Location Is The Speedbump on Mobile Highway - Understanding how futile 'Location' is as a driver of any mobile service concept
I am regularly frustrated by the unwarranted hype and excitement around 'location' in mobile. The frustration comes from the fact that this issue has been studied ad nauseum and yet newcomers to mobile manage to reinvent the same tired ideas and peddle them as if they would shortly change the world. They won't. I have been writing the same article about why location is not the big opportunity in mobile for more than a decade now, and its time to do that again. Its not that location cannot give 'any' gains or benefits, there are some. But how to understand location's relevance, I think I now have the right metaphor. To use location in mobile services is similar to putting speedbumps for cars on the highway.
THE NUMBERS ARE NOT THERE
Location-based services (LBS) including LBS-based ads were launched in year 2000, so they are about 13 years of age. First LBS services included the apartment-hunter from Finland, the shopping mall LBS push ads from the USA and the LBS maps from Japan. The mobile data based media industry was invented only two years earlier, in 1998 when the first downloadable paid content for mobile was introduced. That was the ringing tone in Finland by Saunalahti (later Jippii, now part of Elisa). By year 2009 (12 years from launch), basic ringing tones were worth 5 Billion dollars according to Juniper Research. For context, the very basic ringing tones outsold global iTunes music by approximiately 2 to 1 that year.
Now lets look at location-based services. LBS based advertising was launched in year 2000. By 2012 total global LBS advertising services were worth 685 million dollars worldwide (ie 526 million Euros according to Berg Insight). So over a similar 12 year period, one service became 5 Billion dollars in value, the other only under 700 million in value. Basic, monophonic 'ploink-ploink' ringing tones managed to grow 7 times bigger than location-based advertisements.
So, lets be clear. Location-based advertising CAN grow. It HAS grown. But the average growth rate of non-messaging based mobile data (mobile media) is about 50% at an annual growth rate for the past five years. LBS is growing at perhaps 10% or 20% per year. It is THE worst-performing sector in all of mobile. If you do ringback tones. If you do MMS. If you do social networking. If you do music downloads. If you do coupons. If you do alerts. If you do augmented reality. Anything else in mobile grows more strongly than location-based services.
RISING TIDE RAISES ALL BOATS
Mobile has set the world record for fastest-ever growth from zero income to 1 Trillion dollars in annual value, achieved in only 29 years from the first commercial cellular mobile (car-phone) call in Tokyo Japan on NTT's network in 1979 (four years before the more famous Motorola phone was sold in Chicago by Ameritech). And 29 years later, the mobile industry breached 1 Trillion dollars in annual revenues (currently 1.4 Trillion). Note first, that many big industries we know well, like music, movies, gaming, radio, television, computers and the internet - have never grown this big. So yeah, mobile is far bigger than those industries. And that no Trillion-dollar sized industry has achieved it this fast, in only 29 years. So mobile has set the record, and is currently still, the strongest-growing giant industry on the planet.
Anything you do in mobile should grow. The point is, if you are not growing at the rate of the industry, you are underperforming! And LBS is consistently, chronically, dramatically underperforming. So yes, you can give me a stat of growth or of revenues. It may seem impressive by itself. But immediately when we compare it to any other forms of mobile data services, location-based services are exposed as pathetically bad.
Take advertising. The first mobile ad was served in 2000. It was an ad running on SMS text messaging, to fund the free headline news service on SMS (launched in Finland by MTV3 the television broadcaster). How did SMS text messaging based advertising do? eMarketer reported in 2009 that SMS text messaging based mobile advertising was worth 6.4 Billion dollars. Yes, you can do ads with LBS, in 12 years reaching a paltry 685 million, or you could do 9 times better in one quarter less the time, using SMS advertising. You see what I mean. A rising tide raises every boat. Even the worst, leaking, barely afloat boat will be raised by a rising tide. But you should not aim for the worst part of this industry, aim for strongest-growing parts.
LBS SPEED BUMP
So I think I have come up with a good analogy. LBS is like a speed bump in road-construction. Most of the time if you build a highway (to allow cars to drive fast from one town to another) you don't want speed bumps on it. Like cars, with mobile, most users will want the speed, they don't want to be slowed down. That doesn't mean there is 'no use' for speed bumps. We use speed bumps for example to slow cars down near schools, or other ways to slow down traffic, if for example there is road construction on our highway. In specialized cases, like race cars, some racing circuits insert 'slow-down zones' in terms of chicanes and hairpin turns, so that the race car drivers have more challenges, more opportunities to make mistakes and for good drivers to be able to pass lesser drivers, like they often do at Formula 1 race circuits, when the organizers notice that the cars are getting too fast for that circuit.
Yes, we can find specialized uses of speed bumps, but in most cases, most cases, they are a nuisance. Similarly LBS. If you give me a case example of any mass-market success of LBS, the success can be attributed to some other aspect, not the location. So LBS coupons? Yes. The gimmick here is coupon. You'll find that mobile coupons of almost any variety are growing at break-neck speed. You don't need 'location' to do successful coupons. Or the gamification of becoming the Mayor of Starbucks, via FourSquare. This is a game. Games are huge growth - just look at Angry Birds. Games are big, even location-based games can succeed (but at lesser rates than most popular mobile games that do not use the speed bumps of location). Or take Augmented Reality. Yes, plenty of AR is done with location information, but its by no means the only way to do AR. The powerful agent here is AR, not location.
So, lets take a perfect example. Parcel delivery. UPS has already launched the service that smartphone users can re-direct their package deliveries to where they are physically, at the time of delivery. So if you are not at home, because you are stuck at the office working late, or there was an emergency and you had to take one of your children to the hospital, etc, you can have the parcel delivered to where you are, not the original delivery address that was entered when the package was sent a few days ago. Brilliant, consumer-oriented service. And I think I saw a TV ad of FedEx doing something similar when I was in Toronto just now (only caught the end of the ad). This is a 'perfect' case of LBS. Obviously, parcels are physical items, and are delivered to a physical location. Isn't this a perfect location-based service?
No! No no no no no. Location is the speed bump again. Yes, its possible that I am at the intended location when the 'querie' is made as to where to deliver the parcel. Yes, its possible to use the GPS positioning on my smartphone to tell UPS or FedEx please deliver the parcel 'here' (wherever that may be, my home, my office, any other place). But its equally possible, that I am NOT where I want the parcel delivered!!! The power of mobile is to go beyond location! I could redirect that UPS package to where I am not now - I am now at home, but heading to the hospital, so 30 minutes later, I'd prefer the parcel delivered to the lobby at the hospital, not to my home. Or better yet, mobile can transcend location. I could re-direct the parcel to my sister's house on the same street, knowing she is at home. My smartphone cannot pinpoint my sister's location based on my phone's GPS sensor. But I can easily give the direction via an SMS or map, or simple mobile web address box, and type in my sister's house number on the same street. Why would you want to limit your 'service' to an explicit location, when mobile goes beyond location, to 'movement'. I can be freed from location, with mobile. Location is an artificial fence, an artificial jail for consumers. Mobile has the power to free us from borders and limits and locations!
And again, this may seem radically 'new' and bizarre to you, if you are relatively new to mobile, such as you discovered the mobile industry only in the iPhone era (year 2007 or after that). We have known. J-Navi, the location-based mapping and guidance service of J Phone in Japan (now Softbank) reported in 2001 that 30% of their map request by mobile phone users came for map information about some other location than where the phone was physically at !!! Guys, I am not inventing some new radical thought here! We've known this for more than a decade (those of us who bother to study this industry, not just spew some baseless drivel)
USE THE 9 UNIQUE ABILITIES
This is so frustrating to me. I know exactly where it comes from. It comes from the technology-geeks who look at the GPS sensor, see the personal location on a map, here is where I am. And next they think, hey, I could serve coupons and offers to the person near the store. This is so stupid. Mobile has 9 unique abilities that offer us the chance to deliver magical experiences, something never before possible on any tech including laptops and the legacy internet. Location is not one of the 9 unique abilities of mobile. Location existed in the third mass media - cinema. We can do location-based ads shown at the cinema 'after the movie if you want to have a nice dinner, come to Tony's Italian Restaurant two blocks from this cinema'. - these kinds of ads used to be very common back in the earlier days of movie advertising. And how supremely successful are they? Yeah. As trivial to cinema advertising as any LBS ad examples are to the overall mobile ad market. If Location-based ads were so hot and successful, we'd today see massive LBS ad market powering cinema and dwarfing television ads.
So what are the 9 unique aspects of mobile? The listing is:
1 - Mobile is the first (genuinely, and measurably) personal mass media
2 - Mobile is always carried
3 - Mobile is permanently connected
(these two are not the same, you can permanently carry a device that is not always connected - your wristwatch for example, and you can have a permanently connected device that is not always carried - like your home broadband internet connection)
4 - Mobile has a built-in payment system (note this includes both making payments and mobile can be a terminal for receiving payments)
5 - Mobile measures the audience most accurately
6 - Mobile is available at the point of inspiration
7 - Mobile captures the social context of consumption (ie our viral forwarding, our likes and follows, recommendations, which does not require purchase - I can recommend something even if I didn't buy it)
8 - Mobile enables Augmented Reality
9 - Mobile offers a digital interface to the real world
These nine abilities are the way to build successful mobile services. Location is not one of the unique abilities. Location is not even a 'useful' addition for most services. In many cases where location is used, the service could be better if location was abandoned, and in most cases where location is collected, the service would not suffer in any meaningful or measurable way, if location-collection was abandoned.
NICHE ONLY
Yes, there are niche uses where location is very important. The Blackberry Pocket Cop app, for example, allowing policemen to use Blackberries at work. It has all kinds of secure police uses including obviously secret messaging if the policeman is in a dangerous situation and cannot talk but needs to communicate. But yes, it also has the location-positioning of the police officer. This is very important if the police officer needs help, because he will not necessarily know the exact name of the street or cross-street or street number etc. But a location pin-pointing of his position can truly be life-saving feature, in a highly dangerous city like say Baltimore (one of the first where Pocket Cop was launched).
If you find yourself lost, then location-based accurate positioning is very useful. Yes, if you are driving your car in unfamiliar places, and find yourself lost - yes, an accurate positioning of your map is very useful. So specialized drivers - taxi drivers for example, who always drive to different places - will benefit from LBS based guidance on their car navigation systems. What about you and me? Did your office secretly shift to a new address last night? Did your children's school suddenly escape to another town? Did your home re-position to another suburb today while you were at work? No. Most of us do not find ourselves in unfamiliar places daily, weekly or even monthly. Once or twice per year we might go on vacation to an unfamiliar location. A few times we might venture to a strange part of town to some visit etc. But unless you are a jetsetting global James Bond, mostly we do not need the daily guidance in strange cities every day.
And if you set up a treasure-hunt type of game, like the rapper Jay Z's autobiography (released as a traditional printed book) where there were clues on every page for 300 treasure-hunt type of missions for fans to discover out of New York City, then yes. Locatino can make a difference. But thats about it.
SO LO NONSENSE
So we get SoLoMo, Social is great. Mobile is treat. But Location is sheer rubbish idea. If location was so powerful as a driver of commerce for example, why would retail worry about mobile. Traditional bricks-and-mortar stores are ultimately location-based. They say its all about 'location, location, location' in retail. Why would they worry about shoppers with mobile? Because mobile releases us from the binds of location! Because mobile frees us from location. Because mobile liberates us from the chains of location. Imagine being superman, able to fly, and then being chained to the earth. Thats what you get, if you force location to something that is mobile. You shackle it down like a prisoner.
Location only limits your business opportunity, it does not expand it. Take your location-based promotions. Say you are a florist and find yourself with sudden overstock of inventory of flowers. Flowers that don't last long. Someone had a wedding, but cancelled. You now have tons of flowers to sell. So you could blast the neighborhood with flower offers, get 12 roses for the price of 6, that kind of thing. And if you did use location-based ads, for example blasted to all within walking distance, no doubt you'll get some business out of it.
Here's the point. If you did the same ad - without the location-limitation - you'd get more sales. So why only limit sales to those who happen to be near you (but are not necessarily needing flowers). You annoy lots of people, to get some business. But why not rather have opt-in database for clients who shop with you? Now you can send the offer to all who already like your store, who have shopped with you before - and some happy Romeo can take his car, drive to your store, from quite far away, to buy say two dozen roses for the price of one dozen, to surprise his Juliet.
Location limits your reach. So its not just those within driving distance to your store. What about the James Bondian world traveller. He who has a nice secretary, his 'Moneypenny' back at the office. If he gets the alert while on a business trip to Germany, he could buy a bunch of roses, pay by credit card, and have them delivered as a spontaneous gift to the hard-working secretary back at the office. Location only limits your opportunity. Its like a speed bump on the highway. For most mobile services, location reduces your opportunity.
ORCA VS NARWHAL
I wrote at length about how the Romney vs Obama campaigns used data-mining. Romney did it the old-fashioned way, by zip codes, voting districts. His method was akin to location-based marketing. This voting district has a high proportion of Republican supporters, lets direct 'get-out-the-vote' type of activities like phone calls and reminders to that area.
Then there was Obama's campaign which yes, did of course know what district you were in, but its targeting was based not on location, but rather, on two scores of actual human behavior - the voter's preference ie supporter of Obama or supporter of Romney (individual voters identified and targeted this way) and get this - also each voter's likelihood to vote. So if you are a strong supporter of Obama (and have not voted yet on election day), you won't need the encouragement to vote. If you are very likely to vote that day (but have not yet voted) its no cause for concern at Obama headquarters, because they know you will (and any get-out-the-vote efforts would be wasted, because you would vote for Obama anyway). But the targets were the lukewarm supporters of Obama who were not sure if they would vote that day. Those types of voters would get calls and SMS reminders, even other Obama supporters would call them directly (as volunteers) with a nurse calling a nurse, a teacher calling a teacher, a military vet calling a military vet etc. This is the far FAR more powerful way to use (mobile) technology to achieve your ends.
Yes, Romney's campaign with location, could do something that was better than nothing. But what Obama did, with targeting, actual voter insights, and focused efforts (all to an opt-in database where voters had given permission to send messages from the campaign etc) gave Obama at least 3.5 million more votes than what he would have gotten if Team Obama had used traditional zip code/postal code/voting district type of - location-based - voter activation methods.
COUNTER-PRODUCTIVE
Mobile allows our service to be freed from tethering. Freed from the cable. Freed from the socket. Freed from proximity. Freed from short-range wireless even. Freed totally from location. Location-positioning is the very antithesis of what mobile can do. Its like building an airplane, then cutting off its wings. I am reminded of Gary Schwartz's excellent observation in his new book about use of mobile tech in retail: Fast Shopper, Slow Store. Gary explains why tablets are only ultra-portable digital devices, not as powerful as mobile phones and smartphones. Because mobile phones and smartphones can be operated single-handedly,.while doing other tasks. Tablets, on the other hand, in Gary's words 'immobilize consumers'. The tablet is very portable yes. But the moment you pull it out of your bag, and start to use the tablet, it will immobilize you. You want to be seated, you need to use both hands. Its very difficult to use a tablet while walking, and almost impossible to use it single handed. Most of the time with tablets, once we start to use them, we stop. We stop moving. We become immobilized. A tablet to mobility is like Kryptonite to Superman. The superpowers were there, but are now gone.
So, when you see millions (and even Billions) headed to some new start-ups and ventures that seek to revolutionize mobile through location, be warned. Tomi told you so, Tomi said years ago, that is not going to be big business. Be very careful and monitor the space.
If you see forecasts of huge growth projected for location, don't fall for the same trick! We had the exact same forecasts years and years ago. It never came. Don't be fooled by some clueless analyst promising a massive future. Look at his starting point data. What does the analyst say location is worth today. How many users today. How much revenue today. It is pitifully little. Then wait and see. If I am wrong, and suddenly after more than a decade of failure, location somehow does break free, then we must see real user and revenue numbers that are big. Revenues in the many Billions. Else, be smart. If the numbers are not there, learn the lesson, and put your money, your time, your project resources into any other part of mobile, where it will give you better returns than it would in location.
And please please please do not write that 'now' is somehow different. No, GPS on iPhones today in America is no different from GPS on early KDDI phones in Japan in 2002. Yes, Japan had GPS based location services a decade ago. Don't say maps make a difference or 3D rendering of cities. Japan had all that by the middle of the last decade, yet KDDI itself - who essentially invented and launched almost all modern LBS concepts from LBS-based ads to LBS-based treasure hunts to LBS-based maps - say that of their whole service portfolio, LBS is the worst-performing part.
Context is good. Context is useful. Context can include elements like time, and the users 'status' of being at work or at home. Context can have dozens of elements that can help us identify and target services to help our consumers. And within the area of Context, location can be used as one element (distinct from say, proximity). Location can be used as an input to derive other benefits such as movement. We can measure speeds of traffic based on the measured positions of individual phones on a highway, and measured over a few minutes of time. Across many phones (as those inside cars moving on that road) we can calculate very accurately the average speeds sustained on that road, to determine for example if there is road congestion this morning, etc. Context-based services I can see becoming big over time. And location may be one of dozens of inputs. But don't plan on launching location-based services for the masses. They never turn out big.
Posted by Tomi T Ahonen at 07:43 PM in 7th Mass Media, Advertising, Augmented Reality, Blackberry, Business Users, Finland, Gaming, iPhone, Japan, Location-Based, m-Commerce, Mobile Data & m-Web, Music, Quotations, Retail & Commerce, Revenues, Statistics, Strategy, Unique Abilities, USA, Users / Subscribers | Permalink | Comments (18) | TrackBack (0)
An Attempt to Validate the 150x Per Day Number Based On 'Typical User'
I've been working on that 150 times per day number. You may have heard it, Nokia was first to publish the number in 2010, saying that on average a mobile phone (not smartphone, any mobile phone) user will look at the phone 150 times per day. This not only in wild and woolly Finland, but across the planet. We had seen big numbers before, but they were all under 100 times per day and Nokia's bombshell 150 number was widely reported. And then, last year, T-Mobile USA verified the number for the US market as well - a market that severely lags the Industrialized World average in most things mobile - lagging often even many advanced Emerging World countries... So when the USA cellphone users (not smartphone, any cellphone) are looking at their phones 150x per day, thats getting pretty serious.
UPDATE OCTOBER 8, 2014 - Now there is finally a consumer survey published with a published number. A UK survey of only smartphone users (not dumbphones included) found as one might expect, an even larger number. The survey of 2,000 British smartphone owners found they look at their phones 214 times per day. Read more here.
And last year we heard that in the UK, the average smartphone user looks at the phone 200x per day. But lets not worry now about Angry Birds addiction. Lets remain with the basic phone - four out of every five mobile phones in use on the planet still today is a 'dumbphone' ie not a smartphone. I have been trying to validate the 150x number and I've gotten pretty close. So this is my 'argument' in support of 150 times per day. WHAT would a 'typical user' do with the non-smartphone today, that results in looking at the phone once every 7 minutes of every waking hour of every single day? I'll paint a scenario, using for the best part, consumer statistics on behavior on phones, or replacement behavior, plus some observations and personal experiences and chats with some fellow experts.
MESSAGING 23 TIMES
So lets start with the feature used by more than any other as a percent of all mobile phone owners. No, its not voice calls anymore, more people have abandoned voice call use, than don't use SMS text messaging. The primary use of a mobile phone (including smartphones by the way) is mobile messaging. So, what kind of behavior do I see that gets us 23 looks at the phone as a messaging tool. The average person does not send 23 messages per day..
Among active users of SMS, the number is 6 SMS text messages sent per day. If you send 6 messages, you average also receiving 6 messages from your friends. Thats 12 times right there. But what's the rest?
Once per day we draft a message we don't send, or draft a message and save the draft, to edit and send ti later (remember, these are pretty addicted users, who send and receive 6 messages daily). Then we re-read messages (yes! We all do!). So the saved message that we love or hate or didn't understand. I'd say on average 2 times per day we re-read a message we read before. Plus we'd receive perhaps 1 unsolicited message, an ad or alert or reminder etc. And then we anticipate! We check in case there has been a message that had arrived, maybe we are awaiting a reply, maybe we hope for a contact, etc. I say we look for a message that isn't there typically more often, than messages actually arrive - so that would be 7 times we seeked a message that hadn't arrived (yet). That gives us 23 times looking at a phone relating to messaging. (and please don't write about OTT services like iMessage, Whatsapp, BBM or Skype - these are all used by a tiny tiny sliver of the total worldwide population, only Skype reaches 1 Billion users, vs over 5 Billion active SMS users. We are not talking of heavy messaging fanatics on smartphones on WiFi or all-you-can-eat data plans, we are talking typical users worldwide. That means SMS, not OTT)
VOICE CALLS 22 TIMES
Then the voice calls. The average phone user places 3 calls per day and also receives 3 calls. Where are the other 16 times? Interruptions! We have a dropped call (1x per day) or we make a call attempt that won't go through (1x per day). We miss a call that was coming, too slow to pull the phone out, or forgot we had changed our ringing tone (yes, we all have done that too). I say 1x per day we miss a call. Avoid a call? Yes that we also do, we see whose calling, and decide not to talk, send the bastard to voicemail jail. Thats 1x per day. But you know what. We look at the phone we we start the call - we ALSO have to look at the phone to end the call. So out of the 7 actual phone calls, we have to end 7 calls, that gives us 7 more times to look at the phone. Now I'm at 17 times per day. Where are the last 5? Anticipation again. We look at the phone awaiting or anticipating a call or call-back. I'd say 5 times per day. That gives a total of 22 times we look at our phone relating to voice calls, per day.
CLOCK 18 times per day
If the average person sleeps 8 hours per night, that gives us 16 hours awake. I say we play with the alarm going to sleep and waking up, so out of the 16 hours, there are only 14 hours when we are reasonably awake and care about what time it is, when we don't fiddle with the alarm or snooze. And of that, we then have some moments on a typical day, that we are anxious about time - in the morning, going to work or school, worrying about being on time - and I'd say we look at the clock two times at that occasion, rather than once per hour. Same around lunch-time at work/school, when is this interminable meeting going to end, isn't it lunch-time already? And again, at the end of the work/school day - when we anticipate getting away from work/school. So on those occasions, I'd say conservatively that we look at the clock twice per hour, and on other times, we are curious about what time it is, roughly once per hour - often very habitually, and even subconsciously - so you know the story, the wife sees the husband just glanced at the watch, and asks him, what time is it, and he can't tell you, even though he just looked at his watch a moment ago... Anyway, I get 18 total times we look at the clock on the phone, not counting setting or resetting or shutting the alarm.
ALARM 8 TIMES
Which brings us to the alarm. I've been saying for years that the mobile is the last thing we see before we fall asleep and the first thing we see when we wake up. Its nice to see that was also verified by the Time global mobile survey finally in 2012. But yes, what of the alarm? To set it, I'd say the average person does that once, and then once before falling asleep, or waking up at night, or a little before the wake-up, looks at the alarm setting, just in case. Thats 2 times total. Then the wake-up alarm, 1x more. And then snoozing. I'd say average person snoozes three times? That gives us 6 uses of the alarm as a wake-up. But its not the only use of the alarm. We also use it as a convenience reminder during the day. I'd add 2 more uses of the alarm daily, once to set, once to turn off the ringing. That gives us 8 times we look at the alarm feature on the phone.
CAMERA 8 TIMES
Then the camera. Most of us are not shutterbugs who take dozens of pictures every day, but the consumer surveys suggest the average cameraphone owner takes about 1 picture per day. How do I get 8 times to look at the phone? First we have to launch the camera app. Then we have to aim the camera at our object. Then we take a picture. And we have to check if the picture turned out good. And likely it wasn't good enough. We take a second picture. And look at that picture, decide its a keeper. Then we delete the first pic. And finally, we randomly look or show a picture during the day. That gives me 8 uses of camera.
MUSIC PLAYER 13 TIMES
Not everybody uses music on the phone but nearly half of mobile phone owners do consume some kind of music from music streaming services to using the phone as an MP3 player to ringing tones. Lets take the music player option - nowadays a staple with very modest priced dumbphones already. And I think a typical user would find 4 times per day to listen to music. When listening, sometimes we hit a song we don't like or don't feel like listening to (or finishing) so we skip. I'd say we skip 3 times per day. Like a voice call, we have to turn off the music player when we're done, thats another 4 times we look at the phone. And I'd say on average we get interrupted once per day to pause the song that is playing - such as for an incoming call or message - and then resume the music. That gives me 13 times looking at the phone for music consumption.
GAMING 12 TIMES
For gaming, I'm now thinking basic time-killer games like Snake or Tetris, not Angry Birds. Launch the game 3 times, end the game 3 times. Interrupted twice, resumed twice, and looking at scores or settings 2 times per day. 12 times of use of the phone for gaming purposes.
CALENDAR 5 TIMES
I think a calendar might be used 5 times per day, once to make a new entry per day, 3 times to see whats up next, and once to edit or delete an entry.
SOCIAL MEDIA 9 TIMES
Accessing Facebook, Twitter of the like perhaps 5 times per day. As the usage tends to be longer, there is plenty of opportunities to be interrupted, so I'd say 2 interruptions and resumptions per day. Remember, we are talking of typical users, not heavily addicted youth, so the usage is not intense, also these users are not on 'all you can eat data plans' so their social media surfing is somewhat limited by the costs involved.
NEWS 6 TIMES
Nearly half of all mobile phone owners already consume news on their phones. It would mostly be on two primary types, the type where you go find the news ie access your fave news site(s) like the BBC or CNN or for pop music celebrity news, MTV etc.. And then there are the alerts you may subscribe to. I'd say 4 news alerts arrive per day and we actively go to news sites twice per day, for a typical user.
SEARCH 3 TIMES
And yes, increasingly we use search on our phones. But the search behavior is markedly different from PC based online access to Google and our other search engines. Mobile search is often urgent and very specific. But it often becomes the most valued app and service on the phone. A third of people in New Zealand have for example used mobile search to settle a bet or argument. Like I say, the mobile has become the Magical Truth Machine in our pocket. But lets say the typical user only searches 3 times per day on the mobile (remember, several hundred million internet users on mobile don't even own or have access to any PC based internet device, their dumbphone and its web browser and clumsy keyboard interface is the only internet they have access to - and at per-use data charging too!)
WEB 3 TIMES
And random internet services. Going to the website of the bank, or the travel agent, or the ecommerce site, or whatever. Again, I'd think this number is easily much bigger, but lets keep it at 3. Remember, these are NOT touch screen iPhon-a-clones, these are rudimentary basic phones, featurephones at best.
VIDEO 6 TIMES
Mobile videos are easily addictive and many carriers offer special video tariffs on their 3G data plans etc. We often receive links to videos, and videos can be sent and received via MMS. I'd say we watch 4 video clips per day, interrupted once, and resumed once. That gives us 6 uses relating to video. This also includes saved videos on our phones, something we shot on our own cameras, something that was forwarded to us, or perhaps moved via a microSD card or Bluetooth. And isn't it funny, we will look at that tired short video clip many many times when we have nothing else to do...
