Tag: Smartphone

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The Industry

The Evolution of Smartphone Pricing

Smartphones are so ubiquitous that’s it’s easy to forget that the first iPhone was announced in June 2007 and released to the public later that year. The Apple App store at the time of the first phone had only 500 apps, most for pay. Apple had convinced developers that smartphone users would pay big bucks to download useful apps and most app prices ranged from $1 to $25. It became clear that users preferred free apps, and Ebay and other free applications found great success. But some for-pay apps like Super Monkey Ball, priced at $6 found good commercial success.

The cellphone companies at the time had mostly deployed 3G networks. The cellular companies saw the smartphone as a way to lure new customers and they all offered unlimited data plans. Unlimited plans were not a problem at first because the average phone didn’t use much data. However, the smartphone boom surprised everybody with Apple selling 4.7 million iPhones in the third quarter of 2008 – and sales skyrocketed from there. Android phones also entered the market in 2008 and the 3G cellular networks were quickly getting swamped. The cellular carriers quickly stopped selling unlimited data plans and tried to lure people from existing plans through practices like the way that AT&T slowed data speeds on unlimited plans.

About this same time was the introduction of 4G, which offered faster speeds and could connect more customers per cell site. The cellular companies had migrated entirely to metered pricing and sold data by the gigabyte. The market was clearly trying to extract as much revenue from customers as possible like they had done in the past with products like text messaging. The few cellular carriers were effectively monopolies who were selling a product with great demand, and prices steadily rose.

For many years there was enough capacity on the cellular networks to have supported unlimited and larger data plans. I remember a few unguarded comments by cellular executives admitting that they had plenty of network capacity – but the cellular companies cared more about profits than in accommodating the needs of customers. I remember years when both AT&T and Verizon were earning cellular profits of more than $1 billion per month.

T-Mobile upset the market equilibrium by offering cheaper data. They did this by offering more gigabytes of data for the existing market price and the other cellular providers responded by dropping the price per gigabyte. jumped on the bandwagon. We started seeing plans that promised gimmicks like rolling over unused data so that customers didn’t have to fear exceeding their data caps.

During this time we started seeing big customer volumes for MVNOs – carriers that repackaged wholesale minutes from the big cellular companies. The MVNOs offered options numerous options that lowered prices, such as low-price plans for small data users or large packages of data plans for the larger data users. All of this was aided by the continued evolution of the 4G networks that improved steadily as more of the 4G specification was introduced – we finally saw the first fully 4G compliant cellular sites at the end of 2017.

In early 2017 we sy another sharp turn in market pricing when all of the carriers announced ‘unlimited’ data plans. This was largely in response to T-Mobile which had launched ‘T-Mobile One’, a truly unlimited plan. The unlimited data plans from other carriers weren’t actually unlimited and most were capped at a little over 20 gigabytes of data per month. This seems to have created the expectation from the public for large data plans.

Already since then the cellular carriers have subtly shifted the game again. They now offer multiple tiers of unlimited data. For instance, customers can buy unlimited plans that charge more to add on HD video. Customers can buy plan that add international roaming or plans that throttle usage when customers hit a certain cap. The multiple-plan approach looks to be a way for the carriers to extract more revenue from a product that they fear is becoming a commodity. They are offering add-ons that they hope will lure customers to spend more each month.

It’s hard to believe that all of this has happened within only eleven years. There must be grist here for dozens of economics PhD thesis papers looking at how an oligopoly market responded to major technical improvements and massively increased demand. There is no arguing that the cellular carriers have been successful and have convinced each person in a household to buy cellular plans that cost more than what most families spend on telephone services a decade ago.

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Current News

Industry Shorts – March 2018

Following are a few topics that I find interesting, but which are too short to cover in a full blog:

Surge in Online Video Subscriptions. The number of households buying online video is surging. Netflix added almost 2 million US and 6.36 million international customers in the 4th quarter of 2017. That’s 18% more than the same quarter from a year earlier. There are also a growing number of vMVPD customers. At the end of last year CBS All Access has nearly 5 million customers. Showtime OTT also has nearly 5 million customers. Sling TV now has nearly 2 million customers. AT&T DirecTV hit the 1 million customer mark in December. PlayStation Vue reported 670,000 customers in mid-December. The new YouTube service has about 300,000. Hulu is also growing but doesn’t separately report it’s live TV customers from it’s video on demand customers (reported at 17 million total in December). Note that Hulu let’s customers buy one TV series or movies without needed a subscription.

