Global Smart Phone Sales Up 47% in Fourth Quarter 2011

Worldwide smartphone sales to end users grew to 149 million units in the fourth quarter of 2011, a 47.3 per cent increase from the fourth quarter of 2010, according to Gartner analysts.

Total smartphone sales in 2011 reached 472 million units and accounted for 31 percent of all mobile devices sales, up 58 percent from 2010. Smart phone sales

Apple and Samsung were notable for their sales volume, other suppliers more notable for failing to match Apple and Samsung.

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. Apple, Samsung dominate profits

PayPal Taking Different Tack than Isis, Google

Up to this point, the potential attraction of mobile payments for retailers has been the promise of lower transaction fees for accepting credit card payments. Debit card fees might less a concern these days, but the point is that the most direct value for an upstart payment system is that it costs the retailer less to support.

Up to this point, that has not generally been the case. New mobile payment systems have offered costs higher, or equivalent, in most cases, and only now are some suppliers, mostly smaller firms, offering lower fees.

Some think PayPal might be the first large new provider to try the "lower fees" route. PayPal might actually subsidize its new payment system, allowing retailers to process PayPal transactions at lower costs than has been the case for credit card transactions, for example.

If PayPal can grab a two percent share of checkout at physical stores that would create a $70 billion business, according to eBay Chief Executive John Donahoe. PayPal to attack transaction fees?

That attack on the level of payments transaction fees is not restricted to PayPal. Some other would-be mobile payments providers do offer clear transaction processing fee advantages to retailers. But PayPal has the brand name and heft to create critical mass in the business, something that will be hard for smaller providers to equal.

By hoping to build on its online transaction fee business in the offline world, PayPal is taking quite a different tack than Google or Isis, both of which now are focusing only on revenue streams outside the transaction fee orbit.

FCC Effectively Ends LightSquared Business

The Federal Communications Commission will “indefinitely suspend” the company’s license to use its satellite spetrum to build a new Long Term Evolution fourth generation mobile network because it would interfere with GPS systems operating on neighboring radio bands.

That essentially means the $3 billion gamble to re-purpose satellite spectrum to build a terrestrial Long Term Evolution network is lost. 

Though there is an appeals process, the odds of reversing the decision are minimal, most observers likely would guess.
The FCC decision came after the National Telecommunications and Information Administration concluded there was no feasible way for LightSquared to avoid interfering with the GPS frequencies and services.

An advisory group to NTIA in January 2012 had released the results of extensive testing it said showed that LightSquared “would cause harmful interference to many GPS receivers,” and further testing would not be fruitful. 

At the time that report was issued, there were indications the NTIA tests would confirm the findings.
Investor Philip Falcone has been working since at least 2005 to gain authority to build the network. Among the ramifications for AT&T and Verizon Wireless are the elimination of a potentially troublesome wholesale provider of LTE services. 

Dozens of firms that had planned to launch LTE services now will have to find some other wholesale supplier, or abandon their own business plans. Sprint had planned to provide facilities to LightSquared, and would have gained additional use of LTE spectrum.

Sprint now will lose some amount of revenue from LightSquared. Clearwire and Sprint might be winners, depending on how fast they can ge their own LTE networks up and operating. 

Also, Dish Network might ultimately hope to displace some of the market role LightSquared hoped to create, though Dish up to this point has emphasized its intention to create a retail operation of its own if Dish Network's petition to the FCC, also asking for rights to re-purpose satellite spectrum to create an LTE mobile network. 

The death knell came in the form of a letter sent by the National Telecommunications and Information Administration to the Federal Communications Commission (FCC), which declared the interference to be unavoidable.

"Based on NTIA's independent evaluation of the testing and analysis performed over the last several months, we conclude that LightSquared's proposed mobile broadband network will impact GPS services and that there is no practical way to mitigate the potential interference at this time," the letter said.

In principle, an appeal is possible, but most observers would doubt such an appeal would be successful. The testing conducted so far, which LightSquared has objected to, has shown significant levels of interference to GPS receivers.

As a rule, in such matters, the new applicant has the burden of proof where it comes to avoiding interference with other licensed users of spectrum that already are in operation. That would seem to be the case here.

LTE Apple iPads Coming

AT&T and Verizon Wireless apparently are going to have the right to sell the Apple iPad in a version that supports fourth generation networks those firms operate, the Wall Street Journal reports.  Verizon, AT&T to Sell 4G iPads

The 4G iPad would use the Long Term Evolution networks both AT&T and Verizon Wireless are building, and would presumably stimulate sales of more device broadband plans.

It isn’t immediately clear whether Sprint can get its LTE network built fast enough to qualify for the devices, and T-Mobile USA would seem to be totally out of consideration, since it does not have any concrete plans to build an LTE network. 

