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With iBeacon Adoption, Macy's, Apple on Vanguard of Indoor Marketing

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. 

targeted marketing 1

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.

Isis Mobile Wallet Launches, Most Americans not Interested

Last week, Isis, the NFC-based mobile wallet initiative from a joint venture of mobile carriers, launched nationwide. It only works on smartphones with an NFC chip, which essentially excludes the iPhone.

While most people expect mobile payments to become mainstream at some point, the outlook for Isis in particular is murky at best, if new survey data from Harris Interactive are reflective of general public opinion. 

Harris Interactive surveyed 2,577 US adults in September about their attitudes toward "mobile payments," generally. Scenarios described in survey questions included Square-like smartphone card swipes and "tap-to-pay" NFC systems. Broadly the firm found that more Americans were exposed to and had used some form of mobile payments vs. previous years.

A majority of respondents said they believe that mobile will replace cash and card payments "within five years." However a substantial minority (34%) believe that NFC systems (tap-to-pay) will never become mainstream. Among those who expressed a lack of interest in mobile payments, a "lack of compelling motivation" was cited as the main reason:

Among those not interested in using a smartphone to process payments, a simple lack of compelling motivation remains one of the top factors impeding interest, with 53% saying they don't see any reason to switch from cash or payment cards. This also holds true for smartphone users where a majority (58%) don't see any reason to switch from cash or payment cards either . . .

Simply put, large numbers of people don't see mobile payments, especially NFC-based approaches, as solving a problem. The people behind Isis are conscious of this and are trying to overcome consumer indifference by offering discounts, coupons and cash-back rewards for using it. For example, Amex is offering a 20% cash back award (up to a maxium of $200 total). 

However before Android (and Windows Phone) owners can start using Isis they'll need to get an enhanced SIM card. Then they need to download and install the app. Then they need to find merchants with NFC-enabled point of sale systems. 

The Harris survey data also reflect that interest in mobile payments in the US has fallen somewhat since last year. Security remains a top concern among a majority of survey respondents: "62% listed the fact that they don't want to store sensitive information on their phone as a reason for lack of interest."

Still the fact that most people believe mobile payments in some form are inevitable means there will eventually be consumer acceptance and adoption. As we've argued before the entry point for mobile payments is not these broad "horizontal" payment platforms but "point solutions" and vertical scenarios featuring a stored payment card (e.g., Uber, Amazon, Starbucks, AirBnB, OpenTable, parking, etc.). 

In such situations the convenience and efficiency of paying with an app are obvious to the end user. Indeed, the missing "compelling motivation" is present. Those vertical payment scenarios or point solutions will be the ones that familiarize people with mobile payments, ultimately paving the way for more horizontal payment systems. 

The question for Isis is whether it can survive until that day comes or whether it will have to change its approach or otherwise broaden its capabilities to attract more users, especially iPhone users. 

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

Google Updates iOS Apps with Hands-Free Voice Search

Google updated its iOS search app today for both the iPhone and iPad. The new app brings some additional functionality to Google Now, which is embedded within the app: 

  • Notifications (appear on home screen)
  • Reminders
  • New Google Now cards

The update also enables hands-free voice searching through the trigger/wake-up word "OK Google." This capability started on Google Glass and has migrated onto Android handsets such as the Motorola Moto X and LG Nexus 5. It's now available to iPhone 4S and above users. 

New Google Now cards include:

  • Tickets for movies, concerts and events
  • Airline boarding passes
  • Reservation confirmations for car rentals
  • Transit information
  • Local event listings

The combination of voice search and Google Now has turned "Google Search" into the "Google Assistant," without being rebranded as such. The combined Google capabilities rival Siri and arguably exceed it in some respects.

On iOS hands-free voice searching (OK Google) isn't as readily available as on Android. Users must first launch or open the Google Search app, which can be done with Siri, ironically. Then the hands-free searching can be initiated. That sort of defeats the point. On Android handsets voice search is immediately available on the home page. 

While probably no single feature launched today will generate massively more Google searches from iOS devices, collectively they may bring more user engagement. 

The new hands free search capability may have the biggest impact on the iPad. While users could perviously perform voice queries from Google's iPad app in the past, this new purely speech activated feature may generate more searches for Google from Apple's tablets -- which drive about 80% of all US tablet traffic.  

