Android and iOS Platforms Growing, All Others Shrinking

More than 107 million people in the U.S. owned smart phones during the three months ending in April, up six percent over January 2012, according to comScore. 


Google Android ranked as the top smartphone platform with 50.8 percent market share (up 2.2 percentage points). Apple’s share of the smartphone market increased 1.9 percentage points to 31.4 percent. RIM ranked third with 11.6 percent share, followed by Microsoft (4.0 percent) and Symbian (1.3 percent), comScore says. 

Top Smartphone Platforms 3 Month Avg. Ending Apr. 2012 vs. 3 Month Avg. Ending Jan. 2012 Total U.S. Smartphone Subscribers Ages 13+ Source: comScore MobiLens
	Share (%) of Smartphone Subscribers
	Jan-12	Apr-12	Point Change
Total Smartphone Subscribers	100.0%	100.0%	N/A
Google	48.6%	50.8%	2.2
Apple	29.5%	31.4%	1.9
RIM	15.2%	11.6%	-3.6
Microsoft	4.4%	4.0%	-0.4
Symbian	1.5%	1.3%	-0.2

Apple and Google Map War is about Ad Revenue

Mobile ads associated with maps or locations are estimated to account for about 25 percent of the roughly $2.5 billion spent on mobile ads in 2012, according to Opus Research, up from 10 percent in 2010. That is reason enough for a battle over map applications. 


The reason maps get so much advertising is that geo-location is a fairly serious indicator of purchase intent when a retailer is searched for, within a map app. 


Up to this point, Google Maps is used by more than 90 percent of U.S. iPhone users, the Wall Street Journal reports. 


But if you believe location based advertising is going to be a big deal, then control of inventory is important. On Google's search engine, 20 percent of searches are for local information. 


Digital ad spending by local businesses in 2011 reached $21.2 billion, a figure that is expected to increase by more than 12 percent annually, according to BIA/Kelsey. 


The Apple move comes as Google has started to charge app providers a fee  for use of  Google Maps. 

Larger Screen Devices Don't Always Get Better Click Through Rates

As a rule, people will tend to use the largest screen available to them when interacting with web content. 

Also, one tends to find that larger screens lead to better display ad effectiveness.

But the rule isn't iron clad. 

Jumptap recently found that screen size doesn’t always matter when it comes to mobile ad performance.

The Amazon Kindle Fire, which measures seven inches in length, had a 1.02 percent click-through rate (CTR) while the slightly larger, 9.7 inch iPad had a 0.9 percent click-through rate. 

While tablets tend to have higher CTRs than smartphones, screen size isn’t always a predictor. 


Jumptap also says Millennials tend to prefer Apple iPads, while their parents tend to prefer Kindle Fire devices. 


Data from comScore and Jumptap show that ownership of tablets is heaviest among older Millennials between the ages of 25 and 34. 


But Millennials as a whole (people 18 to 34) are most likely to use an iPad while Baby Boomers are the heaviest users of the Kindle Fire. 

Online Video Advertising Isn't Attractive Enough to Cause Disruption, Yet

U.S. programming networks earn something on the order of $30 billion a year in licensing fees from U.S. video distributors, and something on the order of $25 billion in advertising based on those audiences. 

Today, all online video advertising, in aggregate, probably represents something on the order of $2 billion annually. 

So no rational network executive is going to jeopardize $55 billion in annual revenue to try and chase a single-digit billions business. That doesn't mean change will not happen. It just won't happen soon. 

Nobody Challenges Apple iPad, Yet

A May 2012 ChangeWave survey of 2,893 consumers took a close-up look at North American tablet demand, and finds the Apple iPad continuing to dominate consumer buying plans. The only other manufacturer that is showing some signs of momentum is Samsung. 


About 73 percent of planned tablet buyers are still reporting they'll purchase an iPad. That is down from the 84 percent of respondents that indicated a preference for Apple in February 2012, but is still sheer dominance by any measure. 


Competitors have to hope that long-term market share more resembles the PC or smart phone markets than the MP3 player market. The reason is that Apple continues to hold 78 percent share of the MP3 player market. 


In PCs Apple might have only 10 percent to 11 percent share. In smart phones Apple has about 25 percent share.

$100 Billion in Annual Small Business Sales is Market Square, Intuit, PayPal, Sage are Attacking

According to a recent Intuit GoPayment survey, 55 percent of the nation’s 27 million small businesses do not accept credit cards.

