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June 12, 2009

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Comments

ARJWright

Whew... this could easily have been another ebook you'd publish ;)

I'd only probably argue with one end of the discussion that you have here, that smartphones would continue to be defined the same, and therefore your conclusions would remain the same.

In an article at Brighthand, I penned a newer definition for smartphones that addresses the fact that companies are beginning to understand - from their respective initial extremes in starting towards smartphones and data-enabled devices - what would be best to do in the future towards this class of device and its users. Article is here (http://www.brighthand.com/default.asp?newsID=14839).

That being said, changing behaviors is a lot harder than changing the tech. What I'm seeing from Nokia here in the US is that they are changing their behavior in the mid and low-ranges, so that those people can eventually be shown a tech that makes them change theirs. Not sure if it will be successful, and I'm running my own experiment (see MMM's Sunday (US EST time)) to see what is possible towards that end.

Again, great reading as usual; and you leave a lot to work towards, making the imagination something possible instead of just dreamed.

kalle

maaan u are fuckin bloggin not writing for a phd...

Anya

Tomi, thank you very much for this "ebook", which I stumbled upon through Wright's link on brighthand. I find myself somewhere in the middle, between a (German-UK based) consumer and a (developing) gadget-freak. After reading your article I understand my own behaviour towards phones/gadgets much better. As I travel a lot, my needs are different to the main consumer and my interest in gadgets has gradually been growing according to my needs.

A few years ago I found Windows Mobile based Pocket Pcs very helpful especially for studying for my degree at uni while having to travel internationally a lot. But for phoning or texting they were/are too complicated and possibly unreliable (due to system crashes and poor battery life). So I always have at least one phone on me.

Even though I'm European initially I preferred Motorola (V3x) or even the older timeports, but thinking back, I always seemed to have preferred the largest screens available (which were American). Then as I was becoming more and more aware of what I wanted to do with my devices, I got into buying more appropriate apps for PPC and eventually for my mobile (latest Nokia 5800XM). And I've always thought, why don't they bring out a device where I can combine everything? So for me, the apps markets are brilliant as I can personalize my device according to my needs. And yes, I've gone for the iphone and will get the 3Gs hopefully next week. But I'm still not happy. I will still carry my large ipaq with me as well as my laptop mainly because typing on the iphone isn't good enough for me and I haven't found any office programs as good as the WM ones (Softmaker and RepliGo)!!

However, what I really need is FREEDOM ie an improvement in general services: unlocked phones, so that I can swap sim cards (at least my German T-Mobile Nokia is unlocked again), unlocked sim cards (until I got to 3 UK, I didn't know they even existed) and especially international (data) roaming that is affordable (thank God for WiFi).

So yes, my initial main consumer behaviour has been changing with the growing possibilities of the devices. So has my interest in them. But I can see from friends and colleagues, that most of them seem quite intimidated by their own phones. Texting is big, but that's about it. Some use it for music or taking pictures. Most stay with their operators and only change if they can get considerably cheaper price plans somewhere else. Hardly anyone I know chooses their phone/device first and then the operator. But then we are not professional business users. I can only see behaviour changing if the need for information becomes more imminent for the mainstream employee. I work for a big international airline. A lot of my colleagues have changed to the iphone, as it includes a free vpn client that is compatible with the company's. WM don't. As suddenly the intranet becomes mobile, colleagues find they use it much more than before. And they become aware of what their devices can actually do, and become more interested in them. Yesterday I found that there is an app to go with SecureID. One day our company will find it is much more cost effective to go completely mobile. I believe this is eventually how people's behaviour changes. Becoming aware of your own developing needs through new technologies possibly introduced by your own company. This is how the circle starts.

Tomi Ahonen

Hi ARJ, kalle and Anya

Thank you all for the comments. I'll respond to each individually, but let me first start with a general comment, that I'm personally not very happy with the ending of the blog, I just kind of ran out of steam and was tired at the end of the week, and had struggled with this blog story using up all of my spare time for two days (and nights ha-ha) and so yes, the end is weak. Sorry about it. Now individually to your comments:

ARJ - thanks. And yes, you make a very good point, that the current concept of the smartphone is becoming dated and we would need some new definition(s) and classification(s) of premium end phone(s).

The point about change in behaviour is very good as well, yes this takes time - Nokia has been saying it takes 5-7 years for mobile phone users (mass market consumers) to adapt behaviour as it relates to mobile phones specifically.

kalle - I appreciate your frustration. I did warn readers in the beginning that this is going to be a long blog - and I put it to you, kalle, that if you read the whole thing, which section of the story do you think is "unnecessary" or "frivolous" to the treatment. The reason you don't see many blog stories discussing US vs the world in smartphones today, is precisely that, it is so darn complex, you can't do it in 140 characters of a Twitter comment..