Google, Facebook, Twitter and Pandora Combine for 90% of Mobile Ad Revenue

Google is the world's largest mobile advertising company. However after Google there are only a few big players on a US or global basis. Google doesn't disclose mobile revenues as a separate line item.

According to the IAB, US mobile ad revenues in the first half of 2013 were roughly $3 billion. That means we can probably expect between $6.5 and $6.8 billion for the full year 2013. 

Online just 10 companies accounted for 70% of total online ad revenue in Q2 2013. In mobile, ad revenues are even more concentrated in a smaller group of companies. 

IAB IH numbers

Google's mobile revenues are probably, conservatively, in the range of 15% of its total ad revenue, which will come in around $49 or $50 billion globally for the full year. Let's also assume that roughly 50% of Google's mobile revenue comes from the US market. That would all mean Google would have about $3.6 billion in US mobile ad revenue this year. It could be more, however. 

Facebook, Twitter and Pandora all report the portion of their advertising revenue that is generated from mobile devices. Facebook has by far the most mobile ad revenue of the group, which is likely to come in a little over $3 billion for the year. Twitter has said that 70% of its revenue is coming from mobile -- and most of that is from the US market. 

The mobile component of total ad revenue for Facebook, Twitter and Pandora collectively will be roughly $4 billion for calendar 2013. It's not clear what percentage of Facebook's mobile ad revenue is from the US; however it's likely to be a substantial portion at this stage. 

Accordingly, putting together my estimates for US mobile ad revenues from Google, Facebook, Twitter and Pandora takes us to about 90% of projected US mobile ad revenue for the year. Ad networks such as YP, Millennial and a couple of others fill in the rest. 

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."  

Can the iPad (and the PC) Withstand the Cheap Tablet Onslaught?

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. 

Google Announces KitKat, Nexus 5 and New 'Advertising ID'

This morning Google announced its new Android OS update, KitKat, as well as a new Nexus handset, the Nexus 5 from LG (priced pretty aggressively at $349). In addition the company said that it would begin indexing "deep links" to Android apps in search results (on Android devices): 

Just like it crawls and indexes websites, Googlebot can now index content in your Android app. Webmasters will be able to indicate which app content you'd like Google to index in the same way you do for webpages today — through your existing Sitemap file and through Webmaster Tools. If both the webpage and the app contents are successfully indexed, Google will then try to show deep links to your app straight in our search results when we think they’re relevant for the user’s query and if the user has the app installed. When users tap on these deep links, your app will launch and take them directly to the content they need.

Here's a screenshot provided by Google:

 

Google doesn't mention what happens if users don't have the specified app installed. Presumably users would be directed to a download page for the app (or maybe there's some kind of detection and the link doesn't appear if the app isn't installed). There's no word on Apple devices. Technically it's probably not possible for Google to do this on iOS devices.  

The other significant announcement to come out today is that Google replacing the unique Android ID (similar to Apple's old UDID) with a new "Advertising ID." The new Advertising ID is very analogous to Apple's Identifier For Advertising (IDFA). Google's new Advertising ID implicates ad tracking and targeting in apps only, not the mobile browser.

It moves mobile app advertising away from the unique device ID and "up" to an anonymous identifier that can be cleared or reset by the user at will: 

Google Advertising ID

In addition to resetting or clearing the Advertising ID (like clearing cookies in a brower), Google users will be opt out of "interest based ads" (see graphic above). This doesn't mean no ads, just no retargeted or behaviorally targeted ads.

Advertisers and ad networks on Android must migrate to the new Advertising ID after August 1, 2014: "Beginning August 1st 2014, all updates and new apps uploaded to the Play Store must use the advertising ID (when available on a device) in lieu of any other device identifiers for any advertising purposes."

Separate from Advertising ID Google is increasingly trying to get Chrome browser users to sign in so that it can track and better target them across devices (and later into stores). This is an opt-in system and users can simply not sign in if they have privacy concerns. 

Apple's IDFA approach has been very well received and Advertising ID should also be. It seeks to strike a balance between privacy and advertiser targeting interests. 