Those nearly 15 million U.S. small businesses potentially miss out on $100 billion in sales annually. That’s the reason the new ability to turn a smart phone into a retail point of sale terminal, to accept credit card, debit card or prepaid card payments is growing so fast.

Intuit estimates that each business that does not accept plastic misses out on approximately $7,000 in sales annually, equating to approximately more than $100 billion in collective lost revenue.

Small businesses also face a cash flow chokehold, waiting for an average of $5,140 per month in overdue payments. That’s a potential $1.7 trillion collective cash flow strain annually across all small businesses in the U.S.

Small businesses that accept plastic make more sales and get paid quicker than those that don’t. The survey found that 83 percent of businesses that accept credit cards make more sales, with 52 percent making at least $1,000 more per month and 18 percent making at least $20,000 more per month.

In addition, 74 percent of those surveyed said they get paid faster and reduce bad debt by accepting credit cards.

Investor Warns of "Trouble" for Startups, Possibly Not a Bubble Burst

A disagreement of at least modest proportions about whether we are in yet another Internet bubble has popped up now and again over the last couple of years. Facebook's initial public offering and the valuations of social software firms with zero revenues are contributing to the questions. 


Paul Graham, cofounder of Silicon Valley's most important startup incubator, Y Combinator, has sent an email to portfolio companies warning them "bad times" may be ahead, according to Business Insider.


"The bad performance of the Facebook IPO will hurt the funding market for earlier stage startups," he says. To be sure, that does not mean we have been in a bubble, only that Graham thinks valuations are overdone.


The problem is that "no one knows yet how much" valuations are too high. "Possibly only a little," he says. But  also "possibly a lot, if it becomes a vicious circle." 


That "everyone" does not agree, and given that valuations have not yet demonstrably collapsed, across the board, means we still can't say whether the recent Internet investment climate is a bubble or not. One never knows until afterwards. 


That we still aren't sure means any potential bubble has not yet burst. The other issue is whether the effects of any possible bubble can be confined only to the software and application business, or whether the impact will be economy wide. As destructive as the popping of the Internet bubble was in 2001, it did not have equally destructive force outside of telecom and Internet circles. 


Excess liquidity, which most observers would say characterizes the global economy, generally is part of the problem. Investors cannot find attractive places to invest startup capital, so lots of companies that shouldn't be funded, get funded. 


Remember the Internet bubble? In retrospect, there was a reason competitive local exchange carrier startup executives virtually universally were told to get big, fast, leading to what you might call over-funding of the firms that got backing. 


The reason firms that might have succeeded with their original, smaller business plans were "forced" to come up with bigger plans had nothing to do with the opportunity as such. The problem was mechanical. 


Investment firms were awash with cash, and had to deploy it. Faced with a relative dearth of "good" places to put all that cash, they preferred to place a smaller number of bigger bets, rather than many small bets, because that was a better way to deploy available investment funds.


"Use it or lose it," in other words, became a reason for firms to make funding decisions that ultimately destroyed what many estimate was a trillion dollars worth of investment. For surviving telecom firms, you can see what happened to valuations.

Google Bought Meebo For Advertising Potential

Meebo found a way to actually monetize monetize chat, which is why Google is buying Meebo. Meebo introduced a bar that any publisher or business owner could integrate into the experience of their site, without mucking up the chat experience.


That suggests other chat or messaging applications might someday find a way to create ad revenue in the context of the experience as well, which would create revenue out of app experiences that have been tough to monetize. 

Twitter Really Does Break News

Twitter isn't a very good "search engine," many would argue, but there are reasons for that.Twitter really is becoming a place where real-time news breaks. But that also means a high degree of content churn. 


The most frequent terms in one hour might look very different from those in the next hour, . Twitter says. 


Examining all search queries from October 2011, Twitter found that, on average, about 17 percent of the top 1,000 query terms from one hour are no longer in the top 1,000 during the next hour. 


In other words, 17 percent of the top 1000 query terms "churn over" on an hourly basis, Twitter says.


Repeating this at a granularity of days instead of hours, Twitter finds that about 13 percent of the top 1,000 query terms from one day are no longer in the top 1000 during the next day.


But during major events, the frequency of queries spike dramatically. For example, on October 5, 2011, immediately following news of the death of Apple co-founder and CEO Steve Jobs, the query "steve jobs" spiked from a negligible fraction of query volume to 15 percent of the query stream.