CHARGING PHONE 3 TIMES
And then the charging of the phone. We connect the phone, we come to see if its charged yet (not yet) and we remove the charger when the battery is full or we can't afford to wait longer. Three times we looked at the phone relating to its recharging, on a typical day.
VOICE MAIL 1 TIME
And we access our voice mails perhaps once per day. Remember, when one of our calls is redirected to voice mail, we are indeed using someone else's voicemail but it doesn't require us to do anything at our end, its just that the voice call was kind of hijacked by the voicemail system. But when we have to go listen to our voicemails, then yes, we have to make the extra effort.
If my math is correct, we are at 140 times per day. Then lets toss in random other uses about 10 times per day, including maps, downloading apps, voting for TV shows, using the torch/light feature (or turning the screen on in the dark for same effect), showing the phone such as placing it on a table, doing the SIM-card-switch, sending or receiving Bluetooth files, installing or removing microSD cards, replacing the battery, receving a mobile ad, making a m-payment like parking, bus ticket, lottery, or looking for a WiFi connection, double-checking battery status, etc etc etc etc etc.
That gives a totally plausible 150 times per day for a non-smartphone user who is not a massively over-addicted youth user either.
So what do you think? Did I miss obvious areas that have large usage globally across all ages and demographics - remember, we cannot focus on smartphones, only one in five mobile handsets in use today is a smartphone (but are now selling more than half of new handset sales in many countries, so this will change rapidly).
All analysis here not explicitly identified by source is source: TomiAhonen Consulting January 2013. The data and examples and calculations in this blog may be freely shared and also may be freely turned into any graphics.
And for those who need to understand the mobile market more deeply, check out the TomiAhonen Almanac 2012 - buy it now, get the 2013 edition when it is released in a few weeks, for no extra charge!
Posted by Tomi T Ahonen at 01:29 PM in 7th Mass Media, Advertising, Convergence, Digital Footprint, Dumbphones, Gaming, m-Commerce, m-Govt m-Edu & m-Health, MMS, Mobile Data & m-Web, Mobile Money, Music, Newsmedia, Nokia, SMS, Social Networking, Statistics, Television, Travel, Unique Abilities, Users / Subscribers | Permalink | Comments (19) | TrackBack (0)
Latest Mobile Numbers for End of Year 2012 - This is getting humongous..
The nice thing with a strongly-growing giant industry is, that all the numbers keep growing, eh? The unfortunate side effect is, that almost any number you bother to memorize, becomes obsolete within months... But lets do this again. All major mobile numbers, now updates for End of Year 2012:
6.7 BILLION MOBILE SUBSCRIPTIONS IE 94% PENETRATION RATE FOR PLANET PER CAPITA
This is the big number. Update all your slides, we now are at 6.7 Billion active mobile phone 'subscriptions'. Obviously that is not in reality 94% of humans, as many of us have two phones or even three or more cellular connections (two smartphones and a tablet PC for example) and in many especially Emerging World markets, it is quite common to get prepaid SIM cards on every major network, and then do the 'SIM-card-switch' between the networks depending on who to call or send a message to.
But yes, the 'Mobile Moment' is nearly upon us, as I said, that will come in 2013, when there will be as many active mobile phone subscriptions as human beings alive (this of course includes contract based 'post-paid' accounts and 'pre-paid' SIM cards, and the uses of cellular subscriptions for other non-human uses like Machine-to-Machine and the 3G cellular connectivity of our data dongles and datacards and our tablets and netbooks, all added together).
The mobile industry added about 700 million new paying mobile subscriptions/accounts/SIM cards this year. The growth in mobile alone is about three times the installed base of all tablet PCs including iPads and all its rivals, combined. The growth alone, three times the installed base of tablets. Lets not pretend the tablets PC market is anything more than a niche, a nice healthy niche for PC makers, but tablets still don't even sell as many as laptops annually... smartphones alone, ignoring all other mobile phones 'featurephones' that mostly also have full HTML web browsers, yes, just counting smartphoes alone, they outsell tablets this year by roughly speaking 10 to 1.
6.7 Billion mobile phone users (allowing for overlap). There has never ever EVER been any industry as widely spread as mobile is today - and it grew 11% this year by paying customers. This industry is viciously profitable - the most profitable company on the planet used to call itself a PC company, 'Apple Computer' but now just calls itself a 'mobile' company. The wealthiest man on the planet is no longer Bill Gates of the PC industry, it is Carlos Slim the boss of America Movil the massive mobile empire across Latin America and now expanding into Europe.
4.3B UNIQUES
So then lets dig into the numbers. 6.7 Billion is the aggregate number of mobile subscriptions, when we allow for multiple subscriptions. How many unique mobile phone users are there in the planet. The 'real' count of our market, when duplicates are removed? It is now up to 4.3 Billion unique humans. Yes, 61% of the planet's population, no mathematical cheating, six out of ten humans on the planet does have a mobile phone in their pocket, connected to a mobile network. So 2.4 Billion of all mobile phone subscriptions in use, are duplicates, second, third and even fourth or fifth accounts for those unique users. 36% of all active mobile acccounts now are redundant connections for us, above and beyond our primary mobile connection.
Or to put it in a more meaninful way, it means, mathematically that the average mobile phone user today globally, has 1.56 accounts or SIM cards. Yes, this was a mystery to our American cousins still very recently but the phenomenon that I first discovered out of Finland and has happened in every country that passes the 60% penetration level, we do see it in most countries now. More than 100 countries have passed 100% penetration level. The United States joined this club last year, Taiwan and Hong Kong passed the 100% penetration level eleven years ago, Finland, Singapore and Italy did it ten years ago. The UAE was the first country to report mobile subscriptions passing 200% and now several countries are joining that group such as Hong Kong, Panama and Macao, with Saudi Arabia just on the brink.
5.3 BILLION MOBILE HANDSETS
And somewhere between the absolute ceiling of total active subscriptions, and above the floor of unique users, lies the number of total mobile phone handsets in use. My consultancy has also provided this number since it was first measured, and reports now that for 2012 the number is .. 5.3 Billion total handsets in use globally. So 4.3 Billion unique mobile users, walk around with 5.3 Billion phones. That means, the average mobile phone user has 1.23 handsets (think iPhone user who also has a Blackberry from work). And as each of the 5.3 Billion handsets does have a connection, the excess 'SIM card only' population of 'second and third accounts' is thus 1.4 Billion or 21% of all active mobile accounts are 'only SIM cards' without a regularly associated handset (used temporarily in a handset that is more used by another network). Yes, one in five mobile phone accounts are 'purely promiscuous' customers, you can understand the mobile operators/carriers are increasingly frustrated with their loyalty programs and attempting to identify who are the loyal customers and who are promiscuous...
1.3 BILLION SMARTPHONES
So then the hot story in mobile for the past few years, our smartphone addiction. You would be forgiven for thinking every phone by now is a smartphone, yet the numbers, while showing enormous growth, indicate that only 1.3 Billion smartphones are in use today. That is 25% of all handsets in use worldwide. Yes, you read that correctly. Globally speaking, three quarters of all people who use a mobile phone, does NOT have a smartphone, not an iPhone, not a Galaxy or Blackberry or Lumia. No, three out of four humans using a mobile phone, uses a 'dumbphone' - many of which have good cameras, large color touch-screens and full HTML internet browsers, and can download Java games including Angry Birds, but are not smartphones. The smartphone population grew enormously in the past year but is only at 1.3 Billion worldwide.
1.3 BILLION CONNECT VIA 3G VS 1.1B VIA WIFI
The connectivity of our handsets and data devices is still more driven by cellular than wireless. 3G and faster cellular networks account for 1.3 Billion total global mobile connections ie 19% of all subscriptions, and WiFi is used by 1.1 Billion or 16%. As a percentage of handsets in use, 25% of all handsets now connect to 3G or faster cellular networks (note, a far higher percentage of the phones are capable of 3G connectivity, but the network operators/carriers have not all yet deployed 3G to all regions and many consumers have not upgraded to the data plans that 3G network services often require). WiFi meanwhile is used by 21% of all handsets in use globally. I might add, that the 'traffic' measured via WiFi is vastly greater than that through 3G, as most 3G plans are metered or have usage limits, but WiFi tends to be 'all you can eat' so often the heaviest usage is done in free WiFi hotspots. Don't confuse usage measurements with user measurements.
5.6 BILLION USE SMS TEXTING
And for those who were spreading words of doom and the end of SMS, we have news. Predictable news. SMS text messaging total global user base grew again last year. Up now to 5.6 Billion total users, up 11% from last year. What's with Whatsapp and iMessage and Blackberry Messenger and Facebook and Skype messengers? They all have only a fraction of the smartphone and 3G/WiFi user number, all of those have well under 1 Billion mobile users today, and are not cross-service usable. You have to join a given messaging service, and get your friends to join the same one. But SMS works on all phones. That is why the very latest measured user data from smartphone users in the USA, UK etc, tell us that the vast overwhelming majority of smartphone users with one or more of those messaging platforms - still continues to use SMS text messaging.
Make no mistake, the heaviest users of SMS have shifted most of their heavy messaging traffic away from SMS to the more efficient msssaging platforms. Several countries report a decline in total SMS traffic this year for the first time. But globally, the number of SMS users, the total number of messages sent, and the revenues earned by SMS still all grew in 2012. Yes, SMS total user base grew by 11% this year. In almost any other industry, if you grew 11% in one year you'd have a highlight year of huge bonuses. Imagine airlines or hotels or the cola drinks or shampoo or ice cream industry, they don't grow 11% per year in new users. SMS text messaging did, in 2012. Yet there are 'pundits' and 'experts' who write about the death to SMS. Haha. That may be coming. But its not here yet. Not this year and not in 2013 either...
VOICE CALLS ON MOBILE 5.4 BILLION USERS
Globally, as a percentage of all subscriptions, SMS is the most used mobile service (yes, used more than voice calls) and used by 83% of the mobile phone subscribers. Voice calls come in second, at 5.4 Billion users and 81% of all mobile users. So don't make the mistake of calling it anymore a 'mobile phone' or 'cellphone' - it is no longer primarily a 'portable telephone' - our mobile today, globally, is first and foremost a messaging device, with voice calls a highly used optional extra.. Call it a 'mobile' but not a 'mobile phone'. And yes, you read that correctly. Out of all mobile subscriptions active on the planet, for 19% there is no use for voice calls at all. Some of these are data connections to our laptops, some are 'M2M' Machine-to-Machine connections like our smart electric meters or the irrigation systems operated by SMS like used in India etc. And many more, are mobile handset users, who don't need voice, at least, not traditional cellular voice (they may well use Skype occasionally, but not traditional mobile/cellular voice). But they do use SMS text messaging and other features on the phone..
CAMERA USED BY 72%
The camera on a mobile phone is now used by 4.8 Billion people worldwide. Understand this for context - out of all people who have ever used any kind of camera in their lifetimes, for 12 out of 13 persons who ever used a camera, the only type of camera they ever used, was that on a cameraphone. Not the traditional stand-alone Canons, Nikons, Olympuses etc. Yes, for 12 out of 13 persons on the planet who ever took even one picture, the only camera they every used, was some kind of cameraphone camera. Don't tell me the cameraphone is a toy. Only one person in 13 who has taken pictures, has ever used a 'stand alone' camera either digital or film-based, and most of those will also take at least some pictures on their smartphones too... Oh, and lets look at per capita globally? Two thirds of the planet now have a cameraphone in their pockets, yes 68% penetration rate of cameraphones per capita, across the planet.
The planet has 1.6 Billion personal computers (this includes tablet PCs) - each with a screen. The world has 2 Billion television sets, each with a screen. Toss in 250 million portable gaming devices with a screen. And call it 300 million digital cameras with a screen. Thats under 4.2 Billion electronic devices that have a screen, in most cases, a color screen. And in our pockets, we have 4.8 Billion cameraphones, each with a color screen. Wow. For the planet, the mobile is 'the first screen' so to speak...
4 BILLION RECEIVED ADS IN THEIR POCKET THIS YEAR
And the world's largest advertsing platform and media is... no longer radio. It is now mobile! Yes, in 2012, 4.0 Billion people - a whole 60% of all mobile subscribers - and 56% of human beings alive - have received advertsing on their phones. How can that be if smartphones are only used 1.3 Billion and even web-browsers are used by 2.1 Billion (which has mostly overlap with those smartphones)? Its because the world's most widely used advertising format is.. SMS text messaging, of course. And number 2? Is not web banner ads, is MMS picture messaging (or more correctly, as MMS can do videos, sounds, long texts, web links and pictures, it is as the name is called, Multimedia Messaging Service). Even ringback tones have hundreds of millions of advertising audiences. So don't think that mobile ads are only with your gaming apps and banner ads and pre-roll video interruptions. Most humans who received ads on their phones this year, did so via SMS and MMS, not apps or the web banners...
MMS HAS 2.9 BILLION ACTIVE USERS
And then lets go to MMS. If you liked SMS and are a media brand or advertiser or consumer oriented company, you will love MMS. MMS can be used, yes to send pictures from one phone to another - but is a clumsy and costly and unreliable way to do that. Better ways exist especially for all who have data plans and smartphones and good mobile web services or social networking and picture sharing services. Not all mobile phone users have that, some use MMS yes, just to send a few pictures to their family and friends. Grandparents for example sending pictures of the cool Aston Martin they saw parked on the street that they know the 9 year old grandson would love to see. That is not the main market for MMS and where its growth and market is.
MMS is a multimedia platform. It is perfectly suited for news, entertainment, video, audio, pictures, long text messages, weblinks, QR codes, and yes, advertising. For delivering amazing, highly beloved, widely distributed, highly personal, relevant and timely advertising. Where good ad campaigns get routinely above 25% response rates !!! Routinely !!! Not the pathetic and hated banner ads that on mobile might yield you 4% click-through rates (and mind you, even the hated banner ads on mobile - do 10x better than their online cousins the banner ads do on the web).
MMS is the ultimate 'Engagement Marketing' platform and countless mobile ad players from Blyk to OutThereMedia to Optism to Qustodian know this and use MMS to its fullest power. If you are in media or any consumer-oriented business and are ignoring the digital interactive platform that has more active users than the global internet.. 50% more users than the total number of television sets on the planet - you do so at your own peril. Don't expect to remain employed till the end of this decade, however. 43% of all mobile phone subscribers are using MMS, globally. The 2.9 Billion total MMS user base is more astonishingly 41% of all human beings alive! MMS is the most wide-reaching multimedia platform on the planet.
2.3 BILLION CONSUME NEWS ON MOBILE
Why was it that the Associated Press Managing Editors' Conference concluded about a year ago, that the future of news is not the internet, it is mobile? And why they say that while newspapers were unable to monetize the internet, they are able to do so on mobile? Because of the numbers. The total number of mobile phone subscribers who consume news on their phones is now 34%. Or yes, 2.3 Billion people almost one in three humans alive (remember, this is all humans, counting from babies to great-grandparents) yes, 32% of all humans alive now consume news on their mobiles. Newspapers now send tomorrow's headlines today via MMS and SMS as premium services to their readers. You don't have even to be literate to get news on mobile, voice based news services are very popular in many countries, serving multiple language groups, on premium voice channels as subscription services. And yes, to put it in context these are PAID news users, 2.3 Billion on mobile. Compare to total paid subscription TV services (all formats, entertainment, movies, music, news, etc) of about 1 Billion or total newspaper circulations worlwide of only 430 million. But 2.3 Billion pay to get news on their mobiles. No wonder the Associated Press says the future of news is mobile.
2.1 BILLION USE ANY KIND OF MOBILE BROWSER INCL WAP, 1.5 BILLION USE 'REAL' INTERNET
So then the big internet number? The world has 2.5 Billion internet users now at the end of 2012. And look at that number - 2.1 Billion access browser-based internet content on a mobile handset! Yes, that includes the crude basic WAP browsers, that still populate very low-cost and old hand-me-down second hand phones many use in Africa and India etc. But yes, out of all internet users today, 84% access internet content at least part of the time using a mobile phone (including WAP). And 2.1 Billion mobile internet users (when WAP is included) means 31% of all mobile subscribers.
And then lets address the purists, who think we should only consider HTML 'real internet' even as most familiar browser-based internet services like Google Search, Facebook etc are available also via WAP - but yes, lets do 'real internet' on mobile. How many? 1.5 Billion ie 60% of all internet users, and 22% of all mobile subscribers. Note that this is still well above the total count of smartphones and 3G and WiFi users, because many featurephones have full HTML browsers, and especially in many Emerging World countries, even where 3G is not available, a 2.5G based cellular internet connection, at considerable cost, is far cheaper than attempting an unreliable landline based 'fixed' internet connection, at huge costs and often severe service disruptions.
To put this in another way. We know 400 million internet users do not use a mobile phone, they are 'pure' legacy PC based internet users, or down to only 16% of all internet users (remember, this was 100% of internet users only 13 years ago). There are 1.6 Billion PCs of any kind (desktops, laptops, tablets) and by today, almost all of those are connected to the web (not quite, but we can round it off now to 100%). And about 200 million more who share their access on the PC ie using an internet cafe etc. So 1.8 Billion who use the PC at least some of the time or 72%. Thus 28% of worldwide internet users ie 700 million people never use a PC at all and only use a mobile to access the internet, and a massive 84% of all internet users use a mobile at least part of the time. That tells us that 1.4 Billion people - and 56% of internet users actively use both a mobile phone (includes smartphones and basic phones including WAP) and a PC (including tablet PCs like iPad in PC definition). Yes, more than half of us internet users today use both a PC and a mobile phone to access the web. And by nearly 2 to 1 margin, the exclusive users now favor mobile-only over PC-only users.
There is a good reason so many now talk of a post-PC era and the legacy internet and the end of the mass market internet etc. The balance of users has already shifted to mobile and the game is tilting ever more in that direction.
PREMIUM SMS HAS 1.9 BILLION USERS
Do you vote for TV shows like American Idol or Eurovision Song Contest? Well, we measure that too. The various forms of premium SMS services from paying for your Coca Cola to checking into your airline with your boarding pass to paying for public transport and parking, to yes, voting on TV shows, the premium SMS market has reached 1.9 Billion paying customers. Huge. This is yes, almost twice the number of paid television subscription services, satellite, cable and digital TV systems, combined. Its 28% of all mobile subscribers and by far the most popular service type among Premium SMS is voting for TV shows. Roughly one in every 12 dollars earned by the global television industry comes from TV votes; Finland became the first country where Premium SMS revenues earned by TV outpaced advertising revenues AND subscription TV revenues. Some television franchises like Pop Idol earn in excess of half a Billion dollars in annual revenues, bonus above their usual TV advertising income, just out of premium SMS televotes. This is why I call Mobile the Magical Money-Making Machine in my books.
SEVERAL IN THE 1.2 BILLION OR SO RANGE
Then we have several more categories that are in the above 1 Billion user level. Apps are downloaded now by 1.2 Billion people (this includes Java based apps on featurephones as well as more advanced apps on smartphones). Gamers playing downloaded or networked games (ignoring pre-installed games that came with the handset) now number 1.2 Billion globally. Yes, 2.4 times more people play games on their mobile handsets than the total installed base of all stand-alone gaming consoles, tabletop and pocketable, combined.
1.3 Billion of us use search already on our mobile phones. Thats 19% of all mobile subscribers for those who are counting. Social networking like Facebook, Twitter, Linked In etc are used by 1.1 Billion people on mobile phones, both Facebook and Twitter announced this year 2012, that their half-point has been passed where now the majoirty of their users come from mobile phones, not PCs. And last but not least, ringback tones! RBTs have now 1.0 Billion global users, led by China and India obviously but highly popular in Russia, Indonesia, Turkey etc and increasingly also in more advanced Industrialized Countries of Europe and North America. In Asia-Pacific they have been the rage for some time already. How big is that? 15% of all mobile subscribers are now paying a monthly fee to have custom ringback tones via their networks and the music industry loves this subscription service as it cannot be pirated...
THATS IT. THE BIG NUMBERS ONCE AGAIN
So thats the big picture. Here to summarize the main numbers as the end of 2012 globally:
GLOBAL MOBILE NUMBERS
Human population . . . . . . . . . 7.1 Billion
Mobile subscriptions . . . . . . . 6.7 Billion is 94% per capita
Unique Mobile Users . . . . . . . 4.3 Billion is 61% per capita
Handsets in use . . . . . . . . . . 5.3 Billion
Smartphones . . . . . . . . . . . . 1.3 Billion is 25% of all handsets
3G Connections . . . . . . . . . . 1.3 Billion is 19% of subscriptions and 25% of handsets
WiFi users on mobile . . . . . . 1.1 Billion is 16% of subscriptions and 21% of handsets
SMS active users . . . . . . . . . 5.6 Billion is 83% of subscriptions
Voice call users . . . . . . . . . . 5.4 Billion is 81% of subscriptions
Camera users . . . . . . . . . . . 4.8 Billion is 72% of subscriptions
Mobile Ad audience . . . . . . . . 4.0 Billion is 60% of subscriptions, is 56% of planet
MMS active users . . . . . . . . . 2.9 Billion is 43% of subscriptions and 60% of cameraphone users
News active users . . . . . . . . . 2.3 Billion is 34% of subscriptions
Browser (including WAP) . . . . 2.1 Billion is 31% of subscriptions and 84% of all internet users
Premium SMS . . . . . . . . . . . 1.9 Billion is 28% of subscriptions and 34% of all SMS users
HTML browser 'real internet' . . 1.5 Billion is 22% of subscriptions and 60% of all internet users
Search on mobile . . . . . . . . . 1.3 Billion is 19% of subscriptions and 62% of mobile browser users
Gamers (download/browse) . . 1.2 Billion is 18% of subscribers and 57% of mobile browser users
Apps downloaders . . . . . . . . . 1.2 Billion is 18% of subscribers
Social Networking . . . . . . . . . 1.1 Billion is 16% of subscribers and 53% of mobile browser users
Ringback tone subscribers . . . 1.0 Billion is 15% of subscribers
Source for all the above: TomiAhonen Almanac 2013
This data may be freely shared and quoted
Yes, the above is all excerpted from the upcoming 2013 edition of the statistical yearbook TomiAhonen Almanac 2013. You may freely quote this blog and use any data in it and re-write any parts of this blog to better suit your readers. Just use the source as TomiAhonen Almanac 2013 and please also link to this blog, ok?
And if you don't happen to have the Almanac yet, I have a year-end special for you. Anyone who buys the 2012 edition now, gets both the 2012 edition now, and the new 2013 edition for no extra charge when that is finished in late January/early February of 2013. There is no reason to wait for the new edition. Get both for the price of one and get all of the current edition data now. The TomiAhonen Almanac 2012 is a massive 190 page volume as ebook/mbook in unrestricted pdf file, formated for your small screens of your iPhones, Galaxies and Blackberries, to have all the mobile data at your fingerprints. See more here TomiAhonen Almanac 2012.
Posted by Tomi T Ahonen at 08:31 AM in 7th Mass Media, Advertising, Convergence, Digital Footprint, Ecosystem, Emerging World, Forecasts, Gaming, Google, Mobile Data & m-Web, Music, Newsmedia, Revenues, SMS, Social Networking, Statistics, Strategy, Television, UK, Unique Abilities, USA, Users / Subscribers, Virtual Worlds | Permalink | Comments (27) | TrackBack (0)
The Mobile Moment is Only Months Away - Preparing For the Biggest Number Ever - Yes That Day Is Near: When One Tech Passes Human Population In Size
The ultimate number in technology is upon us. Within months, literally, only months now, we will reach the point in time that there are more active mobile phone connections on the planet than human beings alive. Not 100% penetration 'by households' or 'by adults'. No. I mean 100% mobile penetration per capita. By humans alive. Counting literally everyone from babies to great grandparents.
This is totally, comprehensively unprecedented in the human history of technology. No tech ever, no tech, has even come close. Not television sets, not Playstations, not PCs, not Walkmans, not radios, not cars, not motorcycles, not even bicycles; not credit cards, not even bank accountsl; not books in print, not newspaper circulations; not the reach of electricity or landline telephones or even running water; not wristwatches, not toothbrushes, not even pens and pencils.. have been as widely used as mobile is today. And now comes the ultimate milestone. The first time ever, there will be a consumer technology that exceeds the whole human population by its size.
Source: TomiAhonen Consulting August 2012, TomiAhonen Mobile Forecast 2012-2015
This data may be freely shared, this image may be freely used
This is the big picture. This is the biggest story there ever was in any technology, ever. The most widely reaching technology ever - by a massive margin by now - and what is more, mobile is not just a telecommunication tool, it is also a digital, interactive mass media channel. It is also a payment channel. And it is the ultimate technology cannibal.
This is your primer to understanding the most radical, utterly disruptive technology there ever was, and what it is doing now, and where it is headed next. This is a long blog, so set yourself some time. But if you are in telecoms, or media, or advertising, or the financial industry, or in travel, or retail, or education, or healthcare, or well, almost any industry from farming to fishing to forestry to funerals - mobile will change your life. This is your guide to your digital future. Do grab a cup of coffee and follow me after the break here to an adventure into the electronic eldorado, the digital klondyke that we call mobile. We are about to pass the Mobile Moment. That point in time, where humans for the first time ever, found a consumer technology that had grown larger than the total human population itself.
Continue reading "The Mobile Moment is Only Months Away - Preparing For the Biggest Number Ever - Yes That Day Is Near: When One Tech Passes Human Population In Size" »
Posted by Tomi T Ahonen at 12:30 PM in 7th Mass Media, Advertising, Africa, Asia, Blackberry, Carriers / Operators, China, Computers, Convergence, Dumbphones, Emerging World, Europe, Finland, Gaming, Google, iPhone, Japan, Location-Based, m-Commerce, m-Govt m-Edu & m-Health, MMS, Mobile Data & m-Web, Mobile Money, Music, Newsmedia, Nokia, Quotations, Revenues, Scandinavia, Smartphone, SMS, Statistics, Strategy, Television, USA, Users / Subscribers, Virtual Worlds, Youth | Permalink | Comments (59) | TrackBack (0)
Massive Milestones in Mobile - Will These Numbers Change Your Mobile Strategy?
In less than 12 months from now, the world will have more mobile subscriptions in use, than humans alive. That is an unprecedented milestone for any technology but it is also widely expected and is not news to the readers of this blog. (The world had 7 Billion people and 5.9 Billion mobile phone subscriptions in use by the end of 2011, today we are past 6.2 Billion mobile subscriptions already). Yes, on this blog and in my books I have chronicled the rapid rise of mobile. But what else can we expect in mobile milestones over the next few years? As I have just released my Mobile Forecast 2012-2015, there are several interesting items in it that may be useful for our readers. Lets take the ten most amazing moments coming in mobile soon.
