Wireless Smartphone Strategies

The industry’s most comprehensive set of critical market statistics and qualitative analysis, tracking and reporting on smartphones.

April 22, 2010 22:04 bjoy
The Q1 2010 results season are upon us, and Apple reported yet another stellar performance, shipping 8.8 million iPhones globally. This is the best iPhone performance the company ever had outside the fourth quarter.  Typically the iPhone sales are the strongest in during the back half of the year. The third quarter stands to benefit from product refreshes and the fourth quarter from holiday sales. The record first quarter sales is really promising, the upcoming OS 4.0 along with a likely hardware refresh this summer will boost the second half sales even further. The AT&T results the following day shed some additional light on Apple’s performance. The Apple iPhone is still the breadwinner for AT&T, even after nearly three years of launch. Check this fact: AT&T activated 2.7 million iPhones during the quarter, and one third of the activations came from new subscribers, which is higher than the total post paid net-adds reported by the carrier. The impact of the iPhone becomes more obvious if we consider the fact that this is despite the competition from a growing smartphone line-up under the AT&T portfolio, including Android, RIM , and Symbian devices. So who is buying the iPhone these days? After all, the device has been in the market for several quarters now. The early adopters and early majority are already iPhone subscribers (read youth, prosumers etc). The tail end of the demographics, which are the late majority and the laggards (typically the 55+ age group) are the next wave of opportunity for Apple and AT&T. innovation-curve.jpg Innovation Adoption Curve; Chart Source: Google The tail-end of the market is always a difficult proposition for companies as they are often hesitant to embrace new solutions, even if the product or service on offer enhances the quality of life. The word of mouth through family and friends is a major driver for smartphone adoption among seniors, and for this to occur, the product should have a large installed base and be in the market for a very long period. The iPhone in the US is at a distinct advantage in this respect as it enters its fourth year this summer - and perhaps that is already showing in the most recent AT&T results. - Bonny Joy

April 14, 2010 17:04 Alex Spektor

After months of industry-wide speculation about Microsoft’s “Project Pink,” the software giant recently unveiled two phones: Kin One and Kin Two. Manufactured by Sharp (the maker of most T-Mobile Sidekick phones, in partnership with Danger, whom Microsoft purchased in late 2008), the phones will ship with specs found on many of today’s smartphones: capacitive touchscreens, QWERTY, high-megapixel cameras, gigabytes of flash memory, Bluetooth, GPS, accelerometers – the list goes on. Yet, the Kins are not true smartphones, as there is no application support. Rather, the Kin family of products consists of cleverly targeted feature phones.

While the smartphone segment is growing steadily, the wireless industry is certainly not done with feature phones, which we expect to account for approximately two-thirds of handsets sold in North America this year. Earlier this year, AT&T announced intentions to give significant attention to the mid-range, messaging-centric feature phone category, which the operator calls Quick Messaging Devices (QMD).

At Verizon Wireless (who, along with Vodafone in Europe, will soon carry the Microsoft phones), the Kin will make an interesting replacement to aging handsets like LG’s enV series. In a way, the Kin family is part of VZW’s answer to AT&T’s QMD category. Expect VZW and Microsoft to back a heavy advertising campaign when the phones come out, promoting the novel user experience and social networking functions. With a low retail price and some innovation on data plan pricing (see the Nokia Nuron smartphone, which requires just US$10/month for unlimited data at T-Mobile USA), the two Kin models could drive strong volumes for the carrier.

 

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For Microsoft, who recently painted themselves into a high-end corner with hefty hardware requirements on Windows Phone 7, the Kin family represents an interesting platform framework to get closer to the youth segment.

The high-tier Windows Phone 7 will be a natural handset upgrade path for today’s Kin user, as both platforms are forming common elements. While the short-term goal with the Kin family is to expand the addressable market by bringing messaging/social networking services through a robust framework, the long term goal is to own the consumer by highlighting the Microsoft value proposition to him/her early on.

Either way, Kin provides an interesting glimpse into Microsoft’s understanding of the future handset market, where feature phones will rely heavily on the cloud. (Like its Sidekick predecessors, the Kins store user data and content on company servers.) Add to that Windows Live service and Zune content integration, and Microsoft can be seen as gradually ramping up its strength on the multi-screen index.

