Chart: Internet Access by Device

As our readers know, every now and then I like to post a chart and tease out the highlights. Today, I want to do that with some updated data. Across many global markets, consumers were asked which devices they have accessed the Internet on, either through an app or browser, over the past 30 days. This data is updated frequently so we can track the growth of internet access by device over time.

Screen Shot 2014-11-07 at 9.30.04 AM

Mobile/Smartphones: This is be obvious and we can expect continued growth in internet access by smartphones for the foreseeable future.

Tablets: Tablets remain the other growth area. Given the slowdown of tablet growth overall, we can make a few observations. The first is the tablet is continuing to steal internet time from other devices, mainly the PC. The second is the tablet market is actually growing. However, it is doing so by the secondary market. Meaning that many of those initial rush of iPad buyers are continuing to hand down older iPads to other family members as they upgrade their iPad. Since this upgrade isn’t happening all at once but is trickling in over time, we see slower sales but larger use of tablets. Another is the continued explosive growth we see of Chinese white box tablets. In certain markets like Russia, India, Mexico, Brazil, and to some degree China, these low cost, no name brand tablets are quite popular. Most are dedicated game players or portable TVs, but internet access at some level should also be assumed. This is happening to a degree in the US as IDC highlighted RCA being in the top 5 of tablet vendors for Q3 2014.

As I see this data on tablets and see quarter after quarter of more people say they are getting on the internet with a tablet than the quarter before, it shows us the category is still viable and still growing.

PC/Work PC: I like that these two categories are separated in the survey. It helps us get an understanding of how much larger the consumer PC segment is vs. those who use a PC at work. When you look at both numbers, it is possible to interpret their lines and believe the PC market is simply not growing. This certainly looks to be the case. We are not adding brand new PC users at anywhere near the rate we once were. Also, as I alluded above, more PC users’ internet use is likely shifting to other devices.

I point this out in many of my focused PC industry analysis reports through my firm Creative Strategies. What we discover when we study PC behavior in both consumer and enterprise environments is the device is becoming a much more focused product than a general purpose one. People use it for specific tasks and have now defined what tasks it is better for vs. others. A great example of this is Facebook. In our studies, we found over 75% of daily US Facebook users access Facebook on their phone but while sitting at their work PC. Facebook has a browser based version so why not just use it? We find people simply prefer the mobile version, so we see this dual use of a PC and smartphone at the same time. Responses we’ve heard were that it was faster, more private, more convenient, and they could use the mobile app to get a particular task done, even though they could have done the same thing on the PC. If general purpose computing moves from the PC to devices like the tablet and even more so to the smartphone, it will bring dramatic implications to the PC ecosystem.

Television: Increasingly, more people are accessing the internet from their TV. It is important to note in this data that a game console or set top box is included. This is not referring to a dedicated connected internet TV, but to the use case of connecting to the internet in some way from your TV. Clearly Netflix, online console gaming, and other use cases drive this, but the fact it is slowly increasing tell us quite a bit about the role the TV will play going forward and the internet services are poised to be monetized from the big screen.

Given this survey comes from over 30,000 responses, what the lines also show approximates volumes. The higher the percentage of the line, the more people using the device to access the internet. Like most surveys, it does not include mobile only consumers, but we can be assured there are more people accessing the internet from a mobile device than a PC, even though these lines don’t show that. What this chart sheds light on is what the internet by device landscape looks like in the multi-screen user world. The “internet embedded into everything” is the theme. What devices dominate its usage is the interesting part to watch going forward.

The Myth of BYOD

I’ve caught wind of an interesting trend, or perhaps I should say a counter trend. Recently, I have had a number of discussions with many Fortune 500 CIOs and CTOs about the topic of BYOD. What came out of these conversations was very intriguing. Nearly all of them who have deployed some type of BYOD initiative remarked it hadn’t taken off as well as they thought. Meaning it was still a small overall percentage of their hardware deployments, particularly PCs. They stated for many of their mobile workers, they were still perfectly happy having their IT department equip them with their work PC.

What this is not suggesting is that BYOD is irrelevant. It is still and will be an important program. But as we chatted about these observations, some of the insight as to why BYOD PC programs were slow to take off became clear. It appears as though employees are getting savvy to the work tech vs. home tech ecosystem. The multi-device era has matured the market in a way where more and more employees are happy with a work PC given to them and fully managed by their IT department, and keeping that device separate from their home technology ecosystem. Part of this I feel has to do with security. Having a work PC is already hassle enough when you have an overly aggressive IT department. What I believe many employees are realizing is there is a security risk to both parties. Using the same work PC for work tasks and personal tasks, and the hassle involved with keeping both separate and managed on the same device securely may be turning out to be more struggle than it is worth. It seems as though more and more employees are happy to simply let their IT departments provide them with hardware and manage it as they see fit and use their own hardware at home for personal life. It is still too early to make too many conclusions regarding the BYOD programs to date, but the early insight being gained from these programs is very interesting.

