Tablet use by mobile phone users almost quadrupled in one year

comScore has released some findings from its forthcoming TabLens report on the U.S. tablet market. Here's a summary from the press release:

• Mobile phone users (ages 13+) who also use a tablet almost quadrupled from April 2011 (4.7%) to April 2012 (16.5%). 
• Smartphone users who use tablets increased from 9.7% in April 2011 to 23.6% in April 2012. 
• Feature phone users who use tablets increases from 2.3% in April 2011 to 10.4% in April 2012. 
• Women are slightly heavier users of tablets (50.8% vs. 49.2% for men,) while men are slightly heavier users of smartphones (51.6% vs. 48.4% for women.) 
• Tablet users tend to be significantly older than smartphone users: The heaviest concentration of users of both devices is between the ages of 25 and 44, but tablet users were 28% more likely to be ages 65 and over, and 27% less likely to be ages 18 to 24. 
• 56% of tablet users have an income of at least $75,000/year, compared to 49.3% of smartphone owners. 
• Tablet owners are nearly three times as likely to watch videos on their devices as are smartphone owners--20% of smartphone users said that they'd watched a video on their device in the month of the survey, compared to 53% of tablet owners, and heavy video watchers were more than three times as likely to have watched a video every day on tablets (9.5%) than on smartphones (2.9%).

Radio Shack to operate mobile centers within Target stores

Earlier today, Target announced that it will partner with Radio Shack to open Target Mobile centers within 850 of Target's stores in the U.S. by the end of this year and virtually all Target stores by the end of next year. This is a direct move to counter the increased emphasis on mobile at Best Buy and Wal-Mart. In particular, it looks very similar to Best Buy's partnership with Carphone Warehouse, the U.K.'s largest independent mobile phone retailer. In order to increase its mobile retailing expertise, Best Buy acquired 50% of Carphone Warehouse in 2008, and the two companies together developed the Best Buy Mobile centers that are now located in all Best Buy stores, as well as 77 free-standing Best Buy Mobile stores.

Radio Shack has been rumored to be in play for acquisition, but it seems very unlikely that Target would partner so closely with a company that might be purchased by a competitor. Therefore, it's likely that Target is in the running to acquire part or all of Radio Shack. If the in-store Target Mobile centers are successful, this could lead to some Radio Shack stores being rebranded as Target Mobile stores.

A Big January Coming from CES, Google and Apple

Image via CrunchBase

January 2010 is going to be a big month for new product announcements. First up is Google, which has scheduled a major announcement for next Tuesday (January 5th) on the Googleplex campus, most likely to showcase the Nexus One mobile phone in partnership with T-Mobile. As I speculated earlier, leaked details indicate that there will be only one rate plan available for the phone if you get it from T-Mobile, but it's not a bad one: Unlimited voice and data for under $80 US a month. The phone will be subsidized if you get it from T-Mobile; the price will be $180. The price of the unlocked phone from Google will be $530; I thought that Google would at least partially subsidize the price of the phone and offset it with advertising revenues, but I was wrong.

Image via Wikipedia

The Consumer Electronics Show (CES) opens in Las Vegas next Thursday, January 7th. There's not a lot of pre-show buzz about new products, but here's what I expect to see:

• Several new eBook readers (both hardware and software). In software, the biggest noise is likely to come from Kurzweil and Baker & Taylor's blio--eBook reader software designed to maintain "page fidelity" rather than make eBooks readable on devices with tiny screens. There will undoubtedly be several hardware eBook reader announcements, including some with two-page displays and full color.
  
• More Internet set-top boxes like the Roku. This might be where Comcast first shows the Roku-like set-top box that it's been working on to support its Xfinity service, and Video Business Magazine
  Image via CrunchBase
  
  accidentally broke an embargo yesterday on a new set-top box called Popbox. Also expect to see lots more Internet-enabled Blu-Ray players supporting Netflix, Amazon On Demand, YouTube and other services. Internet connectivity will be the thing that drives sales of Blu-Ray players, not Blu-Ray itself.
• More companies will jump into the "dead-simple" camcorder space pioneered by Cisco's Flip. Samsung recently shipped its first model, and I expect to see Panasonic make an announcement as well. Expect to see more models with image stabilization, more control over image quality and better sound, as well as WiFi and geolocation. The challenge will be to make camcorders that are more sophisticated but still inexpensive, small and simple to use.
• There will undoubtedly be more waves of HDTVs, including someone pushing the "world's biggest" model. There will be more OLED models on the floor, still at stratospheric prices, but with larger screen sizes that are more practical for everyday use.
  
