Dean Bubley

Mobile Phone Industry in Denial About Economy

The iPhone example is an interesting one - but coupled with other factors it's still quite a US-centric model that doesn't work quite so well elsewhere.

Bear in mind that in the rest of the world, the majority of people use prepaid cellphone plans (often with unsubsidised devices), not monthly contracts. iPhones can be $500-1000 upfront in those cases.

SImilarly, "ditching the landline" is unlikely in markets which tend to use ADSL rather than cable for broadband, especially if there is no legal imperative to sell unbundled DSL without an associated PSTN telephone account. Generally it is only the economically disadvantaged that "cut the cord" - it's not aspirational, except in a few countries like Finland.

I'd certainly agree that Apple is better-placed than the Android ecosystem at this point in time. Slightly less true of non-US markets where people generally buy high-end Nokias because of brand, or basic preference for their voice and SMS user experience.

Also, worth noting that in many parts of the world users would rather have a mobile broadband USB modem for their notebooks, than a smartphone.

Dean Bubley

2009 Will Be a Painful Year for Mobile Device Vendors

The amount of memory really isn't going to be the determinant of Apple's lower-end price point.

Bear in mind that the $200 iPhone price points only apply on long-term contracts (usually 2 years), that imply a large subsidy by the carrier.

The "real" price of the iPhone 3G is more like $350-500. Certainly, if you buy it on prepay, it's a $500+ device, and in some countries more like $800.

I certainly think that there's a reasonable opportunity for Apple to expand its market share, but of the overall global 1-billion phone market, it's probably chasing realistic addressable target of 5% or so for the foreseeable future, although 50m phones is a pretty tempting target.

A more interesting prospect is if Apple introduces a smaller "iPhone Nano", or better still a clamshell version, as there is a large part of the market that would never go near a large tablet-type device.

Nokia's New Product Blurs the Featurephone / Smartphone Divide

Ken

I tend to agree, although Internet usage isn't necessarily the only measure of the value of "smartness". Arguably the reason that Nokia sells so many is that the OS makes it easier for *Nokia itself* to spin the platform into many different handset variants. And if you look at Japan, NTT DoCoMo uses Symbian for its own purposes, to create its own handset platform.

But in terms of end users actually doing "interactive stuff",and especially browsing the web with large volumes of traffic, you're probably right, although there's quite a large number of people using downloaded Symbian apps for things like VoIP. Also there's huge differences between the US, Europe and Asia in all of this

Dean


On Nov 27 12:50 PM KenC wrote:

Nokia sells about
> half of the smart phones in the world, and yet, smart phone usage,
> as measured by internet access indicates very few people are using
> it as a smart phone. You wonder if usability plays a role in that.

Does a Mobile Internet Devices Market Exist?

Thanks.

A few comments -

Tiffy - yes, it sounds like we're in total agreement.

Mollytjm "absolutely no one buys an iphone because they want a phone. they do want something closer to a pocket computer". Sorry, that's wrong. There are plenty of iPhone users who just want it because it's a phone that looks cool, at least initially. Some/most will later discover it does a bunch of other stuff, but certainly outside the US I wouldn't underestimate the power of aesthetics or subsidy.

Also a sizeable % teenagers don't like the iPhone's lack of proper numeric keypad. It's impossible to send SMS without looking at the screen - you can't send messages with the phone under your school-desk / in your pocket. (And some non-teenagers would prefer a proper QWERTY if they're heavy SMS/email writers)

Various - Bluetooth headsets are only useful for a % of users, for a % of the time. If the phone rings on your bedside table, or while you're in the pub, are you going to fumble around to put the headset on? No. Nobody I know uses a headset for 100% of their calls, and unless you talk while you drive a lot, probably few people are >50%. A phone needs to be a phone.

Brewer - I don't get other "enthusiasts" berating me on SeekingAlpha or my main blog. Given I'm independent of the debate (to be honest, I prefer featurephones to smartphones for my main mobile device), it seems to me that Apple fans are particularly vociferous - and go out looking to start a fight with people who aren't being belligerent.

Others - clearly there's broad mix of people who want smaller/larger and single/multiple devices. It depends on wealth, existing behaviour, country, preferred services, preferred usage models, whether you carry a bag, how large your pockets are and a zillion other factors. Proclaiming one device or form-factor as the God Product is unreasonable.

