Global Smart Phone Market, at the Low End Trumps the High End for the US, Western Europe and Japan

On Friday, September 19, 2014, Curt Prins (a mobile strategist) posted his thoughts, which were distributed by LinkedIn, on the comparative impact of the launch of the Android One, in India to Apple’s recent, highly publicized debut of the iPhone 6. Prins titled his post Apple just lost the global smartphone war to Google. This writer has written several posts to this blog to voice similar opinions about whether or not all of the media accolades about Apple’s new smart phones really amounts to much, at all. My concern is whether or not Apple will be able to maintain its enormous market capitalization just on the appetite of consumers at the very high end of the market, or not.

But Prins is to be commended for supporting his contention with metrics. I didn’t take the time to put together supporting data for my position, choosing, rather, to articulate it based on my gut instinct about markets and where all the frivolity surrounding the September 9, launch of the new iPhones might be headed.

A quick look at the Android One home page exposes some additional information worth noting: Samsung is noticeably absent from the set of OEMs committed to manufacturing the devices. The same set does include several businesses located in India, including Karbonn, and LavaOne to name just two.

The features of the device can be reviewed on the Android One web page. The quad core processor, all day battery life, and dual SIMs are more typical of smart phones targeted to the high end of the market than the low end. So the $105.00 price Prins claims for the Android One represents a significant move, on the part of Google and its Android OEMs, to lower the cost of entry for emerging markets (with India being the first) to the world of mobile online computing. Further, the actual consumer costs Prins presents, in contrast, for the iPhone 6, etc., lend accuracy to my own comments, earlier this week, on the actual street price for the iPhone 6, “after the emperor has shed his clothes (meaning the carrier subsidies applied to create an artificial consumer price of $199.00)”. Is yet another Apple smart phone, unlocked, worth $649.00? After the rush of the last two weeks, I don’t think so.

The Android One is also some bad news for Microsoft’s efforts to introduce low cost smart phones to the same markets. Ditto for Blackberry. But the real story, likely in the making, is precisely the change in leadership for the smart phone industry Prins alludes to in his post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Facebook Acquires Pryte, Deepens Its Commitment to Mobile Data Markets

Despite a couple of highly questionable acquisitions earlier in 2014, Facebook’s acquisition of Pryte, a Finish business with a niche in the Over the Top (OTT) content market, looks to be a very smart move, with a lot of promise.

The news of this merger appeared first on Pryte’s web site. For readers unfamiliar with the notion of OTT, and what it might mean for the mobile data market, I found the following explanation, authored by Dan York and published on the Disruptive Telephony web site to provide a useful definition: What is an Over-The-Top (OTT) Application or Service? – A Brief Explanation.

If I may use a personal example to illustrate the likely attraction of OTT content to the average consumer of high speed data services, I would characterize the level to be very high. Once consumers have the option of consuming digital content entirely in an asynchronous manner, without worries about DVRs, limits on storage, etc, they are not likely to look back. My household went through a Chromecast and is now settled on two Roku devices, which we are using every day, much more frequently than we do the cable set top boxes we also have available.

Pryte’s claims to offer providers of high speed data to mobile consumers a method of monetizing their role as the packet transport provider delivering the application direct to the customer. With Pryte enabled, a Telco like Verizon could opt to charge a premium for a specific OTT content service (for discussion purposes, say Netflix). Should the consumer opt to purchase the additional data, a Verizon running Pryte would also be able to directly assign the additional data to Netflix usage, only.

Of course, by assigning an a la carte purchase to a specific application (Netflix), the consumer is positioned in such a way both the Telco and the application provider (Netflix) can share in the revenue. What is a direct benefit of sharing the revenue? The additional cost of ensuring quality of service from Netflix to the consumer, comes off of Netflix and lands on the consumer. Netflix has already signed deals with Comcast and Verizon to purchase additional data to ensure high quality of service for its subscribers. So Pryte promises some relief to this pain, on both ends.

