Ultra-Mobile Devices Experience a Surge in Demand

A variety of Ultra-Mobile Device (UMD) types are experiencing new demand in the marketplace. The shipment, price and revenue data for media tablets, eBook readers and netbook PCs were all part of a recent market study conducted in the third quarter of 2010.

Published in a report by ABI Research, the market data shows that media tablets were indeed the most promising new device type -- with some 4.5 million of the tablets shipped during the quarter. Of those, about 93 percent were Apple iPads.

ABI senior practice director, Jeff Orr, said "Over time, Apple's first-to-market iPad advantage will inevitably erode to some extent."

ABI Research has been tracking media tablets since December 2009 -- future quarterly editions of their report will include market share tracking of all the major media tablet vendors.

The eBook reader vendors continued to do well in their market, bringing new products to consumers in time for the 2010 holiday shopping season.

"The U.S. continues to be the leading market for eBook readers," says Orr, "and the three top vendors, Amazon, Barnes & Noble, and Sony, are comfortably maintaining their top positions in it."

Barnes & Noble introduced a color version of its Nook reader -- the first color model from a leading vendor -- while Amazon debuted a third-generation Kindle.

Along with their new capabilities, these products also introduced lower list prices than the earlier generations of the same devices.

The first half of 2010 was slow for netbook PCs, as relatively few new products were introduced.

However, Orr points out, "The third quarter saw PC OEMs again breathe life into the segment by introducing new platforms that offered dual-core processors, and lighter or thinner devices with significantly better performance, sleek styling, and visual appeal."

South by Southwest 2011: Top Three Predictions

I’m attending SXSW Interactive once again in March. As in prior years, over the course of five days, I’ll assess the overall themes that garner my attention and then write a summary of the most compelling storyline that emerges.

Based on the buzz leading up to the event, and having reviewed the current schedule of SXSWi Sessions, I can somewhat predict three key theme possibilities:

1. The previously independent Music, Film and Interactive festivals will continue to converge around common-ground -- as an example, with Transmedia or cross-communication projects becoming more mainstream activities this year. 
2. The term “User-Generated Content” will likely disappear as a description applied to all low-budget content creators -- it’s inappropriate for the multitude of talented writers, musicians and videographers that produce quality digital media. 
3. Bloggers that contribute to Content Factories (aka content farms), and the companies that host their material, will be targeted as the latest foe of traditional media -- as mainstream newspapers and trade publications continue their decline.

Last year I wrote about a few of the vendors that provided interesting product/service demos to me at their trade show booth. I intend to do the same again this year, if I’m able to devote the time.

Looking Forward to South by Southwest 2011

If you’re a Session presenter and would like to connect with me at South by Southwest, then please do stop by the press lounge – I’ll be there during most of the breaks between sessions, and also attending some press briefings.

If you’re an author, publicist or book publisher, then do reach out to me before the start of SXSW. I’ll gladly consider reading a review copy of your latest media business-oriented title. FYI, my current reading list includes “Content Rules,” “Tell to Win” and “Enchantment.”

If you’re part of the UKTI “Digital Mission” delegation, welcome to Austin. I will try to find the time to connect with you during your stay. Note, I’ll be coming to the UK in the spring and I’m very interested to meet entrepreneurs that are based in the “East London Tech City” – potentially for a follow-on meeting.

Here are some of my editorials about prior observations at the South by Southwest (SXSW) event in Austin, Texas.
 

SXSW 2010: Free-Market for Earned Media

SXSW Recognizes Multimedia Convergence

SXSW 2007: Digital Storytelling Phenomenon

Video Advertising Engagement is Highly Subjective

Marketers value engagement with their content marketing efforts, because it indicates that people actually care enough to interact. However, according to a recent eMarketer report, while engagement is compelling, 10 marketers might define it in 10 different ways.

As the interactive ad format that most attracts brand marketers, much is riding on internet video advertising -- mainly their marketing budget ROI. But are consumers really paying attention to online video ads, when most say they avoid or ignore them on broadcast television channels?

As spending for online video rises and takes a bigger slice of the display ad pie, marketers must be confident that they are spending wisely. Engagement may be difficult to quantify abstractly, but is key to the worth of video advertising.

"All effective advertising today -- not just video -- requires some degree of audience engagement," said David Hallerman, eMarketer principal analyst. "However, unlike some metrics that provide real-time insight into advert performance, much audience engagement does not happen in the moment with the ad. Nor can it be measured automatically. Instead, it's a process over time."

The most likely campaign objective for online video advertising is brand awareness, a baseline component of engagement, according to advertisers and agencies surveyed by Tremor Media and DM2PRO. Close behind brand awareness is brand engagement itself.

For video ads, marketers use various concepts to identify engagement -- including server- and survey-based metrics, traditional brand health metrics, social video-sharing, interaction rates and more.

They can use several strategies to increase or influence engagement -- such as which websites to advertise on, how to target campaigns, and the length or creative of marketing videos.

"Before deciding which types of engagement to focus on, marketers first should examine what they want to achieve for their brand, who might best respond to their message and how comfortable they are with relaxing control over the ways consumers relate to their brand," said Hallerman.

Perhaps the more important question to ask; knowing the outcome from prior advertising efforts, isn't there a more effective use of your limited marketing budget?

Smartphone Designers are Challenged to Differentiate

According to the the latest market study by ABI Research, smartphone shipments grew from 177 million in 2009 to 302 million in 2010 -- a remarkable 71 percent growth rate.