BY 2013 - VOICE CALLS DROP BELOW CAMERA USE
Last year 2011 was the first year ever, that voice calls were no longer the primary use of our mobile 'phones'. SMS text messaging, when measured by total number of users, has passed voice calls globally in mobile. Now, next year 2013, we will see the second use passing voice calls - it will be our cameraphone use. Lets learn not to call it a 'mobile phone' or a 'cellphone'. It is a mobile, a mobile device, but not a mobile phone. Voice calls will fall to third most used ability of our mobile gadget by next year. So yes, messaging is the primary use, and very shortly camera is the second use, voice calls fall to third.
BY 2013 - SMARTPHONES SELL 1B UNITS
Last year smartphones sold 486 million units globally. That was up massively in just one year, growing over 60% from year 2010 when the world saw 298 million smartphones sold. The growth curve continues. This year we will see the world buy more than 700 million smartphones. Next year, 2013, will be the first year that smartphone sales will pass 1 Billion units per year. That is a number only exceeded by the level of sales of basic mobile phones. No other consumer electronics has ever sold 1 Billion units per year, not TVs, not DVD players, not Walkman-style portable music players, not stand-alone digital cameras, not PCs, not tablets, nothing. In fact, none of those technlogoies ever sold even half a billion unit per year. Only mobile phones, and now from next year, 2013, also smartphones will sell over 1 Billion units per year. Wow.
BY 2013 - ONE THIRD OF PHONES HAVE WIFI
Another huge milestone, with massive impacts to the global mobile industry, is WiFi. The first WiFi enabled mobile phones came from Japan a decade ago, on NTT DoCoMo's network. Outside of Japan, Nokia was the first major handset maker to introduce WiFi on smartphones for the Western World in 2004 with the 9500 Communicator. Gradually WiFi connectivity was spreading, and when the iPhone offered WiFi, it was a big boost to this technology. But when will the world have a significant proportion with WiFi ability? That happens next year, 2013 becomes the first year when a third of all mobile phones in use worldwide will have WiFi connectivity. This will further threaten the traditional business models of carriers/operators with OTT (Over The Top) providers like Whatsapp, Skype, Blackberry Messenger, iMessage and Facebook taking voice and messaging traffic and shifting much of that to WiFi networks (and obviously cutting the revenue opportunity from cellular telecoms).
BY 2013 - MORE VOTE VIA SMS ON TV SHOWS, THAN TOTAL TV SETS IN USE
Another astonishing number we will see next year, is an amazing milestone related to television. TV voting such as American Idol, Eurovision etc, will keep on growing, that is not surprising. What is, is that we are now nearing the point where more people have voted on TV shows, than the total number of television sets in use globally. How is that possible? The voters are individual family members, each with his or her own phones. So a family with one or two TV sets may have four or five individuals voting on different TV shows from that family. At the end of this year the two numbers will be running neck to neck, but by 2013, more people will have voted on TV shows, than the total number of TV sets in use on the planet. What a big moment - and no doubt why the television industry is now so interested in mobile.
BY 2014 - TOTAL MOBILE HANDSET SALES PASS 2 BILLION PER YEAR
And then another monster milestone comes in year 2014. The only gadget ever to sell 1 Billion units is mobile. Now we have one variant of mobile phones, the smartphone also selling at that level from year 2013. But no other electronic gadget has even sold half that level! TV sets don't sell 500 million per year, neither do PCs, neither do DVD players or videogaming consoles or stand-alone digital cameras. But mobile phone handsets sell 1 Billion new units every year. From year 2014, they pass a new enormous level - two billion new handsets sold per year. Massive.
BY 2014 MORE ACTIVE USERS OF SMS THAN HUMANS ALIVE
The SMS growth is not ending. The world had 5 Billion active users of SMS text messaging by last year (more than total users of voice calls on mobile phones). Yes, heavy users are shifting their heavy use to OTT providers like iMessage, Blackberry Messenger, Whatsapp and Skype, but even most of the mobile users with OTT services, still use SMS some of the time. And the non-user base of SMS keeps growing. And those with two or three or more subscriptions, will also tend to use SMS on most of their subscriptions. So yes, from 2013 we will have more active mobile phone subscriptions on the planet than human beings of any age. And a year later, by 2014, there will be more global users of SMS text messaging than humans alive. That means, mostly, that it will be users with two or more accounts, often with two phones as well. Nonetheless, it is the first time ever, that any electronic or digital service has counted more users than total humans on the planet. Quite a milestone! Even more so when we consider 860 million people (12% of the planet) are too young to have gone to school to learn to read and write, and 800 million people (11% of the planet) are of reading age, but never went to school and are illiterate. Yes, SMS cannot continue to grow forever, and yes, it will be replaced by more user-friendly and less costly OTT services, but still, for the next few years, we will see enormous growth in SMS. And by 2014, there will be more active, paying users of SMS text messaging, than total humans alive on the planet.
BY 2014 - HALF OF INTERNET USERS NEVER USE PC BASED INTERNET
43 years ago the first four computers were connected to what was then called the ARPAnet what later became the internet. They were of course mainframe computers, intially connecting some university and research computers in California, in 1969. By 1988 the Internet had spread beyond the USA to seven other countries, Canada, Denmark, Finland, France, Iceland, Norway and Sweden. Soon it would also reach the UK, Hong Kong and Australia. But this was still a government and education focused internet, run on mainframe computers. It was possible to dial up to a mainframe computer with a personal computer at this time, using a modem and some emulator software, but most PCs that existed at this time did not find any use to connect to university mainframe computers, unless you were a college student or professor, obviously.
In 1989 Tim Berners-Lee invents the Worldwide Web and the internet was able to come to personal computers via our web browsers. We saw Mosaic and Netscape, give way to Internet Exploder, which now has been replaced as the most used web browser just last month, by Google's Chrome. The PC based internet rapidly took over and exceeded in users and traffic, the old legacy mainframe based internet. And yes, the Worldwide Web is only 23 years old. What happened next? While I was employed over at Nokia, I wrote the first White Paper on how to do the internet on mobile. And the first company to do that, commercially, was NTT DoCoMo in 1999. So the mobile internet is only 13 years old. How long did it take for Japan's mobile internet to pass the PC based legacy fixed internet? Not long. Just five years later, by year 2004, the total number of internet users in Japan who accessed the internet via mobile had exceeded the number of PC based internet users.
Since then we've seen internet use globally explode. In many cases the initial 'mobile internet' use for many of us was on a simplified version of HTML, called WAP. Many said WAP is crap, the pricing was nasty, the speeds low, the pages often very poorly designed and the experience on WAP was often far inferior to that on the traditional PC based legacy internet. Still, the mobile internet use kept growing. By 2006 we heard from global internet leaders like Google and Yahoo! that the future of the internet was mobile. There were from early on 'real internet' enabled premium smartphones like the Nokia Communciator series which did in addition to supporting WAP, also offering full HTML based 'real internet' functionality. Then when the iPhone came along in 2007, we saw the real breakthrough and the pocket internet really exploded. By 2008 40% of all internet users came from mobile, as reported by Adobe and IDC. By the end of 2009 we heard that the 50% level was passed, as reported by Nokia and IBM. So yes, today more than half of all people who access the internet, do so via mobile phones. Most of the popular internet services like Facebook and Twitter say so of their use. More significantly, of the biggest internet countries by users, the big Emerging World countries like China, India, Russia etc have the majority of their internet users accessing from mobile handsets, rather than traditional PCs.
But most who access the internet today, do so on both types of devices. Both on PCs and on mobiles. So we may briefly go to Google on our smartphone while at the store, to check on something, but then at home we can spend plenty of time on Facebook etc. Here is where we will see a monster milestone coming in year 2014. Yes, in about two years from now, most who access the internet, will never use a PC at all! So pure PC users, and those who use both PC and mobile, will be less than those who never use a PC, and only access the internet on a mobile. That moment is a massive change to the internet. No wonder Google says 'Mobile First'. Any internet website should be formated primarily for mobile access - by default - and the PC large-screen access as the secondary option (as it is for example in Japan today).
By 2014 - HALF OF NEW PHONES SOLD WILL HAVE TOUCH SCREENS
And another huge change in our computer inputs. The Macintosh changed the whole PC world in 1984 when it introduced the mouse as an input device, and suddenly even our moms and dads, even our grandparents could use a PC without going to computer classes. The Windows PC world of the past two decades has been built on that mouse-based control of our PC experiences.
The mobile phone, its internet and other functions, were attempting to mimick the PC world. The keypad was tiny, often only the 12 keys of the T9 keypad. Even with a QWERTY keyboard like on a Blackberry, the keys were tiny and squished. And then what of the mouse? Some handsets tried to do it with a stylus and an early touch screen. Others tried to do it with a tiny mouse on the smartphone like the Blackberry Bold. And others tried to control the movements on the screen via only four directions of movement ie [UP], [DOWN], [LEFT] and [RIGHT], like recent Nokia Communicators.
These were all suboptimal. The early touch screens were not a solution either. And it would need, as so often is the case, the brilliance of Apple to resolve this for us. Apple's iPhone touch screen innovations were two, to make the experience superior for common users. First, they used a capacitive screen rather than resistive screen, which allowed a more fluid, more 'human' type of effortless experience. And then there was the innovation of multitouch. Now we could do much more realistic movements on the screen. And today, just like the Macintosh changed all PCs two and a half decades ago, Apple again changed all mobile phones and increasingly new phones look like iPhone clones, with the large touch screens as their only input methods.
So when will half of all new phones sold be using touch screens? That moment is coming soon. A little over two years from now, the year 2014 will be the moment when more than half of all new phones sold will have either a pure touch screen, or a hybrid input with touch screen and some kind of keyboard as well, such as a slider or folder QWERTY input. Thank you Apple once again, for making our lives easier and simpler.
BY 2015 - HALF OF MOBILE SERVICE REVENUES COME FROM DATA
And we are witnessing the transformation of the mobile telecoms industry. In 1979 when NTT DoCoMo launched the world's first commercial cellular service in Tokyo Japan (four years before the famous Motorola handset was sold in Chicago where many still mistakenly think this industry was launched) the only service we had on mobile was voice calls. Even when 2G launched in Finland by my former employer, Elisa Corporation (and its mobile unit, Radiolinja), the only service offered on GSM was voice calls. But it was Finland in 1993 that launched the first commercial non-voice service as a data service - the humble SMS text message (incidentially, invented by Matti Makkonen of Telecom Finland, and one time mentor to me and Nokia consulting department that I later headed).
SMS text messaging as a mass market commercial service is only 19 years of age. Mobile data services are barely over half the age of voice calls on mobile, which are 33 years of age now. And we are approaching a big transition-point. In year 2015 we will see the point where more than half of mobile industry service revenues will no longer come from voice calls. SMS and MMS messaging will be a significant part of the data services, yes, but so too are all sorts of newer mobile data services from TV voting to mobile advertising to ringing tones to search, to various subscription services, smartphone apps etc.
BY 2015 - SMARTPHONES WILL ACCOUNT FOR 75% OF NEW PHONES SOLD
And the last big milestone I want to mention from the next few years, is year 2015, when smartphones will account for 3 out of every 4 handsets sold. Last year 2011, it was barely more than 1 out of 4 handsets sold. But the shift to smartphones is an inevitable trend and by 2015, yes three out of every four handsets sold will be a smartphone. In most of the Industrialized World countries we will not see 'dumbphones' for sale anymore, they will all be smartphones.
That is a little bit of a preview into this next few years in mobile. The growth opportunity in mobile is the biggest economic opportunity of our lifetimes. No wonder Apple Computer changed its name to Apple, calls itself a mobile company and now is the most profitable company on the planet. No wonder Google says 'put your best people on mobile'. No wonder Ford says that mobile will be part of every advertising campaign they do on any media platforms. No wonder the BBC says that all broadcast content, TV and radio, will be available on mobile. No wonder Visa says the future of money, the future of payments is mobile. No wonder Carlos Slim replaced Bill Gates as the wealthiest person on the planet. Bill Gates built his empire on the profitable PC software industry. Carlos Slim out of Mexico now runs his empire on the most profitable part of the tech industry, mobile telecoms with his America Movil empire stretching from Argentina across all of the Americas to the USA and now even across the Atlantic to the Netherlands. No matter what your career is involved in, this decade you will be doing more mobile than anything else.
This is the freebie version of selected highlight data points to celebrate my new report, the TomiAhonen Mobile Forecast 2012-2015 that I have just released. This blog had 10 data points. That forecast has 110 data points across 4 years, so it has in total 440 data points. If you are involved in strategic planning in mobile, if this blog was useful for you, that Forecast is probably a 'must-read' document. Obviously most of them are not as dramatic 'milestones' as these ten items in this blog, but consider the type of information it includes:
FROM TABLE OF CONTENTS: TOMIAHONEN MOBILE FORECAST 2012-2015
SIZE OF THE INDUSTRY
- Mobile subscriptions, unique subscribers, second and third subscriptions
- Handsets ('terminals') in use actual
- Mobile industry revenues including voice, messaging and VAS/non-messaging data
- Penetration rate per capita, as unique users, and among humans alive over age 10
- Regional subscribers (for each, Total, Unique and Multiple subs) for 8 regions - North America, West Europe, East Europe, Asia-Pacific Advanced, Asia Developing, Middle East, Africa, and Latin America
- Active base users: Clock and Alarm, Camera, SMS, Advertising, Voice calls, Web Surfing, Music, MMS, TV voting, News & Alerts, Search, Downloading
HANDSETS OVERALL
- New handset sales in units, smartphones in units, migration rate
- Smartphones in use & migration rate
- Installed base of handsets by ability: MMS capability, Bluetooth, Media player, Camera, Memory card slot, HTML browser, 3G, Java/Brew, WiFi, used handsets (second hand handsets), touch screen
- Average camera resulution
- Input method Touch Screen, QWERTY, hybrid and basic
HANDSET MARKET SHARES
- Market shares of new sales: All handsets, dumbphones, smartphones
- Smartphone OS Forecast Base Case and 5 scenarios (Samsung, Apple, Blackberry, Microsoft, and Nokia cases)
- Regional OS market shares for 8 regions - North America, West Europe, East Europe, Asia-Pacific Advanced, Asia Developing, Middle East, Africa, and Latin America
MOBILE DATA SERVICES
- SMS users, traffic, revenues
- OTT Cannibalization of messaging
- MMS users, revenues
- Mobile VAS (non-messaging premium data) users, revenues
- Mobile users of internet, PC users of internet, Mobile-only users, PC-only users, Both Mobile & PC users of internet
- Mobile service revenues for TV & video, mobile social networking, news & alerts, music, advertising
- Consumer app revenues, business app revenues
- Consumer & enterprise/business subscriptions
- Consumer & enterprise/business smartphones
- Prepaid vs Postpaid customers
This is the best one-source resource for you as a guide into the future. It only costs 99.00 Euros and is available immediately as an ebook download. It is formated for the small screen, so you can carry the TomiAhonen Mobile Forecast 2012-2015 in your pocket, on your iPhone or Blackberry or Android device. It is in basic PDF format so you can also read it on your other digital devices like your PC, laptop and iPad.
If you are involved in any way in the planning and future of mobile, you need this Forecast. Note it costs a tiny fraction of most other forecasts that often sell for thousands of dollars. But you can trust this, as I have been called the most accurate forecaster of the mobile industry, and I am the father of more theories about this industry than any other expert. My 12 published books are already referenced in more than 120 books by my peers, and Forbes just measured me as the most influential expert in mobile. My forecasts are regularly quoted in various global media like the Wall Street Journal, Financial Times, Business Week, the Economist etc, as well as over 300 press mentions in two dozen languages, and I am often seen on TV talking about mobile industry numbers.
To see more including full table of contents, please see TomiAhonen Mobile Forecast 2012-2015.
Posted by Tomi T Ahonen at 05:22 AM in Advertising, Africa, Android, App Stores, Asia, Blackberry, Business Users, Carriers / Operators, China, Computers, Convergence, Dumbphones, Ecosystem, Emerging World, Europe, Forecasts, Google, India, iPhone, m-Commerce, Market Share, Microsoft, MMS, Mobile Data & m-Web, Music, Newsmedia, Nokia, Samsung, Smartphone, SMS, Social Networking, Statistics, Strategy, Television, USA, Users / Subscribers | Permalink | Comments (14) | TrackBack (0)
My TEDx Talk about Augmented Reality AR being the 8th Mass Media Channel - Updated with Link to Video
I just delivered a presentation at the first ever TEDx Mongkok event here in Hongkong's hectic Mongkok region. The theme of the event was 'Chaos' and we had a great lineup of speakers around that topic.
TEDX MONGKOK CHAOS
Just to show how chaotic it was as an event, it wasn't even held in Mongkok but in nearby Tsim Sha Tsui. Perhaps the most memorable element of the chaos was the presentation by Dr Kay Ottik, of University of Leningrad in Russia, on Organizational Dynamics Embrace Chaos. Her lecture was interrupted by a heckler, a fellow Russian expert who accused Dr Ottik of plagiarism of a third Russian expert on the topic, and Dr Ottik handled the hecling by pointing out that because the heckler follows her around the world, he must be in love with her. She had the whole audience read outloud some obscure reserch paper synopsis, and then her presentation itself was interrupted by spontaneous dancing from the audience by dozens of dancers.
It was a hoax, a fake presentation! A fantastic way to help give a break to the event in the afternoon session after lunch. Professor Kay Ottik doesn't exist (I found a total of 6 Google entries for that name, and supposedly this University of Leningrad professor has had broad exposure to the industry). The University of Leningrad explicitly doesn't exist as such, and has never existed, but there was a "Communist University of Leningrad". The city of Leningrad of the Soviet Union has years ago changed its name back to the original St Petersburg and yes, there is of course a St Petersburg University. But yes, absolutely great fake presentation and she was that good, she even had me totally fooled, her slides and talk seemed very topical and relevant, etc. She was in reality Australian/Hong Kong improvisational actress Kay Ross whose day job is around marketing. What a fantastic performance! Truly fantastic and what an unbelievable way to help bring chaos to our event at TEDx Mongkok Chaos. I will post a link to the full presentation when it is up. Congratulations Kay and the full improv team. Bravo!
I also want to mention the most astonishing presentation by any teenagers I have ever seen. TEDx Mongkok invited youth contributions by 16 year olds from Hong Kong schools, to join in a short 4 minute session. Over 50 submissions were made and only one was the winner, and it was incredible. Two 16 year old boys, Andrew McBain and Vincent Wang did a suberb 'performance' more even than a speech (with choreography etc) about education for a modern age, entitled 'Us bad educate; are problem'. You HAVE to see it and bear in mind, these are not professional stage performers with a decade of experience, they are teenager boys. I will post the link here as soon as I get it.
So yes, it was my honor to be part of the first ever TEDx by the TEDx Mongkok team. Thank you so much, Now, what was my presentation? Well, being the most-published author in mobile with 12 books already on that topic, and doing my first TED related event, naturally my topic was... not mobile. Isn't that chaos as well? It was the first full presentation I have ever given on the topic of the 8th mass medium - Augmented Reality (AR). Yes, I have of course included AR in my presentations for many years now, but always only a side story, perhaps a couple of slides at best. Today was the first full presentation I did just focused on AR. I will of course post the video as soon as TEDx get it up, but here is a blog version of what I think of AR as the 8th mass medium, roughly in line with the presentation, and adding some links, stats, and some more examples.
I'd also like to credit the source of my opening joke. I told a variation of the joke I believe was first told on Twitter by George Bray Twittering as @georgebray, a 20 year videogaming industry veteran, whose hilarious Tweet more than a year ago was: "Your mobile phone has more computing power than all of NASA in 1969. NASA launched a man to the moon. We launch a bird into pigs." I expanded that a bit and brought some personal angles to it, but the root of my opening joke is this tweet from 22 March 2011. When we have the full video, you'll see my version.
THE 8TH MASS MEDIA CHANNEL
So, lets start with the real content of the TEDx Talk. I was the person first arguing in any book that mobile was a unique mass medium and was not just a copy of the internet; that a mobile phone was more than just a pocket computer. That was ten years ago. I then kept exploring early data services, apps and content on mobile from messaging to music to gaming to news to advertising to payments to telematics to mGovernment and mLearning and mHealtcare etc. Along the way the media part kept growing, so I released a book in 2008 purely about how media content thrives (and makes money, and differs from the internet and legacy media) on mobile. News, games, music, internet, search, social media, advertising etc. Mobile as the 7th of the Mass Media was a global betseller and many say it is still my best book today, and that it is very valid today, with totally relevant modern topical case studies, theories and lessons. In the book I explained the 7 Mass Media taxonomy which is familiar to regular readers of this blog obviously, as:
1st mass media: Print (500 years old) including books, pamphlets, newspapers, magazines, billboards etc
2nd mass media: Recordings (from 1890s) such as music records, videogames, videotapes and DVDs etc
3rd mass media: Cinema (from 1910s)
4th mass media: Radio (from 1920s)
5th mass media: Television (from 1950s)
6th mass media: Internet (from 1991)
7th mass media: Mobile (from 1998)
(and now 8th mass media (from 2009))
The 7 Mass Media taxonomy has been very useful in exploring the differences and similarities in the media space. So for example cinema and television were both 'multimedia' moving pictures media. Many thought TV would kill cinema, it didn't. All current cinema content is also repurposed for television. But some early cinema content died after TV came along. Cinema used to have for example 'newsreels' ie the video news of the world, before we had nightly TV news at home. So in the 1930s and 1940s it was quite common to go to the movies to see the news shown before the main feature. These newsreels carried video coverage of major news events like the Olympics, or the Hindenburg zeppelin disaster, and of course the second world war.
Similarly we can see that radio and recordings were such a similar area, where both offered music for example, both were sound-based mass media and again, when radio was introduced, many thought it would kill the recordings industry. Or we can see that while they offer very different content, television and radio are 'cousins' in mass media, both being 'broadcast' media so their distribution method and to a large degree also their revenue model is the same, very distinct from say print and cinema.. and so forth.
Now I explained why AR is not just a media content format for mobile, the 7th mass medium, it is its own full mass media channel, with multiple delivery platforms beyond just mobile phones, and that it has emerged now, in 2012, as a legitimate 'mass' medium, with legitimate 'mass media' size audiences in many countries, not just a niche tech nerdy digital toy.. And obviously, I didn't invent AR, nor was I the first to argue that AR should be considered the 8th mass medium. That was Raimo van der Klein of MoMo Amsterdam who is now the CEO of Layar of the Netherlands. So of course I credited Raimo for discovering the 8th mass medium.
Raimo kindly wrote the foreword to my 10th book, The Insider's Guide to Mobile - which has one chapter about Augmented Reality. This is the free book, we made as a gift to my readers, after they had so kindly made me a 9-time bestselling author in the previous ten years. You can download the 350 page free eBook that is an unrestriced pdf file. Pick up yours at Lulu.com Tomi Ahonen book Insider's Guide to Mobile and please forward it to your friends if you like it.
EARLY AUGMENTED REALITY
So lets see what AR was like. The technology came from the military, jet fighter pilots have AR based helmets and goggles where a fighter pilot will see 'circles' around the different fighter planes in the sky, as they fly in 3D space at Mach 2 speeds whirling around each other and firing long-range missiles at each other. You don't want to accidentially shoot down a plane from your own side, not when fighter planes cost 30 million dollars a piece and your air force might only have 50 fighter planes in total haha.. So the technology had evolved to identify enemy planes and mark them with red circles in the helmet, and your friendly forces with blue circles, so you always see who is on your side and who is the enemy. Very valuable tech useful in modern war.
Now, the technology emerged onto the civilian side in 2009. The first campaign of AR use in advertising was a Ford campaign from Europe to promote a new Ford Ka automobile. The AR campaign was mostly a gimmick, only few phones were capable of being used for this, required several steps by the consumers, but yes, you could go to an empty street, where a virtual Ford Ka was 'parked' and this invisible car would become visible through only your mobile phone screen. Cool, but perhaps nerdy campaign. But it was the start.
The first big step towards AR moving to a valid mass market platform came with the launch of Layar in the Netherlands, the world's first AR Browser. Yes we have web browsers like Google Chrome (congratulations by the way, we have just heard this week that Chrome has passed Internet Exploder as the most used web browser in the world) and Firefox etc. Now we have the world's first browser to explore AR and yes, its called Layar. Layar launched in 2009.
In my talk I showed a short clip from the original 2009 video from Layar. If you the reader of this blog do not know what is AR, please take the two minutes to see this video, this is a perfect simple guide to show you what is basic AR, what was already possible in 2009 in Amsterdam Netherlands, on Android smartphones. How AR might help a tourist in Amsterdam navigate maps, find a cash machine/ATM, find an apartment for sale, find a restaurant or bar, etc. Please see the video and then lets look at where AR has evolved since.
Link to original Layar 2009 video about basic AR services already launched in Amsterdam
Ok. What else did we see coming? The platform Layar created enabled thousands of 'layers' to be created superimposed over reality. We can do yes, the 'radar' to find things in the city as we walk around lost or as tourists, but there is so much more, we can now do.
SOME AR EXAMPLES ON SMARTPHONES TODAY
The smartphone platforms soon evolved to enable AR on other smartphones beyond just Androids. And with the Layar platform ever more clever ideas emerged. Plus there are AR solutions that also are made independently as smartphone apps. Some of my favorites include:
The Lynx campaign (AXE) deodorant from the UK. This is an actual magazine ad. Lynx/AXE is a youth deodorant targeting teenager boys. So they will of course be very interested in seeing the sexy girl. But the print magazine has only the white spots and you can't see the full girl. Take out your smartphone and see the sexy girl in full. The ad is made interactive, this is cool, sexy, and helps drive Lynx/AXE sales.
Then lets go to something less frivolous and more practical. Another very early AR solution was from Idea in Germany, where they provided the AR based 'furniture virtual trial' for your home. Take items from the Ikea catalog and have the sofa or table or bookcase image on your cameraphone, then move your cameraphone to point at the place in your room, to position the sofa to see if it fits, do you like the colors, does it fit with your other furnishings like your curtains, carpets etc. I have created a mock-up of what this would look like:
Note, in the above picture, the background is the real home with no sofa, the cameraphone view has the Ikea sofa that you can then position to your room, to do a virtual trial, before buying the actual sofa and having it delivered to your home.
MAGICAL BINOCULARS
I have been often talking about some of the AR innovations as a kind of magical binoculars. You know, regular binoculars make the view bigger, when you look for some birds or boats or airplanes far away. AR can be like a magical binoculars, not making things bigger, but showing something that doesn't exist anymore, or hasn't been built yet, or showing action where there is none etc.
So yes, we have for example the Berlin Wall AR version. You can travel to Berlin today, and the Berlin Wall doesn't exist anymore. But you can walk along the path where the Berlin Wall used to stand, and see it through an AR solution. Better even than the original wall, we can now go to both sides of the wall and see it from either side. What did the Berlin Wall look like to communist East Germany side, where they saw just the rooftops of West Berlin (and the barbed wire and machine guns etc that were used to shoot Germans who tried to climb the wall to escape East Germany to the West). And you can walk to the West German side, and see the graffiti etc that was on the wall from the West Germany view.