Still, I appreciate the fact you took time to post your comment and frustration. But do recognise, kalle, we have a loyal readership here at the Communities Dominate blog, who come to expect deep, insightful - and at times lengthy - discussions. And they reflect our thinking as it emerges and evolves (and is thus by definition not finally refined) - so if you prefer to read the shorter, polished version, you can buy my next book in a year or so.. We try to offer a service and value here at this blog, and please bear in mind, this is a hobby and totally volunteered writing here, so we don't get paid, no advertising on this blog, no money coming in from these thoughts. So please do consider that when some of my writing is long..

(Obviously kalle we won't censor you, we'll keep the comment here. We keep all relevant comments here and only remove the spam)

Anya - thank you so much for that personal story of how your relationship with the phone has evolved. And I obviously share with most of your experiences and agree with your sentiments.

The industry is a monolith (for some good reasons too) but it is gradually changing. The Scandinavian operators tend to be very liberal and free and customer-oriented in their dealings. Many of the Asian ones in advanced Asian markets are truly a delight to deal with. So the industry is indeed changing and evolving and becoming better. but its a very long way to go. The customer should be enticed "with honey" and try to make the customer fall in love with your service, so much so, that the customers become an army of fanatics, as UK based marketing guru Jonathan MacDonald calls for. Not to imprison customers into your network "ha-ha, boss, I captured another one. 24 month contract, ha-ha, we have him!"...

Thank you all for writing

Tomi Ahonen :-)

gerardo

I propose the kids test. Interestlingly, my kids and their friends, happy MAC computer users don't want an iPhone! They even rejected the Nokia 5800. Why? They NEED a keypad. Of course, their life runs through texting and they quickly found out how awkward typing is even on a highly optimised virtual keypad. Just as businesspeople, they don't have time to lose fiddling around with a touchscreen keyboard to keep up to their 100 SMS per day productivity benchmark.

And kids (usually) don't get expensive data plans paid by their parents. They stick to SMS. Mine routinely deactivate(s) data access to avoid surprises on their prepaid budget.

But this is also changing - at least in Spain, virtual operators now get you 3.5G fast mobile Internet access for as low as 1 MB running at 3c, 100 MB at 1 euro, 1 GB at 9 € good for a month... (Mas Movil, Simyo, ...). At 3c per MB my son now uses a widget to monitor soccer results and because he uses a widget and not life surfing, the MB lasts forever.

Lesson learned from my son: yes, SMS is a driver (although more for my daughter, women do communicate more than men even when texting), they consider phones with a touchscreen virtual keyboard as a no-go.

My son will not buy any applications, nor is he seriously considering the n-gage gaming option up to his PS3 (or not even to his little brother's DS) standard, but yes, he uses (very recent development) widgets, and yes, he now clicks on ads and subscribes to lists (to be read on his computer).

I think you missed one point: not all kids want to be cool. At least mine prefer not to be particularly noticed, so they like modern devices which are no big eye catchers (no attracting thieves).

Guess what is my 14 years old boy's preferred phone? No, not N-Series. It's the Nokia E75. Looks like a normal phone, but has that sliding qwerty keyboard. I (virtually) offered him the iPhone, an SE Xperia (perhaps the only cool WinMo phone on the market after even the new Samsung Omnia HD switched to Symbian), the Nokia N97 (I just picked up...) and the E75 and without the slightest doubt he picked the latter (his current phone is the Nokia E51 - he loves the solid steel back of the e-series because it survives the worst mountain biking accidents).

My daughter is a different story, she loves her 2 years old relatively simple SE music phone and passed on the 5800 offer because it was "two complicated". She rejected the iPhone because it had no MicroSD slot to exchange music and photos with her friends at the college - she uses iTunes only to keep her music catalogued...

Chippy

An excellent and thought-provoking article that provides great perspective. I enjoyed gerardo's comment above too.
Keyboards are going to be important outside the U.S. Do you think that Palm are trying to break out of the U.S. with the Pre? A slider smartphone with a keyboard goes against most of what you've said about the U.S. market here.

