Laptops, Netbooks & Handsets

It will be interesting to test our prediction of the iPhone 5 (made about 18 months, end of 2010/early 2011 - see above) ago vs reality. From what we have gleanes so far it has:

Processor Speed - Apple Twin Core A6, estimated speed unknown but rumours are it will be similar to the iPad 2, c 900 mHz
RAM - 1 GB
Memory - 64 Gb
Screen resolution - 326 ppi, but screen area size has increased by c 20% by increasing the length

(We have been arguing that smartphone screens will get to banknote size for quite a while, all the work we have done says the bigger the screen, the better the functionality, so eventually it will be as big as can be easily carried in a pocket - look at our iPhone 6 predictions, its hard to iamgien a device like that constrained in a c 2 x 3 inch screen)

We assumed weight would stay about the same, in fact its gone down c 20%, from 140g to to 112g - quite a drop. It would be interestimg to know where its gone down
Battery life we also assumed would be similar to the 4S. The iPhone 5 and the 4S both have eight hours of talk time, but the iPhone 5 can browse the Web for 10 hours instead of eight

Looking at the specs it seems that the processor is a genuine jump forward, but its other systems are more like an iPhone 4 with a bigger screen and a bit better battery life, as you'd expect it runs the latest comms systems (4G not 3G, latest WiFi etc) and a Moore's Law-esuqu increase in toy performance. No doubt the 5S will move to a 128 Gb memory and prove our prediction right

We don't think price has much to do with cost, when the costimgs come out it will be interesring to see where the weight was saved - I hope its not in the casing.

A Pew Research piece on the Future of Apps suggests that they too, shall pass:

Futurist John Smart, founder of the Acceleration Studies Foundation, looks beyond 2020 and sees apps as merely a passing phase in Internet evolution. “Apps are a great intermediate play, a way to scale up functionality of a primitive Web,” he said, “but over time they get outcompeted for all but the most complex platforms by simpler and more standardized alternatives. What will get complex will be the ‘artificial immune systems’ on local machines.

They also had a survey 0f 1,021 Internet experts about which of 2 scenarios they agreed with, these and the outcome is in the diagram above - roughly 2:1 for the Web (see diagram above).

The Pew article points to Wired's Chris Anderson leading the cheers for Apps in their rise up the hype curve in 2010, when they argued that the World Wide Web was “in decline” and “apps” were in ascendance:

Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to closed platforms that use the Internet for transport but not the browser for display…. Because the screens are smaller, such mobile traffic tends to be driven by specialty software, mostly apps, designed for a single purpose. For the sake of the optimized experience on mobile devices, users forgo the general-purpose browser. They use the Net, but not the Web. Fast beats flexible…

This was all inevitable. It is the cycle of capitalism. The story of industrial revolutions, after all, is a story of battles over control. A technology is invented, it spreads, a thousand flowers bloom, and then someone finds a way to own it, locking out others. It happens every time.....

The wide-open Web of peer production, the so-called generative Web where everyone is free to create what they want, continues to thrive, driven by the nonmonetary incentives of expression, attention, reputation, and the like. But the notion of the Web as the ultimate marketplace for digital delivery is now in doubt.

By 2011 the App craze was in full swing:

The boom in mobile connectivity has been accompanied by a boom in innovation and sales of targeted software applications (apps). Apple’s iPhone and its App Store debuted in June 2007; the iPad debuted in April 2010. On March 3, Apple announced that 25 billion apps had been downloaded.4 Similarly, Google’s Android Market hit 10 billion downloads by December 2011, and users have been downloading apps at a rate of 1 billion a month.5

In June 2011, researchers reported that time spent on apps began to outpace time spent on the desktop or mobile Web.6 The change reflected a 91% increase in time spent with apps between June 2010 and June 2011. In December 2011, the technology forecasting firm The Gartner Group predicted, “By 2015 mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4-to-1. Smartphones and tablets represent more than 90% of the new net growth in device adoption for the coming four years.”7 Gartner predicts that 1 billion smartphones will be sold in 2014 – about double the number of PCs it expects will be sold that year.

even Tim Berners Lee was worried, writing in Scientific American that:

“The Web as we know it is being threatened,” adding that it “could be broken into fragmented islands.”