Smartphone Derby: Lumia Improves, Apple Holds Position but Samsung the Big Winner in Q3

A bunch of smartphone-related data and numbers are out today: Nokia earnings, Nielsen US smartphone figures and Samsung's global smartphone share.

First, Nokia reported Q3 2013 revenue of €5.66 billion vs €7.24 billion a year ago. Sales were off 22% YoY but there was a small operating profit due to aggressive cost cutting.

The company said that it sold 8.8 million Lumia smartphones (vs. 7.4 million last quarter and 6.3 million a year ago). Microsoft is taking over the Nokia handset business. Overall Nokia sold many more non-smartphones; however that market is decline and unlikely to be aggressively supported when Microsoft takes over. Nokia said that it sold 55.8 million non-smartphones vs. 76.6 million last year.

According to Strategy Analytics, Samsung was the big winner of the smartphone derby in Q3. Based on shipments estimates the firm said that Samsung captured 35% of the global smartphone market. By comparison Apple had a 13.4% share, which was down from just under 16% a year ago but still put the handset maker in second place.

The third place smartphone vendor was something of a surprise in China's Huawei. LG was fourth and Lenovo was fifth on this firm's list.  

Back to the US, Nielsen is out with new smartphone data for Q3 (collected prior to the iPhone 5s release). Nielsen says that smartphone penetration is now 64.7% (comScore's number is just under 61%) in the United States.

In Q3 Android handsets combined for 52% of the market followed by iPhone with a 41% share. No other company has a meaningful share of othe US smartphone market. And despite the overall sales improvement in Nokia's Q3 results, there's little evidence of momentum for Lumia or Windows Mobile devices in the US to date.

The following is Nielsen's US breakdown of smartphone market share by manufacturer: 

Nielsen smartphone OEM

Apple Sells Almost $20 Billion Worth of iPhones

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: 

  • Revenue: $37.5 billion (vs. expectations of $36.8 billion)
  • iPhone sales: 33.8 million units (expectations: 31 million) 
  • iPad: 14.1 million (slightly less than expected)
  • iPods: 3.5 million
  • Mac sales: 4.6 million
  • Margin: 37%

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:

  • iPhones: $19.5 billion (52% of total revenue)
  • iPads: $6.2 billion
  • Macs: $5.6 billion 
  • iTunes/software $4.3 billion 
  • iPods: $573 million

According to Localytics the following is the global breakdown of iPhones in market: 

Future of Privacy Forum Announces Indoor Location Privacy Rules

The Future of Privacy Forum's Jules Polonetsky was one of the featured speakers at the inaugural Place Conference. He spoke about indoor location and privacy with Jennifer King from UC Berkeley. We alloted 30 minutes for the discussion but could have easily spent an hour on it.

Privacy is the 800 pound gorilla of indoor location and the issue that challenges and potentially threatens its roll out. Ever since the negative publicity and coverage suffered by Nordstrom retailers have been scared to death of talking about what they're doing with indoor location -- despite the fact that consumers stand to benefit greatly through these innovations. 

Hoping to head off regulatory intervention and preempt more ill-informed coverage and negative publicity, Polonetsky's Future of Privacy Forum (and Senator Charles Schumer of New York) announced a code of conduct that will govern indoor analytics and seek to protect consumer privacy.

The companies involved include Euclid Analytics, iInside, Mexia Interactive, Nomi, SOLOMO, Radius Networks, Brickstream and Turnstyle Solutions. Euclide and iInside spoke at the Place Conference.

This list doesn't include all the companies involved in indoor analytics (e.g., Retail Next) but the rest will adopt and abide by the rules announced today. And retailers will follow them. Basically the new rules require clear disclosures, enable consumers to opt-out of indoor tracking, make any tracking anonymous and prevent the misuse of information gained by venue owners. 

People always forget that much more intrusive closed-circuit video cameras have been in retail environments for more than a generation.

As our panel on indoor analytics pointed out most of the data aggregated and anonymously captured by retailers will translate into in-store improvements, from staffing to store layouts. However consumers need to be educated about all of this given how new and little understood it is. This is where retailers need to step up (rather than cower) and help consumers understand why and how indoor location will benefit them. 

Hopefully this new code of conduct will enable them do that with confidence.  

