The Mobile War Is Not Over
Let’s step back to January 2007. Do you remember what your job was at that time? I was already an industry analyst covering mobility, and at that time, the space was less fascinating to cover. Back in January 2007, Google had acquired YouTube for $1.65 billion only a couple of months before. Android did not exist. The iPhone did not exist. Twitter did not exist. Facebook was only a couple of months old as an open public website. Nokia had a market valuation of around $120 billion, and its share of the global smartphone market was above 45%. BlackBerry – then the leader in enterprise mobility solutions – had initiated a move in the consumer space with the BlackBerry Pearl.
Less than seven years later, Google has activated more than 1 billion Android devices, and Apple will soon pass the 700 million iOS devices mark. YouTube now has more than one billion users globally and generates 40% of its traffic from mobile devices. Facebook has 1.2 billion users and generates 41% of its ad revenues from smartphones and tablets (it could even reach 50% in Q3 2013; Facebook discloses its financial results on October 30). Twitter has more than 230 million users and generates more than 70% of its revenue via mobile.
Needless to say, the pace of consumer adoption and innovation in the mobile space has accelerated like never before in the past few years. Microsoft and Google have followed Apple’s successful vertically integrated approach and are now starting to more deeply integrate Nokia and Motorola hardware in their software and services ecosystems, respectively. Other platform players, like Amazon, have followed the same route by launching a range of tablets and eReaders – but no smartphones yet. The smartphone bloodbath took place, and many were forced to abandon their global ambitions or to exit the market (e.g., the Japanese handset makers, such as NEC, Panasonic, Sharp, and many others).
The war is not yet over, since we’re only scratching the surface of the evolution of computing. The move to tablets, the blurring lines with PCs, the connected cars and TVs, and the arrival of wearables and other sensor-laden devices will change the game again and certainly lead to new acquisitions. Think of Lenovo. Back in August, the company said its sales of mobile and tablets had outstripped revenue from its core PC business for the first time. It's no wonder that parts of BlackBerry or HTC are interesting targets. The battle for smartphone leadership will continue to be extremely fierce between Apple’s and Samsung’s challengers – Huawei, LG, Nokia, Sony, ZTE, and Chinese newcomers like Xiaomi.
The challenge for these players will be to embrace software and services innovation across platforms. A lot of today’s buzz is focused on hardware innovation with, for example, flexible displays like the LG G Flex or Samsung’s Galaxy Round. What do these innovations bring to consumers and marketers? Not much for now. Long-lasting innovations – at least ones that will be of interest to third parties and marketers – have to be linked to the software, services, and app ecosystems. That’s why even today’s smartphone leader, Samsung, is at risk of being too dependent on the Android ecosystem, due to the success of its Galaxy range of products. Software and services are not yet part of Samsung’s DNA, and it will be extremely interesting to analyze the success of Samsung’s Tizen launch in the coming months. It will be a good time to stop comparing Apple and Samsung like-for-like.
Marketers willing to engage with consumers on mobile devices and new computing form factors had better stop being fascinated by hardware innovation, handset specs, and technology per se. Instead, they should look at these only as enablers of new experiences to be delivered on top of digital platforms.
Marketers should also stop looking just at average smartphone penetration levels or volume shipments. They should be much more granular in their analysis of mobile consumer behavior and attitudes to prioritize the development of new experiences across touchpoints. For example, comparing iOS and Android at a high level is increasingly less relevant. Firstly, because you must focus first on your core target audiences and not base your approach on a market average. Secondly, because it is less and less relevant to directly compare iOS and Android. Of course, Android leads in volume, while iOS leads in usage. But bear in mind that the gap in usage can mostly be explained by the profile of iOS users and the fact that Android is embedded in a hugely diverse set of devices, from higher-end Samsung’s Galaxy S4 to lower-end Chinese handset devices that do not have Android services pre-installed.