Mobile Platforms

In Smartphones: Google is King but Apple is Rich

A couple of weeks ago, the inevitable was announced. According to Canalys, a leading mobile market research firm, in Q4 2010 Android has overtaken Symbian as the world’s most-pervasive smartphone platform. According to Canalys, 33.4 Million Android phones were shipped by Google licensees in the quarter – more than double the iPhones or BlackBerries.

While this has been touted with much fanfare, some seemingly contradictory information is “common knowledge” to mobile application developers. It is still much easier to get traction and especially monetize iPhone apps than Android apps. How come? With such momentum for Android, you’d expect it to be at least as successful as iPhone.

The answer, which I’ve been proclaiming for awhile now, can be summed up this way – “Android is the new Symbian”. Now I’m sure some Googlers will resent this, so maybe a different way to put it is – “Android is the new MS-DOS”.

What I mean by this are really two things. First, that Google’s strategy with Android is to reach as far and as wide as it can. That’s one of the reasons it is free to licensees, open-source etc. Google intends to eventually leverage Android by tying it to its other assets and ultimately use advertising to monetize it. This means you can build cheap Android phones and target the mid-market, not just the high-end as other smartphones have (in truth, Android hardware requirements are still relatively high, but Moore’s law is taking care of that cost). Furthermore the abundance of licensees means that a price war is evident – and indeed we now see free (subsidized) Android phones on many operators portfolios. So – Android is becoming the dominant player in the mid-market, with high-end presence too, and ultimately low-cost aspirations. This is exactly the path Symbian took in 2004 – 2008, becoming the world’s leading smartphone platform by volume – but dwindling in consumers’ eyes to a point where it drives low-margin devices, with BlackBerries (initially) and iPhones (later) commanding the high-end, high-margin sector. In 2008, a Nokia executive told me personally that Nokia learned the hard way that the top 10% of the handset market commands 50% of the margin. Think about it – if one company takes over the top 10%, it can be worth as much of all the other companies combined (who sell in aggregate 9 times as much as it does). Right? So this is the second point – a smartphone platform that is focused on mass is doomed to become a low-margin platform. Google doesn’t mind. But it’s licensees are doomed to fighting over scraps.

Now this is a tall order claim, that I couldn’t really publish before, until I ran into this analysis by Asymco’s Horace Dediu:

Which brought to mind Noam Wasserman’s “Founder’s Dilemma” metaphor about Rich vs. King. Apple’s startegy with the iOS devices, just like with the Mac before, is to aim for the top 10-30% of the market. The people who can spend, the people who care deeply about the product they are buying and using. Google’s strategy is more like carpet-bombing. If we can get to 80% of the people, we’ll surely find a way to monetize that.

So is this just an interesting business case? Or Valley gossip?.

If you’re involved in this business in any way – you might be an app developer, a marketer wanting to reach mobile device users through mobile ads or a mobile app / website etc., or a service provider who is pushed to provide a service to his customers through their phones, this is critical info. Cause it means that you are going to reach a different demographic and psychographic when you target the different platform. In the Apple case, your demographic will be skewed towards high-income, users may be more engaged with the product, and there may be more willingness to pay. On the Android platform you will eventually reach more people, but engagement and purchasing intent will be different. And your adoption ratio (compared to the total available Android market) will be different, as many of these users are much less enthusiastic about their phones. Yes – they bought a smartphone, but maybe because “everyone else is getting one” or because “it was free, so why not”. So choose your audience wisely, and plan your marketing moves with consideration for its composition.

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Mobile Platforms, Online Travel

Mobile Travel Lessons from EyeForTravel

 

Last week, I had the honor of moderating the Mobile in Travel track at Eye For Travel TDS Chicago.

With presentations and panelists from fifteen different companies, the amount of experience and hands-on knowledge was hard to replicate, and hopefully was useful for the audience.

 

Given the nature of such events, sometimes after listening to so many people over so many hours it is hard to recap everything. Here’s a run-through of the main points, as delivered by the speakers and discussed in the panels.

 

The Time For Mobile is NOW!

This fact is was demonstrated in two different ways by two very different presentations – Jared Miller from Continental showed the traction generated with the brand-new Continental iPhone app – within weeks of release the application was providing services to dozens of thousands of passengers and generating significant ancillary revenue. Tripit’s Gregg Brockway took the 30,000 feet approach, presenting mobile as part of another wave of change which will change whole industries, and which you should prefer to ride – rather than be crushed by. According to Gregg, the interoperability between current offerings, mobile and social capabilities provides for a new Traveler-Centric service approach. Similar thoughts were reflected by Max Starkov of HeBS in his talk about the “hyper-interactive travel consumer”. This is an opportunity for disruption, which could come from start-ups, incumbents, or companies not traditionally involved in travel, who decided to step in (esp. mobile giants).

 

… A video recording of Gregg, Max and Chris’ session is available online here.

 

Mobile Creates New Touch Points With The Customer

Jim Davidson of Farelogix moved the audience with his question – “What is the first thing that happens once an aircraft touches down?”

The answer – hundreds of cellphones are turned on all at once. The potential for revenue-generating or otherwise value-generating interaction with the arriving passengers right there and then is easy to understand. It is totally feasible to deliver relevant content and transactional opportunities at this time (to wit – it is a feature of WorldMate on BlackBerry). Many such examples exist, based on location, context and immediacy. Jim predicted that “in 2012, 50% of all ancillary transactions will be made on mobile devices”. While this may sound like a tall order, Jared from Continental presented a chart showing that weeks after their iPhone app was released, check-in transactions on iPhone were generating more ancillary revenue than on any other medium (web, kiosk or mobile web). In the hotel domain, similar data points are emerging.  Tony D’Astolfo quoted a Priceline report stating that 82% of their mobile customers book their hotel within one day of arrival – compared to only 45% who do it on the web.

 

The Platform Story Is Complicated – And Will Remain So

It’s a complication from multiple aspects – first, the multitude of different mobile platforms (iOS, BlackBerry, Android etc. – see my previous post) and approaches (apps vs. mobile web). And no – it doesn’t look like the platforms are consolidating soon, nor does it seem like HTML 5 will replace apps in the foreseeable future. TripAdvisor’s Mike Putnam suggests a hybrid approach, with an app that presents the main user interface but uses an integrated “browser window” to present most of the on-line content.

 

Second, some experiences call for a platform-wide solution, for instance mobile boarding passes – a sub-par experience that can be improved with an airline app – but only for boarding passes from that same airline – and do we really want to download and sign up on an app for each of the airlines we use? More likely, we want the platform to provide a solution, styled after Kerry Kennedy‘s “save the screen shot” idea but a little more direct.

 

Last – Tablets. They Are A Separate Opportunity

Tablets (e.g iPad, PlayBook) are great travel research tools, unlike smartphones that are great immediate info retrieval / action tools. This market is growing quickly, as demonstrated by some of the stats provided by Orbitz’ Chris Brown.

 

 

 

It’s a different mode of interaction – more similar to the desktop, but still a different user interface. If you’re an online marketer, these too should be on your roadmap, and unfortunately, what you deploy on these should be different from what you plan to build for smartphones.

 

… In retrospect – we’ve barely scratched the surface. Marco Saio and team at EyeForTravel did a great job arranging this – maybe they should consider a whole conference dedicated to mobile.

 

Personally it was a challenging experience for me not to try and answer every question myself… If you have specific questions / ideas and need someone to discuss them with, contact me directly or comment here.