Online Ads To Beat Print Spend For First Time

Online advertising will will exceed print spending in 2012 for the first time, eMarketer now predicts. 


U.S. online ad spending will grow by 23.3 percent in 2012, eMarketer projects, to $39.5 billion. It expects print advertising to reach $33.8 billion in sales, down from $36 billion in 2011. The shift has been a long time coming, and represents a key watershed for the media business.

Where a rational observer might have argued that online was a subsidiary medium, with print being primary, the crossover point now has been reached. One might now argue that online media are primary, and print is secondary.


At least in part, though, the shift is powered by growing digital revenues for former print publishers. Newspapers in 2012 will continue to be a bright spot. 


Researchers at eMarketer forecast that digital ad revenues for newspapers will grow 11.4 percent to $3.7 billion, after rising 8.3 percent to $3.3 billion last year. 


At the same time, print advertising revenues at newspapers will fall  percent to $19.4 billion in 2012, after dipping 9.3 percent to $20.7 billion last year.  

Google Has a Vested Interest in "Speed"

Though low latency, faster access networks often are seen primarily as an access provider issue, Google has a direct financial interest in the fastest-possible degree of end user Internet access, which would explain Google's experiments with, and support for, faster broadband access, ranging from municipal Wi-Fi to white spaces to fiber to the home.

It is more than a subjective matter of "better end user experience." Faster access, and lower latency, mean users can view more pages and content in a shorter amount of time. For a company that makes its money from advertising, that means a potential increase in the number of impressions.

Now Google appears to be testing ways to reduce page load time by 10 percent to 40 percent by changing the way the Transmission Control Protocol operates.TCP is a key protocol used by all users of the Internet, and all web pages.

Google also appears to be working on methods for speeding up error correction methods, which would likewise speed up end user experience and delivery of pages.

Google also is said to be developing algorithms to improve experience on “noisy mobile networks” by reducing latency.  Google working on faster web experiences.:

Apple, Samsung Earn 81% of All Mobile Phone Profits

Profitability, more than anything else, now is shaping the global smart phone business, one might argue after considering the latest estimate by Strategy Analytics of market share in the global handset business.

Globally, Apple and Samsung have, over the last 12 months, surged to the top of the charts in terms of smart phone sales volume. In the past, the “smart phone” category has not been significant, as all devices were feature phones or basic phones.

As the market begins to shift to a smart phone buyer pattern, differences in firm strategy and execution have lead to a rapid change in market leadership.

Global smart phone shipments grew 54 percent annually to reach a record 155 million units in the fourth quarter of  2011, according to Alex Spektor, Strategy Analytics associate director. That apparently has proven to be a decisive change.

In the past, Nokia has been the global share leader, but Nokia has not been able to translate that prior success into smart phone success, where Apple has changed the game and Samsung apparently has been able to keep pace.

Apple overtook Samsung to become the world’s largest smartphone vendor by volume with 24 percent market share. Apple’s global smartphone shipments surged 128 percent annually to 37.0 million units, as distribution of the iPhone family expanded across numerous countries, dozens of operators and multiple price points.”

Apple took the top spot for share on a quarterly basis, but Samsung became the market leader in annual terms for the first time with 20 percent global share during 2011. With global smartphone shipments nearing half a billion units in 2011, Samsung is now well positioned alongside Apple in a two-horse race at the forefront of one of the world’s largest and most valuable consumer electronics markets, Strategy Analytics says.

In contrast, Nokia’s smart phone market share was cut in half from 2011 to 2011, dropping from 33 percent in 2010 to 16 percent in 2011.

That is one reason there has been so much focus on the Nokia partnership with Microsoft, as many would argue the Windows Mobile operating system represents the best shot Nokia will have to avoid collapse.

The other observation of note would be that profitability might now be emerging as the key differentiator, even though design and consumer demand clearly are driving the market overall.

Samsung’s most-recent quarterly earnings also set records. Samsung Electronics Co declared $4.7 billion in quarterly operating profit. jumping 76 percent year over year.

