Developer Interest in Android wanes as Hybrid Apps take over

HTML5 is taking over as the key enabler of Internet on mobile phones. The Internet of all things and cloud based convergence will be a key theme in this decade and it will be powered by a tight integration powered by APIs. The future will be about Platforms on which devices and services will be enabled will be powered by applications both native and web based. This post examines the platform, applications and developer intent.

A recent survey by Appcelerator finds that Apple iOS leads the developer interest charts with 89% intent. iPad comes a close second at 88%. On the Applications side, the loser is a very unlikely candidate: Android (79% on the Android phones,64% on the Tablets and 51% on the ICS platform). Appcelerator in its quarterly survey figures out that Android is gradually slipping down mobile programmers’ priority list, with HTML5 powered Web apps stepping in to as an answer to development difficulties. HTML5 ended up showing 67% positive intent from developers.

The wanning interest in Android platform is being attributed to the Fragmentation of the Android platform. The survey concludes that a lot of developers are unhappy with the fragmentation of the platform as well as the fragmentation of the monetization platform. Fragmentation impedes monetization on the Android platform. Customization for screen size, feature sizes, even skins that device manufacturers have put on top of that eats into resources allocation on the platform.

79% of developers think that HTML5 was going to be a component of people’s apps in 2012. Only 6% developers plan to make all-out Web app that runs in a browser; a much larger 72% plan a hybrid approach that wraps native interface elements around an app that relies on a browser engine behind the scenes. A hybrid has some native code on device, but content will be delivered via HTML.

For developers on open platforms it’s a tough line to walk. They want to have an open OS, but openness means they’re going to have fragmentation.

Web applications–those built with technologies such as HTML, CSS, and JavaScript that run using a browser engine–answer at least some of Google’s fragmentation challenges.Web apps rose slightly to 67 percent, passing Android tablets in the last quarter. Thus HTML poses the answer to fragmentation.

The good news for Android is that even while it has suffered recent declines it fares much better than Blackberry (16% Developer interest) and Windows (37% developer interest).

The good news for Google is that developer interest is on a rise for Web-App hybrid environment like the one running on its Chrome OS and Chromebooks.

2012: Make or Break for Yahoo!, Blackberry and Nokia

2012 promises to be a very tough year for Yahoo!, Blackberry and Nokia who having ruled their respective domains for a decade, suddenly risk redundancy due to lack of innovation. In the technology domain, historically, once an incumbent looses a pole position to challengers riding a new wave of technology, the incumbent no matter how large and dominant finds it difficult to come ahead and regain the leadership position. This has been the story with Yahoo!, Blackberry and Nokia.

• Blackberry and Nokia have eroded 81% and 50% of their m-cap in the last year and are 90% off from their historical highs. Same goes with Yahoo! which is 85% off from its historical highs in the heydays of dot com bubble.

• All three have leadership changes in recent/one year and have made a few hard choices and a few other risky ones to get back into reckoning. Can Stephen Elop turn around Nokia, Can Scott Thompson revive Yahoo and Who replaces Lazardis/Basilie at RIM (and more importantly how fast)

Value erosion* is the m-cap loss in last 1 year

• The Market position of Yahoo!, Nokia and Microsoft is vastly altered from 2 years back. Yahoo! is gradually loosing its No.2 spot to Microsoft and the search relevance in the overall picture. Nokia lost its Smartphone leadership to Samsung and Apple in 2011 and as per reports, Samsung forecasts walking off with the Mobile Phone manufacturer crown in 2012. Blackberry has lost out to Android and Apple in good measure and its Playbook has been drubbed. There isn’t much that is expected from future releases of BB OSs and Devices.

• Blackberry appears to me as the worst in the lot and is a prime acquisition target. Same goes with Yahoo!. The Nokia Lumia series of Windows phone has seen some limited success and also been able to secure partnerships with T-Mobile and AT&T. However there is talk of Microsoft acquiring Nokia Smartphones which leads one to think how would Nokia compete without Smartphones?

2012 will need to be the turnaround year for these three and if not then there is a possibility that there could be partial or full acquisition and buy outs very soon.

