Mobile Addicts

Flurry released a report on how many times people launch applications in a day. The data is quite interesting.

  1. People launch applications 10 times per day on average with a significant proportion opening apps more than 60 times per day (the addicts).
  2. Women are more likely to be addicts then men.
  3. In addition to people under 24-years of age, middle-aged parents were also more likely to be addicts.

In the report, Flurry touches on wearables;

Mobile Addicts launch apps over 60 times per day, making them consumers that are effectively wearing their devices. This analysis of the Mobile Addict should give us a sneak preview into the make-up of early-adopters of Wearables, and what types of apps and experiences will resonate with them. To date, many applications for Wearables have focused on fitness and health, but thinking about what’s next, developers should think about the other experiences that will delight the people who need to be connected all the time. This includes Teens, College Students and Middle-Aged parents who are interested gaming, autos, sports and shopping, and who may have a constant need to entertain or educate their children. After all, the people who we consider “Mobile Addicts” are already essentially wearing their devices 24/7/365.

While I agree with the general conclusion on wearables, I think we can go a bit deeper into discussion. My feelings are the following;

  1. Addicts are launching apps over 60 times per day. If we assume that launching means more than simply being notified, then it is likely that notification-type smartwatches are not enough for the addicts. Addicts aren’t satisfied with being notified; they want to do more.
  2. If smartwatches are going to replace the time that you spend on your smartphone, it has to be a better experience for the key task which addicts do 60 times per day. As long as smartwatches focus on notifications, they will never be a better experience, because that is only a small part of the jobs-to-be-done.
  3. Flurry suggests that wearables focus on what the addicts do. I do not agree. Addicts are obviously quite satisfied with their smartphones and have high demands. It would be difficult for a wearable to sufficiently replace them. Replacing a high-end product with a low-end one won’t work.
  4. Instead, wearables should focus on other things; things that do not require constant user interaction. Wearables should focus on being a new-market disruption.
  5. I am very interested in what role the form-factor plays in the constant-interaction shown by addicts. Obviously, if the phone is going to be accessed more than 60 times a day, it has to be in a very convenient location and has to be easy to pull out. It is obviously better for the device to be small enough to carry close by. Although there is a trend towards large smartphones, I’m doubtful if those phones allow this kind of constant-interaction, especially for women.

Data Usage Statistics

There are quite a few companies that provide insight into browser (web) usage statistics. Both StatCounter and NetMarketShare provide reports that you can just point your browser to. Chitika provides detailed analysis of topics-of-interest.

One criticism of these data when applied to mobile platform analysis is that they do not include app usage. Hence data usage from the native Facebook, Twitter or WhatsApp applications are not included. With PCs, most people use web browsers to access online resources so this is not an issue. However on mobile, we know that a lot, if not most of Internet access is actually through these native applications and not through browsers. Therefore the data from StatCounter, NetMarketShare and Chitika is less relevant for understanding user behavior.

Data usage on carrier networks is separate statistic that provides information from a different angle. This counts traffic from both native applications and web browsers. However it only includes usage on the carrier networks and does not include WiFi usage. Let’s compare this data.

First web usage data from StatCounter for Europe, Oct 2013 (only mobile data excluding tablets). This data shows that Android is a little bit ahead of iOS in web usage. Compared to the US, Android usage is higher in Europe. A common explanation is the lack of attractive subsidies for the iPhone in Europe, which make the iPhone much more expensive to own than an Android phone.

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Asymco recently tweeted data usage on network carriers in Europe for the same period (source Amdocs). We immediately notice that iOS (iPhone) usage is much higher compared to web usage.

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These two sets of data are not directly comparable, and care should be taken in their interpretation. Regardless, considering other evidence, I think it is safe to say that iPhone users seem to use Apps much more than Android users. This is why Android beat iPhone in web usage, but lost in total data usage.

