REPOSTED from Wireless Week
For every dollar the phone companies make on data services, they used to make two to four times that on voice services. That is, until now.
In 2010, the average revenue per user (or ARPU) for wireless consumers decreased $0.46. Within this revenue shortfall, voice ARPU fell the most – $2.86 per user. Meanwhile, data ARPU actually increased by $2.37. That means phone call revenue is falling by the wayside, and data and apps are the new trend.
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Reposted from Bloomberg Businessweek, March 16, 2011
When consumers weigh buying a tablet, a smartphone, and a basic, no-frills phone for calling, the smartphone looks expendable, contends analyst Eric Chan
Smartphones are the products most at risk of cannibalization in the rising tide of tablet sales—not laptops, as some industry analysts are predicting.
Current forecasts for the ‘tablet effect’ are shortsighted and fail to consider the long-term implications that this phenomenon will have on the mobile electronics industry. While tablets are likely to crimp laptop and netbook sales for the first year or so—until consumers fully understand what a tablet is—the long-term trend is different. Laptop sales will bounce back. Smartphone sales will drop. This long-term trend should be clear just by looking at user surveys, product evolution, the redundancy factor, and basic economics.
Consumers use smartphones primarily for media and data capabilities, not calling features. That means they’re not really ‘telephones,’ per se; to the average person, they are portable media devices. So why stick with a three-inch screen when you can have one three times larger? And if you do buy a tablet, why continue with a smartphone? At current prices of $200 to $400, the smartphone is too expensive to win the battle against tablets at a mass-consumer level.
According to a 2008 Nielsen (NLSN) survey, consumers were already using SMS text messaging more frequently than telephone calling. The survey found users in the 13-17 age market texted 754 percent more often than they called. The same held true for the 18-24 market, which texted 298 percent more. Even the 25-34 market texted 138 percent more often. The Pew Mobile Access 2010 Data Usage Report found a steady and significant increase in data usage by smartphone users: 34 percent record videos with their smartphones (vs. 19 percent in 2009); 34 percent play games (vs. 27 percent in ’09); 38 percent access the Internet (vs. 25 percent in ’09); and one-third play music (vs. 21 percent in ’09).
Nielsen also reported that smartphone data usage increased by 230 percent from the first quarter of 2009 to the same period in 2010; a mere 3 percent of smartphone owners use these devices for only voice communications and half use Wi-Fi on their phones to download data. At its core, the smartphone is just a smaller tablet—a precursor, in fact. Product evolution demonstrates that there is an optimal size that a mobile device wants to be. That size isn’t three or four inches. It’s seven-to-nine inches.
Consider how smartphones have grown bigger while tablets are shrinking. Smartphones began as small 2.25-inch BlackBerry (RIMM) screens, jumped to the 3.5-in. iPhone screen, and now range as high as a 4.3-in. Android (GOOG) screen. At the same time, tablet sizes are getting smaller—from the 9.7-in. iPad screen to the 7-in. screens of the Samsung (000830:KS) Galaxy Tab and RIM PlayBook. Rumors have also circulated that Apple (AAPL) is developing a smaller iPad, in the six-to-seven-in. range, or a larger iOS device with a five-in.-plus screen. Remember that when the first tablet appeared in 2010 as the iPad, the form factor was almost identical to Apple’s iPhone. So, too, were the features. The only real difference was size.
Consumers use smartphones not to call their friends, but to consume data and media services. That puts smartphones in the same market space as tablets. The devices mimic each other in services and features, particularly when you consider that tablets can also make video calls via Skype and FaceTime. The only essential difference is user experience, reflecting the disparity in screen size. Given these devices’ redundancy, and the costs for maintaining both, it makes sense that consumers will eventually shift away from the smaller of the two.
The relatively ‘cheap’ price of tablets, in relation to the cost for smartphones, puts the latter at a market disadvantage:
• Samsung Galaxy Tab ($299) vs. Samsung Fascinate ($199)
• iPad 2 ($499) vs. iPhone 4 ($299, $199)
• RIM PlayBook (est. $499) vs. BlackBerry Storm2 ($199)
So what’s the point of having two mobile devices—at hundreds of dollars apiece—when both do pretty much the same thing? Does it really make sense to own an iPad and an iPhone? Or a Galaxy Tab and a Samsung Fascinate?