More to the point, both AT&T and Verizon Wireless would have clear business reasons for convincing Apple to restrict that LTE version of the iPad to just the two largest U.S. carriers, for some period of time, much as Apple gave AT&T a period of exclusivity on the Apple iPhone.

The decision highlights the clear importance devices now have assumed in the mobile service ecosystem.

Goldman Sachs figures tablet data consumption is increasing by 30 percent per year and by 2020 will account for 17 percent of all mobile data demand.

“We expect global tablet sales to grow over 300 percent through 2012,” Goldman’s analysts say. “Our forecast implies a 42 percent compound annual growth rate from 2010 to 2020 in network-activated tablet subscribers (tablets that actually subscribe to a wireless data plan) with monthly data usage assumed to grow at the rate of 30 percent per year from 1.5 GBytes month to over 20 GBytes per month in 2020,” Goldman analysts say.

Growing use of tablets, and families now paying for many mobile broadband subscriptions, are one reason both Verizon Wireless and At&T are getting ready to introduce new “family data plans” that allow consumers and devices registered to a single account to share a single bucket of data usage.

How Big a Deal is Pinterest?

Pinterest, a social media site launched in March 2010, was getting about 40 times more visitors in December 2011 than it did in June 2011. 

But will the explosive growth continue, and will Pinterest be useful to corporate content marketers?  Vitrue CEO Reggie Bradford thinks the answer to the first question cannot be known yet, but the answer to the second question is a definite “yes.”

Is Pinterest valuable to large brands?
Bradford: Essentially, any brand that can tell its story or feature its products visually stands to benefit.  They’d be capitalizing on what has made Pinterest so compelling and fueled its spectacular growth: a focus on eye-catching imagery.  Pinterest essentially brings “scrapbooking” to the Internet, sans scissors and glue.  So marketers who are able to leverage great visual content can weave their boards into a cohesive social experience within their existing Facebook and social community. But, of course, some brands translate better to a “visual bulletin board” social experience than others. Retailers that already let people visually express themselves should be leveraging Pinterest—think clothing, shoes and jewelry. Brands in the DIY and home improvement space can benefit as many users share favorite room designs, remodeling ideas, paints, furniture, etc. Or cooking or food brands can leverage images and recipes for users to pin and share.  The Wall Street Journal is using Pinterest for Fashion Week. The thought behind it is the WSJ is already covering fashion and the event—which both are inherently visually—so why not leverage Pinterest to perhaps reach a wider audience.

Pinterest content can be surfaced on Facebook Tabs, which is great for creating an integrated and cohesive social experience. But marketers should remember over 40% of Facebook users are accessing it viamobile devices, so brands will want a tech platform with mobile optimization so that Pinterest material looks as great as it was intended. And these stats will only increase. Our own research shows incredible growth with mobile access. (Can provide our recent mobile-social user engagement data, if interested).

Pinterest users seem to have distinct interests.  How do you explain why that pattern has developed?
Bradford: Sure.  We’re seeing an overall trend from social communities being organized around friends and connections to being organized around interests.  Pinterest taps into this by allowing users to create custom “boards” – think virtual bulletin boards -- to feature something specific, let’s say crock pot recipes, which allows others to discover it based on their own interest in that subject.  This bodes very well for its use by brand marketers.  If you’re a coat store, would you rather attract people who are specifically looking at coats or try to make friends with everybody in the hopes that a good percentage of them want a new coat?  Interest-driven social media creates a very different dynamic. And Pinterest’s use of visuals, and simplicity of its use, have attracted users and is increasingly become a time-consuming digital activity.

How might a brand approach the issue of using Pinterest, as compared to Facebook, for example?

Bradford: Whether or not to embrace, or how fast to embrace, an additional social network is a decision every brand has to make for itself, based on its social goals and strategies.  And, again, some brands translate more naturally for Pinterest. However, the beauty of social is that brands can experiment inexpensively, even free, with these new platforms as they come along to see if they bring anything unique that especially addresses their aims.  Facebook is clearly dominant on the social network scene and has, along with Twitter, become foundational for social campaigns.  But brands should stay aware of newcomers, especially when you can incorporate what’s “cool” about those newcomers into Facebook via tabs so you can integrate and get the best of both.

What limitations or advantages does Pinterest have as a venue for brands engaging with potential customers?
Bradford: Many brands have invested a lot of time and effort building their Facebook fans and Twitter followers, and more recently Google+.  The thought of tackling another network can be daunting.  That’s not Pinterest’s fault.  But without a comprehensive platform to streamline the management of multiple streams (Pintrest’s API is not yet accessible), internal resources become an issue.  Secondly, the “Pin It” button works well for consumers, but was not designed for marketers.  It’s missing features that allows for analytics tracking (platforms can help here along with the API).  Lastly, still images are great, but do have their limitations. Unless users click through to the source site, a brand’s ability to communicate everything they want to is limited.  You also have to watch for link rot where the source image is moved or removed, thus generating a broken link that stands out like a sore thumb in such a visually driven environment.