_____

Below is the full text of the press release: 

New York, NY – U.S. Senator Charles E. Schumer, The Future of Privacy Forum (FPF) and a group of leading location analytics companies – including Euclid, iInside (a WirelessWERX company), Mexia Interactive, SOLOMO, Radius Networks, Brickstream and Turnstyle Solutions – today announced that they have agreed to a Code of Conduct to promote consumer privacy and responsible data use for retail location analytics.  The companies responded to privacy concerns raised by Senator Schumer and the FPF about the use of this new technology.  The code of conduct includes in-store posted signs that alert shoppers that tracking technology is being used, and instructions for how to opt out. 

“This is a significant step forward in the quest for consumer privacy,” said Schumer.  “This agreement shows that technology companies, retailers, and consumer advocates can work together in the best interest of the consumer.  There is still much more work to be done and I will continue to push for privacy rights to be respected and strengthened, but this represents real progress and I thank the Future Privacy Forum and these tech companies for their hard work hammering out this agreement.

“Today, location analytics companies have introduced a comprehensive code to ensure they have data protection standards in place to de-identify data, to provide consumers with effective choices to not be tracked and to explain to consumers the purposes for which data is being used,” said Jules Polonetsky, executive Director of the Future of Privacy Forum. “These standards ensure that consumers understand the benefit of the bargain and have choices about how their information is used while allowing technology to continue to improve the shopping experience. As we quickly approach the holiday shopping season, this is not only the right move – but a timely one as well, adding a layer of trust, choice and transparency onto a shopping experience that in 2013 is more mobile and hi-tech than ever before.”

In July, Schumer warned that major national retail chains were testing technology that would allow them to automatically track shoppers’ location through stores.  Following this warning, FPF worked with the technology companies to develop a Code to ensure that appropriate privacy controls are in place as retailers seek to improve the consumer shopping experience. These technology companies use mobile device Wi-Fi or Bluetooth MAC addresses to develop aggregate reports for retailers.   

The Code puts guidelines in place to create best data practices that will provide transparency and choice for consumers. The Code calls for the display of conspicuous signage by retailers and for a central opt-out site for consumers.

Under the Code, companies that collect data through this technology must limit how the information is used and shared and how long it may be retained.  The Code mandates that companies de-identify the data and explain in their privacy policy how they do so. Companies are required to get opt-in consent when personal information is collected, or when a consumer will be contacted. The Code calls for opt-out consent where the information collected is not personal.  In addition, this data cannot be collected or used in an adverse manner for employment, health care or insurance purposes.

"We are just beginning to see the possibilities that in-store analytics can bring to shoppers and to retailers, and yet, as with any new technology, there is the chance for confusion about the intent and possible implications of such technology,” said Steve Jeffery, CEO, Brickstream. “We applaud the Future of Privacy Forum for taking the lead in bringing retailers and technology providers together to address these important issues.”

“We would like to thank Senator Schumer for his leadership on this issue,” said Will Smith, CEO, Euclid. "Privacy has always been a priority as we've designed and built our services, and we have been working diligently with FPF to release best practices for the retail analytics industry as a whole.”

"iInside and industry partners have made it a top priority to assure that consumers are well-informed and their personal privacy and identity are protected.  The newly announced code is a major step forward in establishing and communicating clear and concise standards across our industry," said Jim Riesenbach, CEO, iInside Inc.

“The release of a Code of Conduct to guide industry practice ensures that businesses and retailers are able to enhance their customers’ experience without compromising their privacy,” said Glenn Tinley, President & Founder, Mexia Interactive. “Business and consumers also can be assured that a company listed on the SmartStorePrivacy.com website has committed to following the code.”

"Proximity and location technology is evolving rapidly, and we want to make sure it’s deployed in an open, responsible and trustworthy manner. The retail location analytics Code of Conduct is a solid step in the right direction," said Marc Wallace, Co-Founder & CEO, Radius Networks, Inc.

“SOLOMO sees privacy as an opportunity for retailers to build trust with customers,” said Liz Eversoll, CEO, SOLOMO.  “We’ve collaborated to develop the Code of Conduct to ensure transparency and empowerment for retail customers.   Indoor location technology will offer customers new in-store experiences, special deals, and localized services as retailers introduce it in their stores.  Everyone wins.”“Turnstyle Solutions is pleased to partner with the Future Privacy Forum in the development of this Code of Conduct. We are confident the code lays the foundation necessary to protect sensitive consumer information, while offering retailers and consumers services that enhance their shopping experience," said Devon Wright, Co-Founder, Turnstyle Solutions.

