1 billion is undeniably 1 billion

[Andy Sjostrom]

The analyst firm Emarketer provides some food for thought. More than 1 billion cell phone users by this summer, they say. 392 million use prepaid subscriptions. The largest cell phone market is China with 149 million subscribers.<br /><br />Here are my random thoughts from a general mobile devices market perspective:<br />1. Believe in volume over price? Go to China! (Perhaps a Chinese version of Chopper Alley? Kidding.)<br />2. As phones are getting smarter, the smart phone market is where wireless connectivity will find most number of users. Connected PDAs with built-in phone circuitry will be "just" the top 2-5 percent - absolute maximum. Microsoft Smartphone will play a key role in this market.<br />3. The current Palm vs Pocket PC battle is close to irrelevant, in terms of number of units. Look at the graph below. It shows the number of cell phone, Palm and Pocket PC users. The market share difference between the two platforms is hard to tell, heh? Wireless connectivity will differentiate. Pocket PC Phone Edition has the upper hand today.<br /><br /><img src="http://www.pocketpcthoughts.com/images/market.gif" /><br /><br />4. How many percent of the 1 billion should be considered as "interesting" for a cell phone platform/device maker? Is 100 million users enough? That would be "just" 10 percent, you know...<br />5. Extrapolate that kind of volume into the near future and ask yourself: is this market bound for commoditization? I would say it is, and add that that statement is today's understatement. Lower margins drive higher volume and vice versa. Nokia's business model is being threatened in the same way IBM's was in 1986/1987.<br /><br />There you have it! What do you think?

[OzBert]

Not exactly Smartphone-smart, however - expect double-digit million mobile phones being shipped this year with a JavaVirtualMachine.

Even without JVM - current "better" phones, such as the Siemens SL45i (www.my-siemens.com/sl45i) feature not only MP3-capabilities (making this probably the best-selling MP3-player, well because it is a phone?) but also an Outlook-syncable PIM.

Those phones might pose a huge threat to the low-end Palm, at least in Europe.

Yeah yeah, laugh at the JVM and the unexciting hardware spec of them cellphones - but keep in mind that the PPC user of this forum are not representative of the majority of users out there.

The silent majority is content to download a new game once in a while, and similar trivial tasks.

With JVM-apps also WAP will be used much more - as content order/delivery system.

The just launched Siemens M50 consumer phone (read low-end-ish, mass-market price, high volume), as example, also provides content developers some sort of security - the apps can only be downloaded over-the-air, not via cable from your PC. Hence no unkosher app-sharing.

Siemens also has a revenue-sharing system (www.siemens.com/mobile-partners) already in place - for content being downloaded from their website (www.my-siemens.com/city).

My two EuroCents, Oz

[Janak Parekh]

Oh no... EdH is completely right! ;-)

(See the debates over on PDABuzz to hear EdH pointing out the potential of Smartphone 2002, etc.)

--bdj

[Ed Hansberry]

Oh no... EdH is completely right! ;-)

(See the debates over on PDABuzz to hear EdH pointing out the potential of Smartphone 2002, etc.)

--bdj

Was there ever any doubt? :lol:

[Joff]

Andy, your remarks fail to forsee what the future holds.
Of course there are many more phones than PDAs. A PDA is still pretty much like a luxury or a corporate tool. At the start, it was the same story with mobile phones, few poeple could afford them. But huge price reductions have driven most poeple into the mobile market.

A price reduction will not be sufficient to drive large crouds into wireless PDAs. It is the new service offerings and also the ease of use that will really make the difference I believe. Well, as it stands, PDAs like PocketPCs are really for computer gigs (like me!) . But I hold alot of faith in the wireless information age and we will probably soon (so to speak!) have wireless Internet access.
:roll:

[Kilmerr]

Wholly flawed analysis...point by point rebuttal.

1. Volume only as a price point factor? Nice idea, but that is IF there is a market. Volume itself is counterproductive. And doesn't take in account all the "Many to One" factors: Fixed Price, Demand Aggregation, Exchanges, Auctions, Reverse Auctions... And you are forgetting that to GET volume, to ramp up production, to get to the point where you can do the price vs. volume game you have to arrive at a place in the market where you are fairly dominant. Doing that is a tricky game. Many many many companies, such as Planet Hollywood, WinStar, Global Crossing, etc. went full-speed ahead on "volume over price". But they never got to the endpoint of volume itself and it all imploded. Volume over price also can cheapen the price point. High volume, low demand, zero profit. Low volume, adjusted pricing, profit. Getting the game right time after time is quite complex. Many many factors at play.