While this initial insight is related to enterprise PC deployments, where BYOD is critical is with mobile. It is my belief, and has been for some time, that employees will be more particular when it comes to their mobile device than their work PC. Employees are bringing whatever smartphones they choose to work and IT is ready to support it. PCs may stay largely provided by IT but smartphones will not. BYOD appears to be more of a myth, for now, with PCs but more employees will bring their own smartphones and want to have access to corporate network apps, email, and other needed functions for their job. This is an area that makes the Apple/IBM partnership interesting.

Apple and IBM are emphasizing mobile first. When it comes to a soup to nuts hardware, software, and services targeting the enterprise, Microsoft and their ecosystem has a compelling story. Now with Apple’s hardware, IBM can layer their software and services on top and offer their own competitive full solution. The difference is Microsoft is still PC first in their philosophy. From our research and discussions with many IT groups, it is becoming clear there is a difference in philosophies in how mobile devices and PCs are managed and deployed.

Understanding the role of hardware in the enterprise is essential. The initial premise of BYOD does not seem to be playing out the way many thought, especially with regards to PCs. The multi-device era has complicated the landscape but also given us much deeper insight into the best way people use computing hardware as a part of their work and personal life.

The Smartphone Is Not Merging With the PC

Behold the pot, bathtub and swimming pool. They all contain water. They are the same. ~ Horace Dediu (@asymco)

On July 9, 2014, Walt Mossberg published an article entitled: “How the PC Is Merging With the Smartphone.”

(I)n the past month, it has become clear that a serious effort has begun to merge the smartphone and the PC. ~ Walt Mossberg

To “merge” means:

    merge |mərj| verb “combine or cause to combine to form a single entity”

[pullquote]Writing is easy. All you have to do is cross out the wrong words. ~ Mark Twain[/pullquote]

I respectfully, but vehemently, disagree with Mr. Mossberg’s observation that the smartphone and the PC are merging. Not only aren’t they merging but they — and their underlying design philosophies — are diverging.

Starting Far Apart

Apple, Google and Microsoft are three of the largest players in personal computing. However, their design philosophies start from very different places.

Apple, Google, and Microsoft each offer all three things: devices, services, and platforms. But each has a different starting point. With Apple it’s the device. With Microsoft it’s the platform. With Google it’s the services. ~ John Gruber

Apple, Google and Microsoft not only start from different places, they are also headed in three very different directions.

Moving Further Apart

Google wants you signed into Google services on all your devices, from phones to tablets to PCs. ~ John Gruber

Google may well be offering one experience at the services layer, but that is not the same as merging the smartphone and the PC and it is not at all the same as what Apple and Microsoft are doing.

Microsoft wants you to run Windows on all your devices, from phones to tablets to PCs. ~ John Gruber

Microsoft may well WANT to run a single Windows operating system on all of your devices, but so far their efforts to create one operating system that runs on phones, tablets, and desktops has actually caused Windows to splinter into three operating systems: one for the phone (Windows Phone 8); one for the tablet (Metro) and one for the desktop (Windows 8). Calling them all by one name does not make them all one thing.

[pullquote]There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter Drucker[/pullquote]

Further, while Microsoft may well be attempting to merge the tablet and the PC at the hardware layer 1) that is not the same as merging the smartphone and the PC; 2) the paltry sales numbers for their 2-in-1 devices weigh against, not for, the proposition that merging is the way of the future; and 3) Microsoft’s efforts are not at all the same as what Apple and Google are doing.

Apple wants you to buy iPhones, iPads, and Macs. ~ John Gruber

Apple is not merging anywhere — not at the services layer, not at the operating system layer, and most especially not at the hardware layer.

(Apple chief of design, Jony) Ive demands that the hardware be true to itself—its purpose, its materials, the way it looks, and the way it feels. ~ John Siracusa

Not only aren’t iPhones and Macs merging, but Apple’s continuity features allow Apple to draw bright lines between their phone, their tablet and and their desktop offerings.

Apple’s vision is about harnessing the uniqueness of each device rather than converging them ~ Ben Bajarin (@BenBajarin)

Further, what Apple is doing is not at all the same as what Google and Microsoft are doing.

Whatever This Is, It’s Not Merging

  1. A gardener uses a trowel when he gardens and a shovel when he digs. He doesn’t think, “Hey, the trowel and the shovel are merging because they both dig holes!”
  2. A homeowner uses a watering can to water the flowers in her home and a hose to water the flowers on her porch. She doesn’t think, “Hey, the watering can and the hose are merging because they both water flowers!”
  3. A restaurant employee washes the floor with water from a bucket and washes dishes with water in a sink. He doesn’t think, “Hey, the bucket and the sink are merging because they both do washing!”


