Mobile Application Downloads to Reach Five Billion by 2014

New York based research firm ABI Research says that the number of mobile applications downloaded by mobile phone users is expected to reach five billion by 2014. It says that the surge in smart phone sales and the increase in the number of mobile app stores are the reasons why there has been a sharp increase in the number of apps downloaded in the last few years.

The iPhone, according to ABI Research, is still the major player in the mobile app market. However, its market share is expected to reduce considerably over the next few years due to the rise of Google Android. Android currently has an 11% market share. Due to its increasing popularity and Apple’s shrinking market share, Android’s market share is expected to increase from 11% to 23% by 2014.

The reason behind Android’s growth in the mobile application market is not hard to fathom. As of now, 14 phones run the Android OS and the number is expected to increase sharply this year due to the introduction of new Android based phones. Also, the response for free mobile apps from Google, Google Maps being a fine example, has been great so far. Since Google is expected to come up with more such free apps and ad-funded apps, it is safe to assume that the number of mobile apps downloaded by consumers will increase in the coming years.

ABI Research has also made another observation. It says that even though the number of mobile apps downloaded by consumers is expected to rise sharply, it may not reflect positively on the revenue chart. It says that the proliferation of free ad-funded apps might make people reluctant to buy paid mobile apps. It is quite a bold prediction given the fact that the idea of ad-funded apps is still in its nascent stage.

What I believe is that there is enough space for both ad-funded apps and paid apps. While the demand for free ad-funded apps is likely to increase significantly, the demand for paid apps, particularly business centric mobile apps, will not disappear completely, as there are quite a few people who do not like the idea of a mobile app loaded with ads. So, I predict a mobile ecosystem where ad-funded apps and paid apps can coexist without any problems. What do you think? I am interested in hearing different opinions.

Categories: Cell Phone Advertising, All things mobile phones.

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Huge Slump in Smartphone Market Share - Can Microsoft Reinvent Itself?

When you take a close look at the smartphone market, you will notice something strange. Experts often talk about what is possibly the most popular smartphone available today – the Apple iPhone. They talk about how Google Android could give Apple a tough competition. They talk about Symbian and they talk about Blackberry. They even talk about recently released smartphones like Motorola Cliq and Droid. One name that is conspicuously missing from this list is Microsoft’s Windows Mobile.

It is really surprising. After all, Microsoft entered the smartphone market long back – Pocket PC 2002, the predecessor of Windows Mobile OS, was released in 2002. Soon, Windows Mobile was released in 2003. What has Microsoft managed to achieve in the past six years? The answer is – nothing worthwhile.

Windows Mobile, as of now, is the fourth most used mobile operating system in the world. Nokia with its Symbian OS is the market leader – followed by Blackberry and the iPhone. Experts, however, predict that it might not be able to stay at that spot for long. When you take a good look at the numbers, you get the feeling that what they predict might actually come true.

In the first quarter of 2004, Microsoft’s Windows Mobile had an envious 23% share in the smartphone market. In the first quarter of 2005, there was a steady decline and its market share was somewhere around 18%. In the first quarter of 2006, it further slumped and remained with a market share of 12%. In 2008, its market share dropped to 14%. At the start of 2009, it slumped further and remained at 7.9%. If we go by the recent report from AdMob, Microsoft’s market share, as of now, is only somewhere around 4%.

It is quite a slide – from 23% market share to 4% market share in a span of just five years. In the mean time, Apple, Nokia, RIM, and even Google have made their presence felt in the market big time.

It is really hard to believe. After all, Microsoft has got everything - all the money in the world, some of the brightest minds in the world, and plenty of goodwill. Yet, it has not been able to conquer the mobile market like it conquered the PC market. While late entrants like Apple and Google have been able to generate a big buzz, Microsoft has not been able to do anything that is worth taking notice.

Apple iPhone continues to climb the ladder and even new entrants like Motorola Droid have managed to create a big buzz. With this being the case, Microsoft’s only bet is Windows Mobile 7 OS – which incorporates the elements of Windows Mobile 6.5 and Zune – which is slated for release in 2010.

The mobile phone industry, the smartphone market in particular, is expected to grow bigger by the day. Mobile advertising, as we all know, is set to grow big as well. The time is ripe and the competition is intense. The question is – can Microsoft pull it off?

Categories: All things mobile phones, Microsoft.

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Entertainment Sector Tops Mobile Ad Spending

A recent metrics report from Millennial Media has the details about the recent trends in mobile ad spending. According to the report, entertainment is the sector which tops the list as far as mobile ad spending is concerned.