Thanks again
Chippy - UMPCPortal

Ed

Fascinating article. I've, of course, heard about many of the difference between the US market and the rest of the world, but you've told the story behind the story. I'm not sure about your point about App Stores and the mass market. You seem to be saying that people will buy (or subscribe to) web services but won't purchase applications, but if I buy an application which is a mobile client to a web service, such as maps or even Twitter, isn't this the same thing? The downloaded rich client user interface, 10 years after Java and Flash, is finally becoming a common experience on desktop and mobile Internet, through things like iPhone and Android apps, and to a limited degree, things like HTML5. I don't disagree that the type of applications which are successful a year from now on US smartphones will be very different than the ones today, or that a subscription option will have to be offered by Apple and Google in their application stores. However, I seriously doubt the US carriers will ever implement a model of web service revenue sharing like you describe as being popular in Japan, but which is open to all web service providers large or small the same way the app stores are. Anything of that nature, at least in the US market, will have to come from a third party, whether it be Apple or Google or Microsoft or someone else who wants to deal with all the hassles of setting it up, running it and making it appealing to consumers, but who also has the market clout to dictate terms to the carriers rather than the reverse. The advantage for either an application developer or a web service provider is that they can gain access to the US market and hopefully the ROW by dealing with a single party (the app store provider) rather than hundreds of carriers. The point is to think more about the "store" and less about the "app", these store services are first and foremost payment clearinghouses for mobile media - maybe in the ROW, the carriers are so progressive that such a middleman isn't necessary, but in the US market they're essential.

MM

A great post and I have to say, I actually prefer long, iterative and insightful blog posts as opposed to the stream of conscious style that dominates many blogs. So please don't let that discourage you from doing the same in the future (and looking at your previous, it doesn't seem like it has).

In any case, my thoughts and questions pretty much echo Ed's so I'd be interested to hear you take.

Another thing that just struck me is that in your view, Apple was actually correct with regards to pushing developers to create web-based apps and services. The fact that they met such resistance was more just a result of the US market not being ready for the idea right now, or rather, the US networks aren't reliable enough for people to readily access web-based services and apps. Thus, people preferred a local app since you could access it without any issues. However, if the US carriers provided as good of a service as those found abroad, perhaps the outcry against Apple wouldn't have been so great.

One other thing I was curious about was the type of mobile services currently on offer in Japan in South Korea. Would you please elaborate on these?

skylights

Too long for a late night, but I think I get the idea from reading everything after IN SUM.

Yomi Adegboye

Tomi,

Insightful article here, and I am basically in agreement with your positions. Its a complex maze, but its pretty much nicely presented.

Giff Gfroerer, i2SMS

As to Americans and mobile technology, Chetan Sharma recently reported the average US subscriber texts 16 times per day. You mention 4 times per day around the fall of 08. CTIA also reported 1 trillion SMS sent last year in the states, bringing the average for US to 10 per day per subscriber.

How do you relate those numbers to the mobile technology in the US and US adoption to mobile advancement?

Tomi Ahonen

Hi Gerardi, Chippy, Ed, MM, Skylights, Yomi and Giff

Nice to see you all here and thank you so much for the comments. I'll reply to each individually:

Gerardi - very good test, yes. I actually often talk of the quick-and-dirty test of two groups, does it work with teenager, and does it work with your own parents (grandparent age group). If the service is appealing enough for kids, and the grandparents can still do it (not too complex) then it has a good chance of success in the mass market..

Chippy - the keyboard with touch screen (Palm Pre). Yes, I think this will be a big growth market to smartphones, precisely because of SMS - and in a way, Blackberry started to "break the US market" so to speak, with their iconic phones years ago. I did argue before the original iPhone launched, that the biggest problem the iPhone had was a lack of a real keyboard. What Apple did not seem to know at the time (and am not sure if they fully grasp today) is that SMS is a one-handed operation. So often we need to be able to text while holding something important or heavy in our other hand, like the laptop of our child, the steering wheel of our car, or the hand of our child when walking on the street.. But we so often do send text messages (or at least read incoming ones) in those situations and a keypad/keyboard is far better than the best virtual keyboard on the screen, for one-handed operation of SMS. That is why both will be a popular (but not the only) option.

Ed - very good point about the Apps store and other third part apps that are installed to smartphones after they have been bought. I honestly do not "know" the real answer, the facts are not in and we are way too early into this phenomenon. But every gut instinct in my body says its the minor (niche) market and the mass market is pre-installed apps combined with web services. The maps example you gave - that maps app is pre-installed. The content (a given city map when you go on your holiday) can be downloaded later. But the application to enable the smartphone to use apps came out of the box.. That I think is the likely mass-market scenario.

Please note, Ed and others in this section, that the US model for web services sold to phones is very archaic and poor - but it is evolving and getting better. The European typical market, consider the UK or Spain, is far more advanced but still not ideal and are still evolving to become better. The Northern European and advanced Asian markets (Japan, South Korea, Taiwan etc) have the web services at roughly the state where we can expect all to evolve.

So don't look at the current US market as the final end-state of how it will be, rather think of it as an early stop on a journey that will - inevitably - lead to something similar to what the advanced markets have. Just like SMS, just like ringing tones, just like mobile commerce, just like TV-mobile-interactivity, etc etc etc

MM - I discussed part of the answer here in the above with Ed, and yes, you understood correctly that I believe it will be web-based services which will be the big opportunity.