The beginning of wisdom is a definition of terms. ~ Socrates

Is this just a question of semantics? Well, even if it was, semantics matters. Semantics is: “The branch of linguistics and logic concerned with meaning.”

A definition is the enclosing a wilderness of idea within a wall of words. ~ Samuel Butler

However, this isn’t just semantics. This is a distinction with a difference.

The difference between the right word and the almost right word is the difference between lightning and a lightning bug. ~ Mark Twain

Nothing Is Merging

[pullquote]You cannot step into the same river twice. ~ Heraclitus[/pullquote]

Apple is improving the workflow between its devices. Workflow is, by definition, a flow. Saying that workflow is “merging” is like saying that a river is a lake. The improved workflow between Apple’s devices allows those devices to be true to themselves and to grow ever more distinct, one from the other. At Apple, the smartphone and the PC are not merging.

Google is improving its services. It wants you to think of phones, tablets and PCs as portals used to peer into the Cloud — the Google Cloud that is — where all your content and apps, reside. Google may not care which portal you use, but they have no interest in merging those portals. At Google, the smartphone and the PC are not merging.

[pullquote]Facts do not cease to exist because they are ignored. ~ Aldous Huxley[/pullquote]

Microsoft is improving nothing. They are forcing the merger of the tablet and the PC because their Windows’ business model demands it. They have not learned — or more likely, they refuse to acknowledge — that the mouse driven user input suitable for the desktop is unsuitable for, and incompatible with, the touch driven user input of the tablet. At Microsoft, the smartphone and the PC are not merging.

Caption: Leaked image of the Microsoft Windows 8.1 Pro Surface Axe/Razor 2-in-1 Hybrid Shaving Combo Device.


Microsoft’s muddled personal computing design is going nowhere, but the design philosophies of Google and Apple are unique and they are rapidly diverging, rather than merging.

Normally, in mature markets, products grow closer and closer to one another as each competitor borrows the best ideas of the other and incorporates them into their own product or service. That has happened with Mac and Windows over the past thirty years and with iOS, Android and Windows Phone over the past seven years. However, Apple and Google are now rapidly moving in opposite directions.

Apple is pushing all of the value down into their devices. Google is pushing all the value up into their services. This is going to have dramatic, long-term, consequences.

Google will almost certainly excel wherever machine learning matters most: maps, voice translation, predictive services and who knows what else.

Apple will almost certainly excel at any task that requires rich applications and with any entity or institution (education, business, government) that inhabits the “long tail” of app creation (i.e., specialized or proprietary apps) and demands robust security and privacy.

Suggesting that the smartphone is merging with the PC obscures this reality. It implies that the overall approaches of Apple, Google and Microsoft are drawing closer together when, in fact, they are not.

Henry Ford said:

The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.

I get the feeling that both Google AND Apple fit into this category of business. Each feels that they know best and each is moving on without much regard for the what the other is doing. Focusing on merging is a distraction. What we need to be focusing on is what is emerging from these two great titans of tech.


A dog goes into a newspaper to place an advertisement.

“What do you want your ad to say?” asks the newspaper clerk.

“Woof Woof Woof. Woof Woof Woof. Woof Woof Woof,” says the dog.

The newspaper clerk adds up the words and says, “Okay, that’s nine words. We charge the same for up to ten words. You could add another ‘woof’ for no extra money.”

The dog says, “But that wouldn’t make any sense.”

Walt Mossberg is not just a good tech writer, he’s one of the very best there is. However, on this one occasion, I believe he added one “woof” too many.

How The Tablet Made An Ass Of The PC

[pullquote]If you can’t explain it to a six year old, you don’t understand it yourself. ~ Einstein[/pullquote]

Many tech watchers STILL don’t understand what a “disruptive innovation” is. I’m no Einstein, but I’m going to try to explain it in terms that even a six year old could understand (and with pretty pictures too!).

A disruptive innovation is:

an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.

If that still doesn’t resonate with you, that’s okay, because we’ve just begun and…

Perplexity is the beginning of knowledge. ~ Khalil Gibran

(Author’s Note: For the sake of simplicity, I’ll be using the term “PC” to describe both Notebook and Desktop computers, i.e, any computer with an attached keyboard.)

The Analogy

[pullquote]If the King’s English was good enough for Jesus, it’s good enough for me! ~ Ma Ferguson, former governor of Texas[/pullquote]

The new often disrupts the old, which is somewhat akin to saying that the new often makes an ass out of the old, which brings us to my analogy:

The PC is like an Elephant and the Tablet is like an Ass (in the biblical sense).

ignorant donkey

I’ll bet you didn’t see that one coming.


