and if PayPal can gain broad acceptance at stores and restaurants it could become one of the winners in the segment. 

I don't know what this looks like from the merchant side -- other than to assume that the new in-store payment system is subject to PayPal's standard merchant transaction fees. 

From a functionality perspective Google and mobile carriers could do something quite similar: enable consumers to associate credit cards or bank accounts with mobile numbers and a pin. But there's a whole "infrastructure" that PayPal has set up that may not be so quickly duplicated by others (that's a bit of a blind spot for me). 

Regardless this is a bold new step toward educating consumers and mainstreaming mobile payments. 

Nokia Sells a Million Windows Phones, AT&T's 7.6 Million iPhones and Fake Android Tablet Numbers

This morning both AT&T and Nokia reported quarterly earnings. AT&T sold 9.4 million smartphones, including 7.6 million iPhones last quarter, but generally missed expectations and posted a loss (partly because of the blocked T-Mobile deal). The company ended the year with 103.2 million mobile subscribers in the US. Verizon earlier this week said that it had 108.7 million subscribers.

Nokia beat the market's low expectations despite announcing a $1.4 billion (€1.07 billion) loss. More importantly the company announced that it had sold more than 1 million Lumia Windows Phones during the quarter in Europe. That was consistent with analysts' projections and has boosted Nokia despite the accelerating decline of its Symbian platform.

Yet data from forecaster Kantar, discussed by Reuters yesterday, reflected that sales of Lumia handsets in all nine markets where the phones are available were "less than 2 percent." Accordingly there's a long climb up the mountain for Nokia to reclaim its former position as a market leader on the back of Microsoft's OS:

Kantar said Microsoft's Windows Phone share in all of the nine key markets it measures remained at less than 2 percent despite the high-profile launch of the Lumia range from Nokia.

Nokia's flagship Lumia 800 model failed to break into top 10 smartphones sold in Britain by the end of the fourth quarter, the researcher said.

Nokia said in November the model was off to an excellent start in Britain, and had seen the best ever first week of Nokia smartphone sales in the UK in recent history.

Microsoft and Nokia have an arrangement where licensing and royalty payments change hands. But basically Microsoft is paying Nokia billions over a period of years to use the Windows Phone OS.

Finally, in the battle over marketshare numbers, Strategy Analytics put out an attention-getting release this morning arguing, "Android Captures Record 39 Percent Share of Global Tablet Shipments in Q4 2011." This conveys the impression that Android tablets have captured substantial marketshare, which is inaccurate. 

The chart below suggests that Android tablets sold 10.4 million units -- in part because Apple actually sold 15.4 million iPads.  

Kindle Fire, a quasi-Android tablet (quasi because it marginalizes Google and the Android Market), sold perhaps 4 to 4.5 million units. If correct that would constitute nearly half the "shipments" in the chart above. Beyond this Nook, another low-end Android tablet, may have sold quite well in Q4 also. These are the bestselling Android tablets. All others have had negligible sales.

Previously the HP TouchPad was the bestselling non-Apple tablet because it was reduced to $99 by HP to move units. 

Let's end talk of "shipments" as a market share metric. Devices "shipped" does not mean devices purchased by consumers. Nor do "shipments" stand as a proxy for purchases, although they do typically in the unique case of Apple devices.

The "shipments vs. sales gap" was most starkly revealed last year specifically in the case of Android tablets (and RIM Playbooks). Millions of units "shipped" but almost none actually "sold" to consumers. Instead they sat on shelves. Effectively then "shipments" is a discredited and invalid metric to measure market share. 

Statistically valid consumer survey data would be more reliable as a measure of market penetration.

Apple's Really Really Big Quarter (by the Numbers)

Apparently Kindle Fire didn't take much wind out of iPad's sales. Apple's holiday quarter solidly beat the most aggressive analysts' estimates. Here are the big numbers:

• Revenue: $46.3 billion (cash on hand is now $97 billion) -- kaching!
• Mac sales: 5.2 million
• iPhones: 37 million (vs. about 30 million expected) -- 2X YoY
• iPads: 15.4 million (well over a million more than expected) 
• iPods:  15.4 million (iPod Touch was more than 50% of sales)
• Apple retail stores: $6.1 billion (22K visitors per store per week)
• Gross margin: 44.7%
• Quarterly profit: $13.06 billion (yowza!)