But, we are now starting to see some interesting countertrends - research shows us that App usage declines soon after download, and there is an App 80/20 - most of the Apps downloaded are hardly used at all after a while, so while App usage rises as new users find them, existing users' use declines over time. This is the classic system dynamic of a hype curve, everyting is in the ascendant as users are gained, but as that slows the cycle of people ignoring apps becomes more prevalent and a rapid decline then sets in.

Thus, I must admit I agree with John Stuart, and the 59% who voted for the Web. To me, Apps are just the latest RingTones or Widgets (remember them) - simple functions to make it easy to use simple devices, which are redundant as the next generation of smarter devices come along. These have now passed, and Apps, too, will likely also pass.

As the iPad 3 hooha was releasing, the FT Digital media Conference was opining. Sooth was said by:

James Bilefield, President, Condé Nast International Digital
Peter Driessen, CEO & Co founder, Spil Games
Rich Riley, Senior Vice President and MD, EMEA Region, Yahoo!

The iPad has been:

- A Transformatory product (because people pay), generating 7% of all paid circulation after 6 months (Conde Nast).
- iPad accessible by younger kids (and less IT savvy people) has brought PC to the masses (Yahoo)

And will be

- Tablet is marvellous Ad device - (Oh yeah? I think Ads, like tourism, will kill the thing they love here)

But soft! What goeth there - Uh Oh, the Big Monopoly Shadow has fallen across the room:

- What is the rental appropriate vs extorted for going through iPad, especially if the competition goes away as Apple Out-Innovates
- The Kindle - can it keep up the innovation arms race?
- Do all the Olde Media Business Models travel across to this new screen?
- FT didn't like 30% App store charge, and they keep user data
- Will there be subscription fatigue on Apps?

Forsooth, who will compete with iPad. Someone? Please? Please?

Incidentally, at Broadstuff Towers we did a little analysis of iPad Futures using Moore's Law, I'm hanging on for iPad 4 - see the stats above in our Moore's Law Predict-aScope.....

The only downside is I can't decide whether to queue outside the Apple Store, AppleO2, AppleBBC or get it mail order from AppleZon.com. And now that the FT and WSJ have been merged into The Big Apple, there is only the AppleConomist left for independent comment. Oh, wait....

Apart from that, everything else will be as for the iPad 3. Oh yes, except it now interfaces with the iPTV, iRobot, and iSpy-in-the-Sky.

Update - the breathless reviews are out, here are some updates:

- 1 Gb RAM confirmed
- CPU power increase is focussed on handling the graphics, not the processing speed
- It is heavier and thicker again (closer to iPad 1) to cope with a battery that can give similar life

Amazon has launched a demi-tablet to not compete with the Apple iPad - The Omnivore has a good synopsis:

Unlike a wave of other tablets that have emerged hopefully only to flop, such as the HP TouchPad, the Motorola Xoom, and the RIM PlayBook, the Kindle Fire has a good shot at turning the newest theater of war in high-tech into a two-tablet battle. With a 7-inch display, the Fire is about half the size of the iPad. At $199, it’s also less than half the price of the cheapest Apple model. Amazon has painted over the rough surfaces of Google‘s Android operating system with a fresh and easy-to-use interface and tied the device closely to its own large and growing content library. Kindle Fire owners can watch the film Rio, scroll through magazines such as The New Yorker or Esquire, and access their music collection on Amazon’s servers.

“What we are doing is offering premium products at non-premium prices,” Bezos says. Other tablet contenders “have not been competitive on price” and “have just sold a piece of hardware. We don’t think of the Kindle Fire as a tablet. We think of it as a service.”

Its not an iPad in other words - its not a premium product, its smaller screened, cheaper and (knowing Android) probably nastier to operate - so its a mass market play that hopes to be a Good Enough for most of the rest of the (non iPad owning) market.

We have done quite a lot of work for clients inthe e-reader/tablet supply chain, and the one thing that drives success - time and again, as for all devices - is a good variety of content. It took Google a long time to get this in Androidworld, but Amazon has the best chance of taking Apple on of all the players (as they showed with Kindle).

