Smartphone Market Share Influences Download versus Mobile Web Debate

In a recent article from Media Post a software application developer from Istanbul, Turkey attending a conference in San Jose, California, voiced his opinion that the US does not understand the importance of the Mobile Web. This article reminded me of the panel discussion I moderated at the PhoCusWright @ITB conference in Berlin earlier this year where the subject of downloadable applications was debated against the advantage of the Mobile Web with a panel of European mobile travel experts. During that discussion a common argument in favor of the Mobile Web approach was the ability to have the application available on all devices with a mobile Web browser. On the side of downloadable apps, the ability to use the GPS location capability and ability to balance the processing load between the network and device were common arguments for the downloadable app approach. Given the explosion of app stores from device manufactures and wireless network providers , it is clear that the downloadable approach has been recognized as an important channel for application delivery. So given this debate, what is the right approach for travel companies who want to build and deploy mobile apps?

The answer lies in the recent 2nd quarter market share numbers published by Canalys. Here is the worldwide smartphone adoption numbers:
From a global perspective the growth of Apple's iPhone is phenomenal. But the true insight comes from the individual regional market share.

Clearly in the US market RIM and Apple dominate the smartphone market.


Contrast this with the EMEA market share












Now compare this with the numbers for Asia Pacific:

As you see Apple and RIM do not even qualify for their own category and are grouped into Other.
The simple conclusion is this:
1) Clearly smartphones are a growing category.
2) Areas of the world dominated by Nokia have not felt the true impact of the smartphone adoption.
3) Travel companies need to understand the specific smartphone adoption market share percentages for their clients when planning a mobile strategy.
On a long term basis as recently voiced by Google, browser-based applications may dominant, but for the short term (3-5 years), downloadable apps will be the most logical path. Keep in mind that smartphone penetration is much greater for frequent travelers who are early adopters of smartphones. Developing applications for the leading smartphone devices: RIM, iPhone and perhaps Windows Mobile is the most logical path to follow. Nokia's recent announcement concerning their new relationship with Microsoft is an obvious attempt by both companies to fight the growth of RIM and iPhone.

Is the Finger Print Reader on the IPhone the Solution for M-commerce and Security?

Apple has filled patents for fingerprint recognition system for the iPhone. This may have major implications for m-commerce and security as well as mobile user interfaces. Fingerprint reader technology has long been used for computer security. The interesting thing about Apple's research is that involves the use of fingerprint patterns to actually identify distinct fingers. The idea is to match specific functions to specific fingers. This table shoes how an index finger press might perform on action (PLAY/STOP) while a middle finger press could fast forward.
Clearly fingerprint reading is coming to mobile phones. When implemented consumers could become comfortable with storing personal information on their mobile phone provided no one can access it due to the fingerprint lock. There has been a great deal of discussion on the concept of a portable profile that could be used across sites to provide more personalized interaction. Given the personal nature of the mobile device, fingerprint controls may provide the needed security to make a portable profile a reality. Travel apps could use specific fingers for targeted tasks such as purchase or rebook. Clearly fingerprintf identification and interaction is something to watch over the next few years.

Illegal iPhone Clones are Here

This image is an iPhone, right? Look again. This is an illegal iPhone copy made in China that I found was being sold in Dubai. A client of mine bought this from a vendor in Dubai about a week ago while I was there. Apart from the obvious legal ramifications of this device (I'll leave that to Apple), the impact on the market will be significant. My client bought this iPhone copy for 300 Dirhams (about $82 USD).
In our report for PhoCusWright, we predicted a flood of smartphone copies in 2009. This clear ripoff of the iPhone is characteristic of what will be common phenomenon throughout Asia. As long as the wireless carriers go along, illegal copies like these will flourish and significantly increase the penetration of smartphones in the market. It is unclear if this phone would access an app store. BTW if you didn't notice, the key difference between a real iPhone and this illegal copy is that it only has four rows versus five on the main screen.

Top Apple Travel Downloads

With Apple approaching 1 billion in downloaded apps, I thought it would be good time to take a look at the top 5 most popular free and paid travel apps on iTunes

PAID.
1. Flight Track - this application from Mobiata is similar to Web based applications such as Flight Stats, but produced by a small mobile app vendor. - Question why doesn't Flight Track have the top position here?


2. Tipulator - Allows you to calculate the appropriate tip for service. Question: Isn't that essentially a calculator?


3. Where The Locals Eat - was created by the dining guide company of the same name. The popularity of this paid app reinforces the demand for local dining advise


4. iFare Finder - is a Kayak like meta-search application. The interesting aspect of iFare Finder is that it is only a mobile app. I could not even find a Website for RIV Creations the creator of iFare Finder, only a blog. Having helped a client last year create a mega-search engine, simple screen scraping will not work as a long term solution. Time will tell the quality of the engine behind iFare Finder.

