Posts tagged shift
Most Filipino mobile phone users are expected to shift from traditional handsets to smartphone devices in the next two to three years to get easy access to the web.
Napoleon Nazareno, president and chief executive of PLDT and Smart Communication, said the shift is a global trend and Smart is taking the lead in promoting the transition locally by offering affordable internet-capable phone and data plan packages.
Smart is introducing an array of high-quality, affordable smart phones and tablets led by its Netphone and low-cost internet service packages in the next few months.
Smart will also beef up its cellular data network in anticipation of growth in mobile data volume. The PLDT Group is expected to raise its capital expenditure above P30 billion this year, with much of the increase aimed at fortifying Smart’s cellular network, including mobile broadband.
“Network superiority has been a key competitive advantage for us. Our fixed and mobile networks are the country’s most extensive, resilient and robust. We are building on that strength,” said Nazareno.
For Smart’s 46 million subscribers, “we are offering our own line of smart phones featuring a suite of relevant, affordable services that will bring the internet to the broad market of Filipino mobile phone users,” said Orlando B. Vea, Smart chief wireless adviser.
In Barcelona, Smart unveiled a world first, the Netphone which is designed to provide internet services in affordable bite-sized servings.
Early in the year, the company also made a major push to promote internet access by introducing IDEOS, billed as the world’s first affordable Android smart phone.
Expecting mobile data traffic to rise, Smart is both expanding and upgrading its broadband and cellular networks. The expansion program covers Smart’s 3G/HSPA mobile broadband and WiMax networks.
Smart provides internet access to more than 8.3 million subscribers all over the country,
“This is the largest mobile internet subscriber base being served by a Philippine telco. With the surge in popularity of smart phones and tablets, we expect this subscriber base to grow further in the coming years,” Vea said.
Globally, sales of smart phones rose 72 percent to over 300 million units and made up nearly 20 percent of total mobile phone sales, according to Gartner, a leading global IT research and advisory company.
In a recent report, the research firm IDC said smart phone sales are expected to grow faster in 2011 as vendors make available more mid-range to low-level handsets at lower prices.
- Business Insight
The smartphone story is buzzing in the world. But the line between a ‘featurephone’ and a smartphone is blurring too. Did you know most featurephones have full web browsers, accept apps and often have advanced inputs like touch screens or QWERTY keyboards?
Total Market Size
The year 2010 established a new record for new mobile phones sold, at about 1.37 Billion units sold. Bear in mind, that the world has only about 1.2 Billion personal computers and about 1.6 Billion television sets. But mobile phones sold almost 1.4 Billion new handsets just during the 12 months of 2010.
Smartphones sold more than a fifth of the phones (22% for the full year) and the rate of smartphones is accelerating; it reached 25% in fourth quarter of 2010. Of those smartphones, 33% were Nokia branded, about 15%-16% were RIM and Apple branded (each) and HTC and Samsung both sold about 8% of all smartphones. Motorola, SonyEricsson, ZTE, Sharp, Fujitsu and several dozen others sold the rest. In 2011, we’re looking at around 30% of all phones sold being smartphones; that’s 450 million units.
The more relevant issue is of course the operating system battle. Nokia’s Symbian ends the year well leading the market, as it was on 38% of all smartphones sold. That used to be an overpowering lead, but it is now threatened. For the full year, the upstart Android by Google achieved about 22% market share – but by fourth quarter, the two were running neck-to-neck and by early 2011, Android is expected to pass Symbian (the recent news story by Canalys that Android had already passed Symbian was premature). After Symbian and Android, the two other major OS platforms for 2010 were BlackBerry OS and iOS, both with about 15%-16% market share. Then the small operating systems were now discontinued Windows Mobile at 4%, Samsung’s Bada at 2% and Microsoft’s Phone 7 at 1%. Others are in smaller numbers than those.
The year 2010 was the first year where half of all mobile handset revenues were generated by smartphones. Individual smartphones generated 3.5x more revenue per handset, than dumbphones. The industry’s average sales price is at 120 dollars – which splits so that smartphones had an average sales price of about 330 dollars, and about 60 dollars for the ‘dumbphones’.
If we examine the biggest ‘dumbphone’ makers – which accounted for 78% of all phones sold but included phones as cheap at 25 dollars each aiming for Africa etc. – and at the top end run into the 200 dollar range of premium ‘featurephones’ with touch screens and quite advanced features. In this dumbphone category, Top 4 players are Nokia at 32%, Samsung at 23%, LG at 10%, and ZTE at 6% share. The small players are Huawei and SonyEricsson both with about 3%, and then Motorola and Sharp both of which have about 2%. Remaining 19% is split by 50 small-scale and specialized manufacturers.
The world has passed 5.2 Billion mobile phone subscriptions. That is not ‘phones’ as many people have multiple subscriptions while using only one phone, and switch the little SIM cards to select which network to use. The number of actual mobile phones in use today is smaller by a billion, at 4.2 billion phones. And the number of unique phone owners is 3.7 Billion. Let’s look at that installed base a little bit more.