DB

Does a Mobile Internet Devices Market Exist?

Daniel

Read the post again. As I said, you can choose whether or not to include the iPhone in the "MID" category depending on how you define the segments. You can call it a small MID or a large smartphone, or both, depending on your preference.

And as you yourself say "it's redefining the cellphone market". I'm not talking about the cellphone market, I'm talking about MIDs.

Honestly, I'm getting fed up with iPhone fanboys trying to read criticism into anything I wrote about the thing, particularly when I'm praising it. I've repeatedly said its a good device - it's just a shame about the attitudes of some of its fans, who seem to go actively looking for negative comments, where none are made or implied.

DB

Complete Web Browsing On Your Cell Phone? Not Yet

KenC

Yes, I take your point about standards, but there's a lot about the PC-oriented web which is based on de-facto rather than de-jure standards. There's a lot of websites with Flash, there's quite a lot of websites with Java, there's a lot of websites with questionable Javascript implementations (yes, I know the difference). PDF wasn't an open standard until a couple of months ago, either, yet most people have viewed it as "must have" for years.

Many websites are "long tail" ones that are unlikely to be bothered about how well they render on mobile for many years, if ever. Based on the numbers I'm seeing & predicting, mobile access will remain a minority or secondary consideration for many website developers, especially in areas like B2B. I wouldn't expect Boeing's webmaster to be too worried about someone downloading 747 specs to a mobile phone, for example.

The market evolution will be defined more by "public expectations than published standards", to use your terms. If a given customer's favourite website doesn't work on a phone, when it does on a PC, it's unlikely to be poor standards compliance that gets blamed.

It's also worth bearing in mind the Flash Lite is already supported on a lot of phones, notably most of the current higher-end Nokia devices, plus it's being blended with Java by SonyEricsson. I certainly don't think Flash is the be-all and end-all of the mobile web, but I don't think it's going to suddenly evaporate either.

Complete Web Browsing On Your Cell Phone? Not Yet

...and more importantly to get this back on topic: The whole point is that the Apple browser experience (which as stated is currently very good but not perfect), or the Nokia browser experience (which OK but quite a long way from perfect) are likely to trickle very slowly through the rest of the market.

In other words in 5 years' time, *most* mobile users will still have either no, or sub-standard, web performance.

Complete Web Browsing On Your Cell Phone? Not Yet

Brewer - I'm an industry analyst. I look at the way the industry as a whole is developing.

You completely misread that "I don't use an iPhone because I want Flash".

My post isn't about my personal device decisions. What I'm using personally is irrelevant to my analysis of the wider market.

I'm not a particular fan of any brand of handset or OS and I also don't give advice to other people on what devices to buy, nor do I recommend investments. And I certainly don't need advice from other anonymous people on what devices I should use personally - as I'm in the industry I'm quite aware of the options and their pros/cons.

What my clients pay me for is to look at the way the mobile industry will *most probably* develop, or sometimes other scenarios, or how they could influence them. My blog & the syndicated posts on SeekingAlpha are adhoc comments on the way I see certain trends developing - hence this one about mobile browsing.

I'm currently surrounded by about a dozen devices of various types, I switch between them regularly, and I have used an iPhone a fair bit (I even bought my father one as an Xmas present). Some of them are paid for by me, some of them are sent to me for evaluation - such as the E71 which I'm using as my main work email/web device at present. If O2 send me an iPhone, I'd probably use that more, and to be honest it's been ages since I used a BlackBerry, so ideally I'd play with one of those for a month or two as well.

Complete Web Browsing On Your Cell Phone? Not Yet

I'm continuously amazed by the attitudes of iPhone fans. In this post I go out of my way to point out that the device has the current best-in-class web performance but still get flamed because I mention its (few) limits.

Not only that, but in a previous post of mine I pointed the finger at network problems (ie not the phone) for the lacklustre reported 3G performance in the US, and yet I still get comments such as XamaX's.

Don't you realise that this almost religious over-reaction is counterproductive? I know people who specifically don't want one because of the uncool "enthusiast" connotations.

The fact is that many websites have Flash. Currently, the iPhone doesn't render them. Java is missing, too. Hence the UK Advertising Standards Authority recently banning one of Apple's ads for being misleading when it said "all the parts of the internet are on the iPhone."