-Alex Spektor


April 12, 2010 15:04 Neil Shah
Verizon Wireless in the US is pressing hard to get its hands on the Apple iPhone. Its CEO, Ivan Seidenberg, has reportedly told Apple that it wants to stock the iPhone sooner rather than later. Why would Verizon Wireless want the iPhone? Well, it would surely love to break AT&T’s exclusive for the iconic device. Verizon would be keen to solidify its data ARPU and improve the company’s churn outlook by stocking the popular iPhone. And with next-gen models like the HTC EVO 4G WiMAX starting to appear at Sprint, Verizon needs to remain at the cutting-edge of data-centric handsets and services. If (if) Verizon Wireless were to stock the iPhone in 2010 to 2012, should it be optimized for CDMA or LTE connectivity? Of course, timing is king. Should a Verizon iPhone be launched in the second half of 2010, then it would definitely be a CDMA-only version, because Verizon’s LTE network will not be fully commercialized. How about an LTE version in mid-2011? Well, our Wireless Device Strategies (WDS) service forecasts LTE handsets will make up just 1% of total shipments in the United States next year. Launching an LTE iPhone in 2011 would be a huge marketing coup for Verizon, but it would be entering a niche immature market, so we think this approach is too high a risk for Apple -- as a historical benchmark, Apple’s first WCDMA iPhone in 2008 did not launch until WCDMA volumes were approaching some 10% of the nationwide total. Therefore, we believe a launch-date of 2012 or even 2013, when LTE will be more established, is a more realistic option for a Verizon Apple LTE iPhone. If an iPhone arrives at Verizon before those dates, then it will almost certainly be a CDMA-only version. - Neil Shah

March 30, 2010 00:03 David Kerr

sa photo dk Returning from CTIA in Las Vegas last week and with only 2 days before going off on vacation to Florida, I found myself reflecting that two of the most interesting meetings I had at the show were with mobile operators.

During CTIA I spent some time with AT&T emerging devices and T-Mobile M2M teams and was impressed with how both these units had managed to cut (or at least untie) the cord to the mother ship and avoid having innovation stifled by the Borg up at Corporate.

    • AT&T’s efforts to encourage a broad range of new applications and devices has definitely paid dividends with Mr. Lurie and his team adding an impressive 1M users in Q409 as a result of new device categories (mostly PND and EBR).
    • T-Mobile revealed a somewhat unheralded pedigree in M2M.

Partnership is the order of the day.

AT&T highlighted partner applications ranging from location enabled pet collars (Apisphere) to glow cap bottles to aid compliance with medication schedules (Vitality) to a very cool new tablet from Openpeak which is very different to the announced but apparently supply side challenged iPad.  Verizon Wireless and Sprint are of course also praying at the alter of open development but perhaps with less public presence.

When I think of enterprise mobility, AT&T and Verizon Wireless are top of mind but T-Mobile has in fact quietly been developing strong competency in the M2M space over the last 7-8 years.

T-Mobile offers four different SIM form factors to suit specific applications and have enjoyed triple digit growth for the last four years. T-Mobile US has quietly activated “hundreds” of different device types on its network with only a handful of devices being rejected or pulled due to network unfriendly characteristics. These devices span Telematics, Connected Energy, Telemedicine and several other applications.

So what is the common DNA of two very different operators that has allowed them to innovate and focus on new opportunities? Separation and operational autonomy to facilitate and open funnel approach to partners and speed of execution not normally associated with US carriers.

In the case of AT&T, the Emerging Devices group was chartered with developing a new space and freed from the legacy of voice & data consumer tariffs and prepaid/postpaid categories which just don’t cut it in the new connected reality where users will have multiple devices connected but used in very different ways. Mr. Lurie and his team have been able to streamline device certification and experiment across the spectrum of business models for new connected applications.

For T-Mobile, speed of certification (days not months) and the independence of being a self-contained unit (own engineers, own sales although linked to broader enterprise group) reporting to Finance & Strategy have allowed them to pursue their “easiest to do business with” approach to the M2M markets.

So, the takeaway? Innovation is alive and well at US operators but separation from the collective corporate mind is essential.