[pullquote]The absence of alternatives clears the mind marvelously. ~ Henry Kissinger[/pullquote]

Suspend belief for a moment and imagine that the PC is an Elephant and that the Tablet is an Ass. (That wasn’t so hard, now was it?) Imagine further that you lived in a land where the only pack animals were Elephants.

If you only have one tool, then that is the tool that you will use for most every task. If you only have one pack animal, i.e., the Elephant, then that is the pack animal that you will use for most every task. (Similarly, if you only have one type of computer, i.e., the PC, then that is the computer that you will use for most every computing task.)


Now imagine that the Ass (Tablet) is introduced into your Elephant-only (PC-only) ecosystem. If you were a purveyor of Elephants (PCs), would you feel threatened? Would you even care?

Of course not.

  1. An Ass can carry goods. So can an Elephant.
  2. An Ass can give people rides. So can an Elephant.
  3. An Ass can pull a cart. So can an Elephant.


There is nothing that an Ass (Tablet) can do that an Elephant (PC) cannot do and do better. Not only that, but an Elephant (PC) can do many things that an Ass simply cannot do at all.

— An Elephant (PC) is far more powerful than an Ass (Tablet).

— An Elephant (PC) can pull tree stumps and clear forests. Try doing that on your Ass (Tablet).

— An Elephant (PC) comes with special options like a built-in trunk. All you get with a Donkey (Tablet) is a bare Ass.

— An Elephant (PC) is so big, it can make its own shade.

Elephant in the desert with umbrella.

— An Elephant (PC) is self-cleaning. (Let’s face facts — sometimes Donkeys stink).

Elephant bathing, Kerala, India

— An Elephant (PC) can carry heavy loads and add additional storage.

3d elephant isolated on white

— An Elephant (PC) will figuratively — and literally — go to war for you.

War Elephant - Antique Greece/Persia

In other words, the owners and purveyors of Elephants (PCs) would never have any fear of the Ass (Tablet). They would, instead, mock it. They would treat it with disdain and consider it beneath contempt.

So why on earth would anyone ever consider using an Ass (Tablet) instead of an Elephant (PC)?

Reader Alert: This is the part where we try to understand why disruption occurs.

[pullquote]Q: What’s that gooey stuff between an elephant’s toes?
A: Slow running people.[/pullquote]

An Ass is:

  1. Cheaper to buy;
  2. Cheaper to feed;
  3. Easier to stable;
  4. Easier to train;
  5. Easier to discipline;
  6. Easier to pack; and
  7. Easier to ride.

In other words, an Ass (Tablet) does most everything you use an Elephant (PC) for and does it cheaper and easier too.

The Four Stages Of Disruption


[pullquote]The speed of a runaway horse counts for nothing. ~ Jean Cocteau[/pullquote]

The problem starts when the Elephant (PC) begins to over serve its customer’s needs. The consumer only needs and uses a smidgen of the Elephant’s (PC’s) many and mighty powers. A feature means NOTHING to the end user if it isn’t useful. In fact, it’s a burden, both in added price and complexity.


At first glance, the Ass (Tablet) SEEMS to be far inferior to the Elephant (PC) but, in reality, the Ass has several disruptive advantages — including lower price and lower complexity — over the Elephant (PC).

The Elephant (PC) can do everything that an Ass (Tablet) can do but an Ass (Tablet) can do everything that the consumer wants and needs to do and it can do it easier and cheaper too.


“But, but, but,” you say, “there are some tasks that the Ass (Tablet) simply CAN NOT do and that ONLY an Elephant (PC) can do. That’s a deal breaker!

True enough.

However, it turns out that if 96% of consumers only need the power of the Elephant (PC) 4% of the time, then they will find a work-around that allows them to get by with the cheaper and easier to use Ass (Tablet). That’s the 4% solution ((Why 4%? It’s the Pareto Principle (80/20 rule), redux. It’s 20% of the remaining 20%.)) .

For example, if you only need to use an Elephant once in a great while, you can simply borrow one from a neighbor, or rent one, or get by with the aging one that you already own.

[pullquote]I owe my success to having listened respectfully to the very best advice, and then going away and doing the exact opposite. ~ G. K. Chesterton[/pullquote]

This is highly counter-intuitive, yet crucial to the understanding of disruption. The Ass (Tablet) doesn’t need to be all things to all people. It only needs to be most things to most people.


Over served customers — gradually at first, then more and more rapidly — gravitate to the seemingly inferior solution that:

1) Best meets their needs;
2) Is cheaper; and
3) Is easier.

The customers leak away from the incumbent — whether it be an Elephant or a PC — until the incumbent is left high and dry, serving only the 4%; the “power users”; who truly do need the added power — and the added cost and complexity — that the incumbent’s product provides.