In terms of the perennial question of "Do people WANT the real PC Internet on a mobile device?", the answer is some do, some don't, for some sites, some of the time. In certain cases a mobile-specific site is convenient and more useable, but in other instances it's incredibly frustrating if you're trying to use a familiar feature and it's not there. The best sites (eg Google) offer you both an optimised version and the "real" PC one.

DB

Are Global Smartphone Sales Poised For Takeoff?

Thanks for the comments.

To the first poster Papita with the rant "you people are coming out of the woodwork" - you're talking gibberish. I've been a technology industry analyst for 17 years and advise clients (mostly non-investors like manufacturers and network operators) on trends in a variety of mobile sectors. The content here is syndicated from my own mobile-industry blog.

MightBuyOneNow & others - This is something on which I've done a lot of research. In my view, this notion that smartphones will be substitutes PCs for people in developing markets is wishful thinking by people in the mobile industry. It's not supported by observed facts, although obviously there are occasional specific exceptions.There are numerous reasons, not least the fact that PC prices are falling rapidly, and PCs have (typically) a 2x or 3x working life compared to a phone. They can also be shared more easily among families. Further, kids in education get access to PCs as governments wish to encourage future computer literacy for business, and develop local software industries. I'm not aware that anyone *writes* software on a phone, or runs their company's accounting system on one either.

Then there are hidden factors - for example, many people in developing countries use PCs to watch (often illegally copied) movies bought on video CDs or DVDs. And it's difficult for teenagers to have 15 separate IM chat windows open on a phone.

This doesn't mean that people won't want Internet access on mobile devices as well - that will certainly be a growing trend, and indeed is probably the main thing driving smartphone sales.

In China, according to official stats, about 73m people access the Internet on mobile phones... but virtually all of them also access it on PCs. The vision of "mobile-only" Internet users is a myth, with a specific exception for Japan, and to a lesser degree in India.

For more detail, please see:
disruptivewireless.blo...
disruptivewireless.blo...

Thanks

Dean Bubley

What's Up With 3G Performance in the iPhone?

Tuskagee - try re-reading my posts. You're misinterpreting them.

What's Up With 3G Performance in the iPhone?

No problems, AppleFinland. It's a lot better than boring names like Jobs or Gates, and a lot more easily pronounceable than Kallasvuo....

Tuskagee - you do indeed recall that. But that's Apple's fault, while this seems more likely to be a network issue, given the reports I'm seeing that the 3G iPhone is working fine elsewhere.

Incidentally, it appears that Seeking Alpha has included this article of mine twice under different titles. See the other comment thread at:
seekingalpha.com/artic...

Or my original post at:
disruptivewireless.blo...

3G iPhone: What Has Apple Got Against Cameras?

This is my article.

First of all, note that I do not write it for SeekingAlpha. This site syndicates content from my own well-read (wireless industry) blog at disruptivewireless.blo... , which is not primarily intended for investors but mobile industry insiders. It is a mix of industry analysis & some of my own personal views on matters mobile. I seldom read & respond to comments on here. SeekingAlpha doesn't pay for my articles, and neither does anyone else.

This particular post was a follow-on to one a few weeks ago, in which I'd discussed a range of recent top-end devices as part of a narrative with my readers about my own, personal choice of devices & my personal criteria for choosing them. I'd ended it with the comment that the 3G iPhone could well have been one which ticked all the boxes. For reference, my current main personal phone is a Sony Ericsson K800i, on which I've taken over 1500 photos, many in low light & with some remarkably good results - and many on occasions when I wouldn't have had my normal camera with me. If you're reading it out of context, this may not have been apparent.

The fact remains that many individuals *are* choosing phones on the basis of the camera. You may not like it, and you're right that megapixels=quality is a very simplistic equation, but it's a fact of massmarket buying behaviour. People stand in stores and say "Oooh, that one's got a 5MP camera!". Often that's on the basis of seeing a plastic model nailed to the wall - they may not even see the UI & software until they buy it. Apple is ignoring it at its peril, especially in Europe & advanced Asian markets. I think Jobs has made a bizarre error in not upgrading the camera (and also still no memory card slot either).