Across the board unit sales were higher than expected. In short a pretty remarkable quarter. US and Japan were identified as Apple's strongest iPhone markets, although the 4S just launched in China. Demand there is "off the charts." 

Tim Cook characterized the iPhone 4S audience reception as "breathtaking." The iPhone 4S was the "most popular" iPhone (vs. the cheaper models) according to Apple.

Apple said that there are now 315 million iOS devices in market, with 62 million sold in the last quarter alone. 

Kindle Fire: A Template That Will Burn Google?

I've now had my Kindle Fire for about a month. It's the most successful Android tablet on the market (probably to the tune of about 4 million in sales) but much less of an Android tablet than others. As most people know, Amazon operates its own Appstore and users don't have access (w/o an awkward hack) to the Android Market proper.

My grade for device is "B." It's awkward as a web-browsing device. It's really awkward for email; the keyboard is sloppy and there aren't the customary Android alternatives (Swype, FlexT9, Swiftkey). It's good for reading eBooks and watching movies. In general, apps are what redeem its shortcomings as a web-browsing device.

The problem, however, is that not all Android apps are available. Surprise of surprises: Netflix, which competes with Amazon's own video service, is available. But the main New York Times app is not -- presumably because Amazon is selling subscriptions to the Times. I would expect that more Android apps will eventually become available, however.

The following chart was produced by SAI from survey data collected by RBC Capital Markets. It reflects that most people use Kindle Fire as they used the original Kindle: for reading eBooks. 

Kindle Fire is an aggressive example of something that was always hypothetically always envisioned for Android: extreme customization by device makers and carriers. To that end, BusinessWeek has an article this morning about Kindle Fire and Chinese versions of Android on mobile handsets, which leave out many of the otherwise pre-installed Google apps:

Amazon.com Inc. and Chinese Internet giants Baidu Inc. and Tencent Holdings Ltd. are using Android as a building block for their devices, skipping preloaded applications such as Gmail, Google Maps and YouTube that generate ad revenue for Google, as well as its app store. Amazon’s Kindle Fire tablet, which is gaining ground on Apple Inc.’s iPad, comes with none of those apps.

The article makes the case that if more OEMs follow suit Google will lose revenue, citing a recent Cowen & Company report which estimates that Google makes roughly $7 per Android device sold. However that's not entirely true.

Most of Google's mobile ad revenue is from search -- although mobile display is growing -- and most of Google's query volume is via the browser. It's really only if there's a different "default" search engine on devices that Google will truly suffer. Accordingly, browser-based search is where Google is most vulnerable. However, third party apps that feature ads from Google/AdMob will also continue to money for the company regardless of whether Google-branded apps are on the phone.

Nonetheless, it's a provocative article and interesting to contemplate how many more hardware companies may emulate Amazon. For example, RIM or Nokia could take Android and build UIs that are very customized on top of the software. That's probably something RIM should start doing -- immediately. It would be potentially unique and provide access to the trove of apps that Android Market offers. RIM could even build its own Android appstore like Amazon. Without apps BlackBerry will fail. 

Google, for its part, doesn't want to lose control of the Android ecosystem. It has responded to Kindle Fire's challenge by promising an aggressively priced, "highest quality" 7-inch tablet later this year.

Of Devices and Men: Apple Earnings, Nokisoft Sales & RIM's Complacency

Apple reports quarterly earnings today after the US market's close. Speculation about device sales and revenues is feverish. I'm less interested in whether Apple beats expectations than I am in getting a concrete sense of how many iPhones and iPads are in the market. Since earnings are a cat and mouse game in which the financial analysts try to predict sales and revenues and the company tries to surprise it's hard to say what will happen. 