Enterprise Videoconferencing and Telepresence Market Growth Decelerates

There was  a noticeable deceleration in enterprise telepresence and videoconferencing market growth in the first quarter of 2012, with videoconferencing revenue growing 14.4 percent year over year, well below the 23 percent to 25 percent year-over-year growth range witnessed in the prior three consecutive quarters. 


Compared to the fourth quarter of 2011, the enterprise videoconferencing market declined 21 percent. 


The single-codec telepresence market grew 28.5 percent, while the personal videoconferencing segment grew 52.6 percent, year over year.


The multi-codec immersive telepresence market declined 38.7 percent, IDC says. 


The first quarter of 2012 was the fifth consecutive quarter of year-over-year declines for the immersive telepresence segment, IDC says. 

Tablets Will be Added to Enterprise "Standard" Devices, IDC Predicts

There was a time when PCs were not a staple of enterprise worker "standard issue" productivity gear. Neither were notebook PCs or smart phones. All those products now are staples. And tablets will be next.


A high percent of respondents surveyed by IDC reported they expect tablets will be a second device to the typical  worker's laptop or desktop. 


The notion that tablets would be treated as second devices to laptops and refreshed every 2.5 years will be costly for IT organizations in the long run, IDC says.


IDC estimates it will cost the average large organization an additional one percent of their IT budget every year just to refresh the tablets alone, IDC says. 

U.S. Text Messaging Declines Slightly in April 2012

In April 2012, 74.1 percent of U.S. mobile subscribers used text messaging on their mobile device. But that was a decline from the 74.6 percent of U.S. mobile subscribers who used text messaging in January 2012.


That will bear watching, to see whether the European substitution trend, where users are using over the top messaging in place of text messaging, also is growing in the U.S. market. At the very least, it appears text messaging use has flattened out.  


Downloaded applications were used by 50.2 percent of subscribers (up 1.6 percentage points), while browsers were used by 49.0 percent (up 0.5 percentage points).


Accessing of social networking sites or blogs increased 0.3 percentage points to 36.0 percent of mobile subscribers. Game-playing was done by 33.1 percent of the mobile audience (up 1.3 percentage points), while 25.8 percent listened to music on their phones (up 1.3 percentage points), according to comScore. 

Eventually, Service Providers Will Price by Value

There are some very-practical implications to the notion that telecommunications now is a multi-product business.

Profit margins (net income divided by revenue), varies widely by industry. Grocery stores have margins in the six-percent range, while banks have margins as thin as two percent to three percent.

Many would note that profit margins for text messaging are quite high, in fact, almost arbitrarily high. One reason is that text messaging is a feature made possible by the out of band signaling digital voice services require. In other words, short message service actually is possible because it is part of the other signaling activities the voice network has to support, anyway.

That means it is mostly an accounting exercise to determine what text messaging profit margin actually is.

One issue is that it matters how people pay for use of text messaging. Many have flat fee plans for an unlimited number of messages, so profit margin arguably could depend on the number of messages sent, though messaging cost is relatively insensitive to volume.

You might argue that a user on a per-message plan, paying 20 cents to send a message up to 160 characters in length, is paying, for the use of bandwidth, at about 100,000 times more than the per-byte rate of a typical consumer access plan, by some estimates.

That isn’t really the point, though. Few products are absolute commodities, and few products are priced strictly according to cost of production. In fact, one characteristic of highly-branded luxury products is that retail pricing is set more on intangible factors (demand) than the cost of production.

Also, any multi-product retailer typically sells products with varying profit margins. That increasingly is true for communications service providers as well.

By some estimates, though gross profit margins averaged 86.51 percent for the telecommunications industry in 2010, net margin was only about 10.99 percent, on average.

Assuming industry-average expenses, a reasonable profit margin would be anything between 10 and 15 percent.

Of course, little in the telecom business is “average.” Without various subsidies, small rural telcos would consistently lose money, overall.

Also, profit margins vary dramatically by product. Text messaging margins are almost arbitrary, and can in principle feature margins of 80 percent, though margin is dropping.

As communications now is a multi-product business, including mobile voice, texting, mobile broadband, machine-to-machine services, fixed network broadband, voice, video entertainment and business services, with important new lines of business being built in other areas, executives and managers must contend with many lines of business, each with a different gross revenue contribution and profit margin margin.

