iOS Continues to dominate mobile market for mobile ads, but for how long?

Most recent reports suggest that Apple's iOS continues to dominate the mobile advertising market in terms of impressions and revenue generation delivering almost 44% of all ad impressions and almost 50% of revenue (Figure 1).  The mobile market is increasingly looking like a two horse race between Apple iOS and Android and whilst on the face of it Apple continues to dominate, the decline of any alternative operating system other than Android suggests that in the near term Android will soon pass iOS as it becomes the de-facto alternative operation system.

Traffic share (mobile phone OS)

OS Share	% of Traffic	% of Revenue
Android	31.24%	28.08%
Phone	30.58%	27.76%
Tablet	0.66%	0.32%
iOS	43.75%	49.36%
IPhone	30.88%	36.44%
iPad	8.04%	10.21%
iTouch	4.83%	2.71%
RIM	3.37%	5.41%
Symbian	5.16%	1.56%
Windows	0.26%	0.30%
Other	16.21%	15.27%

Source: Opera  mediaworks

The challenge presented by Android is strengthening as Google and its partners increase the rate of innovation.  Apple is clearly showing signs of innovation fatigue.  A recent report by Goldman Sachs pointed to several concerns, including “delayed product cycles, supply chain difficulties, product price erosion, and a slower pace of product innovation.” Apple’s ability to continue innovating at the breakneck pace it maintained over the past few years remains a major concern.  The recent performance of Google Play surpassing Apple's App Store downloads particularly in emerging markets underline the direction of travel.

This rebalancing of the market suggests that in the longer term the Android market is set to become the most important mobile advertising market.

The Appscape

Here are a number of interesting facts concerning the growth of mobile marketing and in particular the App market.

• Apple Apps – 700,000 (Nov 2012)
• Android Apps – 700,000 (Nov 2012)
• Microsoft – 120,000 (Dec 2012)
• 37mins the average time spent on apps per day
• Mobile apps will grow from a $6 billion industry today to $55.7 billion industry by 2015 (Forrester)
• The average Android smartphone user has downloaded 44 apps onto their phone
• 53% of American cellphone users now have a smartphone
• 38% of people who use social media on mobile devices cite general browsing as their main activity

The rapid growth of Android apps is very impressive, having caught up with Apple so quickly and will undoubtedly pass Apple in 2013.  The fact that Apple apply rigid "quality control" as to which apps make it on to the iPhone and Google pretty much set a minimum compliance approach cannot be the only reason Android has blossomed since Microsoft has failed to grow in quite the same way.  Apple need to decide whether they are going to carry denying other smartphone users the chance to use the Apple IOS and ultimately see the market they have owned slowly (or maybe not so slowly) eroded by Android as they did twenty years ago during the PC wars.

iPhone 5 Decline in face Samsung Challenge?

Sales of the iPhone 5 appear to be slowing dramatically in the UK and around the world. In what seems like a bid to drum up sales, for the first time I can recall, my mobile provider is making unsolicited calls to remind that I am due an upgrade and have the opportunity of getting my hands on an iPhone 5 as part of my package.  Previous it appeared I needed to be best friends with the chairman of the mobile operator to get such an offer.   Furthermore, according to the Wall Street Journal, Apple has cut an iPhone 5 display manufacturing order by half citing "weaker-than-expected demand." The display order, which was targeted for the January to March quarter, was cut along with other key component manufacturing in December.

Given the crowded marketplace that the smartphone arena has become, it is only good business that there should be changes to manufacturing orders.  However, this data seems to confirm that globally, Samsung is beginning to get the upper hand in sales of smartphones in head-on competition with Apple.  With 1.3 billion smartphones in use worldwide by end of 2012 and 465 million Android smartphones sold in 2012. Google’s operating system has now captured a 66% global market share.  Samsung has used the Android OS to drive sales with their latest smartphone the Galaxy SIII with shipments estimated to be 18 million units for the third quarter of 2012, while smartphone and overall mobile device shipments are projected at 59 million and 106 million units respectively.