David Kerr


March 22, 2010 21:03 Neil Shah
With Q3 FY 2010 financial report released this week and the outlook is still gloomy for Palm, it is being titled as a candidate for a “potential” buyout. But the future is in its own hands, and for the company like Palm it still has enough potential to weather out of this state and see some sunlight. There are some key areas where Palm has to rework its strategy. Palm has a good product line with likes of Palm Pre Plus & Palm Pixi Plus, and powered by a striking Linux core webOS platform enabling an intuitive UI covering all the basic traits to suit the targeted North American market. But still it’s unable to leverage on this appealing product line. The major issue for this lacklustre performance is due to its competition against the smartphone giants- Apple with a richer user experience and sea of applications, Samsung & LG growth with their manufacturing strategy customizing to satisfy mobile operator’s market segments, Blackberry with strong enterprise growth as well as remarkable entry into consumer segment, and the growing entrant Google with its open Android Platform. It is clear that Android, Mac OS X, Blackberry will dominate the North American market and Palm will be a secondary priority for the operators in spite of an innovative webOS platform. Based on the latest results, roughly half of the Palm’s shipments are in carrier channels struggling to sell through and the pressure is likely to increase further as Apple iPhone and Android begins the next innings with major software and hardware revisions in the following quarters. Perhaps Palm need to embrace growing platforms like Android, where operator and consumer interest is on the rise. By developing cross platform interfaces and services such as the Synergy, Palm can still provide a unique user experience on top of Android without betting the farm on webOS. Also, with positive outlook on HTML’s growth and adoption in mobile phones, from the applications development point of view Palm is at an advantage in leveraging its HTML/CSS written webOS in an opportunity to create new revenue vistas through mobile web browser based applications easily which may attract the operators participating in the recently announced “Wholesale Applications Community” at GSMA World Congress in Barcelona. Palm should also keep an eye on in incorporating the evolving wireless technologies (ex: TD-SCDMA, HSPA+, LTE) to expand and diversify its future offerings. So, Palm should for now go with the flow instead going against it and incorporate newer platforms like Android in its portfolio by 2011 instead of pushing the sole struggling webOS devices and thus come up with unique selling propositions satisfying the consumers & operator’s needs. Palm should also focus on striking strong long-term operator relationships especially GSM operators with a well thought and executed go-to-market strategy,and clawback out of this deteriorating situation. Thus, there will not be any need for “Palm” reading, as it will control its own future. - Neil Shah

March 17, 2010 23:03 bjoy
High-end mobile handsets have more in common with the consumer electronics industry than they used to. Music, camera and GPS segments are some of the early examples that have lost increasing ground to the mobile industry. As the industry converges further, more use-cases and functions will be bundled on high-end handsets and crimp the growth of other consumer-electronic segments such as portable gaming. Retailers are closely watching the evolution of cellular devices and treading the waters carefully. Connectivity will of course be common across multiple device categories, whether it is your 65-inch Plasma TV or internet-enabled table clock – and for the most part, this is a new learning experience for major main-street retailers. Connectivity adds another dimension and requires additional training for their customer representatives – initial set up, configuration, billing, activation, rebates and contract obligations are areas where retailers need to climb up the experience ladder. Some interesting trends from the buoyant US market: Best Buy is betting its future growth on high-end smartphones and emerging connected devices such as 3G laptops. Smartphones are just the launch pad for Best Buy’s broader strategy in taking an early position in the evolving connected terminals space. Wal-Mart is embracing a different route that is aligned with their low-cost mass-market philosophy. The no-frills service plan StraightTalk, developed in conjunction with TracFone, was a big success during the last holiday season. The business is changing in the online channels as well; Amazon launched is beta program last year and connected devices are often sold at significant discounts than through carrier-direct channels. On one hand, third-party specialist retail channels will expand operators' addressable markets to new segments. Operators do not have all the necessary assets to tap the long tail of emerging 3G device segments or new service plans that are aligned more with the consumer electronics industry. In this scenario, retailers are the operators' friend. On the other hand, dilution of operators' direct channels will be a threat for operators' control, and without proper checks in place, the thousands of existing operator stores in the US will soon become much less important. In this scenario, retailers will gain more distribution power and become the operators' foe. - Bonny Joy