Revenues are expected to exceed $40 billion; consensus estimates are about $39 billion. Roughly 30 million iPhones have been sold according to the various estimates. One question mark is iPads. Were sales hurt by the cheaper Kindle Fire? The expectation is somewhere between 13 and 14+ million were sold last quarter. We'll know later today.

Meanwhile over in Windows Phone-land, early sales estimates for the Nokia Lumia line in Europe appear to be promising, with analysts estimating that the company sold more than 1 million phones since launch. Bloomberg averaged the numbers and determined the consensus is that 1.3 million units "shipped": 

The Lumia handsets, which went on sale in Europe in November, probably sold 1.3 million units globally to operators and retailers by the end of last year, according to the average estimate of 22 analysts compiled by Bloomberg. The projections range from 800,000 to 2 million and only one analyst predicted sales of fewer than 1 million handsets. 

Separately, another source shows that Nokia handsets already dominate Windows Phones that have actually been sold to consumers (vs. shipped). According to data compiled by WMPowerUser, Nokia-made Windows Phones now constitute nearly 50% of the active market. 

Finally, as I had predicted early this month, RIM's co-CEOs were ousted or sacrificed to appease investors, who have punished the stock over the past year because of the company's performance and perceived complacency in the face of rapidly declining share. Remarkably, RIM's new CEO Thorsten Heins, a company insider, said that no new strategy is required to right the ship:

Mr. Heins has worked at RIM since 2007, most recently as the senior of two chief operating officers. On a conference call Monday, he immediately emphasized that he will mostly follow the path set by his predecessors, co-Chairmen and co-Chief Executives Jim Balsillie and Mike Lazaridis.

He told analysts not to expect "seismic changes" and ruled out splitting up the company. Mr. Heins (pronounced like Heinz ketchup) said he was focused on getting out the company's newest line of phones, to be run off its latest operating system, BlackBerry 10.

RIM and Nokia may turn out to be case studies with opposite outcomes. Nokia, having taken radical action, may turn around and regain momentum (though it's not clear yet). RIM, if Heins merely stays on course, may crash and burn.

RIM's OS and devices aren't competitive with the iPhone and Android at this point. It can no longer rely on the enterprise market and its product line is confused. Developers are also not writing for RIM. It thus needs to embrace the Android ecosystem in one form or another -- probably sooner rather than later.

Indeed, the company doesn't have that much longer to take some dramatic action. But by picking a loyal and apparently complacent insider in Heins RIM may have all but precluded that from happening.

Tablet Ownership Doubles, Now Critical Channel for Retailers

Retailers: if you haven't yet got a tablet app or optimized site, you're behind the curve. Earlier today the Pew Internet Project released data showing that between early December and January the population of US tablet users effectively doubled, from 10% to 19%. This is of course due to holiday gift giving.

If one were to extrapolate these figures out to the entire US population it would mean (by my quick calculation) roughly 45 million people now have tablets (distinct from eReaders). And by some measures Tablet users are more valuable than smartphone and even PC users. 

According to data released last week by Adobe, based on an analysis of 16 billion visits to top retailer websites, tablet owners spent more money and were more inclined to buy than smartphone owners and PC users:

• Tablet Visitors spent over 50% more per purchase and were nearly three times more likely to purchase than Smartphone Visitors
• Tablet Visitors spent over 20% more per purchase and were nearly as likely to make a purchase as Traditional Visitors

Tablet owners had slightly lower conversion rates, however, than PC users. And there is much less traffic coming from tablets vs. PCs. However there does appear to be some "cannibalization" going on.

Here are the top-level findings from Adobe's study (AOV is "average order value"):

There's plenty of other evidence that support's Adobe's finding that tablets are an important new commerce platform: 

• Call It 'T-Commerce': Almost 50% of iPad Users Have Made Purchases in Past Month
• It's a Four-Screen World Baby

Several recent studies have shown that retailers in particular are lagging in their adoption of optimized mobile sites and apps. The Pew data and Adobe findings should be a wake up call to retailers that they have to address tablets as a distinct channel. 

