Mobile Market Second Quarter 2010 Recap

The market results for the second quarter of 2010 were posted last week, and the activity for mobile phone companies reveals an ever-intensifying battle between Google and Apple, along with several other developments in the smartphone realm. 

According to comScore, 49.1 million Americans aged 13 and over owned smartphones from Feb 2nd to the end of May, an 8.1 percent increase from the same term the previous year.

The major smartphone operators vying for this market are Palm, Microsoft, RIM, Apple and Google, and each one of these saw a slip in market share except for Google, which seemingly wrested its 4 point increase from its collective competitors. Google bounded by offering the popular Android system through T-Mobile, Verizon, HTC and Sprint.

Apple slipped 1 point to 24.4 percent, Microsoft dropped 1.9 points to 13.2 percent, RIM slipped 0.4 points to 41.7 percent, and Palm dropped 0.6 points to 4.8 percent.

It is important to note that Apple’s market share likely waned due to an anticipatory period before the release of the massively popular iPhone 4, which sold over 3 million by July 16th and was the most successful product launch for the storied company.

But mobile devices are only a piece of the pie—about 50 percent of it for Apple—with notebook sales skyrocketing despite the release of the iPad.

Not that the iPad was a bad thing for Apple either. Sales of the iPad have been a hearty 3.27 million by the end of the second quarter, which shows Apple’s success in tapping the tablet market, something which has been tried futilely by other companies.

Now a strong argument can be made that Apple has defined the tablet much to the extent that they defined the portable music market with the iPod and its crushing win over the MP3 player.

Yet, while Apple has been making headlines with their flashy (if not controversial) products, the other players have maintained strong footing with savvy marketing practices, frantic mergers and what seems like shear grit.

BlackBerry manufacturer RIM still commands the greatest portion of the smartphone market with 41.7 percent. And Microsoft still earned $4.52 billion in the quarter, outshining both Apple, with $3.52 billion and Google, with $1.8 billion. (Remember, still, that these are before iPhone 4.)

Graph credit to techland.com

Microsoft did this in the absence of a smartphone that competes with those put forth by the other operators and despite having to cancel the Kin.

According to this article in the New York Times, Microsoft’s success results from targeting businesses, an industry that is far less glamorous to the media, and therefore, far less likely to make headlines. Nonetheless, Microsoft has a history of selling to both consumers and customers, and without the shiny Macs, iPads, and iPhones their grasp of garnering new customers will steadily drop—even when they sell 150 million Windows 7 OS licenses. Those Windows 7 licenses were mainly purchased by previous Windows Vista users, a disconcerting fact for investors.

The release of the Windows Phone 7 is imminent. The company announced on July 18 that it was in its technical preview stage, and it has received promising-yet-iffy pre-launch reviews. Whether they will get their heads in the game in time for the 2010 holiday release season remains to be seen.

Jailbreaking Mobile Phones Legalized by Feds

Hackers Jailbreaking their iPhones or other mobile devices are not doing so in violation of federal copyright law according to a ruling made by the U.S. Copyright Office on Monday.

The decision says that bypassing a manufacturer’s block in order to allow “handsets to execute software applications” will not be viewed as illegal, meaning that users can now download third- party applications  that aren’t approved by the phone maker or carrier without fear of legal retribution.

The practice has been criticized by manufacturers who say that jailbreaking destabilizes the phones, and Apple, the manufacturer with devices most prevalently jailbroken, contends that the strict vetting process by which apps are approved in the official App Store results in the promotion of higher-quality apps.

However, a relatively small yet sophisticated group of the mobile company’s customers have been hacking the phones enthusiastically, heralding benefits such as increased customization, unlimited 3G service and the ability to turn one’s phone into a mobile Wi-Fi hotspot that can be used for tethering. Additionally, jailbreaking provides a path for “unlocking” the device, allowing users to operate the phones with carriers other than the one specifically intended for the phone.

According to CNET, by February 2009 400,000 U.S. iPhone users had jailbroken their phones—a relatively small group when set beside the total number of iPhone users in the U.S. (6.4 million in June 2009). Despite the number of jailbroken phones Apple has never sued for terms of use violations.

Bypassing the Apple protection mechanism can void the manufacturer’s warranty, but jailbreakers can easily skate the void by performing a hard reset on their devices before taking them in. However, there are other risks, and anyone considering the jailbreak ought to read up on it before embarking.

As of the time of this writing Apple has not commented as to whether it will sue the Feds to controvert the decision.

In the spirit of the fresh legality, though, here is a good site with jailbreak instructions for the latest iOS4.

T-Mobile iPhone in the Near Future?

The iPhone may finally be shucking off its exclusive chains to AT&T. How’s this sound: The T-Mobile iPhone.

It sort of rolls off the tongue, doesn’t it? And this whole time we thought it would be Verizon.

Yes, According to Cult of Mac, a news site focused on all things Apple, a high-placed executive with T-Mobile said the iPhone is coming to the wireless company in the fall.

Talks between Apple and T-Mobile have apparently progressed, and it’s an 80 percent possibility that T-Mobile will have the iphone in Q3, according to the source.

T-Mobile USA is the fourth-largest U.S. carrier with 33.7 million customers, and the parent company, Deutsche Telekom, out of Germany, helped give it some extra clout in the negotiations.