There are many other such uses, for example the World Trade Center twin towers of Manhattan of course don't exist anymore but they have been recreated as an AR version. You can take a picture of yourself with the World Trade Center towers even as they don't exist anymore.
Its not just stationary things and still items like a building. There are historical battlefields of the USA Civil War, that have been animated based on real actors who perform the re-enactments of the major battles. Some of those are now available as AR views. So imagine going to Gettysburg and standing on the actual battlefield as the Confederate soliders in grey uniforms get ready to fight with the Union troops in blue uniforms. You can stand on the open peaceful historical field, and looking through the smartphone, you can see the two armies as they do battle. Its like stepping into the middle of a movie as it is happening..
And this keeps evolving. We just learned earlier in May, that british TV personality James May of Top Gear has gone to some UK museums, and now offers the James May tour of the museum, as an AR tour guide. You have James May walking with you in the museum and he tells you his version of what he thinks is of interest in the museum's exhibits. We had dynosaurs just attacking London a few weeks ago, celebrating the 100 year anniversary of Universal. Life size Tyrannosaurus Rex dinosaurs were rampaging all across Oxford street, only visible via smartphone AR views. There are all sorts of AR games and solutions and fun. Magical views to reality. Seeing the past, seeing the future, seeing what never even existed (dynosaurs never walked in London)
COMBINING VR AND AR
So then the really exciting parts come from digital convergence of course. What if we add virtual reality (VR) to augmented reality. We see this for example in the Japanese invention of the iButterfly. The iButterfly has since flown also here to Hong Kong and to Germany etc. The iButterfly is a large virtual reality 'game' covering huge area such as a city, even a country. In it there are, like in the real world, lots of butterflies. The iButterflies are regionally specific so in different parts of town, you'll have different colors. And to hunt them for your collection - you need a smartphone with the iButterfly AR app. Every time you capture one of the iButterflies, you get a coupon, such as here in Hong Kong to Pacific Coffee. Sounds like a gimmick? Not so fast. Here in Hong Kong we've had 300,000 users download the app and they've caught 10 million iButterflies in less than a year. How relevant is that? We have 7 million people in Hong Kong, so 4% of the total Hong Kong population has already used iButterfly - in just a year. And not all have smartphones. Across Hong Kong smartphone users its 7%. That is getting to be very serious mass market size, for a brand new mass media. To put it in context, globally only 6% of us buy a daily newspaper!
And then lets go back to Japan. What is happening in the AR and VR space there? Japan's latest craze is 'Balloon Fishing'. How can I explain it? Imagine a game of fishing, where they create a virtual lake that covers all of Japan. But you can't fish just anywhere. For you to be able to fish, you have to have an Augmented Reality 'portal' to access the virtual lake. Now your smartphone is not enough, you also need liquid. So you have to find some real world liquid, like in a cup of tea, or a bowl of soup, or a glass of water. Now you can start fishing. This is bizarre, whimsical, fun and addictive. I really can't do it justice, please go take a look at the video of Balloon Fishing.
The area of AR is vastly expanding and ripe with innovation. We have AR in shopping, such as the Adidas T-shirt tester. We have AR in boating, as a low-cost 'virtual radar' to see where the other boats and ships are for example if there is a fog and you can't see - you don't want to have an accident with your boat and AR can help you see what other ships and boats are out there - and more importantly, in what direction they are moving. AR can help animate window displays in stores and magazines and catalogs in print. This is truly a magical creative opportunity and I could write about new AR ideas literally every day. But is it for real or is it only a tech nerdy geek thing?
GLOBAL SIZE
So we go back to Layar. They just spoke at the big event in Amstedam where I gave a keynote two weeks ago. Layar reported that they have now been installed on 19 million phones and their active user base has passed 3 million people. If we say (this is my conjecture purely) that half of those are in the Netherlands, as Layar is a Dutch company and most of their active layers are in that country - that would be 1.5 million people. What is the population of the Netherlands? 16.6 million people. So if 1.5 million already use Layar, that is 9% of the Dutch population. Ten percent is roughly where the 'early adopter' market limit is seen and we 'cross the chasm' to go mass market. Across smartphone owners in the Netherlands its already 16% !!! So soon as the smartphone penetration approaches all phones in a few years, certainly the Layar user base in the Netherlands will pass one in six Dutch people. How big is that? Thats the scale of total personal computer penetration rate globally!!!! If you think the PC based internet is a 'real' mass market media haha, Google, YouTube, Facebook and all that - within Dutch smartphone users, the adoption rate is roughly the same, as global PC penetration rate. And this, in barely over two years from launch.
So I do want to point out, Layar has evolved a lot since 2009. They now are for example digitizing and adding AR to print magazines - thousands of Dutch print magazine pages have been turned interactive with Layar's solutions already (and they started this service only earlier this year). I got a copy of a special edition of the Dutch home decorations magazine vtwonen. They have just released a 'magalogue' - which combined a magazine with a catalog. So its a full printed magazine about home decoration which is also a catalog and on every page you have digital animations, AR links, more info, videos, pictures, different colors, info about the product such as what materials it is made of, etc; and yes, being a catalog, you can make instant purchases right as you sit at home and decide you like that lamp... Again, like so much in AR, this is difficult to explain well in writing, please go see the video of vtwonen and their Magalogue.
But yes. We have 4% of the people here in Hong Kong using AR in one year. We have 9% of the total Dutch population using AR in two years from launch. What does this mean for the industry? I compared the launch of AR (8th) mass media to the launch of mobile (7th) mass media and did a comparison. I estimate that very conservatively, globally at the end of 2011, there were 5 million AR users globally, in very round numbers. In reality it is more than 5 million but certainly not yet 10 million. But what is that in comparison to mobile? Mobile mass media launched in 1998 with the first downloadable ringing tone (from Finland). Mobile then saw the mobile internet launched in Japan in 1999. The first 5 million mobile media audience was achieved in two years.
I projected the same growth path of (7th mass media) mobile media to (8th mass media) AR media, and the pattern suggests will will pass 1 billion AR users by year 2020 !!! Yes, before this decade is done, we will see 1 billion users of AR. That is yes, folks, twice as big as global newspaper circulations are today. That is massive. Don't miss this opportunity! AR is a new mass medium and it will be huge in this decade.
Well, then in the second part of the TEDx Mongkok Chaos talk, I showed a few short simulations of what AR might be like here in Hong Kong. I went to Mongkok over the weekend, shot some videos, and created simple simulations to show what kind of tech I foresee as early AR media solutions. I think those are best seen from the video, so while we wait for the TEDx video to be uploaded, let me just summarize on a few videos for now, to add some other views.
The biggest company in this space is Layar, obviously. I urge you to go see their latest video, where execs like Maarten Lens-Fitzgerald, Claire Boonstra and Raimo van der Klein give their views of AR today and into the future, with illustrations of the power of AR today. So please see this, Layar's current video showing the power of AR and how Layar sees the AR future. Its must-see stuff.
And then to the future. What is someone like say.. Google thinking of AR? We just had the first major view by Google of AR and they have given their vision of AR beyond the smartphone, when AR moves to our eyeglasses. This is sci-fi stuff, that will become reality well before this decade is done. If you want to understand how different the second half of this decade is, from today, please go see this video about Google Glass (ie 'Google Goggles'). This is visionary stuff, yet the tech is within some years from commercial launch - we will have this on our faces well before the decade is done. See Google Glass.
Ok, that was what I spoke about at TEDx Mongkok Chaos. Now, if you want to see my short videos of the near future of AR, you have to see the video itself. See my video of TEDx Mongkok Chaos about Augmented Reality as the 8th Mass Media.
Posted by Tomi T Ahonen at 09:55 PM in 7th Mass Media, 8th Mass Media, Android, Augmented Reality, Convergence, Engagement marketing, Europe, Gaming, Google, Japan, Location-Based, m-Commerce, Mobile Data & m-Web, Music, Newsmedia, Retail & Commerce, Smartphone, Speaking Events, Statistics, Strategy, Unique Abilities, Users / Subscribers, Virtual Worlds | Permalink | Comments (25) | TrackBack (0)
The Virtual Tupac via 2D/3D holographic projection, the dead rapper returns
This is so amazing. While this is the quarterly reporting season and thus there are many stories here on the Communities Dominate blog about smartphones, there is life in the world beyond smartphones too. And this is a truly amazing story. Plus its about a rapper and me being one of the world's oldest white dude European fans of rap music haha - of course I have to celebrate the return of Tupac.
Tupac Shakur was a chart-topping rapper who was killed very early in his career. There are some recordings of his performances and some music videos etc. But now, a company called AV Concepts has worked with the record label and helped create a virtual avatar version of Tupac. So this is not using his films and videos to create something out of past recordings like they did for example with Michael Jackson's death. No, this is an actual human-sized and very realistic robotic avatar, created with programming not just to look like Tupac but to move like him with his mannerisms etc, and of course to sound like him. And that virtual Tupac just made his stage debut in California with Dr Dre and Snoop Doggy Dog.
Now, this is not a real holograph like say the Princess Leia character in Star Wars. This is using a magician's stage trick with a projection on a glass pane, but to the audience he looks perfectly real and the two other rappers were able to choreograph their moves and rhymes to work with Virtual Tupac. It is the modern digital virtual electronic version of a animatronic puppet like you might see in Disneyland but this is far more realistic, and it being only software, they can easily make this new Virtual Tupac to change his dance moves, sing different lyrics, say hello to the audience etc. It is VERY cool technology. Take a look at the AV Concepts site for a video. And here is MTV news covering the story.
Posted by Tomi T Ahonen at 11:29 AM in 8th Mass Media, Augmented Reality, Convergence, Gaming, Generation C, Music, Television, USA, Virtual Worlds, Youth | Permalink | Comments (9) | TrackBack (0)
Disappointed Buyer = Returned Lumia = Salespeople Avoid = Growing Nokia Retail Problem
When Stephen Elop announced Nokia's Microsoft Strategy on February 11, 2011, I said immediately that this was great for Microsoft and a disaster for Nokia. I wrote a series of blog articles examining the early prospects. I concluded that the Microsoft smartphone strategy for Nokia was a huge gamble - it would hurt Nokia intensely in the short run - and that it was very likely to fail in the long run - but I did write that it was possible Nokia could succeed with this option. I did not say it cannot succeed, only that I felt it unlikely to succeed.
UPDATE (March 21) has more stunning info, see at end of story
During 2011 I monitored the developments at Nokia's new Lumia project and the parallel developments of Windows Phone over at Microsoft to try to evaluate the prospects for Nokia's Microsoft-based smartphones. I said it many times that Nokia had only one chance to make it all work, the launch of Lumia had to be executed perfectly. Because Nokia was bleeding market share, this was a one-shot chance to turn the gamble into a success. This is in US professional football analogies, the 'Hail Mary Pass' - you are at the end of the game, and only a touch-down can win you the game, and on the last play, your quarterback sends all receivers to the goal line, and you throw the long pass, and say your 'Hail Mary' prayers...
IRON GRIP OF RETAIL CHANNEL
How is Elop's Hail Mary doing? I have written many articles on this blog to explain the retail side of the mobile handset business. The mobile phone business is totally different from other high tech and consumer industries, like TVs, PCs, videogaming consoles, DVD players, digital cameras, MP3 players etc - where in those industries if you make a good product and sell it at a competitive price, you tend to have market performance commensurate with the 'merits' of your device and its price. That is not true in mobile phones. In this industry, the success of any handset brand is primarily controlled by the carriers/operators of the world. Look at the iPhone. Early on it sold only on one network in many markets such as AT&T in the USA, O2 in Britain, Softbank in Japan etc. When the iPhone expanded to more carriers, it achieved far bigger sales. And look at the Microsoft Kin youth phones. Even as these were highly praised and were expected big sellers, the sudden collapse of carrier support resulted in the phones being discontinued - in only six weeks. This even though Microsoft is the global IT giant who has thousands of resellers to its brand. When the carriers refused the Kin, no matter how 'great' Microsoft was, the handset was doomed.
In mobile phones, the success of any single phone is most determined by the support of the carriers/operators and their stores. In mobile phones, different from any other major home electronics or consumer high tech, there is a gatekeeper that decides who wins and who loses. It is the reseller channel, mostly controlled by the carriers/operators.
SO A CUSTOMER WALKS INTO A STORE
Lets take a random customer to a mobile phone store. Lets go to Nokia's traditional strongest market, Europe. The average replacement cycle for all mobile phones is about 18 months. So right now, in March of 2012, the typical customer walking into a phone store wanting a new phone, bought his or her current phone in about August, September or October of 2010. IDC told us in the summer of 2010 that Nokia was the bestselling mobile phone brand with 33% (Samsung was second). IDC also told us, that Nokia's European market share specifically for smartphones was even better than that, at 40% (Apple was second). Europe is no longer a growing unique users in its mobile phone market (ahead of the USA which still adds unique users), Europe has been past 100% penetration rate per capita for many years now, so these are not first-time buyers except when parents come in to buy a first phone for a child perhaps. (Europe still keeps growing total subscribers, but those sales are now second or third accounts and phones to people who already have one).
Lets start with those iPhone users. You know there is no going back. Apple has by far the best loyalty of any smartphone brand, so almost any iPhone owner will not even give the Lumia a second look in the store. They want the latest iPhone. What of Nokia? Remember, one third of Europeans who bought a new phone in 2010, have a Nokia brand. We have a survey of 1,780 mobile phone owners in 2010 from Britain by Right Mobile Phone, reported in The Telegraph, which found that the average loyalty for any phone brand in Britain was 32% but for Nokia it was over 50% (Nokia's loyalty was the highest in the survey). These customers have never heard of any 'Burning Platforms' or what Nokia CEO Stephen Elop has said about the Nokia handsets. They bought a Nokia in 2010, have probably bought Nokia phones for most of the past decade, and now walk into a phone store asking to buy a new Nokia. What happens?
What happens? The customer is at the mercy of the sales guy. I have seen internal surveys from several countries, that the sales guy's personal sales effort can change the mind of the customer - when they already had a preference - in more than 50% of the time. If you walk in asking for a random mobile phone brand, a Motorola or LG or HTC, in half of those cases, if the sales guy wants to sell you something different, they can do it. Obviously the sales guys have incentives to drive them to push certain phones over others - such as phones on promotion with the carrier/operator, phones that support certain services that the carrier/operator offers, etc. This all makes sense.
INSIDE THE MIND OF THE SALES GUY
The random European consumer didn't know anything about who or what is a Stephenelop, or what or when were there any Burning Platforms. One in three European buyers today walks in with a Nokia branded phone, and they tended to be satisfied with their purchase in the past, and they now want to replace that phone. So they ask to see what new is in Nokia phones. If the sales guy wants to make an 'easy' sale, pushing a new Nokia (Lumia) phone at this customer is the fastest way to make a sale. The 'default' setting in the mind of the salesguy is to sell what the customer asked for, as long as the store has it in stock, etc.
What would have to happen that the sales rep takes the extra effort to push another brand phone? Something has to have happened. This goes against all the training and experience of the sales guy. The customer asks for brand X, if you have it in stock, of course you offer the customer branx X, maybe then suggesting some alternatives too for consideration. What would have to happen to change this equation? Maybe the store manager has seen they have a big load of some brand of phone from last week's special promotion that wasn't all sold, and the store manager has added a sales bonus to push selling those phones out. Or one of the handset makers may have some special sales campaign (sales contests are often popular, take some of the best sales reps to an international travel trip as a reward, for example). But what if there is a 'toxic' phone? What if there is a mobile phone with exceptional return rates? That is a phone model that any sane salesguy will immediately try to avoid selling. Why?
RETURNS ARE HATED
A customer wanting to return a phone is triple the work for no more money. If the salesguy sells a new phone to a customer, and the customer has regrets, and returns that phone within the legal period for returns, the salesguy has to accept the phone back without questions, with a box that is opened, inventory that all accessories are there too like the battery recharger etc, process the return paperwork for the store, which will automatically deduct his earned sales commission, now removed from his paycheck. Then the sales guy has to sell another phone to this same customer, to get a second commission, which will end up being essentially the same as the original commission (as the customer will have typically a budget, so they will replace the returned phone with something of roughly same price range). In the worst case, the salesguy has to throw in some extras just to keep the customer happy, which comes out of his commission. Three times the work, for no more money. That is a textbook example of a "fool's errand". The moment this pattern emerges for some phone model, the sales staff will desert that phone and its sales in that market is doomed. Sales people talk to each other, and this type of pattern is very easy to spot early, when you work in a phone store. You go to the back room and see other return boxes and frustrated salesguys with the same problem - with the same phone model.
Trust me, I have been in sales for most of my life. Later in my career in telecoms, I was in sales management specifically with mobile telecoms sales and trained and motivated in-store sales staff for many years, and was quite successful at it too - under my leadership we set a world record for taking markets share from the incumbent in Finland in the 1990s when I worked for Elisa Group (Helsinki Telephone, Radiolinja etc) and Finnet. My third book is much about all this, how you win in the wars, and that is often getting to the soul of the sales guys and gals in the stores and the calling centers. Incidentially that third book, 3G Marketing, was the fastest-selling telecoms book of all time, already translated and in multiple printings, so its not like my theories are something weird and wild.
Back to Lumia. I said last year that Nokia had one chance to make this work. I warned that some early signs were troubling. But now we have the Lumia handsets in the wild and now it really is in the hands of the retail channel. They are now deciding is Nokia Lumia going to succeed in the market or not. And that comes back to those pesky returns.
BUILT TO DISAPPOINT
The Lumia series is no iPhone-killer, not by a long-shot. It looks nice, in particular the Lumia 800 and Lumia 900 - as their look was copied from the highly desirable genuine flagship phone the Nokia N9 running MeeGo, from last year. But even in the store, any current iPhone owner will almost immediately turn away from the Lumia and stick to the iPhone. Same with Blackberry owners. Bizarrely as we have already seen four Lumia models, and Nokia has traditionally been very strong in QWERTY based phones - the Lumia series even after four models has not offered even one QWERTY variant. So anyone who loves their QWERTY keyboards (I am obviously talking of consumers who send 100 mobile messages per day or more. I am not talking of enterprise/corporate buyers who don't go to consumer stores to buy any phone, they are limited to what phones their employer will offer) like Blackberry owners will not even consider the Lumia as a Blackberry replacement.
But existing Nokia owners then? The current Lumia 800 is a disaster as a pretend-flagship smartphone. It is a severe downgrade of past Nokia flagship phones like the N95, the E90 Communicator, the N86, the N900 the N8, the E7 and the N9. Take the N8, which started selling almost 18 months ago. Compared to 2010 flagship N8, the Lumia 800 sees a downgrade in its primary camera from 12 megapixels to 8. It doesn't record full HD video like the N8 did. There is no second forward-facing camera. The flash is not Xenon 'real flash' like on the N8, now the flash is only the lame LED flash. There is no facility to read microSD cards. There is no TV out. There is no HDMI out. There is no FM transmitter. And on and on and on and on. For any existing Nokia owner, the Lumia 800 is a severe disappointment.
That all is obvious already in the store. But note, many of the problems with the Lumia 800 are not obvious in the store! The messaging function on the Windows Phone OS is horrid. Nokia has traditionally had the best messaging abilities of any brand this side of a Blackberry. Always. And thus many heavy-messaging mobile users prefer the Nokia brand. It is why most Nokia flagship phones have either had a full QWERTY keyboard like the E90 Communicator and the N900, or if the flagship was a pure touch-screen form factor smartphone like the N8 (on Symbian) or N9 (on MeeGo), there has been a sister phone of nearly identical specs with a slider-QWERTY like the E7 (on Symbian) and N950 (on MeeGo).
But Microsoft's Windows Phone OS was designed in California where they didn't get the memo about SMS being the most used function of a mobile phone everywhere on the planet (more used than voice calls even). SMS is by far the most important functionality of a modern phone - even with pure smartphone users in the USA - their number 1 most used feature is not apps or the mobile web, it is SMS text messaging said a 2011 survey over 10,000 smartphone users by Zokem. Not only that, but 9 out of 10 US consumers with smartphones surveyed by Cloudtalk in 2011 found that their most preferred improvement to their current smartphones was - better messaging! But how is SMS text messaging on a Lumia? You can't even save draft text messages! When do you notice this? Not in the store. You don't even notice it the first day or two using the phone. But suddenly you do, and you are mad when you notice this (if you are a heavy user of SMS text messaging, and Nokia owners are more likely to be that).
To really REALLY annoy messaging users, then there is the Microsoft design flaw in Windows Phone. The Windows Phone OS has a bug that if any Windows Phone owner receives a specific string of characters sent as an SMS text message, it will cripple the phone. Remember, this is not like email viruses, that you have to 'open' and click on the link to make them do their damage. No. SMS is received on your phone when it is sent from the network and you have no control about it. It does not wait for you to go read the SMS. You can have no warning. What happens? Your phone is locked. The only solutoin is to wipe the phone. All saved pictures, all saved messages, all saved phonebook entries etc are erased in that process. This is a problem Microsoft has admitted it has and is trying to fix. But how many times do you think you would accept this to happen on your own primary phone? I bet most would not accept this to happen once, losing all the precious saved content on your phone. You'd be returning your Lumia 800 immediately.
Back to those loyal Nokia customers. Most will not have bought an N8, they will probably have phones from prior to that, say a 5800 Xpress Music or an N86 or N97 or some other N or E Series. So they look at their music library they have on their previous Nokia phone. How can you move your music library from the previous Nokia phone to the Lumia 800? With the microSD card of course! Like for years past, with Nokia phones. But there is no slot for the microSD ! What about Bluetooth. The sales guy in the store assured that this phone has Bluetooth. And yes it does. And then after an hour or two of struggling with the brand new Lumia, its Bluetooth simply refusing to transfer files, the owner reads through the fine print in the user's manual, and discovers - to utter dismay - that the Bluetooth function only allows a wireless headphone to be used, but will not do Bluetooth File Transfer!
What moron at Nokia approved this crippling of a standard Nokia feature that goes back more than a decade! Of course it was not a decision made at Nokia, it is a Microsoft decision, common to all Windows Phone handsets. Again its those incompetent American designers who don't understand global consumers. Bluetooth is the most used data transfer method in many countries especially in nations with censorship and social mores that make some types of file transfers 'sensitive' - so for example the youth in the Middle East prefer to use bluetooth to transfer some files, just so they are not monitored on the network, in countries where they still have arranged marriages etc. So. Back to Lumia. Past Nokia smartphones were compatible with not just all previous Nokia phones that supported Bluetooth (more than one Billion such Nokia branded handsets - smart and dumbphones - in use worldwide) but of course Bluetooth file transfer is supported by almost all other brands of mobile phones from premium Blackberries and Samsung Galaxies to low-cost handsets from ZTE and Huawei and G'Five and Mi-Fone and Micromax. Thats 4.8 Billion handsets. Well more than half of them - and almost all high-end phones among them - support Bluetooth. Lets just say 2.4 Billion phones. So every friend who has any kind of Samsung or LG or Blackberry or SonyEricsson or Motorola or older Nokia can do Bluetooth transfers but your brand new 'exciting' Lumia .. cannot. You are, of course, disappointed in your purchase. In the worst case, your friends will jeer you for making a dumb purchase.
Now Nokia has made itself incompatible with the industry, with this Lumia series. This is something the buyer will not see in the store. Even if the buyer is smart enough to think about it, the box will say that this phone supports Bluetooth. The little summary description in the store will have the tick box, that says this Lumia model does do Bluetooth. If the buyer actually asks the sales rep, the salesguy is likely to say that yes, this phone does have Bluetooth and may even be 'helpful' to show how it allows the connection of the cool new wireless headsets. As the buyer has an older Nokia that has supported Bluetooth file transfer for many past models through the years, it does not occur to ask 'but does this new phone still support file transfers with Bluetooth'? That question is totally beyond the normal consumer's frame of reference. Until he or she tries to send the cool picture from this Lumia phone to the friend's SonyEricsson phone. Why doesn't it work...
I could go on and on and on. The Lumia 800 is a nice student experiment by the West Coast novice handset designers from the USA, who have a history of disasterously failing phones for the world market (Microsoft Kin, Palm, Motorola Rokr etc), but its a brave attempt. Part of its best aspects are copied from a far superior Nokia flagship phone, the N9. Part of the wow-factor in the first impression of the Lumia is the tiles of Windows Phone. But once a new proud owner of a Lumia 800 tries to live with the smartphone, it produces one disappointment after another. And worst of all, for any loyal Nokia owner, it seems like the phone was designed to disappoint any Nokia return customers and to scare them away.
Note, the Lumia 710 is worse, the Lumia 900 is almost no better.
TOMI IS BEING PETTY
Am I? The Lumia 800 was just reviewed in Australia by The Australian, on 6 March. Australia is one of the world's most advanced smartphone markets - ranked 4th highest in smartphone penetration rate per capita (for contrast, the USA is ranked 16th). Australia has had the MeeGo based N9 and now they make the painful comparison several times pointing out that the Lumia 800 is a severe step back from the highly rated N9. The Australian takes this flagship Nokia Lumia 800 and gives it a rating of 7 out of 10. In the review the newspaper repeatedly compares the Lumia 800 in failing terms to its contemporaries from rivals including naming by name and model, like the HTC Titan, the Samsung Galaxy S2 and the iPhone. And like I said, The Lumia 800 fails compared to last year's Nokia N9. This is not what you want when you are launching the Lumia 800 in one of the world's most advanced smartphone markets.
Maybe its better in the emerging world markets? Didn't Nokia say that the Lumia model range was being developed right now to be attractive in the Emerging World where Nokia's 'next billion' customers live? Lets read from the Economic Times of India. They reviewed the Lumia 710 just now, on March 12. They conclude "you are better off with the Samsung Omnia W that offers a better Amoled display, better build quality, a superior 5mp camera and better battery life." Ouch indeed.
The reviews are pretty much the same everywhere. Engadget ran a big Lumia 800 review, and concluded that first of all for most users, an Android smartphone or an iPhone will be a better fit. Then among Windows Phone handsets, Engadget recommends comparing the HTC Titan with its better camera and bigger screen. And throughout the review, Engadget keeps pointing out that the Lumia 800 is the crippled weaker spec little brother to the N9.
Or how about Nokia's home market? In Finland the tech magazine Tietokone reviewed the Lumia 800 and concluded its an ok smarpthone but the reviewer suggests either buying the MeeGo based N9 as a better Nokia phone now, or if you want a Windows Phone now, buy one from HTC or Samsung instead (double-ouch) or wait until Nokia can make better Lumia phones in the future. Finnish daily newspaper Ilta-Sanomat said in its Lumia 800 review, that the N9 is the better smartphone from Nokia. And in Finland, MTV3 the TV broadcaster ran its review and came to the same conclusion, that the N9 is the better smartphone.