Cellphone Data Usage Growth. According to the research firm NPD the average US smartphone now is used for an average of 31.4 GB per month of data. This is combined usage between cellular and WiFi data and is evidence that people are starting to really accept the small screen for video. This is up over 25% from a year earlier. The firm reports that video accounts for 83% of the usage.

The number of people willing to use a cellphone for video has also surged. NPD reports that 67% of cellphone users watched at least one video during the 3rd quarter of 2017, up from 57% in the 2nd quarter. Another research firm, Strategic Analytics reported that worldwide cellular data usage grew 115% in 2017, or more than doubled.

Global Streaming Doubled in 2017. Conviva, which provides systems to monitor and analyze online usage also reports that online video content more than doubled last year. They report that there were 12.6 billion viewing hours of online video in 2017 measured across 2.4 billon viewing devices. They report that 58% of video viewing came from North America; 21% from Europe; 19% from Asia 2% from the rest of the world.

Satellite TV Taking the Brunt of Cord Cutting. For some reason cord cutting seemed to be hitting the two big satellite TV providers even harder than landline cable companies. Dish Networks and DirecTV together lost 4.7% of their subscribers in the fourth quarter of 2017. We can only speculate for the reasons for the shift. The bundles of the landline cable companies make it harder for customers to drop their cable subscription. But to offset this, many satellite customers are in rural areas where there is often not a good broadband alternative to cable. But perhaps the FCC’s CAF II and ACAM programs are speeding up rural broadband enough for households to consider cutting the cord. It should be noted that AT&T is pushing their DirecTV now product more than their satellite TV, which also might account for part of the shift from satellite TV.

Apple Jumps into Programming. Apple quietly has gotten into the programing business. They’ve allocated over $1 billion in 2018 for the creation of new content. They’ve landed some big-name talent such as Steven Spielberg, Jennifer Aniston and Reese Witherspoon for projects. Apple doesn’t have a content platform and the industry is buzzing with speculation on how they might market and distribute the content.

Pirated Video Content on Rise. Sandvine reports that 6.5% of North American households have accessed pirated video content in the last year. I’ve read reports from Canada of companies openly advertising pirated content, including providing settop boxes that can download IPTV content directly from the Internet. Yesterday’s blog talked about new efforts by content owners to force ISPs to enforce copyright infringement.

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Technology

Death of the Smartphone?

Over the last few weeks I have seen several articles predicting the end of the smartphone. Those claims are a bit exaggerated since the authors admit that smartphones will probably be around for at least a few decades. But they make some valid points which demonstrate how quickly technologies come into and out of our lives these days.

The Apple iPhone was first sold in the summer of 2007. While there were phones with smart capabilities before that, most credit the iPhone release with the real birth of the smartphone industry. Since that time the smartphone technology has swept the entire world.

As a technology the smartphone is mature, which is what you would expect from a ten-year old technology. While phones might still get more powerful and faster, the design for smartphones is largely set and now each new generation touts new and improved features that most of us don’t use or care about. The discussion of new phones now centers around minor tweaks like curved screens and better cameras.

Almost the same ten-year path happened to other electronics like the laptop and the tablet. Once any technology reaches maturity it starts to become commoditized. I saw this week that a new company named Onyx Connect is introducing a $30 smartphone into Africa where it joins a similarly inexpensive line of phones from several Chinese manufacturers. These phones are as powerful as US phones of just a few years ago.

This spells trouble for Apple and Samsung, which both benefit tremendously by introducing a new phone every year. People are now hanging onto phones much longer, and soon there ought to be scads of reasonably-priced alternatives to the premier phones from these two companies.

The primary reason that the end of the smartphone is predicted is that we are starting to have alternatives. In the home the smart assistants like Amazon Echo are showing that it’s far easier to talk to a device rather than work through menus of apps. Anybody who has used a smartphone to control a thermostat or a burglar alarm quickly appreciates the ability to make the changes by talking to Alexa or Siri rather than fumbling through apps and worrying about passwords and such.

