Two early side-by-side comparisons of Cortana with Siri and Google's Voice Search/Now contend (and demonstrate) that the Microsoft assistant achieved comparable performance:
It thus appears that Microsoft has taken away Siri or Google's assistant capabilities as competitive differentiators vs. Windows Phone. Indeed in the Gizmodo test Siri lagged in a few cases.
Neither review says that Cortana has exceeded the other assistants at this point. But the fact that Microsoft is out of the gate with a comparable capability is impressive. The only major thing that now stands in Windows Phone's way is its more limited app selection.
Let's hope that Cortana now puts pressure on Apple to further upgrade Siri. Since its dramatic introduction nearly four years ago Siri has not lived up to its potential, though it has continued to improve incrementally.
Google Voice Search performs adequately. It's speech recognition for dictation is consistently not as good as Apple's (Nuance's). Google Now's "anticipatory search" and related features are much more interesting. However Google Now also hasn't evolved significantly in the past 12 to 18 months.
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).
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.
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.
Yesterday on the conference call discussing the $2 billion acquisition of Oculus VR, Facebook CEO Mark Zuckerberg also told the audience that it now had one billion mobile users -- quite a milestone. The company previously reported in its Q4 2013 earnings that it had 945 million "monthly active" mobile users, as of December 31, 2013.
Daily mobile users are now probably around 600 million on a global basis.
Ad revenue from mobile devices in Q4 was "approximately 53% of advertising revenue ... up from approximately 23% of advertising revenue in the fourth quarter of 2012." That means the mobile ad-revenue number will likely be 65% or greater by the end of the year. Twitter gets roughly 70% of its ad revenue from mobile, based on its most recent earnings report.
Even though mobile experiences, advertising and marketing are still relatively young (since 2007), Facebook is looking beyond mobile to the "next computing platform." For Zuckerberg that's virtual reality.
He's potentially right.
However much depends on whether and how virtual reality can be translated into a mainstream experience. It's not unlike taking original IMAX and turning it into a smaller but more "accessible" cinematic IMAX for popular film releases.
Beyond gaming, which is Oculus' current pursuit, Zuckerberg articulated the idea of bringing people (virtually) into places, events and experiences in a more immersive and direct way. There are both commercial and non-commercial scenarios. Many of them, however, are straight out of science fiction or dystopian novels and movies (see, e.g., Matrix, Demolition Man, Strange Days).
Paradoxically, the Oculus acquisition brings Facebook more into the "real world" (away from 2D internet) but also offers new potential opportunities to create internet-like experiences for users, into which they can enter. One such example might be strolling down a virtual shopping street, like a character in a 3D game, where people can "touch" and examine products in a holistic 3D experience.
It's fascinating to contemplate an internet of the future that might be radically different than what we know today.
Four years after Apple acquired Siri and two years after Google introduced its "predictive search" assistant Google Now (along with its voice interactions), Microsoft is finally bringing an intelligent assistant -- Cortana -- to market.
Gadget site The Verge obtained some leaked screenshots of Cortana (see right), which is supposed to launch on Lumia devices with Windows 8.1. The question is whether Cortana will help Microsoft and Windows Phones differentiate and advance or whether they will simply be a kind of late entrant and "me too" product from Redmond.
Cortana is supposed to operate across platforms and screens, including on the PC and Xbox. Derived from a character in the game Halo, Cortana was at one time going to offer an "embodied" female avatar. While that's still possible the screenshots leaked suggest that Cortana will not have a face or a body (which makes "her" more family friendly). It's also likely now, given the "baggage" associated with the Halo character that "she" won't even be named Cortana when she reaches the market in April.
The Microsoft intelligent assistant will reportedly offer Google Now style anticipatory search and personalization features as well as Siri-like interaction. For Microsoft users (Outlook, Windows OS) Cortana may offer a rich experience but the company lacks some of the personal and search data that enables Google Now to function the way that it does. It has been speculated that for this reason, Microsoft invested $15 million in Foursquare last month in part to gain access to its location data and content to help feed Cortana.
We'll have to wait for the ultimate product to assess whether it offers new depth or a better assistant experience. Siri helped create (or more appropriately name) the market but has since not kept pace with increasing user demands. Google voice search and Google Now are highly useful but not entirely "coherent" as an overall user experience.
If Microsoft can in fact offer a "next generation" intelligent assistant it may have found a tool to drive Windows Phone sales as well re-stake a claim as a technology leader.