If this year’s tablet sales meet the 24.1 million projected sales numbers of Forrester Research (FORR), and smartphone sales overtake feature phone sales for the first time, as predicted by Nielsen, then it is quite reasonable to expect that smartphone sales could start to diminish by the latter part of 2012.
I specifically see smartphone sales falling among consumers in the 13-17 and 18-24 year old markets. Young consumers will start buying down on their phones, opting to buy a tablet plus a feature phone, rather than the expensive redundancy of a smartphone and a tablet, or the limited features of just a smartphone. These age groups are particularly vulnerable because they are already adopting tablets and e-readers as book replacements. Changing readership habits provides a strong incentive for moving to a tablet device; these demographics’ smaller budgets will necessitate a buy-down on the phone. In the 25-34 market, consumers will still use smartphones when employers provide them. Left to their own devices, a significant proportion will opt instead for a tablet, plus a basic phone.
This buy-down trend is coming in the next two to four years. But it’s possible for smartphones to stay in the game.
Mobile payment could be the key for smartphones. If mobile payments become widely adopted by carriers, operating systems, credit-card companies, and retailers, it could help smartphones withstand the natural downward trend that is coming. Bloomberg News reported on Mar. 15 that Google plans to begin testing a mobile payment system in New York and San Francisco in the coming months. Such a service would extend the use of its Android mobile platform.
Another short-term strategy is price cutting. Staying as close as possible to $200 will be critical. Also, manufacturers and retailers will likely have to offer special incentives for buying a tablet plus a smartphone. In the long run, smartphone survivability depends on the manufacturers’ ability to maximize the smartphone’s single inherent advantage over the tablet: size. Because of it, such key functionalities as photography, navigation, calling, mobile payment, and scanning are easier to perform on a smartphone than on a tablet. Harness those advantages, and smartphone sales will decline less than they otherwise would.
In general, the next few years will likely be tough for smartphones. This may not be a permanent trend; I think it will last only a few years, until consumers adjust to the idea of spending more on personal devices. But in this multiyear interim, we will see the smartphone market wither as innovation tapers off, developers exit, sales decline, and brand diversity wanes.
CTIA is back to Orlando this year, instead of Las Vegas. In annual tradition, I have posted a list of networking events for the 2011 CTIA Conference in Orlando.
In the post 2011 Mobile World Congress, Carnival of Mobilists, there were several submissions to contribute this month. Before we get into it, I have to say that this was one of the more exhausting conferences that I have attended in a while. Part of it might be due to the larger attendance as well as my meeting schedule.
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Forgot the USB power plug adapter? Not to worry, just install one of these power plugs in your house, office, anywhere you need to charge up those devices – iPhone, iPods, mp3 players, digital cameras. Now you just need to remember to have the cable nearby.
So where can I buy this thing? Click here to buy.
MY BLACKBERRY IS NOT WORKING! – The One Ronnie | HILARIOUS | Ronnie Corbett, Harry Enfield
Listen carefully at the dialog. If you are in the mobile industry, you’ll pick up on the subtle humor.
For reference, found this quick infograph from Executive Travel Magazine, Nov/Dec 2010.
Did you realize that the first mobile touchscreen phone was first introduced in 1993 by IBM? Even adjusted for price inflation, it the latest HTC Evo is very affordable in comparison to its predecessors.
REPOSTED from The Huffington Post
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This morning, I had the opportunity to do my first live TV interview on Fox News with Tracy Byrnes and contribute to the Apple Steve Jobs story and got my chance on FOX News. Below is my video clip. I will say that it’s a bit odd having to log into Skype for the call, but then listen to the questions over a mobile phone (excuse the earbud in my ear during the interview).
Source: Fox News
With less than one month away from the World’s Largest Mobile Industry event, the annual tradition of the Party List of the 2011 GSMA Mobile World Congress is up.
If CES 2011 in Las Vegas was any indication, the annual show in Barcelona should also notice an increase in attendees with over 50,000 people attending.