March 10, 2010 05:03 Alex Spektor
No, I did not misplace my BlackBerry. This blog post is not about the “Find My iPhone” feature or any other innovations in device recovery. Rather, I would like to lament my disappointment with the general lack of true intelligence in so-called smartphones. Named so for their advanced (PC-like, Wikipedia suggests) capabilities, smartphones trump ordinary phones with their ability to tie in new services, run applications, and browse the real Web. But should being PC-like be the ultimate aspiration for handsets? After all, phones have a key advantage that not even the lightest of netbooks can have – phones are always with their users and, as such, they know a lot about them.
  • Using GPS and accelerometers, the phone can know where you are and whether you are moving.
  • With knowledge of your calendar, the phone can know if you are busy and whether it should interrupt you.
  • By monitoring your behavior, the phone can guess how you will behave next time a similar situation arises.
Privacy advocates and conspiracy theorists will have a field day with this one, of course. But their fears can be assuaged with feature opt-in and with clear, published documentation of what data are stored and shared. Mobile context awareness is nothing new. Academics have been talking about it for over a decade. But, outside of downloadable (i.e., not truly integrated) apps and some barebones functionality (such as the “Automatic” ringtone profile on some WinMo phones, which goes to vibrate during scheduled meetings), there still is not a whole lot of context awareness in smartphones. Platforms like Android allow you arrange your widgets across multiple home screens. Powerful? Yes. You then have to flip through the home screens until you find the one with the right widgets. Smart? Not really. Why can’t your phone – knowing whether you are at work, on a train, or at home – give you the right home screen on its own? And switch wallpapers. And change the vibrate settings.

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This example only scratches the surface of the possibilities out there. Vendors looking to differentiate on open platforms such as Android or Symbian have a terrific opportunity in building a robust context-aware user experience. Tomorrow, this stuff will be table stakes. But today, we are still waiting for somebody to lead the way. Handsets are loaded with power: processors, sensors, round-the-clock connection to services. But where is the intelligence to tie all of this power together? Maybe we should call them powerphones until they start doing something smart. -Alex Spektor

February 17, 2010 03:02 bjoy
With the launch of Google Nexus, the term superphone started to make its rounds through the blogosphere. There is no single definition for the superphone, but in its simplest terms it stands for devices that are built to render Web 2.0 services to its full potential along with an array of sensors and hardware bells and whistles. So what’s next? Well, if you ask me, I would drop the “phone” from smartphones and superphones and coin a new category called the “Super-Smart”. In an increasingly connected world, platforms are not going to be confined within the realm of phones, regardless of whether or not they are smart or super. And this goes well beyond the Web 2.0 services or Application Store fronts, where Android and Apple have taken the lead. The next evolution in device platforms will leverage content, hardware and services from a full range of connected terminals and services, whether it is hardware, software or web based frameworks.  Two of the main announcements from MWC 2010 have embraced this approach: Windows Phone 7 Series wp-7-v1.bmp The new platform is a huge leap from the previous Windows Mobile versions. Microsoft has reengineered the platform with an intuitive user experience, but what really stands out is the fact that Microsoft has put serious efforts into tying all their consumer brands and services through the mobile platform – some of which have been long ignored in the mobile context, such as the Xbox and Zune services. At least in theory, the Windows Phone 7 series have great assets in touching many aspects of the consumer life: Xbox (entertainment), Zune (media), Windows 7 (computing), Bing (Internet) and Sync (Auto). On the flip side, the biggest challenge for Microsoft in the near to medium term is passing the form factor/emotional appeal of the device, a huge task for its OEM partners to overcome. Intel and Nokia team up to form MeeGo meego-v1.bmp Intel and Nokia have merged their Linux based Moblin and Maemo platforms to form “MeeGo”. In theory, the partnership between the mobile and computing giants is aimed at facilitating a development ecosystem that spans across media, connected homes, and in-vehicle use cases through the MeeGo framework. To begin with, Maemo had some success in showcasing its potential with the Nokia N900, while Intel’s Moblin has been a non-starter without any commercial launches. The new MeeGo platform is a step in the right direction by pooling the resources to build a compelling platform ecosystem, but it is late to the party. But it is clear that Nokia is making a commitment to this “super smart” device class, which is in itself affirmation of this emerging product class. As it has been in the past, the winners in this expanding ecosystem will not be counted by the assets or potential it offers, but how effectively they can turn the endless possibilities to a few realities – and for now Apple and Android ecosystem is well ahead of Windows Phone 7 and the MeeGo platforms. But one thing is sure – the future of platforms is beyond super or smart phones, and the suppliers that fail to embrace this approach will soon be irrelevant. - Bonny Joy

