Palm Centro: Major Shift to Smart Phones, Data

Smart phones do indeed drive consumer purchases of data plans, new data from Palm suggests. Palm reports that 95 percent of new Centro buyers signed up for a data plan.

More than 70 percent of Centro buyers also appear to be upgrading to a smart phone for the first time, Palm says.

Keep that up for a long enough period of time and mobile providers will discover that most users have data plans and smart phones.

Which is just what they plan.

Android, iPhone: Finding the New in the Old

Sometimes the insight that leads to an assault on a new market is to discover the new market hidden in the weeds of an older and established market. Incumbents in the mobile phone market have dismissed the Apple iPhone simply because the volumes of devices shipped by the leading players is so overwhelming.

Though it is less often said, the same sort of dismissal could be aimed at Android, the open-source operating system under development by Google and 30 or so other partners.

And it's hard to argue with that perspective. Unless you dig in the weeds and reimagine a market. If one looks at smart phone (perhaps more aptly described as mobile PC or mobile Web device)penetration, it is still quite low.

Looking just at smart phones, which have low penetration, the market volume to be shared by all players is still quite small, so the market share doesn't have nearly the same meaning it would in a large volume market.

"Smart phones" or "mobile Web" devices or "conference in a pocket phones" or "email in a pocket" phones remain a developing market, not a saturated market. So new players still have a shot of ultimately achieving significant influence and share, no matter how small their efforts might appear if the market is defined as "mobile phones."

Hughes de la Vergne, Gartner analyst, estimates that even powerful Symbian has just two to three percent share of the U.S. smart phone operating system market, for example.

But that's just the U.S. market. The numbers certainly look daunting just about everywhere else.

Does iPhone Hurt BlackBerry?

If Changewave Alliance members are an accurate reflection of broader market trends, sales of Apple iPhones do not hurt sales of Research in Motion BlackBerries, Curves and Pearls. Since January 2007, it appears the percentages of new phone buyers who plan to buy either an iPhone or RIM device have increased fairly steadily, with Apple retaining a slight edge in buying intention.

Of course, things could change once poll respondents actually go to the retail outlet to buy. But the poll suggests that the iPhone is not hurting RIM's handset sales. Instead, sales of smart phones seem to get a boost. Among brands, it most likely it is Motorola devices that are taking a hit.

OS Shift?

Amazon's top-10 "Most Wished For in Computers & PC Hardware" list includes, in order or popularity:
1. Asus Eee PC 8G
2. Asus Eee 4G
3. Asus EEE 4G
4. HP Pavilion DV6662SE
5. Nokia N810 Portable Internet Tablet
6. Nokia N800 Internet Tablet PC
7. Apple MacBook
8. Apple MacBook Pro
9. HP Pavilion DV6626US
10. Apple MacBook MB062LL

A couple of things strike one about this list. First, the prevalence of Linux-powered machines at the top three spots. Second, the prevalence of smaller form factor, highly portable devices among the top 10. Third, the prevalence of operating systems other than Windows in the top 10. Fourth, the prevalence of devices optimized for Web and Internet use.

On Amazon's "Bestsellers in Computers & PC Hardware" list, five of the top 10 devices use operating systems other than Windows. On Amazon's "Most Gifted" list, six of the top 10 devices use operating systems other than Windows.

Here's the other angle: some people carry smart phones with them when traveling, and leave their PCs behind. Top management and sales personnel are more likely to do so than people who have greater needs for text entry and Web app access. The point is that at least for shorter trips, the smart phone goes, the PC stays.

Almost everybody who owns a smartphone takes it, not a PC, when traveling locally, because email and text communications that otherwise would require a PC still are available.

To the extent that this trend continues, and more-mobile PC style devices also get traction, as the Amazon data tends to indicate, what does it mean? Web. Remote computing and storage. Need for better interfaces.

Small devices almost have to lean more heavily on applications in the cloud rather than local processing and storage. And several of the new devices plow new ground in the form factor/power/price equation, banking on Web apps to reduce price footprint, for example.

Navigation on a small device also is more problematic, so devices get an even-bigger push for new input options. Speech and touch, for example. Finally, taking all notebook PCs and smart phones together, and looking at them as a single market, not separate markets, one can observer that there already is more diversity in operating systems than has been the case in the desktop PC market.

How do People Use Their Smart Phones?

The Nokia Smartphone 360 survey shows that mobile users spend an average of 48 minutes per day on their smart phones, says iLocus. About 12 percent of the time is spent on making voice calls while messaging consumes 37 percent of user time; multimedia 16 percent; PIM 14 percnet; Games four percent; Browsing eight percent.

Browsing accounts for 72 percent of data traffic while entertainment accounted for four percent of the traffic in 2006. That pattern changed in 2007, though, with entertainment grabbing a sharply greater share of time spent with the mobile device.