About Japan and South Korea, where can I begin ha-ha. I wrote Digital Korea, my fifth book, as a kind of showcase of how what we in the rest of the world (ROW from Korea's point of view, not US) might think of as science fiction is already reality today in South Korea. But a few quick examples. Your dog? They have services that interpret the dog's barking and send it as SMS to your phone. I just blogged at my 7thmassmedia blog about the plants in Japan that do the same thing, sending you an SMS when they are thirsty and need watering. The romance meter in your phone from Korea, ie tells the girl if the guy is telling the truth, and how much he is in love with her (based on the measured tension in the vocal chords). Then there is Kamera Jiten out of Japan which uses the cameraphone to scan any printed page in English, and displays the translated page in Japanese on the phone screen. This kind of "science fiction" futuristic stuff is everyday in Japan and Korea.

They have apartment buildings where the locks operate by phone. The parking service not only handles the payment of your parking slot by phone, they now help you navigate to the nearest available parking place. The payments, Visa in South Korea have stopped sending old-fashioned plastic cards as the Visa ability is automatically enbabled onto your phone and the plastic is a free option you can get mailed to your home if you still want one. Etc etc etc. And I haven't even started on the first true killer app for 3G, ie social networking on mobile. From Cyworld to Mobage Town, South Korea and Japan are the leaders in this space.

I'd suggest anyone interested in the advanced mobile services to first hop over to www.7thmassmedia.com where I have about a hundred of them discussed, many with usage stats, user numbers, revenues, profits even. And then the obvious next step is to read my latest hardcover book Mobile as 7th of the Mass Media which is a compendium of the best of the new services and apps we can have on our phones, beyond just copying the internet.

Skylights - I appreciate it. Please do note, that even for me, this was a first in addressing this specific issue (I have previously written about the overall telecoms leadership and where the US sits with cellular telecoms; but not smarthpones). Also please note the level of discussion this has sparked on this blog, and at the big smartphone forums from All About Symbian to Windows Mobile Experts to Samsung etc; and that there is no other in-depth article like this about smartphones and the US vs World analysis.

Maybe in half a year, I could filter this down and make it into 5,000 words. I am very likely not going to do that. So while the article is very long, it is a first stab at a very complex and difficult area and it seems to have stirred up a lot of discussion by just about all sides who might be interested or affected. And for the most part, all comments seem to appreciate the analysis and find most of my sections in it to be relevant and reasonably good.

But yes, it is a long article. A friend of mine said it takes 45 minutes to read. Not exactly Twitter material ha-ha.

Yomi - thank you. A maze indeed.

Giff - good point. The US adoption to SMS has been dramatically fast in the past 12 months, no doubt most due to the mass-market appeal of the Obama phenomenon and how cleverly they used SMS in their communciations. So the US numbers will keep on growing probably faster than the rest of the world for quite a while. We saw that in Israel too, in about 2003, when they were one of the very last Industrialized Countries to enable cross-network SMS and while their usage had lagged the European levels (where mostly Israel seems to be on par with Europe on most stats), suddenly they had an explosion of use and overnight they matched European usage levels.

As to US adoption and advancement level of the US technology, you'll remember Giff that I blogged about whose behind and whose ahead in telecoms about a year ago, and gave the four major measures of leadership. On data usage - and using SMS as its proxy - the US was behind on this measure (as the US was beyhind on all 3 other measuyres, networks, subscriptoin and handsets). But the SMS usage level is a solid growth and put the US on par with mainstream Europe last year and now on par with European leaders (and still growing). It does not eliminate the lag that the US market has for cellular phone subscriptions (US is at about 90% while Europe is at 110% per capita and the leaders like Hong Kong are at 140% per capita) not 3G adoption (Japan and South Korea are at about 80% migration to 3G) or handsets (as per this article; for US readers - the Europeans already have cameraphones with 12 megapixel resolutions; and both the Nokia N-Series and E-Series have many more models sold in Europe (and Asia) as they offer in America, etc.

So the US is moving up, yes, but the competition is not sitting still. They too are improving and there is a long way to go.

What the US needs most of all, right now, is significant growth and maturity in the carrier/operator space. That is the biggest "bottleneck" for the industry right now.

Thank you all for writing, please come back and comment some more

Also - if any of you have blogs or discuss these at any forums, please let me know and I'll happily come there too to discuss these matters. Its a difficult area, and there are a lot of misconceptions around it, so you might enjoy my contributions also at your forum or blog. Let me know, my email is tomi (at) tomiahonen (dot) com

Tomi Ahonen :-)

JM

Tomi - Finally made it through :) Your caveat was correct, for the purpose of the article, a great deal of background and analysis was necessary. Thus we end up with a self-contained, complete, and very eye-opening overview of the US / ROW markets, technologies, and trends. Thanks very much for writing.

