In that year, Gartner forecasts Android will actually rank second globally, behind the Symbian OS, which is used in Nokia devices that are highly popular in Europe and many countries outside the U.S. Symbian now runs on about half of all smartphones, but will fall to 39% in 2012, Gartner says.

The Gartner forecast gives Android such an enormous surge in popularity because of a variety of factors, but chiefly because of Google Inc.’s backing of Android and the range of cloud computing functions and related applications that Google will make available in coming years, Ken Dulaney said in an exclusive interview with Computerworld.

While the first Android product release, the T-Mobile G1, only won a lukewarm response, Android 1.5 (code-named Cupcake) is well thought-out, Dulaney said. Other expected improvements in Android for its application store and development environment will be “backed by the power of Google’s search engine,” he said. “Google’s other up-and-coming consumer and enterprise products should make[Android] a dominant platform.”

And because Android and Google operate in an “integrative and open environment, [they] could easily top … the singular Apple,” he said.

Android will also run on phones from several manufacturers, helping its growth, especially when compared to the iPhone, Dulaney said. In 2010, as many as 40 models of Android devices will ship, and the next OS update, code-named Donut, will ship in the second quarter, Dulaney predicted.

As an early example of how Android should be successful, Dulaney pointed to Motorola’s Cliq, with its Motoblur interface that he said “handles communications very effectively.”

To explain, Dulaney said that smartphone interfaces seem to have headed off in two divergent ways, with iPhone’s heavy focus on applications compared to Windows Mobile’s and Symbian’s focus on smartphone tasks and communications. But Android, he said, “has blended a focus on applications and tasks pretty well.”

Android’s interface allows a user to perform frequently needed tasks without going back to the top of the logic tree to switch between tasks, he said. Makers of Android “have done a good job of knowing how you work on a phone,” he said.

The complete Gartner forecast for smartphone OSes by the end of 2012 puts Symbian on top with 203 million devices sold, and 39% of the market. Android will be second with nearly 76 million units sold, and 14.5% of the market.

Coming in a close third, the iPhone will ship on 71.5 million devices in 2012, giving a 13.7% market share. Windows Mobile will finish fourth, with 66.8 million units sold, or 12.8% of the market.

Very close behind Windows Mobile, the BlackBerry OS will sell on 65.25 million devices in 2012, Gartner forecasts, making it fifth with 12.5% market share.

Various Linux devices will sell 28 million units, at 5.4% market share, in sixth place. Palm Inc.’s webOS will sell on 11 million units in 2012, about 2.1% of the market, in seventh place, Gartner says.

Android will have moved up the most from 2009 to 2012, from sixth place to second. BlackBerry will have moved down the most, from second to fifth, while iPhone will remain in third position and Windows Mobile will remain in fourth position, Gartner says.

OCTOBER 5, 2009
Demographics evening out
As mobile Internet usage increases, men are losing their advantage in numbers. They still account for the majority of users, but women are catching up quickly.

Mobile Internet visitors were up 34% year over year to 56.9 million in July 2009, according to The Nielsen Company. Growth among women outpaced the average rate by some 9 percentage points. Men still made up 53% of the mobile Web audience in July.

What keeps men so attached to their mobile phones for Web browsing? They make up the bulk of the audience for tech, sports and news content—and, unsurprisingly, for men’s magazine Maxim. Fully 95% of the Gizmodo mobile audience is male, and men accounted for about nine in 10 mobile visitors to NBA and NFL sites in July.

Women, by contrast, embraced the mobile Web for access to celebrity news, shopping sites and social networks. Females outnumbered males in their mobile visits to sites such as People.com, AT&T search and Horoscope.com.

Teens, adults ages 25 to 34 and those ages 55 and older also adopted the mobile Internet faster than the average rate, but, especially in the case of teens and seniors, from a very small base. Takeup was slowest among young adults ages 18 to 24.

