Archive for January, 2011

Posted on January 13, 2011 - by David Etheredge

Consumers want Mobile Coupons

Groupon’s annoucement, reported by FT.com, that they closed a $950M round of financing to fuel expansion of their online couponing empire, should be a wake up call for businesses that continue to ignore coupons as a viable way to reach new customers. There has long been an attitude among many businesses and ad agencies in the U.S. that the use of coupons serves to devalue “premium” brands while undermining the carefully nurtured notion among consumers that when you pay full price, you end up with a superior product.

The fact that Groupon is so successful that they have exceeded 50 million subscribers and were able to command one of the largest private equity rounds in history shows that consumers at least are moving in a different direction. A report published in The Guardian in June of 2010 indicated that 79% of people polled by UK website Save.co.uk, used online vouchers (as coupons are called in the UK) for food shopping and 47% used them for eating out.

As recently as two or three years ago, it would have been almost impossible to imagine nearly 50% of people who eat out in the U.S. bringing along a coupon – but not anymore. Europe is ahead of the U.S. in mainstream adoption of coupons, but given Groupon’s explosive growth and continuing economic pressures, we may not be far from a time when a significant percentage of consumers are more likely to choose between similar products or services based not on brand, but on the availability of a discount.

The barrier for mass adoption of coupons has always been convenience. Cutting out or printing coupons is tedious. We’ve all experienced repeatedly forgetting to bring coupons to the store with us, only to remember at check out, when its tool late. And who hasn’t triumphantly slapped a coupon down at the check-out counter only to find out it expired a week ago? Everyone wants to save money, but we want it to be easy and to conveniently fit into our hectic lifestyle.

Mobile coupons appear to be the answer. Using a smart phone to find, save and redeem coupons would remove all of the aforementioned issues while allowing consumers to find and choose discounts at the point of purchase decision. A survey conducted by Accenture and reported in Mobile Commerce Daily indicates that 79% of smart phone users want to be able to receive coupons on their phone. Combine the ability of consumers to use GPS based search to find retailers with the products they are looking for and a mechanism for delivering targeted discounts directly to the user’s phone and you have a recipe for an explosive new marketing channel.

79% of smart phone users already see what’s coming. Maybe its time for the retail channel to get on board?

Posted on January 11, 2011 - by David Etheredge

Most Anticipated Mobile Devices for 2011

Our advance recon team came back from CES with intel that the most impressive mobile devices on display were from Motorola.

In the smart phone category, the Motorola Atrix distinguised itself with a dual core processor and the ability to transform from a mobile phone into a full desktop computer through the use of a docked keyboard and monitor.

The Motorola Xoom, which also sports a dual core processor looks like the new heavyweight in the tablet PC arena and is already being dubbed an “iPad Killer”. With front and back facing cameras and native Flash support the Xoom is just the lastest example of how Google is working with device manufacturers who have been shunned by Apple, to overtake the mobile marketplace.

Posted on January 11, 2011 - by David Etheredge

2011 – The Year of the Mobile Consumer?

Mobile Ad Network company, Millenial Media has dubbed 2011 “The Year of the Mobile Consumer” in their report “Predictions for the Top 11 i n’11″. Although we’d love to see mobile commerce explode in 2011, it seems more likely that Mobile Commerce will need another 12 to 18 months to really take off in the mass market.

Wikipedia reports there were about 285 million mobile phone users in the U.S. as of December 2009, while a recent report from TechSpot puts the number of smart phone users at a shade above 61 million with quarterly growth running around 10%. That means we still haven’t quite reached the mark of 25% of mobile phones users having smart phones.

In addition, anyone who’s used their mobile phone to attempt to purchase a product through the mobile web or a native application can attest to the fact that mobile commerce is pretty much a miserable experience unless you’re using a newer touch screen enabled smart phone.  Touch screens are gobbling up market share from all other types of mobile phones at a frightening pace, but most of this growth is fueled by younger consumers as the 40+ crowd stubbornly clings to outmoded flip phones and web & application unfriendly Blackberry and Palm devices.

This means the actual market of consumers who own touch screen devices which are suited for mobile commerce might be a small as 50 million users and even with projected explosive growth in 2011, the penetration of touchscreen might not break the 100 million user mark until the tail end of the year. Yes there will be a lot of potential consumers on mobile commerce capable phones by years end, but does that mean Millennial is right in their prediction?

We’re not convinced. In a perfect world, businesses would read the writing on the wall and start deploying mobile commerce optimized websites and applications now in anticipation of the 100 million or so consumers who will be ready to buy things through their touch screens by year’s end. But in reality, there will likely be a majority of companies who take a “wait and see” attitude and fail to deploy a mobile optimized website until after the mobile commerce marketplace has already taken off.