2. "...the smart phone market is where wireless connectivity will find most number of users", that is not a given. Most phone users don't want smart, then want it to just work. Smart BUT crash/bug prone, well...People want their PDAs to do more, but the market has not shown that people want their phones or their basic household appliances to be "smart". Plus a number of providers are going to charge for offline items. SmartPhone will too? And the Pocket PC Phone Edition is a novelty at best. Hardly mass-market.

3. "The current Palm vs Pocket PC battle is close to irrelevant, in terms of number of units." So? Not a comparable market. A bike store may sell 100x what a car dealership does. But, "number of units" absent revenue generated, absent the market unto itself, tells one little. Simply comparing "units" in a market that is not even that similar is crazy.

4. To focus on the numbers game in large markets is an economic fallacy...recall that in the dot.com era people tried to sell 'eyeballs' and other such nonsense. Large vague "potential" markets breeds hype. You sell a product not "potential"...billions and billions, so? If anything "billions and billions" of an already established market makes a newcomer entrance that much more difficult. And the entire market going to rush to a 1.0 of something? Nope. Heck, CE/PPC is on its 5th try and it still hasn't got the market share. And given the falsestarts and bad press SmartPhone is already generating, not to mention all the DOA BT units...well, flash over substance of now. Potential, yeah? Show me. And I am also wary of some of the numbers sometimes. I have 2 dead Palms in a drawer someplace, do they count as market share?

5. Extrapolate that kind of volume? Just on a whim? And lower margins drive higher volume and vice versa? Not always, and way too simplistic of a take; things do not function in a vacuum. To increase margins, most often volume is steady; products "cut the fat" aka Dell and become a basic commodity. Margins go higher, volume stays the same. And certian markets have a volume cap. And any number of ways that the margins game can be played.

Nokia's business model is being threatened? 30% of the market compared to a dismal entrance by Microsoft? The phone has to work right from the get go. Having a buggy machine that locks up, well...the proverbial "three times to get it right" will not apply here. The real threat comes from the services itself, the .NET push per se. Nokia becomes a Dell, pushing the handsets while Microsoft drives the services. But if you think the entire telecom world is just gonna grant MS a pass...think again. MS'z only hope is a mature .NET that telecom will trust, which is no where close to happening now...3-5 years maybe. But the landscape will have changed by then. Java, Symbian, various OEMs and a whole host of other concepts can go "smart" too. And even they are having a hard time. But to think 'smart' is only the domain of Microsoft is missing the picture. Voice is still king. If anything, what will kill Nokia and telecom is the WAP/SMS box-in, and the pay-as-you go concepts. When presented with full services for one easy price, people will venture there; over locked-in telecom services.

[Registered]

Quite true, I'm afraid.

[Chubbergott]

.....The market share difference between the two platforms is hard to tell, heh? Wireless connectivity will differentiate. Pocket PC Phone Edition has the upper hand today....


Any comparison that is limited to Palm and Microsoft is going to yeald inomplete results, at least while discussing this market.

Anyway, I fail to understand why Microsoft has the upper hand when they are yet to release a Smartphone product. I understand that Palm have already released a smartphone, as did Nokia many years ago and everyone I know is eagerly awaiting the 7650 (ok, nearly everyone - half the time, the rest want to know what the flippin' blink I'm on about :wink: ).

This is not to say that they will fail, but if any company believes that they have it all done and dusted, it'll be their last belief. The fight hasn't even started in ernest yet.

[Andy Sjostrom]

Kilmerr!
Thanks for your thoughts!

Point by point:

1. Agree. I am not saying volume is the Only factor. Look at the device market today. I don't believe the MS camp would want to swap its profits for the Palm camp's losses to get to volume. But I am saying that, moving forward, volume will be important to drive revenue (in the smarter area of the market), platform share, and brand.

2. I disagree. I oppose some of the mobile network operators' and device manufacturer's beliefs that the customer is stupid. If anything, the IT consumer market shows that smarter products win and that consumers get educated as market matures.

3. I disagree. Convergence is what is happening today. Not anything new, really. Same thing as in 1986/1987 when many different types of technologies converged into PCs. Cell phones and PDAs are growing closer.

4. I agree with regards to the danger of going: "YEAH! Billions of dollars in our pockets tomorrow!" That is hype. I meant to say that 1 billion users IS 1 billion users, which I believe even you would agree on! :wink: I have no doubt that Microsoft is on the right track with its Smartphone and Pocket PC Phone Edition initiatives, and that moving forward one, two or maybe three generations from now, I believe Microsoft is one of the top 3 telecom market players.