Update: According to demo video above from UnleashThePhones Cortana will ask a series of questions to try and develop a personalized user profile to start. The more data that Cortana has over time the more personalized and "predictive" Microsoft can make the system.
It appears the question is no longer whether Apple will break into mobile payments but when. A payments-related patent application recently surfaced that indicated Apple is quite serious -- at least over the long term -- about mobile payments. After all, it's a natural for the company.
Yesterday the Wall Street Journal reported additional details that indicate Apple may be preparing to enter the market sooner rather than later. Here are some of the key facts from the story:
These moves don't guarantee Apple will enter the space but they're strongly suggestive of it. Apple has roughly 600 million consumer credit cards on file in iTunes. It also has a consumer trust advantage over other competitors in the segment. (Wall Street would celebrate an Apple move into payments.)
Apple's fingerprint sensor could become a key security feature of a Pay with iTunes/iWallet service. However there's considerable complexity still "on the back end" with real-world retailers and merchants and their POS systems. Retailers also have their own mobile payments initiative, which could create resistance to Apple just as carriers supporting ISIS have resisted or blocked Google Wallet. Those factors would probably limit the immediate availability of an Apple payments solution for goods at major retail stores, though not necessarily at places such as QSR and fast-casual restaurants.
It would be technically easier for Apple to enter e-commerce and create a PayPal or Pay with Amazon competitor. Perhaps most likely, however, Apple could enable app developers to incorporate a Pay with iTunes capability, which would in turn enable payments for offline services (AirBnB, Uber, Dash, etc.). This is where "mobile payments" has traction today -- in specific apps or "vertical" contexts with a stored credit card.
Apple's Passbook app would probably get merged into or incorporate any Apple payments program. I would also expect that iBeacon (BLE) would be tied in to an Apple payments solution (as with PayPay Beacon). All this potentially adds up to a very powerful set of related capabilities including location awareness/indoor location, couponing/loyalty and in-app payments (for e-commerce and offline services).
An Apple payments service could also operate as a meaningful differentiator vs. Android handsets for both app developers and consumers. Google Wallet's offline payments capabilities have so far failed to catch on.
I also wouldn't be surprised if Apple made one or more (high profile) acquisitions before launching payments to bolster technical capabilities. Google would probably be motivated to compete for some of the same acquisitions -- for its own sake and/or to keep them away from Apple.
In the near term, a comprehensive mobile payments solution will probably require a hybrid approach to offer merchants and consumers a couple of ways to accept mobile payments and to pay. And while mobile payments have yet to gain mainstream adoption, Apple is one of the few companies that could really accelerate the market.
Last week ShopKick introduced "shopBeacon," which uses Bluetooth low energy (BLE) indoor positioning technology. The company is testing it with Macy's, which has also independently been using indoor location for some time (mainly leveraging WiFi) to enhance its in-store app experience for customers. (See ShopKick demo video.)
ShopKick's adoption of iBeacon is an important move to insert the company back into the in-store shopping conversation. It had been an early pioneer in mobile loyalty, seeking to help retailers drive consumers into stores. But as indoor location has gained momentum ShopKick has largely been on the sidelines -- until now.
ShopKick has a wide range of brands and national retail partners, including Target, BestBuy, Sports Authority and JCPenneys. The company seeks to serve retailers but also "own the customer relationship." Accordingly there's some tension between working with ShopKick and providing a direct indoor-location experience, as Macy's does through its app.
A less-well-known company seeking to do something very similar for retailers is Swirl. Swirl has both a consumer-facing multi-retailer app but also powers the indoor experience for retailer apps through an SDK. Timberland is the company's best-known partner. ShopKick is now also an indoor-location enabler with its shopBeacon BLE beacons.
Apple itself is going to implement iBeacon in its own stores. There are a range of obvious and secondary use cases, including providing enhanced product information and notifications about Genius Bar appointments. Beyond an improved in-store experience, Apple hopes to boost sales through iBeacon. The product can also be used to support in-store mobile payments (see, PayPal Beacon).
It's well established that a majority of consumers have used smartphones in store for research purposes and many are interested in indoor/in-store information. However recent research from ISACA suggests that retailers will need to be judicious about how they use in-store notifications and personalization and not become too "pushy" in trying to upsell and cross-sell consumers.
