Market Overview 2010:
The state of the smartphone revolution
|Smartphones not only are advancing at a fast clip in terms of adding powerful features and capabilities, but the adoption curve by consumers is the steepest and fastest of all prior media technologies.
The old generation of “features phones” is quickly being pushed aside by smartphones, led by Apple with its iPhone models, RIM with its Blackberry devices, and a new wave of phones operating on Google’s Android mobile OS. Mobile-device world leader Nokia is struggling in the transition from being THE force in feature phones but could still become dominant with smartphone offerings for the global market.
News publishers reading the tea leaves correctly will gear up quickly to serve smartphone users.
In 1997, Ericsson introduced Penelope to the world as the first “smartphone.” Penelope featured a full keyboard and the ability for users to send and receive not just calls, but also faxes and e-mails. Ericsson began using the category name in 2000 with a larger release of the R380, the first phone to be marketed as a smartphone. The R380 earned its name for its capabilities beyond basic telephonic communications with features like e-mail and Web access, a calendar, and a touchscreen interface . Cellular devices without the ability to connect to the Internet and exchange data packages came to be known simply as feature phones.
Full-function operating systems that provide the user the functionality of a miniature laptop computer now define smartphones
Definitions for smartphones vary across the industry and continue to evolve over time. In the early 2000s, capabilities like e-mail and Web access differentiated a smartphone from other cellular phones. In 2010, the industry looks to the phone’s operating system and how third-party developers can design additional applications (a.k.a., ” apps“) for a phone device. Standardized, full-function operating systems that provide the user the functionality of a miniature laptop computer now define smartphones in contrast to less capable feature phones . Feature phones now take on a negative definition; they are everything that smartphones are not. While many feature phones now are able to access the Web and e-mail, they commonly run on proprietary operating systems designed specifically for the individual phone model. Support of third-party software is usually extremely limited and only accessible through Java or BREW software .
|Non-voice call uses of phones
U.S. adults, 18+, between April 2009 – May 2010
Source: Pew Research
Use of mobile phones for more than voice continues to increase steadily. comScore reports that mobile-phone users’ use of text messaging, mobile Web browsing, checking social networks, playing games, listening to music, and downloading applications all increased from January 2010 to April 2010 . (See chart below.) comScore research also found that the usage of touchscreen phone devices was up 159% in 2009 compared to 2008 . A May 2010 study of the U.S. market by Pew Research found that mobile-phone ownership remained mostly stable over the last year, but users were taking advantage of more of their phones’ capabilities compared with a similar point in 2009. And 40% of adults in 2010 used their mobile phones to access the Internet, send or receive e-mail, or use instant messaging, according to Pew, which compared to 32% of adults in 2009. Nine-in-ten young adults (18-29) own a mobile phone, Pew found, and “these young cell owners are significantly more likely than those in other age groups to engage in all of the mobile data applications we asked about in our survey” .
MOBILE CONTENT USAGE, U.S. MARKET (AGES 13+)
|3-month average ending April 2010 vs. 3-month average ending January 2010|
|Share (%) of U.S. mobile subscribers|
|Jan. 2010||April 2010||Pt. change|
|Total mobile subscribers||100%||100%||N/A|
|Sent text message to another phone||63.5%||64.6%||1.1|
|Used downloaded apps||26.7%||29.8%||3.1|
|Accessed social networking sites or blog||17.1%||19.9%||2.8|
|Listened to music on mobile phone||12.8%||13.8%||1.0|
With the wide variety of mobile apps already on the market, going beyond the capabilities of the hardware has been demonstrated. For example, the 2-year-old iPhone 3G lacks a video camera, unlike the later iPhone 3GS and iPhone 4, which both come with video-recording capability out of the box; however, several apps have been developed that permit the iPhone 3G to record video using its still-image camera. Different models for revenue, news distribution, alerting the user, and interacting with the content, the author, and other mobile users are emerging. A consensus is yet to form on issues such as how best to generate revenue and how to let the user interact with the content and other people. E-book readers and digital tablets offer even more options for users to consume and interact with content. Amazon’s Kindle, Barnes & Noble’s Nook, the Sony Reader, Apple’s iPad, and even more wireless devices offer more venues for developers to create applications for users.
While mobile apps are wildly popular, mobile Web sites developed using still-under-construction standards such as HTML5  and CSS3  and working across any smartphone platform already are emerging that can include many of the advanced features previously limited to stand-alone mobile apps. Apple Computer in mid 2010 began a high-profile campaign to encourage publishers and developers to create rich, app-like mobile Web sites using the still-evolving HTML5 and CSS3 standards, in part to discourage use of Adobe’s Flash technology for animation and video, which Apple does not support on its iPhone, iTouch, and iPad products.