Out of the 4.2 Billion mobile phones, 750 million are smartphones (about 18%). Most smartphones support 3G connectivity and have full Internet capability, accepting user-installed applications.
Of the remaining 3.45 Billion ‘dumbphones’ – most of those also have a full web browser (so they can do the ‘real’ Internet. And practically all remaining simple phones can still do the simpler WAP style web browsing). What probably surprises many readers, is that today half of all dumbphones in use are also fully ‘application-capable’ i.e. they support apps designed using Java or Brew. Don’t be surprised to know that even a 13 year old Nokia 5110 supports “apps”, i.e. Java games.
Of all phones in the world, 77% are cameraphones (3.3 Billion); more than twice the number of TV sets and nearly three times the number of all PC’s in use including desktops, laptops and tablet PCs like the iPad. Note that all cameraphones will have a color screen as well. How are they used? You might be surprised to find that the world has already 2.1 Billion active users of MMS picture messaging. That is 65% of the total installed base of cameraphones. And yes, MMS is 50% bigger in the number of users than email is on the Internet. The only data service bigger than MMS is SMS with 4.2 Billion users worldwide or 81% of all mobile phone subscribers.
Apps vs. Services
Hot story of 2010 were app stores, and Apple just celebrated its 10 Billionth app download (the word ‘app’ is a bit misleading – the second biggest category of paid downloads are eBooks). As Apple had seen 3 Billion downloads by the start of 2010, which meant that the calendar year 2010 saw a total download number of about 7 Billion apps from Apple’s iPhone App Store. That was clearly the biggest app store; all other app stores produced roughly as many downloads as Apple alone.
We don’t have the full numbers yet for 2010, but roughly speaking Apple’s App Store produced app revenues to the tune of 1.5 Billion dollars. If we double that, the global market for user-installed apps bought from all the app stores worth somewhat less than 3 Billion dollars.
Even if those numbers look good, there is a bigger smartphone app paid market than that. The total app market in 2010 was worth about 6 Billion dollars. What is the variance? It is enterprise/corporate applications i.e. business apps, that are sold by IT integrators for typically Blackberries, or Windows Mobile or Nokia E-Series phones sold by the thousands to enterprise/corporate customers. So while yes, ‘apps’ are worth about 6 Billion dollars – which number is not available for those who design iPhone or Android apps (or Symbian or Bada or whatever else) that are sold to individual consumers through app stores. The app store global market size is under 3 Billion dollars – but it is growing strongly.
Now, before you get excited, the value of MMS multimedia messaging globally – which delivers all sorts of media content from videos and sounds to pictures, news, coupons, ads and text – was worth… 32 Billion dollars in 2010 – 10 times bigger than apps. The total ‘value-add’ services opportunity for mobile was worth 100 Billion dollars – 30 times bigger than apps. Don’t forget, the total mobile data opportunity including SMS was worth 300 Billion dollars in 2010. Before you say, that’s teenagers chatting, the answer is clearly no. SMS is massively used to deliver news, ads, marketing, and coupons; enable payments such as paying for car parking, buy tickets; and deliver massive consumer interaction for other media such as television voting like American Idol. Yes, total mobile data is 100 times bigger than apps and app stores.
One more for the end…
The total market of new smartphones sold in 2010 was about 300 million handsets. Not all of those are or will be used to download apps. But the active user base of SMS text messaging grew by… 600 million new users in just one year! Do you understand why I keep reminding you, our respected readers, that while yes, smartphones are big, the app store opportunity is in its infancy, and the real money of mobile today is made on SMS, MMS and other simpler services that work on most phones.
That’s a quick look at the mobile phone market and installed base in the world at the end of 2010. You may freely quote these stats in any use, feel free to link to this blog, or you may say the source is TomiAhonen Phone Book 2010, from which the stats have been taken. If you need deeper stats on the phone industry, please see the eBook TomiAhonen Phone Book for more. The 171 page eBook has 98 charts and tables all fresh with December 31, 2010 statistics on phones, features, average prices, markets, installed bases, regional splits, etc.
Commercial feature – Smartphones have become the norm. Whereas previously they were seen as slightly excessive, or a luxury, today they are a requirement.
The mobile phone market is filled with smartphones; each company produces their own version and the demand for them is increasing to the point that there is now a focus on how much can be achieved with smartphones and how their potential can be increased.
While smartphones have existed for a few years now, there has been a recent surge in their popularity of the product with varying types of consumers.
Where smartphones are concerned, there are different types of customer. There are those who must stay abreast of all technological advancements at all times; they must buy new products as soon as they are launched. These consumers have had smartphones for years and constantly upgrade them as they develop.
There are then those who keep in touch and relatively up to date, but aren’t in so much of a rush. With each upgrade on their contract, they’ll get one of latest smartphones available but there is no queuing outside stores overnight.
There are also those who aren’t that bothered about having smartphones, despite this group diminishing. It is these consumers who are gradually coming to realise that having a smartphone is becoming as important as having a mobile phone. Today, having a regular mobile phone only impedes you from being in contact with more people at once. Carrying a link to the Internet with you at all times, plus the apps and extra features available from the variety of smartphones, has turned the product into an essential.