Apple is rumoured to be accelerating the launch of the iPhone 6 to combat this growing Korean threat and thus it is of little surprise that they are ramping down iPhone 5 production to make way for a newer model.  Clearly being sued by Apple is good commercial business for Samsung since it has crystallized the belief that the once mighty Apple may have a worthy competitor in the form of Samsung.  Litigation can have unexpected consequences and certainly it seems it may be the case that Apples lawyers are better at marketing Samsung's products than helping their own side win.

Goldman Sachs Technology Symposium - Apple Developments

Here are the highlights of Tim Cook the COO of Apple comments at the Goldman Sach Technology Conference currently going on in Redwood City, California and favourite to replace Steve Jobs as CEO.  There are some very interesting comments here as to the future direction of Apple.

Economic decline

“I’m not saying Apple’s immune to the economy. But if you look at last quarter as an example … last quarter in the U.S., the GDP growth was less than one percent.  It was miserable by anybody’s calculation. Apple, in the U.S., grew 27 percent.

For us, we’re focused on what we can control. And what we can control is how much we innovate, what products we do, the experience in our stores, the experience in our channel — all of those things. I think Apple’s success depends on how we do on those things versus whether the GDP is slightly above one (percent) or slightly below zero or whatever.”

IPod Touch cannibalizing iPhone sales

“I’d rather Apple cannibalize Apple than somebody else cannibalize Apple. It was very key for the iPod line to go in this direction.”

The iPhone SDK and platforms vs. products

“First of all, I think it’s really important to realize that very few companies in the world know how to build a platform. You can count them on a few fingers. Apple is one of them. We’ve had the Mac platform for years and really understand this.

When we started with the phone, we started by getting developers to focus on web 2.0 apps. And there’s over a thousand of these today. There are probably many people in this room that use them. But people also want to do more than that. And as we got into the phone more and more, it became clear to us that we should release an SDK and we’re going to talk more about that next week at our event. But in essence what it does is it will make the product even more compelling. This is a product that has the highest customer satisfaction (rate) of any Apple product ever shipped, which is a very, very high bar. We’re super excited about where this can take us.”

The real iPhone controversy (aka the missing iPhones)

“The real controversy, if you will, from some people’s point of view is the difference between phones that are activated on Apple-chosen carriers, and the total number of phone sales. So people want to know where are the iPhones? Here’s my short version of this: We have a situation where we’ve purposefully rolled out iPhone in four markets (the U.S., the U.K., Germany and France). We did this at this chosen speed so we would learn, and could apply those learnings to future rollouts, etc. And we are right on track where we want to be. The four million units that we’ve sold over the first 200 days gives us confidence that we can achieve 10 million units in 2008.

So where are the iPhones? Here’s the privilege, so to speak, of this problem. The demand for the iPhone is so intense in the markets where we aren’t offering it that people are exporting it out of the U.S. in many different ways and then running it on local carriers … The thing that I like about that is it shows there’s a lot of worldwide demand. And I think the most important thing for Apple by far in this first 8-10 months of selling in the iPhone world is to deliver a product that would delight customers.

Of all the problems we face, this is the one I face looking at with a little bit of a smile. Because it means there’s great demand for the phone. And to have people stepping over each other to have the phone isn’t a bad thing.”

The one carrier model vs. multiple carriers for the iPhone

“In the U.S., our fundamental choice was do we want to develop two phones: a CDMA phone and a GSM phone. We didn’t. We wanted to do the simplest approach in the beginning because that’s the fastest way to learn. We wanted GSM. GSM is a worldwide standard and AT&T is the largest carrier. The business relationship that we could work with AT&T allowed Apple to be Apple and AT&T to be AT&T. This is the power of this relationship. We feel very good about that. We went into Europe and picked the top carriers in three countries and got going in those countries. Now, are we married to his model? Will we do this everywhere? We’re not married to any business model. What we’re married to is shipping the best phone in the world and continuing everyday to innovate to make (the iPhone) better and turn it from a device into a platform. We are married to that.”