This is unlikely to be a simple App ecosystem issue. Although developers still tend to target iOS first and Android second, for the apps that most people use, these are already available cross platform. These cross-platform apps (Facebook, WhatsApp) probably constitute the vast majority of data usage and it is difficult to image that iOS only apps make a huge difference.

I don’t know the answer to this. You could say that it has something to do with engagement, but it’s a pretty broad term and I’ve never seen information that tells me how user behaviors change with engagement levels.

Non-Google Play Evolution Outside of China

An interesting trend in Android is how they are removing features from the core operating system (which is open-sourced) and adding them to Google Play Services which is closed source and requires a restrictive license from Google to install.

This is a way to solve the fragmentation problem that Android faces. More insidiously however, it is also a way for Google to pressure OEMs and exert strict control of Android.

The problem is, Google is incapable of imposing this restriction in the largest smartphone market in the world. In China, more than 70% of smartphones do not have Google Play services, which means that applications that require Google Play will fail to work for Chinese users.

This is a huge issue of itself. However, the future implications are even larger.

Because Google has removed core applications from open-source Android (AOSP), this creates an ecological niche for third-party developers. Chinese developers are free to create app stores, maps, calendars, chats systems, digital content distribution stores, payment systems, video apps, search apps, location services and a lot more without competition from Google. This is certainly what is happening right now in China. There is a thriving ecosystem with lots of competition in these areas, whereas in other parts of the world, Google tends to crush other players creating a much less vibrant market.

Within the vibrant ecosystem, competition will encourage players to innovate and improve their services faster than a single company, even if that single company is Google. These Chinese services will eventually rise to a level that is of higher quality than Google.

The next issue is whether these services will transfer to countries outside of Google. The Google Play Service licensing restrictions explicitly prevent OEMs from removing the Google search widget from a prominent location. This makes it difficult for Chinese services to replace Google Play on licensed phones. For the Chinese services to be emphasized higher than Google Play, OEMs will have to forgo Google Play altogether.

Is this possible? What would be the economic incentives to do so.

Although this scenario is at least a year into the future and anything may happen till that time, it is important to note that a free OS strategy (Android) is not substantially different from a cost for license strategy (Microsoft Windows). The fact that Android is free does not make it easier or harder for the Chinese alternatives to go to market.

For example, in the Windows PC world, PCs came bundled with all kinds of unnecessary and unwanted “crap ware”, because “crap ware” companies paid the OEMs to load it onto their products. In the future, some Chinese companies could pay Android OEMs to remove Google Play from their devices and instead preload their own offerings. In fact, that is probably what is happening in the Chinese market right now. I would be very surprised if the Chinese service providers did not try this as they launch in other countries.

In conclusion, the following in how I feel about Google’s strategy.

  1. It is understandable for Google to move desirable features out of Android open-source, and to move them into closed source so that they can exert more control.
  2. However in the long-term, it allows alternative services to thrive in certain niches. In the case of China, this niche is happens to be huge and vibrant.
  3. In a few years, these alternative services could mature to the point that they can challenge Google in markets outside their current niche.
  4. Instead of mostly ignoring China, which this Google Play strategy is doing, Google should think of ways to undermine the companies that are enjoying the Google-free void. The threat of these companies challenging Google could actually be larger than US companies like Microsoft or Yahoo.

iPad Sales Decline?

Philip Elmer-DeWitt has compiled analyst estimates for Q2 2014 iPad sales, and the consensus estimate is a 0.7% decline. We will have to wait until the earnings report to get the actual numbers, but given the recent trend in sales, I think that this is a very likely situation.

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The question is, what has happened?

To understand this, you have to realize that the iPad is a “middle” product sitting in between smartphones and laptops. Hence the segment is susceptible to forces from both below and above, which potentially makes the dynamics of the market rather volatile. To illustrate, here are some of the things that could happen outside of the tablet market itself, that exert strong affects on sales.

