Mobile Internet Users in China are 75% of Total

At the end of December 2012, there were about 564 million Internet users in China. There were about  420 million mobile Internet users, representing about 74.5 percent of all Internet users, according to the China Internet Development report.

If you want to know why, sooner or later, Apple will have to create a lower-cost iPhone, that's the reason. Right now, three quarters of Internet users in China use mobile. And, right, now, most of those users own an Android device. 

It isn't any more complicated than that. Apple has done quite well, globally, in dominating the high end portion of the smart phone market. 

But to put it colloquially, Apple now is running out of high end customers. Most of the rest of the market will be more mainstream. So unless Apple wants to settle for low growth, it has to extend its product line, as it has with MP3 players and tablets, to reach a more mainstream user who does not want to buy, or cannot afford to buy, Apple's top of the line device. 

Google, Apple, Facebook, Twitter, Yahoo Sliding into "Personal Assistant" Function, Business

For years, it has  been difficult to "classify" Google. Google says it is a technology company, and with its expanding role in smart phones, tablets, operating systems, its core search business, mobile commerce, navigation and browsers, that certainly is true. 

On the other hand, Google is the paramount example of a big, influential technology company whose revenue stream is based on advertising services. That always throws a monkey wrench into the taxonomy, since historically, "media" firms had that revenue model. 

For other firms, such as Facebook or Twitter, the taxonomy is not quite so difficult. The content those firms "create" might be contributed by users, but there is a reason firms such as Facebook and Twitter are known as "social media." 

They are more recognizably "media."


These days, it also is noted that Apple's Siri, use of mobile devices overall, Twitter and Facebook are "threats" to Google because they are alternate ways for people to "discover or find things." 

In other words, Twitter, Facebook and other apps are challengers to Google as rival ways for people to discover, find or locate content and information that is highly relevant to them.

“When there is too much information, there high value in search, navigation and discovery,” said venture capitalitst Bill Tai. 

Mobile highlights the changing context of "search," though. As it turns out, what people "search for," in a mobile context, already shows a bias towards commerce: places to go, things to do, places to shop or buy products. That drives local search and mobile commerce. 

But maybe something else is happening to search as well. Voice search might be more than just "another input option." Maybe it is something more like a "digital personal assistant," allowing people to quickly find answers to questions. 

Yes, that means people use the feature to find things, which is a search or discovery process. But one might argue it is more: a move by a variety of apps, tools and approaches towards a personalized "digital assistant for your life" approach that some have called the "remote control for your life."

In that sense, it would be easier to categorize firms with ad-based revenue models. They all are in the evolving "personal digital assistant" business.

"Year of the Phablet?"

One informal rule of thumb that works pretty well is to assume that whenever an analyst dubs the coming year the "year of," it will not be. That doesn't mean the trend is wrong. Typically, there is a fair chance a trend, or potential trend, is at work.

The issue is just that a big trend takes a while to get established, and analysts typically are, for professional reasons, too eager to declare that a new trend not only will begin, but will be consequential, in the next 12-month period. 

"Phablets" now have been pronounced the subject of such a "year of" prediction for 2013. By contrarian thinking, that might suggest 2013, in fact, will not be as consequential as predicted. 

The Asia-Pacific is, and will remain, the world's biggest market for phablets, says Joshua Flood, ABI Research senior analyst. 

Last year, the Asia-Pacific region absorbed 42 percent of global shipments, a proportion that will expand steadily over the next few years to account for over 50 percent of shipments by 2017, according to ABI Research.

But some analysts continue to think the problem is that phablets are "too big for a smart phone, and too small for a tablet." The key is ergonomics, some would argue. At some point, a smart phone has to be held in one hand. 

But is it a phone? The point is not whether the device can make and receive calls, or send and receive text messages. In fact, most communicating appliances can do such things. The issue is whether the lead app for a smart phone will always be "making calls." 

These days, most users probably spend more time using a smart phone as an Internet device, for browsing, playing games, sending text messages or consuming media.

It is a reasonable objection that most people would find a phablet a less convenient operation than using a smaller smart phone. But for many users, "making a call" might be only the fourth or fifth most frequent use of the device. 

We will find out, eventually. We probably won't find out in 2013, though. 

New Roles for Retail Wi-Fi

Getting the mobile strategy right can make a big difference for retailers, said Alison Paul, leader of Deloitte's retail and distribution practice. 

When consumers use mobile devices in physical stores, there is a 72 percent chance they will turn their browsing into actual purchases, a 14 percent increase above those who don't use mobile devices, Paul said. Wi-Fi therefore plays a new role in converting interest into purchases. 