In 2007, browsing represented 44 percent of time spent; entertainment 26 percent. Messaging increased from 11 percent of the data traffic to 21 percent year over year.

Nokia assumes that messaging traffic increased because users were sending photos using multimedia messaging service, while entertainment traffic increased due to increased podcasting.

Usage also peaks at different times of day. Music usage peaks at around 8 am and then again at 6 pm, suggesting music gets used when users are commuting. Voice usage peaks around 4 pm to 5 pm. Browsing peaks at around 10 pm.

Obviously mobiles are being used at home in the evening for browsing, and the question is why the home PC is not used instead.

Nokia assumes that the mobile phone is using Wi-Fi to download Internet content. According to Nokia, podcasting also is a later-in-the-evening activity.

About 47 percent of outbound calls are made on the move. About 29 percent of outbound calls are made from home. About 24 percent of outbound calls are made from the office.

About 35 percent of packet data is consumed when users are on the move. About 44 percent is used at home and 21 percent is used at the office.

Data traffic use increased from 6 mbytes a month in 2006 to 14 mbytes a month in 2007.

Wi-Fi or wireless LAN connections accounted for 31 percent of data use while mobile access accounted for the rest of use. WiFi sessions were longer with an average session duration of 4.5 minutes.

About 31 percent of the respondents used instant messaging. Some 38 percent of respondents listen to music at least once a week. Some 47 percent of the panellists say that mobile is now their primary music player.

About 59 percent are regular gamers. "Snake" and "Card Deck" are the most popular games. About 81 percent of users regularly use browsers, and the typical user visits two sites a week.

iPhone: Some Glimmers of Enterprise Adoption

SAP, Salesforce.com and scores of smaller developers are letting sales and finance teams work away from the office on their iPhones, says Reuters. SAP, in fact, has broke with precedent by introducing a version of its upcoming customer relationship management software for the iPhone before launching versions for mobile devices from Research in Motion and Palm.

In SAP's case, its own salespeople demanded it, according to Bob Stutz, SAP SVP.

There still are some issues many of us believe will be resolved over time. "Push" email and over-the-air synchronization are some of the features a really enterprise class iPhone would have to support. Integration with Microsoft Outlook is an issue, but basically a licensing deal.

Some potential business buyers probably are holding out for a model that runs on faster wireless networks, but that is a problem being resolved by Apple and at&t already.

One barrier some users might continue to have, though, is the relatively higher error rates for entering text, compared to other devices with keypads.

New BlackBerry Consumer Phone

MultiMedia Intelligence projects worldwide unit shipments of multimedia feature-rich mobile phones will exceed 300 million units in 2008, outnumbering shipments of TV sets.

Multimedia phones have at least 1 megapixal image capture, MP3 audio, video playback, Java, USB, Bluetooth, 16-bit screen color, QVGA resolution, WAP and MMS. Revenue from these handsets will be over $76 billion.

Numbers that large are a reason why Research in Motion will be launching new consumer-focused devices in the first quarter next year. The 9000 series is described by Carmi Levy, an analyst at AR Communications Inc. , as "the future of the BlackBerry franchise," a complete breakaway from the device's business roots. Instead, the new series targets the consumer space served by the Pearl and Curve models.

"The 9000 is supposed to be a touch-screen device, very similar in form factor to the iPhone," Levy says. "Which means that it is not an enterprise-friendly device."

The 9000 series will break from the traditional half-screen, half-keyboard look of the BlackBerry. The handsets will also incorporate an upgraded multimedia system, along with the standard push email capabilities.

Levy speculates that RIM will introduce the 9000 series in the first quarter of next year.

Among the updates will be "a Curve with WiFi," according to Levy. These devices may have other updates like GPS location tracking and higher resolution on-board cameras as well.

Heavy Text on iPhone? Not so Accurate

You probably would have guessed this would be the case: User Centric, Inc., a Chicago-based usability consultancy, says iPhone owners can enter text just as rapidly as a BlackBerry user can, but the error rate for iPhone users is higher, and significantly higher for longer messages.

While iPhone owners made an average of 5.6 errors/message on their own phone, hard-key QWERTY owners made an average of 2.1 errors/message on their own phone. Nor does it appear experience makes that much difference. Though User Centric found that experienced iPhone users could type faster, they made as many mistakes as users who never had touched an iPhone before.

Participants who had previously not used either a hard-key QWERTY phone or an iPhone also were significantly faster at entering text messages on the hard-key QWERTY test phone than on the iPhone. These participants also made significantly fewer errors on the hard-key QWERTY than on the iPhone.

Numeric phone owners made an average of 5.4 errors/message on the iPhone, 1.2 errors/message on the QWERTY test phone, and 1.4 errors/message on their own phone.