Meanwhile, handset OEM market share changed significantly. Nokia's share dropped from 39 to 33 percent, even as the collective share held by manufacturers of Android-based phones increased from 4 to 24 percent.

ABI's vice president Kevin Burden said, "the market has been disrupted during a period of record growth."

Today's smartphone includes a long and growing list of technologies, components and software. Some combinations are in demand, others are not. Smartphone OEM strategies determine how these components are used together into cohesive products.

With the rise of Android, the number of handset OEMs with significant smartphone market share increased in 2010. This competitive landscape is forcing handset makers to consider their device and portfolio strategies carefully.

Many are placing their bets on Android. Are they right?

ABI senior analyst Michael Morgan says "Motorola has pinned its entire turnaround strategy on Android. As competitors flood the Android ecosystem, Motorola wants to become known as the OEM that brings Android devices to business."

Meanwhile Samsung is hoping that it can convert its feature phone customers to smartphones, on the backs of both Bada and Android. And Nokia has now moved away from a purely proprietary OS strategy.

How are these strategies working? It appears that handset OEMs choosing Android have had success that is both driven by and limited to the reach of their distribution networks and operator partnerships.

Morgan says, "OEM-specific Android enhancements have not yet created a clear differentiation in people's minds. Smartphone OEMs adopting Android as a key platform must produce meaningful design innovation or risk losing significance."

Global Market is Primed for Connected TV App Stores

During 2010, there was significant growth of new consumer electronics (CE) devices with networking and web content presentation capabilities. Network-enabled CE devices have the ability to connect directly to the Internet or to a home network.

Web-enabled or Smart devices deliver IP-based video content for viewing either on the device itself or on a separate screen, such as a connected TV set. Both types of devices are expected to grow exponentially over the next five years.

According to the latest market study by In-Stat, by 2015 there will be 1 billion web-enabled, stationary CE devices in operation worldwide.

"Smart TVs and Blu-ray players (that support online apps) will constitute over 50 percent of all web-enabled CE device shipments worldwide in 2015," says Keith Nissen, Principal Analyst at In-Stat.

North America and Europe will remain the primary regional markets for web-enabled, stationary CE devices. Over the next five years, both the North American and European markets will exhibit a 23 percent CAGR and will account for nearly 70 percent of the global market.

In-Stat's recent market study findings include:

- The popularity of over-the-top (OTT) video is creating interest in enhancing the IP video capabilities of cable, satellite, and IPTV set top boxes (STBs). This is creating a growing market for hybrid STBs -- for those vendors that are able to enter the window of opportunity with CE-like devices.

- The vast majority of Blu-ray disc players and recorders shipped will be both network-enabled and web-enabled devices.

- The Asia-Pacific region will favor mobile CE devices over stationary devices but will still show a 20 percent CAGR in web-enabled stationary devices over the forecast period.

- There are many different TV application platforms. Yahoo! Widgets is the major TV app platform in the industry, though Sony, Samsung, and others have developed their own proprietary platforms. Look for the Google TV App store and the Apple TV Apps store to create new momentum.

Americans Viewed 4.3B Video Ads in January 2011

comScore released new market study data showing that 171 million U.S. Internet users watched online video content in January -- for an average of 14.5 hours per viewer. The total U.S. Internet audience engaged in nearly 4.9 billion viewing sessions during the course of the month.

Google Sites, driven primarily by video viewing at YouTube.com, ranked as the top online video content property in January with 144.1 million unique viewers. VEVO captured the #2 ranking with 51.0 million viewers, followed by Yahoo! Sites with 48.7 million viewers. Viacom Digital took the fourth position with 48.1 million viewers, while AOL, Inc. drew 44.5 million viewers.

Google Sites had the highest number of viewing sessions with 1.9 billion, and average time spent per viewer at 283 minutes, or 4.7 hours.

Americans viewed more than 4.3 billion video ads in January, with Hulu generating the highest number of video ad impressions at nearly 1.1 billion. Tremor Media Video Network ranked second overall (and highest among video ad networks) with 503.7 million ad views, followed by ADAP.TV (432 million) and Microsoft Sites (415 million).

Time spent watching videos ads totaled 1.7 billion minutes during the month, with Hulu streaming the largest duration at 434 million minutes. Video ads reached 45 percent of the total U.S. population an average of 32 times during the month.

Hulu delivered the highest frequency of video ads to its viewers with an average of 44.6 over the course of the month.

Other notable findings from the January 2011 study include:

- The top video ad networks in terms of their potential reach of the total U.S. population were: Tremor Media at 46.8 percent, BrightRoll Video Network at 41.9 percent and Break Media at 40.7 percent.

- 83.5 percent of the U.S. Internet audience viewed online video.

- The duration of the average online content video was 5.0 minutes, while the average online video ad was 0.4 minutes.

Broadband Bliss in America: the Innovation Challenge

Broadband access service is a necessity for many people in America. In fact, within the growing majority of U.S. households, it is considered the one telecommunication service that they value the most. However, compared to other nations that lead in the adoption of broadband services, most Americans still use rudimentary applications by comparison.

In many of those U.S. households, the user's most important concern is the download speed or available bandwidth of their broadband connection. But the few Americans that are savvy and informed are no longer satisfied with broadband downstream speeds and narrowband upstream speeds -- they want symmetrical service, real broadband in both directions.