So, an early hypothesis from me - Apple will probably continue to sell high margin, high class product to the 20% at the top of the tablet market (as they have done since the 1970's in every market). Amazon will be mopping up the low margin mass market. The fact that Microsoft, the arch mass-market mop-up player, is underpinning the Fire's OS is another pointer to this.

No doubt there will be a bigger Fire soon, but no doubt Apple will also be innovating. They could launch a prodcuct that is half-way between the iPad and iPhone in a fairly short time we suspect - maybe call it the iPhad

I just don't believe these numbers on advertising from “The Mobile Movement: Understanding Smartphone Users,” a study from Google and conducted by Ipsos OTX, an independent market research firm, among 5,013 US adult smartphone Internet users at the end of 2010 - Google blogs:

71% of smartphone users search because of an ad they’ve seen either online or offline; 82% of smartphone users notice mobile ads, 74% of smartphone shoppers make a purchase as a result of using their smartphones to help with shopping, and 88% of those who look for local information on their smartphones take action within a day.

Or more accurately, I don't believe the face value. I'd like to see the underlying definitions, for eg how often the 71% who search because of an Ad actually do search, and what the 88% "taking action" means. . While reading the whole thing (below) I also became aware that many of these were probably generic facts, ie applied to nearly any comms device - so I replaced the term "smartphone" with "dumbphone" and found the results still made nearly total sense, ie these are generic "this is what people do on phones" stats (The`y still made quite a lot of sense when I replaced smartphone with "carrot".....). I have also added a few "watch out for misleading wording" tags in [square brackets].

General Dumbphone Usage: Dumbphones have become an integral part of users’ daily lives. Consumers use dumbphones as an extension of their desktop computers and use it as they multi-task and consume other media.

- 81% browse the Internet, 77% search, 68% use an app, and 48% watch videos on their dumbphone
- 72% use their dumbphones while consuming other media, with a third while watching TV
- 93% of dumbphone owners use their dumbphones while at home

Action-Oriented Searchers: Mobile search is heavily used to find a wide variety of information and to navigate the mobile Internet.

- Search engine websites are the most visited websites with 77% of dumbphone users citing this, followed by social networking, retail and video sharing websites
- Nine out of ten dumbphone searches results in an action (purchasing, visiting a business, etc.) [90% action rate - I suspect etc includes "visiting a website"]
- 24% recommended a brand or product to others as a result of a dumbphone search [If a purchase is made, fine - if not, very unlikely]

Local Information Seekers: Looking for local information is done by virtually all dumbphone users and consumers are ready to act on the information they find.

- 95% of dumbphone users have looked for local information
- 88% of these users take action within a day, indicating these are immediate information needs [what does this mean - look for a place on a map and go there?]
- 77% have contacted a business, with 61% calling and 59% visiting the local business [with what frequency - ie how does this differ from any 'phone?]

Purchase-driven Shoppers: Dumbphones have become an indispensable shopping tool and are used across channels and throughout the research and decision-making process.

- 79% of dumbphone consumers use their phones to help with shopping, from comparing prices, finding more product info to locating a retailer [how often]
- 74% of dumbphone shoppers make a purchase, whether online, in-store, or on their phones [*or* on their phones? I suggest the statistics for the latter are tiny and overall data for carrot eaters are similar]
- 70% use their dumbphones while in the store, reflecting varied purchase paths that often begin online or on their phones and brings consumers to the store [statistic does not justify conlusion]

Reaching Mobile Consumers: Cross-media exposure influences dumbphone user behavior and a majority notice mobile ads which leads to taking action on it.

- 71% search on their phones because of an ad exposure, whether from traditional media (68%) to online ads (18%) to mobile ads (27%)
- 82% notice mobile ads, especially mobile display ads and a third notice mobile search ads
- Half of those who see a mobile ad take action, with 35% visiting a website and 49% making a purchase
- 71% search on their phones because of an ad exposure, whether from traditional media (68%) to online ads (18%) to mobile ads (27%)
- 82% notice mobile ads, especially mobile display ads and a third notice mobile search ads
- Half of those who see a mobile ad take action, with 35% visiting a website and 49% making a purchase

So, after a few sections of "well they apply to anyone " data, it is that last section that I really struggle with. Those action rates are an order of magnitude (at least) higher than any Ad responses I've ever seen, and the behaviours reported here look nothing like anyone I asked about it (granted that is a small sample). Do you fit the profile here?

