Both Gartner and IDC have recently published their handset rankings for Q3/2010, and both have Apple moving into the #4 spot globally. That is impressive, as this is not measuring smartphones but all phones, and it is not measuring North America and Western Europe but the world.
In Smartphone-only terms, Apple has leapfrogged RIM into the #2 slot.
On a platform-basis, Apple’s iOS is now #3 behind Symbian and Android but ahead of RIM’s proprietary Blackberry OS.
Interestingly, IDC has the rankings identically but the market shares of the leading players lower, which would suggest a higher share of the “others” (which is probably unduly diminutive for such companies like Motorola, HTC or Sony Ericsson).
IDC’s smartphone numbers are here.
Recently, previously civilized and subtle top executives of the world’s big mobile handset makers took the gloves off and became, well, a little more outspoken. What sticks from this is, of course, always only the most figurative snippets. Because all of these esteemed people have the most vested of all vested interests, their statements tend to distort reality a little. And because of that, we have increasingly lively debates at hand. But, alas, these debates may not necessarily lead to enlightenment.
So I thought I undertake a little mapping exercise and see where we end up…
The War of Words
I don’t know who started this. But we have had a couple of outbursts recently. Nokia’s soon to be former smartphone maestro Anssi Vanjoki (of nGage and other fame) likened switching to Android to boys who pee in their pants for warmth in winter. What he wanted to say is that it gets worse after brief relief. Apple supremo Steve Jobs sees no one (and in particular not RIM) getting anywhere near his beautiful iPhones anytime soon (he probably has not forgotten Mike Lazaridis riposte to the iPhone 4′s Antennagate). Others are convinced that Apple cannot beat Android. Period. Everyone wonders what Nokia will come up with (and, no, we do not think the N8 is it). Etc, etc, etc.
A Lot of Little Worlds
When one looks at the world map and then listens to the good folks cited above (and others), it appears that there is not one but many little worlds out there. Nokia is sitting high and dry in overall handset rankings with over 35% market share across all handsets. It is estimated to ship more than 500m handsets in 2011, too (so hold back with your obituary just yet). However, it is nowhere to be seen in the US (and even less in US smartphones where it is fighting a close fight with Palm around the 4-5% mark). Samsung (one of the few big boys not to participate in the above bickering) is building out its #2 spot with around 20% market share. Apple is well behind (although recording fairly impressive numbers given that it is basically a single handset company).
Does this matter in the discussion who is “winning”? No, it does not. An iPhone is useless if you are in an emerging (or developing) country with no 3G coverage and no abundance of power outlets from where to re-charge your fancy beauty every 8-12 hours or so. On the other end of the spectrum, a Nokia 1100 is useless if you would like to navigate on your handset through the urban jungle of Manhattan whilst shooting photos for the ones at home. But it runs forever, doesn’t mind a bit of sand or water and will never ever break. Ever.
The point is that there is more than one market here. The market is not mobile phones. The market is not even smartphones. There are many. And in some of them, Apple is looking really weak. And in others, Nokia is looking really weak.
Single Segment vs. Multi-Segment
Nokia’s strength (and, to an extent, curse) is that it wants to be everything to everyone. The N8 is a great handset from a hardware perspective but, after having played around with it for a week or so, I think it has a distinct 3-years-ago feel to it. It makes great phone calls though (which, well, the iPhone does not always). However, will Apple be able to challenge Nokia (and Samsung) in the broad lower-end mass market? Not for a long time, I would say.
The situation is a little more serious for other single-segment OEM. RIM used to live off the fat of the land in the enterprise sector. And it continues to thrive there. In recent years, it has seen a huge upswing amongst kids – because of the now almost legendary BBM (Blackberry Messenger for the uninformed). However, can you successfully build or expand on a single feature? And then on one that could really also be mimicked, worked around or substituted by something similar? Tricky.