Between them, Apple and Samsung earned fully 81 percent of all profits in the mobile handset business.



Apple in the fourth quarter of 2011 shipped 37 million smart phones worldwide, up 117 percent from 17 million in the second quarter. This represented the strongest sequential quarterly growth among the top-five smart phone brands, according to IHS ISuppli.

“Samsung advanced in 2011 because of its strategy of offering a complete line of smartphone products, spanning a variety of price points, features and operating systems,” says Wayne Lam, IHS senior analyst.

On the other hand, the market share battle between Apple and Samsung reflects the competition between the two leading smartphone operating systems and ecosystems: Apple's iOS and Google's Android, says Lam.

“The relatively small growth of Sony Ericsson and Motorola may indicate that the Android smart phone market is becoming too crowded as the various licensees compete for limited consumer mind share and shelf space,” Lam says.  

User Experience on PCs, Tablets, Smart Phones: Huge Latency Issues

Latency is getting to be a bigger deal for mobile user experience. Apps that load quickly on a PC take much longer to load on a smart phone or tablet, Yankee Group reports, using Keynote Systems data.

Also, according to Yankee Group analyst Carl Howe, typical users now carry as many as five different mobile devices. But each of those devices might be optimized in different ways, in terms of latency.

Load times among sites differ because in most cases, content owners are not customizing the content they deliver to the device, says Howe. The majority of the sites Keynote Systems monitored, including major online brands Craigslist and Apple, sent the same content to smart phones and tablets, for example.

Facebook, Bing, Kayak, MSN, Amazon and IMDB all sent significantly more objects and bytes to tablets than to smart phones. These sites detected the larger screens of tablets and sent them more information, says Howe.

The one company that behaves significantly differently is Google, which sent roughly 450 KBytes to smart phones while sending only about 200 KBytes to tablets.

Google chooses to add several location-based options such as “Restaurants” and “Coffee” to smart phone content but doesn’t serve up those features to tablet users, probably because many tablets don’t offer location services by default. As a result, smart phones receive more content from Google than tablets do.

Those findings are interesting for several reasons. Since different devices feature different screen sizes and input and output capabilities, get used in different ways, at different locations, at different times of day, customizing the experience makes sense.

But tailoring a user experience based on what device is used, when it used or where it is used is not so different from tailoring an experience based on what application a user wants to engage with. And that’s where legitimate concerns about unfair business advantage bump up against end user preferences.

When a user wants to watch a video, conduct a video call or play an interactive game, issues such as latency and consistency of bandwidth availability are important performance parameters.

The policy issue is whether users or service providers ought to be able to manage network experience to enhance end user experience. For such reasons, some think “best effort only” access is not optimal.

Microsoft to Pay AT&T Employees to Sell Windows Devices

Microsoft apparently plans to pay AT&T staff $10 to $15 for each Windows Phone handset sold as a direct result of a recommendation to a customer. It isn't illegal. Lots of products get promotional support of one sort or another.

Subsidies Verizon Wireless is paying to entice consumers to buy Apple iPhones might also be penalizing Android devices, some now argue. Though top Android devices cost as much as Apple iPhones, high-end Android devices often sell for prices $100 to $200 higher than the iPhone.

In other words, Verizon is trying to recoup some of its cash flow and operating margin by making Android handset users pay more for their devices than Apple iPhone users.

Verizon is betting that buyers who want the high-end Android phones will pay, so they're marking those models up.

John Hodulik, an analyst at UBS AG has estimated that the iPhone subsidy could be as high as $400 per iPhone customer. If 13 million of the devices get sold in a year that implies a which $5.2 billion hit to earnings. Some argue that devices should not be subsidized, since doing so means consumers have to sign contracts. But iPhone subsidies are quite a big expense for firms such as Verizon Wireless.

From at least one perspective, contracts and subsidies offer value for consumers and service providers, with users getting devices they want at $400 lower prices, while service providers can smooth out recurring service revenues and reduce customer churn.