Given that it is (i) Planet Mobile (famous for exagerrating/misleading data) and (ii) self serving for Google, I'd approach those latter numbers with a large pinch of salt and a healthy dose of scepticism. Anyway, there is a webinar tomorrow with (hopefully) more details.

Last September we wrote that we just did not believe Gartner's forecasts for the smartphone market (see Dumb Forecast for Smart Phones):

I had just read Gartners 3 year forecast for the Smartphone market this morning .... and was marvelling at how they could even deign to forecast such a thing with one set of numbers, never mind assume that Android will continue to rise inexorably for the next 3 years just because it has for one year already - haven't they heard of "S" curves?

I was going to write a suitably pedagogical post about the importance of standard deviations around numbers over time, about the inevitability of the S curve, about the need for scenarios, dynamic models and other methods of dealing with uncertainty in this sort of work - but ZD Net has done a good debunking job already (Ed - we were not the only ones who found the predictions hard to believe]

....

An aside - we traditionally (for the last 10 years anyway) take forecasts like these from Planet Mobile analysts and halve them, turns out to remarkably accurate (in an 80/20 sense) for about 5 minutes work

Turns out they have radicaly revised them more in line with our views, ie much more Apple, much less Nokia and Android - Apple Insider.

Gartner's most recent prediction is an acknowledgment that it had no real notion of what was going to happen just 18 months ago. Gartner's original prediction in late 2009 essentially just plotted continued, conservative growth paths out for Apple, RIM and Palm, the three major vendors who own their own operating system. It drew tremendous growth in sales for Nokia's platform, likely due to the company releasing Symbian as an open source project, even though Nokia continued to be the primary (and almost exclusive) user of Symbian.

Android was also given a dramatic projection of unit growth of nearly 11x over three years, as it was just beginning to gain traction. In late 2009, Verizon Wireless was gearing up to replace its former dependance upon RIM's BlackBerry platform with new Android-based partnerships with HTC and Motorola under its "Droid" branded campaign.

However, the biggest and most difficult to fathom prediction by Gartner was Microsoft's reversal of fortune for Windows Mobile. That platform had already clearly lost its initial momentum, with sales remaining flat since the iPhone debuted in 2007. Despite those dim prospects, while Gartner suggested in 2009 that RIM's sales would nearly double and Apple's would almost triple, it stated that Microsoft's would grow more than 4.5x in the same three year period.

Rather than that happening, Microsoft's Windows Mobile platform continue to decline through 2010 despite a heavily promoted deal with LG. And when Microsoft released WP7 as its improved new version of the platform and ended compatibility with previous versions of Windows Mobile, sales tanked completely.

Gartner's 2009 predictions were essentially a bet that openly licensed platforms would make tremendous gains in the market while Apple and RIM would only make incremental progress. While Gartner was correct in guessing that Android would make big gains, it also stated that both Microsoft and Nokia would also grow their platforms at a dramatic rate.

Whereas we have argued till we are blue in the face that (i) Olde style Planet Mobile suppliers (read Nokia) don't have the DNA to build smartphones, and that "Open" (aka Android) is not what it is about, the lessons from the PC market and most others after is that "Software" - or "Apps" as they call them in SmartPhoneSpeak - is what drives intelligent device sales, not device features. And Apple has the winner take all end-to-end supply chain for that.

So why the error? Apple Insider reckons its because of Payola:

If Gartner's historical predictions were more accurate, it would be harder to suggest that the firm was simply concocting its numbers to fit a particular outcome for profit rather than modeling numbers to deliver a useful outlook for the market. It certainly wouldn't be the first time. Microsoft's confidential memos leaked during its monopoly trial state that the company paid hundreds of thousands of dollars to Gartner as it "lobbied" the firm to change its outlook to flatter Windows NT and denigrate competing Network Computers in the late 90s prior to that trial.