These new platforms and emerging Web standards present many challenges to news organizations. How to present the same story across multiple formats without simply copying it to a smartphone screen is an important issue to address.
Akin to the all-knowing ‘Encyclopedia Galactica’ tablet in the ‘Hitchhiker’s Guide’ books, smartphones are becoming capable of functioning as do-almost-anything devices
While all styles of phone — smart and “less intelligent” — are evolving at a rapid pace in adopting new technology, smartphones like Apple’s iPhone, those running Google’s Android OS, Palm’s Pre, Research in Motion’s (RIM) Blackberry line, and Nokia’s models are leading the industry in the development of technologies and services that expand a device’s capability from a simple phone into a complex computer. E-mail and Web access are standard features on these smartphones, and now they have expanded to incorporate such technologies as GPS and geo-location, content creation and sharing (in the form of video, audio, and still visuals), from-the-handset e-commerce, and the most novel of all, so far, augmented reality. Each of these technologies expands users’ ability to share more content with their contacts as well as glean more information from their daily encounters.
Much as the late author Douglas Adams imagined the portable, all-knowing “Encyclopedia Galactica” tablet in his Hitchhikers Guide to the Galaxy novels, smartphones are becoming capable of functioning as do-almost-anything devices that assist with many parts of a user’s daily life. From being the alarm clock that stirs one from bed, to the medium for instant alerts of breaking news, to providing insight on the best destinations for a quick lunch (including directions to get there, other patrons’ reviews of the food, and alerts if other friends are dining at the same time), smartphone technology is moving in the direction of being capable of answering nearly any question a user may pose.
The reliance upon these devices inspires us to seek better presentations of news and information and to design better methods for sorting and discovering the information most important to the individual user.
Source: Nielsen Research
Adoption of smartphone technology is expanding at a rapid rate in developed markets like the United States, Europe, and East Asia. Gizmag.com’s Loz Blain tracked switching behavior in 2006 and 2007 and witnessed mobile-phone users switching from feature phones to smartphones as the technology was beginning to go mainstream . Smartphone penetration of the U.S. market stood at around 21% in Q4 2009, and is expected to go over 50% by Q3 2011, according to Nielsen research . The roll-out of 4G wireless infrastructure in the next few years is expected to accelerate the adoption of smartphone technology to even higher rates.
The smartphone market is extremely competitive, especially in the American market. Globally, a handful of major brands are fighting to become the dominant global force in smartphone handsets. Nokia currently enjoys the greatest global market share in all types of handsets (4Q 2009), with 34%, and in smartphones, with 39% . However, the Finnish handset giant in 2010 was struggling as its profits declined sharply as a result of keen competitive pressure. Nokia is pinning its future smartphone hopes on its Symbian 3 mobile operating system, which will power the company’s newest smartphones beginning in October 2010 . Apple and Google are fast on the rise with the iPhone and Android-based phones, respectively. While gaining fastest in the U.S., both Apple and Google look to make a run at Nokia globally.
|Most widely used smartphones in Q1 2010 according to sales (U.S.)
In the U.S. market, Nokia is not a significant presence with smartphones. RIM’s Blackberry devices currently are the most widely used smartphone handsets in the U.S.; they comprised 36% of smartphone sales in Q1 2010, followed by Google Android operating system phones at 28%, then Apple iPhone with 21%. Q1 2010 was the first reporting period where Android beat out Apple’s mobile OS phones in sales . Android-based phones are predicted by some analysts to make the biggest gains in the coming years and possibly erode Apple and RIM’s market share . Palm, Microsoft, HTC, Fujitsu, and others make up a small portion of smartphone shipments and are fighting to establish a larger, permanent presence in the smartphone market.
The rapid adoption of smartphone technology that has been witnessed, and which is expected to expand, inspires us to hypothesize and test the best methods to present in-depth news reporting on a wide variety of smartphones. We seek to establish the best system that will make the consumption process as seamless as possible, while integrating other communications devices to improve the experience of consuming and interacting with in-depth news. The opportunities presented by a device such as an iPhone to distribute news and information are beyond what is possible on the PC Internet due primarily to the mobility factor. With the steady trend of users spending more time on their phones, news organizations must deliver their product and interact with the mobile-news consumer through this new popular medium, or risk losing more of news consumers’ attention time and more revenue as advertisers move larger portions of their budgets to mobile.
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