[pullquote]The obvious is that which is never seen until someone expresses it simply. ~ Khalil Gibran[/pullquote]

The reason people don’t see disruption coming is because they compare one product to another when they should, instead, be comparing the needs of the consumer to the product that best serves those needs.

If you compare an Elephant (PC) to an Ass (Tablet), there is no question that the Elephant (PC) is superior. But that’s missing the point entirely. Because if you compare the task at hand – say, riding into town, or sending an email – to the available tools, then the lowly Ass (Tablet) kicks the Elephant’s (PC’s) keister ever time.


Should Apple Make A Larger iPhone?

iphone_bigThere has been chatter of late around Apple’s plans for the iPhone. Some suggest they need to make a more affordable version of the iPhone. Notice I didn’t say cheap. The logic for a more affordable iPhone is that it will open the door to new customers, especially in emerging markets, who can’t afford the high price of an unsubsidized iPhone. There is a lot of merit to this argument and if done right it can be a healthy addition to the iPhone product line.

The other speculation as of late is that Apple could make an even larger iPhone than the current 4” iPhone 5. This would fall into the larger phone category (some call it Phablets) and would give Apple a competitive iPhone for those who desire larger screens in the 4.7-5.5” range. Apple making a larger iPhone is a newer element to the discussion but one that is worth some thought for those of us who analyze competitive trends.

No matter how you slice it, I believe the time has come for Apple to expand the current iPhone line. This would mean releasing two or three current generation devices in the same year each targeted at different audiences. Apple does this now with the Mac line where they have 11”, 13”, and 15” products in their lineup. Arguably they also do this with the iPad line offering both the 4th generation larger screen iPad and the iPad Mini. I believe it is time this same thinking comes to the iPhone.

Although I think the idea of a more affordable iPhone is compelling, if I had to choose the strategy for either the more affordable iPhone or a larger screen size version for the first product to expand the lineup, I would choose the larger iPhone.

My reason for this logic is the ecosystem. As we have learned from Android phones, focusing on the low-end lowers engagement and ecosystem investment. Those who have cost constraints simply don’t spend as much in an ecosystem. A large question looms as to whether iOS would lead those in the cost conscious category to higher engagement or ecosystem investment. But the evidence we have so far is that the lower end of the market uses these devices very different than the tiers above them. And not in ways that lead to loyalty or deeper ecosystem investment.

Ecosystem investment is important to Apple. Horace Deidu and analyst at Asymco tweeted out the following data yesterday:

Also in a tweet earlier than that one Horace estimated that gross margin for iTunes is now 15%-17%. This is why for the current growth trend and competitive strategy for Apple, focusing the iPhone lines on segments who can and will invest in the ecosystem is important.

An expanded current generation iPhone line not only gives more customers a path to Apple’s door, it gives more customers an opportunity to invest in Apple’s ecosystem.

Now turning our attention to the topic of Apple making a larger iPhone. I wrote on Friday about my experience thus far with the Galaxy Note II. I made many conclusions in that article and the primary being that larger phones, those above 5” are actually more tablet like than phone like. Yet the value of a pocketable phone/tablet is apparent. The question that needs answering is whether or not the market for larger phones (Phablets) is big enough for a company looking for mass market products—like Apple— to care about. I believe the answer to that question is yes.

Is The Market Large Enough for Large Phones?

The Galaxy Note I sold about 10 million devices world wide in 2012. They will most likely sell at least 20 million this year and most well reasoned analysis I have seen project a steady growth trend for these larger size smart phones. The reasons are simple.

For many markets people can’t afford a smart phone and a tablet. For many markets, especially emerging ones, a product that can merge the benefits of a phone and a tablet is a compelling value proposition. We all know that the phone capabilities of any device is simply just an app, but the portability or pocket-ability is important for a device that is with us 24/7. This is what makes the larger phones a legitimate category. Just how big a percentage of the overall smartphone market large phones are, is a project I am still undergoing. I believe it is larger than 10% but how much larger I am not yet sure. Even if it is only 10% of the overall growing smartphone base of the next few years, it would be in the hundreds of millions.

For more analysis on the value this form factor brings to market read my column on the Galaxy Note II.

Room to Innovate For Larger Devices

Using the Note II, and for that matter the iPad Mini, has led me to think about those form factors as unique sizes to solve challenges for one-handed operation. 5-7” devices, whether phone or tablet, are still manageable to hold and do some operation with one hand. Samsung included some software around the keyboard and keypad to make one-handed operation easy but the device is still to large for full ease of one-handed operation. I genuinely believe this form factor presents some unique opportunities for innovation.