U.S. Internet service providers were successful in 2010 in increasing the amount of available bandwidth to their subscriber base. Results from an annual survey of U.S. broadband households show that downstream speeds increased an average of 34 percent in 2010, according to the latest market study by In-Stat.

Ignorance is Bliss, When You're Not Worldly

In-Stat didn't mention progress with upstream speeds, probably due to the poor results -- when compared with the global broadband market leaders, such as South Korea, Japan and Singapore.

"The survey also highlights that the majority of U.S. broadband subscribers are generally satisfied with the current speed of their broadband service," says Mike Paxton, Principal Analyst. "This response indicates that so far, broadband service providers are managing to stay ahead of the consumer demand curve for bandwidth."

I believe that the key finding of the In-Stat study points to the economic innovation challenge that America faces today -- most people still apparently are 'consumers' of content, they produce very little that would require a globally competitive upstream broadband connection to the Internet.

In-Stat's market study also reveals the following:

- The average download speed for the broadband subscribers in the survey was 9.54 Mbps, up from 7.12 Mbps just twelve months earlier.

- In comparison to the rapidly rising amounts of bandwidth available to broadband subscribers, between YE2009 and YE2010, the average price for broadband service increased by 4 percent.

- 38 percent of the survey respondents also had a mobile wireless broadband connection.

- The average downstream speed across all access technologies increased by 71 percent over the course of the past two years. Cable modem and FTTH downstream speeds showed the greatest increases.

- The appearance of newly competitive access technologies, such as mobile wireless broadband, acts as a driver for increasing overall broadband speeds.

Global Mobile Media Consumption Intensified in 2010

According to the recent comScore report entitled "The 2010 Mobile Year in Review," smartphones aggressively penetrated the mobile market in 2010, driving an escalation in mobile media consumption by subscribers worldwide.

Technological innovations enabled an extraordinary number of new capabilities for mobile devices, even expanding the definition of what it means to be mobile through the introduction of tablets, e-readers and other connected devices.

As more subscribers access the mobile web in 2011, it will become essential for marketers to reach this rapidly-expanding segment of consumers.

"2010 was a game-changing year for the mobile industry," said Mark Donovan, comScore senior vice president of mobile. "Smartphone adoption, 3G penetration and unlimited data plans drove a surge of mobile media consumption across geographies and deepened the integration of mobile devices into everyday life."

Key findings highlighted in the 2010 report include:

- Smartphone adoption accelerated in both the U.S. and Europe. U.S. smartphone adoption reached 27 percent of mobile subscribers in December 2010, an increase of 10 percentage points from the previous year, while European adoption reached 31 percent, also up nearly 10 points versus year ago.

- Network quality and cost of monthly plan were the top 2 purchase consideration factors for mobile subscribers in the U.S. and UK.

- Nokia was the top OEM in the UK, Germany, Italy and Spain. Samsung took the top spot in the U.S. and France, and also ranked in the top three in the UK, Germany, Italy and Spain.

- 36 percent of mobile Americans and 29 percent of Europeans browsed the mobile web in December 2010, with access through an application reaching 34 percent of Americans and 28 percent of Europeans. Across regions, mobile browsing and application usage is growing in the range of 7-9 percentage points per year.

- More than 75 percent of mobile subscribers in Japan are connected media users (used their browser, accessed applications or downloaded content) far surpassing the U.S. and European countries in this regard. Japan also saw nearly 10 percent of its mobile audience make a purchase with their mobile wallet in December 2010.

- Over the past year the number of mobile users that accessed a social networking site at least once a month via their mobile device increased by 56 percent to nearly 58 million users in the U.S. Even stronger growth occurred in Europe, with a 75-percent increase in the number of users over the last year to 42 million in December 2010.

Video Advertising will Grow to $5.71 Billion in 2015

Viewing traditional television content is central to mainstream America's media day. But the internet is already having a profound effect on U.S. consumer viewing habits and the proliferation of devices is altering their video consumption behavior.

eMarketer estimates that in 2011, 68.2 percent of U.S. internet users, or 158.1 million people, will be watching video content online each month. By 2015, that figure will increase to 76 percent of internet users -- or 195.5 million people.

In the same period, online video advertising spending will surge from $1.97 billion to $5.71 billion.

"Consumers are not ready to go over the top (OTT), but they are edging closer," said Lisa E. Phillips, eMarketer senior analyst. "They care most about convenience, cost and choice, and are interested in viewing options to the extent that they fit in with those demands."

Broadcast live TV shows are still popular with mainstream U.S. viewers, but newer technologies make it easy to time-shift shows to suit people's schedules -- even while watching on a TV set. Gaming consoles, present in a majority of households, also facilitate OTT video streaming.

eMarketer expects that this year, 69.4 million adults will watch TV shows at least once a month through some type of internet connection, meaning the show could be watched on a TV set, computer screen or mobile device. By 2015, nearly 100 million adults, or 48 percent of all adult internet users, will do the same.

"There is no one-size-fits-all approach to advertising around video content, given the myriad devices and demographics that are intersecting," said Phillips.

Brand marketers need to know their target audiences expect to be entertained with strong creative -- and merely re-purposing legacy 30-second TV commercials for online video use has proven to be problematic.

Mobile Augmented Reality Apps Use Case Scenarios

Augmented Reality (AR) is a term used to describe a live direct or a indirect view of a physical, real-world environment whose elements are augmented by computer-generated sensory input -- such as sound or graphics.

Mobile Augmented Reality -- the overlay of useful information on real-world views seen through a mobile phone's camera viewfinder -- has the potential to transform mobile marketing, online search, tourism, retail and social networking.