This is not rocket science. This is a clear pattern. The Nokia Lumia 800 is perceived as a supposed flagship (even as it is not) and thus it will be compared to the top models by rival makers and the Lumia 800 fails miserably in those comparisons. (And I told you so on this blog that this would happen, you should not be surprised.) Meanwhile Nokia's brand image suffers and the customers are exposed to the faults in the Lumia. And the Lumia 800 suffers severely in any comparison even with its older N9 sibling in anything from no idle screen camera function that many Nokia owners love, to a lame memory allotment with no expansion ability, to no ability to use the Lumia 800 as a WiFi hotspot router. Then we have the user experiences.
OVER TIME YOU GROW TO HATE THE LUMIA
The situation gets far worse once you have lived with the Lumia for a little while. The Lumia 800 was not even manufactured in Nokia's own factories. Stephen Elop outsourced its manufacturing to Compal of Taiwan, so in reality it is not a Nokia quality device. The Lumia 800 is a badge-engineered no-brand Windows device, from a big third-party manufacturer who mass-produce handsets and other electronics. And does that matter? You betcha! The Lumia 800 was shipped with a major battery fault - something Nokia has admitted to and is trying to fix. The battery sometimes does not charge, or it displays wrong charging status information or turns itself off without warnings. This is first of all a manufacturing defect due to not using Nokia's own factories.
Many of the Lumia 800's shortcomings are like time-bombs, set to anger and upset you days, weeks even months after you bought the device. Like MMS. Nearly half of all mobile phone owners worldwide now use MMS. And the Lumia 800 does support MMS - for picture sharing. Only when you try to share a video - something you could do with past Nokia cameraphones easily - the Lumia 800 refuses to comply. Again. Why? Who was the first phone maker to allow music to be used as ringing tones? Nokia 14 years ago! So any - ANY - Nokia owner has been able to customize ringing tones and expects the Nokia to do so intelligently. The Lumia 800? Will not let you install your own songs as ringing tones! What? Yes, in this day and age. (I guess its Microsoft forcing you to buy new music from its store to use as ringing tones, arghhh). And if you live in parts of Africa or Asia where USSD is used for various interactive services, the Lumia 800 supports basic one-directional USSD, but not interactive USSD. Again, you think as this is the newest Nokia, and it has a feature you have liked, of course it works like before. But these are problems that arise only after you've taken the Lumia 800 home and used it for some time.
THEN THE RETURNS
And it leads to returns. The first reviews on paper are reasonably positive about the Lumia series, but the longer users live with the Lumia, the more they discover the annoying parts to it, and wish they can return it. The Guardian was the first major newspaper to write that they were so disgusted with the Lumia 800 that they returned their model just after Christmas. The German newsmagazine Der Stern in turn prefers the N9 so much ahead of the Lumia 800, that they recommend German consumers to drive to another country (!!!) - Switzerland or Austria - to go get their N9 (not sold in Germany) rather than buy the Lumia 800 sold there. This will be the pattern. Britain and Germany were among the first 5 launch countries for the Lumia. Now their major press says openly this is a phone you can't live with. In fact, you should return your Lumia. And now we come back to the retail.
STORE SALES WILL PUSH RIVAL PHONES
The worst effect is, if the returns are so frequent, that they exceed the norm for handsets (all handsets see some returns, even the iPhone gets some returns) and the sales people in the stores will start to push customers to rival phones. Stephen Elop already has admitted that in many countries the store sales staff are not happy to push Lumia anymore in early launch countries, like the UK. So. What prompted me to write this article. Its this next bit of truly revealing news.
Finland is Nokia's home market. Most Finns know someone who is currently employed, or has in the past been employed by Nokia. Nokia is Finland's largest corporation and supports large parts of the Finnish economy through not just direct employment, but indirect work via various subcontractors etc. Finns are proud of their Nokia. When Antero Kivi surveyed the Finnish mobile phone market in 2008 for the Helsinki University of Technology, in a very deep handset model specific measured survey from carrier/operator actual handset databases - not consumer surveys, this is one of the most deep installed base handset analyses ever done in this industry in any country and released into the public - he found Nokia handsets had 86% market share in the installed base. The first non-Nokia brand handset among the top 100 most used phone models in Finland came in ranked at 57th. Nokia's lead was even stronger in smartphones. So much so, that for example RIM didn't even bother to try to sell its Blackberries in Finland and Apple waited for a long time before releasing the iPhone for Finland. This pattern of sheer Nokia supremacy in Finland held until February of 2011, when after the Elop Effect, Nokia's rivals had started to eat up Nokia's past market share dominance even in Finland. But that means, that still today, most consumers who walk into a phone store in Finland, will walk in holding an older Nokia model which they intend to replace.
8 OUT OF 10 STORE SALES FEAR ALLOWING CONSUMER BUY LUMIA
MTV3 the Finnish TV broadcaster and news service ran a secret test of the Finnish handset retailers in the Helsinki and Tampere regions (the two largest cities of Finland). They sampled two stores from each of the three mobile carriers/operators, and two stores from the two largest independent phone resellers. The MTV3 journalists pretended to be normal consumers and visited ten stores and every time asked to see Nokia Lumia smartphones. In six out of ten stores, the sales people showed only rival phones (Androids mostly by Samsung) when the 'consumer' asked for Nokia Lumia !!! In another two cases the sales person came with several phones rather than just the Lumia and offered immediately a series of handsets to compare. Only in two cases out of ten, did the sales person show a Lumia on first request. Every store had the Lumia on display and in stock and the news story makes the point, that in most stores Lumia had the biggest sales displays at prominent places.
I have written on this blog that since the Elop Effect, the retail channel has put Nokia into a boycott (that has been independently reported from several European countries prior to my blog, and Nokia's own statements are consistent with at least a retail sales de-emphasis of the Nokia brand). I have also reported on a separate sales boycott of the Microsoft based smartphones that appeared after Microsoft bought Skype (carriers hate Skype). This was independently reported by several newspapers across the USA and at the end of 2011, a Microsoft Windows Phone ex-President admitted that Microsoft had very bad relationships with the carriers - and that Microsoft had been making them worse in 2011. No wonder Windows Phone sales fell by half during 2011 and Microsoft resorted to hiding their sales numbers by now combining Windows Phone sales with the sales numbers of the older and incompatible Windows Mobile.
I explained in the above, that the sales staff in the stores will decide which phone wins and which phone loses. I then explained why the Lumia series is poorly designed, and that it will not help land new non-Nokia customers, but it will disappoint existing Nokia owners. I have also shown how the problems with Lumia will build over time adding to the anger and frustration of the consumers. I have shown that the media early reviews of Nokia Lumia have been lukewarm and often suggest that rival phones are better and even the older N9 is a better value than the Lumia 800. But as people take the Lumia 800 home, the anger grows and there will be returns.
Now we have the evidence from Finland. If ever there was a reseller 'boycott' of any kind, official or unofficial, against Nokia branded phones - it would be least and last in Finland, Nokia's home market. Yet we have the evidence now. If the Lumia series produced satisfied customers, the sales people in Finnish mobile phone stores would eagerly sell Lumia handsets to existing Nokia owners who walk into the stores, asking for the Lumia. But that 8 out of 10 salespeople will not feel comfortable selling the Lumia - and six out of ten take the incredible step of not offering even one single Lumia model whatsoever when a customer requested Lumia by name. What do we know? The sales guy (gal) knows. The evidence is blatantly obvious. The Lumia series produces too many disappointed customers and the sales reps will not want to try to push the devices. They know Androids especially by Samsung produce far more satisfied customers - even in Finland, the home of Nokia, where almost every current mobile phone owner has owned something like 7 or 8 Nokia branded phones in the past decade, and many of them are on their fifth smartphone already.
LUMIA IS FAILING CONSUMERS
The proof is in the pudding. The retail sales will not push customers away from one brand to another, consistently, across rival stores and networks, unless there is a systematic problem. And there is. The Lumia is a magnet for returns. The sales guys hate that. They therefore pre-empt any such problems by selling phones that don't have such problems - and that is increasingly Samsung Galaxies instead of Nokia Lumias. Good job Stephen Elop. You are not only damaging Nokia, you are helping Samsung gain sales and new customers. And you said that you are not worried about Samsung taking Nokia customers? No wonder. You are pushing them to Samsung.
If you thought the Microsoft strategy would be a winner for Nokia's future, think again. If you even thought only that the Lumia strategy has a good chance of succeeding, now we have the evidence, it is not. The design by Elop's incompetent West Coast design team has produced a failing series of Lumia phones, that receive at best lukewarm early reviews and at worst push customers to rival phone makers. Longer user reviews based on owning and living with the Lumia actively suggest consumers should not just avoid the Lumia, but if they had bought one, the consumers should return their Lumias. And now we see the evidence in the stores. Even in Finland of all places, in 8 out of 10 cases in the biggest stores of the biggest phone sellers in the biggest cities of Finland, the sales people fear showing Nokia Lumia to their customers - who ask for Lumia - and will try to sell other brands right off the bat. The Stephen Elop strategy of creating the disappointing Lumia series is now boosting sales of Galaxies at Samsung.
As you read the reviews, it is obvious that the N9 running MeeGo would be a far better phone to offer globally. Its sister phone, the MeeGo powered N950 with its QWERTY slider keyboard would be particularly warmly received because the Lumia series has no QWERTY devices. The Nokia 808 PureView (which runs on Symbian) will not be sold in the USA where Nokia desperately wants to make a come-back. What moron CEO has a hit phone in his portfolio (the N9) and refuses to sell it. What incompetent CEO sees a premium priced handset that has such unique form factor, it cannot compete with his fave Lumia series, but would sell at a higher price point helping boost Nokia income closer to making a profit - but refuses to sell it. And where the 808 PureView won literally the handset of the show award in the biggest mobile industry event in Barcelona two weeks ago, and now the destructive CEO refuses to release it in the market where Nokia is aiming to recover. The N9 and N950 with MeeGo are far more desirable - and do not produce disappointed customers like the Lumia series.
The N9 and N950 should be sold in every market now, not so that Germans have to drive to another country to get theirs. The 808 PureView will start selling in April in some countries like the UK. It should be sold globally including in the USA. This would not be in conflict with the announced Microsoft strategy with Lumia. Samsung sells smartphones very profitably running on Android, Windows Phone, Windows Mobile and its own bada OS - on four separate operating systems. I am not suggesting Nokia to resurrect a dead OS or to launch a new one - Nokia today manufactures the MeeGo based N9 and is introducing a new Symbian based 808 PureView in addition to four Lumia models. Why can it not sell smartphones on all three platforms and see which succeeds the best?
Stephen Elop has bankrupted Nokia's future in smartphones. The Lumia strategy is totally doomed. Stephen Elop is incompetent to run Nokia and needs to be fired - now!
UPDATE (on 21 March) - I have been chronicling the problems that Nokia (and in parallel, unfortunately also Microsoft Windows Phone) have had with the retail channel, since the Elop Effect of last year. I just spotted a story at Finnish Talouselama where they did a survey of the major European markets where Lumia first launched. Right now in March, this is what Talouselama found (countries in order of smartphone market size):
Germany - at T-Mobile (Germany's largest mobile operator/carrier) Lumia 800 is ranked 9th bestselling smartphone. At Phonehouse (independent phone retailer) Lumia 800 is ranked 8th. Whereas on Amazon Germany, the Lumia 800 is not in the top 100 smartphones.
UK - at Vodafone (UK's largest operator/carrier) the Lumia 800 is not in the top 10. Amazon UK site lists Lumia 800 ranked 86th, behind Nokia dumbphone X1-01 ranked 20th bestselling phone.
France - at Orange (France's largest carrier/operator) the Lumia 800 is not listed among bestselling smartphones. With Phonehouse France, Lumia 800 is listed 9th bestselling smartphone. Amazon France does not find Lumia 800 among bestselling smartphones.
Netherlands - KPN (biggest operator/carrier) lists the Lumia 800 as the second bestselling smartphone.
First. If your phone model is consistently around 8th best or 10th best or so, across all sales channels of a country, your market share is about 2%-3%. Netherlands is one third the size of France and one fourth the size of Germany. The KPN news does not in any way balance the problems in Britain, Germany and France.
Secondly, Nokia Lumia had under 2% market share in Q4 of 2011 (the Christmas Quarter) in these countries. The survey now by Talouselama suggests, Nokia's Lumia 800 has been falling in sales from Q4 into Q1, not improving.
But there is the Lumia 710? Talouselama makes the point, that the alarming news is that in these countries where Lumia launched first, the Lumia 710 was the cheaper model - it should be selling more than the Lumia 800. In no case, did Talouselama find the Lumia 710 to be on any bestseller list. Not once. So it is selling even more poorly than its more expensive Lumia 800 brother.
UPDATE 2 (on 22 March) - I have just added the logical follow-up article to this, the 'so how would you fix it' blog. I know Nokia will of course ignore it, but for those who are interested, here is my best insights of how to fix Nokia and restore it to profitability and a growth path.
Posted by Tomi T Ahonen at 09:48 AM in Bloodbath, Carriers / Operators, Dumbphones, Ecosystem, Elop, Emerging World, Europe, Finland, Market Share, Marketing (classic 4 Ps), Microsoft, MMS, Music, Nokia, Profits, Retail & Commerce, Samsung, Smartphone, SMS, Statistics, Strategy, UK, USA, Users / Subscribers | Permalink | Comments (82) | TrackBack (0)
Some Cases of Mobile Advertising Excellence from Around the World
This blog has had a lot of focus on smartphones and Nokia recently (for many reasons) but mobile is much bigger than the handsets side, and smartphones only formed a third of all new phones sold towards the end of last year. Today I want to talk about mobile services, and focus on the media side - and a very exciting space in it, mobile advertising.
I do mobile marketing and advertising workshops and seminars all around the world. I was just with Sanoma Media and Telegraaf Media in Amsterdam a few months ago, was in Guatemala with Tigo for some mobile advertising workshops there, was with the MMA in Istanbul doing a series of mobile marketing workshops, did a series of keynotes at the Google Think Mobile event series here in Asia, and the keynote to SOCAP the Society of Consumer Affairs Professionals ie the 'Customer Relationship Experts' at their big annual event in Orlando, and so forth. I've been speaking with MMA (Mobile Marketing Association) events from New York City to Singapore to Sao Paulo, and doing private workshops with many companies that specialize in the mobile advertising and marketing space from ad agencies and creative agencies to major brands etc. There was a nice video of me talking about mobile advertising at the Google event in Kuala Lumpur Malaysia.
But its been a while I've shared with you my fave stories right now. So lets do a blog about where I see excellence in the best thinking of using the 9 Unique Abilities of mobile and going beyond simply lame copies of internet and TV and print advertising. Let me show you some of my fave stories in mAd.
AN ARMY OF FANATICS
I love Jonathan MacDonald's concept of nurturing and building an Army of Fanatics. How do you engage with fans? One great example comes from Sweden. Veronica Maggio is a Swedish pop star. She decided to reward her biggest fan with a peculiar treat - his number would be the target phone number to call, to hear the Ringback tone version of Veronica's newest hit song, 'Lordagen den Femtonde Mars' (Saturday the 15th of March). This is not a ringtone. This is a ringback tone. It means you have to call that phone number to listen to it. She made ringback the launch method of her song. Her fans could not hear the song anywhere else, not on radio, not on MTV video, not online, not any other way. The fan - his name is Firat Delen, an 18 year old boy in Sweden - had his phone ringing nonstop for two weeks as the fans of Veronica kept calling his number, to hear the song. When Veronica finally launched the song for sale, it hit number 1 on the Swedish charts. Cool. And by the way, many Swedes, who called his number, didn't know of ringback tones, so it also helped bring new users for Ringbacks in Sweden. But this is a cool way to do something different in music marketing. Not to mention a great treat to the fan club.
And talking of fans, lets hop to another side of the globe but stay with music, Japan. Seeda the rap artist launched his album as a virtual adventure across Japan. For every track on his album, Seeda selected one location, and narrated a story about why that location was relevant to that song. The fans were encouraged to tour Japan and go listen to Seeda's narration of his most relevant places in Japan, and in each place obviously they could hear one track from the album as well. Cool. His album? Hit number 1 in Japan. Now rap artist Jay-Z in New York did something similar with an adventure virtual treasure hunt to promote Jay-Z's book. For every page there was a treasure hidden somewhere in New York City.
A virtual treasure hunt is clever yes, but lets now take it supercharged, and let fans join on a virtual trip with their favorite brand. Honda motorcycles in Japan introduced K-Tra in 2008, the fan club experience where fans can create an avatar and then have the avatar take rides on real Honda motorcycles based on their real riding in Japan. Any owner of a Honda motorcycle can sign up to be a host to take one virtual hitch-hiker along. The movement is tracked based on the mobile phone of the rider, and when the motorbike stops moving, the hitchhiker is deposited into that spot, until another Honda motorbike rider comes by, and your avatar is once again on the move, having an adventure. You get an alert of course whenever your avatar is picked up, and then you can monitor its travels via a map on your phone. Cool. Actual fans and owners have of course then met up in the real world too, etc. How many? 20,000 Honda fans have taken rides of over 1.8 million kilometers (over 1.1 million miles) this way (according to Infinita 2011).
This merger of the real world and the virtual world is a very hot space for advanced mobile marketing campaigns. One that is spreading, from Japan, but is already here in Hong Kong and has reached Germany too, is the Augmented Reality (AR) virtual butterfly, called iButterfly. The real world doesn't have these butterflies and probably city environments are not very conducive for the life of butterflies, but they've created a huge virtual flock of butterflies that flutter about here in Hong Kong. You can only see them on smartphones that have the requried AR app installed, and then you can go hunt for them. Different butterflies in different parts of the city and country, and every time you capture a virtual butterfly, you get a coupon. In our case here in Hong Kong one of the first users was Pacific Coffee, by coincidence my fave coffee shop in town.
Another way to do the virtual hunt is the virtual explorer. North Face the outdoors brand ran a contest to 'Conquer China'. They had a blank China map visible in the stores and online and on mobile. Anyone could take their mobile phone, go to any location in China and if first to that location, 'claim it' for North Face, just like explorers claimed islands and mountains etc for their kings and lords. A red North Face flag was planted virtually to that location, and you were the person who virtually discovered it first. The map was then starting to populate with little red flags all over. Always the first to any location would be its owner, not like with FourSquare with whoever came there the most to become its mayor. And in a campaign of under three weeks, a total of 650,000 red flags were planted in China. Every flag also of course gave its heroic explorer a coupon for a discount at North Face. Does this kind of marketing work? Try doubling sales! Grew sales in fact by 106%. And it drove a lot of footfall to North Face's stores, helping fans find the stores.
And returning conveniently back to Sweden, yet another variant is the race to steal the virtual car. Mini ran a campaign in Stockholm, where they parked a virtual Mini in Stockholm. Then whoever got near enough to the Mini, would 'capture' it, or 'steal' it. Then the person would start to run away with it. Other fans could see on a map where the stolen Mini was, and whoever got near enough to the person holding the Mini, would then capture it. This race had big coverage in the Swedish media as Mini fanatics all around Stockholm were in this race to chase whoever held the Mini. The person who had the Mini at the end of the game? Won a real Mini car.
And then there is the interactivity. The beautiful thing about mobile is that we can accurately measure it, and with it. Like I say in my workshops, Mobile is the Magical Measurement Machine (the 6th unique benefit of mobile in fact). So bear in mind that online, typical ad campaigns will get far under 1% click-through rates. On mobile you can of course copy the same boring banner ad campaign and actually get far better click-through rates like 4% or 5% or 6%. If that is the level your mobile experts deliver for you, fire them now. On mobile we can do far far FAR better than that. What do I mean?
Then lets go to the UK. The myth about mobile ads is that concept of location-based ads that are used to pester us when we go to a shopping mall etc. That concept was proven untenable eleven years ago and I explained why in my early books. But I also asked for the 'when Madonna plays at Wembley Stadium' concept of venue-based ads, that are targeted not by the shopping mall or main street in town, but by what artist or sports activity is happening at the big sports stadiums and concert halls etc. That is a specialized form of location-based advertising which I promised would work. And now we have the evidence. The O2 venues in the UK have been using events-based venue advertising on mobile, obviously targeting the fans of whatever activity was happening, across the big O2 venues like the Millenium Dome in London. How successful? 20% click-through rates.
RESPONSE RATES
A more powerful and relevant measure than click-through rates, and one that is harder to achieve, is response rates. A click-through may happen accidentially, and also the click-through includes those who were curious but not convinced. They click but do not want to continue with that brand or campaign. A response rate is more involvement by the participant, they have actively decided to participate in the interactive campaign. Obviously response rates online are infinitessimally small. What do we see on mobile?
Then lets go to Turkey. Flo Shoes the local shoe store decided to send promotions and coupons via MMS and SMS. They sent out 900,000 total mobile advertisements. They got 160,000 responses (a 20% response rate!).
What about Egypt? Adidas ran a campaign on MMS and SMS and received a 35% response rate on their mobile ad campaign. Yes! More than one third of all who received the ad, responded to it.
REDEMPTION RATES / CONVERSION RATES
The real purpose of advertising is to drive sales (directly or indirectly). And again, on mobile we can measure the conversion rate. This is the ultimate in advertising, can we actually measure the concrete pin-pointed ad performance for a given viewer of the ad? On mobile, a well designed campaign can, of course. And we have some evidence.
I start with Blockbuster in the UK. They sent out 1 million offers and coupons to their opt-in database. 100,000 of those mobile coupons were redeemed. So the campaign achieved a measurable 10% conversion rate. Imagine how powerful that is! Compared to online where we might see 0.2% click-through rates on some banner ads. And on TV we don't know who saw it and which ad of a given ad campaign actually drove sales. But I'm not impressed with 10% conversion.
So lets go to the Philippines. HSBC bank ran a campaign on mobile to recruit new customers to its credit card. The campaign used SMS. The target customers had opted in on Globe network's subscriber base. How many were converted to new credit card customers? 15%. Thats amazing. But I am not impressed with that either.
Fine, so then lets hop over to Indonesia. McDonalds ran a mobile ad campaign for McCafe with MMS that was used to test out new flavors of iced drinks. The mobile coupons were redeemed at a rate of 16% redemption rate. Yes, one in six who received a coupon showed up at McCafe to redeem it. And that is impressive but we can do better.
Lets go to Nigeria. There Guinness beer ran a mobile ad campaign with instant rewards via SMS. It achieved redemption rates of.. 17%. And you are impressed with that? I'm not. Lets go to Japan.
In Japan McDonalds has already converted 20 million Japanese consumers as opt-in customers to McDonalds mobile advertising! How many is 20 million? Its one out of every six Japanese people alive! Not one sixth of 'adults' its one sixth of truly the whole population. How many of them redeem coupons regularly from McDonalds mobile ads? Half!
But wait, even that is not the ultimate. Alan Moore, yes 'our' Alan Moore told us at the Oxford University course on 7th Mass Media about Girlswalker, the Tokyo Girls fashion magazine and youth experience extravaganza on mobile and the real world. The fashion ads on Girlswalker mobile magazine have a conversion rate - not click-through rate, not response rate, but conversion rate - actual business generated - of 45%. Yes, out of 100 girls who see the ad for the new blouse or shoes or handbag, on average 45% will show up at a store and redeem the offer! Wow.
I WANT MORE ADS
So mobile is indeed the 7th mass medium. And yes, clearly, mobile is not the same as the internet. In fact, mobile is FAR more powerful as an advertising medium than the legacy PC based 6th mass media internet. And when mobile ad campaigns are designed well, they achieve huge click-through rates, response rates and even giant conversion rates. But the ultimate in advertising is if the consumer actually likes it so much, they literally ask for more ads. This was the concept we promised in our book with Alan Moore back in 2005, in Communities Dominate Brands, that a well-designed mobile ad campaign should be able to achieve that. And it can. This totally counter-intuitive concept is 100% alien on other media. We don't want more ads on TV or in the cinema or on radio or in our magazines or on the internet. But well designed advertising on mobile DOES produce that bizarre phenomenon - we start to ask for more. Witness Qustodian, already launched in Spain and the UK, a radical new mobile advertising service (among many other things). We heard on Facebook from a random Qustodian user, an Andrew Manley, writing "I never thought I would be asking this question in my life, but how can I receive more ads."
MAKE IT CROSS-MEDIA
But don't misunderstand me. I love mobile, but mobile is not the only media channel. In some cases yes, a 'mobile only' campaign can be great. But in most cases, mobile needs to be part of a mix of media used. And let me finish with the winner of the best mobile campaign in Turkey last year, by Garanti Bank. Its a cross-media campaign online and mobile. You get a link to the web ad, you have to give your mobile number in the opt-in process to get to view it. But then you see what looks like a TV news broadcast. The news anchor reports to the viewers that they have now reached the point where almost everybody in Turkey has a mobile banking account. But they are curious about why the last people are not signing up to it, and as they have reached now the point where there is only one person left who does not use mobile banking, the news anchor says he will call the person. And on camera, he takes an fixed landline phone and calls, looking into the camera. And then your phone rings! And when you answer, for a moment it seems like the person on the news is talking to you! After a little while you understand its not real, its a recording and they clearly are not listening to what you say. But this was a huge viral hit, where people absolutely loved it and told all friends, you have to see this ad. And yes, it obviously drove Garanti Bank to sign up tons of new customers to its banking in particular, to its mobile banking.
The advertising industry is embracing mobile now. Last year Ford became the first global brand to state categorically, that mobile was so critical, that from now on, every Ford car campaign will include mobile in it. Coca Cola offers us a good rule about how to spend your mobile budget, with their 70:20:10 rule, ie 70% spent on mobile messaging (SMS and MMS), 20% spent on the mobile web, and only 10% spent on all smartphone apps across all smartphone platforms. Or the simple guide from US food giant, Kraft, whose mobile philosophy is 'Leave no phone behind'. To illustrate how important mobile is for one of the biggest advertising companies on the planet, Google's Chairman, Eric Schmidt says: 'Put your best people on mobile.'
If you are in advertising, you are probably doing something in mobile already and are considering how to expand. I am here to tell you, that if you don't achieve these kinds of levels of success, you are not doing it right. You CANNOT try to copy the legacy media. You HAVE to learn that mobile has 9 unique abilities, and using those unique abilities, you can create SUPERIOR advertising on mobile, better than anything on any other media. If your mobile ads deliver response rates in the single digits, you are doing it wrong. Fire your agency, hire some competence to teach your team. Throw the current concepts into the waste basket and start again. Read the big names in our industry, books by Kim Dushinski and Chetan Sharma. Hire the right people to advise you like Jonathan MacDonald and Alan Moore (and me haha). Use agencies that have the competence and win the awards and deliver that kind of performance as I outline. It may be global giants like Ogilvy or specialist agencies like R/GA or D2C or Naked etc. But don't accept mediocre performance simply because it outperforms your internet advertising.