New iPads Coming Today Amid Intensifying Competition

Later this morning Apple will introduce at least two new or updated iPads. It's widely expected that Apple will offer a 5th generation full-sized iPad that incorporates design features of the Mini and will be thinner and lighter. In addition the company will likely introduce a "retina" display iPad Mini. There are likely to be other announcements tied to Macs and the Mavericks OS update. 

However the iPad will be the center of attention.

This update is important as Apple faces intensifying competition from Google, Samsung and Amazon. There are also a host of "no-name" tablet makers pushing the price of smaller tablets down. Intel, for example, believes that there will be reasonable quality $99 tablets for sale this holiday season. Accordingly it will be interesting to see whether Apple adjusts the pricing of its iPads in any way. 

According to data from Localytics, the most popular iPad is the iPad 2, which has 38% of the global iPad market. The 4th generation iPad has only 18% and the iPad Mini has 17% according to the firm. Among Android tablets it's a three way race between Samsung, Amazon and Google/Asus. 

Global Tablet Share by Model2

On a global basis Samsung is the Android leader with 55% market share. In the US however Amazon Kindle tablets have outsold Samsung. Overall, according to Chitika in June, the iPad drives 84% of tablet-based traffic in North America. The ad network is set to update these numbers today.  

Gartner and IDC continue to forecast the decline of the PC, with tablet growth continuing. However, thus far, Microsoft has not produced a competitive tablet to stem its falling OS and device market share. 

On Friday the Pew Research Center offered new data showing that 43% of Americans over 16 owned a tablet or an e-reader. That makes for a total of just over 100 million people in the US with one or both devices. Among them Pew said that 35% owned tablets, which I calculated was roughly 84 million people. 

Tablets and ereaders 

In-Store Behavior: EU5 vs. US Smartphone Owners

Yesterday comScore released data about in-store smartphone usage from the EU 5: UK, France, Germany, Spain and Italy. The top in-store shopping activities across the region were:

  1. Take picture of product
  2. Send picture of product to family/friends
  3. Text/call family/friends about product
  4. Scan barcode
  5. Compare prices   

This compares with our survey of US in-store shopping activities: 

  1. Search for coupons or offers
  2. Price comparisons
  3. Make and use shopping lists
  4. Seek/look at product reviews and related information
  5. Send pictures to friends/family re their opinions
  6. Search for nearby stores offering same product
  7. Ask product-related questions or post pictures on social networks
  8. Buy the product through the phone

Source: Opus Research n=1,050 US smartphone owners (9/13)

There are several US surveys regarding showrooming and what consumers do in stores with smartphones. They show slightly different things. Basically, however, the top three activities are: compare prices, get product reviews, find coupons.

We can't assume the comScore data are the final word on European in-store behavior but it's interesting to note that the top activities all involve asking for input or advice regarding what to buy. That behavior is evident among US smartphone owners but further down on the list. There may be a cultural explanation or it may be a function of the framing of survey questions. 

There are roughly 150 million smartphones in the US and between 140 and 150 million in Europe. Penetration rates are comparable. In Europe the leading handsets are Android based, whereas the iPhone is the top smartphone in the US. 

Study: 47% of Mobile Autos Lookups Lead to Purchase

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

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

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

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

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

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

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

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

What Is Indoor Location Really Worth?

There are a number of analyst firms in the market that seem to exist to generate forecasts, many (or most) of which turn out to be inaccurate. In that context I'm quite skeptical about ABI's latest forecast regarding indoor location. The firm says the market is going to be worth $4 billion by 2018.

While it's almost certain that over time indoor location will be worth billions, it's too early to say with any precision or accuracy how much the indoor location market will be worth. Ironically ABI's numbers are probably too small (the firm is usually the source of inflated forecasts). As the market evolves there will be a number of revenue streams and indoor location will touch a wide array of of consumer purchases. 