From smartphones

  1. Smartphones could increase in performance, reducing the performance advantage of tablets.
  2. Smartphones could gain larger screens, reducing the large screen advantage of tablets.
  3. Mobile applications and web sites could become more abundant and better in quality, making it just as comfortable to read with a small screen as with a tablet-sized one.

From laptops

  1. Laptops could become thinner and lighter, reducing the portability benefit of tablets.
  2. Laptops could gain better battery life, resembling tablet battery life.

If you look at what is actually happening in the market, you see all of these forces in play. All the forces that would make a tablet unnecessary or less appealing.

Before and when Steve Jobs announced the iPad, he repeatedly spoke of the challenges of targeting a market that sat between a smartphone and a PC. He said that a tablet had to be significantly better than smartphones and PC at some key tasks, if it was to succeed. Recent improvements in both of these categories have raised the bar even higher. The narrow wedge in which the iPad managed to carve a market is getting narrower. This has been a gradual process that has been ongoing since the first iPhone and the Macbook Air was introduced. Nothing new has happened.

For the iPad to continue its success, it has to find a way out of being squeezed from the top and bottom. The most obvious direction is up; replacing the PC. There are other possibilities however.

Update

There is some discussion as to whether the increasing size of smartphones may have allowed smartphones to entrench on the tablet market. That is to say that larger smartphones are more tablet-ish and that owners of large smartphones will not see a use for tablets, hence lower iPad sales.

This discussion is a result of the analysts confusing customers on Android and iOS ecosystems.

iPad users are disproportionately iPhone users. They share the same ecosystem so you can use the apps that you bought on your iPhone on your iPad and vice versa. In terms of price, iPad users are not the bargain hunters that buy cheap Android phones, but are the people who value quality and also tend to buy iPhones. This is true if you look at countries. iPads are used a lot in high-income countries, which also use a lot of iPhones. Although I do not have the data to back it up, this assumption is rather obvious.

On the other hand, Android users are more likely to use Android tablets because they have the same ecosystem and because they either have less income are or more price-sensitive.

Hence the stagnant sales of the iPad is predominately a result of iPhone users’ purchasing patterns. There are far more iPhone users purchasing or with an intent to purchase iPads compared to Samsung users. If we look at phablet users in China and Korea, the difference is probably more extreme.

Then, if the people who are not purchasing iPads are using iPhones, then their purchase decisions are not being influenced by large-screen phones. This slowdown in iPad sales is not in any major way, a result of large screen phones. It is independent of phone screen size.

Hints on Apple’s Wearable Strategy From Nike

According to CNET, Nike plans to exit Fuelband hardware, their wearable technology for tracking exercise throughout the day.

What does this suggest?

  1. Apple CEO Tim Cook sits on Nike’s board. It is likely that there is a secret collaboration between Nike and Apple that led to this decision.
  2. This decision would make sense if Apple is planning to release a wearable which makes the Fuelband obsolete. Such a device should be both cheaper, smaller and more wearable than the Fuelband. Otherwise, it is simply not a better fitness tracker.

Key points;

  1. Nike is not abandoning fitness tracking. Instead it is focusing on software.
  2. Nike is releasing a public API for Nike+ so third party trackers can plug into it.

Some thoughts;

  1. Although smartphones, especially the iPhone 5s with the M7 chip, are getting better at tracking movement throughout the day, not everybody carries the device on their body at all times. Phablets for example, are often carried around in purses in Asia, even by men. This limits their usage as fitness trackers.
  2. Carrying your expensive smartphone with you when you exercise is not the best experience.
  3. If we want to make our smartphones better fitness trackers, we would want a smaller device, not a larger one.
  4. I doubt that Nike is abandoning the Fuelband in favor of devices that people are less likely to use while exercising.
  5. Nike obviously thinks that third parties can create better fitness tracking hardware then what they are currently capable of. What product do they have in mind? Is it the Jawbone? Is it the Samsung Gear? Is it Android Wear? I don’t think that they are too compelling and think that Nike is looking more at future devices.
  6. Keep in mind that Nike has not released Fuelband software for Android devices. Their Fuelband app is iOS only.
  7. The Nike brand is totally capable of selling at premium prices without being drawn into a price war. Their main business is selling shoes at high prices. Cheap rivals are not likely their main concern.