Another challenge of sorts for retailers with indoor location is the fact that majorities of smartphone shoppers use retailer mobile websites. Indoor-location features are much harder to deliver via websites. Smaller numbers of consumers use retailer apps. This makes sense because apps are typically downloaded and used by a store's most loyal customers, which represent a minority of overall store shoppers.
According to NPD survey data, 71% of smartphone owners access retail websites but only 57% use apps. Many of those apps fall into disuse shortly after they're downloaded. In addition, the survey found that a majority of smartphone shopping-related research was done at home and not on the go, suggesting "that engagement on their smartphone is more of an alternative for online shopping rather than a showrooming tool."
Accordingly in-store information directed at enhancing the customer experience is a way to make apps more relevant and engaging. But as the ISACA study indicates retailers (or mall and venue owners) will need to develop information, content and indoor experiences for customers that are informational and not merely about trying to sell things.
This is a complicated arena for retailers and would-be providers of indoor location and marketing. Experimentation and testing are necessary to determine what's going to "work" for consumers, vendors and venue owners. Macy's is very smart and to be applauded for "getting out in front" of the issue and trying things, notwithstanding the potential exposure to "indoor surveillance" criticisms.
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.
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.
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.
The iPad Air officially became available around the world today. Supplies appear to be readily available in the US but have slipped in some international markets. In the US the 128GB T-Mobile version now has a 5 - 10 business day wait. (Update: New York is reportedly selling out of some models.)
The new iPad Retina Mini will become available "later in November." There are undoutedly many people trying to decide which one to buy (iPad Air vs. iPad Mini Retina).
Beyond the iPad there are the Nexus 7, Kindle HD tablets and Samsung's Galaxy Tabs. The best of that group remains the Nexus 7. However the Nexus 7 is not as polished or quite as good as the new iPads, though it is cheaper. And lower cost is a meaningful factor for many people.
These three makers form a middle tier of price and quality after the iPad.
However, at the bottom, there are scores of "no-name" Android devices selling for less than $150. Many (as in the graphic above) are selling for under $100.
These super-cheap tablets are likely to have battery life and performance issues. They're not going to last little more than about a year if that (my original Nexus 7 broke twice in the same year with eventual total screen failure). Still, low pricing will make them very attractive to some. Indeed the prices are so low in some of these cases they can even be treated as disposable.
These low-end Android tablets will undoubtedly boost Android's share of the market. In the US the iPad still is responsible for more than 80% of tablet-generated web traffic. We'll have to revisit those data in Q1 2014.
There are a couple of ways to see the potential impact of the proliferation of low-end Android tablets. They're not mutually exclusive 1) they will take share from the iPad and 2) they will expand the market for tablets to more price-sensitive groups who otherwise wouldn't pay a premium for an iPad.
Regardless, the tablet explosion is not going to be good news for Q4 PC sales. People are likely to avoid replacing or buying new PCs in favor of smartphones and tablets.
Earlier today Apple announced quarterly earnings. Gross revenue was $37.5 billion vs. $35.9 billion last year. The company generally beat expectations on revenue, earnings per share and iPhone sales. Mac sales were in line with expectations. However, iPad unit sales came in slightly lower than anticipated.
Here are the top-line figures from the release:
Regionally Americas sales rose only 1% year over year. Europe was flat. China was up 6% and Japan was up 41%. Here are the revenue numbers by product:
According to Localytics the following is the global breakdown of iPhones in market:
Paid search marketing firm The Search Agency released its Q3 "State of Paid Search Report" for the US market. The report is based on a large volume of client data and discusses paid search trends by search engine and several industry segments. The headline is that a third of Google's paid search clicks in the US are now coming from smartphones and tablets.
The following are some of top-level data released in the report:
The following charts show the percentage of paid-search clicks by device category.
In the aggregate, Google saw 33% of paid clicks in Q3 coming from smartphones and tablets, with the greatest growth coming from tablets. Bing saw about 18% from mobile devices, since it has a much smaller and less visible mobile presence.
The third quarter US PC shipments figures have been coming out. While there was a mild recovery for some of the PC makers, the numbers overall remain very weak.
Both IDC and Gartner see PC shipments off from 7.6% to 8.6% overall vs. last year. In addition shipments don't equal sales. Consequently the actual sales figures may be weaker than suggested by the shipments numbers.