As for advantages, judging from a Shareaholic report which indicates Pinterest is already generating more referral traffic to sites than YouTube, Reddit, Google+, and LinkedIn combined, you’d have to be living in a cave not to see that benefit.  Images are powerful, and not only are users clicking once, they’re clicking twice to continue through to the picture’s source page.  Another advantage is segmenting, which Facebook marketers were already experiencing with Open Graph Objects.  Brands can segment to boards they’ve divided up by season, theme or merchandise type.  Finally, there’s the size of Pinterest’s audience…12 million monthly unique visitors and crossing the 10 million mark faster than any previous independent site.  That has to be attractive to any marketer.

Again, only time will tell if Pinterest has staying power. The road of technology is littered with once-hot platforms and products. But Pinterest does have potential… and brands should experiment to see where it fits into their overall social goals and communities.

18-Fold Growth of Mobile Data Next 5 Years

According to the latest Cisco Visual Networking Index, worldwide mobile data traffic will increase 18-fold over the next five years, reaching 10.8 exabytes per month, an annual run rate of 130 exabytes, by 2016. The monthly 130 exabytes is equivalent to consumption of:

• 33 billion DVDs.
• 4.3 quadrillion MP3 files (music/audio).
• 813 quadrillion short message service (SMS) text messages.

The number of mobile Internet connected devices will exceed the number of people on earth (2016 world population estimate of 7.3 billion; source: United Nations) in 2016.

Cisco also anticipates that global mobile data traffic will outgrow global fixed data traffic by three times in the 2011 to 2016 period. 

This mobile data traffic increase represents a compound annual growth rate of 78 percent.

Mobile cloud traffic will grow 28-fold from 2011 to 2016, a CAGR of 95 percent.

Cisco also forecasts that there will be more than 10 billion mobile Internet-connected devices in 2016, including machine-to-machine (M2M) modules, exceeding the world's projected population at that time of 7.3 billion.

Tablet traffic levels will grow 62-fold from 2011 to 2016, the highest growth rate of any device category tracked in the forecast, generating about an exabyte a month of traffic.

Mobile video, which will comprise 71 percent of all mobile data traffic by 2016.

By 2016, there will be more than eight billion handheld or personal mobile-ready devices and nearly two billion machine-to-machine connections, such as GPS systems in cars, asset tracking systems in shipping and manufacturing sectors and medical applications for making patient records more readily available.

In 2011, 11 percent, or 72 petabytes, per month of total mobile data traffic was offloaded from mobile networks to Wi-Fi networks.. By 2016, 22 percent, or 3.1 exabytes, per month of total mobile data traffic will be offloaded.

Tablet Business Apps are Almost Trivial

New NPD In-Stat research suggests that the most common business uses of tablets are email and calendar management, note taking, and presentations. About 77 percent report that email also is a common workplace use.

All of those might seem relatively trivial applications that can be conducted on smart phones or notebook PCs as well.

“Email is by far the most dominant tablet application for business users,” says Frank Dickson, NPD In-Stat researcher. In addition to email, customer relationship management and IT network intelligence are listed as “most important”  uses.

None of those “facts” is deterring people from buying tablets. JP Morgan analysts now forecast worldwide tablet shipments will reach 99.3 million in 2012, a 55 percent jump over 2011. In 2013 tablet sales will eclipse the 100 million mark, jumping to 132.6 million, JP Morgan also predicts.

That is not to say current apps are destined to be the lead apps at some point in the future. It is conceivable that tablets could emerge as platforms for new behaviors and apps beyond today’s application set.

What there is no doubt about is that tablets have captured consumer affection.

PCs and TVs still represent the two largest categories of U.S. consumer technology hardware and consumables sold in 2011. But tablets and and mobile phones are the third and fourth largest product categories, by revenue.

Revenue from products was about $144 billion according to The NPD Group. PCs represented the most revenue with nearly $28 billion in sales, accounting for almost 20 percent of sales.

Tablets and e-readers were the clear growth categories in 2011, nearly doubling sales to $15 billion in 2011.

And it appears that consumers are shifting spending from other categories toward the top-five categories.

“U.S. hardware sales growth is becoming harder and harder to achieve at the broad industry level,” said Stephen Baker, Vice President of Industry Analysis at NPD. “Sales outside of the top five categories fell by eight percent in 2011 as consumers shifted spending from older technologies to a narrow range of products.”

Apple was the leading consumer electronics brand for the second year in a row. Among the top five brands Apple was the only one to experience a sales increase, posting a 36 percent rise over 2010.

Sales through online, direct mail, and TV shopping channels jumped seven percent and accounted for 24 percent of all sales, up from 22 percent in 2010.

Sales through these non-retail channels captured 25 percent of industry revenue in the fourth quarter of 2011.