To date, mobile AR is being used mostly as a novelty. However, according to the latest market study by ABI Research, the key to real AR market growth is to embed AR into a wide range of mobile apps running on a variety of devices.

According to ABI senior analyst Mark Beccue, "The market for AR barely exists today -- 2010 revenue amounted to only $21 million. But if the market develops as we expect, it will generate more than $3 billion in 2016."

But market development won't fully evolve if it's limited only to dedicated AR software apps, such as early entrants Layar and Wikitude.

Mobile AR functionality and capabilities will improve rapidly and new software platforms are emerging to enable creative app developers to build AR capabilities into all types of applications.

According to ABI's assessment, this movement will rapidly advance the growth of mobile AR. But how would AR work within other apps? The following are two app use case scenarios.

Navigation -- while using a navigation app, you point the phone's camera at an interesting building. Click on a superimposed 'Info' label, and historical information appears. Retail -- you are in a big-box retailer, using the specific retailer app. Aim the phone-camera at a product, and get useful information or a 3D demonstration.

"Some say that mobile AR has the potential to become our zero-click interface to the Internet of Things, where many common objects have associated data," Beccue notes.

"There is a major opportunity here for retail. It's also likely that Apple and Google will buy or develop AR engines or platforms as development tools for third-party developers to embed AR capabilities into a broad range of apps," adds ABI practice director Neil Strother.

Other likely industry players, such as forward-looking mobile network operators, could perhaps pursue the market opportunities before Apple and Google decide to dominate the AR app developer ecosystem.

Digital Photo-Sharing Use Cases in European Markets

Results from a new market study suggest that there are 3.5 billion digital cameras in use across the globe -- and in excess of one trillion personal digital photos stored on PC hard-drives, portable devices and online in the Cloud.

However, during the time between a camera is purchased and the owner buys a photo-finished product or uploads a photo to a social networking website, that active camera usage can be difficult to define and quantify.

Futuresource Consulting conducted a recent market study of photo-sharing habits in the UK, Germany and France. Their study focused on the images that ultimately have a high personal value to the consumer: those that are actively shared, as opposed to the billions that remain dormant on computer hard drives or memory cards.

Survey questions were also included to pinpoint the features that consumers will look for in their next digital camera.

The use case study revealed that people are embracing many new ways to share their personal photos -- printed media continues to play an important role in photo sharing, though digital dominates.

Some of the key trends mirrored the discoveries from previous waves of research, with the vast majority -- around 90 percent -- of respondents across the UK, France and Germany sharing images with their friends and family.

Survey respondents continued to use a wide variety of methods to share their images -- with females more likely to be sharing than males. The main method of sharing for French and German respondents was via laptop or desktop PC, while UK respondents mainly shared using websites and e-mail.

In terms of image capture, approximately a third of respondents in each of the territories used a cameraphone to capture up to a quarter of the images that they then went on to share.

This varies quite considerably with age, with respondents aged 55 or older the least likely to be capturing images with a cameraphone, with over a third using their digital camera for all of their image capture.

Respondents aged 16 to 34 are more likely than any other age group to be capturing 75 to 100 percent of their images with a cameraphone. Notably, a quarter of respondents in each country are capturing all of their images using a digital camera only.

63.2 Million People in the U.S. Own Smartphones

comScore reported key trends in the U.S. mobile phone industry during the three month average period ending December 2010. The report ranked the leading mobile original equipment manufacturers (OEMs) and smartphone operating system (OS) platforms in the U.S. market.

The December report found Samsung to be the top handset manufacturer overall with 24.8 percent market share, while RIM led among smartphone platforms with 31.6 percent market share.

For the three month average period ending in December, 234 million Americans ages 13 and older used mobile devices.

Device manufacturer Samsung ranked as the top OEM with 24.8 percent of U.S. mobile subscribers, up 1.3 percentage points from the three month period ending in September. LG ranked second with 20.9 percent share, followed by Motorola (16.7 percent), RIM (8.5 percent) and Nokia (7.0 percent).

63.2 million people in the U.S. owned smartphones during the three months ending in December 2010, up 60 percent versus year ago.

RIM led the ranking with 31.6 percent market share of smartphones, while Google Android maintained the #2 position with 28.7 percent, up 7.3 percentage points versus September. Apple accounted for 25.0 percent of smartphone subscribers (up 0.7 percentage points), followed by Microsoft with 8.4 percent and Palm with 3.7 percent.

In December, 68.0 percent of U.S. mobile subscribers used text messaging on their mobile device, up 1.0 percentage points versus the prior three month period, while browsers were used by 36.4 percent of subscribers (up 1.3 percentage points).

Subscribers who used downloaded applications (apps) comprised 34.4 percent of the mobile audience, representing an increase of 1.3 percentage points.

Accessing of social networking sites or blogs increased 1.5 percentage points, representing 24.7 percent of mobile subscribers. Playing games attracted 23.2 percent of the mobile audience, while listening to music attracted 15.7 percent.

Global e-Book Market Grew by 200 Percent in 2010

Demand for e-books and e-readers is still strong, according to the latest market study by Futuresource Consulting. Both are supported by the increased global availability of e-book services and the recent launch of new multimedia tablet devices.

"In 2010, the global e-book market grew by more than 200 percent to exceed 90 million paid-for units," says Fiona Hoy, Market Analyst at Futuresource Consulting.