The market has structurally changed. Smartphone and tablet usage has replaced PC usage in many cases. Smartphone and tablet growth will continue to gain for the next 3 - 5 years, generally at the expense of PCs. We're also not likely to ever see high-end ($1,000+) PC sales at any volume in the consumer market again.
While Apple has been able to maintain higher desktop and laptop prices, most PCs now sell at sub-$500 levels (they're effectively disposable). And once consumers make that leap psychologically they'll want to spend even less (hello Chromebooks).
There's also less and less urgency to replace or upgrade older PCs. Consumer indifference to Windows 8 also compounds challenges for the PC industry.
The "aha" about the Q3 Gartner and IDC PC shipments estimates above and below are that the back-to-school shopping season did almost nothing to boost sales. HP, Lenovo and Dell saw modest growth while other PC makers saw significant double-digit declines.
Meanwhile tablet (and hybrid phone-tablet) devices continue to grow. Roughly 34% of the adult US population now own tablet devices according to earlier 2013 Pew survey data. Those numbers are likely to be above 40% and perhaps as high as 45% after Q4 2013.
The thing separating the PC from more precipitous declines is arguably Microsoft Office. If a functioning version of Office comes to non-MSFT tablets or if the cloud based version of Office is more widely adopted, PCs will be even less "necessary" for consumers than they are today.
In the frenzy of speculation leading up to Apple's iPhone announcement last month, there was lots of discussion of smartwatches. Apple supposedly was developing an "iWatch" and would be announcing it along with the new handsets. Samsung, wanting to beat Apple to market, rushed out its Galaxy Gear watch, which has met with scathing reviews as an "unfinished product."
Google was also rumored to be working on a smartwatch. The 9to5 Google site has some additional information on the potential release of a Google smartwatch at the end of this month: "Details are slim but the person seemed to think that Google Now functionality would be at the center of the product."
The idea is that Google would take its technology and learning (thus far) from Google Glass and put that in a watch. The emphasis on Google Now is interesting and appropriate -- the watch as a kind of notifications center. Samsung tried to cram too much half-baked functionality into Galaxy Gear.
There's considerable consumer interest in smartwatches (much more than Google Glass). Just over 40% of survey respondents in a recent survey we conducted (n=1,024 US smartphone owners) said they were interested in a smartwatch. Not surprisingly respondents were most interested in smartwatches that were made by the same maker as their current smartphones.
The right mix of features and pricing are key here. Undoubtedly Apple will develop an "iWatch." And Google, as the rumor suggests, will probably roll out a watch itself, given its new commitment to "wearables." But these initial products may not get the mix right: simplicity, aesthetics, functionality and cost.
The optimal price is probably $99 to $199. But $299 would be OK if the watch were a great product. At $299 and above, the Galaxy Gear is simply to flawed and too expensive for what it delivers. Now we'll see what Google can come up with.
Place 2013 brought together the entire spectrum of companies building the indoor location ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors attended this unique, one-day event at the Palace Hotel in San Francisco and was the first-of-its-kind anywhere.
8:45 AM - 9:00 AM
The Consumer Foundations of Place-Based Marketing - The majority of smartphone owners are already using their devices in stores to find product and price information, as well as coupons. Opus Research will present proprietary findings on in-store behavior, privacy attitudes and consumer receptiveness to indoor promotions.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation
9:00 AM - 9:45 AM
The State of Indoor Location - For the past several years online mapping giants and technology providers have been laying the groundwork for indoor location. What is the current state of the infrastructure? What technologies are already deployed and how accurate are they? What indoor consumer and advertiser scenarios are possible today and what might be possible within three years?
Joseph Leigh, Head of Venue Maps, Nokia
Leslie Presutti, Mobile, Location and Computing Business Unit, Qualcomm Atheros
Zack Sterngold, VP of Americas, Boingo Wireless
Avinash Joshi, Chief Technologist, Wireless LAN Group, Motorola Solutions
9:45 AM - 10:25 AM
Keynote: Why Indoor Location Will Be Bigger than GPS or Maps - The explosion of smartphones with built-in sensors, accelerometers, GPS and WiFi is making indoor positioning not only possible but also inevitable. The emerging indoor opportunity for venue owners, retailers and technology providers is potentially massive. Google’s Don Dodge, an investor and close observer of the space, will explain why he believes indoor location and marketing is going to be huge and potentially larger than GPS and maps.