Mobile advertising launched 12 years ago and I was the first person in the world to talk about it at any telecoms conference (in Vienna). I then chaired the world's first mobile advertising conference eleven years ago in London. All of my books have included examples and case studies about mobile advertising and one of my twelve books actually is dedicated to case studies only about mobile advertising (see Tomi Ahonen Pearls Vol 1: Mobile Advertising - only 9.99 Euros for 50 case studies - see sample pages including several of the cases at the link).
For those who need an update of how the mobile advertising market evolved and grew in 2011, including the regional split of mobile advertising revenues, the total ads served, the distribution of mobile ads by type etc - there is a whole chapter on just mobile advertising in the TomiAhonen Almanac 2012 - only 9.99 Euros see more including sample pages here.
Posted by Tomi T Ahonen at 11:26 AM in 7th Mass Media, Advertising, Augmented Reality, Engagement marketing, Generation C, Japan, Location-Based, Marketing (classic 4 Ps), MMS, Mobile Data & m-Web, Music, Retail & Commerce, SMS, Social Networking, Speaking Events, Statistics, Strategy, Unique Abilities, Virtual Worlds | Permalink | Comments (22) | TrackBack (0)
The real Top 13 reasons why Nokia Lumia and Windows Phone will fail, not just in USA but across planet
Nokia was prominently featured at the CES show in the USA this week, the biggest consumer electonics show of North America. Nokia CEO Stephen Elop was on stage a couple of times as was Microsoft CEO Steve Ballmer. The brand new Nokia Lumia 900 won best product of the show. And nicely on que, Forbes ran an article of the Five Reasons Why Windows Phone Will Make Big Splash in Smartphone Market. The article got a lot of attention and on first read, to the random reader, it seems to make good arguments (I will deal with those later). The first point to make, is that the author, E.D. Kain, had actually written a pair of articles about Windows Phone, this one yes in favor but also another one against.
There have been many commentaries of the issue, perhaps the best direct response was by Don Reisinger at eWeek. He gave 10 reasons why Windows Phone will fail. His arguments are very good, but they are somewhat USA focused and still do not tackle some of the biggest reasons why Windows Phone - and Nokia Lumia - will fail. Lets take this issue logically, reasonably and with facts, not just conjecture and opinion and hope and hype. And lets start where most sensible marketers start, not from the product but from the consumer. What is it that we, smartphone buyers, want. And readers, this is again one of those ultra-long Tomi Ahonen essays, about 16,000 words (more than a full chapter in a hardcover book) so go get yourself a good cup of coffee before you start. It will probably take you half an hour to complete this article but I promise you, it is stuffed with facts, stats, insights and goodies.
I know this is a painfully long article for most to read. So let me give you the quick executive summary version here on the top. Please do read the specific part in the full article, before commenting. But the short version is this. We know from global consumer surveys what people do on their phones, and what consumers look for when buying smartphones. That has even been measured across the differences of the wealthy countries of the Industrialized World, and the less-affluent smartphone buyers in the Emerging World. I have used real consumer data mostly from 2011, to examine every major element that is decisive in smartphone purchases today. I took the 13 most relevant areas which cover consumer phones and business/enterprise phones; across the rich world and the Emerging World. And on every one of those 13 areas, I evaluated Lumia compared to where Nokia (and Microsoft) was before and where its rivals are now. This is what I found:
Reason 1 - Messaging Madness: Nokia has a natural strength in messaging-oriented smartphones (the most used feature of all mobile phone owners from Africa to the USA is messaging, including smartphone owners). It is abandoned with the first 3 Lumia phones. Nokia voluntarily foregoes a competitive advantage that it has always before taken advantage of. Thus Lumia will perform worse than Nokia smartphones have done before.
Reason 2 - Camera Catastrophy - Nokia mobile phones have always been known for good cameras, its flagship phones tend to have had the best cameras in the world. The camera is the second most used feature. The Lumia series is a downgrade of Nokia camera capability and will severely disappoint past Nokia owners and not stand up to rivals today.
Reason 3 - Look and Feel is not competitive. Nokia Lumia has gotten good reviews for its appearance but nothing beyond that. And by its one form factor alone, it will not win many converts, but on the abandoned other form factors, and its lack of typical Nokia elements, it is a downgrade from what Nokia has been in the past, and yet is not competitive with rivals today.
Reason 4 - Nokia Brand failure. Nokia's brand has been damaged very badly in the past year. Whatever Nokia was able to do in 2010, today Nokia will do far worse, whether in the USA or rest of the world.
Reason 5 - Windows Brand failure. The Nokia brand damage is recent and perhaps reversable but Microsoft's brand damage with Windows Mobile and Windows Phone has been sustained far longer and been far more comprehensive. Microsoft has good brands such as Xbox and Office Suite but its Windows Brand is weak and in mobile, it is poisonous.
Reason 6 - Input failure. The Nokia strength has been exceptional QWERTY keyboards. On the N9 using MeeGo Nokia was able to innovate with touch screen inputs. But Lumia has neither. It is a cheap copycat of the iPhone style touch screen input and Lumia abandons natural Nokia strengths while showing no competitive advantages.
Reason 7 - Fails in variety of models. Nokia has traditionally been able to hold to the world's largest smartphone market share - a year ago Nokia was literally not just bigger than the iPhone, it was bigger than the iPhone and all Samsung smartphones - combined. Now Samsung is 'doing the Nokia' with its expanding Galaxy portfolio while the three Lumia devices are near clones of each other. Nokia is again voluntarily abandoning a competitive advantage, which means Lumia will perform less well than Nokia was able to do in the past.
Reason 8 - fails on apps and app store. Nokia's Ovi was the world's second most used app store just a year ago. That was replaced with Windows Phone, at best the 8th 'best' ecosystem today, which still a year later has less than half the number of apps as Nokia currently still has on Ovi and Symbian. Whatever you thought of Ovi and Symbian 'failing' in apps, it is far worse on Windows Phone.
Reason 9 - the OS is deficient. The Windows Phone OS can seem exciting when first seen with its 'Tiles' but on short usage it reveals how limited and unfinished it is. The tech reviews after using Windows Phone (and Lumia) are quite consistent that Windows Phone is not yet ready for prime time. It may become so in the future, but its not yet nearly competitive with advanced OS platforms out there.
Reason 10 - regressing on features and services. Where Nokia smartphones tended not to be the coolest and sexiest in recent years, at least Nokia was always known for stuffing every conceivable tech feature onto its flagship phones. The joke was, that to see what will be on the next iPhone model, just look at a 3 year old Nokia flagship. The Lumia is the first time ever, that Nokia has regressed in its features, severely. Not just pruning unnecessary tech 'bloat' but literally going back in tech, to specs that were normal on Nokia phones a year, two, even three years ago. That guarantees that any current owners of Nokia will find the Lumia a severe disappointment.
Reason 11 - rejected by business/enterprise customers. I also discuss the enterprise/corporate side of the smartphone business. That market seems a great opportunity due to Microsoft Windows OS and Office Suite integration with Nokia smartphones. Except that this is nothing new. Nokia and Microsoft had done full Office Suite integration years ago and it helped Nokia and Microsoft sell... zero more smarpthones into the enterprise space.
Reason 12 - poisoned carrier relationships with Nokia. The handset industry is different from the PC industry or home electronics, in that the carriers/operators decide which phone succeeds and which fails (witness the short-lived Microsoft Kin). Nokia used to have the platinum-standard carrier relationships a year ago. Those were burned by the CEO last year. Today Nokia's carrier relationships are the worst they have ever been.
Reason 13 - poisoned carrier relationships with Microsoft. But even worse, is that Microsoft never used to have good carrier relationships. And yet, with Windows Phone, Microsoft's own departed exec admits Microsoft has been making those carrier relationships worse. So Nokia Lumia trades the best carrier relationships to bad ones, and then partners with the company with the worst relationships - that has been making them only worse last year.
There is very much more in the article including aspects that are particular to the Emerging World (where half of all smartphones are now sold) and issues to such matters as build quality - Microsoft and Nokia have already admitted to two production quality problems with Lumia. Please read the article for all the details. But I said last February that the Microsoft adventure for Nokia was a high-risk gamble. Now we have seen what the Lumia is like, when managed by Stephen Elop, and it is an utter, comprehensive flop - on every single one of the 13 relevant issues that matter in the market success of smartphones. The Lumia series is doomed to fail. But please read the full analysis:
LETS START WITH CONSUMERS
Smartphones (invented by Nokia four years before the Blackberry) first were enterprise/business tools. Then they became consumer gadgets (also invented by Nokia four years before before the iPhone). What is their proportion? Deutsche Bank counted in 2009 that the total global market for enterprise/business smartphones was 96 million handsets. The enterprise/business market is very stable over time, it will not be significantly over 100 million today, so enterprise smartphones account for roughy speaking 1 out of every 5 smartphones sold globally. And Blackberry obviously owns a lions's share of that market. So that is why I want to start with the consumer market where almost 4 out of 5 smartphones are sold.
What do we do with our smartphones. You will fling a couple of birds angrily at some pigs and no doubt say 'apps'. Maybe you will say 'surf the web'. Those sound very reasonable. So lets see what the facts say. (And lets ignore voice calls). So what else do we do? The most used aspect on our phones is not apps or web surfing. It is SMS text messaging. The second most used funtion is the camera. I don't say so. So says ComScore in 2011 - said 83% of Europeans and 68% of US phone owners sent SMS text messages. 58% and 53% respectively used the camera. Web browser is far lower, at 33% for Europeans and 39% for Americans. Apps are even further down the list, 28% for Europeans and 34% for US consumers. And if you are curious about email or social networking, they come far below.
Is that SMS and camera emphasis perhaps an anomaly? No. Ofcom's global survey just in November 2011 reported that SMS was by far most used service in Europe and the USA, mobile web well below and apps further down the list. Consistently with the above. Ofcom did not ask about camera use, but did ask about picture sharing and MMS. They were used on par with mobile internet and far above apps. So Ofcom is consistent with ComScore that SMS and the camera come ahead of web and apps.
And lets be really really clear about this. If you don't trust them Europeans and want the Pew picture, we have that too. A global Pew survey in December 2011. In the USA, SMS used by 67%, camera used by 57% and internet surfing by 43% (they did not ask about apps). In Europe Pew found in every country the same order, SMS most, camera second and web third.
These were major surveys of all mobile phone owners. How about specifically smartphone owners? Well we have that data too. Zokem surveyed 10,000 smartphone owners in 2011 in the USA and Europe and guess what was used most by smartphone users. SMS of course! But yes, apps and the mobile web had switched places (they did not ask about the camera).
Whatever we think of the smartphone buyer in the world, the target customer for potentially 4 out of 5 buyers of smartphones, the consumers, their number 1 interest is SMS text messaging. And yes, I am not saying that. It too was verified in 2011. Cloudtalk surveyed US smartphone owners in July and found 71% used SMS and only 40% used the mobile web (they didn't ask about apps). Note again how consistent the finding is with the above. But Cloudtalk asked what one thing smartphone owners would most want to improve - 90% of US smartphone owners said they would want better SMS text messaging!
REASON 1 - MESSAGING MADNESS
Did I make my case? Now is Microsoft the expert on SMS? No. The world's first person-to-person SMS text message was sent in Finland in 1993 on the Radiolinja GSM network from one Nokia phone to another, by a Nokia employee Riku Pihkonen. Nokia wrote the book on SMS. Even the inventor of SMS, Matti Makkonen finished his career at Nokia (he was my last mentor). And what has been a major feature of Nokia smartphones always - a high proportion of them have had physical QWERTY keyboards in several formats such as the folder (ie Communciator format) and slider and Blackberry style wide candybar. There even have been exotic QWERTY form factors like the butterfly keyboard. If anything, Nokia was known as the brand that did SMS texting just about as well as it could be done.
Did Nokia bother to put a QWERTY keyboard onto its first three Lumia phones? No! Note, this is a Nokia competitive advantage. Note, 90% of American smartphone owners wish this more than anything else, and its something for example Apple refuses to do with the iPhone. But no. Lumia series is pure touch screen only. Nokia had a massive competitive advantage that it simply refused to exploit. And is this relevant? NPD reported in 2010 that 46% of all mobile phone handsets sold in the USA had a QWERTY keyboard either as its sole input or combined with a touch screen input. Nokia voluntarily abandons nearly half of the addressable market and instead - forces, FORCES all Lumias to be compared to iPhones (rather than compared to Blackberries).
Then we have the SMS design flaw. Microsoft has already admitted that it is true, if anyone sends a specific string SMS text message (or FB message or Tweet) to a Microsoft Phone based smartphone - it will shut down the phone and when the phone is turned back on, the messaging function is inoperable and the only fix is to wipe out everything stored on the phone - all messages, pictures, phonebook etc. What moron moron moron didn't prioritize SMS and allowed this kind of failure at Microsoft? This would not have happened if the phone and its software was designed by adults. SMS is the most valued and most used service on mobile phones in every market - even the USA is now in that state, so said the USA's own CTIA the Cellular Telecoms Industry Association in 2009.
REASON 2 - CAMERA CATASTROPHY
So lets go to Nokia's second huge advantage against all competitors outside of Japan and South Korea domestic markets. The camera. Nokia partnered with German camera optics specialists Carl Zeiss, and from the early N-Series on, Nokia had far and away the best cameraphones in that part of the planet where 98% of its population lives (Japan and South Korea have exceptionally advanced domestic mobile phone markets). Nokia introduced the world's first optical zoom (ie real zoom) camera lens in 2006. The first Xenon ie real flash in 2007. Nokia had a 5 megapixel camera when the iPhone was introduced with only 2 megapixels. Nokia did the (non Japan/non-S Korea) world's first 8mp cameraphone and first 12mp cameraphone. And its not just megapixels. Nokia had better glass on its optics, better sensors in the camera and better software for the pictures. Plus Nokia had removable storage media ie microSD cards so you could shoot many hours of DVD quality video and then just swap your microSD card and continue shooting. The whole camera and video experience was always superior on Nokia. Nokia introduced TV out in 2006 meaning you could watch your pictures, websites, videos etc on your home TV. And today that is of course HDMI out.
This is the second most used ability of the mobile phone. We just heard from Christmas electronics sales in the USA, that digital camera sales and videocam sales had fallen catastrophically - because consumers were switching their camera and video capture to their smartphones. And this is a Nokia superiority. And what does Lumia offer. A massive downgrade to what Nokia used to have. The 2010 flagship Nokia smartphone, the N8, had a 12 mp camera and Xenon flash. It won every contest and comparison against every rival everywhere, a superb cameraphone and videocam phone. It was selected the phone of the year in Britain. And the N8 was that cameraphone used to shoot a full-length motion picture that had a commercial release. Yes. A Nokia cameraphone so good a professional movie maker made not an 'experimental film' for a film festival, or a short film, or amateur film, but a full commercial production movie for cinematic release. That is Nokia excellence in cameras.
What does Lumia have? The topmost Lumia900 that was announced at CES has its camera downgraded from the N8. It doesn't have 12mp. It has 8mp. The flash is not Xenon flash. It is LED flash. There is no TV out. There is no HDMI out. There is no microSD. This 'flagship' phone seems like it was designed by total amateurs who were somehow utterly ignorant of the vast competence Nokia had built over the past decade. And it is. The Lumia series was not designed by Nokia top engineers in Finland. Elop in his Microsoft Madness decided not to use Nokia's Finland based competence, he went to the USA to design his Lumia phones. Yes the USA, known for such fantastic global hit phones as the Palm, the Danger, the HP, the Compaq, the Motorola - anyone remember the Rokr - and yes, Microsoft's own magnificent Kin, the phone so disasterous, it was terminated 6 weeks after launch.
Nokia's flagship phones have always, always had the best cameraphones (Japan, S Korea blah-blah-blah). The Lumia series is the first time ever that Nokia not only was not the best cameraphone, but it actually regressed. If you like your cameraphone, you are better off buying a 1 year old N8 than any of the brand new Lumia phones. The N8 was so good, that the first side-by-side test with HTC's Titan II - with a 16mp camera, and the N8 produced better pictures. That is Nokia knowhow! And Lumia? Abandons it all.
WHAT DO CUSTOMERS WANT IN THEIR NEXT PHONE
We have seen what consumers do with their smartphones. Now, what about specific decision criteria. All those who say 'but the eco-system, Tomi!' That the smartphone OS will decide. Or the number of apps in the app store. Sure they will be important, sure. But lets go to the facts again.
TNS surveyed 34,000 mobile phone owners around the world and found that in the Industrialized World (North America, Europe, Advanced Asia-Pacific) apps and the OS do matter. They came in ranked.. fifth. Tied for fifth. What is ahead of the selection of apps and the operating system in selecting smartphones in the Industrialized World? The Look and Feel. The Brand of Handset. The Input Method. And the Model of Handset. This is not me saying the OS is not top on the mind of smarpthone buyers, or the number of apps in the app store. This is what smartphone owners in the USA, Britain, Spain, Australia, Germany, France, Canada, Singapore etc have said. So before I discuss the OS and the Apps, lets do the more important factors starting from the top.
REASON 3 - DOES NOT WIN ON LOOK AND FEEL
Look. The Lumia 900 and Lumia 800 do look like flagship phones and have won plenty of praise, copying Nokia's radical look of the N9 from last year. So yes, this is a brave attempt. But the Lumia 710 has a decidedly cheap look to it, very plasticky. But yes, what of the flagship(s). If you like QWERTY form factors ie a slider or Blackberry style smarpthone, then this look is wrong for you. The sad thing is, that usually with new lines, Nokia has done a pair, ie the N8 was the tablet style pure touch screen, and its sister model was the E7 with the QWERTY slider. Same with the N9 (pure touch screen) and its sister the N950 (with QWERTY slider). So while Nokia had every chance to gain an advantage on the look side, it voluntarily abandoned about half of the total market potential. By deciding not to make what is a competitive advantage at Nokia.
But if you do love the pure slab tablet style pure touch screen smartphone. Then yes, the Lumia 900 and Lumia 800 are good-looking smartphones, but not as good as the iPhone 4S while being in the same price range. The big screen on the Lumia 900 is nice, but far bigger screens are on current Androids including the monster screen on the Samsung Galaxy Note. And where Nokia previously did have near retina display pixel density on the E90 Communicator, Nokia has again regresssed and now both Lumia 900 and Lumia 800 fall far short of the Retina Display sharpness of even the year-old iPhone 4. If you really love your QWERTY look, you won't even consider these Lumias. If you do love this purist touch screen look - then you will buy.. the iPhone or the Galaxy.
And while we are on the look, what about those weird neon colors? Yes, obviously the Lumia will stand out in the crowd, but it will soon mean that Lumia owners will be ashamed to show their phones. No wonder that one of the US carriers refused to offer the glaring color options. What happened to subtle and stylish? Nokia knows how to do that. But these colors are garish.
Feel. What of the feel? Nokia has a history of truly exceptional feel to its top phones. The perfection in the camera shutter on the N93 or the precision of the hinges on the E90 Communicator or the sheer delight of engineering bliss that is the slider/folder motion in the E7. Nokia could have given us great feel on the mechanics - where Nokia excels far above all other handset makers. But it did not. The Windows Phone OS forces the standard buttons on the touch screen that crowd out part of the screen permanently and the other controls are pretty lame. Again, Nokia abandons what is its competitive advantage in a futile attemp to match the iPhone. For anyone who actually owns an iPhone will not play long with the Lumia in the store, before knowing the iPhone is a far better buy (if you already are an iPhone owner).
The Look and Feel will be above average definitely but not on par with the top phones by the rivals. And when the price is about the same, on the look and feel, the Lumia is the clear loser already in the store. All consumer reviews by the tech press say that the Lumia 800 fails head-to-head against the iPhone 4S or Samsung Galaxy etc, and the Lumia 900 doesn't bring anything better on its look and feel.
REASON 4 - FAILS ON NOKIA BRAND
So the second highest factor deciding which smartphone normal consumers buy, is brand. Nokia had failed in the US market, so the Nokia brand cannot help Microsoft in the US market, that would need to be the other way around. In the USA Nokia is a bargain-basement cheapo-phone brand and the US market hasn't even seen most of Nokia's recent flagship smartphones like the N9, the E7, the N900, the E90 Communicator, the N86 etc. So in the USA, on this Lumia partnership, the conventional wisdom says that the Microsoft brand will help restore Nokia (on the Brand).
What usually totally surprises US based readers is how strong Nokia is outside of the USA. In the Global Brand survey of 2010 by Interbrand, Nokia finished 8th best brand ahead of such icons as Rolls Royce, Rolex, Mercedes Benz, Porsche etc. It was no fluke. Nokia had been in the top 10 for the past decade, as high as 4th best brand in the world. In practically every country outside of North America, Nokia was the top phone brand as recently as 2010. Usually with a huge margin.
Does it matter? Lets look at specific consumer opinion. A survey of nearly 2,000 consumers of the UK mobile phone market by Right Mobile Phone found that the mobile phone brand is more influential in deciding the next phone, than the carrier/operator brand. And in the UK, Nokia was the phone brand with the highest loyalty (not the iPhone or Blackberry which were a lot in the news for big market gains). How good was Nokia sales in the UK in 2010? Nokia's market share of new sales in the summer of 2010 in Britain was 33% according to Kantar. That was the best market share of any smartphone maker in Britain. iPhone came second and Blackberry third. This bodes very well for Nokia and Lumia as these customers are coming in to replace their smartphones now in 2012.
Except that something wild happened between 2010 and today. Nokia did not make an utterly failing phone like the N97 or one with a technical error like the Antennagate of the iPhone 4. The rivals did not come in 2011 with superphones with unbelievable features like say time travel or teleportation. Nokia gave ever better phones with better features (E7, X7, N9) and the Symbian OS released ever better editions and the Nokia Ovi store became the second-bestselling app store and everything was improving at Nokia. I am NOT saying Nokia had somehow magically caught up with the iPhone but the fact is, Nokia had a record Christmas Quarter in 2010, and then things were improving for 2011. Improving! This for the brand that had highest loyalty in Britain at the time!
So what happened to Nokia sales in Britain in 12 months. Kantar gives Nokia's market share in the summer of 2011 as .. 11%. Nokia had been the market share leader, with the best loyalty in the nation, and then produced ever better phones including one of Britain's best smartphones of the year - and its rivals did nothing spectacular - remembering the iPhone 4 had already been released by summer 2010 and the 4S was delayed till Autumn 2011. And Blackberry had its dramatic market failure in this period. Yet Nokia lost two thirds of its customers in just one year. What happened?
The British know what is the Ratner Effect and what is the Osborne Effect. Nokia's CEO Stephen Elop decided that one utter communciation disaster like Ratner Effect is not enough, he compounded it with an Osborne Effect. Both of those communication disasters independently ruined their respective companies, Ratners and Osborne. Elop doubled down and made the most costly management communciation fiasco in the economic history of mankind and devastated Nokia's brand and market demand. He combined the Osborne Effect with the Ratner Effect in something I now call the Elop Effect. Elop single-handedly wiped out Nokia's demand in February 2011. He ruined Nokia's brand.
Its not limited to Britain, obviously. Kantar reported the same crash of Nokia smartphone new sales in all European markets. Similar stats come from all around the world and obviously Nokia's own reported smartphone unit sales tell the same morose tale. In 2010 Nokia grew smartphone sales by 47% from the year before. Elop took that growth and torpedoed it, and for 2011 Nokia global market share collapsed from 29% in Q4 of 2010 to about 12% in Q4 of 2011 (we will know when Nokia releases its Q4 results shortly). This happened while the global smartphone industry exploded in 2011 growing by 59% from the year before.
Nokia brand is sheer garbage today. So the second most important thing customers ask for, which was a strong Nokia asset, has been ruined not by manufacturing errors or market forces, by Nokia's CEO with his idiotic communications last February. So maybe we can find salvage from the Microsoft side of this partnership. Or maybe not.
REASON 5 - FAILS ALSO ON WINDOWS BRAND
Microsoft is a strong brand. The Office Suite and some of its components like Word, Excel and Powerpoint are clear market leaders in their fields. The Xbox brand is strong. But Windows. Windows is not a loved brand. Windows is synonymous with crashes, bugs, delays, incompatibilty, viruses, spyware and tedious updates. Windows is why people talk of the 'Microsoft Minute' in the delays to boot up a PC. The term Internet Exploder came more as mocking Windows crashes than IE the browser crashing.
So Windows is a most unfortunate decision in branding. And the irony is, that Microsoft decided to rebrand its smartphone operating system when it switched away from Windows Mobile. Microsoft could have called the new OS anything. Microsoft Seven. Microsoft Mobile. Microsoft Phone. Xbox Phone. Zune Mobile, Internet Smartphoner. XPhone, Ballmerphone, Redmondo. Or just about anything other than Windows. But no, they called it Windows Phone. So now the new Microsoft smartphone OS has the worst branding baggage out of the whole Microsoft empire. What a dumb move.
But Branding is far more than the name of the brand. Lets see how strong the Windows brand is in smartphones. Lets go to the USA, its home market. In Q2 of 2009 Windows smartphones in the USA had 9.7% market share according to Gartner. One year later in Q2 of 2010, that had fallen to 4.6% !!! Note, at this time, Microsoft smartphones were made by Samsung, LG and Motorola - the top 3 bestselling phone brands of the USA - which did NOT experience a significant change in their market shares! Same for HTC, the pure smartphone maker. It too made Windows Mobile smartphones and it also did not see a fall, on the contrary, HTC saw a growth in the USA on its market share.
How is that possible? These four smartphone makers also make Android smartphones. And in Microsoft's best country market - the USA - when supported by each of the three bestselling phone brands of the US, and its biggest non-proprietary smartphone brand HTC - yet Microsoft's Windows brand was so poisonous, that half of its customer base churned away from Microsoft. That is not a highly loved brand.
So that was the 'old' Microsoft Mobile. What of the brand-spanking new Windows Phone brand then? Windows Phone launched in 2010 We've now had over a year of its 'success' and Kantar reported that the combined sales of Windows Mobile and Windows Phone based smartphones in the USA dropped by half again, from 2010 to 2011. Yes, even while switching to the newer OS, and giving it more than a year for 'ramp up' Microsoft lost again half of what customers remained. This is a brand which is not loved.
The global picture tells the same story. Windows Phone had its peak sales a year ago of about 1.5 million smartphones in the quarter. Last quarter we have data for, Q3, Windows Phone sales had fallen to about 500,000 units worldwide. The Microsoft Windows Phone is not a strong brand in smartphones and neither is Nokia. For the second most important factor for smartphone buyers, the brand - both brands are so poisonous, this is the classic comment, two turkeys do not an eagle make. No matter how much lipstick you put on a pig, it is still a pig. Or polishing shit is still shit.
REASON 6 - FAILS ON INPUT
The iPhone revolutionized smartphones. The multitouch interface, on capacitive touch screen, and Apple's brilliant, logical and intuitive software system, all worked. It was inherently better. That is what you need if you want a competitive advantage. Else if you do touch screen, you are just another rival. Nokia's N9 and N950 on the MeeGo OS, with its radical swype method of input, is a major step. The Windows Phone input is not a radical improvement. In fact, it has severe shortcomings with no foldering, so the more you install apps, the more cluttered and clumsy it becomes. So the touch screen input is no better than any rivals, and is worse than the best. Nobody will buy the Lumia because its touch screen is superior.