This equates to a value of more $900 million and was largely attributable to growth in the U.S. region, which represented more than 80 percent of global revenues in 2010.

Rapid U.S. e-book market growth and consumer adoption was predominantly driven by Amazon's loss-leading strategy on key e-book titles purchased through their Kindle store and related application. A similar strategy was temporarily adopted in the UK.

"Moving forward, the global balance will begin to shift -- with the USA contributing just over half of global revenues by 2014," says Hoy.

Western Europe represented nearly 10 percent of global e-book revenues in 2010, with the UK market dominating. The European landscape exhibits many country differences, with Germany making some steady market gains.

For many countries across the region -- including Italy and Spain -- 2010 was the first full year that e-readers were readily available at retail. However, sparse local language titles and limited paid-for e-book services acted as key obstacles to e-book market growth.

However, as local-language content and demand develops, Western Europe's share of global e-book revenues will grow significantly, contributing in excess of $6 billion towards global revenues in 2014.

Legally free e-books (predominantly out of copyright) continue to play an important role. The launch of Google's eBook service in Europe will have significant impact, providing a recognizable branded service offering millions of free legitimate titles alongside paid-for content.

Additionally, the service allows for storing purchased books in the cloud, ensuring they can be accessed across multiple devices enabling consumers to reap the benefits of heightened competitive forces within the marketplace.

Despite Apple's entry into the e-book market in the second half of 2010, Futuresource research shows that Amazon retained its leadership in the U.S. e-book market last year -- significantly ahead of its competitors. Amazon established a similar position in the UK despite only entering the market in August 2010.

Satellite Pay-TV Set Top Box Shipments Decline

Satellite pay-TV providers in North America haven't added many new subscribers. Competition for subscribers has been an issue, and the fundamental value of all pay-TV services is being questioned by prospective customers.

In particular, the U.S. market for video entertainment has also evolved -- due to the rapidly growing adoption of low-cost on-demand over-the-top (OTT) video services.

In Europe, the market has less need for set-top boxes, because more TV sets have integrated satellite tuners and CI+ slots. As a result, according to the latest market study by In-Stat, shipments of satellite set-top boxes declined in 2010 by 8 percent -- in both the North American and Western European.

"The decline in North America shipments moving forward will be a result of a movement to residential media servers, first by DirecTV, and then by other providers," says Michelle Abraham, Principal Analyst at In-Stat.

The move to IP video clients will impact Europe as well, though multi-room penetration is much lower, so the impact on shipments will be lower.

Markets like Latin America and the Mid-East/Africa regions will see the highest growth percentages as rising household incomes and lower cost pay-TV packages will enable more satellite pay-TV subscriber growth in those markets.

In-Stat's latest market study findings include:

- Saturation in some satellite markets will result in a stall in satellite set-top box unit shipments for the pay-TV market.

- The switch from connecting a satellite set-top box to every TV for satellite viewing to using IP clients will impact the satellite box market.

- HD and DVR boxes continue to gain at the expense of SD boxes.

- Both Colombia and Argentina plan to launch satellite services to complete their DTT coverage.

- The worldwide satellite HD box forecast shows growth each year through 2014 with the exception of 2011 as a result of DirecTV's use of IP set-top boxes.

Mobile Engagement Accelerates Media Fragmentation

As momentum in the mobile phone market swings clearly in favor of smartphones, more people are adopting mobile apps, while device performance increased and yet prices continue to drop.

Meanwhile, the majority of U.S. mobile service subscribers still have a feature phone. But eMarketer predicts smartphone ownership will rise from 31 percent this year to 43 percent by 2015. Nearly 110 million Americans will have a smartphone by the end of 2015.

"Smartphone owners already command the majority of marketer attention," said Noah Elkin, eMarketer principal analyst.

Why? Smartphone users do more than their counterparts with feature phones: more messaging, gaming, listening to music, watching videos, social networking, shopping, using apps and browsing the web.

At the end of 2010, eMarketer estimates 30 percent of U.S. smartphone users had a BlackBerry and 28 percent had an iPhone, the top two operating systems.

But Google Android's share of the market is rising quickly. Nielsen tracking surveys found Android pulling ahead among recent smartphone purchasers, and eMarketer predicts that by 2012 Android will be the number one mobile OS in America.

The changing device landscape is evolving usage patterns. eMarketer estimates that time spent with mobile devices is rising faster than for any other medium, up 28.2 percent in 2010. Smartphone owners, more active with every type of mobile content than feature phone owners, are likely on the leading edge of this trend.

"Marketers need to pay attention to these trends as they project budgets and develop marketing strategies," said Elkin.

Mobile devices will claim more and more attention and engagement during the day -- while traditional media such as TV, print and radio will continue to lose ground to online digital media. This transition will thereby accelerate media fragmentation.

Netflix Success has Mobilized the Legacy Laggards

HDTVs are rapidly being enhanced with access to over-the-top (OTT) video services. Retailers, such as Best Buy, Walmart, and Sears-Kmart introduced online services and are actively promoting the new connected TV sets to compensate for the significant decline in DVD sales.

To counter these initiatives, legacy U.S. pay-TV service providers -- no longer in denial of the market shift -- have begun deploying hybrid set-top boxes (STBs) that support both broadcast and online video viewing -- without the need for smart consumer electronics (CE) devices.

Why Blocking and Tackling Isn't a Winning Strategy
TV content producers are attempting to block access to popular content -- in the hope that they can stall the inevitable market transition to on-demand viewing. "The boundaries between market segments are blurring," says Keith Nissen, Principal Analyst at In-Stat.