The evolution of the Tablet PC Market: From Consumer to Enterprise

Tablet industry will need mass enterprise adoption for powering growth in 2012. Device makers/eco-system masters will have to customize to enterprise use cases. (Cue Android/Blackberry/Microsoft)

The Tablet PC was designed first by Microsoft and targeted at the enterprise segment mainly.

However, it was Apple and iPad with its unparalled experience which turned the Tablet PC into a consumer segment product mainly (That’s been the niche of Apple). Apple established the Tablet as a media consumption device as against smartphone(communication device) and laptops(computing devices). Apple made iPad the centre piece of its eco-system and still continues to add various other dimensions breaking one frontier after the other.The success of Apple spawned many others notably Android, Blackberry and even HP’s WebOS.

However, it was Amazon with its scale and expertise in media distribution that has now taken the pole position in low end tablet category.The Amazon USP is the media based services.Amazon Kindle Fire is exerting pressure on all tablet makers to reduce prices. Furthermore, with the introduction of iPad3,one could see iPad2 price down to at $300 levels. Android is an example of a strong competitor which has failed to create any impact in the consumer segment. The “Apeing Apple” strategy has not worked for Android (see image below). This is perhaps clear with the “missing in action” response that Ice-cream Sandwich has garnered post luanch.(A .6% presence inspite of Samsung, HTC, Sony and LG device makers pushing it). With the consumer segment taken by Apple and Amazon, there is little left for others. There are options of deep penetrative pricing as practiced by HP and Blackberry, but that doesnot translate in profits and viable business cases.

In 2012, tablet makers will have to go the “enterprise route” to find a foothold in a market which is fast polarizing towards Apple and Amazon.Again this will include a eco-system approach which will include application makers, cloud, telecom operators, MVNOs, value added service providers and other linkages with industries, Operators, functions and solutions which might always not strictly be from within the industry.

Device makers will need to decide which enterprise purposes can be supported by their tablets. The key drivers of successes in enterprises will be Optimization for specific use cases. I am listing out a 7 point use case optimization-
1. The stylus will emerge as an important input method which would enable consumers to annotate, make handwritten notes,
2. Similarly, voice enabled input could be a critical feature for creating compelling user experience
3. Tablet makers will need to drive development of apps and services optimized and uniquely well-suited for enterprise uses
4. Tablet makers will need to enable cross-platform interorperability between phones(smartphones), PCs, back-end legacy systems. Prima Facie, Microsoft has an edge in this.
5. Tablet makers will need to heed to security and piracy as key concern areas when addressing enterprise requirements
6. Device makers will need to Promote peripherals and ancillary services such as keyboard, cloud based services, pairing between office peripherals such as photo-copiers, scanners, servers etc in form of partnerships, shared GTM programs etc.
7. Device makers will have to evolve a new device lifecyle revenue model which balances the CAPEX, OPEX and service costs for optimum margins and sustained profitabilities.

2012 will see a lot of tablet device makers explore the enterprise segment as a viable and sustainable business case. The sooner the better.

Carrier IQ and the Surveillance state

During a recent speech to delivered at the City University in London, Wikileaks founder Julian Assange said that most smartphones can be hacked remotely with ease. “Who here has an iPhone? Who here has a BlackBerry? Who here uses Gmail? Well, you’re all screwed,” Assange said during his talk, which followed the release of 287 documents related to mass surveillance. Assange explained to the crowd that more than 150 private organizations in 25 countries can easily track phones and intercept messages, browsing history, email accounts, phone calls and more remotely.

Carrier IQ refers to a suite of what can seemingly be described as spyware pre-installed on a wide range of devices by both carriers and vendors. Carrier IQ was conceptualized by Telecom carriers to understand what problems customers were having with networks or devices for action to improve service quality. It is used to collect information to understand the customer experience with devices on networks and to devise solutions to use and connection problems. The IQ tool was not allowed to look at the contents of messages, photos, videos, etc (as a moral responsibility). Carrier IQ is marketed as an analytics tool for mobile telcos, this software claims to exist to ensure good network performance.