The report also says that 2/3rd of the money spent on entertainment was spent by movie studios for promoting their movies. Major movie studios in Hollywood have been spending a considerable amount of money on mobile ads of late. If you have a high end cell phone like the iPhone or any other web enabled phone for that matter, you could have seen ads for movies like Star Trek, Transformers: Revenge of the Fallen, and Fast & Furious 4. Since the response for such mobile campaigns is usually good, movie studios these days do not think twice to spend money on mobile advertising.

For the regular readers of this blog, this news might not be surprising, as we have already discussed this issue here, here, and here.

Apart from movies, a considerable amount has been spent on games (16% of the total spending), TV (9% of the total spending), music (4% of the total spending), and other things (7% of the total spending) that people are interested in.

One of the things to be noted here is that there has been a considerable change in the way mobile advertising is perceived by large companies in the entertainment industry lately. Earlier, the amount spent on mobile marketing campaigns was very little and it was usually for ringtones and stuff like that. Now, movie studios and television studios are coming up with mobile marketing campaigns to promote their movies, sitcoms, and reality TV shows. This just goes to show that a lot of people are slowly beginning to understand that mobile ad campaigns, when done the right way, can give very good results.

Apart from this, a lot of brands are turning their attention towards mobile ads to drive traffic to their mobile sites and enhance their presence in the mobile world. In my opinion, this is a good sign of things to come in the future. A lot of companies have developed mobile sites to help their readers access the websites they want right from their mobile phone. Since mobile web is becoming increasingly popular and the number of high end mobile users is growing fast, it is a good idea for big companies and popular brands to have their own mobile sites. This issue, as some of you might remember, has been already discussed in this blog.

The report also says that Apple iPhone and iPod Touch continue to dominate the mobile ad market by getting the lion’s share of ad impressions. However, it should be noted that other mobile phones like Samsung Instinct are giving a tough competition to Apple in terms of ad impressions.

Categories: Cell Phone Advertising, All things mobile phones.

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Steve Ballmer takes a dig at Google Android

You’ve got to give it to Steve Ballmer. He has the knack to say something which makes the whole world sit up and take notice. Speaking at the Telstra annual investor briefing in Sydney yesterday, Ballmer said that Google is not a major mobile competitor for Microsoft at all.

Ballmer said that Google is not very high on the list of Microsoft’s mobile competitors and it will not pose a threat to Microsoft’s dominance in the mobile market anywhere in the near future. Speaking of Google’s mobile division, he had these exact words to say – “They’ve got some smart guys and hire a lot of people — blah-di-blah-di-blah.”

Ballmer said that since Google has made Android free for everyone, they will not invest a lot to improve the product. He also stated that he couldn’t see how Google plans to make money from Android, since the product has no viable revenue model at all.

While I cannot disagree with most of the things he has said about Google, I have to disagree with one thing – the revenue model. Let me explain why.

Google never planned to make money from Android by charging people to use it. It was, is, and always will remain a free mobile platform. What Google thought of was a stronghold in the mobile OS market through Android, which I don’t think will be unachievable if Google continues to improve its product. Though it will not be possible in the near future thanks to the immense competition from Symbian, Blackberry, and Apple, you cannot rule out that possibility.

Most importantly, Google is not a mobile OS manufacturer. Its strength is advertising and by pushing more and more people around the world to use Android, Google can easily show a lot more ads and generate a lot of revenue – a fact that Ballmer seems to have forgotten.

As someone who has always wanted to ‘bury’ Google, Ballmer has made his intentions clear. Though he clearly said “I’m not giving them a hard time”, it is exactly what he has tried to do. It will be interesting to see Google’s response, if at all Larry and Sergey bother to respond. What do you think?

Categories: Google, Microsoft.

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A letter to The New York Times

Dear The New York Times journalist,

I do realize that Apple’s 3G iPhone is one of the most talked about consumer products today. I do realize that people are still interested in hearing about 3G iPhone, its merits, and demerits. But then, haven’t you already discussed this issue to death?

When you came up with the brilliant discovery that the new 3G iPhone actually costs more than the old one, I was really taken aback. And if you remember, I already wrote a rebuttal for that. And now, you come up with this. What do I say?

The story is this – Apple sells its iPhone for $600 to those who don’t want the two-year contract with AT&T. Those who come under the contract can pay just $199. You see, we’re fine with that. But then, when you quote some market research firm and say that the iPhone is actually worth only around $170, aren’t you stretching things a little too far?

And how the hell did someone come up with that arbitrary figure? Based on the cost of the hardware components in the phone alone? Hello, ever heard of something called R&D? When you price a product, you have to take the cost of R&D, designing, and marketing into consideration. So, claiming that the iPhone is worth only around $170 based on the value of its components is not just incorrect, it’s plain stupid.

Sensationalizing issues is better left to bloggers like me. You, being a journalist, are supposed to be neutral and most importantly, well informed.

Thanks.

Categories: Rant, Apple iPhone.

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