The study involved data from 60 participants who were asked to enter specific text messages and complete several mobile device tasks. Twenty of these participants were iPhone owners who owned their phones for at least one month. Twenty more participants were owners of traditional hard-key QWERTY phones and another twenty were owners of numeric phones who used the “multi-tap” method of text entry.

Each participant entered six fixed-length text messages on their own phone.
Non-iPhone owners also did six messages each on the iPhone and a phone of the “opposite” type.

The opposite phone for numeric phone owners was a Blackberry and for hard-key QWERTY phone owners it was a numeric Samsung E300 phone. Some participants did additional tasks, including a contact search and add contacts, as time allowed.

iPhone owners entered six text messages on their own phone. They also typed two pangrams – a sentence that includes every letter in the English language at least once – and one corpus – a set of characters that represents the exact letter frequencies of the English language. These tasks were included to ensure that participants experienced the various phone keyboards in a thorough manner. iPhone owners also completed tasks involving text correction, contacts, and visual voicemail

Non-iPhone owners entered a total of 18 text messages – six each on their own phone (hard-key QWERTY or numeric phone), the iPhone, and the “opposite” phone (numeric test phone for QWERTY phone owners, hard-key QWERTY test phone for numeric owners). These participants also entered two pangrams and one corpus on their own phone and completed the contact list tasks if time was remaining.

As it turns out, subjects preferred hard keys for texting. “Not only was their performance better,” says Jen Allen, User Centric user experience specialist, “their rankings and ratings of the phones indicated that they preferred a hard-key QWERTY phone for texting.”

Participants rated the hard-key QWERTY phone highest out of all three phones for ease of text messaging. The hard-key QWERTY phone was also most frequently ranked first out of the three phones by the numeric and QWERTY users. Overall, the hard-key QWERTY phone was ranked first in text messaging by 85 percent of users.

The iPhone was ranked second by 60 percent of these users. None of the hard-key QWERTY phone owners ranked the iPhone first for text messaging and only three numeric phone owners ranked the iPhone first.

In general, hit rates for all keys on the iPhone keyboard were consistently 90 percent or higher. The average hit rate was about 95 percent.

But participants repeatedly pressed certain keys when they intended instead to press other adjacent keys. Several iPhone keys had high error rates: Q (66 percent), P (27 percent), J (22 percent), X (21 percent), and Z (15 percent). In contrast, the median false alarm rate across the iPhone entire keyboard was 5.48 percent.

iPhone keys with the highest false alarm rates were those in close proximity to the five most frequently used letters in the English language: E, T, A, O, and I.

In addition to the high false alarm letters listed above, other false alarm letters included W (10 percent), R (6.5 percent), Y (8.7 percent), and S (6.0 percent), which are also adjacent to high-frequency letters.

B (8.2 percent) also had a high false alarm rate, potentially because of its location near the letter N (which is the sixth most frequent letter, User Centric says.

On the hard-key QWERTY keyboard, the hit rates for all keys were above 97 percent, except for V (96 percent). Additionally, the false alarm rates for keys on this keyboard were below three percent, with the exception of Q (8 percent).

Performance on the keyboard was much better than on the iPhone keyboard. The letters with higher false alarm rates were similar on both keyboards, involving many of the 5 least frequently used letters in the English language, such as Q, Z, V, and B.

Also, the Q and P keys were problematic for users of both keyboards, suggesting that the issue for these keys arises from their location near the top edges of the keyboards.

Participants made different types of errors on the iPhone and the hard-key QWERTY phones.

The majority of errors made on the iPhone involved substituting a nearby letter for the intended letter. However, on the QWERTY phone, participants made more insertion and omission errors than substitution errors.

Also, many of the substitution errors that were made on the QWERTY keyboards involved swapping the order of the correct letters in the words, such as typing “stomr” instead of “storm”.

Compared to hard-key QWERTY devices, the iPhone may fall short for consumers who use on their mobile device heavily for email and text messaging, says User Centric.

The iPhone was clearly associated with higher text entry error rates than a hard-key QWERTY phone.

The finding that iPhone owners made more texting errors on iPhones than their hard-key QWERTY counterparts (on their own QWERTY phones) suggests that the iPhone may have a higher fundamental error rate. The iPhone’s predictive and corrective text features do alleviate some of the errors users make while texting, but it does not catch them all.

The touch screen obviously is an elegant interface for some tasks. It just doesn't appear to be the best interface for all tasks. Mutlitap and touch screen will work fine for many people. Others will find QWERTY keyboards the only way to go.

Symbian Disses Google

Google faces challenges in the mobile device business to be sure. Microsoft and Symbian have made abundantly clear their views on how tough it is to break into the market and how far Google is behind. But perhaps the dismissals are a sign of how great the concern is?