One way could be by using voice, and in Apple’s case Siri. Our research has continually returned many of the primary use cases for Siri not just being search but also automation. Set reminder, add a calendar event, post to Facebook, send a tweet, set an alarm, etc., are all examples of common automation tasks from heavy Siri users. One simple way to address some of the issues with one-handed operation on larger screen devices will be around voice.

Another is sensors. As sensor technology evolves we will be able to embed these sensors into the bezel of the larger devices. The Galaxy Note II was almost impossible for me to reach the back button with just one hand. The back button is a key function of Android and is needed throughout much of its UI. A sensor solution could allow me to have a back button function by simply taping the side of the device. Scrolling was feasible but not ideal on the Note II. This is also a use case I found was capable with the iPad Mini but not as much with the iPad. Sensors could be embed into the sides of the device and allow a slide of the finger down the side to act as the scroll function. There are many more opportunities for sensor control than I can get into here, but I believe this is an area for innovation and improvement. By Apple innovating to solve some one-handed operation problems for a larger iPhone, they can leverage those innovations for iPad as well.

In a market the size of smartphones, staying competitive will mean offering a range of devices. The smartphone market is mature enough that it has begun to segment. An iPhone designed to serve the market that wants a larger screen, which can add to more productive and more media rich experiences in a pocketable form factor, is a good move in my opinion. One that Apple could do right and again put them years ahead of the competition.

Despite Competition, Apple’s US Market Share Gains

Happy Friday to anyone working today–or not working–and poking around the inter webs. Although it’s the Friday before the holiday break, some interesting data came out from the Kantar Worldpanel today that I thought I would highlight. Kantar’s latest smartphone sales data is showing that despite the increased competition, Apple has actually grown its smartphone platform market share in the United States.

Global Consumer Insight Director Dominic Sunnebo stated:

“Apple has reached a major milestone in the US by passing the 50% share mark for the first time, with further gains expected to be made during December.”

Other data from the report highlights platform share in other parts of the world and the various changes. However, despite all the questioning I continually see from the investor community of whether Apple can remain competitive despite increased competition, increase in latest Android smartphone subsidies from carriers, other platforms like Windows Phone 8 emerging, yet amidst those questions and what seems like steep odds, Apple is actually gaining market share.

Keep in mind this is all being done with a limited iPhone lineup. One current generation, and two legacy products still selling well in the marketplace. I’ve said for a while now that Apple is competing against an army of Android devices. The continual sales numbers and marketplace demand for the iPhone remains incredibly impressive despite the massive Android army they are competing with.

That alone is enough to show this market is not acting like many of the pundits and financial analysts assume. Many assume this market looks like the PC industry of old where the market is dominated by one single platform. Wrong on every level.

Take a deeper look at this chart (click on it to enlarge it) as it is very telling in a number of areas. First iOS grew from 35% to 53% in the US market, a change of 17.5% from the same period a year ago. Android went from 52.8% to 41.9% in the US market, a decline of 10.9%. The US market is arguably the most mature smartphone market on the planet. I wonder the degree other markets, as they mature, begin to look like the US, keeping in mind the carriers and how and what devices they subsidize over others. All things equal, however, may paint a similar picture. And don’t think for a second the US an insignificant market and/or litmus test for others. No sane executive at any OEMs believes that and in fact I continually hear from them how important the US market is.

This is a huge market and keep in mind the total addressable market for smartphones is not static but it is dynamic. It is growing by hundreds of millions of new customers every year and will do so for at least the next five years. So to say Apple has increased market share in the US, means that they are also attracting new customers and benefiting from the TAM expansion, arguably more than any current vendor.

I’m yet to write my predictions for 2013, and I will the week following the holiday break. But I believe the smartphone market will look very different this time next year and perhaps not in some of the ways assumed by the pundits.

Verizon, Nokia and the Quest for Differentiation

My first portable cellphone was the size of a brick and weighed almost 2 pounds. And it was dumb. All it did was make calls. By the mid 1990’s Verizon started creating what we now call a feature phone and created its own mini OS, which allowed Verizon to create dedicated apps of their own as well as give third party software developers the tools to also create apps for these phones. This was important since it gave Verizon a controlled eco-system of hardware and software that allowed it to significantly differentiate their cell phones over the competitors.

Of course, the apps they had back then were primitive compared to today’s smart phone applications but they did offer their customer’s games, better contact information and simple calendars, etc. But this was a pioneering move in cell phones and helped Verizon grow this business exponentially. However, in this mode, Verizon had complete control of their eco-system destiny and that made it difficult for third party software vendors to break into Verizon’s apps world in any meaningful way.

