Mobile Banking Faces "Chasm" After Early Adopters

Crossing_the_Chasm, Geoffrey Moore's book about the technology diffusion process, makes the point that there is a chasm between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists) whose adoption is key for any new technology to take hold in the mass market.

Essentially, Moore argues that technology adopters have very different values, requiring a shift of marketing emphasis at each stage of additional adoption.

Crossing the Chasm is closely related to the technology adoption lifecycle where five main segments in turn must be won over: innovators, early adopters, early majority, late majority and laggards.

That same process is at work in the mobile banking business as well. Fiserv argues that many banks and credit unions are on a mobile  adoption path that attracts the early adopters within  a year of offering the service, but the trajectory  stagnates to include just a small additional percentage  of adopters over the next two years.

That’s the “chasm” Moore talks about. Early adopters have embraced mobile banking because it is cool. The next wave of adopters actually will not see that as an advantage, and will resist.

To break through the “glass ceiling” of 20 percent  mobile banking adoption, Fiserv argues,
financial institutions must convince customers outside the pool of early adopters  that mobile banking will provide both convenience and benefits that cannot be experienced through other channels.


In other words, consumers must decide if mobile banking is: 1) useful, 2) accessible, 3) secure, 4) familiar and 5) easy to use. 


How consumers answer these questions will impact the adoption outcome.

Global Mobile Phone Shipments Slow, Economy the Reason?

The worldwide mobile phone market is forecast to grow slightly more than four percent year over year in 2012, the lowest annual growth rate since 2009, due to a sharp decline in the feature phone market and sluggish global economy.


According to IDC, vendors will ship a total of nearly 1.8 billion mobile phones this year, compared to 1.7 billion units shipped in 2011. By the end of 2016, IDC forecasts 2.3 billion mobile phones will be shipped to the channel.


The slow growth in the overall mobile phone market is primarily due to the projected 10 percent decline in feature phone shipments this year. Many owners of feature phones are holding on to their phones in light of uncertain job and economic prospects.


That is not to say consumer behavior always is a leading indicator. Often, consumer behavior is a lagging indicator. In this case, the lower demand for feature phones probably is more a response to declining economic growth.


Since the global recession ended in 2009, the world economy has been fueled powered by rising powers in the developing world led by China, India and Brazil.Now, all three are running into trouble. But Europe's obvious slowdown, threatening to become a renewed official recession, also is matched by similar concerns about the U.S. economy. 

How Will Mobile Service Providers Cover Fixed Costs as Voice Usage Drops?

There will be predictable griping if U.S. and other mobile service providers change retail packaging of voice services in the future, perhaps dropping the "buckets of minutes" plans of various sizes with "one size fits all" unlimited plans.

From a service provider perspective, the ways revenue is offered at retail include both a usage and a fixed cost recovery component. In that sense, how much consumers get charged for a bundle of features and services is partly a matter of traffic sensitive and fixed costs that basically don't change much.


The potential shift of voice calling to unlimited plans is a response to the "fixed costs" part of the cost recovery issue. One can debate whether all network and other fixed costs are appropriate or not. But those fixed costs don't change much based on which services--ranging from text messaging to voice to broadband data--users decide to use.

The simple fact is that the sunk costs of running the network must be recovered, no matter what the usage-sensitive patterns are. And if users are shifting from voice to Internet apps, or from text messaging to over the top messaging, the fixed costs still must be covered.

So a shift to "unlimited" calling is simply one way of recovering the fixed cost portion of providing the full package of features people associate with mobile phones, especially smart phones.

Precisely how those charges are levied will vary from time to time and carrier to carrier. The point is that fixed costs don't change because usage of some apps, services or features changes over time.

Not everyone will be happy with how retail features are priced. Some will complain that profit margins on some products are "too high." That doesn't actually matter much, either. All multi-product retailers sell products with varying margins, some high, some low, some in between. From a mobile service provider's perspective, the main issue is ensuring that the fixed costs get covered.





 

InMobi Says Tablet Ad Impressions Grew 88% Last 6 Months

Tablet ad impressions on the InMobi North American ad network grew 88 percent over the last six months, illustrating the way the new device is creating a new market for mobile advertising.

In fact, tablet impressions have been growing nearly twice as fast as smart phone impressions in North America.  Anne Frisbie, InMobi VP and Managing Director, North America, attributes the tablet growth in part to the appeal of larger screen sizes and growing tablet ownership.

The report finds that Apple clearly dominates, with iOS tablet devices currently commanding 71 percent of the overall impression share, followed by Android with 29 percent. Since those percentages roughly correspond to the installed base of devices, the findings are not unexpected.

North America Tablet OS ad impressions
OS	Q4 2011	Q1 2012	Pt. Change
iOS	81.6%	70.8%	-10.8%
Android	18.2%	28.9%	10.7%
Others	0.2%	0.3%	+0.1%

Despite entering much later to the market than many of its competitors, the Amazon Kindle Fire performed second (9.2 percent) to the Apple iPad (70.8 percent) in the first quarter of 2012.

North America Top Performing tablets, total ad impressions
OS	Q4 2011	Q1 2012	Pt. Change
Apple iPad	81.6%	70.8%	-10.8
Amazon Kindle Fire	N/A	9.2%	N/A
Asus Eee Pad Transformer TF101	2.7%	5.2%	2.5%

Are Mobile Platform Wars Just About Over?

It's a provocative question, but looking at adoption of mobile operating systems, you have to wonder whether the smart phone platform wars are just about over. Microsoft would argue otherwise, and lots of people seem to think that is not an empty boast. Research in Motion might say the same thing, but more people are skeptical about a RIM comeback. 




 

85% of Mobile Users Will have 3G by 2017

Though fourth generation Long Term Evolution networks tend to get most of the attention these days, third generation GSM will, by far, be the dominant network for most people who use mobile networks or mobile broadband.

By 2017, 85 percent of the world's population will have 3G coverage, Ericsson says.

About 75 percent of the HSPA networks worldwide have been upgraded to a peak speed of 7.2 Mbps or above and around 40 percent have been upgraded to 21 Mbps.

And though, by 2017, 50 percent of the world's population will be covered by 4G networks that doesn’t mean that most people who have access to LTE actually use it. It takes time for new handsets, working with the latest air interface, reach critical mass in any market.

For many people around the world, the mobile phone also will be the only means of accessing the internet. According to Ericsson, 85 percent of the world's population will have internet coverage from a  3G network by 2017, and there will be close to nine billion mobile subscriptions in use, compared to six billion by the end of 2011.

Smart phone subscriptions expected to reach three billion in 2017, about a third of all users globally, and global data traffic to grow 15 times by the end of 2017, Ericsson also says.

Mobile broadband subscriptions, meanwhile, are forecast to reach five billion in 2017, compared to one billion by the end of 2011.

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.