Winning the Mobile Market Share Wars

I have been thinking a lot about the make-up of the smartphone market. Two important articles I wrote earlier this year:

I believe in the next few years three operating systems will dominate the mobile landscape (smartphone, tablet and other mobile devices): Android, iOS and Windows Phone 7. These three operating systems will account for 99% of all sold operating systems.

Android and iOS are obvious to me. Both are strong leaders with lots of momentum. Apple, I believe, will dominate tablets and portable entertainment devices (a la iPod) for reasons not discussed elsewhere. (An article is up-coming on this topic.) Android, because of its “free” nature will be the poster child for carriers worldwide and therefore has the competitive edge to be dominant. Given that, I think the two operating systems will make up 90% of the market and the split in market share will be close to 50-40 with Android leading.

Windows Phone 7 is my wildcard. First I think there is a high probability of Microsoft leveraging its Office/Exchange/Windows/.NET infrastructure here. Even though they aren’t as prevalent in the tech community, there are some huge Windows fanboys that can rival the Apple ones. Most importantly, though, Microsoft can’t give up. They have to be a player in this market or they risk losing their supremacy in operating systems. Given that, I don’t see them as a strong competitor, instead taking a 8-9% market share.

Of course this could all fall apart. Apple could fail to adjust their breadth of product, instead staying only at the high end. (Unlikely, I think, based on their iPod history. See John Gruber’s excellent summary of recent Android v. iOS discussions over at Daring Fireball.) Android could become so fragmented that it is really like all the licensees having their own operating system. Windows Phone 7 could just be too late to play. RIM, Palm and Nokia could all do something drastic in 2011 to stay in the game.

But if I had to bet, I’d take Android, iOS and Windows Phone 7 to win, place and show in the market share game.

Tell Me It Can’t Be Done

I found this quote at Bryce.vc this morning and just love it:

“Being an entrepreneur is like being a juvenile delinquent. The more you tell us that we can’t do it, the more we want to prove you wrong.”

– Elim Chew

I was far from a juvenile delinquent. To be honest, I was probably the opposite: too afraid to do anything that would get me into trouble.

But this perfectly describes how I work and live now. And, looking back, always had this streak in me.

Sure, go ahead. Tell me it can’t be done. At least you will get me motivated.

Why RIM Is Flailing

Mike Mace has done an excellent job of breaking down the financials on RIM and has gotten a lot of press for it recently. His two core articles are here and here, well worth the time to read them. His facts back up my beliefs about RIM: that there is something seriously wrong with the company and the BlackBerry platform even though their numbers look good on the surface. What I have been trying to figure out is why.

A product is only as good as those willing to advocate for it. Flipboard and Instagram are two recent examples of this and both have found a very strong user segment to advocate for them. The advocates for Flipboard, a media app in essence, was media folks who consume tons of data and spend tons of time on Facebook and Twitter. Instagram was picked up by photography/social stalwarts in the tech community. Consumer apps/technology that doen’t appeal to that tech advocate crowd don’t seem to do as well, at least not here in the States.

So, RIM… RIM has failed to enlighten the imagination of the tech crowd and now the company is paying for it, at least in North America. As Mike shows, North America sales are near 0% growth and new customer subscriptions are trending downward.

Why? RIM’s products feel stale compared to iOS, Android and Win Phone 7 devices. The perception is that enterprise users would use something else if only the IT departments would let them. So the influencers, the tech paparazzi, doesn’t talk about them in glowing terms. A second group of influencers, developers, have continually been treated like second class citizens by RIM: horrible (there isn’t a word for how bad) developer tools, constant switches in OS strategy (non-touchscreen, touchscreen, QNX), and zero marketing support from the company itself, even for its paying partner companies. Thus, the crowds that usually kicks off technology products is paying zero attention to the company.

Internationally, however, there is a different story going on. A group unswayed by media punditry, teens who text, are dying for the BlackBerry due to its well-done BlackBerry Messenger app and excellent keyboards. This group doesn’t care what the tech crowd thinks, doesn’t care that the developer infrastructure stinks, only cares what their friends do, and that is text with BBM.