Speaker: Don Dodge, Developer Advocate, Google
10:45 AM - 11:05 AM
Case Study: Point Inside - Point Inside was one of the early consumer-facing apps in the indoor location space. The company has since shifted its focus to enterprises and enabling retailers to take advantage of indoor location. The company will present a new case study featuring a major home-improvement retailer.
Speaker:Todd Sherman, Chief Marketing Officer, Point Inside
View slides from this presentation
11:05 AM - 11:30 AM
Featured Case Study: Forest City and Path Intelligence - Forest City Enterprises are many years into using mobile device monitoring and advanced indoor analytics to help create a better environment for their shoppers and their retailers. Hear from the project sponsor and partner Path Intelligence on how they have transformed asset management, leasing, and marketing.
Stephanie Shriver-Engdahl, VP, Digital Strategy, Forest City
Cyrus Gilbert-Rolfe, VP, Path Intelligence
View slides from this presentation
11:30 AM - 12:15 PM
Digital Analytics for the Real World - Using a variety of technologies to identify when and where smartphone shoppers are in stores, retailers can now leverage "big data" previously reserved for Internet companies alone. These "real world analytics" hold profound implications for everything from in-store merchandising and staffing to consumer marketing. Leaders in the segment will offer views on opportunities and potential pitfalls for indoor analytics.
Jon Rosen, Executive Vice President, iInside
Will Smith, CEO, Euclid
Alexei Agratchev, Co-Founder, RetailNext
Michael Healander, General Manager, GISi Indoors
1:15 PM - 1:55 PM
Retail Spotlight: Aisle411 & Dick's Sporting Goods - Aisle411 will discuss current retail deployments and their impact on operations, consumer loyalty and marketing. Dick’s Sporting Goods will share how it’s thinking about indoor location, privacy issues and the overall opportunity. And Bob Rosenblatt, former COO of Tommy Hilfiger Group, will outline the intriguing business opportunities for retailers in develop- ing indoor marketing strategies.
Nathan Pettyjohn, Founder & CEO, aisle411
Rafeh Massod, VP, Customer Innovation Technology, Dick's Sporting Goods
Bob Rosenblatt, CEO, Rosenblatt Consulting
View slides from this session from aisle411
1:55 PM - 2:15 PM
Using Store Visits and Data for Advanced Retail Intelligence - Online to offline has been the dominant but largely invisible paradigm of Internet-driven spending. Using mobile to better target and influence store visits is only the beginning. PlaceIQ CEO Duncan McCall will offer a major retail case study fo- cused on measuring store visits after mobile ad exposures. He will also discuss how to connect online, nearby and indoors for a more complete picture of the customer journey.
Speaker:Duncan McCall, Co-Founder & CEO, PlaceIQ
View slides from this presentation
2:15 PM - 3:00 PM
Ad-Tracking to the Point of Sale - Panelists will discuss the current and future use of indoor location as a way to demonstrate ROI and sales lift on a per- campaign basis. What is the current state of the art in matching store visits to ad exposures? And what are the broader implications of connecting online ads and offline data?
Monica Ho, Vice President of Marketing, xAd
David Shim, Founder & CEO, Placed
Ameet Ranadive, Director of Product, Twitter Ads Team
Michael Shevach, SVP Ad Solutions, Retailigence
Duncan McCall, Co-Founder & CEO, PlaceIQ (moderator)
3:20 PM - 3:50 PM
Opt-in or Opt-out: Indoor Location & Consumer Privacy - Indoor location has already gained the attention of members of Congress and been called "troubling." While not everyone agrees about the level of concern, there are obvious consumer privacy issues raised by in-venue smartphone tracking. How should the companies be addressing these issues today and what might regulation require tomorrow?
Jennifer King, School of Information, UC Berkeley
Jules Polonetsky, Executive Director & Co-chairman, Future of Privacy Forum
3:50 PM - 4:10 PM
Case Study: Meridian/Aruba Networks - Meridian, who was recently acquired by Aruba Networks, will offer two indoor case studies, one involving a small business (Powell’s Books in Portland) and another involving a major U.S. apparel and housewares retailer.
Speaker: Jeff Hardison, Vice President, Meridian
View slides from this presentation
4:10 PM - 4:55 PM
Microfencing: Targeting In-Aisle Shoppers - Billions of dollars are spent each year by brands and manufacturers trying to influence consumer buying in stores. A percentage of that money will migrate to indoor digital marketing. What conditions must first exist and what will those brand-consumer interactions look like? The panel will explore these questions as well as the contours of the broader indoor marketing experience.