However, a recent research published by security expert Trevor Eckhart pulled back the veil on Carrier IQ. Carrier IQ (CIQ) sells rootkit software included on many US handsets sold on Sprint, Verizon and more. Devices supported include Apple iOS devices, Androids, Blackberries, Nokias, Tablet devices and more. Rootkit is defined as software that enables access to a device unbeknown to the device’s owner. Carrier IQ defines its own solutions as “Mobile Service Intelligence solutions that have revolutionized the way mobile operators and device vendors gather and manage information from end users.” Eckhart estimates that Carrier IQ’s software is currently installed on more than 141 million handsets, and that was before references were found in Apple’s iOS software

Shortly after, Wikipedia in its report “the reality of the international surveillance industry” elaborated CIQ technology to spy mobile users across US, Canada, UK, Australia and several of the regimes in North Africa and the Middle East. The Carrier IQ technology has been used in Bahrain to track human rights activists. The malware reportedly can “record every use, movement and even sights and sounds of the room [a phone] is in.” The Wikileaks documents are particularly compelling given the recent revelation that millions of smartphones have spyware called Carrier IQ installed, an application that is capable of allowing wireless carriers to spy on their customers.

It is likely still too early to panic, however. Despite the extensive coverage this story has garnered across tech blogs and in the media, it remains unclear exactly what Carrier IQ and its clients are doing with this data. It isn’t even clear what data carriers have access to. Carrier IQ software on Android devices can log anything from usage data and location to key strokes and usage habits, but it has not been determined that this data is sent to carriers regularly or at all. Carrier IQ’s software can theoretically be used as a window through which carriers can spy on users in real-time if they so choose, but whether or not the software is used in this manner is also unclear.

But, as Assange rightly points out, the interception of this data will lead society to a “totalitarian surveillance state”, if the spying racket is really what it is about.

Presenting a snapshot of CIQ related statements issued by different handset makers and carriers.

Gartner: Q3, 2011 Mobile Phone and Smartphone Market shares

• The global mobile handset market gained 5.6 percent in the third quarter to 440.5 million phones. It slowed from 35% growth reported a year earlier and 16.5% in the previous quarter. The slowdown in Western Europe has been compensated by stronger growth in emerging markets such as China.
• Nokia retained the top spot with a 23.9 percent market share, climbing from 22.8 percent in the second quarter, down from 28.2% year on year. Samsung, LG Electronics Inc., Apple, and ZTE Corp. rounded out the top five vendors.
• Smartphone sales by volume grew 42 percent. Smartphones gained one percentage point from the previous quarter to 26 percent of all mobile-phone sales. Smartphone sales to end users reaching 115 million in the quarter
• Google Android accounted for 52.5 percent of smartphone sales, more than doubling its share from a year earlier. This is up from the 20.5 million Android-powered smartphones sold in the third quarter of 2011, when Android accounted for a 25.3 percent market share.Android benefited from more mass-market offerings, a weaker competitive environment, and the lack of exciting new products on alternative operating systems. Android was estimated to sell 60.5 million units in the third quarter of 2011
• Samsung, maker of the Galaxy line of Android smartphones, became the biggest smartphone maker for the first time. Samsung sold a total of 24 million smartphones in the third quarter compared with Nokia’s 19.5 million. Symbian handsets lost almost 20 percentage points from a year earlier (36.3% last year) to account for 16.9 percent of smartphones as the company shifted to Microsoft Corp. Nokia accounted for 22.1% smartphone sales in the quarter that ended June.
• Research in Motion Ltd. (RIM) declined 4.4 percentage points from a year earlier to 11 percent of the smartphone market in the quarter.
• Apple was the world’s fourth-largest handset vendor, while its iOS operating system was the third-largest smartphone operating system with a 15% market share, down from 16.6% a year earlier. With a limited number of iPhone models taking on a plethora of Android-powered handsets from multiple manufacturers, Apple’s iOS actually lost market share in the worldwide smartphone market last quarter despite growing sales
• ZTE Corp.’s smartphone market share increased to 3.2% from 1.9% in the same quarter a year ago, while Research In Motion Ltd.’s (RIMM) share declined to 2.9% from 3.0%.

Snippets: Blackberry’s share prices fall below its book value

RIM has eroded 80% of its m-cap in the last 3 years and its product line has wilted under relentless attacks from Apple and Android.