The same thing is quickly happening in cars and when your home and car are networked together using the same personal assistant the need to use a smartphone while driving gets entirely eliminated. The same thing will be happening in the office and soon that will mean there is a great alternative to the smartphone in the home, the car and the office – the places where most people spend the majority of their time. That’s going to cut back on reliance of the smart phone and drastically reduce the number of people who want to rush to buy a new expensive smartphone.

There are those predicting that some sort of wearable like glasses might offer another good alternative for some people. There are newer version of smartglasses like the $129 Snap Spectacles that are less obtrusive than the first generation Google Glass. Smartglasses still need to overcome the societal barrier where people are not comfortable being around somebody who can record everything that is said and done. But perhaps the younger generations will not find this to be as much of a barrier. There are also other potential kinds of wearables from smartwatches to smart clothes that could take over the non-video functions of the smartphone.

Like with any technology that is as widespread as smartphones today there will be people who stick with their smartphone for decades to come. I saw a guy on a plane last week with an early generation iPod, which was noticeable because I hadn’t seen one in a few years. But I think that most people will be glad to slip into a world without a smartphone if that’s made easy enough. Already today I ask Alexa to call people and I can do it all through any device such as my desktop without even having a smartphone in my office. And as somebody who mislays my phone a few times every day, I know that I won’t miss having to use a smartphone in the home or car.

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Current News

Universal Internet Access

While many of us are spending a lot of time trying to find a broadband solution for the unserved and underserved homes in the US, companies like Facebook, Google, and Microsoft are looking at ways of bringing some sort of broadband to everybody in the world.

Mark Zuckerberg of Facebook spoke to the United Nations this past week and talked about the need to bring Internet access to the five billion people on the planet that do not have it. He says that bringing Internet access to people is the most immediate way to help lift people out of abject poverty.

And one has to think he is right. Even very basic Internet access, which is what he and those other companies are trying to supply, will bring those billions into contact with the rest of the world. It’s hard to imagine how much untapped human talent resides in those many billions and access to the Internet can let the brightest of them contribute to the betterment of their communities and of mankind.

But on a more basic level, Internet access brings basic needs to poor communities. It opens up ecommerce and ebanking and other fundamental ways for people to become engaged in ways of making a living beyond a scratch existence. It opens up communities to educational opportunities, often for the first time. There are numerous stories already of rural communities around the world that have been transformed by access to the Internet.

One has to remember that the kind of access Zuckerberg is talking about is not the same as what we have in the developed countries. Here we are racing towards gigabit networks on fiber, while in these new places the connections are likely to be slow connections almost entirely via cheap smartphones. But you have to start somewhere.

Of course, there is also a bit of entrepreneurial competition going on here since each of these large corporations wants to be the face of the Internet for all of these new billions of potential customers. And so we see each of them taking different tactics and using different technologies to bring broadband to remote places.

Ultimately, the early broadband solutions brought to these new places will have to be replaced with some real infrastructure. As any population accepts Internet access they will quickly exhaust any limited broadband connection from a balloon, airplane, or satellite. And so there will come a clamor over time for the governments around the world to start building backbone fiber networks to get real broadband into the country and the region. I’ve talked to consultants who work with African nations and it is the lack of this basic fiber infrastructure that is one of the biggest limitations on getting adequate broadband to remote parts of the world.

And so hopefully this early work to bring some connectivity to remote places will be followed up with a program to bring more permanent broadband infrastructure to the places that need it. It’s possible that the need for broadband is going to soon be ranked right after food, water, and shelter as a necessity for a community. I would expect the people of the world to expect, and to then push their governments into making broadband a priority. I don’t even know how well we’ll do to get fiber to each region of our own country, and so the poorer parts of the world face a monumental task over the coming decades to satisfy the desire for connectivity. But when people want something badly enough they generally find a way to get what they want, and so I think we are only a few years away from a time when most of the people on the planet will be clamoring for good Internet access.

 

Categories
Technology

Are Smartphones Bad for Us?