Neg Norton, President, Local Search Association Ben Smith, CEO, Wanderful Media
Melissa Tait, VP of Technology, Primacy
Erik McMillan, CEO, BrickTrends
Asif Khan, Founder, Location Based Marketing Association (moderator)
4:55 PM - 5:30 PM
Reality Check: Assessing the Indoor Opportunity - The other sessions explored major opportunities (and challenges) of indoor location and marketing. Now it’s time for a fun, yet sober assessment of whether and how soon these scenarios will come to pass. Is there real demand and who will own the “indoor channel”? Where will the "place-based market" be next year, in three years?
Jeremy Lockhorn,VP, Emerging Media, Razorfish
John Gardner, Partner, Nokia Growth Partners
Chandu Thota, Engineering, Google
Wibe Wagemans, IndoorAtlas
Apple announced this morning that it had sold more than 9 million iPhone 5s and 5c devices this past weekend. It did not indicate how many of the 9 million were 5c devices vs. 5s devices. Most of the demand globally is likely to have been for the 5s. That's what our survey showed (see below).
The market became very nervous after the 5c went on sale for pre-orders a week ago and Apple didn't issue a press release last Monday. Many institutional investors sold Apple shares. Then the very postive 5s reviews came out stoking consumer demand.
Here's what Apple said in its release this morning:
Apple today announced it has sold a record-breaking nine million new iPhone 5s and iPhone 5c models, just three days after the launch of the new iPhones on September 20. In addition, more than 200 million iOS devices are now running the completely redesigned iOS 7, making it the fastest software upgrade in history.
Essentially the 5s sold out of its initial supply.
Source: Opus Research, n=1,508 US adults (Sept 16 – 19 2013)
Last year Apple said it had sold 5 million iPhones during its first weekend. That was a record at the time. This nearly doubles it. The company also announced this morning that since iOS7 became available late last week, 200 million devices around the world have been upgraded.
I was concerned that I would dislike or be ambivalent about the new OS. However I actually like it quite a bit.
The iPhone 5s sellout will only fuel further demand for the device. Supplies of the 5c remain available. But the public seems to recognize the 5c as "last year's model" with a new coat of paint. While that's not entirely true (there are some upgrades) demand for the 5c has been much less than the 5s as our survey last week predicted.
Update: Localytics now answers the 5s vs. 5c sales question, saying that the 5s outsold the other device by a factor of more than 3X in the US and an even larger margin outside the US:
As I wrote last week the advent of iBeacon and bluetooth low energy may effectively mean that NFC as an in-store mobile payments standard in the US market is dead. Google Wallet had placed a big bet on NFC payments but has been thwarted in its bid for adoption by two principal factors:
Google Wallet 1.0 thus was a failure. Google is now out with a new Android version (and soon iOS) is making a renewed bid for consumer adoption with a range of new features and a partial move away from NFC. In-store payments still depend on NFC and so won't be happening at scale any time soon for the same reasons cited above.
However the new features add utility and breadth to the user experience. Here's what's new:
Exactly a year ago we surveyed 1,501 US adults and found the vast majority were not interested in the idea of mobile wallets: 71% said "I'm not at all interested . . . in using [my] mobile phone to pay for things and replace cash or credit cards." Another 15% said they had only "limited interest." Only 14% had some interest or significant interest.
In specific contexts, where consumers see the tangible benefits of mobile wallets, these numbers change. But in the abstract the public remains largely uninterested in mobile wallets.
Nokia's Lumia handsets represent about 80% of Windows Phone's sales. However Nokia was continuing to lose share to Android and iPhone in key markets across the globe. By the same token Windows Phones had failed to enable Nokia to re-enter the US smartphone market in any convincing way.
Since the inception of the Microsoft-Nokia deal in early 2011, we had been arguing it was a serious mistake for Nokia to not offer an Android phone. However the terms of the agreement between the companies precluded that. In 2014 the deal was set to expire. But before that deal was renegotiated, Microsoft acquired Nokia's phone hardware business for roughly $7.2 billion.
In the middle of last year we speculated that Microsoft might be compelled to acquire Nokia for defensive reasons. When the acquisition was announced a little over a week ago, I argued had Nokia embraced Android it would not have been so weakened and forced to sell itself. I also speculated this summer that Nokia would be compelled to come out with Android handsets if it wanted to survive:
My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral.