Mike Adams

good article, but I do not agree with many of your points. You keep saying how Nokia was good at text messaging, but this is absolutely wrong, since they never had a proper consumer-level affordable phone with a proper QWERTY keyboard (apart from the Nokia 5730 but it's not available yet - the Nokia E70 and E75 are too expensive and not geared to consumer), and their virtual keyboard (on the 5800) is not very usable, whereas in the USA LG & Kyocera and Samsung have had loads of consumer-level affordable QWERTY phones for the past 5 years. So the success of SMS in Europe is despite Nokia, not thanks to Nokia. Also, you mention that Nokia was too early with N-Gage, and that's why it's failed: this is completely wrong, the reason why N-Gage didn't sell well is because they were absolutely rubbish products, with a huge clumsy cumbersome form factor. If Nokia had produced a cool sexy N-Gage handset 5 years ago, it would have sold like hot cakes. You also mention that Blackberry has a consumer satisfaction and loyalty second to none; this is wrong, their latest satisfaction surveys are crashing, and the iPhone has a much higher loyalty and satisfaction level. Loads of Blackberry users are waiting for their contract to end to switch to an iPhone. You also mention that the mass market doesn't care about apps, but with all the huge marketing campaigns from Apple to educate the public about apps, loads of people are downloading apps for the first time, so it will become a mass market concept sooner or later (people will understand that their phone is like a computer and that they can install software). You vaguely touch on the definition of a smartphone, and I think the industry should be much more critical about this; here's my definition: any phone which has a QWERTY keyboard (physical or virtual) and can install apps (Java, native, widgets, etc...), because at the end of the day a phone can only be "smart" if you can type on it properly to interact (email, chat, sms, etc...) and if you can make it smarter by installing apps. So with this definition, the Nokia N96 is not a smartphone, but the LG KS360 and LG Prada II are a smartphone, because they actually have a keyboard and you can install Java apps on them. This makes much more sense from a user perspective. And then the smartphone proportion of the mobile market is probably higher than 12%, especially in the US where they have more than 30 different models of QWERTY-based affordable consumer phones (not Windows, not Symbian, etc...).

Tomi Ahonen

Hi JM and Mike

I will reply to both individually

JM - thanks. Yes, its long and it kinda has to be. Thanks..

Mike - very specific reply to many points and you make very many good arguments. I'll address each. I will subtitle them in the same order you had them, so the rest of this reply is obviously all related to your comment, Mike:

"Nokia was good at texting is wrong" (re QWERTY. I guess you are an American writer, Mike. I would guess you have not seen many high-end and medium-range Nokias that sold the world over. But my point is very clear, SMS is what made Nokia. Not now in the last 2 years when Americans discovered SMS and started to appreciate a QWERTY keyboard, but rather 15 years ago when Nokia became the first brand of basic GSM phones, where every model was SMS-sending-enabled straight out of the factory (many early GSM phones by rivals were not SMS enabled).

I was talking of when Nokia grew from tiny pretender to real contender to world champ in handset makers - today twice the size of its nearest rival - and Nokia overtook Motorola ten years ago. So while your point is true, most Nokia phones do not have QWERTY keyboards, when almost no such phones existed, and T9 was the "only" way to do SMS, Nokia was best.

Also note - four years before the first Blackberry QWERTY phone, Nokia had launched the world's first smartphone with a full QWERTY kleybaord, the Communicator. Since then there have been countless devices and form-factors from Nokia to exploit SMS, including the butterfly-QWERTY folding phone (I forget its number) which its users totally loved as the all-time greatest texting phone. Was not smartphone, was mass market, had QWERTY and sold well about 5 years ago if I remember correctly (I didn't own that model).

So your point that Nokia currently does not have a line of mass-market QWERTY phones for consumers in America, is true. But Nokia has had very good SMS-texting phones for over 15 years already. I was not talking of the last 2-3 years, I was talking of the rapid-growth stage of Nokia a decade ago. I'm sorry if I was not clear.

N-Gage. We can debate N-Gage of course, is not really relevant to the main theme but there were many reasons it failed, one was certainly the design of N-Gage version 1. Most of the faults of the first edition were fixed by the second phone. But I can assure you, Nokia would have kept evolving that product had there not been a worldwide mobile operator/carrier revolt against Nokia at the time, for attempting to sell games "bypassing" the operator (an early attempt at what the Apps Store is). And N-Gage did sell in the low millions. And today 70% of Apple Apps Store sales are games. Validates Nokia's initial project, Nokia's guts in attempting gaming, and also shows how much Sony is again behind the times with no PSP phone (just like they lost it with no rival to the iPod)

"cool sexy N-Gage 5 years ago, would have sold like hot cakes" no. This is patently wrong. This reflects a misunderstanding of the global mobile industry. In about half of the world's markets - and the majority of the advanced markets - and even more so 5 years ago, close to 75% of the markets - and even more for advanced phones like N-Gage - the devices are sold BY the operator/carrier, through their dealerships. If the carrier says no, there is no viable option to get mass market success. Like N97 today in the USA. In reality it costs the identical amount as the iPhone 3GS. But because the US carriers won't subsidise N97, and are willing to the iPhone 3GS, the 3GS seems to cost only 199 dollars vs N97 699 dollars. The price perception ruins N97 chances in the USA. In Britain, the N97 is available for free on some networks but 3GS always costs, so the opposite is true.