First, there's licensing revenue generated by retailers and venue owners to indoor location vendors. There's also IT-related spending for "infrastructure upgrades" to support indoor location. That includes WiFi, bluetooth low energy and a range other approaches. There's no technology standard and unlikely to be one for some time. These numbers are quite small right now, unless we consider historical spending on WiFi as part of all this. 

Then there are a range of in-store marketing angles: in-store couponing, mobile advertising, apps, digital kiosks that interact with smartphones and so on. Though inevitable indoor marketing is generally speculative at the moment. Over time it will be worth several billion dollars. Currently brands spend billions to secure favorable positioning in stores and market to consumers at or near the point of sale. Some of that will inevitably shift to digital, indoor marketing. The question is how much?

Then there's the value of digital influence over offline purchases. A majority of US smartphone owners (and increasingly European smartphone owners) use their devices in stores to help make purchase decisions. There's a direct impact on purchases (deciding to buy or not buy) from this indoor smartphone research or "showrooming." 

I've estimated in the past that the Internet's influence over offline shopping is approaching $2 trillion. Using this type of lens, smartphone "showrooming" is impacting (positively and negatively) offline buying probably to the tune of billions already. Should this be part of an indoor location forecast? Not necessarily but it should be included in the discussion to show how much is at stake for retailers and others in the ecosystem. 

ABI is directionally correct that the market is worth billions -- it's already there if you consider smartphone influence over offline transactions -- but precisely how much and where the money will come from is still to speculative to predict reliably. 

Offering PayPal Provides Modest Conversion Lift to E-Commerce

Digital marketing platform Monetate recently tested whether a site offering the option to buy through PayPal saw any conversion lift vs. not offering PayPal. Using A/B testing and data from a single client the company said there was a modest roughly 1% sales lift by offering PayPal: 

Adding this simple reassurance to product detail pages not only lifted average order value by 1.03%, but it also reduced cart abandonment by 1.21%. Not a huge lift, but not shabby either . . .

We recently asked 1,250 US adults which entities they trusted most to handle mobile payments. The following was the order of results:

  1. My credit card company
  2. PayPal (eBay)
  3. Amazon
  4. Google
  5. Apple
  6. Other (included "my bank") 

Square and Facebook were not on the list of choices. However Facebook is testing its own mobile payments service with some consumers and retailers (stored credit card and details).  

As the survey data above indicate PayPal is in a very strong position to become the dominant mobile payments company (especially after its Braintree acquisition) if it can establish and reinforce its brand and user experience as being the simplest and most secure. 

Apple could quickly enter the mobile payments arena; however so far it has held back. And while Amazon has a presence in mobile payments it's not particularly strong or developed.

Google, for its part, has failed to establish Wallet among consumers. Square is in a decent position but it doesn't have the reach that PayPal currently has. Facebook has massive reach but is not going to be trusted with payments by most consumers without a Herculean education and marketing effort. 

So currently it's PayPal's market to lose really, as mobile payments take hold.  

Report: 103 Million People in US Have Tablets or eReaders

One still gets the sense that there are marketers who treat the rise of mobile devices as something of a novelty. The idea that mobile devices have supplanted PCs in many use cases hasn't quite sunk in for many.

There are nearly 150 million smartphones in the US today, with many of them being used as primary internet devices. Now, according to Pew Research Center data released this morning, there are nearly 103 million people in the US (over 16) who who tablets or e-readers. Eventually tablets will replace e-readers for most. 

A survey of more than 6,000 people in the US (over 16) conducted between July and September found that 35% of Americans own tablets and 24% own e-book readers. Combined, a total of 43% of Americans own one or the other or both. After Q4 the tablet number will be at or above 40%. 

Tablets and ereaders

Source: Pew Research Center 

Here's the breakdown in terms of real population numbers by category -- if the Pew data are reliable: 

  • Tablet owners: 84 million
  • E-Reader owners: 57.6 million

Apple is scheduled to announce new iPad models next Tuesday at an event in San Francisco. While Android tablet shipments (and presumably sales) have been growing the great majority of tablet traffic in North American is still from the iPad.  

Ad network Chitika reported in late June that the iPad was responsible for 84% of all tablet traffic in North America. The company is currently updating its numbers and will release new data next week. 

However this is what the tablet landscape looks like (until further notice) in terms of actual tablet-based traffic to websites:  

June iPad traffic

Source: Chitika