U.S. TV Viewers Using More Screens

The average American watches nearly five hours of video each day, 98 percent of which they watch on a traditional TV set, according to Nielsen. 


After several years of consistent year-over-year growth, traditional TV viewing declined one half of one percent or roughly 46 minutes per month. Nielsen suggests that dip could be explained by any number of drivers other than a shift in viewing habits. 


As more homes adopt DVRs and move to greater use of  time-shifted viewing, time-shifted TV growth has offset the bulk of live TV declines. Other potential factors include time spent using game consoles, tablets and other emerging devices, or even short-term weather, Nielsen says. 


Still, in the fall of 2011 there was a slight decline in the number of TV homes in the U.S. market. This shift is prompting an important conversation around the definition of a “TV household” and a “TV viewer,” as some homes not using "TV" might be watching video on tablets, PCs and smart phones. 



Some 33.5 million mobile phone owners now watch video on their phones—an increase of 35.7 percent year over year. 

Greater Reliance on Wholesale in Telecom Future?

It seems likely that most tier-one service providers, especially in the mobile end of the business, will be relying on more "wholesale" services in the future. To some extent, this already is the case, as when a facilities-based service provider leases capacity and features to a mobile virtual network operator. 


Likewise, enterprise customers have for many decades created their own voice services using their own phone systems, while buying bulk access from service providers only to carry and terminate those derived services. 


Telecom service providers likewise have sold bulk capacity and features to third parties that create enterprise services for retail sale. 


But there now is much talk of ways service providers can increase the volume of services and access sold to third party business partners. Content delivery networks provide one example. Cloud computing services provide other examples. 


But sale of network features and "big data" features likely will be more important as well. The general notion is that application providers could be encouraged to purchase network functions or features in a bulk or wholesale capacity, to enhance or create new application experiences. Advertising or content firms are said to be likely buyers. 


There might be quite a lot more of that sort of activity in the future, representing a shift to more business-to-business sales than traditional business-to-end-user sales. 


Wholesale strategies could become more radical. A few service providers might opt to become wholesale-only capacity providers, though that is likely to remain a fairly unusual strategy for any tier-one service provider. 


But some believe the agency agreements between Verizon and Comcast, Time Warner Telecom and Cox Communications, allowing the cable companies to sell Verizon products, and Verizon to sell cable products, could lead the cable operators to become wholesale providers to Verizon, while Verizon becomes a wholesale supplier to the cable firms. 

Will Apple, Google, Facebook, Amazon or Microsoft Become Mobile Service Providers?

Apple will provide wireless service directly to its iPad and iPhone customers, argues consultant Whitey Bluestein. In his hypothetical scenario, Apple first will sell data packages bundled with iPads. Then it will sell data and international roaming plans to iPhone customers through the iTunes Store, Bluestein argues. 


Over time, Apple will strike wholesale deals with several mobile operators so that Apple can provide wireless service directly to its customers, as Apple Mobile, Bluestein predicts. As “crazy” as that might sound, it might be a fairly common tack taken by any number of device, service or application providers, eventually. 


In fact, it fits well with the general thinking that, over time, mobile and fixed network service providers will increasingly want to sell services to third-party business partners as well as end users.


Other potential moves by a number of leading application or software providers show the ways business advantage is shifting in the mobility business. 


Microsoft's recent investment in the new company that will own the Nook tablet and content business shows the growing importance content, advertising and commerce operations are assuming for device and application suppliers, for example. 

Some believe the "Four Horsemen" of the Internet include Facebook, Apple, Google and Amazon. Others might say the list actually is "Five Horsemen" and include Microsoft. Either way, the notion is that  handful of firms have the ability, at least in principle, to create and own a complete and walled-off ecosystem in which consumers use a single company’s hardware, operating system and storefront to search online, buy apps and purchase digital media and  physical products. 

What remains less clear is the importance of bundling "access" with those other device, content, commerce and advertising capabilities, though. In principle, the separation of applications from access is quite helpful for any app provider. 

On the other hand, are there ways app providers can create a better end user experience by bundling apps, devices and connectivity? 

That remains less clear. But one approach that might have clear advantages is the ability to create mobile access services that are optimized for media consumption. In other words, the aim might be to optimize the streaming media and gaming experience, not provide a "better" voice or messaging experience. 

That could take the form of a branded content delivery service distinct from general-purpose Internet apps, voice or messaging services. What might be bundled, in other words, is a branded experience enhanced by CDN capabilities. In each ecosystem, content delivered as part of a content app or service might essentially be a "private network" experience taking advantage of available optimization techniques. 

Think of a content virtual private network and you get the idea. That sort of optimized access might make more sense than any of the leading ecosystem providers becoming actual general-purpose mobile service providers. 

Mobile Commerce and Shopping Behavior Quite Common

According to a survey conducted by Nielsen, 79 percent of U.S. smart phone and tablet owners have used their mobile devices for shopping-related activities. 

Smart phones are used more often than tablets for activities on-the-go, as you would expect. By some studies, up to 95 percent of tablet usage occurs indoors, rather than in a mobile context.

About 73 percent of respondents polled by Nielsen used their smart phone to locate a store, compared to about 42 percent using a tablet to search for a store.

Some 42 percent of respondents used a mobile device to create a shopping list while shopping. About 16 percent of tablet users reported they did so.

Some 36 percent of respondents said they redeemed a mobile coupon on their smart phone, compared to  11 percent of  tablet owners.   

Some 42 percent of tablet owners have “used their device to purchase an item,” compared to 29 percent of smart phone owners.

Both smart phones and tablets have been used to “research an item before purchase.” About 66 percent of tablet owners and 57 percent of smart phone owners reported doing so.

Some 27 percent of smart phone owners and 28 percent of tablet owners say they have used their devices to make a payment. 