Quick Notes On Google Play Revenue Growth vs. Apple App Store Growth

App Annie recently released their report for Q1 2014. I have commented on these numbers several times before in this blog. Here I want to jot down some quick notes;

Absolute growth vs. relative size

App Annie only sporadically reports total growth for each store. They mention;

The iOS App Store remains comfortably ahead in worldwide revenue, generating about 85% more revenue than Google Play. This gap narrowed over the last quarter though, as Google Play revenue increased markedly in the United States and United Kingdom.

However, it is difficult to understand whether the gap is really closing, or is actually widening. To illustrate my point, let’s take a look at a graph from another App Annie report.

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In 4Q13 of this graph, we see that the relative size of iOS App Store and Google Play is closer in 4Q13 than 3Q13. However, in terms of absolute revenue gap, it is actually widening.

Unless App Annie gives us enough data to draw a graph similar to the one shown above, we cannot conclude whether the gap between the iOS App Store and the Google Play Store widened or narrowed. It is totally possible that the gap is widening in absolute terms.

South Korea

A year ago, South Korea was second in both downloads and revenue for Google Play according to App Annie data. A year later, South Korea is third in downloads behind the US, and fourth in downloads. What has happened?

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With the limit data that App Annie has released, we cannot conclude whether the decline in rankings is driven by increases in other countries, stagnation in the South Korean market or a combination of both. However, given that Distimo gave South Korea a very strong lead over the US in July 2013, it is reasonable to assume that stagnation must have occurred.

If South Korea stagnated, then it is also reasonable to infer that Japan, which also has a disproportionate level of app spending, might also be stagnating. This is even more likely since the largest carrier in Japan, DoCoMo, just recently started selling iPhones, resulting in a decline of Android market share.

Why Are Smartwatches Focusing on Notifications?

It is very interesting to see the new smartwatches focusing on notifications as their main feature. This begs the question; why are notifications so important?

Are notifications so important that many people are willing to purchase a several hundred dollar device and wear it wherever they go?

I don’t think so. I think that the only reason why smartwatches are offering notifications is because it was relatively easy to do. Smartwatches are small so you can’t display a lot of information on them. You can’t provide a good UI that can be used to enter information. The only use-case that was left was notifications. The focus on notifications was not because notifications are important; it was because there was nothing else that Samsung, Google could think of putting on the device.

So the issue remains. Smartwatches are a form-factor in search of a use-case. This is not innovation.

Innovation in wearables lies in understanding what problem they can uniquely solve. How can a device that will be with you at all times enrich your life?

Of course, there may not be a market for wearables after all. Unlike smartphones, wearables are not a replacement for a device that people were already carrying around with them. Wearables are asking the public to carry a second device in addition to their smartphone, which overlaps a lot in functionality. Whether or not there is a market for such a device is very unclear. Even if it existed, it is easy to imagine that it would take a huge amount of time to spread. It is a speculative market.

Innovation is rarely about a technology searching for a market. It’s more often about making a complex product simpler and easier to use, thereby both increasing the number of people who use it and the occasions in which it is used. Notifications simply don’t qualify for this.

Why the Fallacy of Android-First

Dave Feldman wrote a very interesting post on TechCruch (“The Fallacy of Android-First”) where he details why the startup that he founded (Emu) launched Android-first, but after sixteen months, they reverted to iOS only.

There are many interesting points in this post. Here, I would like to categorize his findings and to draw a typical general picture of an innovative market leader and a follower frantically trying to catch up.

The allure of Android

Followers generally try to catch up with the combination of a) price and b) more features. With both more features and a price benefit, it seemly looks like the follower’s offering is better in all accounts. However, if you look under the hood, you often find that the features haven’t been well thought out and that they are actually quite useless.