So for N-Gage, it could not have had a market success, no matter how uber-cool it had been, because not of the design, but because the European operators/carriers decided to punish Nokia for tredding onto their toes and stepping onto their turf, selling content (games) bypassing the operators/carriers. This is the real reason. Am 100% sure and have said so in public and in my books. None of my peers refute this point..

Blackberry satisfaction crashing. You say latest surveys. I have not heard of them, if you share, am willing to consider. I do not have recent survey data, but I have private info from several Blackberry networks on several continents, that its current lineup, and new mostly young adult users, are massively addicted and loyal, far more so than other handsets.

As to iPhone users, in America, there is good reason for some users to want to shift, its because BB is such a big hit and it came in many cases as the "must-use" business phone. In the rest of the world, this is not true, the BB is mostly sold independently and by choice, not as having to take it. Meanwhile, a recent iPhone customer satisfaction survey did say that 20% were eager to switch away - to a Blackberry specifically.. So you say potato, I say potato, eh. But give me the survey you site, and I'll adjust my opionion of the facts do support the position. But until then, on a global basis, my facts suggeest BB is phone with biggest loyalty, second is Samsung by the way.. (iPhone globally - before 3GS obviously - has greatly divided users, some love it others are lukewarm, as has been reported also in the public domain, press etc. The iPhone passion in the USA is far greater than in any other - more advanced - markets..)

"Apps not mass market" - you say it will become a mass market. So fine, we disagree on the forecast. I will be here years from now, and your prediction will stand. Lets return to this in say, 3-5 years and see if your prediction or mine came through. I understand where you are coming from, I also have a very well analyzed and thought-through position. I would suggest, before you lay any bets, ha-ha, that you look at my first postings about the iPhone on the day it was announced, one day after it was announced, and before it was released - and see what predicitons I made. Almost all of them have come true 100%.. So when it comes to understanding mobile phones (and even Apple's abilities in it) I have a very strong track record. Just Google iPhone on this blog and go read the early stuff, before the iPhone had launched. You won't find any other expert on record from that time, who hit the predicitions that accurately, as I did...

But like I said, thank you for your prediction, lets return to this a couple of years from now, and see which one of us will be correct. I'll be most happy to celebrate you if you turn out correct, and blog about it. I've done many corrections to my positions out in public, in my books, and here at this blog in the past. Am not afraid to change my position, if the facts do not support my theories..

"definition of smartphone" You provide a novel definition of smartphone. Certainly that is not used as far as I know, by any published expert on the industry. I think if we are looking at an industry worth over 40 billion dollars and touching 500 million people, we should use the prevailing definition rather than now start to offer new ones. The Wikipedia definition for example is like the one I used. That means that a smartphone is also one, that does not have a QWERTY keyboard, if the phone allows user-installed software/applications and has a standard operating system. And by that definition Java capable phones are not smartphones.

Thank you both for writing

Tomi Ahonen :-)

Ted Shelton

Tomi:
Terrific. Only two suggestions -- one, on your history lesson you don't make enough out the terrible decision by Nokia to not bend to Qualcomm's demands in north america and work with them to develop CDMA phones. Had they done this early enough they might have been sufficiently invested in the US to understand the trends. Oh and should I also include the horrible mistake of locating Americas HQ in Texas due to the accident of a partnership with Tandy?

And on the subject of the mainstream purchasing applications -- for the US market I think you have this entirely wrong and you may also have misunderstood the lesson of crossing the chasm.

Apple succeeded in teaching mainstream consumers to buy music from iTunes. The leap to buying applications from App Store is small.

Crossing the chasm is about understanding that the mainstream makes decisions to adopt a technology for different reasons than early adopters. But if you get those reasons right, they will still adopt.

best

Ted Shelton

Regina Willis

The decision of locking phones to network is not the best in my own opinion. And this problem has really caused a lot of confusion in the market. That aside though, the smartpnones revolution has created apps selling with opportunities for huge earning.