Research In Motion Ltd. has declined below book value for the first time in nine years leaving the BlackBerry maker worth less than the net value of its property, patents and other assets in a sign of investors’ lowered faith.This follows Blackberry’s losses in the U.S. smartphone market share. Blackberry Market share sank to 9.2 percent in Q3, 2011 from 24 percent a year earlier as consumers opted for Apple’s iPhone and Android phones from Samsung Electronics Co. and HTC, according to research firm Canalys.

This leaves Blackberry with a $9.82 bn market cap and a prime subject for acquistion if so be be desired.

Read Earlier Posts
Past Perfect, Present Tense, Future Unsure (Part III, Part II, Part I)
5 Reasons for the Blackberry Slide

Gartner: Q2,2011 Mobile Phone and Smartphone Market shares

Analysts predicted that sometime around the first week of July, the Mobile phone population of the world touched 5 billion devices mark.The global mobility is at 73%.However growth in the mobile phones devices markets continues unabated as Gartner recorded 16% Y-o-Y growth in number of mobile devices sold. However, look deeper and there are a few other interesting trends.Smartphones as a sub-category is powering growth in mobile phones. While smartphones have grown at 74% Y-o-Y as against 16% Y-o-Y growth registered by Mobile phones, Smartphones have also contributed 75% to the differential volume units in mobile devices sales.

Smartphone sales continued to rise at the expense of feature phones.Google and Apple are the obvious winners in the smartphone ecosystem. The combined share of iOS and Android in the smartphone operating system market doubled to nearly 62% in the second quarter of 2011, up from just over 31% in the corresponding period of 2010. The platforms’ popularity can be tied to their usability and apps

The mobile phone category is rapidly evolving and is actually moving away from brands. Sample this: While the today number of branded OEM units remained constant at 252 million, the entire growth in the mobile phone category was powered by Local brands and white label manufacturers such as ZTE and Huawei. Others, ZTE and Huawei grew 52% by unit volumes Y-o-Y. Nokia, Samsung, LG, Motorola, Sony-Ericsson, Blackberry-all the players who defined the market pre-2008 are loosing thier markets.

Consumers in mature markets are choosing entry-level and mid range Android smartphones over feature phones, partly due to carriers’ and manufacturers’ promotions. Local ODMs are making decisive inroads into the markets basis a better value equation and prices on their handsets. Operators are also increasingly looking at the device bundle space to support value propositions to consumers. Mobile phones category is one where value-for-money is winning over the brands proposition. Do we term this as commoditization? In some sense, yes!

Blackberry’s choices!

Continued from earlier posts: Blackberry: Past Perfect, Present Tense and Future Unsure Part 1, Part II, Part III and Reprise

RIM has eroded 80% of its m-cap in the last 3 years and its product line has wilted under relentless attacks from Apple and Android.

So what then are the choices that RIM has?

Blackberry has to do a fundamental re-think of its device portfolio. In an age where push email takes a back seat to navigating by swiping on the screen, streaming rich video on a phone, and perusing application stores with tens of thousands, and even hundreds of thousands, of apps, RIM finds its device has been knocked clear of the limelight. The Bold didn’t work and the Torch didn’t light up sales either. the Blackberry Playbook also isn’t as refreshing. In an age where Apple and Android have been leading by innovation, BB is increasingly seen as a One trick pony.

Interestingly, quite a lot of other factors paint a completely different picture of BB. Revenue is nearly triple where it was in early 2008 and profits are up 250% from the same time period. They are gaining distribution as they move into new markets as well. This looks like a company on the rise with a bright future. On the other hand, Market share is down, the Playbook launch hasn’t been noteworthy, and the company is planning layoffs. RIM has to see thru the dichotomy clearly.

QNX platform, the BB equivalent of iOS and Android is due release in 2012, but getting delayed due to lay-offs and other issues. It will not be a bad idea for BB to consider an Android fling if QNX doesnot work out. That could be the plan B

While RIM still has good sales today, it finds itself more closely identified with HP’s webOS, Windows Phone 7, and Nokia, in that the world passed it by and now it’s trying to catch up. It may have stuck with the current platform too long though, thinking that rising revenues and profits meant it was on right path. Recently announced measures may be too little, too late.