Today, manufacturers, retailers, service providers, and content producers are all reaching beyond their traditional business models -- driven by deep concerns about their long-term survival.

Why the panic? In a word -- Netflix.

Nissen adds "Just understanding devices or services is no longer adequate. You need to closely track and assess the new dynamics of the entire digital entertainment ecosystem."

To meet the changing needs of the industry, In-Stat has introduced a research service called the U.S. Digital Entertainment Tracker. The guidance will likely be well received, since senior executives at legacy companies are now mobilized in numerous "damage control" efforts -- intended to reduce the impact of Netflix subscriber growth.

For example, In-Stat's latest market analysis includes:

- The installed base of devices capable of supporting on-demand video will grow much faster than either the availability of online video content, or the adoption of OTT video services.

- Web-enabled TV shipments in the U.S. are increasing at a 94 percent annual growth rate.

- 45 percent of U.S. broadband households prefer to obtain at least some of their digital entertainment from online video services.

- 54 percent of American households would be more likely to purchase movies using a digital rights locker-based online video service.

- Yet, except for owning a few personal movie favorites, American consumers strongly favor acquiring their TV programs and movies from an on-demand subscription service -- such as Netflix.

Demand for Advanced Apps Driving Fiber Investment

According to the latest market study by Point Topic, rapid digital subscriber line (DSL) internet access growth is expected in developing markets, while fiber is set to increase its share in mature markets as demand for high bandwidth applications continues to rise in the leading markets.

Point Topic's latest survey of broadband tariffs around the world reveals a continued decrease in the cost of a megabit. Broadband households today pay on average just half the amount they were paying in early 2008 for their bandwidth.

The findings from the leading broadband analyst firm show that the ongoing reduction to the price of bandwidth tariffs is due to increased competition as operators look to move into new markets for DSL and fiber.

"DSL prices in particular are being squeezed. Competition between operators and access technologies is driving the search for more markets and DSL is well placed to capture customers who don't need full speed 24/7 bandwidth," said Oliver Johnson, CEO of Point Topic.

Johnson added "Many users do not use their broadband for more than a couple of hours a day and when they do it's often for applications that use relatively little bandwidth. They care much less about the cost per megabit, where fibre has the edge, than about the upfront and monthly charges and DSL wins that battle hands down."

However, the next stage in broadband internet access delivery reveals itself in some of the more advanced markets.

"Fiber to the building is a popular way of providing broadband. An increasingly common model in many markets is for multi-tenant housing to get a fiber connection and the bandwidth is then delivered over a LAN to the individual units," said Johnson.

This solution is dependent on the local and national infrastructure and the spread of the population. Nations that lead broadband adoption and usage -- such as Japan, Korea and Singapore -- already have end-to-end fiber to the home. They're seeing significant technology substitution with DSL in particular being replaced by fiber and therefore the rapid adoption of advanced applications.

The result is that the drop in DSL prices is not worldwide, in Asia Pacific costs have increased over the last two years.

Subscriber behavior is changing. The increasing popularity of high bandwidth applications, particularly video, mean that low cost per megabit carries more weight than low subscription costs. Operators are seeking ways of fulfilling existing needs and scrambling to create new ones.

The developing broadband markets will continue to see rapid growth -- particularly in DSL subscriptions in 2011. However, the advent and spread of connected TV is going to be the real news in the mature markets.

Enabling consumers to watch streaming video on their TV sets will drive bandwidth demand up significantly and where fiber is available we'll see appreciable growth in its market share.

Online Entertainment Grew by 23 Percent in 2010

Consumption of entertainment content is expected to have reached close to $320 billion worldwide during 2010, with the online and mobile digital media segments experiencing the largest percentage growth.

The latest market study by Futuresource Consulting indicates that consumer expenditure on online entertainment grew by around 23 percent, while expenditure on mobile media grew by more than 15 percent -- far outstripping gains made by packaged media, theatrical, cable, satellite and IPTV.

Moving forward, the rise of digital content delivery through mobile and online will continue to drive revenues, with 2009-2014 CAGR forecast at 16 percent and 24 percent respectively.

In recent years, much of the success in mobile has been driven by the growth in smartphones, with the market generating around 280 million unit sales in 2010 -- an increase of 56 percent -- translating to a total installed base of almost 580 million.

Smartphone form factors are continuously being optimized for multimedia content use -- particularly for viewing video, using mobile apps and browsing the Internet. As a result, in the last year, mobile Internet traffic has doubled globally, with the growth in tablets expected to contribute to further activity.

The launch of Apple's Apps store in 2008 created a new mobile content revenue stream, reinvigorating the mobile content industry. A number of other mobile apps services have launched, creating opportunities, particularly for handset vendors, operators, OS suppliers, content holders, publishers, developers and advertising companies.

Over 10 billion apps were downloaded in 2010, and more than 50 percent of those were via the Apple Apps store -- with a total retail value of over $4 billion, even though 85 percent of downloaded apps are free.

Moving forward to 2014, nearly 35 billion apps will be downloaded by consumers, worth $17 billion in new revenue for the mobile digital media industry.

Streaming media activity has been rising significantly in recent months, with consumers more likely to stream content than download it. YouTube, catch up TV and embedded flash/HTML video have been central to driving streaming activity and traffic.

Improvements in broadband performance, advancements in video compression technology and, more importantly, the availability of compelling services have led to a significant continued rise in streaming media activity.