I saw that last week was the eighth anniversary of the day when Steve Jobs introduced the iPhone at MacWorld in San Francisco. Smartphones are so ubiquitous today that it feels like it’s been longer than eight years and it’s already hard to imagine a world without smartphones. Certainly something may come along to be even more amazing, but this so far is the transformational technology of the century.

The iPhone certainly transformed Apple. In 2006, the year before the iPhone was introduced they had revenues of $19 billion with the largest product being the iPod at $7.7 billion. Last year Apple had revenues of $182.8 billion with the iPhone producing revenues of $102 billion. iPods were still at a surprising $2.3 billion (who still buys iPods?).

There were smart phones around before the iPhone from companies like Palm and Blackberry. But the packaging of the iPhone caught the eye of the average cellphone user and the smartphone industry exploded. One of my friends bought an iPhone on the day they came out and I remember being very unimpressed. I asked him what it did that was new and the only thing he could come up with FaceTime – but he didn’t know anybody else who had an iPhone at the time and we couldn’t try it. The original iPhone didn’t have many apps, but that void was quickly filled.

Now that smartphone usage is ubiquitous in the US, we are starting to see studies looking at the impact of using them. Not all of these studies are good news.

Researcher Andrew Lepp at Kent State University looked at how smartphones affect college students. Lepp’s study found that frequent smartphone usage can be linked to increased anxiety, lower grades and generally less happiness. Students who are able to put down their phones are happier and have higher grades. Lepp’s study also showed, unsurprisingly that students with the highest smartphone usage have worse cardiovascular health – meaning they are in worse physical shape.

Researchers at Michigan State found that work-related smartphone use after 9 PM adversely affects a person’s performance the following day. They found that not taking a break from work results in mental fatigue and lack of engagement the next day. Researchers at Florida State found similar results and postulated that the smartphone backlighting interferes with melatonin, a chemical that regulates falling asleep and staying asleep.

The statistics from various surveys on smartphone usage are eye-opening:

  • 80% of all smartphone users check their phone within 15 minutes of waking.
  • Smartphone users with Facebook check Facebook an average of 14 times per day.
  • A scary 24% of users check their smartphone while driving.
  • 39% of smartphone users use their smartphones in the bathroom (I have no idea what this means).

My own theory is that smartphones do so many different functions they can feed into many different versions of addictive behavior. People can use a smartphone and get addicted to playing games, or addicted to texting their friends, or addicted to using FaceTime, or addicted to reading sports scores and stories.

It’s not like addiction to technology is new. We all remember people who got addicted to early computer games. Perhaps there is still somebody today in their basement addictively playing Pong. There are many stories of people before smartphones who texted thousands of times per day. These early studies don’t surprise me and I am sure that many more studies will describe even more woes that can be added to the list of how technology can be bad for us.

Okay, I admit I use my smartphone in the bathroom – it’s a good chance to catch up on tech news. But that’s it. I swear!

Categories
The Industry

How We Get Our Entertainment

Nielsen just published The Total Audience Report for the third quarter of 2014 in which they look in detail at how Americans are getting their entertainment. They define entertainment broadly and include things like web browsing on computers and cellphones. But they do not count voice calling or texting, which are communications.  This report concentrates on the time that people spend on different devices. The report looks at the data in a number of different ways and I found a few of the comparisons to be quite interesting.

The report shows that the way we are accessing entertainment is changing rapidly. Consider the following statistics comparing the number of hours per day that the average person uses various devices , for the third quarters of 2012 and 2014 (in hours and minutes):

‘                                                            3Q 2012          3Q 2014

Watch Live TV                                        4:50                  4:32

Watch Time Shift TV                              0:24                  0:32

Watch DVD / Blu-Ray                            0:09                   0:09

Use a Game Console                             0:09                  0:12

Use Internet on a Computer                1:04                  1:06

Use a Smartphone                                 0:53                  1:33

Listen to AM/FM Radio                          2:51                  2:44

Use a Multimedia Device                      0:00                  0:04

The total time spent by the average person doing these activities increased over the two years from 10 hours and 20 minutes to 10 hours and 52 minutes. The time spent watching traditional TV and listening to AM/FM radio dropped while everything else stayed the same or climbed. The most dramatic shift was in the use of smartphones for entertainment which grew by 75% in just two years.