In comparison, leaders usually focus on actual benefits. If they succeed, the leaders prevail and the market separates into low-end which becomes a price war, and the high-end which is rather stable. If leaders fail and are dragged into the price war, then the market loses the leader and everybody chases features that look good on paper, but are not beneficial to the user.

This is a common theme in many markets. It is also what is happening in mobile.

The Dave’s article, he mentions the allure of Android as the following;

  1. On Android, you can replace the built-in Messages app, while still using the underlying SMS/MMS medium, saving the effort of building a communication service.
  2. Android apps were supposedly easier to build.
  3. Fragmentation was supposedly becoming less of an issue.

The reality

The reality was that allure #1 was a feature that was not well implemented. It was so bad that it was close to unusable from a developer point of view.

  1. Android’s SMS APIs are not well documented. The APIs have also changed over time.
  2. Individual apps can block each other from receiving SMSes. This means that the presence of other apps affects whether your app works or not.
  3. Other issues with MMS make it a nightmare to support.

So the feature was there on Android, but it was very difficult to use in the real world.

There are also other issues described in the post and they basically say the same thing; Android has the features and support, but it’s often not very useful.

The lesson

The lesson is that features which the followers implement are rarely useful. You can’t trust them to have thought out all the issues. Although leaders will also fail sometimes, followers are much more likely to introduce useless features.

How are Apps Dominating Mobile Usage?

On April 1st, 2014, analytics firm Flurry released a report on how time is spent on mobile devices.

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This data is interesting for a number of reasons;

  1. Apps are dominating the mobile usage. As of 2014, Internet browsers are used for only 14% of the time. 86% of the time, mobile users are using apps.
  2. App dominance is increasing. In 2013, Internet browsers were used for 20% of the time compared to 14% in 2014.
  3. Facebook and other social activities constitute 28% of usage time. This compares to 32% for gaming.
  4. Other usages are fragmented with 4% for YouTube (watching video), 4% for productivity, 3% for news.

What does this all mean? Here are a few thoughts of mine.

Why did apps dominate mobile usage?

Both mobile apps and the mobile web have their pros and cons. Although it’s easy to point out the advantages that apps have and to attribute success to these, we have to remember that a lot of people predicted that HTML5 would ultimately win. There are arguments for both sides and hence it’s very difficult to understand what the ultimate driver of success was.

Why is this important? Why do we have to analyze what has already happened?

I have a sense that the success of apps on mobile might affect how we use desktop computers. It is not entirely unthinkable that we might see a resurgence of apps on the desktop. By analyzing how apps dominated mobile usage, we might gain insight on whether this is truly likely.

How can Microsoft fix the ecosystem gap

The smartphone market is dominated by Android and iPhone and it is increasing difficult for new entrants to gain a foothold in the market. Windows Phone is reported to be gaining market share in the low-end, but we want to know whether it can possibly grow to be a significant player.

The problem is the ecosystem. Android and iPhone both have a large number of apps and services. Windows Phone lags in this regard and this is considered the reason why it doesn’t stand a chance.

Let’s look at this by category. Looking a social networks, the big ones are cross platform. Facebook, WhatsApp, LINE, Instagram, Pinterest and many others have native apps for Windows phone. Windows Phone no longer lags here.

In games, Windows Phone lags a lot. Popular games like Puzzle & Dragons and Candy Crush Saga are not yet available.

In the other categories, it is possible that Windows Phone still is vastly inferior in the number of apps available. However, this probably is not very much of an issue. They aren’t an vital part of the smartphone experience.

If Microsoft can convince major game developers to create Windows Phone versions, then it can mostly fix the platform gap.

Usage itself is different from desktops

Although I don’t have data available for desktop computers, I imagine that it would be very different from Flurry’s data. Instead of games, we would see a lot of productivity apps (mostly MS-Office) being used. Email applications would also be huge.