This growth is not exclusive to video: streaming audio has become a mainstream activity through online radio and personalized streamed music services, while streamed social gaming services are also popular.

China and India Gaining in Mobile Broadband Adoption

Worldwide mobile broadband-enabled network service subscriptions are mounting up, and will reach the one billion mark in 2011.

According to the latest market study by ABI Research, at the end of 2010 there were more than five billion mobile subscriptions globally, with one in five of those having access to mobile broadband services.

Another 28 percent growth, or 6.6 billion wireless subscriptions, is expected by 2016, with 40 percent -- or twice the current percentage -- of users being mobile broadband-enabled.

Despite many markets having reached penetration saturation levels in excess of 100 percent, some mobile network operators still have a lot more growth to come.

"With the proliferation of mobile broadband, it has become increasingly common to have multiple mobile connections per user," said research associate Fei Feng Seet at ABI.

The main service subscriber motivation is the desire to stay connected everywhere, with more high speed 4G wireless networks lighting up, and a huge increase in the popularity of social connectivity.

Chinese and Indian operators are now the top five mobile network operators measured by subscriptions, putting Verizon Wireless in the U.S. into sixth place. As of the third quarter of 2010, China Mobile alone accounted for 11 percent of all global mobile subscriptions.

"China's and India's penetration levels are nowhere near the 100 percent mark, leaving much more room for growth than any other countries," notes ABI Research practice director Neil Strother.

In terms of subscriptions, worldwide mobile penetration now stands above 75 percent, of which the Asia-Pacific region already accounts for close to half the global total.

Mobile VoIP is Part of Unified Social Networking

Nearly five years since mobile Voice-over-IP (VoIP) services were first introduced in the marketplace, it's about to move beyond an inexpensive alternative for making international calls -- to become an integrated component of unified social networking services.

According to the latest market study by In-Stat, the next several years are expected to be transformational as mobile network service providers figure out how to respond to a forecast of nearly 139 million mobile VoIP users by 2014.

"Mobile VoIP is gaining real market presence with usage rates climbing rapidly," says Amy Cravens, Market Analyst at In-Stat.

As it becomes further incorporated into other mobile apps, specifically social networking applications, the realm of potential use is expected to broaden.

This has created a great deal of jockeying among mobile VoIP players trying to develop market share and mobile operators trying to determine the best response to this potentially disruptive service offering.

In-Stat's latest market study findings include:

- Mobile operators will gradually remove barriers to mobile VoIP usage, however, will remain guarded in how these services are introduced.

- In-Stat's consumer survey showed that T-Mobile subscribers had the greatest incidence of mobile VoIP usage; nearly twice that of total respondents.

- Total 2014 revenues will be split between the EMEA (39%), Asia/Pacific (32%), North America (21%), and the rest of the world (8%).

- Because mobile VoIP is portable, users can bring the benefits of VoIP with them when traveling abroad and thereby avoid the roaming fees that mobile operators charge.

The Real Social Media Monitoring Challenge

 
eMarketer reports that online monitoring of commentary about your brand or product is vitally important. Even if a company isn't involved in social media activities, customers almost definitely are and sometimes their conversations can end up in the news media.

According to a survey of business technology professionals by InformationWeek Analytics, most companies are relying on the proven low-tech solutions to the social media monitoring challenge.

Note: for those marketers who need some guidance, I maintain a list of free social media tools.

Why the DIY Monitoring Approach is Preferred
Most companies are using basic tools, such as Google Alerts, to monitor online discussions. Outsourcing the task or using a dedicated application for the purpose was relatively uncommon. This is not surprising, since the free tools are easy to use and they're also effective.

That said, the typical survey respondent approach to dealing with online engagement suggested many were not ready for potential negative commentary on social sites.

About a third of companies had a formal process for posting announcements to social networks, and more than a quarter had a plan for dealing with employee postings deemed inappropriate. No doubt, these are the typical "what not to do" policy documents that are now commonplace.

But many were unready for the comments by their public stakeholders. Just 21 percent had a process for responding to complaints on eCommerce sites, and even fewer knew how to respond to commentary problems on Facebook or Twitter.

Overcoming the Social Media Bystander Phenomenon
More than two in five survey respondents had no processes in place for any social media content that might turn up in a monitoring program. Again, that's not surprising, since the punitive wording used in most social media policy documents leaves employees with the impression that doing nothing is preferred.

eMarketer believes that while negative buzz can be a headache for marketers, social media also offers an opportunity to be responsive to customers, demonstrate good customer service, and even improve products or services -- based on legitimate complaints and suggestions.

But how can employees do that if they're afraid to engage online?

Clearly, the lack of a plan for responding to comments leaves marketers vulnerable. If a bad customer experience spreads unchecked, then the marketing leadership is responsible. Therefore, the real social media challenge is enabling employees to actively engage -- and thereby do something meaningful and deliberate with the monitoring results.

Managed Home Automation Services Market Upside

Home automation systems have typically been installed in one of two ways -- the economical, do-it-yourself model, and the expensive custom-designed installation. Both approaches have limited the potential size of the market.

However, a third way is emerging and it promises to fuel tremendous market growth. Home automation as a managed service, provided by a broadband service provider.

Homeowners will be able to monitor their homes remotely, and control basic features such as lighting or air conditioning. These new managed home automation services will both compete with and complement the traditional home security alarm market.

According to the latest market study by ABI Research, there will be more than nine million security cellular wireless M2M connections active in the U.S. market before 2015.