Got a chance to be on TV and comment about the Verizon iPhone announcement with Nina Sparano at KWGN, WB 2 in Denver and KDVR, FOX 31 in Denver. My apologies for the dark video with me looking exhausted, I had just flown from London to Berlin on a late flight and was up until 03:00 CET shooting this interview in my dark hotel room!
Source: KWGN – Transcribed article
Repost permission from Scott Ford, Partner, OPENAIR Ventures
The infrastructure supporting the mobile phone in your pocket is bracing for a digital communication revolution that will result in an economic boom rivaling any of the past developments of the information age. In fact, the mobile handset is quickly becoming the primary access point to the Internet, and this through just a fraction of nearly 5 billion current active units in the global market (four times the number of active Internet-connected personal computers).(1) In three years, the comparison between PC and mobile Internet access will be completely irrelevant as the handset itself becomes a small subset of many billions of mobile connections to the Internet powered through terrestrial wireless networks.
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The tradition of Saint Nicholas Day, usually on 6 December, is a festival for children in many countries in Europe related to surviving legends of the saint, and particularly his reputation as a bringer of gifts. The American Santa Claus, as well as the Anglo-Canadian and British Father Christmas, derive from these legends. “Santa Claus” is itself derived from the Dutch Sinterklaas.
In Germany, Nikolaus is usually celebrated on a small scale. Many children put a boot called Nikolaus-Stiefel (Nikolaus boot) outside the front door on the night of 5 December. St. Nicholas fills the boot with gifts and sweets overnight, and at the same time checks up on the children to see if they were good, polite and helpful the last year. If they were not, they will have a tree branch (Rute) in their boots instead. Sometimes a disguised Nikolaus also visits the children at school or in their homes and asks them if they have been good (sometimes ostensibly checking his golden book for their record), handing out presents on a per-behavior basis. This has become more lenient in recent decades.
But for some children, Nikolaus also elicited fear, as he was often accompanied by Knecht Ruprecht (Servant Ruprecht), who would threaten to beat the children for misbehavior as using this myth to ‘bring up cheek children’ for a better, good behavior. Any kind of punishment isn’t really following and just an antic legend. Knecht Ruprecht furthermore was equipped with eight deer legs. In Switzerland, where he is called Schmutzli, he would threaten to put bad children in a sack and take them back to the dark forest. In other accounts he would throw the sack into the river, drowning the naughty children. These traditions were implemented more rigidly in Catholic countries and regions such as Austria or Bavaria.
I guess the deals where just too good this year. I was leaving Best Buy from some Black Friday 2010 shopping and spotted this BMW 3-Series Convertible leaving the parking lot. While not the most ideal car for going to buy a flat-screen TV, but I suppose, it’s faster than having it delivered.
Upon closer inspection, for those who have a BMW 3-Series Convertible, note that the 47″ LCD TV in the box will fit perfectly in your back seat, with the top down. Those who want to get the 50″ or 55″ model are probably out of luck in terms of fitting it in your back seat.
Sorry if the photo is a little blurry, This was a presentation given by Greg Shea, Managing Director of RIM China at Mobile World Congress 2010 during the App Planet event. Got a hold of the presentation and uploaded the slide here.
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Would love to here your comments on some of these mobile handset designs.
Something strange is happening with Apple. Its product price points are drawing tears. Not tears of frustration, like they used to (its gadgets are cool, but so pricey), but tears of joy.
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On Monday, November 1, 2010, I will be moderating a panel on Top Legal Mistakes Startups Make.
Thanks to Mario Tapia and the rest of the Mobile Monday team in the Silicon Valley for putting this together.
Eric Chan – Mobileslate
Roger Royse, Attorney at Law, Royse Law
Yokum Taku, Attorney at Law, Wilson Sosini Goodrich & Rosati
Pietari Grohn, Co-Founder and General Counsel, Vivio
Date: November 1st, 2010
Time: 6:30pm Registration Opens | 7:10pm Panel Begins
Cost: Free, but is required to attend
Location: Microsoft Silicon Valley Campus Conference Center – 1065 La Avenida, Bldg. 1, Mountain View, CA