The customers and device penetration required to make 2011 “The Year of the Mobile Consumer” may be there by year’s end, but will the products and services be there? Probably not.

There will be some early adopters who get out in front of the mobile commerce boom and reap the rewards of differentiating themselves from their competitors in 2011. But right now, a very small percentage of companies have deployed mobile optimized websites and even among Fortune 1000 companies, there are a tiny number of sites that take full advantage of  touch screen smart phone features such as GPS and high resolution graphics.

It’s hard to imagine the retail side of the mobile commerce equation catching up to consumer demand in less than 12 months given where the industry stands right now. So we’ll go out on a limb and say Millenial is off by a year and that 2012 will be the breakout year for mobile commerce, assuming that the Mayans end of the world predictions don’t bring a premature end to the holiday shopping season next year.

Posted on January 11, 2011 - by David Etheredge

Mobile Advertising Company Millennial Media raises $27.5M

Investors in the tech sector are continuing to pour money into mobile plays such as Millennial Media as evidenced by the companies recent announcement that they have raised $27.5 million in growth equity funding. Millennial Media is one of the largest independent mobile ad network operators in the U.S.

The linked article  includes an interesting pie chart using data from IDC that indicates as of December 2010, Millennial Media owned 15.4% of the Mobile Ad Network market share while sector giants Google and Apple weighed in at 19% and 18.8% respectively.

The most intriguing bit of data to be gleaned from the chart is the fact that over a third of the market share (36.7%) falls into the “Other” category which suggests that as much of the market is currently controlled by companies with too small a market share to actually call them out by name as is controlled by Google and Apple combined. Like just about everything else in the mobile marketplace, its an extremely wide open field with a huge opportunity for emergent companies to grab their piece of the pie chart.

Posted on January 10, 2011 - by David Etheredge

61.5 Million Smart Phone users in U.S.

In addition to confirming that Google is quickly moving towards becoming the dominant player in the mobile OS space, a report from TechSpot.com entitled “Android passes iPhone in the U.S.” contains some valuable metrics on Smart Phone usage during 2010.

In the U.S.:

• 61.5 million people owned smart phones in the U.S. as of Nov 2010
• Smart phone users grew 10% in Sep – Nov 2010 over the prior 3 month period
• For the first time, more people are using phones running Android OS than Apple iOS
• RIM (Blackberry) lost 4.1% smart phone market share, down to 33.5%
• Google moved into 2nd place in smart phone market share, up 6.4% to 26.0%
• Apple fell to 3rd in market share at 25.0% on a meager 0.8% quarterly gain.
• Microsoft lost 1.8% smart phone market share, down to 9.0%

 

Some quick observations from this data.

1. Given current trends, it is only a matter of time before Google takes the #1 position in smart phone market share and it wouldn’t be surprising at all for them to crest 50% market share late in 2011 or early 2012.
2. RIMMs steady erosion in market share coincides directly with their lack of high quality touch screen enabled devices. There are a large number of business people who are stubbornly sticking with their old Blackberry devices, but unless RIMM quickly and emphatically moves into the touch screen market with a large number of high quality smart phones that enable easy web browsing and offer increased application support, Blackberry may fall to sub 10% market share within the next 2 years.
3. Apple may have created the touch screen smart phone market, but in an eerie re-enactment of the Apple / Microsoft wars for domination during the early days of the personal computer, they’ve allowed Google to swoop in an take the market away from them. Apple continues to be draconian in their attempts to control all aspects of the iPhone / iPad business (choosing not to support Adobe Flash, maintaining restrictive control of iOS application development and deployment, failing to license iOS to third party handset manufacturers, etc.) and its now clear they made a huge blunder initially limiting iPhone availability to AT&T, thereby allowing Google to achieve a headstart with other cell providers. Apple will have to make some changes to their business practices very quickly, or they run the risk of ending up with a minor share of the smart phone market, just as they did with the PC market.
4. Speaking of Microsoft, they are almost certainly losing market share because of the bizarre user interface that launched with phones running Windows Mobile 7. I have yet to hear from someone that likes the Win 7 mobile UI who isn’t also on the MS payroll and its a real head-scratcher why Windows decided to deviate from the type of simple, easy to use icon based UI that Apple and Google have popularized. It wouldn’t be surprising to see Miscrosoft continue to slide in smart phone market share to sub 5% levels unless they get in line with Google and Apple and provide a mobile operating system that isn’t different for the sake of being different.