5. The more volume, the easier it is to commodotize.

I don't think "smart" is only the domain of Microsoft, just "smartest". :)

[Kilmerr]

1. Volume will be important to drive revenue? Of course, but it doesn't determine pricing. :)

2. Smart consumers don't want some devices to be difficult. Such doesn't make them stupid. They want easy to use. The fact that my microwave isn't wireless or Bluetooth'ed or has a Smart OS, doesn't mean I am considered 'stupid'. It means I want things to 'work and not have to think about the devices', and your take is ironically backhanded. Microsoft, themselves, made things easy to use. Linux is smarter, but do people want that type of smart? Are people stupid if they don't use Linux on the desktop? Smart has to be easy to use. Smart as complex dies. Tools and not toys. People want productivity not 'smart' complexity.

3. Convergence is what is happening today? People want different types of cars in many differing colors, electronic devices, and branding itself cancels out convergence. People have unique needs, convergence becomes nothing to everyone. And be prepared to buy and buy again. Convergence is utopia.

http://www.macopinion.com/columns/tangible/00/10/27/

4. 1 billion users IS 1 billion users? That still means nothing. One billion car drivers doesn't mean they all are going to buy a Smart Radio, say XM Radio....or something like that. And I agree per the danger of going: "YEAH! Billions of USERS in our pockets tomorrow!".

"...forward one, two or maybe three generations from now?" Well 5 with Pocket PC and we still aren't there. And took 10+ years to get to XP. So I guess hurry up and wait... hope springs eternal. So "maybe three generations from now" before the SmartPhone is bug free and won't lock up on Caller ID? How many 'gotchas' is the average consumer going to put up with? Pocket PC 2002 has too many bug-filled issues of current, and this is the "best of all worlds"...

5. The more volume, the easier it is to fractionalize, custom brand and such too.

Smartest POOM bugs? Something smartest reverses DNS? Smartest kills FTP? Smartest InBox? Smartest reminders? Smartest round-tripping? Smartest ActiveSync? And smartest isn't greater than 16 meg. ;) Smartest GAPI bugs? Smartest Pocket IE's rendering? Smartest currency calculator? Yeah, sure. And not even mentioning OEM problems. Not a perfect world. As they say in Missouri, show me. And to that I would add NOW, not "one, two or maybe three generations..." Promise the world and then make me wait 3 years and buy 3 devices before it is there. That's reality.

[Andy Sjostrom]

1. Agree.
2. Smart means smart. Usability and stability is a requirement.
3. Convergence is what you already have in your PC. Hardware: you've got a hard drive, a video card, a CD-player, etc. Software: you've got an operating system, memory management, file system management, multimedia capabilities, internet connectivity. All out-of-the-box. Not so just some years ago. But I do agree that convergence has to be implemented carefully. The article you linked to is certainly food for thought. Thanks!
4. Generally, your negative remarks regarding Smartphone are quite amusing given that no device is in production, yet.
5. A user that, today, chooses a Microsoft software based device gets the smartest device available. That will continue to be true as we move forward.

[Chubbergott]

5. A user that, today, chooses a Microsoft software based device gets the smartest device available. That will continue to be true as we move forward.



Smartest POOM bugs? Something smartest reverses DNS? Smartest kills FTP? Smartest InBox? Smartest reminders? Smartest round-tripping? Smartest ActiveSync? And smartest isn't greater than 16 meg. Smartest GAPI bugs? Smartest Pocket IE's rendering? Smartest currency calculator? Yeah, sure. And not even mentioning OEM problems.


Please explain how the former (Andy) can be true in the light of the latter (Kilmerr)?

Microsoft products <U>are</U> smart, but smartest? I hardly think the evidence stands up to scrutiny...... not on any of Sol's planets anyway.

Also.......
Regarding the 'negative' comments, it's precisely the fact that Microsoft hasn't yet released a Smartphone product that makes the hype worthless, particularly when the competition has already started to put products on the shelves (don't tell me, Microsoft are working to make sure the devices have no bugs).

I'm glad that someone is ploughing the way to innovate mobile solutions (even if it isn't Microsoft), or else I'd be stuck right now without a connected mobile office solution. When Microsoft starts to move on, I (like many others) will give their devices a fair assesment for purchase potential, the same assesment as I have done when I have spent my money on their mobile devices in the past.

[Andy Sjostrom]

Being a developer, I am the first to admit that software has bugs.