Windows Phone's Polarizing Predictions: Either Beats iOS or Total Failure

Yesterday when Microsoft released quarterly earnings the company said nothing specific about Windows Phone sales. It touted its relationship with Nokia but didn't disclose any figures or evidence suggesting "momentum." Nonetheless three hardware analyst firms, Gartner, IDC and most recently iSuppli predict that by 2015 Windows Phones will have greater share than iOS.

Here are the iSuppli handset sales projections (RIM is presumably among the "others"):

According to the firm most of Windows Phone sales will be driven by Nokia:

Although Nokia is not the only seller of Windows Phone smartphones, the company is expected to dominate the market, accounting for 50 percent of all Microsoft OS-based handsets sold in 2012, IHS iSuppli predicts. The company's share then is set to rise to 62 percent in 2013. Nokia's portion of the market will begin to decline in 2014, as other companies increase their sales of Windows Phone products.

The cyan Nokia 900 was one of the big hits, at least aesthetically, of the recent CES in Las Vegas. It's a solid phone and one that Gartner et al anticipate will mark the return of Nokia to North America. Indeed, these Windows Phone beats iOS forecasts are largely based on the strength of Nokia's global footprint.  

Despite the near consensus that Nokisoft will power a comeback for the two companies there are skeptics. At the other extreme take Om Malik's thoughtful piece likening Nokia to Kodak, which just declared bankruptcy: 

Sure, Nokia has a brand, global presence and a sizable marketshare. So did Kodak. It took 132 years, the last 15 of those spent in constant belt tightening, for the photo film company to sink. Having missed the big wave, Nokia doesn’t have the luxury of time.

Malik anticipates near total failure for the Nokisoft effort. And there are others who agree. My view resides in the middle. I said in my "mobile predictions for 2012" that Windows Phones will see modest but not huge success in North America, greater success in Europe/Asia. 

I don't think that Windows Phones will take the market by storm in North America. I believe the two companies will have less than 10% market share here. With lower-cost models in developing countries they will see more success as well as in Europe, where Nokia's brand is much stronger.

However, predicting what will happen in even three years in the mobile market is next-to-impossible given the pace of change. Yet I remain quite skeptical of the Gartner et al "automatic" assumptions of Nokisoft's win over iOS -- largely on the basis of Nokia's historical performance. 

Mobile Eroding PC Sales, Survey Says iOS-Android 'Duopoly' to Dominate

PC sales are slowly eroding -- and mobile seems to blame. One could argue that the economy has taken a toll on PC sales, and that would probably be accurate. But mobile devices (smartphones, tablets) are gaining mindshare and sales at the expense of PCs. 

Hardware watchers Gartner and IDC both said that Q4 PC sales fell -- somewhere around 1%. Macroeconomic conditions and component shortages are factors. But the big news is tablets and smartphones. Tablets (iPad, Kindle Fire, Nook) were among the most widely requested and given holiday gifts, to the tunes of millions in sales.

EMarketer rounded up third party data and estimates on iPad and Kindle Fire sales. Hardware tear-down firm iSuppli estimated that Amazon sold 3.9 million Kindle Fire tablets in Q4. Barclay's Capital estimated the number to be 4.5 million. The reality is probably in-between.

Meanwhile iSuppli argues that Apple "shipped" 18.6 million iPads in Q4. Shipped is a bogus metric, but with Apple products sales and shipments are closer than with other OEMs. The iSuppli estimate is probably high, but we'll find out when Apple releases its quarterly revenues on January 24. 

Overall, iSuppli argues that global tablet shipments were 65 million units in 2011. Not only are tablets "sexier" but they're typically cheaper than PCs, notwithstanding price erosion in the Wintel PC market. Take a look at charts from Horace Dediu (the first one above via GigaOM), showing the decline of traditional PCs over the past couple of years. 

Separately the Yankee Group conducted a US consumer survey (n=15,000), released earlier this year, which features some striking findings:

• 47% of survey respondents own smartphones (Android 39%, iPhone 25%) -- this is the highest percentage figure in the market to date
• Over 80% of consumers (including current smartphone owners) say they'll buy either an iPhone or Android handset in the next 6 mos.