In part, communications service providers actually do sell “raw bandwidth,” in the case of consumer high-speed access, where government regulations do not permit any packet prioritization or other quality of service measures.

But service providers also sell applications and features. Assuming it eventually recognized that consumer welfare, service provider health and investment require revenue that is matched to cost and value, we should see the development of retail pricing that sometimes is paid by the end user, sometimes is paid by a third party advertiser or app provider, or sometimes is paid by a combination of advertising, end user fees and third party payments.

Tablets Boosting Online Sales

Tablets are emerging as an effective and key online retailing channel, a new study sponsored by shop.org has found, though one might be tempted to argue that tablets might be less a “showrooming” threat for retailers whose own online sales channels are well developed, and whose products are specialized, though.

At eBags, combined smart phone and tablet purchases now represent 17 percent of traffic overall, and a little north of 12 percent of sales,”  Chris Wilson, eBags CMO says. Traditionally, online shopping has been conducted by people using PCs.

The number of smart phone using their mobiles to visit online retail sites is growing 76 percent year-over-year, the study suggests.

Amazon reports seeing a 117 percent increase in the number of site visitors from mobile phones between Feb. 2011 and Feb. 2012, Walmart a 238 percent increase and JCPenney a 332 percent increase.

Some  64 percent of consumers have used their smart phone for some shopping research activity while 74 percent of tablet owners have done so.

Tablet owners are also more active purchasers, with 34 percent having made at least one purchase from their tablet during the three-month period ended March 2012, while only 17 percent of smart phone owners had done the same.

The report also shows 43 percent of smart phone owners having used their mobile device while in a store for a shopping purpose. About 35 percent of tablet owners have done so, as well.

The study also found that average site conversion rate now is one percent on smart phones and 2.4 percent on tablet devices. As most anecdotal evidence suggests that larger screens, such as PCs, generate more activity, that finding likely will not surprise you.

The majority of retailers surveyed reported that their site conversion rate and the average order value are lower for sales placed using smart phones, compared to sales made using the desktop website. That might be related to the “snacking” way tablets often are used.

However, almost half also reported seeing higher AOV for sales made by tablet devices than on the desktop website.

Just how big the order value “delta” is might vary by retailer. The average order value for an eBags tablet purchase is $159.28, compared to  $134.37 on smart phones.

Mobile usage in stores helps  multichannel retailers, Jeff Klonowski, Recreational Equipment executive believes.“We view the stores as a tremendous opportunity for mobile, both from the employee perspective and the customer perspective.”

For employees, REI has rolled out a mobile version of the store point of sale  using iPod Touch devices, so that store associates can help customers check out.

Over the longer term, REI plans to build out functionality for the store associate to help the customer access store inventory, product reviews and product specifications.

Wilson said that, while they have no direct information, there is “some circumstantial evidence” that eBags is getting traffic from customers who are standing in a store.  

“Entries on a product detail page as a percentage of total are much, much higher on a smart phone than either of the other devices, so it seems to be very targeted and we assume that a certain percentage of that is happening in stores,” Wilson says.


You can listen to the webinar here.

Why is Salesforce Buying Social Media Marketing Company Buddy Media?

At first glance, it might seem at least a little "different" that Salesforce, considered the poster child for cloud-based software and sales force automation, is buying Buddy Media,  a social media marketing platform. 


Granted, Salesforce's business is related to marketing. But marketing and sales are different functions, as anybody familiar with both will attest. 


You can debate whether social media marketing is a new adjacency for salesforce, representing revenue growth outside its traditional core business. That's probably the best way to view the move. 


What salesforce says about the deal will explain it. “Salesforce.com now has the number one players in social listening and marketing," says Marc Benioff, Saleforce.com chairman and CEO. “With CMOs surpassing CIOs in spend on technology within the next five years, our marketing cloud leadership will allow us to capitalize on this massive opportunity.”

“We are doubling down on the 'salesforce marketing cloud' to provide CMOs with the ability to manage the entire social marketing lifecycle, says Marcel LeBrun, SVP of salesforce Radian6.


By combining Buddy Media, considered to be the world’s leading social media marketing platform, with Salesforce Radian6, the world’s leading social media listening platform, salesforce.com hopes to deliver the first comprehensive cloud-based platform allowing its  customers to listen, engage, gain insight, publish, advertise and measure social marketing programs.