Here's a list of known/fixed Symbian bugs:
http://www3.symbian.com/faq.nsf/ViewCategoryAll?OpenForm&Seq=1#_RefreshKW_ChoiceBox

Here's a list of known/fixed PalmOS bugs:
http://www.palmos.com/dev/support/docs/palmos40/os41overview.html

As new revs are rolled out, some bugs are fixed while new bugs are introduced. Same thing everywhere. Bottom line: I rather take ten bugs from a smart platform than ten bugs from a less smart platform.

I am glad there's competition, as well!

[mike6024]

Bottom line: I rather take ten bugs from a smart platform than ten bugs from a less smart platform.


I think the bottom line is more: Would you rather take ten bugs from a smart platform than two bugs from a less smart platform?

I've had a pocket pc of some form since 2000, and some of the bugs I find or have read about just amaze me. I'm a deveoper too (of pocket pc software as a matter of fact), and it seems like some of their developers barely unit test.

[Chubbergott]

Bottom line: I rather take ten bugs from a smart platform than ten bugs from a less smart platform.


How do you know it'll be smarter? On what grounds are you making your statement? I ask because you yourself told Kilmerr that his (or her) 'negative' comments were amusing since Microsoft is yet to release a smartphone. Do you accept, therefore, that your positive comments could be equally amusing?

[Andy Sjostrom]

Kilmerr mentioned specific bugs in the released Pocket PC 2002 platform. I didn't, in that post, refer to the Smartphone platform. But...

With more than 10 years as an Enterprise systems architect, I can safely say that Microsoft platforms are smarter than those from competition.
This statement is partially subjective, which statements like that generally are, but also partially objective given a number of critical platform success factors that are tried and tested.

So, I grant everyone the right to think the subjective part of my statement is amusing at the same time I will confidently defend the objective part from whomever that wishes to challenge it! :)

[Chubbergott]

I'm not very good at dealing with political half-truths, but this is what seems to be the message;

1. Kilmerr pointed out some bugs in the PocketPC and made some negative comments about the Smartphone
2. You point out that negative comments regarding a device that hasn't been released yet (smartphone) is amusing.
3. I ask if your positive comments about a device that hasn't been released yet can be equally amusing.
4. You say that you were referring to the negative comments regarding the PocketPC 2002 platform, not the smartphone.

So, Kilmerr can't have been making negative comments about a device that hasn't been released since he was talking about Microsoft's answer to the Smartphone. So, what did you mean when you said that it's amusing to be negative about a device that hasn't been released?

Apart from the first paragraph, I found your answer quite reasonable and much more level headed that I expected, though I don't know that it's wise to assume that nobody else has any enterprise experience from which worthwhile experience can be gleaned.

[Andy Sjostrom]

Clarification:
Kilmerr has on a number of occasions hinted that the yet to be released Smartphone 2002 platform has severe bugs generally and Caller ID bugs specifically. I find that amusing, since I doubt Kilmerr has used or know anyone who has used a released Smartphone 2002 device.

Add to spreading slanderous rumors about the Smartphone 2002, Kilmerr's recent interest in repeating and repeating and repeating well-known Pocket PC 2002 bugs I must conclude Kilmerr spends much time :cry: . Hope to see Kilmerr :) soon.

[Kilmerr]

I find that amusing

You'd be surprised. News does get around. I never said 'released' tho. And the platform does get demo'ed and shown around and there is a slew of press on both sides of the issues. If I can't question it, you can't praise it. And I think it is healthy to be skeptical. Hype and vaporware are out there. So show me. And SmartPhone has been dismal thus far. But you brought it upon thyself with the "smartest" take. Esp with 2002 problems. And we are ooonlyyy human, booorrrn to makkkkeee misstakeeees. (aka Human League) :)

Repeating and repeating? Well-known Pocket PC 2002 bugs? Sure funny a whole slew of newcomers that don't know of these. So because YOU know them, they are old hat. Whole big market out there that hasn't even dipped into the Pocket PC. Sweep all under the rug, eh? And sure funny new ones appear all the time. Why hey, a Backlight iPAQ recall for some just yesterday. So the sin is in 'repeating' problems? If I went to a Doctor and he didn't fix me up correctly, and I continued to "repeat and repeat" that it still hurts...then I am wrong? And I guess I then must have too much time on my hands...

End Prog. But I am starting to get the sense of a REAL gap between the enthusiasts and the real audience out there. I just wish captialism would kick in and grant something on the level of PPC. In the wireless space it already has.

I actually love Pocket PCs, but I am no marketing sap.

[Andy Sjostrom]

Well, regarding the Smartphone 2002 I praise what I have seen and used.

Regarding PPC 2002 problems. People in this community have ears. We've heard you! The doctor (Microsoft) has heard you too and is cooking up new medicines and cures as we speak. Hope you don't loose faith and love while waiting...