So I can see how RIM’s sales have split, how they have flattened in the US and how they have exploded overseas.

The problem is I don’t see it as sustainable. RIMs key customer bases are de-stabilizing. Teens grow older and move onto different technology or something else becomes the hot texting tool. And with that the International gains disappear. And here in the States? The tech crowd is waiting for something amazing, something new and modern. A transition to QNX feels imperative but that has been downplayed by the company’s co-CEOs. And the developers don’t pay much attention because the customers either don’t buy software or are behind IT-constructed walls.

So things can get worse, much worse, if RIM is not careful. 2011 will be a critical year.

 

Are You the Customer or the Product?

If you aren’t paying then you aren’t the customer, you are the product.

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A customer emailed me last evening and asked me to justify the price of powerOne for iPhone, iPod touch and iPad. At first, I have to admit, I was a little insulted but as I thought about it more I decided it was a legitimate question. In this day and age where every software product seems to be free, why should he pay?

And my answer was pretty straight forward: if you aren’t paying then you aren’t the customer, you are the product.

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The Wall Street Journal recently studied 101 iPhone and Android apps and found these apps were commonly relaying personal data about the user, in some cases current location and in others age, gender, even a user’s contact list, to third parties. In almost all of these cases the WSJ was looking at free apps.

Am I surprised? Of course not. Because if you didn’t pay then someone else did, and that someone else wants as much information as possible. My role as a developer is to satisfy my customer to get more of them to pay me money. If you aren’t my customer then someone else is, and then my job is to satisfy them. And that means providing them with what they need to make decisions, even if it isn’t in your, the users, best interest.

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Google, I think, thrives beautifully in this system. You get free stuff (hurray!) and they get money from advertisers. Google is in the business of collecting every scrap of information they can about you so they can do a better job of selling to advertisers.

There is another benefit to Google: since you aren’t paying for the software then Google doesn’t need to support you. Since you aren’t paying for the software than Google can cancel products at any time without worrying about what you think. After all their customers — advertisers — just shift their dollars to a different Google product.

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But wait, you say! If I don’t use these free products than they don’t have the customer base to sell to advertisers. I’m their customer, too.

Sure, you are. Kind of. But in reality you aren’t. It is in Facebook’s best interest, for example, to keep you engaged but they will only do this to the extent you leave their free service. This means that they will push the boundary of what they can get away with. It means they will, as the saying goes, implement today and ask for forgiveness later.

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There are lots of reasons to pay for software. You want to get support, you want to reward the developer, you want to make sure that the app keeps improving. But the most important one is that you want me, the developer, beholden to you and not to some third-party that doesn’t have your interests in mind.

Always remember: If you aren’t the customer, you are the product. And the customer is the one who pays for it.

Will 2011 Be Good To BlackBerry?

I have been following Horace Didieu over at Asymco for some time. He has been consistently writing some of the highest quality analysis on the smartphone and mobile device industry for a while now.

One of his recent posts was on the growing smartphone market and a look ahead to 2011. In short, he predicts, half of all US cell phone customers will have smartphones by the end of 2011! That, in and of itself, is an amazing thing from where I sit. Seems like yesterday the whole industry was at 5 million units per year, US and international.

While I am usually dubious of such claims by analysts, Horace’s posts have been spot on and jive very well with my own perspective on the market. His belief: Android and iOS will be the leaders with Windows Phone 7 will gain market share ground. BlackBerry, still #3, will lose share. The rest of the gains will come from new adopters. Finally, Android will grow the fastest and be the largest by the end of the year.

I see the same thing in the US market. RIM, though, is my wildcard. I think this will be a make or break year for the BlackBerry. If the company can transition to a modern operating system in 2011 and keep developers in tow then the company will have a fighting chance. Otherwise, I believe the company will fade very fast in 2012.

If you are a BlackBerry fan, you better hope Co-CEO Mike Lazaridis’ incoherent, rambling interview at AllThingsD.com’s Dive Into Mobile conference isn’t a harbinger of things to come.