What that means as a practical matter is that only a small minority are considering another platform. While survey data shouldn't be taken as definitive, they indicate how people are thinking and, by implication, the challenge Microsoft and Nokia's joint marketing efforts face. Windows Phones are nice but struggling to grab mainstream consumer attention and interest. 

In terms of tablets, Windows 8-powered tablets won't be out until later this year. Rumor has it that they could be more expensive than some Windows 8 laptops (to be determined). Windows Tablets face the same "outsider" problem that Microsoft confronts in the smartphone market. By offering laptop-tablet hybrids (like the image above), Microsoft might be able to justify a higher price and grab consumer interest.

However the totality of evidence suggests Microsoft is under intensifying pressure with Windows Phones and Windows 8. Indeed, can Windows 8 "bring sexy back" to the PC market? 

Studies Find Major Brands, Retailers Slow to Adopt and Optimize for Mobile

There are two recent studies that show national brands and retailers lagging in their adoption of mobile or under-investing in mobile as a platform. Brand consultancy L2 just this week released what it's calling "Prestige 100 Mobile IQ." Basically a survey of top brands' mobile presences and their efficacy, the firm found that most top brands were not taking mobile (and tablets) seriously enough, despite increasing consumer adoption.

Roughly 30% of the top 100 "iconic" brands surveyed didn't have a mobile app and 33% didn't have a mobile-optimized website. According to the study 52% had both an app and a mobile site, while 16% had no mobile site or app -- no mobile strategy whatsoever. Overall 44% of the brands qualified as "feeble" from a "mobile IQ" standpoint. 

The top 10 brands with successful mobile sites/apps and strategies, according to the survey, were the following: 

1. Sephora
2. Nordstrom
3. Macy’s
4. NET-A-PORTER
5. Bloomingdale’s
6. L’Occitane en Provence (tie)
7. Tiffany & Co. (tie)
8. Neiman Marcus
9. InterContinental Hotels & Resorts
10. Estée Lauder

In a related set of findings, ForeSee Results measured consumer satisfaction with leading retailer mobile sites and compared those to online satisfaction scores. ForeSee found that most retailers and ecommerce sites' mobile ratings were lower than those for their PC websites. (Apple was the exception, with a mobile rating that was greater than its PC-experience rating.) 

It's not entirely clear, at first glance, whether these scores mean consumers found the retailers' mobile sites sub-par or whether they simply preferred the PC sites. Let's assume, however, that it's the former and consumers were expressing dissatisfaction with these mobile sites. 

If so, there will be near-term consequences in terms of lost opportunities as well as a negative brand impact among those companies that fail to optimize for mobile. Mobile and tablets are no longer a novelty phenomenon that can be addressed "later." Mobile internet access will eclipse PC internet usage in the next three to five years. Time spent with mobile apps is already greater than time spent online according to calculations from Flurry Analytics. 

The "takeaway" from these two pieces of research is that you can no longer simply rely on your PC site. Brands and retailers must have an optimized mobile presence. But it's not enough to have a "mobile presence;" brands and e-commerce sites must deliver a positive mobile experience to their customers, which means all of the following:

• an HTML5, mobile-optimized site
• an iPhone app
• an iPad app
• Android app (soon for Kindle Fire tablet too)

These investments are rapidly becoming "tablet stakes" and those that fail to "ante up" will suffer. 

PayPal Seeing Enormous Mobile Volume, Can It Cement Its Lead?

Last week it was announced that PayPal was running an offline mobile payments trial with HomeDepot in a small number of stores. And yesterday at CES eBay and PayPal released very impressive mobile payments revenue numbers:

• PayPal expects $7 billion in mobile payment volume in 2012
• In 2011 PayPal reached $4 billion in mobile payment volume. This dramatically exceeds the original prediction of $1.5 billion
• There are currently 17 million (global) PayPal customers using the system to make mobile payments

These figures enable PayPal to lay claim to being the leading mobile payments platform in North America and perhaps globally. I've previously argued that PayPal's consumer brand is too weak to enable it to be one of the big winners in mobile payments. However enough adoption by merchants and extreme simplicity can overcome what I perceive to be its brand weakness to perhaps a substantial degree. 