Up to this point,Wi-Fi has been an amenity for retailers in verticals such as food and  beverage, the perhaps-classic case being Starbucks. Now Wi-Fi is being viewed by a wider range of retailers who have to  balance a legitimate fear of encouraging "showrooming" with the possible upside of tailoring their in-store Wi-Fi networks to encourage purchases while users are inside the stores.

That might include any number of ways to try and influence consumers while they are shopping, from showing past buying history, delivering coupons or information about specials, for example. 

The business model also is different. Rather than an indirect amenity designed to increase customer dwell time, and therefore sales, the new approach attempts to directly influence shopping behavior. 


According to an analysis by researchers at Deloitte, mobile (defined as smart phones
for this analysis) influences 5.1 percent of all retail store sales in the United States. That implies 
about $159 billion in sales for 2012.

Mobile influence is anticipated to grow exponentially to 17 to 21 percent of total retail sales, amounting to $628 to $752 billion in mobile-influenced store sales by 2016.

Fixed Version of LTE Coming from AT&T

Both Verizon and AT&T have signaled willingness to use Long Term Evolution networks to deliver higher-speed broadband access to customers in rural areas. Verizon already does so, selling its "Home Fusion" product. 

Now AT&T executives are sending clearer signals that AT&T plans to do the same. 

"We anticipate that LTE will be a broadband coverage solution for a portion of the country; we just haven't yet gotten to the point where we have enough experience under our belt to know exactly what that footprint is going to be," said John Donovan, senior executive vice president of AT&T Technology and Network Operations. 

Tariffs will be an issue. It is almost unthinkable that the tariffs for Long Term Evolution, used as a substitute for a fixed broadband connection, will be closely equivalent. Consider that mobile broadband services feature single-digit usage plans, where fixed network broadband services have triple-digit caps. 

Verizon's Home Fusion service, which also uses the LTE network to deliver fixed location broadband, features a few monthly service plans, starting at $60 a month (10 gigabyte cap).

The 20 gigabyte plan sells for $90 per month, while the 30 gigabyte plan sells for $120 per month. Under any circumstances, the usage caps for Home Fusion and FiOS fixed network broadband vary by an order of magnitude. 

Many observers will suggest the future AT&T product, as well as Home Fusion, are aimed primarily at rural and other customers who do not have access to faster fixed network access alternatives. 

The direct competitors, in other words, are satellite broadband services, dial-up access or slower digital subscriber line networks. Some might argue that were cable modem services are available, most consumers will choose that service. 

According to a Federal Communications Commission study, about five percent of U.S. homes cannot buy fixed network service from any provider. 

Developed World Broadband, Voice Prices are Rising

Given the trend of falling prices for high-speed access and voice that have occurred in most markets over the last decade or two, some might wonder whether there is any end to the trend. The answer, surprisingly, might be "yes," at least for broadband access, and in part for some voice services. 

U.S. broadband access retail prices have been relatively stable since about 2010, including both triple play packages and stand-alone retail prices for broadband access, though speeds for same-price services tend to grow.

But there now are signs that broadband and even voice prices in the U.S. market, and elsewhere in developed markets, are growing, not shrinking.

Cablevision, for example, is boosting prices about $4 a month. Time Warner Cable added about a $5 a month modem rental fee late in 2012. In the United Kingdom, Virgin Media also is raising prices, both for high-speed access and voice services.

In Australia, Optus likewise has hiked prices. In the United Kingdom, BT also is raising prices for broadband access and voice services.

That is a significant difference from what is happening in most other areas of the developing world, where prices for broadband and voice traditionally have been quite high, compared to developed nations.

One might argue that prices in developed markets are growing because upgrades of networks to support hundreds of megabits up to 1-Gbps speeds now are happening, with the resultant need to boost prices for those features.

By some studies, developed nation prices already were quite low, measured in local terms as a percentage of income.

Despite Changing Device Preferences, Cloud App Trend is Key

With all the attention now paid to changing device preferences, it sometimes is hard to remember that “client” device preferences only emphasize the growing shift to cloud-based apps and behavior.

Apps related to use of maps provide one example, but only one. Though sales of dedicated global positioning satellite units are growing slowly, use of web-based maps and “directions” are up about 20 percentage points since 2010 according to an Accenture study.

Almost half (47 percent) of consumers Accenture surveyed use global positioning in a typical week.

Some 69 percent use a PC, 48 percent use a mobile device or smart phone and 13 percent use a tablet;

Some 35 percent have a factory-installed GPS device in their car and 43 percent would like to have a GPS device installed in their next car, the study suggests.

The point is that, while the GPS device is highly popular, its preferred form is now in a software app on amulti-function device.   

But similar shifts are occurring around use of other apps as well. A significant increase in use of online services has occurred in just one year, the study suggests.

In fact, usage of cloud apps increased for all eight of the online services Accenture researchers asked about, including online email services, games, photo storage, movie streaming, data backup, music streaming,calendaring and document creation.