It’s not a simple case of apps replacing the web. It’s that these devices are fulfilling a different purpose. Hence there is no guarantee that companies with a big presence on the desktop web will ultimately succeed on mobile.

For example, Gmail has a large presence on the desktop web and is also included in Android as a part of Google Play. It maintains a large market share of email on mobile devices. It doesn’t really matter though because the preferred messaging tool on mobile is not email. Instead, the social messaging platforms dominate.

Likewise, Google maintains a large market share for mobile web search. It doesn’t matter because people don’t do web search on their mobile devices.

Will Google Use Humans to Fix Google Now?

I have never used Google Now, but I was always skeptical. The use cases that were being reported on the web always were extremely limited, and it seemed that they were simply telling us about the things that worked but not about the things that didn’t.

A couple of days ago, Janko Roettgers wrote on GigaOM about how Google Now actually fails, even in the limited tasks it’s supposed to be good at.

We often assume that because Google is collecting huge amounts of information about their users, they are able to understand a lot about who we are and what we want to do. Yes, Google does know where you live and it knows exactly what keywords you used on your searches yesterday. It knows exactly where you are right now. This is all very creepy, especially if you are an Android user. The problem is, there is no guarantee that this information will let Google know your current intentions with any accuracy.

Google has been described as a “decade-old machine learning project”. There are two products from Google which have shown how this can actually be turned into something useful. They are Google AdSense and Google Maps.

Google search basically selects the ads (AdWords) to be displayed based on the keywords that were entered in the search field. Although the information that Google holds about the user is also used to tweak the results, this is not the main driver of the AdWord ads to be displayed. With AdWords, the user has directly expressed their intent through the search keywords and Google does not try to second-guess it. This intent is what drives the ads and this is why I don’t include it in the current discussion.

AdSense is more “intelligent” than AdWords because it tries to guess user intent. It analyses the content of the page the user currently is browsing. It uses knowledge of what pages the user has visited recently. It uses location data. It combines all of these to determine which ad the user is most likely to click on. In reality, AdSense fails most of the time. It does not correctly estimate the user’s current intent. But that’s OK. The click-through rate (CTR) of AdSense is at most a few percent and the vast majority of people aren’t interested in what is shown in an online ad. It’s completely acceptable for AdSense to get it wrong most of the time. Therefore, the “intelligent” guesses of AdSense are successful even if they are completely wrong most of the time. AdSense will still be immensely successful when the majority of users are pissed-off by the ads. It only takes a small percentage of correct answers to succeed.

Google Maps is a totally different kind of “intelligence”. Google Maps has to be accurate for the vast majority of the time. It has to be something like 99.999% accurate or more. Otherwise, we would constantly get reports that some poor drivers drove themselves into a desert. How can Google Maps be so accurate when AsSense is so sloppy? The secret lies in humans. To quote an article by Alexis Madrigal on The Atlantic.

I came away convinced that the geographic data Google has assembled is not likely to be matched by any other company. The secret to this success isn’t, as you might expect, Google’s facility with data, but rather its willingness to commit humans to combining and cleaning data about the physical world. Google’s map offerings build in the human intelligence on the front end, and that’s what allows its computers to tell you the best route from San Francisco to Boston.

Even though Google gets vast amounts of information from satellites and street-view cars, it has to combine these with an army of human beings to gain accuracy. Without these human beings, they cannot get the error rate to an acceptable level. The kind of “intelligence” in Google Maps can only be attained with a huge number of people who manually curate the information.

Now let’s get back to Google Now. Which kind of “intelligence” do we need? Do we want a personal assistant that thinks it is acceptable to guess correctly only a few percent of the time? Or do we want a personal assistant that truly knows what we want to do next?

If we want the latter, we may have to be content with an army of human beings plowing through your most personal information, helping Google’s not-so-accurate machine learning algorithms to make sense of your daily routines.