In HomeDepot PayPal is testing a system that allows consumers to pay for things with their phone numbers and a pin-code. It doesn't rely on the rollout of near-field communications. Such a system could dramatically speed the adoption of mobile payments. Removing the need to physically swipe the card at a POS terminal makes the transaction more secure than it would otherwise be. 

Comfortable Paying with Smartphone

However most people are ignorant of the benefits of mobile payments and a majority remain concerned about security. A recent Prosper Mobile online survey (n=360) found that 44% of respondents were somewhat or very comfortable with the idea of paying for things with their phones. The other 56% were not. 

Related posts:

• PayPal Brand Weakness Standing in Way of Otherwise Compelling Vision
• Will 2012 Be a 'Breakthrough' Year for Mobile Payments?
• Verizon Stuffs Google Wallet, Starbucks Proclaims Itself the Mobile Payments Leader
• Google's NFC Payments Push Not Just about Payments
• Mobile Predictions: 2012 Edition 
• Carriers Blink, Invite Visa to Be Part of Payments Cabal 

Mobile Internet Kicks PC's Butt in Time Spent

Last June mobile analytics provider Flurry released a startling statistic: people were spending more time with mobile apps per day than they were on the PC web. The number of people on the mobile Internet in the US is still smaller than the PC Internet (100 million-ish vs. 218 million). But the implications of Flurry's engagement data are both obvious and dramatic. 

Flurry recently updated its numbers and found the gap had widenend -- in favor of apps. According to the company Americans now spend an average of 94 minutes per day with apps vs. 72 minutes on the PC.

Here's what Flurry said about its methodology and how it calculated the numbers: 

For the web, shown in green, we built a model using publicly available data from comScore and Alexa.  For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications.  We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis. 

Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.

Assuming the calculations are accurate the implications are profound for marketers and brands. In other words, if you're not optimized for mobile and not doing mobile advertising/marketing you're going to miss a significant audience. And that audience spending more time with apps may be your target.

People invariably want to get into the apps vs. HTML5 debate; that misses the point. The real comparison is mobile (apps + mobile Web) vs. PC. The PC audience is largely flat and time online isn't growing. But time with mobile and tablets is.

Smartphones, tablets and one day "smart TV" will be where more and more consumer eyeballs go especially for non-utilitarian tasks. It's a four-screen world; get used it. 

Smartphone Market: Apple vs. Samsung (Android) vs. Nokisoft?

It seems amazing to think that just a couple of years ago Samsung didn't really have a smartphone lineup. Now the South Korean company has become the dominant maker of Android handsets globally. Chief rivals HTC and Motorola (soon to be a part of Google) have been overshadowed by the larger company.

Hurt by competition (read: Samsung) last week HTC posted its first quarterly loss in the contemporary smartphone era. Motorola also said its quarterly results would be weaker than previously estimated, negatively impacted by smartphone competition (again Samsung). 

Samsung has done a ton of marketing in the US and around the world for its Galaxy line-up of smartphones. Some of that appears to be paying off. According to a December ChangeWave consumer survey (US, n=4,073) more consumers are saying they're going to buy a Samsung handset than rivals (other than the iPhone). 

Source: ChangeWave

So if it's the iPhone vs. Android (increasingly Samsung), who will occupy the "third ecosystem" slot? Obviously it will either be RIM or Nokia-Microsoft. RIM is not yet in free-fall but nearly so. Meanwhile Microsoft has received a great deal of positive coverage in advance of the introduction of the Nokia Lumia 900. Many financial analysts are now bullish on Nokia and Microsoft's mobile prospects.

This weekend the New York Times had an extensive and favorable piece on the development of the Window Phone OS: 

Windows Phone, which began appearing in devices last fall, certainly stands out visually. It has bold, on-screen typography and a mosaic of animated tiles on the home screen — a stark departure from the neat grid of icons made popular by the iPhone. While most phones force users to open stand-alone apps to get into social networks, Facebook and Twitter are wired into Windows Phone. The tiles spring to life as friends or family post fresh pictures, text messages and status updates. 