Internet TV - Is it a viable alternative to Satellite?

With the advent of 20Mb Broadband service, Internet TV is beginning to look like a viable offering compared to costly satellite services such as Sky or Cable alternatives such as Virgin. 

In my definition of Internet television, the combination of digital TV and seamless Internet based TV services such as on-demand Internet services such as the BBC’s iPlayer or web based sites such as Joost, offer a credible alternative to the competitive products allowing viewers to choose the show they want to watch from a library of shows as well as a broad range of conventional TV.  With the fall in PC and TV prices the opportunity to join the two together to make a credible entertainment package with a relatively low investment.  The Internet TV service can ride on the back of existing infrastructure including broadband, ADSL, Wi-Fi, cable and satellite.

The primary models for Internet television are streaming Internet TV or selectable video on an Internet location, typically a website. The video can also be broadcast with a peer-to-peer network (P2PTV), which doesn't rely on a single website's streaming.

It differs from IPTV in that IPTV offerings, while also based on the IP protocol stacks, are typically offered on discrete service provider networks such as that from Tiscali in the UK or BT Vision.

Specialised PC/TV solutions like that offered by the  Sony VGF-HS1E, an all-in-one home server for total control of your multimedia entertainment.  Alternatively, there are a range of downloadable solutions which offer the opportunity to run a menu of services on a diverse range of equipment such as PS3 PlayTV  and Wii Games stations or even via your iPhone (see my blogcetera comment).

As we see traditional TV viewing habits fragment, the opportunity to create your own schedule to fit your life style will undoubtedly see the rise of a broad range of both equipment and software solutions that will drive new media options.  The key issue for content providers will be - how they make money from the punters of these new usage models?  Nintendo reckon that 18 million of their 40 million Wii are connected to the Internet and they can create a viable TV channel and delivered credible internet based advertising.  The key will be creating a viable programmable programme guide which the users can set-up and is easy to use and allow simple navigation both of digital TV offerings with Internet offerings.  We shall be following these developments in the Internet TV space, which clearly offer the user huge potential offerings from a boundless Internet and a powerful competitor to expensive satellite and cable services.  Whatever method you choose to view your TV content, the Government will still expect you to pay the licence fee!

Is Watching TV on Your Mobile Worthwhile?

With 3G now the de-facto standard across a whole range of mobile phones, one of the apparently most attractive applications is broadcast IPTV. It is now possible to watch the range of BBC content and Sky content over the mobile networks. The only problem is likely to be your download limit which could make “free” TV seem very expensive.

BBC iPlayer is available on the Nokia's N96 and it is possible to use your iPhone or iPod Touch to pick up the latest BBC re-runs. The BBC is aiming to deliver TV to an increasing number of mobile devices. Take a look at Freebe TV and you will find a incredible range of TV that can be viewed on you mobile. So there is no shortage of content and it is increasing daily.

However, is watching TV a realistic option on your mobile. The largest mobile screens tend to be limited to a maximum of 12 cm by 6 cm or about the same size as a packet of 20! This is considerably smaller that most portable DVD players. Sport has been one the most promoted services particular football, but it does tend to turn into a video version of that old standby the “Spot the Ball” competition.

Using Laptops terminals such as the latest Sony Vaio Z Series or the ASUS EEE PC to access TV is fairly accessible, but watching a 2 inch square screen is a very different proposition.

Maybe the way to go is to use a “Personal Media Viewer” from Myvu or Vuzix, which offers both a stylish way to watch TV and a “big screen” effect. The glasses are still an expensive add on to your iPhone or Nokia from £100 to £250, but from my perspective it is the only way to go to get an enjoyable experience. The effect is to appear you are watching the equivalent of a 44 inch wide screen TV. The most expensive devices allow you to look through the screen to be aware of what is going on around you. It will come as no surprise to learn that these devices have evolved from the military industry.  

I suspect that Mobile TV is probably unstoppable, but it will be largely a gimmick unless you get a pair of personal media glasses!