• Expect more add-ons for the iPhone and iPod touch to increase their functionality, and possibly, the first wave of similar add-ons for the Motorola Droid. Hardware add-ons for Android phones will be much more difficult to monetize because there's no standard form-factor or dock interface, but some companies will jump into the market.

Apple's announcement at Yerba Buena Center in San Francisco on January 26th is probably the most-anticipated event of all, because the expectation is that Apple will announce a tablet computer. The rumor mill has been going wild with this one, but I wouldn't be surprised to see Apple announce a dramatically expanded iTunes Store along with the tablet with a big selection of eBooks, magazines and newspapers to go along with the music, video and movies already on sale.

Pricing will be a huge issue. If Apple announces a tablet for around $1,000, as has been rumored, its market is going to be very limited. I think that they have to keep the price for the tablet to $500 or less, and they may have to get there by striking an exclusivity deal with a mobile operator such as Verizon or AT&T to subsidize the cost of the tablet in return for a two-year service contract.

In any event, this is going to be a very busy January.

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• Jobs to unveil Apple tablet next month, ex-Google exec says (macworld.com)

T-Mobile customer service goes kablooey?

Last year, I bought a Samsung mobile phone and prepaid service from T-Mobile exclusively for travel. I haven't left town for several months, but I have to take a trip next week, so I decided to add some money to my account. I did that part online, and it worked fine...but the phone didn't. It said "No Service", even though I was getting a strong signal. So, I called T-Mobile, and got transferred...and transferred...and transferred. I was transferred to seven different people, finally ending up with someone in India on a connection so bad that I could barely hear her.

Ultimately, I found out that the account had expired, the phone number had been given to someone else (possibly not even a T-Mobile customer), and the company keeps no record of which numbers have been given to which customers once an account expires. I ended up having to visit a local T-Mobile store, which sold me a new SIM card and assigned me a new phone number. This number is only good for three months, unless I use up the current balance and add more time, which will buy me three more months. The customer service experience in the store was great; the experience on the phone was horrible.

Goodbye, Moto?

IDC's numbers for the largest mobile phone global suppliers by volume for the third quarter of 2008 are out, and Motorola has slipped to fourth place, down almost 32% from the same quarter last year. Nokia remains #1, Samsung is #2, and Sony Ericsson, which was once all but given up for dead, has passed Motorola to be #3. LG Electronics is #5 and could pass Motorola soon, and Apple is #6 in shipments and #3 in revenues.

At the same time, Motorola announced that it lost $397 million on $7.5 billion in revenue in the third quarter, and has postponed its plans to spin off its mobile phone business until some time after 2009. They're undoubtedly facing the reality that they won't be able to get any reasonable price for their mobile phone division until the current recession lifts. The only question is whether or not they'll have a viable business to spin off by that time.

Kindle, Meet Kindle 2

Image via CrunchBaseThe Boy Genius Report strikes again, and comes up with a trove of photos of Amazon's still-unannounced Kindle 2. I'll let you go over to their report for the details, but it certainly has a cleaner design than the original model. The basic functionality of the original Kindle appears to be intact (it still has an EV-DO modem), but the SD card slot for expansion memory is gone.

I continue to have a number of problems with the current generation of e-readers, the new Kindle 2 included. First, it's essential that they be open to as many document formats as possible, so that as many publishers as possible can access them. Second, they've got to support many different methods for loading content, including USB, WiFi and Bluetooth at a minimum. 2G and 3G wireless modems are fine, but they should be an add-on, and support for multiple carriers should be available. With Bluetooth compatibility, most modern mobile phones can serve as a wireless modem for the e-reader.

There are two other things that I'd really like to see, but that await future technology. The first is a full 8 1/2" by 11" or A4 display, and the second is full color. The fundamental premise of most e-readers is that books are the only things that people want to read, hence a large screen size and color are unnecessary. I would love to have an e-reader that can show me a full, readable magazine page at a time. I'd be willing to compromise color for size. The Plastic Logic e-reader addresses most of my concerns (except color), but I'm withholding judgment until it goes into production.

Is Best Buy becoming the place to get mobile phones?

In mid-August, Best Buy and Apple announced that Best Buy would sell the 3G iPhone, starting September 7th. Now, The Boy Genius Report says that Best Buy will also get the Palm Treo Pro, RIM BlackBerry Pearl Flip 8220 and T-Mobile G1. Last May, Best Buy invested more than $2 billion to buy 50% of the Carphone Warehouse, the biggest seller of mobile phones in Europe. Go to any High Street (shopping area) in the UK, and you'll see one or more Carphone Warehouse stores there. They compete successfully with mobile operator-owned stores across Europe. Best Buy is tapping into the merchandising knowledge of Carphone Warehouse (with which it has had a joint marketing venture since 2006) to expand its mobile presence in the U.S., and it seems to be succeeding in its goal to become the place to go for hot new phones.