Blackberry: Past Perfect, Present Tense and Future Unsure (Reprise)

Continued from earlier posts about the Blackberry slide. Read the posts: Part I, Part 2 and Part 3.

Apple and Android are squeezing and muscling Nokia and Blackberry out in the war of platforms/smartphones. Earlier this month Nokia sounded its profit warning and was unable to put a number to its quarter earnings through the rest of the year. Blackberry followed suit after it reported earnings of $695 million on sales of $4.9 billion compared to financial analyst estimates of $5.15 billion in sales. RIM shipped 13.2 million phones. Shares for the company fell nearly 23 percent to $27.19 (Contrast this with $140 share price in 2008). RIM now expects to make a EPS of $5.5-6 against an expected $7.This current second quarter, which ends in August, will showcase the continuing decline for RIM. The company is calling for sales of $4.2 billion to $4.8 billion.

According to ComScore, Android commands 36 percent market share, with Apple’s iPhone grabbing 26 percent. RIM is at 23 percent and falling.The shortfall in the United States is primarily related to the age of the BlackBerry portfolio. Android faces a pincer tong attack by Apple at the the top end of its portfolio and by cheap Androids at the bottom end of the portfolio.

Even when BB believes that its OS7.0 will be instrumental in turning the course, analysts and geek boys dont give BB a chance against iOS and Android. Product delays and overhead/headcount cuts are having a deleterious effect on RIM’s forthcoming QNX-based super smartphones intended to give the iPhone and Android handsets stiff competition.While new products in the fall should help,they will not be enough to stabilize share loss vs. faster moving competitors. RIM’s new BB Playbook has not cut the ice with the iPad fan-boys and is not expected to enthuse and excite unless RIM initiates huge price corrections which will impact the bottom-lines in a negative manner.

Gartner: Q1,2011 Mobile Phone and Smartphone Market shares

Mobile phones device sales increased 19% Y-o-Y to total 427.8 million units in Q1,2011, On the same lines, Smartphone sales registered a 85% increase and accounted for 23.6% of overall mobile sales in 2011. Smartphones registered 100.8 million unit sales in 2011. Smartphone numbers have seen a depression due to the situation in Japan and the fact that buyers haven’t invested in smartphones in Q1,2011 anticipating stronger and bigger device releases in Q2,2011.

Graphic:Gartner Mobile device market shares

Graphic:Gartner Smartphone market shares

The smartphone numbers only re-inforce the familiar rise of Android to Ubiquitous status, the marginalization of Symbian in Smartphone OSs and pressure on Nokia to defend its leadership. Symbian lost 24% share in 9 quarters, whereas Android gained 35% of its market in the same 9 quarters propelling the likes of HTC to No.7 in Devices and lifting the ASPs for Motorola, Sony Ericsson and Motorola. Android currently is in the mode of moving into the $100 price feature phones to get into the mass mode.

Nokia’s move from Symbian to Windows was announced this February and there is a 1 year or more waiting time before the Nokia Windows Phone hits the shelves. In the meantime, consumers are expected to shy away from Symbian and thus in the ensuing quarters, Symbian market shares are expected to free fall further. By the time, the Windows tie-up kicks in for Nokia, Nokia could well be around 10% market share points and combined with Windows, it would claw back to 20% but never really challenge the dominance of the Android OS, eco-system and partners.

Graphic:Market shares for device makers over the last 9 quarters

With presence across 90 countries from 186 CSPs, Apple has doubled its number of units sold Y-o-Y. It is unlikely that Apple will push past the 20% market share in Smartphones majorly, but the unique eco system of devices, applications, platforms and services would make it the most profitable mobile platform.

Graphic:Market shares of device majors

In the first quarter of 2011, RIM announced that it would transition its BlackBerry portfolio to the QNX platform in 2012. This should make its smartphones more competitive in graphics, performance and touch, and unify RIM’s tablet and smartphone user experience.
Windows devices launched at the end of 2010 failed to grow in consumer preference and CSPs continued to focus on Android. In the long term, Nokia’s support will accelerate Windows Phone’s momentum to double figures.