In July 2009, users ages 65 and older still made up only 3% of the total. Just 12% of mobile Web browsers were under age 18.

eMarketer, which includes both Web browsing and the use of mobile apps in its figures, estimates there will be 73.7 million mobile Internet users in the US in 2009, an increase of 26.3% over 2008.

Nokia today announced acquiring San Francisco-based Plum, a startup focused on powering “micro-sharing” networks for families, co-workers and other groups. The idea behind the company is to let people in small social groups connect through private networks as an alternative to large social properties like Facebook and Twitter.

The move underscores that social networking is increasingly viewed as a key part of the mobile industry’s future. At its Nokia World conference last week, the Finnish phone giant announced a partnership with Facebook to offer a “lifecasting” service for the N97, making it easier for people to update Facebook profiles via mobile.

With the unveiling of its social-centric Cliq device yesterday, Motorola is clearly staking its comeback as a phone maker on social media and messaging will play a central role in mobile usage. Other handset makers and wireless carriers such as Verizon and AT&T have launched their own social networking-geared phones and services.

For Nokia, the Plum acquisition could lead to the company developing a “microsocial networking” service on mobile devices, something like a social version of the calling circles offered by the major U.S. wireless carriers.

“This kind of ability to link more intimate and closer-knit groups, like families, is likely what attracted Nokia (NOK), the Finland-based mobile phone giant,” noted Kara Swisher in a post today about the deal on her Boomtown blog. It might also complement its lifecasting service with Facebook.

With a company as vast as Nokia, though, it’s hard to predict what, if any, impact the acquisition of a 10-person outfit will end up having on its business.

Here’s why PC giants like Apple, Dell, Microsoft, and everyone else all want a piece of the smartphone market: By the end of 2011, worldwide smartphone sales will pass worldwide PC sales, RBC analyst Mike Abramsky estimates, approaching 400 million annual shipments of each.

…or “So You Think You’ve Got a Million Dollar App Idea”

(this piece also appeared on Silicon Alley Insider)

As a number obsessed techie and ex-management consultant, market sizing and research were a big part of my launch preparations for Exit Strategy NYC. Since launch, I’ve received many questions from people struggling to estimate the market for their iPhone app ideas.

I’ve put together this document as a guide for entrepreneurs considering developing an app. Below, I’ve compiled some up-to-date numbers about Apple devices. I’ve also laid out a framework for estimating what kind of sales can be expected from a paid app.

The Basic Facts

• 45 million iPhone and iPod Touch devices [Apple Earnings Announcement]
• 54% of iPhone and iPod Touch users are in the US as of June 2009 [Admob Mobile Metrics Report]
• The iPhone comprises 68% of worldwide iPhone OS devices and the iPod Touch makes up the other 32% [Admob Mobile Metrics Report]
• Only 75% of users actually download apps [Pinch Media]
  • The most frequently downloaded free apps reach approximately 30% of devices [comScore]
  • The most frequently downloaded paid apps reach approximately 3% of devices [My calculations - explained later]

Right off the bat, there’s a few back of the envelope calculations to make: 54% of the 45M devices are in the US which means ~ 25M devices. The US has about 300M people.  That means about 8% of the general American population has one of these devices.

How To Use These Numbers

Combine this data with your own numbers about how large of a market your product is addressing. For Exit Strategy NYC, our addressable market consists of all subway riding New Yorkers. In 2008, there were about 5M weekday riders and about 3M Saturday riders [MTA's ridership numbers]. The Saturday number is the more relevant one as it better captures subway usage by NYC residents rather than regional commuters. Neither number counts unique riders though, and given that there are 8M residents of NYC our addressable market size is probably somewhere in between these numbers. Let’s say 6M subway riders.

New Yorkers probably skew more techie than average, so let’s assume 10% (rather than 8%) have an Apple device. Also, Exit Strategy NYC works on both iPhone and iPod Touch devices. If your app requires phone/gps/camera/internet to work well, exclude iPod Touch users from your calculations.