The design of Windows Phones is both a strength and a weakness -- because they're different. While it's very beautiful in some "areas," parts of the Windows Phone UI are over-designed. But in general it's an impressive achievement for Microsoft. 

I saw and held the Lumia 900 last week; it's a very nice phone. Yet I don't believe that it will lure people at the "high end."

Those buying the iPhone 4S or the Galaxy Nexus are unlikely to switch allegiances. Nokisoft's best shot, in my view, is to capture those upgrading from feature phones and get them used to the unfamiliar Windows Phone UI. But that initial change from the iPhone look and feel (or Android which imitates it) will be somewhat jarring for many people.

The lack of apps is also a competitive disadvantage for Windows Phones. More apps will be developed over time, especially if consumers start buying Windows Phones. Another curiosity of Windows Phones: the IE browser doesn't seem to enable sites to detect a mobile device and show their mobile version. This is good in some cases but mostly a weakness. 

This year will be "make or break" for both Windows Phones and RIM, though more so for RIM. Both will battle for enterprise and consumer hearts and minds and for this third ecosystem slot. My guess is that Windows Phones (and Nokia) will probably win. 

Wal-Mart, M-Commerce and Brand Weakness

As you may recall, last April Wal-Mart bought Kosmix for roughly $300 million and turned that into the nouveau social-mobile-e-commerce initiative @WalmartLabs. Yesterday the division of the world's largest retailer acquired a Portland Oregon based mobile agency and app developer Small Society: "A highly respected mobile agency, is joining the @WalmartLabs mobile team. Small Society embodies what has made us successful in 2011 and will help us accelerate that success in 2012."

Stepping back the question is: what is Wal-Mart thinking about its strategy going forward? Sure, it's smart to set up a Silicon Valley shop that incubates social and mobile products. But what is Wal-Mart actually going to do with them? 

Wal-Mart could take on Amazon and try to become a better version of the e-commerce pioneer. While that would take enormous corporate commitment and be risky, the company could leverage mobile and social functionality being developed at WalmartLabs. Alternatively or in tandem it could try and build verticals and new initiatives that cultivate new audiences and shoppers.

Building new audiences and expanding beyond its value-conscious/price sensitive demographic is a major Wal-Mart company objective. It sees Target as a big threat in the US, which has much greater appeal to "upscale" and younger shoppers. 

This quickly brings us to the Wal-Mart brand. Yes, it's a global brand -- but it's a brand like McDonald's: low quality, high volume. Wal-Mart has also been tainted in some quarters by its discrimination class action litigation with employees. Accordingly, with certain demographic segments (affluents, higher education) Wal-Mart is seen as an exploitative employer that peddles low-quality products. 

Wal-Mart is equally often seen as destructive of local communities and small business. It's not uncommon to see grass-roots efforts to keep the store out of communities (e.g., San Francisco). This kind of anti-Wal-Mart outrage doesn't exist with other retailers, and Target in particular. 

This negative brand image and reputation is directly at odds with the mission and self-image of @WalmartLabs and will be a major impediment to success -- either via a direct challenge to Amazon or any other "2.0" initiatives that carry the Wal-Mart brand.

However, Wal-Mart could use its own brand and potentially find success over time in a head-on challenge to Amazon and other e-commerce retailers if it did the following things:

• Created sites/apps that offered great (capital G) user experiences
• Competed aggressively on price with free shipping all the time
• Made a very public and sincere commitment to customer service and backed it up with action
• Did a better job of community relations with sincere commitments to local communities
• Integrated stores and online in a smart, channel-agnostic way

If the company were to succeeded across the board on these fonts Wal-Mart might be able to not only appeal to new audiences but it could improve the standing of the brand overall. However, any sort of specialty, vertical or category specific initiative would need to carry a new brand. 

While there's great potential in @WalmartLabs I don't think the necessary corporate-level commitment is really there.