The new era of smartphones wrestled control of Verizon’s closed ecosystem away from them and other competitors doing similar things since these phones had an open OS and more importantly, an open approach to creating and selling apps directly to the customer. Some think that Apple’s ecosystem is closed but it really is a pretty open program in that third party software developers can and do create a plethora of iOS apps and Apple freely pays them directly for these apps when consumers buy them. Yes, Apple does veto some apps mostly for inappropriate content, but theirs is a very open approach compared to what Verizon had back in the heyday of feature phones.

One of the big problems with an open approach, whether it is with the Android OS or the Windows OS, is that both of these operating systems go to the vendors with identical user interfaces, thus creating what we like to call a sea of sameness. That means that an Android phone or a Windows Mobile OS phone all look the same since they use the same user interface. At the hardware level the handset vendor can try to innovate, but in most cases the OS GUI is untouched. This is especially true with Windows Mobile phones, although companies like HTC, Amazon and a few others have added their own UI layer on top of Android’s GUI to try and distinguish themselves from the competition.

Not to be undone by this turn of events, Verizon is working hard with some of their handset partners to make their phones more unique and add more value to the users. A good example is the way they have worked with Nokia on the new Lumia 822. Verizon went to Nokia and asked them specifically to do a special version of the Lumia that could be sold for $149 and had features only available on this phone.

Nokia worked hard with Verizon to accommodate this request and has added three key features that help this low cost smartphone stand out. The first is something called Nokia Drive. This is a turn-by-turn voice navigation service that uses their stellar Navteq maps to deliver a rich navigation solution to Lumia 822 owners. It will work in 89 countries and while in beta now, it will be released officially soon. This service also has something called My Commute that, over time, learns the directions to your office or workplace or any other heavily trafficked route and automatically gives directions to these places with its voice navigation feature as needed.

The second special thing Nokia brings to Verizon with this phone that is not available to others is something they call City Lens. This is an augmented reality application that works with the mapping program that overlays specific information about a place, restaurant or landmark to give users a richer mapping experience. Verizon sources say that this is first step in their augmented reality software and will make it even better over time to give users all types of data or information about locations they are visiting.

And the third thing that is specifically for the Lumia 822 is a new Nokia streaming music service called Nokia Music. It is subscription free and has 16 million tracks or 10 times more tracks then Pandora. Also no account is needed and works right out of the box. You can listen up to 12 hours of music free. You can also just tap and scroll in something called the gig finder, which seeks out the gigs or details of a your favorite band’s concerts schedule and locations.

I have been testing the Nokia Lumia 822 for a while now and am pretty impressed how much is packed into a $149.00 smart phone. The core of the OS is Windows Phone 8 with all of its new features such as live tiles and the special protected area for family’s and kids. But these new special features from Nokia add a richer dimension that gives customers a great experience that comes close to equaling what is available on more expensive smartphones.

What Verizon is doing with Nokia is significant. In a world of smartphones where the OS and UI are identical, doing things that help differentiate the phones and services over the networks will be an important key for success.

Our Future Smart World

One of the things our firm does for our clients in the technology industry is help them think about the future. This one thing alone is one my favorite things about doing trend forecasting, future scenario planning, and analysis. In fact, many of my absolute favorite types of conversations are ones that include extensive use of words like someday and in the future. However, it comes with a downside. Spending quite a bit of time envisioning the future leads can often lead to disappointing experiences with technology in the present. Mostly because we dream big about all the possibilities with technology and how smart technology will continue to solve problems and make our lives better. This happens to a degree today but not to the extent we envision. It all comes down to dreaming about what is possible with technology and realizing we are no where near having our smart devices fulfill their potential.

I see so much more potential for smartphones, smart TV’s, the smart home, smart health, traditional computing products, game consoles, cloud services, etc., than exists today. However, for some reason tablets are the category exciting me the most and not disappointing me. I can only conclude the only reason why that is the case is because tablets are so new and still in the process of defining their roles in the lives of consumers.

Smart Devices Aren’t Really Smart–Yet

This perhaps is one of the things that frustrates me the most. I know we are pushing these devices to their computing limits today but I know truly smart devices are not too far off. My point on this topic is that today devices we call smart contain no real artificial or adaptive intelligence. The only reason my smartphone or tablet may be different than yours is because I put the time in to personalize it. I don’t go buy a new smart device, let it learn about it me, and then have the device customize the experience for my unique uses. For it to be smart, in most cases I have to add the intelligence to make it smart. Someday this will be the case.

To illustrate this point I would like to use App stores as an example. You and I may use our smartphone in entirely different ways. A smartphone can represent a number of different things to a number of different consumers. Take Apple’s app store for example. If two consumers open the app store and look at the featured section for example, they will see exactly the same thing. Yet how these two consumers use this phone may be polar opposites; they see the same static information. The only time this changes is via search and perhaps Apple’s Genius suggestions ( which I have never found useful for my own needs.)