How many Apple device toting subway riding New Yorkers are there?  Well 6M subway riders with 10% penetration = 600,000 potential users.

“But How Many People Will Actually Buy My App!?”

Entrepreneurs are optimists by nature, and it’s tempting to think that 100% of people will buy your product. After all, your product is awesome, right? But reality is a quite different story. In fact, only about 3% of users have purchased the most popular paid apps. To determine that number, I used sales figures from one of the all time best selling paid apps, Firemint’s Flight Control game. According to Firemint’s Alexandra Peters, sales to date have been 1.4 million. As a percentage of the 45M Apple devices, this is ~ 3%.

You should expect a similar upper bound of 3% to apply to whatever market vertical you’re addressing. Of course it’s possible that your app meets some crucial compelling need and therefore achieves a higher penetration rate in your vertical. But don’t count on it — it’s equally possible that your app gets lost in the noise and can’t get traction. Flight control has held a constant spot on the top paid app list for months now. Few others have this advantage.

Realistic Unit Sales Calculations

Returning to the Exit Strategy NYC figures, we knew that if we had an effective marketing and press strategy, we could probably achieve something close to this 3% penetration figure — perhaps higher as many New Yorkers are very passionate about the subway (see? there’s that ever-present entrepreneurial optimism!). 3% of the 600,000 subway riding devices would mean 18,000 unit sales. Does this translate to $18,000 total sales? Our maximum penetration figure was based on a 99c app, but what effect would Exit Strategy NYC’s $1.99 or $2.99 price point have on total sales figures?

Factoring in price into market sizing is difficult. Based on our own informal market surveying, we estimated that the most profitable price point would be $2.99 or $1.99. Around 75% of people willing to pay 99c would also pay $1.99 or $2.99. So 75% of 18,000 units at those prices works out to an ballpark range of around $27k – $40k. Like all software, the app’s unit costs are zero, it’s important to focus on maximizing dollar sales rather than unit sales.

A Growing Platform

One thing to remember is that the user base for apps is growing by leaps and bounds. In their latest quarter, Apple sold 5 million iPhones and 3 million iPod Touches. This means that the potential market for an app grew by more than 20% in only 3 months!

Non-Apple Platforms

One last thing to note: The iPhone certainly dominates headlines, but it’s not the only game in town. In fact, Blackberry outsells the iPhone every day. And in a town dominated by Wall Street, it seems like everyone and their mother owns a Blackberry. Realizing this, we carefully designed Exit Strategy NYC to be easily portable across different mobile platforms. Our app is available for iPhone, iPod Touch, Blackberry Bold, Curve, and Storm, Android Phones, and even as an e-book on Amazon Kindle.  Combined, the Exit Strategy App reaches a significant portion of New Yorkers.

But are device sales a good indicator of a platform’s expected app sales?

(CNN) — When Apple starts selling what it bills as the fastest, most powerful iPhone yet on Friday, the company’s latest entry will only heat up the already sizzling smartphone landscape.

Got smartphone fever? A new version of the Apple iPhone goes on sale Friday.

Fans, techies and ordinary consumers eager to purchase the new iPhone 3GS may be preparing to stand in line at Apple stores around the United States and seven other countries. But they have more choices than ever when it comes to phones that act like mini-computers.

“We expect that [smartphones are] going to be the fastest growing consumer segment for quite some time,” said Ryan Reith, a senior research analyst for technology research firm IDC.

“It’s all about connecting to the outside world.”

The U.S. smartphone market grew by 68 percent last year and is projected to grow by 20 percent in 2009 and almost 25 percent next year, according to IDC. Compare four smartphones »

No wonder companies are rushing to meet the demand for sleek mobile devices that combine e-mail, data, music, photos — all in the palm of one’s hand.

Interested in something other than the iPhone? The options include the new Palm Pre, Research in Motion’s BlackBerry Storm or phones powered by Google’s Android or Microsoft’s Windows Mobile operating systems.