Tricky in a different way is the situation for the likes of Motorola, HTC or Sony Ericsson: they have all committed their life to the Android platform. With Google’s muscle in the Open Handset Alliance, this means that they depend more and more on hardware design only. It feels a little like the movie business: hit-driven. And that is a tricky situation to be in. HTC looks good at this: this is home turf for it. On top of this, it has quickly started to try some gentle steps to distinguish itself (HTC Sense; Google Nexus One, etc) from other Android makers. Motorola’s Blur was less successful initially. And Sony Ericsson has yet to show its hand.
Vertically Integrated vs. Multi-OEM
All this does of course not bother Android (and perhaps also Microsoft’s Windows Phone 7) as they have the advantage of being able to bringing many weapons to the battlefield. Android’s huge advantage is one of price due to its open-source nature: For Windows Phone 7, you need to pay a software license. Android is – basically – free. Both have multiple OEM that fight their corner though. Which is, or at least can be, good. Google will not really care if the next killer phone is produced by HTC or Motorola or Sony Ericsson (or Foxconn directly for that matter).
Apple will likely struggle to match the sheer number of iterations being thrown at it. And therefore it is likely that Android will be winning, or rather continue to win.
Does this matter much to Apple? Possibly not. The margin discussion will, in all likelihood, be one that Apple execs will happily take. They will look better at it. However, will it manage to break the old Mac vs. PC pattern? Probably not. However, Apple’s position looks much brighter than it did in the decades of 5% OS-share mediocrity. The company has perfected the hardware-software-service-sex-appeal equation, which looks likely to cement a much more comfortable niche for it (just have a look at its market cap).
Vertically Integrated Multi-Segment
Nokia and Samsung try (or seem to try) a different way. Nokia is betting on MeeGo (its Symbian support sounds more and more hollow by the day). Samsung, which traditionally bet on almost every horse, made a big push for its proprietary bada OS.
This approach could be a winner: with their strong grip on emerging markets and the ability to roll out a proprietary OS across multiple segments, it presents an opportunity to nurture users in emerging markets (where the real growth will be in the next 5 years) into the use of their respective ecosystems. It did pay off for Nokia the first time around!
The Real Battlefield
In the more saturated markets in the Northern hemisphere though the battlefield is likely to be one involving OEM and network operators. This is where Apple really shook up the markets. A lot of the revenue streams from the iPhone simply bypass carriers. The Android OS opens similar avenues. The reason why Apple managed to pull this off is likely to be seen in the branding side of things: it enjoys such pulling power that carriers were bending over backwards to get their hands onto it (and then of course started moaning about the strain on their networks). Android is now being positioned as the alternative. At least, carriers can put competing offers onto Android devices.
Now, in markets where handset purchases are also driven by the overall package (cf. my recent post on this), this is likely to be important.
Nokia, Motorola, RIM, Samsung, etc all enjoy good distribution relationships with carriers. Apple is in a special position because of a) its brand but also b) its price; not much flexibility here, I suspect.
Nokia for instance struggled however to assert itself with some further-reaching ideas it had: some carriers pushed it back over e.g. plans to put Skype onto its handsets. It apparently has less brand power than Apple. Or the carriers were more used to having a say over what gets onto its handsets and what doesn’t.
Conclusion: We don’t Know What We don’t Know
We are, hence, in essence still in a fairly foggy situation: other than Apple’s brand power, we really don’t know as yet what, who, how will prevail. And that is in itself good news. Because it means we will have some time left with competing concepts, competing OEM and competing approaches. And with more CEO banter of course…
It is this time again: my phone contract comes up for renewal. And – as anyone who is following this blog will know (to recap, look here), I have not been all too happy with the treatment I got from O2 UK. So today I started looking around. Given my rather fat tariff requirements, carriers normally throw in all sorts of goodies (scil. free handsets), so started there. I have an iPhone 4 and a Nexus One already, so started to see what else is out there, as there are:
- Samsung Galaxy S or its Windows Phone 7 (which I rather fancy) sister, the Omnia 7.