Apple has set a standard entry price of its newest smartphones at $199, with higher end models available with more storage. This year however, Verizon has set a new contract price for its high end Android phones at $299.

The implications are clear enough. If you like high-end Android devices, do not buy them from Verizon.

Both the Motorola Droid RAZR and the just released Google-branded Samsung Galaxy Nexus are $299 with a two year Verizon contract, and both are listed as costing $649 without a contract.

In contrast, Apple's 16GB iPhone 4S is offered for only $199, even though it costs the same $649 without a contact. Apple is getting a $450 subsidy, compared to just $350 for Android licensees Motorola and Samsung.

Verizon's $199 Android phones, including the Samsung Droid Charge, Motorola Droid 3 and Droid Bionic, cost $499, $459 and $589 respectively without a contract, making their subsidies worth just $300 to $390, or $150 to $60 lower than Apple's, one might note.  

The closest Verizon's phones currently come to an iPhone subsidy appears to be the HTC Thunderbolt, which is being offered for $149, a $420 subsidy compared to its $569 full retail price. However, this involves a special promotional discount of $100, making the "sale" price of Android models still higher than regular price of any of Verizon's iPhones. Verizon Wireless can do what it wants, of course. But consumers should also do what they want.

Apple Makes Enterprise Inroads

Some 21 percent of surveyed enterprise information workers are using one or more Apple products for work, Forrester Research says.

Almost half of enterprises (1000 employees or more) are issuing Macs to at least some employees and they plan a 52 percent increase in the number of Macs they issue in 2012.

Managers and executives are more than twice as likely to use Apple products, suggesting an adoption pattern where the ability to use the device is something of a “perquisite,” much as at one time the ability to use a BlackBerry was a perquisite for enterprise executives.

But younger information workers (IT staffs for example) are twice as likely to use Apple products as older ones. 

Higher income workers are more likely to use Apple products as well, but there is a “younger worker” issue here. Most of the sample of 10,000 global information workers earns less than $50,000 a year, but the adoption rate of Apple products is almost 17 percent even in the bottom quartile of workers who make less than $12,000 per year.

Keep in mind, also, that the survey was global in scope, and Information workers in countries outside North America and Europe were more likely to use Apple products for work. Annual salaries also might tend to be lower in non-European and North American settings.

Wi-Fi Offload Causing Price Hikes?

Wireless service providers have been encouraging users to switch their mobile connections to Wi-Fi networks, when they can, as a way of managing their mobile data plans, and to improve user experience.

As it turns out, users have been heeding that advice to such a degree that AT&T now is raising mobile broadband prices and data caps, to encourage users to rely more on their mobile connections.

The ironic results show the unpredictable effects of operator policies intended to preserve user experience. Wi-Fi alleviates congestion on mobile networks. But Wi-Fi also is a substitute form of access, and AT&T now seems to be signaling that it wants to recapture more of the revenue-generating value of mobile access.

"AT&T said at a recent conference that they are seeing customers walk up to the edge of their tier and then use a lot of Wi-Fi to stay below the tier," Jefferies & Company Inc. equity analyst Thomas Seitz says.

Something similar can be noted elsewhere. Utility or water consumers often are encouraged to "use only what you need," in part to forestall the need to build expensive new generation facilities, dams and so forth.

But as consumers in Denver have found, because they reduced their use of water so much, Denver Water has had to raise rates, to cover fixed costs as revenue (water consumption is the revenue model) has decreased, precisely because conscientious consumers are behaving in a conservation mode.

Something quite similar might be happening in the mobile space. Mobile service providers globally have a vested interest in higher usage of broadband features, since that creates new revenue streams. But the desire to alleviate congestion by offloading traffic to Wi-Fi, also siphons off some usage that might otherwise be monetized by users who buy more-expensive access plans.

Offloading mobile broadband access to Wi-Fi might "help" consumers manage their consumption, as it helps operators alleviate congestion. But such measures can backfire, AT&T seems to be saying.