Smartphones seem to follow two designs. Some follow the classic mobile phone outlay, with a screen at the top and physical buttons below. Previously, these have been for numbers zero to nine, with some navigation buttons, but smartphones have transformed it to a full QWERTY keyboard. There are also other buttons around the exterior to navigate your way around the phone and its functions.
The other design features a screen that takes up virtually the entirety of the front of the phone. These touch phones then use buttons on the screen for their navigation that can change with each page, rather than the fixed buttons from the other design. Touch phones and their design are the most popular. This may be down to the fact that the design enables the screen to take up almost the entire face of the phone, making it bigger and easier to use, and the fact that the buttons can change.
LG’s Optimus 7 may have found an ideal solution for touch screen technology. While it may be expected by smart phone veterans, touch screens can be confusing, if not a little daunting for those new to the technology. For consumers used to standard keys on their phone it can be a bit of a stretch. The Optimus 7 is a touch phone but has three function buttons at the bottom of the phone just under the screen; Back, Home and Search.
The phone is one of the first to run the new Windows Phone 7 operating system, and trying to navigate through it, as well as LG’s own features, becomes a far easier thing to do with the three physical buttons under the screen. They make the phone an easy thing to use and as a result familiarity can be achieved pretty swiftly.
That said, the virtual keyboard on the screen is very responsive and accurate, and typing emails or working in Microsoft Word documents is an uncomplicated process. The same applies to text messages and browsing the Internet; LG has managed to make the Optimus 7 very user-friendly indeed.
The camera is good, but it is made a lot better by the different types of photographs that can be taken. ‘Beauty shot’ and ‘Anti-shake’, as well as a couple of other modes, mean that each photo taken can improve significantly with a little experimentation. The phone is encased in metal, and as is so vital in this market, looks very good: modern without being overly fussy.
A number of LG’s smartphones use Android as their operating system. It offers its own set of apps and is one of the biggest mobile operating systems on the market. LG is one of a few manufacturers to use Android, and the system makes it possible to synchronise with all Google mobile services and social networking.
LG is also trying to make Android technology more accessible to the cheaper end of the smartphone market. While there are plenty of smartphones that cost large sums of money, the Optimus One model puts that same technology into a phone where the handset and the possible contracts are far cheaper than those of their rivals. The result is a very effective mix of functionality with affordable price. The top technology is no longer just limited to the most expensive phones, and this is another factor that will only help to increase the demand for smartphones. At just under £130, it makes smartphones very affordable, and can offer a far longer battery life that competitors should aspire to.
Smartphones are becoming more popular and less expensive, with the price for the phones themselves, as well as the contracts available to customers, falling. Both these trends will continue as owning basic mobile phones become more defunct.
The key for the manufacturers is to keep competing in terms of the technology that each phone can provide, while trying to keep them as simple and uncluttered as possible. The operating systems used in smartphones will undoubtedly develop as companies like Windows and Google compete with one another; it is then down to cutting-edge manufacturers like LG to offer consumers the ultimate device.
The Consumer Electronics Association is lashing out at a proposal from the Recording Industry Association of America and the National Association of Broadcasters that would mandate mobile device manufacturers to integrate FM radio chips into all wireless phones manufactured and sold in the U.S. The proposal is the latest chapter in a long-running dispute between terrestrial radio broadcasters and the recording industry over music royalties, with the NAB battling the RIAA’s push to require radio stations to pay labels and performers for the right to broadcast their songs. Existing U.S. laws demand radio stations pay royalties to songwriters, but not labels or artists–broadcasters contend that radio airplay provides free promotion and drives music purchases and concert ticket sales, but with CD sales in steep decline, the RIAA is exploring new revenue alternatives.
Although both the U.S. House of Representatives and Senate Judiciary Committees have passed bills that would award labels and artists a share of radio advertising revenues generated by playing their music, legislation has stalled in the face of overwhelming opposition from the NAB. Broadcasters, looking to expand their audience reach, have now proposed a new settlement, agreeing to pay the RIAA around $100 million in annual royalties on the condition that lawmakers mandate the inclusion of FM radio chips in mobile phones and other portable devices. Congress is expected to act on the proposal sometime this fall. “Nothing is locked down just yet, but we’re on the precipice of an historic breakthrough,” RIAA chairman and CEO Mitch Bainwol told the Associated Press.
“This is two old-media industries attacking the new wireless broadband industry,” said Consumers Electronics Association head Gary Shapiro. “We don’t think Congress should accept a back-room deal on how an iPhone should be designed. We think consumers should choose and companies should choose.” Jot Carpenter, vice president of government affairs for wireless industry trade organization CTIA, states there is “not a huge desire [among consumers] to listen to over-the-air, ad-laden radio” on mobile devices, adding there is scarce demand for phones with FM radio chips.
For more on the music royalty proposal:
- read this Associated Press article