More recently, Gartner analysts began predicting in 2005 that Windows Mobile 5 would cause big trouble for Symbian, something that never happened. In 2009, the outlook for Windows Mobile was so bleak that even Gartner refused to say it would surpass the iPhone in three years. The situation for Microsoft has only grown worse over the last year and a half, with the company's Nokia deal seeing little positive comment in the tech media.

Gartner's latest prediction now claims Microsoft's WP7 will grow by more than 1,790 percent over the next five years, significantly faster than Android or the iPhone over the same time period, faster than Android grew last year, and faster even than Gartner incorrectly predicted Windows Mobile would grow back in 2009.

Like Apple Insider, I just cannot see where they are getting their Microsoft assumptions from, it seems hugely optimistic - the "what you have to believes" are fairly extreme in this case. Unlike Apple Insider, I think they are capable of making the errors without payola, because their predictive models do not seem to look at the end-to-end supply chain and how it impacts the game theory of decisions downstream at the device end. In my experience, until a market is fairly mature and just chugging along so you can run it on "last 3 years mean growth", it is essential to understand the "whole system" dynamic.

(I should add that in may other areas I find Gartner quite reasonable, but they have always been very optmistic about the Olde Planet Mobile growth data over the 10 or so years that I've been watching the industry - and they are not the only ones, mobile seems to be continually subject to overoptimism by many analysts - pre smartphone days we used to take a mean of all the major analysts' forecasts and halve the growth - turned out to be surprisingy good 2-3+ years out )

Computerworld:

Tablets are the culmination of what Steve Jobs wanted to create at Apple from the beginning, Apple co-founder Steve Wozniak said Monday.

During a keynote session at Storage Networking World in Santa Clara, California, Wozniak was asked how tablets would change the computer industry. He compared them to TVs.

"The tablet is not necessarily for the people in this room," Wozniak told the audience of enterprise storage engineers. "It's for the normal people in the world," Wozniak said.

"I think Steve Jobs had that intention from the day we started Apple, but it was just hard to get there, because we had to go through a lot of steps where you connected to things, and (eventually) computers grew up to where they could do ... normal consumer appliance things," Wozniak said.

He's probably right - or at least for the 90% who don't create or critique, just consume

The first session today at the Financial Times Digital Media & Broadcasting conference in London was interesting given that today is Official iPad 2 Hype Day - there were very strong indications that the BBC will launch iPlayer on the iPad outside the UK this year, for a fee of several dollars a month. BBC Director General Mark Thompson said that the BBC was "exploring internationally what the right pricing and models are..." and said that it would be less than ten dollars per month to subscribe to it. He also said that content played over the iPlayer would be unchanged. Timing was unclear when he was pressed.

Speaking to people at the conference, opinions about the strategic rationality were mixed, and one pointed out they seem to have finally jumped out of bed with Microsoft, but just to jump in with Apple - a few pointed out that this was a pretty robust riposte to Her Majesty's Government for cutting licence funding. Having worked on the byzantine world of BBC content rights in the past, I think that will still need some settling.

One questioner asked about the BBC and YouTube, I interpreted Mr Thompson's reply as implying that YouTube is good for short-form media and trailers, but did not have the heavy lifting for long form content.

He also called for the UK mobile industry to collaborate to find a Mobile TV approach that worked and a believable roadmap. We aren't holding our breath on that one....

I had just read Gartners 3 year forecast for the Smartphone market this morning (see above), and was marvelling at how they could even deign to forecast such a thing with one set of numbers, never mind assume that Android will continue to rise inexorably for the next 3 years just because it has for one year alraedy - haven't they heard of "S" curves?

I was going to write a suitably pedagogical post about the importance of standard deviations around numbers over time, about the inevitability of th eS curve, about the need for scenarios, dynamic models and other methods of dealing with uncertainty in this sort of work - but ZD Net has done a good debunking job already:

After looking more closely at and thinking further about the latest Gartner predictions that show Symbian falling 10% over the next four years, Android rising 12%, RIM falling 6%, iOS falling 0.5%, and Windows Phone falling 0.8% I have to say I think these type of forecast reports are interesting to talk about and discuss, but should not be taken too seriously. The smartphone market is not like the PC market. The smartphone market moves very fast and just because one platform is extremely popular at the moment and shows major growth does not mean it will continue for years.