The key is having access to the Internet anytime, anywhere.

“Mobile Web browsing is a huge thing,” said MG Siegler, a writer for the technology news site TechCrunch. “People especially want to get on the Internet and do the things they’re doing when they are at their [home] computers, which is social networking and sharing photos.”

When it comes to mobile Web surfing, the iPhone seems to be the king. A recent report by AdMob found Apple’s device generated 65 percent of mobile HTML browsing, a statistic that didn’t surprise Siegler.

“The Web browser on the iPhone has been up to this point far superior to what it is on some of the other phones out there,” he said. “The great thing about the iPhone is that you don’t have to have a mobile specific page. You can look at the regular page and just see it perfectly fine.” Read about the new iPhone’s features

All about apps

While Apple has lots of buzz and appeal, it’s not the dominant smartphone player. The company had only about a 20 percent share of the U.S. smartphone market in the first quarter of this year, a distant second to Research in Motion’s 55 percent slice of the pie during the same period, according to IDC.

Apple is the undisputed leader, however, when it comes to mobile applications — the software programs that let users do everything from play games to track their calorie consumption and everything in between. Sign up to receive information about CNN’s iPhone app

Apple’s App Store has a whopping 50,000 applications available, and a number of its competitors recently launched their own stores in the hopes of catching up. It won’t be easy: BlackBerry’s App World, Palm’s App Catalog, Microsoft’s Windows Mobile Catalog and Google’s Android Market have only a fraction of Apple’s offerings.

“It’s pretty clear that Apple has the lion’s share of people who want to develop mobile apps. It’s a great distribution platform,” said Erica Ogg, a writer for CNET News.

Some competitors are trying to lure developers to their platforms by letting them keep more of the money generated by their apps. While Apple offers a 70/30 split — with developers getting to keep 70 percent of the revenue and the company taking 30 percent — Research in Motion is offering a more favorable 80/20 split, Reith said.

Ironically, industry observers believe Apple’s success itself may eventually drive some developers to competing stores where their apps would be less likely to get lost in the crowd and have a greater chance of standing out.

“I would think that developers would want to look at a lot of these other platforms, like the Palm Pre, because they would still be so early on in the development cycle that they could get their app out there,” Siegler said.

“If the Palm Pre ends up taking off and sells millions of units then they’re much more likely to be successful.”

Speed matters

In fact, Siegler believes the Pre could be the biggest wildcard right now because it’s the first smartphone since the iPhone to use multi-touch. The feature lets users maneuver around the interface by using their fingers — double-tapping the screen to zoom in or out, for example, or “pinching” with their thumbs and forefingers to do the same thing.

Beyond the technology inside smartphones, the focus now is also on improving the infrastructure that services them.

“You’re going to start to see in the next year Verizon and Sprint, followed by probably AT&T and T-Mobile, start to increase their networks so you’ll have Internet speeds on your device that will be almost equivalent to broadband within your house,” Reith said.

All of this technology comes at a price. The iPhone 3GS, for example, starts at $199, with a required two-year contract that will have consumers shelling out at least $70 a month with AT&T. Both Reith and Siegler don’t see the monthly fees changing any time soon, which may cool some consumers’ smartphone fever.

“Definitely more people are interested in smartphones, but I think the costs of the data plans are for a lot of people prohibitive,” Ogg said.

“Especially with the way people’s budgets and finances are today, there’s still plenty of room for the free phone that comes with your plan that does basic things.”

JUNE 9, 2009

Look!

Applications for mobile devices date back to the 1990s, when Palm—by far the largest PDA player at the time—built an open platform that developers soon filled with thousands of applications. Users downloaded applications to PCs and synchronized them with their PDAs.

Enter the Apple App Store in July 2008.

“Apple did not invent either the model of aftermarket applications or the notion of building a store to house them,” says Noah Elkin, eMarketer senior analyst and author of the new report, Mobile Applications: Moving Beyond Apple, “but it did succeed in radically improving an existing idea.”