- HTC Desire HD or – again Windows Phone 7 – HTC HD7 or HTC 7 Trophy
- Or maybe Nokia’s latest attempt at recapturing the upper hand, the N8 with its stunning 12 MP Carl Zeiss lense?
- What about the Motorola Milestone 2 (yes, my dear Americans, that’s the horrible name the Droid 2 got over here)?
- Finally, the LG Optimus 7 doesn’t look bad either…
Then I started looking at where, what, how I could get it and at what price, and the UK carrier labyrinth was entered: The Omnia 7 is carried by 3, Orange and T-Mobile, not by O2 or Vodafone (at least I couldn’t find anything to that end). The HD7 is an Orange exclusive, the Trophy is a Vodafone exclusive. The Galaxy S and the N8 seem to be with all of them.
Step 2: tariffs. With an unhealthy amount of traveling abroad to do, my main cost item on phone bills regularly is data roaming, so this is where my sensitivity lies (because of the eye-watering bills I regularly get, I am not bothered about 600 or 900 UK any-network minutes costing £5 more or less), and it became clear quickly: Orange, T-Mobile and 3 are out of the race (their charges are even higher than O2′s). Vodafone looks good (about 1/3 of O2′s rates) but O2 claims to still have their Blackberry tariff for international data roaming (although I struggled to find it on their website). Now, THAT would bring my bill down by a cool £150-200 a month or so. Enter Blackberry. The Bold (which I dearly loved when I had it) or the Torch (which gets decent but still very mixed reviews)? And then: O2 again? In spite of my anger with them?
And then I started to compromise: anything exclusive to Orange, T-Mobile or 3 was out of the question (because data roaming is pretty much a killer for me), which boils it down to Blackberry and O2 or any of the others on Vodafone (which would mean that I couldn’t get what started being my favourite, the Samsung Omnia 7). Hang on: I compromise over some shoddy pounds? Is the handset then not so all important as one might have believed when reading all those blogs, news blitzes and tech publications over the last months?
And, yes, I think it is true to say that – at least in instances where there are certain usage requirements (in my case data roaming), the package is what rules. This is perhaps then the wedge that the carriers - scrambling for meaning in this new app store world – could use to pry that dump pipe/smart phone dichotomy open. How’s that for an idea?
So, good folks at the carriers, listen up: do it (oh, Vodafone, and get me that Omnia 7, will you? 
).
It’s been looming and was long expected but today Vodafone announced it would embed its Vodafone 360 app store on two Android devices next to Android Market. Vodafone says their store would give partners a richer retailing experience than Android Market – but then they would say that, wouldn’t they?
But cheap puns aside, the move does have some legs: Vodafone uses Qualcomm’s Xiam personalisation engine, which provides recommendations based on user behaviour. They claim – and you may have heard that before in any number of my talks – that recommendations are a much stronger driver than promotions, stronger by a level of 4x to be exact. This ties in with my preachings: nearly 3/4 of all purchasing decisions (not only mobile, all of them!) are made on the recommendation of friends. And, alas, this is where “user behaviour” as the applicable pattern comes short: do I care how many, say, Amazon buyers of Grisham novels are also buying other authors’ crime thrillers? No. Why not? Because I don’t know these people. Do I care what my friends may think I like? You bet! Why? Because they know me and my tastes. Doh!
Anyway, back to Vodafone. They have realised (and, credit to them, admit it!) that a vertical implementation where you only get the full scope of 360 services if you have one of two phones doesn’t work. And, well, that’s somewhat obvious, isn’t it? Or is it a reasonable assumption that all my friends will all of a sudden (and at the same time) exchange their various handsets for a Samsung M1? No, I thought not either.