A lot of early comment on this deal has emphasized how it complements Facebook’s Internet.org effort and provides a method for emerging markets to pay for content as they start to consume data services. Certainly these comments make a lot of sense, but over a longer term. If the Pryte service works, as advertised, mature high speed data markets here in the US, Western Europe, and Japan could, perhaps, constitute an even quicker method of delivering revenue.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Mark Zuckerberg Talks Up Emerging Markets During His Mobile World Congress, 2014 Keynote

Mark Zuckerberg’s Keynote Presentation for Mobile World Congress, 2014, amounted to an onstage discussion with David Kirkpatrick, the host of the annual Techonomy Conference. Their chat started with some words on facebook’s acquisition of WhatsApp, and quickly moved along to why emerging markets, and ultra low cost (or even free) Internet access for emerging markets is a very important component of any plan to double the size of the Internet audience.

facebook is one of the founding partners of Internet.org, along with three handset manufacturers (Nokia, Ericsson, and Samsung), two wireless chip manufacturers (Qualcomm and Mediatek), and Opera Software. Zuckerberg made many references to Internet.org during his conversation with Kirkpatrick. The common theme behind most of these references was his claim about the real extent of Internet penetration of the total world market. From Zuckerberg’s perspective, ” . . . most people in the world don’t have access to the Internet, at all.” (quoted from a video recording of the Keynote Presentation by Mark Zuckerberg at Mobile World Congress, 2014. I’ve provided a link to the entire recording at the start of this post).

Zuckerberg thinks an approximate 1/3 of the total possible audience for Internet services is actually connected, today. So the upside potential for a business like facebook, should an effort like Internet.org succeed, is very big.

Contrast these comments with Apple’s last webcast of quarterly results and you have two diametrically opposite approaches as to how best capture the financial reward represented by the market for online services. Apple is clearly focused on the job of cementing its position as the #1 brand for the very high end of smart phones and tablets. Zuckerberg, and, presumably, facebook, is investing in an effort to lower the cost of Internet access for truly emerging markets, so as to substantially increase the size of the online audience.

The objective certainly makes sense, especially if facebook continues to report earnings beating analyst estimates, while the not-for-profit Internet.org effort is ongoing.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Google Understands the Importance of Emerging Markets to Continued Explosive Growth of Smart Phone Sales

The Android 4.4 KitKat O/S promises to provide smart phone users with a better method of delivering the kind of highly useful information Google’s search engine requires to successfully serve relevant results to queries. Google advertisers are also likely to benefit from this new O/S. Best of all, this O/S is highly efficient, and inexpensive — just what emerging markets are after.

Walt Mossberg has written up a review of the LG Nexus 5, which runs on the latest Android 4.4 KitKat O/S. A lot more technical information about this O/S is available in an article by Richard Goodwin, which was published on the “Know Your Mobile” website, titled “Android 4.4 KitKat:release date, features, tips & tricks and sweet updates”.

The news about this O/S adds more detail about the importance of high volume/low cost product sales for Google, as a follow up to Larry Page’s short preamble to Google’s Q3 2013 quarterly earnings report. I wrote about Mr. Page’s preamble to this latest quarter’s results earlier in this blog.

Most Google analysts should now clearly understand the importance of emerging markets to further growth for many Google products. Regardless of whether the product is a lightweight, compact Chromebook®, or this Nexus 5 LG smart phone, Google’s objective is to keep consumer retail cost as low as possible. Obviously, low costs make for high volume sales. So this method promises to support Google’s efforts to keep sales growing at a very fast pace, across its various product lines.

Mr. Mossberg argues some of the features in the LG Nexus 5 serve Google’s own interests, but I couldn’t find any specific detail in his review to support the claim. I did find some details in Goodwin’s article about much more efficient sensor functionality in this latest Android O/S. One example of the benefit of this new method of handling sensors is much more efficient GPS functionality, which, with the LG Nexus 5, only uses a fraction of the power formerly required for this feature.

Perhaps Mr. Mossberg’s comments were intended to point to these more efficient methods of handling sensors as examples of how Google has built some features into this O/S clearly designed to help its search engine, and, presumably, its click advertising business. It’s not clear from his article. But nevertheless, I’m impressed with what I’ve read about these new smart phones.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved