Tuesday, April 1, 2008

Smartphones: where we are

Monday I reprised my appearance at the Smartphone Summit, held in conjunction with the semiannual CTIA trade show. In addition to moderating a panel, I got to attend the rest of the conference.

The most new information came from the opening panel of mobile phone industry analysts:

  • Mark Donovan - Senior Vice President & Senior Analyst, M:Metrics
  • Pete Cunningham - Senior Analyst, Canalys
  • Andy Castonguay - Director - Consumer Research, Yankee Group
  • Bill Hughes - Principal Analyst, In-Stat
  • Jonathan Goldberg - Senior Analyst, Deutsche Bank Equity Research
I’m used to having panels with stars and duds, but this was one of the largest panels I’ve seen at any show where everyone was first rate.

There were a lot of interesting presentations of data. One was the Canalys summary of the 2007 smartphone OS market share in North America and EMEA (Europe, Middle East, Africa):
Symbian S60 34.8m 0.5m
Windows Mobile 5.0m 4.9m
Blackberry 2.3m 9.2m
Symbian UIQ 1.5m
iPhone 3.4m
Palm OS 1.4m
Other 1.3m 0.3m
Total 44.8m 19.7m
This gives more specific data about US vs. Europe and full year statistics that were not available in the Q42007 data released in February. Canalys is expecting a 50% CAGR for smartphones from 2004-2010.

There were other interesting comparisons between the two regions:
  • Smartphones in the US are 2/3 enterprise while Europe is 2/3 consumers. Sales in the US are distorted by American addiction to handset subsidies: consumers don’t buy phones without subsidies. so cheap smartphones (think Palm Centro, RIM Pearl) sell but expensive ones do not.
  • In the US, users (including teens) with PC experience want keyboards for e-mail and text, while European teens are quite happy with T-9. (At least one of the panelists shared my view that everyone wants good input and small form factor suspect others are like me and want both a small phone and a keyboard).
The In-Stat data on US users was also really interesting:
  • Did users install any mobile phone apps (i.e. themselves, not their employers). The mean has creeped up from 1.54 in 2005 to 1.83 to 2007, but the histogram more interesting: none (30%), one (17%), two (19%), three (10%), four or more (25%).
  • Phones are used as PC extension (53%), laptop replacement (17%), desktop phone replacement (17%). (The most interesting is that 30% of the users are just using it as a feature phone — the Smartphone OS is used by the manufacturer as a way to software-configure features, but the users don’t treat it as a smartphone.)
  • Average ARPU per customer: $81 corporate-liable (company direct pay), $59 business-personal (reimbursed by company), $48 personal and unreimbursed business, and $26 pure consumers.
However, the In-Stat slide that got everyone's attention was the discussion of correlating platform strategies to vendor profitability. (I tried to grab my camera phone but was too slow). Hughes claimed that of the top 13 vendors, all of the vendors with simple platform strategies (2 or less) are profitable, and all those with complex ones (3+ platforms) are not. (For #14, it's so small that it doesn’t make money even though it has a limited number of platforms).

The first mention of the iPhone was Hughes asking if the iPhone is a “smartphone” — even with the recent SDK, the audience was evenly divided. (It is certainly a good web surfing device, extensible by web apps, so I think it would be silly to claim it is not “smart”). No one expects the iPhone to succeed in the enterprise, except perhaps in a few vertical markets like advertising.

Everyone agreed the iPhone is having a major impact on the industry. As Goldberg said: “In the U.S., consumers are suddenly interested in smartphones and aware of smartphones in a way they weren’t before.”

The crystal balls were otherwise cloudy. Are sales disappointing in Europe (France, UK, Germany, Ireland, Austria) due to the price? The form factor? (The lack of ITunes store penetration?) Or because it’s not yet 3G?

Still, I thought it gave a really good overview of where smartphones are today in the US. The one thing I’d add is the Rubicon Consulting iPhone study, which is being unveiled today at the main CTIA conference.

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