Apple, Samsung, Android Still the Story in Second Quarter 2012

Apple, Samsung and Android remain the story in the global smart phone business in the second quarter of 2012, according to IDC.

In the second quarter, Android had 68 percent market share. All other operating systems lost 15 percent market share, compared to the second quarter of 2011. 

The IDC figures also show Research in Motion's market share decline from an 11.5 percent share in 2011  to 4.8 percent over the last 12 months, Symbian dropping from 16.9 per cent to 4.4 percent.




Smartphone OS World market shares Q2 2012 and 2011

Tablets Indirectly Threaten HP's Business Model

Tablets are not a direct cause of HP's strategic disarray. PCs and the consumer hardware business arguably are the problem, clashing with HP's ability to become a pure-play enterprise services supplier. 

But tablets represent both a threat to the PC revenues and a device that relies on the cloud services that HP might alternatively focus upon. The problem remains that HP is a firm with conflicting pressures and interests. 

HP is still the biggest maker of PCs in the world – excluding tablets – but Steven Milunovich at UBS Investment Research reckons the tech giant should get rid of its PC hardware business and focus on services related to cloud computing and business products. 

Of course, that course has been at least temporarily rejected. Former CEO Leo Apotheker proposed doing so and was dumped. New CEO Meg Whitman reversed course. And now Milunovich essentially argues Apotheker was right. 

Doing two things stops HP doing either well, he argues: "HP lacks the pure enterprise focus of IBM and EMC yet will have trouble competing for consumers without strong tablet and phone businesses like Apple and Samsung," 

So, indirectly, tablets represent the latest twist in the rather lengthy story of HP vacillating about its strategy. Without a robust tablet and smart phone business, the consumer business looks vulnerable, longer term. But since the PC and printer business is about half of HP, the continual debate about remaining in the consumer and enterprise businesses 
is tough to resolve. 

U.S. Mobile Business Now is Unstable

There are growing signs that the U.S. mobile service provider market is unstable, in terms of market structure, and on the cusp of changes that could include a significant wave of provider restructuring, despite the failure of the AT&T bid to buy T-Mobile USA. 

"What is clear for now, in our view, is that the current strategy, indeed the entire current business, isn't working," said Craig Moffett, an analyst at Sanford C. Bernstein. Moffett seems to be referring to the whole business operated by regional U.S. wireless carriers. 

To be sure, Moffett has been saying that the U.S. mobile business is saturated since at least 2009. 

Oddly enough, to some of us the new stresses resemble the earlier transition from dial-up Internet access to broadband access. In this case, the transition is from feature phone to smart phone business models. 

In that earlier transition, many suppliers that had made a business of supplying dial-up access found they no longer could compete in the broadband business. Now, in mobile, it appears that the cost of supporting handset subsidies is pinching operating revenue, while the cost of building fourth generation networks likewise will hit earnings. 

Of the "big four" U.S. mobile carriers, only T-Mobile USA seems to have experienced a subscriber loss. 

In its second quarter of 2012, AT&T added 1.5 million net new customers. Verizon Wireless added 1.2 million net new subscribers. Sprint added postpaid net additions of 442,000 postpaid net additions. But T-Mobile USA, one the "big four" U.S. mobile service providers, lost 510,000 subscribers in the first quarter. 

The immediate stress is heavy for the regional mobile providers, often using prepaid models. 

Regional or prepaid service providers clearly have had a tougher 2012 than had been the case in the mid-2000s, for example. Leap hasn't been profitable since 2005, for example. MetroPCS profits dropped 63 percent during the first quarter of 2012.

A study undertaken by Tellabs suggests that mobile service provider profitability could become extremely challenging for some mobile operators within three years, with costs surpass revenues for many operators.

In North America that could happen by the fourth quarter of 2013 or as early as Q1 2013. Developed Asia Pacific service providers could see problems by the third quarter of 2014. In some cases this could happen as early as Q3 2013, Tellabs said. 

Service providers in Western Europe could run into trouble by the first quarter of 2015. In some cases this could happen as early as the first quarter of 2014.

Photo of Mars Rover "Curiosity" Heat Shield Dropping Away

Here's a shot of Mars Rover Curiosity dropping its heat shield on the Martian descent. Also, lots of dusty brown rocks, eh?

M2M Mobile Connections: 2.5 Billion by 2020

Mobile network machine to machine (M2M} connections will grow from 277 million in 2012 to 2.5 billion by 2020, growing at a 30 percent compound annual growth rate between now and 2020, according to Strategy Analytics.

Health, meter reading, energy management and transportation applications are expected to lead the growth.

Mobile Broadband Subscriptions for Tablets: $15 Billion Incremental Revenue in 2017

Consumers will add 150 million new data subscriptions for their tablet devices in the next five years, creating a new data access market representing $15 billion in revenue by the end of 2017, when tablet subscriptions will reach 172 million worldwide, Strategy Analytics says.

"Less than 13 percent of the global tablet installed base will have active mobile broadband service in 2012, yet in the US, both AT&T and Verizon Wireless saw tablets play a key role in net subscriber additions in the second quarter this year," says Susan Welsh de Grimaldo, Director, Mobile Broadband Opportunities (MBO) at Strategy Analytics.

Long Term Evolution will become the access technology of choice for mobile network connections, accounting for nearly 68 percent of mobile broadband tablet subscriptions by the end of 2017, Strategy Analytics says.

Tablet Users Don't "Work" on Tablets

There will be nearly 70 million tablet users in the United States by the end of 2012, an increase of more than 100 percent over 2011, eMarketer estimates.  Aside from representing the fastest-adopted digital device ever, tablet usage also shows the way digital device activities have changed since the advent of the "PC" era.

Of the top 10 or 11 categories of things people report doing on a tablet, only using email is arguably something that could sometimes be called a "work activity," most of the time.

And that also is something not specific to a tablet, as more people can use email on their smart phones, as well.

Granted, we all have been at meetings where an attendee looked something up using a browser and search engine. But those things also are done by other attendees on smart phones or PCs. The point is that PCs, smart phones and tablets all are multiple-function devices. But the lead functions of each device are distinct.

For many observers, that suggests tablets are not a "replacement" for a PC so much as an indicator of the ways digital appliances now have become content consumption vehicles. True, tablets are smarter than TVs, radios, DVRs or some older MP3 players. But they are content consumption or media players as much as anything.

For all tablet owners under age 50, playing games was the most common activity. For the youngest tablet owners, ages 18 to 29, this was followed by shopping, reading books and email.

Email had a much greater importance among 30- to 49-year-olds, who were about twice as likely to use their tablets for email purposes than were their younger counterparts.

For 50- to 64-year-olds, email was the most common tablet activity overall.