However, looking at the details of the iPhone I am indeed more convinced by its benefits as a business phone, and may get one to replace my current HTC email/web device. (Yes, like most people in the UK, I have two primary phones & have no desire to "converge" to a single device).

Is User Apathy About Smartphones Becoming Apparent?

Most of the discussion on my post is on my blog rather than Seeking Alpha.
disruptivewireless.blo...

Various comments here are misrepresenting my argument. In particular, I'd argue that US users are *more* likely to download apps to smartphones because they tend to "deliberately" buy smartphones in the first place & have a heritage of using PDAs. Conversely, European tend to get smartphones because they want a Nokia with a 5MP camera, and it comes with an OS by default.

Assorted comments have inferred all sorts of rubbish about my views on iPhones, none of which is supported in the text or indeed my opinion. The post isn't about Apple. For what it's worth I quite like the iPhone (it's much better than I'd expected), bought my father one as an Xmas present, and might get a 3G one myself when available. I don't think it's a fad, but neither do I see it having a huge impact in the global scheme of 3 billion mobile users. It's a bit like the original PDAs - fantastic gadgets for *people who care about that sort of thing and have the money to spend on them*

Data pricing is an issue everywhere, although cheap flatrate is becoming more common. Sub-$10 per month for a decent amount of data per month (perhaps 50-100MB) is pretty typical, although I know the US can be more expensive, and roaming is horrible.

Although many people assert that "everyone" will want access to the Internet on mobile devices, at present that is just an assertion. I think the demand, economic feasibility, and practical constraints (eg enough spectrum/cellsites) is lower than many evangelists would hope for.

As for adding extra *applications* to a mobile device, that's purely a specialist sport, and likely to stay that way. Most "Normal people" don't want to download apps to phones, even iPhones. (This is a flaw in Google's Android worldview too). Browsers and Web 2.0 and AJAX helps a bit, but still won't get close to ubiquity.

Handset OS Fragmentation is Here to Stay

Baba

Of course arbitrage is not a networking term. It's a general concept in business and commerce, whereby *users* or *customers* can play off differential pricing of what is essentially the same good or service.

It applies to handsets where there are multiple ways for the *user* to choose between to achieve a specific objective, be it making a phone call or downloading/sideloadin... an MP3 file. For a music download, realtime is (usually) not important, so the user can look at exploiting the differential pricing between an operator-mediated portal and transferring a file from a PC.

The *user* or the *user's software agent* is starting to call the shots, facilitated by ever-more powerful devices which when combined with IP networks & the Internet can decouple access from service.

Increasingly, real-time services are becoming less important than non real-time capabilities in terms of the perception of user value (and also payment). This is already true in the fixed line/Internet world, with the exception of voice. But to deliver scalable realtime voice it clearly is *not necessary* to have IMS. Existing circuit services, over-the-top VoIP, and standalone operator-managed SIP VoIP app servers work well enough already and scale.

In any case, we are already starting to see voice calls fragment between QoS-essential (999 / 911 calls, important B2B communications, medical etc) and QoS-optional calls (phoning a mate in Australia for an hour's chat). There's no point "wasting" QoS and network resources - consumers already know this, which is why they use Skype or SMS or VoIP callthrough instead of needlessly expensive cellphone calls.

Real time mobile video is near-irrelevant. There's no massmarket business model in mobile, and I haven't seen anything that even remotely demonstrates that this is likely to change. Video should be treated as an add-on, not a core design objective for mobile-centric NGNs.

Conversely, non-realtime applications - SMS, web access, email, music/content downloads, social networks, filesharing and so on - are becoming proportionately more valuable in mobile.

*Therefore* future network investments will start to become more *optimised* for non-realtime capabilities. Realtime will still be valuable, but over time it will become secondary. This in turn will drive network capex and handset architecture decisions.

Sure, we will probably always see some form of QoS-managed network for the stuff which absolutely, positively has to be realtime. But it won't drive the overall investment decisions & certainly not define the underlying architecture for the majority of traffic for which that would be over-engineered.

This is why various of the radio-access network evolutions are evolving to some form of split-access mechanism. The stuff that matters goes to the QoS-managed operator core. The stuff for which best-effort is good-enough gets piped straight out to the Internet.

And in many cases it will be the handset (& its software & above all the user) that defines any instance of communication in terms of whether or not QoS or realtime is important.

Dean