5. Zagat to Go - At last a familiar brand name!



FREE
1. Google Earth - shows how Google is already dominating the mobile space


2. Urbanspoon - a slot machine that allows the user to chose a type of restaurant randomly


3. YELP - the UGC local restaurant and services



4. WiFi Finder - locate free and paid Wi-Fi networks



5. Choice Hotels Locator - At last a familiar travel brand!


So what does this all mean? Though brands such as Kayak, Hotels.com and Disney do appear in the top 20, a vast number of travel brands are missing. Now multiply this by 1000 and you can start to see how the explosion of app stores from Google, RIM Blackberry, T-Mobile and Nokia will further lead to missed branding opportunities unless the travel industry major players recognize that mobile downloads are here to stay and that they need to be part of every travel company's strategy.

It all about the App Stores

Apple launched its App store in March of 2008 permanently changing the way mobile applications are distributed. Today there are over 15,000 apps in the iPhone store, but there's a lot more to come....

New app stores have been announced from RIM Blackberry, T-Mobile and Google. There has also been some speculation that both Microsoft and Nokia may be launching apps stores.
So what does this mean to the travel industry? Sometime in the not to distant future we may be looking at over 100,000 downloadable applications available from a variety of sources. The percentage of applications that fall into the travel, location based services and navigation categories will likely be high. The travel industry needs to create applications today for the current app stores from Apple, RIM Blackberry and T-Mobile. These apps should not simply be retreads of their current Website but include innovative ways to combine location, context and personalization into delivering unique value to the business and leisure traveler.

An approaching "Storm" of smartphone competition

Things are heating up even more on the smartphone front as RIM introduced the new BlackBerry Storm which will be available later this month. RIM's BlackBerry owns the enterprise smartphone mobile space. Recent surveys we've completed as part of the PhoCusWright special report "The Future of Mobile Travel" shows the iPhone gaining ground on the BlackBerry with a significant number of frequent business travelers (at least 4 business trips a year) stating that they are considering an iPhone.
The growing smartphone war has positives and negatives for the travel industry. On the positive side, smartphones patterned after the iPhone will have a more practical mobile Web browser experience. The downside comes in application development. Our research is indicating that downloading applications is a more practical strategy than simply repositioning current Website information. In addition to Apple's iPhone App store, Google and Blackberry have announced plans to open app stores as well. The cold reality of this trend is that travel companies who are serious about mobile applications will need to port their app to multiple environments. The iPhone SDK is a good development platform but very closed in nature. In contrast the Google Android platform promises to provide a more open environment for mobile platform development. Even Symbian OS now owned by Nokia is talking about a more open computing approach. Those travel suppliers and intermediaries who believe that simply translating their current Website to work with Web browsers on multiple handsets is a sufficient mobile strategy, will need to rethink that approach as smartphones become the standard device for business and leisure travelers. Yes Web browsing is definitely on the iPhone, but even with the ability to use the two finger pinch to zoom in on Web content, there is a major difference between an iPhone app verses viewing a Web page on the Safari browser.

Here is the screenshot for the Travelocity Web page on the iPhone. Yes you can zoom in but this is still not a practical way to book itineraries.

















Compare that to the screenshot of the Travelocity iPhone App. Sure the Travelocity app does not have booking capabilities but the UI is much easier and more practical to use for a future booking platform, which BTW our research shows frequent business and leisure travelers want (especially for irregular operations!).

The First Android Phone versus the iPhone

T-Mobile introduced the first Google Android phone this week. This long anticipated new platform combines elements of the iPhone (touch screen) and the Blackberry (pull out keyboard). Since I began researching mobile technology for the "Future of Mobile Travel" special report from PhoCusWright, I have been saying that the iPhone is a game changer. This message became more real to me as I purchased an iPhone earlier this month. Like any device it has its pluses and minuses. The same is true with the new Google Android platform. Both of these phones are shifts in the way people view their mobile device. Here's my brief take on the two devices and how they will impact the travel experience:
1) The iPhone - The most exciting part of the iPhone is not the phone itself but the combination of the phone's capability and the large number of inexpensive apps available through the Apple App store. Though downloading apps is nothing new, bypassing the "deck" of the mobile carrier presents a more intuitive, flexible and direct environment to load applications. There are currently 175 apps listed in the travel category and another 121 apps listed in the navigation category. The simple concept of locating yourself though GPS and looking at your immediate surroundings for restaurants, shopping or movie theatres is made simple by apps such as "Nearby" or "Where To". Surprisingly few travel companies with the exception of the online folks such as Travelocity or TripIt have released iPhone specific apps (though a lot more are on the way). Once travel companies start realizing the ease of distribution available to iPhone users I anticipate many more traditional brands populating the travel category. The iPhone is a mediocre email device particularly for those Blackberry thumb users who can type long letters rapidly from the phone. The email application works fine for me as I normally wait to respond (unless it is an urgent message) until I power up my laptop or desktop. I had no trouble connecting the iPhone to my MS Outlook. The Web browser is another strong element, but even with the larger screen and ability to expand using the two finger pinch, browsing on the iPhone is much improved from other devices but NOT a replacement for the Web. Our research has uncovered the fact that many travel companies are simply porting their current Web pages onto mobile devices and even with the iPhone's improved graphics, booking travel on the mobile Web browser can be challenging. The other approach of downloaded apps seems to be a much preferred way to penetrate the iPhone market. A strength that Apple has verses Google is the control of the hardware and software. The hardware control includes the firmware (software that is embedded on the hardware) giving greater consistent performance. The message here is simple, all travel companies should develop applications for the iPhone.
2) The T-Mobile G-Phone wants to be both a Blackberry and an iPhone. Surprisingly, currently the T-Mobile version only connects up with Gmail and in fact you need to have a Gmail account to use the G-phone. No doubt Microsoft Exchange may become a future capability, but until it does the G-Phone cannot replace the Blackberry. I will hold off my full evaluation of the device until I actually see the physical phone. My sense is that the Google Android platform can match the iPhone look and feel and simplicity of Web browsing. How apps are created and distributed will be a key element of the success. According to Strategy Analytics, the Android mobile operating system will account for 4 percent of all fourth quarter smartphone sales in the U.S., a small % but likely to grow. If the Android operating system spreads quickly and if developers gravitate to the application development environment, the same ease of use of downloading apps for the Android powered systems may further cement this process as the preferred delivery of travel specific apps, provided a central store is created. If the carriers remain in control your ability to download apps may be limited by the traditional control the carriers have put on new app distribution. The lack of control over the firmware may be an Achilles heal for the G-phone but it is too early to determine if the need to work with a variety of firmware is truly a market inhibiting problem.