Now the NY Times is reporting that Android Lumia phones were in development:
A team within Nokia had Android up and running on the company’s Lumia handsets well before Microsoft and Nokia began negotiating Microsoft’s $7.2 billion acquisition of Nokia’s mobile phone and services business, according to two people briefed on the effort who declined to be identified because the project was confidential. Microsoft executives were aware of the existence of the project, these people said.
There are two overlapping potential scenarios: Nokia was developing Android handsets in part to add leverage in negotiations with Microsoft (for renewal or acquisition); and/or Nokia was developing Android handsets in earnest and would have rolled them out -- forcing Microsoft to avoid that outcome through an acquisition.
Regardless it appears that the idea of Nokia marketing both Android and Windows Phones was a potential disaster that Microsoft sought to avoid at great cost -- literally. As I've written elsehwere, however, it remains unclear that Microsoft's $7.2 billion have been well spent.
The Apple iPhone event just concluded. Everything that was announced at the event had been leaked or written about beforehand, including:
However that last item, the "Touch ID" fingerprint sensor, was the stand-out announcement in my view. It will enable users to both unlock their phones and confirm iTunes purchases instead of entering a password:
Put your finger on the Home button, and just like that your iPhone unlocks. Your fingerprint can also approve purchases from iTunes or the App Store.
What I mean by the headline is that Touch ID is to the 5S what Siri was to the 4S: a kind of "wow" feature that helps it stand out from other smartphones. It partly compensates for the fact that Apple didn't introduce a larger screen, which everyone now wants. That's coming with the iPhone 6.
Apple's iPhone launch event is confirmed for September 10. It will take place at Apple's HQ in Cupertino, California. The company is expected to announce multiple devices at the event, including a new iPhone 5S, potentially an iPhone 5C and possibly an iWatch wearable device. There may also be new iPads.
The iPhone 5C is real and may come in a variety of colors (5 is the rumor) -- hence the colorful bubbles in the invitation. The forthcoming 5S is supposed to come in a champagne or gold in addition to traditional black and white. Pricing of these devices is uncertain, though the 5S will likely follow past pricing ($199 with 2-year contract, etc.).
Some reports have suggested the 5C will cost between $400 and $500 unlocked. Carrier subsidy pricing is TBD. The real question surrounding the 5C is how appealing will it be? How "good" wil it be?
Apple is walking a tightrope.
The 5C is intended to make Apple more competitive in developing markets and at the "lower end" of the market where there's more price sensitivity. If the phone is "good enough" and cheap enough -- does the "C" stand for "cheap" or "China" or "color"? -- it could potentially cannibalize sales of the 5S. But if the phone is not of sufficiently high quality it will fail and Apple's brand will suffer.
I suspect that Apple will include a previous-generation chip in the 5C (perhaps the current 5 chip), whereas the 5S will get a new more powerful processor. There may also be memory limitations with the 5C. However the apps and app ecosystem should be the same.
The primary differentiators will thus likely be price, color, materials (plastic) and processing power/speed. But how does Apple build an attractive product that is competitive but doesn't overshadow its more profitable flagship product? That's the dilemma.
Kantar Worldpanel ComTech reports that Windows Phone has made gains across major EU markets and now stands as the solid #3 platform behind Android and Apple. Windows Phone success in Europe is largely due to its association with Nokia, which remains a strong brand in Europe.
Germany, UK, France and Italy are Windows Phones' strongest markets. Gains in those countries helped elevate the Microsoft OS's share of the smartphone market in the "EU5" to 8.2%, up from 4.9% a year ago. That's an impressive gain. Mexico and Australia are also big markets for Windows Phones, according to Kantar.
Here are a comparison of the Kantar smartphone market-share data for the US, China and EU5 markets:
As indicated above, Kantar says that Windows Phone has a 3.5% share in the US. However, comScore shows a smaller gain and share (as of June 2013):
The Kantar data show a significant loss of share in the US for Android -- nearly 8%. Given this I'm skeptical that the data are truly reflective of the broader US market. However Kantar boasts that its panel is the largest and its data are the most accurate in the industry.
In Europe, BlackBerry and Symbian have lost a combined 7.4%. That's more than the gains enjoyed by Windows Phones. Accordingly the question arises: to what extent are those defecting BlackBerry, Symbian and "other" adopting Windows Phones? The Kantar data strongly imply that's where Windows Phones' EU gains are coming from.