They also do quite a good pen picture of the sort of narratives one might design into scenarios of market evolution, for example (I have edited it):

Symbian - I don’t think predictions of such a steady reduction in market share over the years is accurate. Symbian has no measurable impact in the US, but that could easily change with proper marketing and wireless carrier support as we saw with Android and the Motorola Droid on Verizon.

Android - It wasn’t until Motorola launched the Droid on Verizon that Android took off at breakneck speed to the level now where every carrier has decent Android devices with nothing looking to stop the momentum at this time. However, to rise another 12% in four years (going from 47.5 million to 260 million) in a crowded smartphone market will be quite a feat for Android with operating system fragmentation and an almost overwhelming number of choices for consumers.

RIM - has been able to count on the enterprise market for a fairly steady share of the market and the largest in the US, but the rather disappointing incremental upgrade seen in OS 6 doesn’t look to bring in too many new smartphone consumers.

Apple - iOS showed a meteoric rise when it went from a nonexistent entity to 15% in just three years. It has now flattened out and is primarily selling to previous iPhone buyers who upgrade and will most likely continue this way until they expand beyond AT&T in the US. Apple charges premium prices for their devices and is quite profitable with the iPhone business so that could sustain them and help them continue to gain market share. (To this I would add hat i you look at Apple over 30 years their strategy is always to enter early and to carve out the most profitable 15% of the market, leaving the rest to fight over commodities)

This is more like how we would predict the market - look at the numbers today, develop the above narratives into about 3 scenarios each, build a dynamic model - with standard deviations around the predicted means - that then plays with the scenarios and then look at the "what you have to believes" to understand where the SWOTS and leverage points are.

Bad news with our approach is it is harder to do than taking a spreadsheet and just projecting it out for X cells in time, but the good news is that it gives you a deeper understanding of the likely twists and turns in the game so you can see it coming. Sort of the difference between a fish and a rod.

An aside - we traditionally (for the last 10 years anyway) take forecasts like these from Planet Mobile analysts and halve them, turns out to remarkably accurate (in an 80/20 sense) for about 5 minutes work

News that Nokia is looking to replace it's CEO - WSJ:

The world's largest handset making is calling for a new CEO, sources told the Wall Street Journal on Monday. WSJ Corporate Bureau Chief Andrew Dowell and Dow Jones Newswires' Rob Armstrong join the Digits show to discuss possible successors to Olli-Pekka Kallasvuo, and how heavily Nokia should focus on a new mobile software strategy.

............

While Nokia continues to sell more cellphones than any other manufacturer, it has failed to keep up with advances by such rivals as Apple Inc. and makers of smartphones running Google Inc. operating software.

The Espoo, Finland, company's failure to get back in the race has taken a toll. Its stock rose eight cents to $8.82 in 4 p.m. New York Stock Exchange trading Monday but is off nearly 42% since April 19.

This is a story that starts pre-iPhone - before this blog even started in 2007 we had done analysis showing Nokia was losing ground on usability of its handsets, and the tardiness of their response to the iPhone has been an indication that the corporate culture is unable to come to grips with the new smartphone market. There has been a few chairs shifted at the top, but we suspect more root and branch change to company culture is required* - a totally independent unit in another country perhaps?

Still, its not just Nokia that is struggling - news out today that 70% of iPhone users would buy a new iPhone, but only 20% of Android users will buy a new Android - the reason is also one of Nokia's main problems:

Google has to work with .... handset manufacturers who have their own agenda. Unfortunately that agenda very often conflicts with customer needs. Old habits die hard for this manufacturers who still insist on adding more crap to the phone and complicating them. The lesson that everyone should learn from Jobs is less is more. Less is more.

For "Handset manufacturers", replace with "Nokia".

*Removing a CEO is seldom enough to change the culture of a company, which is usually promulgated by senior middle managers proecting their own positions.