Is History Repeating Itself with Google Android?

I am old enough to remember the early days of personal computing. In fact the first Mac I worked on did not have its own hard drive and thus required switching out floppies to do any simple computing task. My first non-Mac "personal" computer was a suitcase sized Compaq which ran DOS and Lotus 1-2-3. The advantage of the Mac GUI was obvious. When the first version of Windows was released it contained many Mac like functions and through later releases soon became the dominate GUI for PCs. Despite Apple's initial innovation, Windows based-PCs are the standard.

I am starting to question whether history is repeating itself on mobile devices. There is no dispute that Apple's iPhone represents a game changer in the world of mobile technology. With the first practical mobile Web browser, the iPhone delivers a vastly improved Internet mobile experience, though the telephone aspect of the device is still in need of enhancement. The Google mobile platform is in its infancy, but we should see Android based mobile phones by Q4 of this year. Google has announced an agreement with the Open Handset Alliance, a consortium of 34 handset manufacturers, carriers and chipmakers that have said they plan to support Android products and services. As an open-development platform, third party applications will flourish. Apple's iPhone is clearly the innovator, but the market will likely be flooded with iPhone clones with 18-24 months. Will the Android platform do to the mobile phone what Microsoft Windows did to the PC market? The answer is not completely clear as the mobile industry has many operating systems - Symbian, Palm and of course Windows Mobile. There are also a variety of development environments including Java and Brew. In addition to an innovative design, Apple's iPhone also shifted a significant part of the revenue from AT&T to Apple, something very much on the minds of all mobile carriers. This economic shift plus the power of Google to dominate the mobile market is something to watch as Google Android enabled phones appear later this year.

iPhone SDK: The Good News and Bad News

Yesterday's announcement concerning the availability of the iPhone SDK (Software Development Kit) is significant for potential travel application developers. The iPhone has shifted the focus from cell phones to mobile Internet devices with the first full function mobile Web browser. Applications written for the iPhone can be downloaded directly from the Internet bypassing the traditional walled garden of the wireless providers. The announcement specifically emphasized application development for the business market to compete with RIM's Blackberry, the leading corporate smartphone. Venture capitalist firm Kleiner Perkins Caufield & Byers announced it was creating the $100 million iFund to help new developers for the Apple handheld platform. As a result there is a lot money on the table to encourage developers to create corporate oriented apps. Are you listening travel software vendors? That's the good news.

The bad news goes to the heart of what Apple is about: proprietary software. Though the iPhone design is truly revolutionary, the corporate strategy of a proprietary operating platform environment may constrain development. There is fear among developers that Apple will limit the ability for third-party developers to distribute apps, in the same way they did with the iPod gaming market In addition the ability to write the application once and have it shared across devices is impossible with this proprietary approach. For example many of the current mobile applications are written in Java which can run any device that has a Java Virtual machine (JVM). This week Apple also announced that they will not support a Flash Virtual machine on the iPhone limiting the use of Macromedia's Flash, a very popular way developers have added animation and desktop functionality to Web apps. In addition, the Telcos are not happy with Apple as the iPhone has eliminated the revenue associated with the control over application distribution that has been a driver for the walled garden approach. A slew of new iPhone like devices is already hitting the market with many more on the near horizon. Apple has again been pivotal in the development of new platforms as it was in the creation of the personal computer, but may fall victim to the same low marketshare fate if open applications environments such as Google's Android platform take hold allowing a more practical path for cross platform mobile application development. I don't believe we'll see the iPhone's share of the mobile market diminish as it did in the early days of the PC, but limiting third party application development is never a good thing in the age of open source computing.