And where are the QWERTY inputs. Nokia failed the opportunity to do something Apple doesn't. To be a viable option for the nearly half of consumers who do insist on a physical QWERTY keyboard on their phones. The sad fact is, that on QWERTY the keyboard on the E7 is truly magnificent. So it would have been an easy selling attribute for anyone trialling a Lumia in a store. But no. No QWERTY keyboards. Even though Nokia designed three very similar spec smartphones (and Nokia has tons of QWERTY phones on Symbian, S40 and MeeGo operating systems).
REASON 7 - FAILS VARIETY IN MODEL OF HANDSET
The fourth most important factor is the model of the smartphone handset of any given brand. And here again, Nokia has the biggest production capacity. Nokia has the widest range of components and suppliers. Nokia can do the broadest product portfolio. Just like in cars, consumer preferences in mobile phones are very diverse. Someone prefers a Cadillac Escallade, another prefers a Toyota Prius. Someone prefers a Mercedes Benz C-Series, another prefers a Porsche 911. Someone else wants a pickup truck, or a minivan or a Smart Car. Apple makes its iPhones very similar to each other. Nokia is able to stretch its range to suit very divergent needs. If one of its three Lumia models is aimed to be an iPhone 'killer' then make the other two as different and all three quite distinct from each other. When you look at the Lumia 900, it is like the designer of the Lumia 800 fell asleep. Where is the difference. Even the Lumia 710 is just a cheaper lame version of the Lumia 800. This is the desperation move by the small rival who tries by a few cosmetic tricks to expand its product line.
Compare to Nokia's biggest rival (who is not Apple's iPhone, it is obviously Samsung). Samsung does just on its Galaxy series the obvious iPhone clone basic slab touch screen versions of almost exactly iPhone physical size; and then offers the Galaxy Indulge with the QWERTY slider; the Galaxy Beam with the pico projector; and the Galaxy Note with its gigantic screen. Thats how you do differentiation. But no. Nokia which could easily do this, rather has made three variations of one boring theme.
But again, its even worse. Why is Nokia Lumia not on every network in every country? Nokia has easily the production capacity and the world's largest phone sales network and distribution system including the ability to air ship a million phones a day, every day, anywhere it needs to. So lets take again just the USA. T-Mobile will sell the Lumia 710 but not the 800 or 900. AT&T will sell the Lumia 900 as an exclusive. The other big US carriers are not selling any Lumia handsets this Spring. So, in a perfect world, Nokia could sell 3 handsets on four networks ie 12 variations for the consumer. Now Nokia only offers 2 of those 12. If you want the Lumia 900, you can only get it on AT&T. If you want the Lumia 710, you can only get it on T-Mobile. And the Lumia 800? Gotta fly to Europe to get that.
It is perfectly possible that Nokia and Microsoft marketing have convinced a random customer that they do want the Nokia Lumia smartphone. And that customer most likely went online somewhere to see what model they want. And then went to their carrier store, to buy it. And in 10 times out of 12, the carrier will not offer the Lumia which the customer would want. Then - while the customer WOULD be willing to prioritize the brand of phone (Nokia) ahead of the exact model - in these cases, there is no other Nokia smartphone to sell (because idiot Elop decided to pull all Symbian phones from the shelves in the USA, and worse - refuses to sell the magnificent N9 and N950 which run on the MeeGo operating system). So. If the customer wants a specific model, and that is not sold by that carrier, the facts tell us that the smartphone customer would be willing to buy another Lumia or even another Nokia smartphone - except that because of management madness, there are no others. It may be to Microsoft's advantage that the customer doesn't buy a MeeGo or Symbian based smartphone - but that customer will then go to another brand - and in 9 times out o 10, it will be either an iPhone or an Android. And in any case, if a customer wanting a Nokia branded phone, is not walking out of the store with a Nokia branded phone, that is a lost customer to Nokia (and gain to Apple or Android). Elop's 'strategy' is totally not in Nokia's best interest.
REASON 8 - FAILS SMARTPHONE APPS AND APP STORE
The smartphone apps portfolio is ranked only tied for 5th/6th highest priority for buyers of new smartphones. Note that all of the above come ahead of your precious app store. But then, come on. Windows Phone app store? It has only passed 50,000 apps. Even the 'burning platforms obsolete' Symbian based Nokia (Ovi) app store has twice that in apps. Android is 8 times bigger, Apple iPhone App Store is literally 10 times bigger. If you walk into the store with the apps as your decision criterion, then Windows Phone fails from the start. And that is not even before we look at the apps. The reviews of WP7 apps say rather consistently that they are poor versions of their iPhone and Android masters, and further, that they do not take advantage of WP7's abilities.
These will get better over time. But the application developers' interest in making apps is totally dependent on their belief that its worth their while. Once they bother to count, to do the basic math, and see that there are about 190 million Android users worldwide, about 120 million iPhone users (and about 170 million iOS users when we add iPad and iPod Touch); and over 300 million Symbian users; and about 100 million Blackberry users - and only about 5 million Windows Phone users. Yes. The total installed base of Windows Phone today, about a year and a half from launch is... under one percent of the smartphones in use worldwide. Under one percent. Less than 1%. This is when the futility of bothering to create WP7 versions becomes obvious. Microsoft has been able to peddle the sheer impossibility of a 'third ecosystem' - which even Microsoft loyalists would not have believed considering how ridiculous are Ballmer-oriented claims about Microsoft's future - but they suddenly believed it, when the Nokia CEO said the same.
Please do the math. We just heard from Morgan Stanley that they project Nokia and Microsoft to sell 37 million Lumia phones this year 2012 and 64 million Lumia smartphones next year 2013. This forecast by Morgan Stanley is quite optimistic. But lets assume it truly happens. Those numbers sound great, don't they. That is awesome, isn't it.
So by December 2013, the world will have about 111 million Windows Phone smartphones in use. Yes. That might sound good. Except that in December 2013 the world will have about two BILLION smartphones in use (we will see about 700 million sold this year alone). So, even three years from now, the Microsoft Windows Phone OS family will have only about 5% market share. That is not a third ecosystem in anyone's book. And Android will be over a Billion smartphones. Where is the developer attention going to go. Understand that even in 2013, Symbian will utterly tower over Windows Phone in installed base. So Apps will not win the battle for Lumia.
REASON 9 - DEFICIENT OPERATING SYSTEM
The Windows Phone 7 and 7.5 Operating Systems do look cool and sexy when shown on stage or briefly demo'ed. But all experts who have reviewed Windows Phone have immediately pointed out that they are not even up to modern standards yet, far less being in any way 'leading edge' technology. The tiles are a gimmick but mostly are only an update of Widgets that have existed on such 'burning platforms obsolete' operating systems as Nokia's Symbian. Windows Phone does do multitasking, but only just. For example the phone will not wake up from the alarm. So you buy yourself a Lumia and then set it up to wake you for the next day to go to work - and will have a severe 'I hate Nokia' moment when your phone rings silently without waking you up. What is with that?
The camera utility is limited and restricted. Windows Phone 7 doesn't even support dual cameras (that came with 7.5). There are many application developer issues that are not supported - like the hottest area right now, Augmented Reality. Nokia's past flagship phones have proudly done AR, but not these Lumias. And there is no support for NFC. And you cannot transfer apps and various content via bluetooth etc. The system is very restrictive and limiting.
What is worse, the next update to Windows Phone is aimed at the cheapest phones, so the flagships cannot even catch up to the rivals with the next Windows Phone release. This is the Microsoft way. The short term allure of the Tiles does provide some in-store excitement. But when smartphone users start to use the Lumia, they soon are frustrated and disappointed. Again this is not me saying. I have not used a Lumia or any Windows Phone based smartphone. But the Guardian tech writer who bought a Lumia 800 in the UK before Christmas, was so fed up with it already after Christmas when using it, he returned the smartphone - and wrote in one of Britain's biggest newspapers that its what he did. This is not proof of an OS that is ready for prime time. It may become that one day, but it is not competitive yet. This is probably more like Windows 2.0 (remember that, ouch ouch ouch) than Windows 3.0 which finally was the first Windows on the PC that was (barely) usable.
Not everybody will return Lumias. But it will see more returns than its peers. That poisons the reputation both for friends recommending smartphones and the sales reps at the stores. The sales reps hate returns - because the customer has to be sold another model smartphone - but the sales rep won't get a new commission. And then the rep has to do the returns paperwork and packaging hassles. Three times the effort for zero more commission - while the customer bitches and moans and gives the sales rep a bad day. So the sales reps learn real fast which phones have high return rates - and stop selling them!
REASON 10 - REGRESSING IN FEATURES AND SERVICES
And the last of the major decision criteria in the Industrialized World for selecting smartphones is the features and services offering. And Nokia is known for a lot in this area. Nokia smartphones used to come with a huge array of pre-loaded apps and the devices were overloaded with technological goodies. If the iPhone was sexy and slick, and the Nokia was more bulky and unsexy, at least the Nokia had every conceivable tech built in, and several more you didn't even know existed.
I'll be the first to admit most consumers won't use most features and in recent years the smartphones have become so complex, even expert users couldn't work all parts of their phones. So it was overkill on many levels. But for some consumers - remember this is only the 7th most important priority - they have their 'check lists'. Does this phone have LTE. What resolution is video recording. Which file standards does the media player support. Etc etc etc. And then there is the specialist need. Like the customer who has had a previous Nokia and loved that its FM transmitter lets you connect to your car without an iPod cable connector. Or perhaps the customer has a collection of movies transferred to microSD memory cards, or whatever.
So lets see how technologically advanced the Lumia 800 is, the flagship currently available - the Lumia 900 will release only on AT&T late in the spring about the time when we expect the iPhone 5 to launch.
So, Lumia 800? Compared to Nokia's previous flagships and current rivals. The Lumia 800 has only 8 mp camera regressed from 12 mp in N8 a year before. The market leader now has 16mp (HTC). The screen size is 3.7 inches, which is regressed from 4 inches on the E90 Communicator four years ago. Current market leader Samsung Note has 5.3 inch screen. There is no slot for any kind of memory card which is regressing from the microSD slot in the N8 that supported 32 GB memory cards. Today top phones support at least 64 GB microSD (and probably even bigger). The Lumia 800 doesn't support video calling (Gosh, how far back can I go, I think it was the 6680 back about 2004 that first had videocalling support and every Nokia flagship has had it since.. except not now the Lumia. And obviously, after even Apple added videocalling support to the iPhone 4, essentially every rival (not using WP7) does videocalls.
The flash on the Lumia 800 is LED, the first Nokia flagships to go better was the N95 and N82 in 2007 with Xenon flash. Several better cameraphones have it now. The Lumia doesn't have FM radio, Nokia added it gosh, years ago, about 2005. Many rivals have FM Radio today. The Lumia 800 doesn't support Real Media player files (that will play well with web services haha). Real Player was standard on Nokia phones still last year and most rivals support the file format. The Bluetooth on the Lumia 800 won't support many types of file transfers, it did on past Nokias and does today on rival phones. The Lumia 800 doesn't have a QR code reader installed. Nokia put it on its flagship first in 2006 on the N93. Most rival smartphones have QR code readers.
Lumia 800 doesn't have TV out, that came to Nokia flagships in the N93 in 2006 and many rivals have it. The Lumia 800 doesn't support HDMI out which came to Nokia on the E7, and now some top rivals do it too. The Lumia 800 doesn't read USB thumb drives and memory sticks. Nokia introduced this fantastic feature on the N900 in 2009 (note, yes, read thumb drives and other USB memory devices including portable hard drives making the smartphone behave just like a real laptop). I don't know if other smartphones support this function yet but obviously Nokia has brought it to newer phones like the E7.
And the Lumia 800 doesn't offer a replacable battery. Nokia has started on that dumb path already earlier under Elop with the N8 being the first Nokia smartphone that didn't let users replace the battery. Considering how heavily smartphones can be used on some days this is a huge disadvantage, especially for power users who surf the web, use WiFi, shoot video, play music, watch YouTube videos etc etc etc. Luckily Elop has seen the error of his way and now starting with the Lumia 710 the practise is ending, but there are still phones in the pipeline that don't allow battery changes - like the Lumia 900.
This is Nokia's current 'flagship' which fails in side-by-side comparisons on many widely used and desired features and specs - with its Nokia brothers from years ago! Years ago! How badly is the Lumia 800 regressing ! It seems like it was deliberately designed to fail in the market.
We have looked at how consumers use smartphones, and what are currently the top things that decide which smartphone we buy next. By every SINGLE criterion, Nokia Lumia is underperforming the market - and on most it is regressing from where Nokia was before Lumia. If you thought the Nokia of the past was 'obsolete' for your market, whether that was the USA or Europe or Asia-Pacific or wherever, this Lumia line offers you NOTHING that is better but on TEN separate factors, Lumia is now worse than what Nokia was last year. WORSE.
REASON 11 - REJECTED BY BUSINESS / ENTERPRISE CUSTOMERS
So that was consumers. Many will be eager to argue the synergies of Windows and Office Suite at the enterprise/corporate customers. And drool at the amazing opportunity that Nokia business-oriented E-Series smartphones can have with full Microsoft Office integration. The massive global market share dominance that Windows and Office have in the workplace. This must be Lumia's big market and Tomi is a total fool to not see it. Yes. Total fool.
First, remember that only 1 in 5 smartphones sold worldwide is a business/enterprise smartphone. Secondly, remember that Blackberry owns roughly speaking half of that. Before we get into massive argument about Blackberry is dying, hear this: A 2011 survey of 20,000 businesses in the USA by TNS, found that Blackberry penetration ranged from 61% to 81%. Six out of every ten smartphones was a Blackberry in tiny US businesses of less than 4 employees and 8 out of ten smartphones was a Blackberry in the biggest corporations of 1,000 employees or more. The myth of the iPhone replacing the Blackberry is, alas, quite premature. The statistics of smartphone sales reflect that too. Blackberry is collapsing in consumer sales in the USA, yes, that is true (but growing internationally) but the enterprises are replacing their smartphones rather loyally, Berry by Berry.
And before you say 'Windows' - the second most popular smartphone in US businesses - Microsoft's home country and Microsoft's Windows PC and Office Suite penetration's best country by far - is not Windows, not Windows Mobile nor Windows Phone. It is yes, the iPhone. If Microsoft Windows was such a magical synergy tool, why is the consumer-oriented iPhone outselling the Windows smartphones in the US enterprise/corporate space, after a DECADE of Windows Mobile / Windows Phone sales by Microsoft and its partners. There is no synergy.
Which brings us to the Nokia Magic with Microsoft Office Suite integration. So what if we really do put the full Microsoft compatibility to E-Series? Surely that is the magic potion. Haha. You know what? That was already done. Not last year. Not in 2010 when Elop joined Nokia as its CEO. No. Microsoft and Nokia did full E-Series and Microsoft Office Suite and other Microsoft software business/enterprise integration in... 2009. And the big corporate/enterprise clients they landed in the next years? None. None. And you know who was in charge of that project on Microsoft's side? Stephen Elop thats who. Rather than achieve corporate sales successes for their 'strategic partnership' Elop rather prepared his job transfer from Microsoft to become CEO of Nokia the next year.
So today ANY Symbian phone can do full Microsoft Office fully and all its peripherals and apps. Including Skype (Windows Phone does not support Skype). Symbian supports such vital business needs as.. folder (Windows Phone does not) and full multitasking and the transfers of apps and files via bluetooth. So doing your Microsoft business solution is far better on a Symbian E-Series phone than with Windows Phone! Remember, the old Windows Mobile was built to be business-oriented (as was Symbian originally). But Windows Phone was built to be the iPhone-killer - so admit Microsoft execs now - and it was made to be a consumer-oriented smartphone OS, not a business-oriented OS. If you seriously believe that Microsoft can win enterprise/corporate customers of any meaningful degree with Nokia, you are deluding yourself.
And this is all without considering the natural need of enterprise/business phones - keyboards! Why is every Blackberry and every Nokia E-Series carrying a full QWERTY keyboard? That is what enterprise/business customers want. Why is Lumia not offering a QWERTY variant!
No, Lumia will not do better than Nokia did before with E-Series on Symbian and E-Series on Symbian is more Microsoft-friendly and enterprise/corporate user friendly than Lumia using Windows Phone. Whatever success or lack therof, you have seen of Nokia in the business/enterprise space, that will do worse on Lumia and Windows Phone, not better.
And finally on the enterprise/business users. The Microsoft loyalty and brand was equally demolished with the catastrophic crash of its market from 10% in the US market in 2009 to 5% in 2010 to under about 1% today (when adding both Windows Mobile AND Windows Phone). So don't delude yourself into thinking that Lumia can somehow grow on the enterprise/corporate client side, either in the USA or the rest of the world. If Microsoft was the magic potion - surely Nokia should have been able to capitalize on it in 2009 and 2010 before Elop decided to set his platforms on fire like the psychotic arsonist.
WHAT OF EMERGING WORLD ?
Hey, that was only half of the world of smartphone sales. The planet has a population of 7 Billion who have 5.9 Billion mobile phone accounts. Only 1.2 Billion people live in the Industrialized World and all of the above only related to what is called 'The West'. What of the Emerging World where 5.8 Billion people live, where 75% of all mobile phones are sold, and now half of all smartphones are sold. China overtook the USA as the biggest individual country market for smartphones last year. India is rapidly growing into another giant as is Indonesia, Russia, Brazil etc.
First, most of the points in the above apply to the Emerging World but in perhaps different orders of priority. So for example the TNS global survey of 34,000 mobile phone owners worldwide on their purchase priorities with mobile phones, the rankings are different. The top 7 most important decision criteria are in this order: 1) Brand, 2) Model of Handset; 3) Network Provider; 4) Look and Feel; 5) Features and Services; 6 Operating System; and 7) Apps and Content. Lets look how these differ for the less affluent part of the planet's population.
AMPLIFYING REASON 4 - BRAND IS MUDDLED
You understand that if Nokia was a rubbish brand in the USA, but still ranked 8th most powerful brand globally in 2010. then Nokia had to be far better than ranked 8th outside of the USA, after all the USA is by far the biggest economy on the planet. And it was. Nokia was not only the best phone brand essentially in every country outside of the USA, Canada (and South Korea and Japan); but it was literally the most valued brand: period. In many countries from India to Nigeria. The most trusted, most desired, most valued and loved brand. And that was of course also damaged massively by the Elop Effect as in the above. But some evidence. In India for example Nokia was toppled in 2011 from being the topmost brand.
In the 'West' we have PCs at work and home. We know Microsoft well and most of us use Windows based PCs. Both Microsoft and Windows are very powerful brands for us. But in the Emerging World they do not have PCs in every home or every office. If they do, they are often Linux based PCs (or have pirated Microsoft software which may be very buggy etc). So while we in the Industrialized World can at least theoretically have a good impression about Microsoft and Windows, and it can 'help' in the branding battles - top priority please remember, then in the Emerging World countries the Microsoft Brand is no help and easily a hindrance.
But Elop has consistently been making it worse. Making Nokia's branding worse. He made a widely criticized decision to change Nokia's naming, to go to pure numbering in its names (Not Nokia N9 or E7 or X7, but just Nokia 500 etc). This was very confusing and he reversed his decision two months later and today we have the Lumia series, the Asha series, and even individual phone models like the Lumia Ace ie Lumia 900.
Then he decided to kill the Ovi store brand. The Ovi store was nothing, nobody and nowhere in the USA and no doubt when Elop flew every week from Finland to his other home in Seattle USA, he felt Ovi was a failure. Except that it wasn't. The iPhone App Store is the world's bestselling smartphone app store .. in those countries where the primary language is English. But all those countries combined have a population that covers 7% of the planet's population. What about the other 93% of us? The biggest country by population is China. Biggest app store in China? Ovi. The second biggest country by population is India. Biggest app store? Yes, Ovi. Third biggest population is the USA, but fourth biggest? Indonesia. App Store king? Ovi. Fifth biggest population is Brazil. Store? Ovi. Then Russia. Ovi. Nigeria. Ovi. Pakistan, Egypt, Bangladesh, Vietnam, Turkey, Ovi Ovi Ovi...
Nokia's Ovi store supports over 50 languages! And obviously, local developers can offer local apps in their home languages! And now Elop wants to cause all that confusion by discontinuing the Ovi store brand. Why? What possible benefit can it deliver, while Nokia's overall apps partnering is in turmoil with Symbian and MeeGo and Maemo and Windows Phone and S40 and Meltemi and whatnot. And its not just that, very big global partners have been cross-promoting the Ovi store. CNN for example was promoting its Symbian smartphone app worldwide on countless daily ads on all CNN channels. The value of just that advertising runs in the millions except that Nokia got it for free. And what did CNN still promote in December of 2011 - half a year after the end of the Ovi brand - yes CNN's smartphone app was available on the Ovi Store. No wonder Nokia's brand is being flushed down the toilet. The CEO is actively assassinating the brand in every way he can.
AMPLIFYING REASON 7 - FAILING MODEL OF HANDSET
In the Emerging World the smartphone situation is dramatically different from that of the wealthy Industrialized World. For us in the Industrialized World countries, it is no hardship to pay 600 dollars for a premium smartphone like the iPhone or Samsung Galaxy or Blackberry Bold or Sony Xperia or Nokia Lumia 800. But in the Emerging World where it is very common to have a daily wage of 2 dollars (thats before taxes) a 600 dollar superphone is totally beyond reach. As implausible as thinking of buying a corporate jet or a superyacht. They dream of buying a bicycle to improve their lifestyle. They do have mobile phones but ones that cost under 50 dollars, often as cheap as 20 dollars new.
(For US readers, remember, a 'free' iPhone 3GS on 2 year contract is not a free phone. I am always talking of real prices, not the bogus prices of bundled contracts with handset subsidies. The African farmer who earns 2 dollars per day, can neither afford to buy the iPhone at 600 dollars without contract, nor to sign up for a 2 year contract of 50 dollars per month to get a 'free' iPhone on handset subsidy).
Here we have to go to the phone price pyramid. I don't have a current one in the public domain but in 2009 Morgan Stanley published their price pyramid for mobile phones worldwide. Morgan Stanley found 2% of the phones sold to be premium smartphones; 11% to be other smartphones and the remaining 87% to be 'featurephones' ie non-smartphones or 'dumbphones'. These cheap phones in 2009 had an average price of 100 dollars (that has come down since then). In 2009 about 13% of new phones sold were indeed smartphones. Now about 29% of all mobile phones sold worldwide were smartphones.
The planet did not suddenly have a huge rise in its wealth in the past two years (arguably, we've suffered globally with the economic crash). The poorer people didn't suddenly all - billions of them - receive massive pay rises. But the total smartphone proportion of all phones sold more than doubled in the past two years. The only way that is possible, is if smartphones have become less expensive at the low end of the price point. The 100 dollar smartphone (remember, this is without contract! Without handset subsidies, a 100 dollar smartphone).
And we have them! Nokia shipped sub-100 dollar smartphones from 2009 as did Samsung. We are now fast approaching the 50 dollar smartphone led by ultra-low-cost phone makers who specialize in the Emerging World markets, from global giants like ZTE and Huawei, to regional players like MiFone of Africa and Micromax of India etc.
Nokia was perfectly poised to fight for this low-cost price segment with Symbian, because Symbian was designed to work on very modest technological requirements and often these ultra-low cost smartphones are not touch screen devices. Meanwhile Microsoft's Windows Phone was designed to work on very high spec components - in fact, Windows Phone does not even work on Nokia's standard chip supplier equipment like Texas Instruments. And Nokia owned the low-cost smartphone space. Canalys statistics tell us that in China in 2010 in Q2 the market share for Nokia (obviously running Symbian) was.. get this.. 77% !!! The second biggest smartphone maker brand in China was Motorola and Nokia was .. 16 times bigger than its nearest rival. This, in the country that was about to become the world's biggest smartphone market.
Similar stats from market after market after market. Over 70% of smartphones in India over 80% over the whole continent of Africa in new smartphone sales in 2010 were Nokia branded. Nokia had very accurately foreseen the future markets as they emerged, and provided suitable, low-cost smartphones for those markets and utterly dominated the Emerging World. And how? By offering a wide range of smartphone models. Now the Lumia 800 and 710 are far too expensive for this market. (again, US readers, don't be fooled about T-Mobile contract price of 50 dollars for Lumia 710, it costs many times more without the subsidy).
Lumia 800 (And 900) is utterly beyond the market price except for the rich elites, who will rather buy iPhones, Blackberries etc. The Lumia 710 is yes, cheaper than the 800 but its still far too expensive to become any kind of mass market success (its price without subsidy is about 350 - 400 dollars). But in the Emerging World countries, the price differential between models is far more value-driven. There are almost no subsidies, so you pay exact real retail price. One phone model costs 479 dollars, the next 529 dollars, another 499 dollars etc. The differences are nuances.
And the buyer has worked far more for that dollar than we have had to for our dollar. The customer is far FAR more value-aware. The customer knows FAR more accurately what is true value. So the feature list is scrutinized far more thoroughly. All aspects are tried and tested before purchase. The advice and guidance of peers and friends is seeked even more than we might do. Remember, these customers do not have an internet to go do price-shopping. They do not read tech magazines with product reviews and contrasts and recommendations.
With Symbian at low-cost smatphones, Nokia had conquerred the world. If Elop could have left Symbian alone, he would be now reaping the benefits of all the hard work Nokia did over the years. Except he didn't. The Elop Effect collapsed the Nokia smartphone sales globally, not only in the Affluent countries but also in the Emerging World countries. So look at China. Analysys gave the Q2 market shares for China in 2011 and Nokia had crashed in one year to.. 22% with Samsung and Motorola nipping at Nokia's heels. Now in October 2011, Morgan Stanley reported that Chinese consumers plan to buy their next smartphone preference for Nokia had fallen further to 18%.
What Nokia would have desperately needed out of early Lumia was low-cost smartphones now, to try to hold onto that market share. It is being now burned forever. And the Microsoft Windows Phone cavalry will not arrive in time to save Nokia. The current Windows Phone edition does not support low-cost smarphones. Because of that, Nokia can't even start to ship low-cost smartphones until the second half of this year at the earliest (if Microsoft manages to deliver on time). So the handset portfolio problem is far bigger here in the low end of the smartphones for the Emerging World markets.
REASON 12 - HOSTILE CARRIER RELATIONS WITH NOKIA
The third biggest factor for smartphone buyers in the Emerging World, far ahead of apps or the OS, is the network provider ie the carrier ie mobile operator. The issues range from network coverage to service reliability to network technology to service offering and pricing etc.
Nokia had THE BEST carrier relationships in the world. Nokia phones are sold on more networks than any other phone brand and Nokia has special partnership relationships with many carriers, ranging from the world's largest carrier/operator China Mobile to the world's most advanced and demanding carrier/operator NTT DoCoMo of Japan (the carrier who launched the world's first cellular telecoms mobile business ie the company that started this industry).