If my smartphone was actually smart when I went “app store shopping” I would be presented with a fresh and dynamic view of applications based on the things I have primarily been using my phone for lately. This would be a fresh personalized app shopping experience that could change on a daily, weekly, or monthly time frame depending on the things I have been doing the most lately with my phone. Or perhaps even change with the seasons. When Football season starts, my smart device would know I like football and specifically the 49ers. I would like to see whats new in software for Football experiences like games, news, and more.

Of course one may say that this is the point of search. I agree, however search is best, in my opinion, when you have a general idea what you are looking for. It is less useful when you have a vague idea or no idea and are in a browsing mode. I do this quite a bit as I just open the app store to do some general browsing. I would love a more customized app store experience based on my unique uses with my smart device. It is these kinds of adaptive and dynamic experiences with smart devices that are unique to my personal habits and needs that I am looking forward to with the next generation of smart technology.

What it will really boils down to is that our smart devices will move from being useful to also being helpful. That, I feel is the root, of the artificial intelligence element of the smart device future. A world where smart technology is helpful as well as useful is a vision I can get behind. And by helpful I mean able to anticipate the user needs and preferences and offer up assistance based on context and situation.

Right now we are in the stage where our personal computing is more personalized by me than dynamically customized by the devices intelligence in order to become truly personal. In the future I assume the ideal scenario will be where both exist. There will be times where I want the assistance of the device to customize or anticipate my needs, wants, and desires in any situation, and other times where I want to spend the time to customize it myself.

Many things, from more advanced semiconductors, better predictive software and artificial intelligence, and cloud technology need to come together to make this future a reality. As I survey the landscape today we still have a long way to go before this vision of the future is realized, and I can’t wait until this happens.

The Pandora Box of Mobile – The Sky’s the Limit

If you were at the Web 2.0 Summit in San Francisco last week, you probably heard Pandora Founder Tim Westergren share that SEVENTY PERCENT of their usage is through mobile venues.  Yes.  70%.  And having created a super-successful digital space for themselves, Pandora doesn’t see Spotify, iTunes, or any other competition eating their lunch any time soon.

Tim Westergren shared the following about the portability of the iPhone and its impact on Pandora, “Overnight it transformed our business. We almost doubled our growth rate. It changed Pandora from being desktop computer radio to being like real radio.”

One can’t completely appreciate the enormous (and growing) impact of the mobile industry without really understanding its past. I recently interviewed my longtime colleague, Anthony Stonefield, a leader in the mobile and digital industries, who literally pioneered downloadable song distribution in the 90’s and popularized ringtones worldwide in 2000 (creating today’s $8 billion ringtone market). Anthony also executive produced the worldwide mobile program for the Live 8 event, and the mobile charity part of Melissa Ethridge’s “I Run for Life” breast cancer campaign, among others. I asked Anthony Stonefield where he thought super distribution will take us in the next few yeas and to talk about SmartPhones and their broad effect on users.

“Smartphones put everything that you had on your PC into your hand… I think what’s happening now is that we’re unlocking the true internet. Until today, we have always thought that we are driving the web, but now, SmartPhones are reaching down into the emerging markets, to the next several billion individuals, and these people are creating revolutions, changing the face of the planet, because they’re getting their first real-time connection to the rest of the world, through SmartPhones.  As these phones infiltrate emerging markets, we have a whole new world to embrace… this is changing the nature of the human being and the way we interact.”

“My experience is that entertainment media is always consumed on impulse.  So the technical solutions are also part of this equation.  4G will eventually enable a distribution model that can scale, but until then, we face serious limitations of scale… 4G has a way to go before it can provide viable, reliable user experiences, but it does enable a way to discover and present media very rapidly.”

You can hear the entire interview here.

Getting back to the future, so to speak, Pandora’s founder explained at the Web 2.0 Summit that Pandora transformed from a simple desktop radio to a “real” radio when users started taking their iPhones and plugging them into their cars and living rooms.  It’s important to realize that, conceptually, Tim Westergren does not consider Pandora competition to Apple, Spotify or other subscription music services.  He considers it a streaming radio service, and does not charge for participation.

With revenue skyrocketing due to ad sales, similar to traditional radio, Pandora has forayed further into radio, actually developing programming and content – and perhaps even newscasts and “sports radio” broadcasts in the future, further solidifying them as the leader in this industry – at least for now.  Like any great industry, competitors WILL show up.  AOL, who could arguably be called the founder of online radio, relaunched its own product within hours of Westergren’s speech, with half of the audio commercials.  (And AOL Radio already carries ESPN Radio and ABC News stations.)

It’s hard to know if AOL will be the biggest contender in the mobile war, but with Smartphones becoming the “transistor radios” of the future, Pandora’s box is definitely filled with opportunity.