Vodafone did divulge a little data sniplet that must encourage them though, and that is that 360 customers have a 3x higher ARPU than others. If you look at the above (recommendations, friends, etc), that is not completely surprising. So now the next hurdle is to roll it out across their whole range of handsets. And let’s face it: a simple store won’t cut that on its own. Going cross-platform also means that – depending which handset you fancy – you may find different app stores of differing attraction competing with Vodafone’s own for attention (e.g. does Nokia’s Ovi offering seem to have more traction than, say, Blackberry App World but the latter has – from a publisher’s perspective – vastly superior price levels). All in all pretty sub-optimal, I think.
On a sideline: I will be moderating a panel on “How to Make Money as a Developer” this week at Mobile 2.0 Europe in Barcelona and I will be having the immense pleasure of having two operators on the panel (Orange and Telefonica-O2) as well as Microsoft (representing the OS side). This Vodafone announcement highlights some of the challenges the industry is facing. Interesting times!
Apple’s iPhone is only a marketing fad for vain urbanites. True purists go for Android. Those who see the light in volume go for Nokia or Samsung.
All this are points often heard when one dives into the deeper echolons of most mobile tech blog or forum. Engineers throw up their hands because those “American-centric media types” “don’t get it” and only wave their flag for whatever Steve Jobs, turtle neck and all may put up onto the big screens of his church.
I am not American and I am not a media type. And I don’t wear turtle necks (well, not since c. 1989 at least). And yet, I do prefer my iPhone (3G) over my Nexus One. And this despite obvious advantages of the Nexus: better screen, quicker, haptic feedback (yes, Mr Jobs, I do like that), the concept of open source, etc, etc. So why do I stick to the iPhone? Fanboy? Marketing fad? Vain urbanite?
Here’s why: I have been trying to set up my Nexus so it will do what my iPhone does, and I am not talking of playing a fancy game or running some other app that is not (yet) available on Android. I am talking about the two key things I need a phone for (41-year-old non-techie I am), and that is phone calls and e-mail; calendar (with sync) is important, too. For the former I need my address book, and I need it to sync properly. For the latter, I need my (admittedly too many) e-mail accounts set up on my device and syncing properly. As to calendar, wait for it below. Alas, two very different experiences:
- On the iPhone, you do the following: 1) plug the phone into your computer, 2) answer “yes, please” when iTunes asks you if it should sync contacts and e-mail addresses, 3) get yourself a cup of coffee, 4) walk off.
On the Nexus, you’re OK (-ish) if your life evolves around Google. With a Gmail account and associated contacts (and/or calendars), you’re sort of OK. It does all that. Now – shock, horror – I do not actually send all my mail from Gmail and my contacts are mainly dealt with in my address book (take Outlook or whatever you want if you’re a Windows user). And I use iCal and not Google Calendar. And so it starts: there is no desktop application that would help me do this. On a Mac, the phone is not even recognised when you plug it in (and that is a rare thing on a Mac; is this another piece of Apple vs. Google? I don’t know but I doubt it). So you are finding yourself setting everything up by hand! Entering the POP3 and SMTP (or IMAP) server addresses, user names, passwords, etc, etc for seven e-mail accounts is no fun. And (remember I am not a techie) invariably leads to some box checked wrongly here or a typo in a password there and, kawoom, nothing works. I can set up a Google Calendar/iCal sync BUT that will only sync the specific Google Calendar bit between the two, and not any of my other (work, home) calendars. I can sync my address book with Google, so that works. The whole procedure took me the better part of 45 minutes, including lots of corrections and swearing and led to me abandoning a half-configured beauty of an Android phone. Great result.
So why is that?
My answer is: because they design it with engineer-centric design. And that is wrong! Why? Well, because most people are not engineers! An engineer thinks something along the following: I am Google and we love the cloud. Therefore, I will design everything so that it will adhere to that principle and will – in a purist kind of way – design everything in a way that you can beautifully and seamlessly set everything up – if and as long as you use all the wonderful Google services we have. And if you don’t get that, you’re not worthy.