I am not suggesting that all Nokia carrier relationships were in good condition. The USA relationships were particularly damaged. But compared to any other handset maker, Motorola, Samsung, LG, Apple, RIM, HTC, whoever, Nokia had the best, THE BEST carrier relationships worldwide. That is why even when Nokia had problems like the failed flagship smartphone N97, Nokia overall global sales did not suffer severely. Compare to Motorola which after the Razr launched the Rokr and today Motorola is no more, as the bankrupted and split-up handset maker it was bought by Google.
Nokia cultivated the partnership model with its app store, Ovi, and its content and its networked services such as maps, advertising, mobile payments etc. Nokia had secured 'carrier billing' relationships with over 100 carriers worldwide for Ovi (no other rival app store had even one quarter that level - carrier billing means one-click payments that get charged directly off your phone bill or prepaid account. No credit cards etc needed). With the language support, the ecosystems nationally around the carriers and Nokia grew meaningful in many cases. Now last year in February that all was suddenly sunk, with the Elop Effect.
I am not suggesting the carriers/operators loved Nokia - Nokia was too big and powerful to be loved. But Nokia was seen as a mostly gentle giant, and one that mostly did not do harm to the ecosystem. And over time Nokia management earned a reputation that you could count on Nokia's word. That all died with the Elop Effect.
From February 2011, the global carrier community revolted against Nokia and Elop. Nokia was placed on a sales boycott. This has been reported only in anecdotal evidence and mostly in countries of the Industrialized World, but Nokia itself admitted in the Quarterly results that its carriers and distribution channel had reduced inventory suddenly and to an unanticipatedly large degree. Evidence? I can't 'prove' prove it to you, but it is very widely accepted by experts in the industry, that Nokia's resale channel froze in February and Nokia products were removed from displays etc. This phenomenon continues and reports trickle in from many countries that Nokia smartphones are conspicuous in their absense from store shelves and inventories. Obviously the global utter collapse of Nokia smartphone sales is partially a symptom of this problem (and other problems).
REASON 13 - HOSTILE CARRIER RELATIONS WITH MICROSOFT
Nokia was known to be friendly to carriers if bureaucratic and uncompromising. If that feeling turned to hostility, there is good chance it can be reversed. But Microsoft was known as the Evil Empire long before they announced the partnership with Nokia. Forget about Microsoft's bullying of its developers and partners and rivals, and the prolonged feuds with the regulators on both sides of the Atlantic. Just in wireless, Microsoft is the mobile death wish. Their very first strategic partner and launch customer for Microsoft's first smartphones, UK based Sendo was driven to bankruptcy after lengthy court cases with the Evil Empire. Motorola went from profitable to loss-making in its strategic partnership with Microsoft smartphones. Motorola was so disgusted it announced it would discontinue smartphones on Microsoft platforms which gained it a lawsuit to boot. LG's strategic partership with Microsoft bled the company profits into losses and LG ran to Android. HTC, Microsofts' longest-serving smartphone partner was so upset with Microsoft, it refused to support the final version of Windows Mobile and now strongly prioritizes Android. If you don't know the history of how devastating Microsoft has been to its 'strategic partners' in mobile, like the vampire, its bled them dry. Read Horace Dediu's review of In Memoriam: Microsoft's previous strategic partners.
Microsoft is like the cheap prostitute. Not only has Microsoft been sleeping with everybody, but Microsoft then awards its 'strategic partners' with a sexually transmitted incurable disease as a parting gift.
While mass market consumers are usually blissfully ignorant of the backstabbing in the corporate world of partnerships, the carriers/operators are not. They pay very close attention to every player in the market. The carriers/operators know they need the handsets, and smarpthones need operating systems to run. They are very aware who is who and who plays naughty and who plays nice. No wonder that 'do no evil' Google is getting global support everywhere. I do not have to go into the specifics of what all Microsoft has been doing in the past to anger the carrier community, as it is widely acknowledged that Microsoft's carrier relations were 'strained' or 'challenged'. Even Microsoft executives acknowledge this as a fact.
Then came Skype. I have written another long blog explaining why Skype is the ultimate red flag to carriers/operators. You can believe me, or not. That doesn't matter, we now have an ex Microsoft executive, no: ex Windows Phone General Manager at Microsoft, Charlie Kindel, who acknowledges that Microsoft had further angered the carriers in 2011. This is how he phrased it "Windows Phone raised its middle finger at the carriers" and to make matters worse, even after that, currently "Windows Phone requires Microsoft to push hard on the carriers" And the carriers do not like this at all. Kindel said carriers are reluctant. He said because carriers have explicitly decided to support Android rather than Windows Phone - "that is why Windows Phone has not sold as well".
Whatever you thought of Microsoft success or failure in the past in mobile, the ex General Manager of Windows Phone tells us that Microsoft had indeed had a bad relationship with carriers, Microsoft's attitude to carriers had already been one of arrogance and abuse; and that carriers hated it; and that since then Microsoft had been making matters worse - and the resulting penalty from carriers was to push sales away form Microsoft to Android. I say boycott, you say tomato. Regardless, it is patently obvious that Microsoft relationships with carriers were bad before and are getting worse with Windows Phone. This now is again worsened as we hear for example from Europe that Nokia was bullying carriers about commitments to sell Lumia in Q4 etc.
Whereas in the Emerging World, for smartphone purchases, consumers will look at the operator/carrier as the third most important issue - where Nokia's reputation has suffered with Elop and Lumia; and its partnering with Microsoft has only made matters worse. This means Lumia is worse off than Nokia was before the Elop Effect. Worse off. Lumia is in trouble.
AMPLIFYING REASON 3 - LOOK AND FEEL
Remember in the Emerging World Nokia is the gold standard for consumers of mobile phones. They worship Nokias. Even the superphones are featured in the stores even as few customers ever can afford them. Proud owners walk with four year old models if they were top models way back when and so forth. In countries where the average person has no hope of ever owning a car, the mobile phone is the nearest thing to a true status symbol. Nokia has far higher assigned esteem than just a phone or gadget.
So the customers know Nokia models and their specs. And they truly appreciate some minor details. That FM radio that you laughed at in the Features section many thousand words ago in this story? In Africa, literally, for about half of the population, the first radio they ever personally owned, is the one that comes on the Nokia phone. Yes, they don't have TV sets. They are so poor they don't even own a radio receiver. Not until the first radio in the mobile phone.
The hideously stripped nature of the feature set of the Lumia line is screaming for rejection. Look at electricity. We take electricity for granted. In countries like Pakistan and Bangladesh the electrical grid is shut off several times.. per day .. to conserve energy. How do you live in that kind of world? The replacable battery is far more necessary. And power grid? In India and much of Africa the access to electricity is so rare, that people often send the spare batteries to nearby towns or villages to be recharged (while using the other spare battery to power the phone). Bluetooth file transfers, microSD cards, these are absolute must-haves where there will be no practical use or indeed network connectivity to use Microsoft's SkyDrive. Nokia knows all this. The sensible smartphone designed for emerging world markets as a low-cost smartphone will have dual SIM slots, will have family ringing and family phonebooks (allowing the sharing of one phone with several family members) and will include the torch/flashlight etc where the village has no street lights at night etc.
The Lumia including Lumia 710 was designed by affluent American college kids. They have zero concept of what a farmer in Nigeria needs or a lumberjack in Brazil or a fisherman in the Philippines. But Nokia's 'real' designers know. The past Nokia phones, dumbphones and smartphones have dominated the Emerging World. But this Lumia series including its 'cheap' version Lumia 710 is a slap in the face of Emerging World markets. And the series will flop utterly, comprehensively.
I COULD GO ON
Yes, I could. There is NOTHING in the Lumia 800 or Lumia 710 today, or in the Lumia 900 late in the spring, that is better than what Nokia had in the past, or what rivals offer today. Whatever you think of Nokia's success in the past, whether you applaud it or are aghast, the performance of Lumia will be worse. I have given you only 13 reasons why Lumia will fail. These 13 reasons are not my opinions of what I think should be the cause or effect for smartphone market succes. I have given you evidence and facts and stats and end-user surveys, showing what smartphone users do, and what smartphone users want, and what other factors influence the purchase decision ie the carrier relationshiops the corporate purchase departments.
If you think another reason somehow 'trumps' these 13 problems, I suggest you not only decide it is so, because you think that makes sense. If it is indeed true, you should be able to find experts saying so. If you do find experts claiming some benefits for Lumia, then compare those to this list of 13 and see if the evidence suggests one is more relevant than another.
I SAID NOTHING OF BUILD QUALITY
The above is all sales related matters. Marketing, branding, design, price, distribution. They are utterly dooming Lumia. I didn't talk about the reality of the device as it is manufactured, whether design flaws or component problems or build quality etc.
This is a whole new can of worms. Imagine if if I sold you a Ferrari. A brand new Ferrari. And rather than it costing say 200,000 dollars, I charge you 150,000 dollars for the brand new Ferrari. Bright Ferrari red, the prancing horse logo and all. You get full registration and all details. A genuine Ferrari 2 seater sportscar. Luxury. Sportscar. And you are not quite familiar with all Ferrari models, so you then talk with your friend and then you go to the internet to see the actual details about this particular Ferrari model.
What if you find out that your 'genuine' Ferrari was not actually manufactured in a Ferrari factory in Maranello Italy. It actually came from India, from the Tata motors factory (the company that makes the cheapest car in the world). Well, that is not really the end of the world, as long as it does have real Ferrari components, except that when you look at the engine, you find it came not from Ferrari's engine factory. The engine your Tata sportscar has, came from Proton the cheap car maker in Malaysia. But you do love the look and feel of the Ferrari and its bright red Ferrari color, until you drive next to another red Ferrari, and obseve that your red is not the same red. So you dig more and you find out, that this car wasn't painted by Ferrari in its colors, it was painted by Kia the cheap car maker of South Korea. And you think, ok, but it does drive well, and at least it was designed by the iconic sportscar superstar designers from Italy. And then you find out, the car was designed by the tractor factory designers from Zetor in Russia. The only thing genuine Ferrari is the badge, which they bolted onto this fake Ferrari, and even that was not put on in Italy. No part of the car has ever seen the country of Forza Ferrari! Would you feel betrayed?
That is the Lumia. No aspect of it is genuine Nokia. It was not designed by Nokia's top designers from Finland. It was not manufactured in Nokia's world's most efficient and competent handset manufacturing factories. And it isn't even powered by Nokia components like the CPU (the engine). And we know the decorations are not genuine Nokia - the operating system and apps (the paint job). Rather than Nokia's own-designed mobile-optimised and smart OS platforms, Symbian and MeeGo, this fraudster uses an OS that was never designed to any degree by any Nokia programmers. And the production.. Get this. Nokia factories are the world's most modern and efficient, including the world's largest handset plant in China. They are now idling because Nokia sales have crashed. What does Elop do? He actually hired an outside company, Compal of Taiwan, to manufacture the Lumia smartphones! That is not a Nokia. Nothing about it is a Nokia, except that the CEO has the nerve to stick a Nokia badge on the phone and claim it is a genuine Nokia.
Let me make an observation here. Stephen Elop is an excellent communicator but he seems to be a systematic liar. Just about everything he does, and everything he says, turns out to be untrue, often the opposite seems to come true. I am thinking of former Vice President Dick Cheney and 'we know where the weapons of mass destruction are'. He looked you in the eye and lied, deliberately. That to me, is what Elop seems to be. None of his words have any relationship with reality or the truth. So lets continue..
No matter what any expert may have said about how obsolete Symbian was or how horrible Ovi store was or how bad the software was, the one thing everybody agrees about Nokia, its build quality has always - always - been the best in the world. No Antennagates at Nokia. No exploding batteries at Nokia. No cracked screens at Nokia. There was the famous dog who ate the Nokia phone. It went through the dog, and the next day, in the dog poo, the Nokia phone was there, and it worked. They are bulletproof.
Is that the same for a contract manufacturer with near slave labor in Taiwan who make phones and gadgets for dozens of companies? No. It cannot be. And the first evidence is already out. I mentioned the SMS crippling text. There is a second technical manufacturing problem already admitted by Nokia. The Lumia battery is failing. Some batteries draw down too fast, others don't recharge properly and sometimes the problem blocks the whole battery operation. This is the build quality you get when you outsource your factory. The last vestige of Nokia strongholds - its superb build quality - is now jeopardized and indeed, first evidence of problems already not just reported - but acknowledged by Microsoft and Nokia! The Lumia is a failure and it will get worse.
FORBES REASONS ARE QUITE SILLY, ACTUALLY
So lets go to the Forbes article then. The Forbes article starts off saying Windows Phone has a totally unique User Interface. That may be true. But is it truly more important, that the UI is 'unique' - something no buyer asked for - or whether the operating system itself if useful, or the app store has tons of apps, or the camera is easy to use; etc. I am not saying it doesn't matter at all. But I don't see someone coming to the store, and buying the lousy phone with the unique interface rather than the good phone with the familiar interface.
So let me quickly comment on the other five reasons. Forbes said Windows Phone would have less patent wars. That may be good for Microsoft (which seems not to care in the least about suing everyone so it might even be seen as a drawback at Redmond). But this is utterly irrelevant to Nokia. Nokia has the biggest patent portfolio of any handset maker in mobile and has invented the second most aspects to mobile behind only NTT DoCoMo. Look at the Apple lawsuit. Apple is suing everybody and winning. Apple surrendered to Nokia and now pays Nokia not just for every iPhone made, but Apple also paid a lump sum to compensate Nokia for the patent infringements of early iPhones. Nokia didn't need to pay one penny to Apple. No, Nokia doesn't need patent protection, and this wont' matter one iota in Lumia's success or failure.
The third point raised by Forbes is that with Windows Phone there will be uniformity across devices. So they claim no fragmentation. Obviously that is impossible, even with the iPhone there is fragmentation (Retina Display for example so the screen resolutions are different in the 3 series and 4 series of iPhones). But yes, I'll accept this is a fair argument. Symbian is plagued with fragmentation (although it was getting less so) and Android is seeing more and more of it.
So? Do you go asking your handset dealer about fragmentation? I think this phone has too much fragmentation, I'd like another phone with a bit less fragmentation? No. This issue is a total non-issue - for end-user consumers when buying the smartphone. Yes, some geek like you and me may know of it, but even for us, its very VERY low in the order of what we want. Fragmentation is relevant to application developers and other partners, not to end-users. If the market is big, and there is money to be made, then application developers will cope with the fragmentation. They don't like it, but they will do it, if there is money. If the ecosystem is tiny, no matter how uniform it might be, if the market size is too small, they won't care. Market size totally trumps fragmentation.
Then Forbes says that Zune is a reason why Windows Phone will succeed. Maybe so. But first, remember that 'services' (like Zune) came in at 7th most relevant point when deciding, in the Industrialized World and 5th in the Emerging World. And Zune is only one in a series of services. Will it matter, of course it will. Will it decide some sales, maybe. Will it change the world for Lumia, of course not. Because most of all, there is Nokia Music! Nokia's OWN music service! Nokia has been selling 'Comes With Music' handsets for years. Zune might - might - duplicate the modest success of Nokia Music in the best case. More likely, today consumers have so many ways to get music by sideloading and on free music services, that it won't matter one iota.
Lastly Forbes mentions Xbox Live support. Note, this doesn't exist and no word has been given that it will be arriving to Windows Phone and/or Lumia. So this is utter speculation of what MIGHT help the smartphone. Sure, like Madonna said to Wayne and Garth, And monkeys might fly out of my butt. Microsoft MAY do this some day. After that all games need to be repurposed to the Windows Phone format - thats no small feat - and the handsets need the gaming accelerators etc for the hardware, etc. This is at best a long-term gain. Except that I have bad news for you. Nokia HAS a VAST library of videogames already formated for the small screen. Nokia has its own gaming engine with graphics accelerators and all. Its called N-Gage. The first Nokia flagship smartphone to include the N-Gage gaming engine was the N82. And you know what. It did not set the world on fire, the gaming side. Yes, we all play Angry Birds but a vast gaming catalog of 'pure' platform games, rather than custom 'casual' mobile games? I don't see Xbox gaming to be a 'game changer' haha. But yes, even if you like this, this idea is pure speculation and cannot be implemented this year. So its pretty phoney by Forbes to add this as a reason why Windows Phone will 'make a big splash' in the smartphones market this year.
SO THE VERDICT
I have given you my 13 reasons why Lumia is currently failing and will continue to fail. I based them not on my personal desires and preferences of what I like in my phones, I based it on the facts and stats of what real consumers do and want. I also refuted each of the 5 reasons Forbes felt that Windows Phone would win. What is the truth?
We will know in a few days when Nokia reports its Q4 results. Last year at this time, for Q4, Nokia introduced a new operating system version, Symbian S^3 led by the new flagship smartphone N8. This was not a make-or-break critical product launch. It was just routine, supported with no particular marketing effort. The smartphones were competing with many other Nokia smartphones already in the stores, so they faced competition from Nokia's own product line. They sold 4 million units. That was a year ago. Since then the global smartphone market has grown by 60%. So just to compare apples to apples, the new operating system launch led by the new flagship phone, Lumia 800, would need to sell 6.4 million copies in the past Q4, only to match what Nokia did a year ago.
And notice. All factors were totally in the control of Elop. He could choose which type of models Nokia would create - as these are truly new-from-the-ground-up smartphones, as they do not even use standard Nokia components. He could decide their specifications, their intended target markets and end-users. He could decide which countries and which carriers would be offered the Lumia. He could decide how to price them and support the launch with marketing. Elop could decide how and where to introduce the actual models to the public, how near or far from the commercial launch date. He could decide when to announce the Microsoft partnership. Nothing was forced upon him. This is totally Elop's choice. The Nokia share price was not falling in February - the stock market liked Elop's first five months of Nokia leadership so much, that the share price had climbed 11% - a very strong growth in a five month period for the new CEO, when the previous three years had seen a 50% drop in Nokia share price.
And Elop could plan carefully, organize everything and make sure the most important product launch in Nokia's history would be a total success. Elop had carte blanche to overspend on the launch marketing activities as much as he wanted, and obviously no other CEO in any other situation would have approved as extravagant marketing budgets for just any year's 'regular' flagship model launch.
If thats not enough for you, there is the Microsoft marketing machine. Microsoft committed 'billions' of marketing support to Nokia Lumia. So this is by every measure the single biggest product launch in the history of mobile phones. Nokia could throw all at it, and Microsoft would essentially then double that still.
You would have to be a colossal idiot to mess this launch up. So, last year with only normal launch, with a tight schedule which could not be changed (the N8 and S^3 were delayed to an embarrassing degree), with only modest marketing budget (Nokia had just recovered from a quarterly loss) the N8 and Symbian S^3 sold 4 million copies. Adjusted for growth, this time that would be 6.4 million units. If Elop is only an average manager, he will achieve 6.4 million in his sleep. This time there is huge pent-up demand for Nokia phones and almost no rival Nokia handsets to steal any Lumia sales.
With these matters utterly in his control the CEO can easily deliver that. Olli-Pekka Kallasvuo, the disgraced previous CEO could have easily delivered 6.4 million sales of Nokia's newest flagship and its OS if given those parameters. Anssi Vanjoki even if asleep, even if simultaneously having nightmares, could still outperform the 6.4 million under those conditions. So we will see the mettle of Stephen Elop, is he competent to run Nokia.
And all the evidence says Nokia Lumia sales in Q4 were a total disaster. Unmitigated utter colossal catastrophy. In Britain Lumia didnt make it into the Top 10 bestselling smarpthones even for the December month. In Germany the same story, not even the Top 10, not even for the December month. Customer surveys suggested only 2% of customers in the launch countries even considered a Lumia. The measured sales are worse than that. Every industry analyst with short term quarterly forecasts has either reduced their target or held steady. Not one, not a one analyst has increased their forecast. This while the industry reports massive jump in Q4 sales by rivals like Samsung and Apple.
But the spin doctors are at it. Taking a book from Donald Rumsfeld they are trying to convince investors that Lumias will be greeted as liberators. They try to erase the known unknowns. Look what is happening. Nokia unattributed executive said Lumia sales were "getting good traction" and "we are pleased with the early results". But no named source and no numbers! One Nokia executive claimed the youth were growing tired of the iPhone. This against the reported evidence that the iPhone is breaking all of its sales record and on every national chart for which I have seen statistics, the iPhone 4S sits as the bestselling phone for Q4.
What is even more insidious and will damage Nokia's tattered reputation considerably, is the revellation that Nokia and Microsoft executives have been going to blogsites to argue with reviews if they were negative about Lumia. The employees did this with aliases, but were revealed from the website addresses they used. They came from Nokia and Microsoft offices. The Guardian reported on this for example. The Blogosphere is very upset with Nokia - perhaps less so with Microsoft as it seems to be par for the course. We now apparently have the Evil Empire and its Evil Twin.
FARCE OF THE THIRD ECOSYSTEM
It is hard to avoid articles that talk about Microsoft and Nokia, that do not mention the promised nirvana of the 'Third Ecosystem'. Elop and Ballmer talk about it at every opporunity. And they are very happy to quote reputable analyst houses who promised Windows Phone with Nokia will reach 20% market share or better in smartphones.
There are literally thousands of news stories parroting that 20% number and the Third Ecosystem baloney. And when you think about it, if Google's Android has about 45% and Apple's iPhone between 15% and 20%, then if Nokia and Microsoft can get 20% - game on. This is Xbox vs Playstation vs Wii. Then yes, most definitely, Microsoft and Nokia are in the game and can certainly be believed, that they can win this game.
Now the reality. While Nokia and Microsoft have been repeating the 20% numbers from those big analyst houses, as recently as October of 2011, the reality is, that those numbers are not news in October. They were repeating an old story. Not from September. Not from August or July or June. Not from May, but from April and March. And here is the relevant point - the two major analyst house projections for Microsoft Windows Phone with Nokia partnership, were published before Nokia and Microsoft Q1 financial performance numbers were released.
They are based on data form Q4 of 2010. The forecast was based on numbers, prior to the Elop Effect. So yes, if you take Nokia in December 2010, when Nokia had 29% market share with Symbian; and you add Microsoft Windows Phone and Windows Mobile, who had a combined market share of 3%, and add those together, you get 32%. From that it is a very 'safe' projection - actually quite negative of this alliance, if separately they are worth 32% but combined they only do 20% or 22% or something like that.
Now we know that Stephen Elop destroyed his company in February. We know there emerged a sales boycott. We know the market share crashed, sales revenues crashed and Nokia profits vanished. Did those analyst houses bother to give an updated forecast? No. They have remained silent (in shock). They are hoping and praying that nobody ever ever mentions their absurd forecasts again.
So, earlier this week, we had the very first major industry analyst house issue a fresh, post Elop Effect, forecast for Nokia and Microsoft Windows Phone. That was Morgan Stanley. They say that Windows Phone would reach about 37 million unit sales this year and 64 million in 2013. These number have been reported in hundreds of stories and the vast majority of those stories cheerfully reported that this was good news.
I could tell you that a gambler left Las Vegas with 100,000 dollars in his pocket. Is that good news? It depends how much he had in his pocket when he arrived in Vegas. In this Nokia case, the gambler arrived with a million dollars and only has 100,000 to show for it. Utter total failure. That is what the 37 million and 64 million numbers reflect. Not success by any definition. Why?
Lets add in the Symbian sales and see. Morgan Stanley forecasts that in 2012 Nokia will sell 40 million Symbian based smarphones so the total for 2012 for Nokia is 77 million. In 2013 the projection has 16 million Symbian sales for a total of 80 million Nokia smartphones. So far so good. Now the cold shower. In 2010 Nokia's annual unit sales was 100 million smartphones which gave Nokia a market share in smartphones of: 33%. For 2011 it will be around 18% (maybe less). But after Nokia jumps into bed with Microsoft in 2012 the market share is not 20%, it will be.. 11%. In 2013 Nokia and Microsoft will not magically recover to 20%. Morgan Stanley's projection when converged to markets share is.. 8%.
Do you believe that abandoning 33% market share - when your unit sales grew 47% and your revenues grew and your profits grew so explosively, for the last quarter Nokia set a record in profit growth of its handset unit - and replacing that with 8% market share only 3 years later, with no growth but about flat sales, dramatically fallen revenues and at best miniscule profits (probably continued losses). Nokia has taken its customer base and walked it in front of a firing squad, and shot it dead. Destroying 75% of its customer base in three year! This is corporate suicide. This is a hara-kiri by the CEO.
Please do not say Tomi hates Nokia. Those are not my numbers, they are Morgan Stanley's numbers and they are the FIRST analyst house to dare to make a projection on the Nokia-Microsoft partnership. For what its worth, my gut says they are way too optimistic, the evidence suggests it will be worse that this.
If Stephen Elop can deliver 6.4 million Lumia sales in the past Q4, I am willing to say in public, I was wrong, he is competent to manage Nokia and I will accept he's made some mistakes that should be forgiven as learning on the job.
If Stephen Elop can deliver at least the 4 million Lumia sales that Nokia N8 and Symbian S^3 did last year - without adding the industry growth, I would conclude that Elop is spectacularly incompetent or irresponsible or foolish or rash, but perhaps the Board can be forgiven to allow some more time for Elop to try to make his strategy work.
If Lumia sales are below 4 million, Lumia has failed to an unacceptable degree. Elop will have squandered the only chance Nokia had had, to try to shift platforms, and blasted what any opportunity may have been left for Lumia. If the Lumia sales in Q4 fall under 4 million, the signs are undeniable that Lumia's path is a dead end, a cul-de-sac, and the sooner Nokia Board sees this, the sooner they must terminate all activites that waste resources pursuing that route. It is the proverbial dead horse. And you can't ride the dead horse the only thing you can do, is get off the horse and find some other way to proceed. If Lumia fails to sell 4 million copies in Q4, it will be so comprehensively rejected that Nokia cannot revive it. Then it is time to think what to replace it with? Android? MeeGo? Tizen? bada? Blackberry OS? Palm/WebOS? (check out where the leading forecasters now estimate Lumia sales for Q4. Can you spell 500,000 units?)
And obviously my view already now as we await the Nokia Q4 numbers for Lumia is, that based on his behavior in the past year, Elop has mismanaged his company so totally, that he may not be allowed to continue running Nokia. He must be fired. Now!
Posted by Tomi T Ahonen at 07:30 PM in Africa, Android, App Stores, Asia, Augmented Reality, Blackberry, Bloodbath, Business Users, Carriers / Operators, China, Convergence, Dumbphones, Ecosystem, Elop, Emerging World, Europe, Finland, Forecasts, Gaming, Google, India, iPhone, Japan, Market Share, Marketing (classic 4 Ps), Microsoft, Music, Nokia, Profits, Revenues, Samsung, Smartphone, South Korea, Statistics, Strategy, UK, USA, Users / Subscribers, Youth | Permalink | Comments (88) | TrackBack (0)