It’s also interesting to look at these same statistics by age group. Consider the following that shows weekly statistics for the average person in three different age groups (in hours and minutes):

‘                                                               18 – 24            35 – 49            65+

Watch Live TV                                         17:34              29:41               47:13

Watch Time Shift TV                                1:43                3:40                 3:19

Watch DVD / Blu-Ray                               0:46                1:08                 0:37

Use a Game Console                               3:35                1:03                 0:07

Use Internet on a Computer                  4:54                7:22                 2.48

Watch Video on Internet                        1:46                 1:48                 0:26

Using an App on Smartphone               9:40                 9:39                 1:16

Watch Video on Smartphone                 0:29                 0:14                 0:00

Listen to AM/FM Radio                          10:30              13:48               12:06

Use a Multimedia Device                        0:38                 0:30                 0.13

This shows a dramatic difference by age for watching traditional TV. The younger you are, the less TV you watch. Young people in the 18-34 age group watch 63% less TV than those over 65 while 35-49 year olds watch TV 37% less. It’s the dramatic decrease in TV viewing by younger viewers that has the TV industry worried. This is certainly going to mean a major shift in advertising dollars away from TV, something that has recently become noticeable. And this same trend of caring less about TV might be what breaks the traditional cable model rather than cord cutters. Young people still watch TV, but a lot less than older generations.

There is also a huge difference between generations in terms of total hours spent using these devices. The 18–24 year-olds spend 51 hours and 20 minutes per week, those 35-49 spend 68 hours and 20 minutes, and those over 65 spend 68 hours and 6 minutes.

People under age 50 have made a dramatic shift to using their smartphones for entertainment, be that playing games, browsing the web or shopping. Both the 18-24 year olds and the 35-49 year olds use their smartphones over 9 hours per week. Interestingly, I have read a lot of articles talking about how smartphone video usage is growing rapidly and will eventually swamp other kinds of viewing, but these numbers don’t support that contention. This shows that even those in the 18-24 group are watching video on the smartphones less than a half-four per week on average. Certainly usage of smartphones in general is way up, but they still only represent a very tiny sliver of the market for watching video.

These charts also reminded me how much people still listen to AM/FM radio. I listen to Sirius XM radio in my car since I am a talk radio junky and I haven’t listened to regular radio in years. But these numbers still show that all age groups are listening to the radio more than 10 hours per week.

Categories
The Industry

Statistics on How We Watch Video

Experian Marketing has published the results of yet another detailed marketing survey that looks at how adults watch video. This is perhaps the largest survey I’ve seen and they talked to over 24,000 adults about their viewing habits. This one has a bit of a different twist in that it correlates TV viewing with the use of various devices. The conclusion of the survey is that people who use certain devices are much more likely to be cord cutters.

Probably the most compelling statistic from the survey is their estimate that as of October 2013 the number of cord cutters has grown to 7.5 million households, or 6.5% of all households. This is several million higher than previously published estimates. This survey shows that age is an important factor in cord cutting and that 12.4% of households that have at least one family member who is a millennial between the ages of 18 and 34 are cord cutters. And something that makes sense is that over 18% of those with a NetFlix or Hulu account have become cord cutters.

The survey also shows that the number of people who watch streaming video continues to grow and that 48% of all adults and 67% of those under age 35 watch streaming or downloaded video from the Internet each week. And this is growing rapidly and both of those numbers increased by 3 percentage points just over the prior six months.

The main purpose of this survey was to look at viewing habits by type of device. One of the surprising findings to me is that smartphones are now the primary device used to watch streaming video. I guessed it surprised me because this is not one of the ways we watch video in our household other than videos that pop up from Facebook. But during a typical week 24% of all adults or 42% of smartphone users watch video.

The television set is still the obvious device of choice for viewing content and 94% of adults watch something on their television each week. Only 84% of adults now use the television to watch live programming and the rest are watching in some different manner. For instance 40% of television watchers still view content from DVDs, 32% get content from a DVR, 13% watch pay-per-view and 9% watch streaming video. As of February 2014, 34% of television sets are now connected to the Internet. Of those 41% use AppleTV, 35% use Roku and the rest have Internet-enabled TVs.