February 11, 2010 15:02 Alex Spektor
…Continued from part 1 PC vendors should be worried. It will be impossible to recreate the iPhone’s success. Furthermore the engineering-centric technology and design resources they currently rely on for their legacy products put them at a distinct disadvantage in today’s smartphone market, which is largely driven by engaging user experiences and a complementary set of compelling applications and services. Still, the operator smartphone craze means there is still plenty of room for good devices. Specialists like Dell and Acer can succeed if they prioritize the following issues.image · User Experience – The importance of a top-notch user experience cannot be overemphasized. Be it stock Android with top-shelf hardware, highly customized Android with decent hardware, or something in-between, handsets that provide an engaging experience will eventually make their way into consumers’ hands. · Content and Services – Technology and design will get you noticed, but content and services will get you used by consumers. This is where PC vendors are weakest. They should be proactively forging relationships with content/service providers. Working directly with carriers on on-portal offerings should not be ruled out. In fact, as operators look to drive on-portal usage, PC maker’s willingness to play is a potential differentiator from traditional handset vendors. · Platform Selection – Small vendors should focus on winning platforms. Samsung, with a huge distribution network, strong R&D resources, deep pockets, and dozens of SKUs can afford to support multiple open platforms and develop their own. Inexperienced vendors do not have this luxury. Indeed, platform selection is at the core of the PC-smartphone vendor’s issues, as it dictates the user experience and services capability. The experiences of HP, Asus, Palm and Motorola have shown that Windows Mobile has not been driving vendor success in the consumer smartphone market. Like its European rival Symbian, WinMo failed to evolve to address consumer demands for touchscreen-driven, Web-oriented user experiences. WinMo 7 and Symbian^4 will address these issues, though handsets based on these platforms won’t hit en masse until 2011. If PC vendors want to see meaningful smartphone sales, they need to expand beyond their familiar relationship with Microsoft and consider Android as their primary alternative. Dell has recently re-focused on Android to have a better shot at being consumer-relevant in the broad global market. This focus is necessary to allow PC vendors to concentrate on building the resources and relationships for content and services that are so critical in the mobile world. -Alex Spektor

February 10, 2010 17:02 Alex Spektor
When Apple launched the iPhone, it was the first PC maker to successfully cross the threshold into the handset space – a largely unfamiliar territory, dominated by veteran players and guarded by all-powerful carriers. Eyeing their rival’s success and fueled by early accomplishments in the emerging netbook segment, PC vendors have recently ramped up their interest in the smartphone space. So, is another rising star on the horizon?
  • HP was making Windows Mobile-powered PDA-phones under its iPAQ brand more than five years ago, and it continues to make iPAQ smartphones today. HP has been successful with iPAQ in the enterprise, where they can subsidize the device to their customers on lucrative services contracts. The iPAQ Glisten, a late-2009 release, looks fine in terms of specs, but is largely indistinguishable to consumers in the sea of WinMo QWERTY candybars.
  • clip_image002Asus, like HP, has been making WinMo phones for some time. Unlike HP, though, Asus tried to “think outside the box,” and recently teamed up with navigation giant Garmin. The pair put out the Linux-powered Nüvifone G60, which has been available via AT&T since early Q4 2009. But the device has been a disappointment, and we found that a poor user experience was one of the reasons for the weak sales.
  • Acer, who also launched about half a dozen WinMo phones in 2009, recently released the Android-powered Liquid smartphone. The Liquid’s Q1 2010 volume expectation is around one quarter of a million units, driven by quality hardware (Snapdragon, 3.5” display) at a reasonable price.
  • Dell, who previously played in the PDA space with WinMo-powered Axim devices, revealed the Android-powered Mini 3 smartphone, launched in China in late 2009 and due for release with AT&T sometime in the first half of 2010, just in time to boost the carrier’s portfolio after its pending iPhone exclusivity loss.
Let’s recall what has made the iPhone so successful: user experience, apps, industrial design, marketing, distribution, hype … the list goes on. Each of these factors has supported the others to propel the iPhone to stardom. The iPhone was a game-changer, and to repeat what Apple has done would be a feat. Given what it takes to be a star, can other PC makers still succeed in the consumer smartphone space? To be continued -Alex Spektor