ABI Practice director Sam Lucero says, "Traditional security firms such as ADT will increasingly be joined in the mainstream by these new providers offering managed home automation services."

Verizon Wireless announced such a service at CES this year, and Comcast is currently trialing one in the Houston, Texas area.

They key concept is that these are not primarily security alarm systems but basic home automation systems -- they can incorporate a security alarm system as part of the overall offering. ABI sees this new model becoming mainstream in the 2012-2013 time frame.

However, there are factors that may impact market growth. The key inhibitors are the newness of the technology to the service providers, and to potential subscribers. A significant consumer education process will therefore be required.

Mobile Internet Revenue Tops $100 Billion in 2010

Rising mobile phone penetration and the proliferation of mobile broadband continues to boost wireless service provider revenue. ABI Research estimates global wireless service revenue at more than $159 billion for 3Q 2010, of which data services account for nearly one third.

Mobile Internet revenue is estimated at about $100 billion for all of 2010 -- that's a 20 percent increase from the previous year and almost three times more than revenue earned five years ago.

"The rapid uptake of mobile broadband has increasingly revolutionized network operator strategies," says ABI research associate Fei Feng Seet.

Consumers are now spending more time on social networking, blogging and online gaming among other activities, and they need to stay connected everywhere.

This has contributed to the success of new brands such as Clearwire, Yota and UQ, and further pushed network operators around the world to build next-generation data networks rapidly, to gain market share.

Mobile network operators in many world regions have announced their interest in, or commitment to, deploying LTE 4G networks.

According to ABI practice director Neil Strother, "A handful of markets including Hong Kong, India, Canada, Austria, France and the UK are starting to face declines in voice usage. The resulting loss of revenue is compounded by a growing subscriber base that uses the Internet for social communication. New applications such as Skype video calling and Whatsapp messaging are expected to capture additional market share."

ABI Research expects the rising mobile data usage and revenue trend to continue through 2011, coupled with more focus on mobile applications -- or the apps, as they're more often described by those who use them on their smartphones.

Global SMS Traffic to Reach 8.7 Trillion by 2015

According to the latest market study by Informa Telecoms & Media, mobile phone short message service (SMS) will remain a significant source of revenues and traffic for mobile operators on a global basis until at least 2015.

Global SMS text messaging revenues are forecast to rise to $136.9 billion in 2015 -- from $105.5 billion in 2010. While global SMS traffic is expected to increase to 8.7 trillion messages in 2015 -- from 5 trillion messages in 2010.

"Mobile operators are spending heavily on rollouts of LTE and other high-speed mobile data networks, leaving relatively little in the budget for messaging services, however SMS remains a core service for mobile users and continues to account for the vast majority, 80 percent in 2010, of their data-and-messaging revenues," says Pamela Clark-Dickson, senior analyst at Informa.

SMS will continue to be the most popular form of messaging for a number of reasons: universal access and interoperability across devices and mobile operator networks, ease of use, reliability, and relatively low cost.

Although traditionally used primarily by consumers, SMS is increasingly being used by government departments, banks and financial institutions, brands, retailers and transport providers, among others, for increasingly sophisticated purposes.

SMS is used to deliver alerts, information services or mobile marketing campaigns -- it's also used to deliver appointment reminders, tickets, coupons, banking and payments, and loyalty programs, among others.

SMS is also becoming increasingly popular in emerging markets, in particular for the delivery of a range of financial services to mobile users who would otherwise not have access to banking products, for information services, and for e-mail and instant messaging.

Indeed, the types of information services that are being delivered by SMS in emerging markets in Africa and other regions are playing a vital role in improving the economic and social well-being of mobile users and their families in these markets.

SMS will remain a key mobile messaging medium over the coming years, but growth in text messaging revenues is slowing or falling, particularly in developed markets, and mobile operators may lose a significant cash-cow if they do not act to introduce or enable the introduction of new and innovative SMS-based services.

Smartphone Shipments Move Toward 1 Billion by 2015

The demand for advanced mobile phones that contain significant processing power, additional memory, large screens, and open operating systems has dominated the mobile handset market for the several years.

Smartphones will continue to lead the market into the foreseeable future. According to the latest market study by In-Stat, unit shipments of smartphones will reach nearly 850 million by 2015 -- as they approach the 1 billion shipment mark.

"There are several critical factors that drive smartphone success," says Allen Nogee, Principal Analyst. "These include a powerful browser, a wide variety of apps, an easy to navigate user interface, and a good keyboard or touch screen."

Additionally, other intangible smartphone attributes, such as being fashionable, and perhaps that your friends have one of the latest design devices, are important market drivers.

In-Stat's latest market study results include:

- More than half of U.S. handset shipments will be smartphones by 2012.

- Android is maintaining its momentum and will continue to be the leading OS.

- The demise of Symbian has been greatly overstated. On a global basis, annual unit shipments of Symbian-based handsets will continue to grow, resulting in Symbian having the second highest unit shipments of all the smartphone OS platforms.

- The smartphone OS war is heating up, as relatively new or renewed entrants such as MeeGo, Bada, WebOS, and others join a very crowded market.

- By 2015, over two thirds of smartphones will still be WCDMA-based. LTE smartphones will comprise only a small minority of annual handset shipments, even in 2015.

- The display and baseband/apps processor are the two high-cost items in the bill of materials. Other significant items include memory, camera, software and licensing, the device casing and manufacturing.