Tomi Ahonen

Hi Ted and Regina

Thank you for the comments. Will respond to both individually

Ted - good points. About Nokia not joining with Qualcomm with CDMA, I think you have a good point there, it would have been great for Nokia's US market share. But at the time, Nokia and Qualcomm were locked in a global struggle for the 3G standard. Qualcomm was seen as the leader of the "CDMA camp" ie CDMA2000 evolution path to 3G. Several European players were driving the WCDMA (UMTS) version, ie "GSM camp" for 3G, and Nokia was most seen as the cheerleader of that camp, although Ericsson, Siemens, Alcatel were all very closely in it too. Obviously the GSM camp won as today over 80% of all 3G networks are on the WCDMA/UMTS technology and several CDMA carriers/operators have abandoned that technology and switched to the GSM/WCMDA/UMTS/HSDPA side and none gone the other way.

So yes, that could have been a "tactical" good decision for Nokia to gain US market share, but would have been a huge "loss" in the bigger battle for 3G. I trust Nokia HQ will take this decision still today, with hindsight, as having been the right one. But very good point, making peace with Qualcomm would have given them a far better chance with the CDMA camp in America.

Crossing Chasm is good point, but on applications, I totally stand by my view and am certain it will be proven right. Apps are only bought by small parts of the mass market. Take a typical family. IF they buy apps to the family PC in that family (and not all do), then it is typically one geeky family member (and probably more often than not the husband or the eldest male child). So yes, that one family member is ok with installing apps to PCs. But the rest of the family don't do it.

Yet the rest of the family all have cellphones. Do not misunderstand this hype around the Apps Store. The gossip on the tech boards is that only about a quarter of all iPhone users have downloaded apps, the vast majority do not. And thats for the iPhone, which has 8% of smartphones. The vast vast vast majority of smartphone owners, including in the USA, all those Blackberry etc users, the vast majority do not install apps. I know I am not wrong on this, not even for the US market. You are mistaking the passionate use of techie-geeky users for the mass market.

But your point on crossing the chasm is valid, that it can be done, as long as you understand the needs are different. Very good point and I totally agree.

Regina - Thanks. Yes, I agree locking phones is a bad decision. But it may be part of the reason why there are people willing to install apps, and probably - but we don't have any actual consumer survey data yet on it, so am speculating - but yes, probably there is a strong divergence of markets where phones are more open, and users access more services; while markets where phones are more locked, users install more apps because they can't easily access those services..

Good point. But yes, the smartphone revolution has created new opportunities and that is good

Thank you both for writing

Tomi Ahonen :-)

Francis

Nice article. I came across your article because I recently just bought a phone. I spent 13 months in the Philippines a couple of years ago but now that I am back living in the US, I still had a very tough time investing money on a CDMA handset. So much so that, although I'm part of a family plan on Sprint, I chose to invest my money on a GSM phone and go prepaid in addition to my CDMA free "dumb" phone from Sprint which I mainly use for voice calls.

Part of the logic was that I can use the GSM phone if I ever go to the Philippines again. It's a bit irrational since I don't have any plans on spending a large amount of time there again, but I guess the thinking comes from how most US carriers try to tie customers to their network. I just don't like that feeling of being tied down when spending a couple hundred dollars on a device.

Before I went to the Philippines, I also had the mentality that the main use of a cellphone is voice calls (although the cellphone I had at the time isn't really capable of much beyond voice and text). When I was in the Philippines, it was quite liberating to stop thinking of cellphones as voice call devices.

That's one of the reasons why I was comfortable with a prepaid GSM even here in the US. I noticed that I don't really use the phone much for voice calls at all (maybe 10-20 minutes per month). It's data that I've always find myself wishing on having on more than a number of occasions. Although I agree that SMS is really a very big thing, I think it is over priced. I know carriers won't promote it, but instant messaging chats on a data plan is almost always cheaper than SMS plans when you take into consideration the price per kilobyte of SMS vs that of instant messaging on a data plan. That's not even taking into account that data plans are more flexible than SMS.

I chose my cellphone based on how I forsee myself using the device. When I read your article, I realized how much of your points applied to me. Yes, I'm a techie, gadget loving person, but I didn't really bought the phone with the main purpose of installing apps. I get enough of that on my computer and laptop. I just want my phone to work for the things I bought it for which is mainly data related. I also agree that the US consumers have a very different preference in style compared to the rest of the world. I personally prefer Nokia's style over the more US oriented styling of the iPhone and Blackberry.

I guess one of the reasons why this market is so hard to predict is because the consumers themselves don't really know what they want or need. For most, the only way to find out that a certain feature or innovation is useful is when the device is already paid for and already in use.

cell phones for seniors

Interesting article. There are however several different smart phones on the market today to choose from.

office supplies

nice post. I like the mobile phone that can be folded.

rob

Interesting article - there are definitely some insights there I have not considered. You seem to have a Nokia-centric outlook, however. This doesn't square with my experience at all, and I'd like to share my insights.

In my (US-based opinion) Nokia is doomed to fail. Look at their stock - it's plummeting. Why? Because their software is awful (I would argue it's terrible out of the box, not good), their service is terrible, Nokia lacks focus, and they are not executing on their vision.