Here comes the G1

Yesterday, T-Mobile and Google launched the G1, previously known as the HTC Dream, the first Android-compatible mobile phone. Comparisons with the 3G iPhone were immediate and obvious; the G1 is about the same height and width as the iPhone, but it's about twice as thick. It will sell for a little less, $179 vs. $199 for the 3G iPhone, and like the iPhone is available only on a two-year plan. The G1 has several more buttons than the iPhone, the most important of which are part of a slide-out QWERTY keyboard, which, of course, the iPhone doesn't have.

As you'd expect, the G1 is very Google-centric; you have to have a Gmail account in order to use the phone, and all the other Google services are front-and-center. It has a lot of location-centric, GPS-based features--even more than the iPhone, and unlike the iPhone, turn-by-turn navigation applications will be possible. And, developers can add applications to the G1 without review or approval by Google or T-Mobile, so it's a far more open platform than the iPhone.

There is a "but", however, and as this video from Engadget shows, in this case the "but" is that the iPhone is just much better integrated, and operates much more smoothly, than the G1. However, that's to be expected, since Google's Android is designed to operate on a wide variety of devices, some of which Google will have very little control over, while the iPhone and the version of OS X that the iPhone runs are engineered together. Android is a "generalist" system, while the iPhone is very tightly integrated.

I'll withhold my final verdict until I can play with the G1 myself, but from everything I've seen, it's not as refined as either the iPhone or the most recent BlackBerry models, but nevertheless, it's a very good first effort.

Taking the competition to the next level

A few posts ago, I wrote about the difficulty that IPTV operators are having with differentiating their services from cable, satellite, and (in some markets) over-the-air broadcasters. Triple-play packages (landline telephone, high-speed Internet and video) are old news in most markets, and cable operators are using VoIP to compete head-to-head with the telcos. Quadruple-play packages, adding mobile service, are less common, and are more difficult for non-telcos to compete with. In order to get access to mobile services, cable and satellite operators usually have to resell services from a telco, which puts them at a pricing disadvantage.

In most places, even when you buy a triple- or quadruple-play package, you get a bundle of services that don't talk to each other. Consumers purchase on the basis of price and features; brand loyalty doesn't exist. In this situation, you can get a runaway "race to the bottom", as is happening in several countries in Western Europe, with France being the best example. There, operators are piling on more and more features while maintaining the price at 30 Euros a month. Packages that would sell in the U.S. for $99 a month or more are going for the equivalent of under $45 at current exchange rates.

The real opportunity is in what I call silo-busting--tearing down the walls between services in order to unlock consumer value and provide the opportunity to increase prices (or at least maintain prices in the face of competition.) Telcos are just now starting to let consumers get Caller ID on their television when the phone rings. Instead of running to the phone when it rings, your television can tell you who's calling, so that you can make the decision of whether or not to take the call. If that service has value to you, and the competition doesn't offer it, you're more likely to stay with your service provider. Let's take it to the next step: Add a speakerphone to the set-top box's remote control, and you can take the call without picking up the phone. Now the television and the phone service are tightly linked. That adds value and increases differentiation.

Let's take a quad-play example: PCCW in Hong Kong enables consumers to look up movie showtimes and buy tickets, right from their televisions. The tickets are sent to their mobile phones in the form of a barcode. At the theater, the barcode is scanned for admission. PCCW can do this because they control all the elements. They're now the biggest seller of movie tickets in Hong Kong. They not only generate transaction fees every time they sell a movie ticket, they offer a desirable service that their competitors can't match.

Or consider a location-based service that ties the television and mobile phones together: A parent can see where her children are by plotting the position of their GPS-enabled mobile phones on a map on her television. It's a service that non-telco competitors can't match, and it's of considerable value to a section of the market.

The last point has to do with paying for these new services. In highly price-competitive markets, there's a fear that telcos won't be able to increase their prices, and these new services will simply get sucked into consumer expectations. Most video providers, whether IPTV, cable or satellite, package their services into tiers: For the basic price, you get a basic tier. If you want more channels, you have to buy another tier at a higher price. If you want premium channels, you pay even more. Consumers are familar and comfortable with this model. The integrated (or converged) services that I'm proposing can be priced into service tiers, just like video programming. Service providers can offer a basic service at a low price to retain subscribers, and offer unique services on tiers to bring in more revenue.

In short, I believe that the real key to unlocking value is to integrate services through applications. As consumers see the power of tying these services together, they'll migrate to the service providers that let them do the most, not just to the providers that are the cheapest.