Apple, Google, Amazon Microsoft: Who Wins the Ecosystem War?

Microsoft's recent investment in the new company that will own the Nook tablet and content business illustrates a couple of important strategic shifts now happening in the mobile device and application markets. The biggest shift is the growing importance content, advertising and commerce operations are assuming for device and application suppliers. 


Among the secondary issues is a new take on "open" versus "closed" approaches to software development have been a live issue for decades. These days, with the emergence of content and commerce as key elements of device and application strategy, the questions are taking new shape. 


Some believe the "Four Horsemen" of the Internet include Facebook, Apple, Google and Amazon. Others might say the list actually is "Five Horsemen" and include Microsoft. Either way, the notion is that  handful of firms have the ability, at least in principle, to create and own a complete and walled-off ecosystem in which consumers use a single company’s hardware, operating system and storefront to search online, buy apps and purchase digital media and  physical products. 


If that proves to be true then a couple of predictions are easy to make. Facebook and Amazon will produce their own smart phones. Facebook might also have to produce a tablet. Apple will have to create a mobile payment service, as will Microsoft. 


Google and Facebook will have to get more share of the e-commerce and mobile commerce transactions, and all will deepen the activities they now already support around mobile advertising, promotion and loyalty. 


Last week, yet another rumor surfaced that Facebook is getting closer to releasing its own branded smartphone, an obvious attempt at owning a stack component (hardware) that’s currently missing from its line-up, Wired reports. Rumors about an Amazon smart phone have circulated for a couple of years, on and off, as well. 


“A smartphone would be a logical next step for Amazon,” ABI Research Analyst Aapo Markkanen says. 


Either of those moves, plus an eventual move to create a Facebook tablet, illustrate the changing role of devices and connectivity in the mobile space. Traditionally, mobile phones simply were devices carriers had to provide to sell voice and messaging services. 


These days, matters are more complex. In addition to communications, hot consumer devices frequently are used for content consumption. That means smart phones are more important to application providers as platforms for selling content and advertising. 


Everyone expects a mobile device to handle voice and texting. Beyond that, more users expect the ability to consume content and conduct transactions. That changes the strategic importance of being a device manufacturer. 


For mobile service providers, phones have been a sort of prop to produce revenue indirectly, in the form of service subscriptions. But that also now is increasingly true for application providers. 


For Apple, which merchandises all sorts of content to sell devices, the tight bundling of content and commerce is a major reason it can sell so many devices. That also is true for some other mobile device manufacturers. But not for all. 


For Google and Amazon, devices are a way to sell more advertising, content and merchandise. Microsoft has a slightly different take, as it always has preferred to sell operating systems to partners who make phones. But Microsoft has to succeed in mobile operating systems to profit from the device ecosystem that supports the advertising, commerce and content businesses. 


Such thinking is not terribly new. Consumer electronics manufacturers have for decades understood that content was important for the devices business. Sony is probably the best example of that. Apple arguably was the first consumer devices firm to really achieve that integration, with its iPod and iTunes. 


These days, gaining the ability to lock consumer into a particular content ecosystem is the reason producing devices matters. 

Smart Phones Really Are Content Consumption Devices

During the three-month average ending March 2012, 50 percent of U.S. mobile subscribers used downloaded applications on their mobile device, up about five percent from 47.6 percent during the three-month average ending December 2011, according to comScore. 


For the period, downloaded applications extended their lead in penetration over browsers, which were used by 49.3 percent of subscribers (up from 47.5 percent, quarter over quarter). 


Texting remained the most common activity, used by 74.3 percent of U.S. mobile subscribers, unchanged from the previous three-month period. 


In addition to apps, users also made significant use of music, gaming, social networking and browser interactions. 

Over the Tip is Like "Showrooming;" Best Buy and Target Responses are Like "Retail" and "Wholesale" in Telecom

Target is not happy about "showrooming," the practice whereby many consumers take a look at products, but then wind up buying that same merchandise online. Target now appears to be concerned enough about lost sales to Amazon that it will stop selling Kindles in May 2012.

Every firm has to decide what to do about competition, and Target seems to have no similar qualms about selling Apple tablets. In fact, Target is preparing to launch Apple Stores inside Target locations.

Since Target stores began selling Amazon's Kindle line back in 2010, and the Kindle Fire was even the retailer's best-selling tablet during Black Friday 2011.

The new deal with Apple is said to represent a "conflict of interest."  Target's move, in one sense, isn't unusual. Lots of distributors have special deals with certain suppliers, and Target might be betting it will make more money selling Apple tablets than Kindles. There might be clauses in the deal that require Target to remove Kindles. It just isn't clear.

But Target and Best Buy might be heading in opposite directions in dealing with "showrooming." Target has asked its suppliers for special "Target only" merchandise, for example, to limit "showrooming" impact. That might be likened to mobile phone "exclusives" offered by mobile service providers.

Best Buy, on the other hand, is mulling a shift in the opposite direction. Best Buy has, like Target expects to do, supported Apple mini-stores inside Best Buy locations for quite some time. But Best Buy might consider shifting even more fundamentally in that location, essentially allowing many other suppliers to rent space inside Best Buy as a primary revenue model.

In telecom terms, Target wants to remain a retail supplier, where Best Buy could move in the direction of a major reliance on a wholesale role in the value chain. Target's strategy is the more common approach in the communications business, where nearly all the money is made selling products directly to retail end users.

Best Buy might be considering a shift to a "Clearwire" style, wholesale-only strategy that is relatively uncommon in the communications business. Where the retail Target strategy rests on revenues created by end users, the wholesale strategy rests on sales of products to business partners.

Where Target is a business-to-consumer model, Best Buy might be contemplating a shift to a business-to-business model.