Today’s Wall Street Journal article reports on the rapid growth in the 1Q2010 mobile handset market, throttled by an increase of 49% in smartphone unit sales, totalling 54.3M devices. RIM and Apple have now vaulted to the #5 and #7 global handset volume list, where they continue to nibble away at Nokia’s massive market share.
Are apps driving the demand for these devices or are they more affordable or both? Apple is setting the pace with approximately 200,000 apps available. Meanwhile, RIM is lagging in this category with only 6,000 apps, but has the best mobile email in the industry.
RIM is up 1% while Apple is slightly down in their respective exchanges this morning.
Sprint (NYSE: S) is up five percent on heavy volume today with their
earnings announcement looking relatively positive. The company’s net loss of subscribers for the quarter was 75,000, which is an improvement. If you look into the details of the erosion of customer base, there’s a big number that jumps out at you. iDEN, the old Nextel customers, fell by 447,000.
Hesse is doing the right thing. iDEN was an aging technology with one feature, push-to-talk, when Sprint acquired Nextel. Either entice those Nextel customers to migrate to CDMA or give them a super-size option, 4G, and the new HTC smartphone launching this summer. We can live with short term negative net loss of subscribers. Just leave the iDEN network and the ghosts of the acquisition behind.
NYSE: S, May 2009-Present
Analysts, industry players and media are now all agreeing that we are seeing a growing wave of supply and demand for mobile apps, and it is not a ‘fad’. The market is poised for double digit growth for many years forward and with some interpolation of forecasts, sixty billion (60,000,000,000) apps will be downloaded from 2010 thru 2014. What is being underanalyzed, and probably discounted, is the growth in business oriented applications. Most articles I read, including this recent Business Week review, still refer to consumer and social related apps. As we have seen in Internet and previous mobile product adoption cycles, consumer applications are at the front of the wave, due to their appeal to massive segments of the user base. Then a second wave of business driven, return on investment justifiable, apps follow.
We are seeing this now at MacroSolve. In the past week we have had restaurants, country clubs, health clubs, nursing homes, beverage distributors, oil and gas companies, marketing/promotions companies, public schools and even a zoo approach us for tools and guidance. Our resellers are getting the same breadth and depth of potential sales volume as well. FY2010 may well be the year of the appstore. FY2011 may well be the year of the business app, on the appstore.
It seems hard to believe that in March 2000, Palm was trading at $800, in the middle of the ‘Internet Era’. Two years later, MacroSolve began developing mobile applications for businesses on Palm PDAs and Apple Newtons and then launched ReForm(tm) with Palm in 2003 as the first wireless data connected devices began appearing on the market. Palm settled into a trading range of $25-$15, until disaster struck.
The end of Palm was near when in September 2005, Palm sold off their operating system division, PalmSource, to ACCESS CO., LTD. The infusion of cash and hope that the company would transform itself was short lived. Palm had outsourced its user experience and engineering expertise while creating confusion and frustration in the application development community. Starting in the second quarter of 2006, the stock slid from $23 to $14 and by 2007 year end, $6. Game over.
The lesson learned, which has been noted by Google and Apple today, is that the value in mobility is connecting the user with meaningful applications. Control and coordination of the operating system with the developers is the path to profitability.
RIM just announced that fourth quarter revenue rose an incredible 35% and earnings rose 37%, up to $1.27 per share. The stock took a 1.26% hit with the news. Is there any other industry with growth and profitability expectations higher than this?
With news coming out that Apple will be developing iPhones for the Verizon, Sprint and other networks besides AT&T, over $12B in market cap has shifted this morning. Google has lost 1.5% while Apple has bounded upwards by 1.5%.
That crunching sound you hear is the sound of Google’s Droid smashing competitors. Jim Patterson and Flurry released a report that shows greater initial unit sales than iPhone and an appstore that has already grown to 30,000 titles.
One of the industry analysis tools that RCR Wireless magazine provides is a Wireless Index which is a basket of stocks across the wireless/mobile ecosystem. Prior to the market crash in 2009, the index performance typically tracked above NYSE peformance, but has been slightly lagging for the last year and a half. Over the past month, the stock market has been bullish with consistent gains on the DJIA up to the 11,000 level. Over the same time period, the Wireless Index has performed above the NYSE, reversing the trend.
RCR Wireless Index - March 2010
Tulsa Drillers ticket scanning at the turnstyle.
While visiting our local minor league baseball park this past weekend, I noticed that mobile technology is becoming a part of the fan experience and club operations. It started at the Tulsa Drillers turnstyle, where Leslee greeted me with a handheld scanner which captured barcode information off of the ticket. She said the information they capture helps them create a better product for season ticket holders and other fans.
After stocking up on food and drinks a young lady approached me and asked if I would participate in a quick survey. She had a WiFi handheld device, asked a few questions about the wireless carrier I use and what attracts my family to the game. She was using ReFormXT software which allowed her to check a few boxes on the device as I responded, and that information was immediately fed to a database in the office.
Once seated, everyone around me was texting between innings. A friend of mine was using his iPhone to get stats on the visiting team’s pitcher. A group of young ladies were taking pictures and forwarding them to friends and posting them on their MySpace account. Almost everyone was connected. The only person who wasn’t using a handheld device was the umpire. At least I hope so.
The Smartphone market is one of the areas we closely watch as it serves as a bellweather for trends on how businesses are adopting mobility. Within this market is Nokia, RIM/Blackberry, iPhone, Windows Mobile devices, HTC, Palm and others. What makes these devices ‘smart’ as compared to a cell phone? In simple terms they have an operating system that allows applications to be downloaded, a wireless data connection and usually a keyboard that accomodates a lot of typing.
A leading research firm, Gartner, just released its annual report on this market. Of the 138 million devices sold in 2008, Nokia owns 40% of the market, followed by Blackberry (~20%) and then iPhone (~10%). Nokia is losing market share, Blackberry is up 84% (quarter over quarter) and iPhone, a new entrant, is up 111%. What is interesting here is that Blackberry is now a $12Billion company and this growth rate is incredible for a company that size. Blackberry’s niche is serving the business customer, which are typically email fanatics. iPhone serves a completely different segment, entertainment driven customers.
My take on this development is that businesses can cost justify a Blackberry as a business tool. With a new application store called App World, we will likely see this trend continue.
If you would like more detailed information on the subject, Michael Mace’s blog has some very good statitistics and observations.