Google's attempt to create a widely-used Linux-based mobile phone operating system is "a bit like the common cold," says John Forsyth, Symbian VP, in an interview with the BBC. "It keeps coming round and then we go back to business."

"About every three months this year there has been a mobile Linux initiative of some sort launched," he says.

Symbian's recent financial results show it sold 20.4 million smartphone software licenses in the last quarter of 2007 and since the company was launched nine years ago more than 165 million phones have been shipped using its platform."Search and a mobile phone platform are completely different things," Forsyth argues.
"It's costly, arduous and at times a deeply unsexy job of supporting customers day by day in launching phones."

Forsyth also questioned whether developers would flock to the system. "You have to have a lot of zeroes in your sales figures before a developer gets out of bed," he argues. A phone that can't be sold until next year "is not one that is going to ignite developers," he says.

Nokia, a major driver of Symbian device sales, is more circumspect. "We are always open to discussion and debate on that. We were not ready to make any commitment to it or discuss it at the time," says Simon Ainslie, Nokia UK managing director. "We are having ongoing discussions with Google."

Skype Phone Coming

One mobile device trend is the creation of "cross over" devices that meld feature phones big on media with "work" phones optimized for email. But there's another trend: creation of new devices that are optimized for one particular application or use mode. Add the new Skype phone to that bucket.

Skype plans to introduce the phone in the countries where mobile carrier "3" operates. 3 is the mobile venture of Hong Kong's Hutchison Whampoa Ltd. and operates in Australia, Hong Kong, Indonesia, Austria, Denmark, Italy, Ireland, Sweden and United Kingdom.

The whole point here is to optimize the phone for Skype, making it as easy as possible to use on a mobile device. If BlackBerry is "email in your pocket," and iPhone is "Web and music in your pocket," then the new device is "Skype in your pocket."

Pantech Duo for at&t

Touch screen smart phones aren't universally desired. So at&t is introducing a dual-sliding phone like the Helio Ocean, but using the Windows Mobile 6 operating system. The Pantech Duo uses the 3G network, , a sleek-looking dual-slider that zips along on their 3G HSDPA network, has a 1.3-megapixel camera, and can do push email.

Apple iPhone Price Cut is, Oddly, About the Buzz

Equity analysts and presumably some investors are said to be quite unhappy about the $200 price reduction on the eight gigabyte vesion of the iPhone, which now sell for $399, $200 less than the price consumers paid just three months ago when the iPhone launched on June 29. "Leaving margin on the table" is the problem.

Apple announced a credit of $100 for early buyers after the price reduction. The credit is a bit unusual. The timing of the price cut is quite unusual. Apple has in the past waited as much as a year to drop prices on a device.

Some say the move is a significant strategic and tactical misstep. Maybe. But Apple once again gets huge buzz, refocusing attention a couple months after the splashy launch. Lower than anticipated sales is unlikely to be a drive, as the company stands by its initial projection of one million sales by the end of the quarter.

It might sell twice as many. Nobody knows yet. Undoubtedly some thought was given beforehand to the customer irritation factor. The credit could have been part of the plan, not an afterthought when a hue and cry arose about the unfairness of the price cut for early buyers.

Yes, there is some margin hit. But Apple now stands ready to move past the "gotta have it" early adopter crowd and occupy other niches in the market. Just what niches is the issue. Everybody intuitively understands that a BlackBerry is "email in your pocket."

I'm still having trouble coming up with a simple description of what precise niche the iPhone occupies. It might be the "heavy iPod user who doesn't want to carry a mobile phone." The iPhone might simply be a communicating iPod. It doesn't seem quite right to say it occupies the "whole Internet in your pocket" position.

It might more plausibly be something like an "easy to use mobile phone" positioning, analogous to the way the early Apple PCs held that niche in a world of command line interfaces. Graphical user interface is then the idea; "mouse"-based instead of "C: prompt"; finger rather than scroll wheel or button.

With the price cuts, Apple gets a chance to establish something more like its ultimate market position, as enough users are aggregated to figure out how end users view the device. Right now it still seems to be a device whose niche is evolving.

Microsoft iPhone Competitor?

Since every other manufacturer of handhelds has been scrambling to create new devices that can compete with Apple's iPhone, it is only logical that Microsoft will do so as well. SoMindy Mount, corporate vice president and CFO for Microsoft's Entertainment and Devices Division, says it's not "unreasonable" to think that Microsoft will integrate photo, music, and touchscreen features into a Windows Mobile product in the future.

Microsoft's idea with Windows Mobile has been to move everyday business capabilities, such as accessing e-mail, from the PC to the mobile device. However, "Being able to do pictures and music is something that consumers are going to want, so it's a natural thing for us to want in our product road map," she says.