The same works with Nokia: we’re Nokia and we have the best hardware, the best distribution and an incredibly good and powerful plethora of services around it (we did spend time, resource and money after all to become mighty competitors in maps [Navteq], music [Comes with Music], apps [Ovi - and the many iterations before it], etc). I will therefore design everything in a way that I can let this hardware shine as best I can; I mean: we had video calls since 2005, for elk’s sake! And if you are too dumb to configure everything in a proper way and cannot find the destination to where your downloads were stored, you’re not worthy.
Apple looks at things a little differently (and it is not only for the better although, for most people, it is): they provide a tool that brings everything I need over to my phone just like that. Job done. Easy! They will look at whatever tools they need for this. And if it means extending iTunes (which, yes, I know, they had already) to accommodate syncing data other than music and video to something other than a computer, than so be it. In that, they follow their own philosophy as slavishly as the other guys do but they do design it from a people-centric rather than an engineer-centric point of view. And that is why it works so well for people that are not (also) engineers.
They key point is this: Apple does not try (or at least not in your face) to change what people do. If I want to run my e-mail off 5 different domains, then so be it. If I prefer my contacts to sit on my disk rather than in the cloud, that’s fine. They’ll give me tools to facilitate doing what I do already and don’t lecture me on what I have to do to make it work. That this brings about subtle changes in user behaviour is fine: if you convince me gradually that things work better one way rather than another, I might be converted. But to tell me “my way or the highway” does not work! Ever!
The downside is Apple’s control mania, which blocks things (sometimes fairly questionably) because they are (or only might) be out of their control. And this is where Google, Nokia and all the others could score: try to combine things! If you would look at how Apple does things, and then – at the very end – you provide a door (doesn’t have to be a trap door, can be a flashy entry portal) to the innards and machine room of your device, so you can show off whatever you want and open the marvels of technology to those who can and want to handle it – so they can turn their super-smartphone into an uber-super-smartphone. But do leave normal people alone.
In the post-iPhone era, things have changed already (a little): you now get hidden installers (that do not ask you 100 questions on where you want to do what and where and under what penalties and with which risks), you get better interfaces, etc. BUT the default is still engineer-centric and not people-centric. Improve this, and the iPhone killer can be yours!
Image credit: http://www.ntamco.com/main/images/stories/design-is-a-behaviour.jpg
Gartner published the latest smartphone numbers for Q1/2010 (or so I read), and it is testament to the continuing rise of this segment: sales increased by nearly 50% year-on-year (and do remember that there was this recession-thing last year). Total sales were 54.3m units in the first quarter of this year. Not too shabby!
On the OS side, the rising stars are Android (9.6% global market share from 1.6% a year ago), which is now bigger then Windows Mobile (and it took it only a year!) and iPhone (15.4% vs 10.5% in Q1/2009). The silverback gorilla still is Symbian which dropped to 44.3% from 48.8%. Blackberry is also down (albeit only slightly: 19.4% from 20.6%).
Here’s a table:
According to a recent report, Android has zoomed past Apple in US smartphone OS share, taking the #2 spot with 28% behind Blackberry (36%) but now ahead of Apple iPhone OS with 21% (and, yes, I know that Apple somewhat lamely queried the accuracy of this). Be it as it is, Android is growing (and we all knew that, did we not?). According to Google’s CEO, Eric Schmidt, the company now sees 65,000 new phones being activated per day; this equates to a run rate of 23.7m for the year.
This is good news for handset manufacturers like HTC, Motorola and Samsung (all of who are shipping successful Android devices) as well as Google (which is fairly tightly embedded in the whole thing) but does it also reflect on the wider ecosystem of developers producing applications and services for the platform?
The main points that are usually mentioned are:
- Low overall numbers: Digital Chocolate’s CEO Trip Hawkins moaned the company sold less than 5,000 units of its hit game “Tower Bloxx” on Android Market, which was indicative for the lack of uptake. If that is so overall, may remain to be seen. I beg to take into a account that Android as a platform is fairly new and the overall install base is still smaller than its competitors.