Adults are watching content on a lot of different devices now. Something that might be surprising to bosses around the country is that 16% of adults with a PC at work use it to watch streaming video. One fourth of adults who own game consoles watch streaming video, 26% of adults who own a home PC use it for videos, and 42% of adults who have either a smartphone or tablet use them to watch video.

The survey also looked at what people watch and the time spent with specific programming on each kind of device. For example, YouTube is the source for 59% of the video watched on PCs and the average adult spends over 21 minutes per week watching it. Only 7% of content viewed on PCs is NetFlix, but the average time spent is over 23 minutes per week. And over 10 minutes per week is spent on PCs watching Hulu, Bing Videos and Fox News.

The survey also asked how adults feel about advertising that comes with the video on each kind of device. Not surprising to me, only 9% of those over 50 found the advertising on their smartphone to be useful and 14% found advertising on the TV to be useful. But younger viewers are not quite as jaded as us baby boomers and 36% of millennials find advertising on their smartphone to be useful and 39% find TVs advertising to be useful.

Categories
Technology

The Latest in Home Security

Home security (Photo credit: Wikipedia)

Anybody following this blog knows that I have been promoting the ideas of telecom providers getting into the home security business. I see this as one of the ways that you are going to keep yourself relevant with the advent of the internet of things.

Modern Home security centers in the homes are already a lot more than that, and they can also be the platform used for home automation and energy management. There are numerous devices being made that function as the gateway to any ethernet device in your home that can be connected with wires or with wireless technologies. These main consuls then can interface with the user through smart phones or other such devices.

Of course home security still does the basic stuff. You can set up your house with monitors on doors and windows that will tell you when something changes. But modern security systems can do so much more. Here are some examples:

  • Everything can be tied into your smart phone so that you have access to your security system at all times. You can use your phone to change settings, to peek in on any of the cameras or even to speak with somebody who is at your front door even if you are not at home.
  • You can tie normal security features in with motion detectors. This will tell you if something is moving in a room that ought to be empty. But it can also do cool stuff like alert you when anybody approaches the external doors in your house. So rather than wait until somebody has broken in you can be alerted when somebody is at one of your doors. It’s not all that useful to know when the mailman comes every day, but it’s very comforting to know that you can be alerted when somebody is at your back door at 2:00 in the morning.
  • The systems can be tied into a number of other kinds of monitors. Certainly you can tie this into smoke detectors, but you can also monitor if the temperature changes drastically in any room. You can monitor for carbon monoxide levels (and if you are really paranoid, for many other kinds of chemicals and gases).
  • New systems include voice recognition and you can talk to your system. This allows you to change settings on the fly. For example, you can just tell your system that you will be working in a certain room and to ignore monitoring that room for a while. But your security system can then help with those absent-minded people like me. If you turn off the security in an area for a while, you can set it to ask you later if you still want it off.
  • Your system can get to know you. Sophisticated systems are starting to use things like face recognition and gait sensors so that your security system will know it’s you walking around on the lawn at midnight and not a stranger.
  • And it’s all cloud based, meaning that you can get an alert if the power goes out on your system while you are not at home. Turning off the power to a home has always been a common burglar technique for confounding a security system, but the system can be set to alert your smart phone every time the power goes out.
  • And of course, there are cameras to view or record everything. You can set your cameras up with some smarts to only view unusual events or events of a certain kind so that you are only storing views of things that matter. But the cameras give you the ability to monitor pets or babysitters while you are not at home. With cheap cloud storage you can record a lot of video.
  • There are now smart door locks that are tied to the security systems. These can use some combination of proximity to cell phone, voice or face recognition to allow keyless entry.
  • For those times when you drive away from home and can’t remember if you set the alarm a certain way, your system can be tied into your smart phone’s GPS and it can ask you if you want the alarms on once it senses you away from the home. Side benefit – you are always tracking the location of your cell phones if you want to see where your kids really are.
  • You customers can monitor it all themselves. It’s no longer necessary to have the security system tied into some center that will alert the police. A customer who is never without their smart phone can take a more active role and get all of the alerts if they so choose.

Most of these changes have been introduced within the last few years and one can imagine that many more changes will be coming in the next decade. So the best platform is one that is software driven and that can be upgraded to accept new devices and new features as they hit the market.

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