Excitement over the iPhone and App Store transformed these functional utilities into full-blown consumer experiences. Apple and others in its wake have jolted the mobile advertising market and are paving the way for paid branded applications.

As a result of rising smartphone popularity, eMarketer projects that mobile Internet access will see significant gains over the next five years, with the number of mobile Internet users reaching 134 million in 2013.

Global economic forces are taking their toll on the mobile device market, but smartphones have been spared the ravages of the economic downturn.

Even in the face of a worldwide recession, the International Data Corporation (IDC) expects smartphone shipments to grow by 3.4% this year, and expand at triple the rate of feature phones in 2010.

This sales growth will dramatically reshape the device market. By 2013, Informa predicts smartphones will make up 38% of all handset sales worldwide, more than double their share in 2009.

“As integrated devices grow more sophisticated in functionality and more accessible in price, consumers are responding by upgrading their handsets,” says Mr. Elkin. “And once they have experienced the mobile Internet through improved browsers or installed applications, they appear unwilling to let it go.”

The size of the mobile applications market is something of a moving target, given how quickly app stores are proliferating and their catalogs growing. Piper Jaffray, one of few organizations to project the extent of the growth, estimates that combined spending on consumer and business mobile applications will top $13 billion worldwide by 2012, a nearly fivefold increase over 2009.

“It is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Mr. Elkin. “In both cases, the essential challenge remains: to understand consumer behavior and craft experiences that not only resonate with a target audience but also integrate with other channels.”

Palm handset beat 8Gb iPhone in cost of goods

Rick Merritt
EE Times
(06/08/2009 7:00 PM EDT)

SAN JOSE, Calif. — Apple Inc. leapfrogged the Palm Pre with the announcement of its iPhone 3GS Monday (June and undercut the Pre by dropping existing iPhone prices to $99. Palm, however, undercut Apple slightly in the cost of hardware in handsets with 8 Gbytes flash.

The new iPhone 3GS uses an upgraded application processor, baseband and more NAND flash memory to deliver new media capabilities at $199 for a 16 Gbyte model. That’s the same price—figuring in a $100 rebate–as the Pre released Saturday (June 6) with 8 Gbytes flash.

Teardown specialist Portelligent (Austin) estimates the cost of goods of the Pre at just under $160. That compared favorably with the existing iPhone 3G with 8 Gbytes flash that Portelligent pegged at $173.

By comparison the HTC Dream—the first phone to use the Google Android software—cost $143 in hardware to build but had less than 256 Mbytes of flash, according to Portelligent, a division of TechInsights which publishes EE Times.

Details of the Pre teardown including photographs of its internals were released on June 7.

Initial reports said lines of consumers looking to buy the Pre at retail shops over the weekend were significantly lower than those for the first two generations of iPhones.

The new iPhone 3GS now supports HSDPA networks with downloads of speeds up to 7.2 Mbits/second, implying a new baseband processor. It also sports new video, graphics and audio capabilities, implying a significantly upgraded applications processor, said Jeff Brown, principal analyst at Portelligent.

The 3GS can record video at 30 frames/second at VGA resolution. Its camera has been upgraded to an autofocus version supporting 3 Mpixel resolutions.

The camera also has built in video editing capabilities and a feature that allows the camera to focus on whatever spot a user touches on the phone’s LCD. The phone also supports limited voice recognition for hands-free operation.

“All these features will require a significantly more powerful apps processor,” said Brown.

The new iPhones use an upgraded version of the Apple operating system announced earlier this year. Apple said it has put more than 50,000 applications for the iPhone in its App Store.

A 32 Gbyte iPhone 3GS costs $299. The new phones will be available June 19, but the lowered price on existing phones begins immediately.

Separately, Apple announced a new version of its computer operating system that has expanded support for multi-threading. The Snow Leopard software will be available as an upgrade in September for $29.