- High price-sensitivity: according to an AdMob survey in January 2010, 12.6% of Android apps are paid vs. 20.4% on iPhone OS; the same survey revealed however that the average monthly spend was actually similar on Android ($8.36) and iPhone ($8.18) though higher on iPod Touch, which runs the iPhone OS, too ($11.39).
- Return policy: Google allows users to return an app for a full refund within 24 hours of purchase. This is seen particularly onerous for games (a lot of which can be played start to finish inside that time frame).
- Discovery: developers feel Google fell well short of Apple on this one. There is no possibility to discover apps from outside a mobile device (i.e. no iTunes) and Google has not really done anything in terms of marketing either (very much unlike Apple).
- Ease of purchase: I would like to add ease of use of the buying process. Registration with Google Checkout is a far, far cry from setting up an iTunes account. This will very likely change very, very soon as Google will add carrier-billing now that it decided to move distribution of its branded Google Nexus One from D2C web-only distribution to the usual carrier model.
So what about it? Let us not forget how young Android is – even compared to the adolescent iPhone. The platform launched from an install-base of zero some 18 months ago, with the HTC G1 being the only device out there – and available through a single US carrier, T-Mobile (with a market share around 12%). Whilst I do not want to take anything away from Apple’s superior accomplishments with the iPhone, the growth of Android is not too shabby either! And with a plethora of manufacturers deploying Android-based handsets now (cf. the growth numbers above), Android is likely to be powering into the fore even more (irrespective of whether or not the above stats on it overtaking iPhone OS in the US already being true).
Price-sensitivity is not actually as bad as people think: the aforementioned AdMob survey shows nigh identical average spending patterns. Personal impressions may again be hampered with by early experiences: be reminded that, initially, there were only free apps out there. They will surely still be hanging around, but will they also for much longer?
Apple has always been extremely scrupulous on approval of applications on its platform. And whilst this may now be held against it every now and then (e.g. in the case of nipples or Pulitzer-price-winning political cartoons), it has helped it to uphold a fairly high standard of quality, which Android was lacking (initially) and which even led to “crap-filter” apps. One can however safely assume that this will change once the market size improves: Apple’s margins might be superior to everyone else in the world but that does not mean that the margins game developers can achieve with it are the same. With Android OS primed to expand at a much faster pace, the numbers will clearly speak for it, and – I would posit – that will bring more and more quality to the store, with the fads sinking fast.
Also, do not forget the big brands: they do not necessarily care for a small share of the audience only. Whilst Android was fledgling and just starting up, they may have held back but, ultimately, they are about reach, and Android is certainly bound to deliver that. I would therefore suggest that we will be seeing an influx of large brands (gaming and otherwise) onto the Android platform very soon, and this will also help user orientation as to what to go for and what not.
The discovery of apps will also be helped by the more open nature of Android. There have been a number of announcement for curated stores by carriers (e.g. Vodafone, Orange, Verizon Wireless, Sprint, etc.), and these will certainly not be allowing a free for all! Besides that, the app store model does per se pose some challenges on developers: the more successful a platform (and/or store) is, the harder it is to be discovered. One might need to look for other solutions in that respect…
The billing side of things is bound to improve, too. With carrier-billing around the corner (cf. supra), this will get easier and better. And also easier and better than it is on the iPhone: charges will simply appear on your carrier bill (smart pipe anyone?). Besides that, the business models for games are undergoing significant changes anyhow: Freemium takes centre-stage, and so it should: the model allows people to try a game out and be charged for it only when they know that a) they like it, b) what they are being charged for (e.g. that coveted sword, a couple of precious lives, or that cool background theme).
Remains the return policy. I have been raising this with Google, and it must be pointed out that similar things exist on the iPhone (they’re just “better” hidden). So besides the obvious (Google’s good intentions came back to haunt them), it is also time to think of new business models (cf. Freemium). It is not something constrained to Android: transparency requires you to deliver value. If you do, there are good and transparent means to monetize that value; and users will follow.
So, yes, there is game in Android. If you don’t believe it now, just wait for it!