First, a little history. I am now an iPhone user. Prior to that, I went and bought a Nokia E71 from Best Buy and got a pay-as-you-go contract. I am not the average US consumer - I am more technical than the average consumer.

The first thing I noticed about the E71 was the hardware. It was excellent. Best hardware I have ever had on a phone - much better than the iPhone. Unfortunately, that is where the excellence ended.

1. The Symbian software is ugly and incomplete. It looks like it was programmed back in the early days of software - think Blackberry circa 1990. The Nokia E71 was marketed as a Blackberry competitor - yet it didn't even come with a native push email application. Business users had the option (digging hard here) to download a buggy Exchange client that limited mail access to a single folder(!). Personal email didn't synchronize - it just pulled via POP. Worse yet, the UI was very confusing and email has extremely hard to manage. There were paid alternatives (I used DataViz and then another client), but these were not native to the phone so each had their own look and UI scheme that differed from that of the phone.

Contrast that with my iPhone that natively worked with all my email - GMail, Yahoo, Hotmail and Exchange right out of the box.

The one single place where the E71 shined was surfing the internet. However, at one time I had 4 browsers running on the phone and as cool as that was, it was a pain to remember which browser to use for which page. Sure, I could get flash on the E71, but it ate my battery in minutes.

2. The service is terrible - simply awful. Maybe Europeans will tolerate awful service, but Americans do not. Immediately after getting my phone, I was in London working and was having trouble with the Nokia Exchange client. I took my phone to the flagship store (down the street from Apple) and we could not diagnose the problem. Why? Because the store had no working WiFi and I did not have a London data plan. Plus, the people at that store did not understand their own products.

Later, an OS software update bricked my E71 while I was working in Chicago. I took my phone to that flagship store and was informed that they would send my phone to a service center and 'get back to me' in 2 weeks. I convinced a store tech to revive my phone only after pleading with the store manager for an hour. For the price of an unlocked phone, they should have handed me a new one once the issue was determined to be Nokia's fault.

As an FYI, it has been announced that the Chicago flagship store (along with others globally) will be shuttering. This is due to the fact that service is terrible, making it unnecessary to visit their stores. Plus their retailing is terrible. (Both London and Chicago stores are right down the street from Apple stores. At any time you can walk by Apple and see throngs of people while Nokia hardly has any people in them.)

3. Nokia completely lacks focus on doing anything well. Ok, they have offline maps on their new phones. That's pretty cool. But so does an iPhone. They have all kinds of operating systems - multiple versions of Symbian, Maemo, other. They have people working on software all the time, but much of it seems half-baked and bolted onto the OS.

I will say that my E71 had great text input. But maybe this is a cautionary tale on focusing on a past product (SMS) and not enough on where the industry is going. There also seems to be a lack of coordination between the development teams and the OS teams. I have rarely seen a company that is so openly unwieldy - and it shows in their stock performance. (Just look up the Nokia Youtube channel to see what I mean.)

4. Nokia cannot execute on their vision at all. Ovi, the web service, is terrible, no matter how you slice it. I don't want ANOTHER email address. I don't want to store my photos at Nokia. Their online calendar isn't as good as Google's free calendar.

Ovi, the store, was a mess when I used it. I would go to look for software, only to be confused by which version of the product I should use. Is this right for my version of Symbian? Who cares - Nokia knows which phone is connection (or should) - only show me the valid software for my phone. That never happened.

I created a Nokia account. And yet whenever I logged in, I had to drill down to E71. Nokia knew that I had only registered one phone, and yet their site couldn't remember which phone it was. First, I thought they didn't care. Then I realized they just couldn't track it - these people don't know how to design websites, stores or good web services.

And then I realized the worst thing of all - that the focus on web services (and other phone OS versions) was causing the company to NOT focus on their phones. And that is when I dumped the Nokia E71 and went to the iPhone. The lack of execution on the web services did not keep me with Nokia - it drove me away.

So, I would argue that Nokia will continue to dominate the cheaper, low margin business. But right now, they are in a death spiral as people flock to the high-end phones. That means that they have less capital to invest in the high-end. Developers are not working as hard on Symbian products as RIM and Apple. Consumer preferences are shifting away from SMS and more to data-oriented services. (I personally use IP-based SMS and Instant Messenger. RIM has worked the IM space really well.) Nokia used to be a forward looking company - I agree. Today, they are an also-ran with some dark days ahead.

If they can't keep me for a customer - someone willing to try hard and make it work - then they won't get the less sophisticated customer either.

Emilian

A picture is worth a thousand words no ? You could use some pictures / charts to display some of the info you want. Might make the reading more pleasant too.

Winstrol

Maybe the marketing campaigns are different in different countries

DurhamKate20

It's perfect that people are able to receive the home loans moreover, this opens new chances.

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