Though T-Mobile lags behind both AT&T, with 87 million subscribers, and Verizon, with 92.8 million subscribers, and many analysts expected that Apple would naturally gravitate to Verizon when the exclusive contract with AT&T expires later this year, the iPhone’s hardware is incompatible with Verizon’s network.

However, Apple is purportedly working with chipset supplier Qualcomm on hardware that would jibe with the Verizon’s CDMA-based network.

Nonetheless, hardware is not the only roadblock. Verizon has aligned itself quite successfully with Google and, over the release of seven Android phones, has forged a strong alliance with the search giant. And with this alliance has come a fierce competitor to Apple and AT&T—one that has launched PR blitzes and ads deriding the iPhone 4’s antennagate issue.

All said, an overture to T-Mobile would be a sound strategy for Apple, and given their track record of quickly going to new carriers when exclusive contracts run out oversees, a likely one too.

It would be a good way for Jobs to avoid copping to his competitors over at Google and Verizon. Plus, no one would have to swallow their egos in a massive renovation of corporate alignment.

Apple wants to get away from exclusivity with AT&T; a coalition with T-Mobile would satisfy that need. To boot, the iPhone is compatible with T-Mobile’s GSM network. According to the Cult of Mac article, there are still questions as to whether the iPhone will be compatible with T-Mobile’s specific 3G bands.

An Apple-T-Mobile coalition will undoubtedly take some working out. It reminds one of a European parliamentary alliance between two similarly-minded yet varied factions, meant to ensure one’s dominance—in this case Apple’s—while bringing the other onto a more prominent platform—T-Mobile.

Skype Gets Multitasking on iPhones

Skype is now available for multitasking on the iOS 4, a perk that allows for background VoIP compatibility.

Users with the most updated version of the app will get a pop up message when they’re called or messaged via Skype, allowing them access the call immediately. The app can run in the background, meaning that it doesn’t have to be open on the screen to detect the calls.

Even when the iPhone is on the lock screen, simply sliding the unlock bar after the popup shows will take you directly to the call or message.

Background compatibility is not yet accessible for video conferencing because of a Terms of Use controversy that cropped up with Fring, which banned Skype earlier in the year.

With the ban set in place by Fring, any ability to video chat on the iPhone was effectively halted, except for Apple’s Facetime.

Steve Jobs Rankles Smartphone Competitors

Steve Jobs stirred the hornets’ nest with his remarks about antenna issues on Friday, and now competing handset companies are buzzing out with their stingers primed.

In the press conference, which was called to address a spate of bad PR catalyzed by iPhone 4 antenna issues, Jobs argued that all smartphones are prone to drops in signal strength when gripped in certain ways. A day after the conference, Apple released their internal antenna tests that showed the attenuation problems with other smartphones to back up Jobs’s assertion.

Now, the other providers are crying foul.

The Wall Street Journal on Friday reported an interview with Hui-Meng Cheng, chief financial officer at HTC, in which Cheng said the reception problems were uncommon among smartphones.

Samsung reported that negative customer feedback concerning signal problems has been minimal for the Omnia 2, one of the phones Jobs used to display the problems in Friday’s conference.

The Finland-based Titan of the cell phone industry, Nokia, released a statement that said, “Nokia has invested thousands of man hours in studying human behavior, including how people hold their phones for calls, music playing, web browsing and so on.” The release added, “As you would expect from a company focused on connecting people, we prioritize antenna performance over physical design if they are ever in conflict.”

And Research in Motion, the makers of BlackBerry, released a pointed statement calling Jobs’s remarks “unacceptable.”

“Apple’s claims about RIM products appear to be deliberate attempts to distort the public’s understanding of an antenna design issue and to deflect attention from Apple’s difficult situation,” the joint-report from RIM CEOs Mike Lazaridis and Jim Balsillie.

The report added, “RIM has avoided designs like the one Apple used in the iPhone 4 and instead has used innovative designs which reduce the risk for dropped calls, especially in areas of lower coverage.”

Consumer Reports has been a recurring player drawn into the mudslinging. At one point they agreed with Apple, saying all cell phones had signal issues. Later, they warned against buying the iPhone 4 due to the antenna issues.

All the flip-flopping and mudslinging should be taken into perspective. First, one needn’t be clairvoyant to foresee Apple’s competitors lurching at the opportunity to defend their products. Nonetheless, Apple’s claim did seem a bit evasive when it was clearly their phone being dragged through the gauntlet, not everyone else’s.

A statement made to CNET by Ross Rubin, an analyst with market research firm NPD Group, is helpful: “You can reconcile the statements that Apple and its competitors are making if you accept that other competitive handsets may indeed be more resilient to this kind of interference, yet not immune when the right conditions are applied.”

iPhone 4 Press Conference

Steve Jobs held a press conference today concerning the issues surrounding Apple’s iPhone 4 and conceded that the antenna reception issue was a problem with engineering, but added that it was an issue inherent in all current smartphones.

Jobs said Apple would provide free cases, which reportedly alleviate the reception blockage, and would refund those who had already purchased cases.

He also made clear that Apple could not make enough bumpers for the 3 million iPhone 4’s currently in use, so other cases will be sourced for users to choose from. The free case offer lasts until September 30.

During the PowerPoint presentation regarding the issue, Jobs showed data points that demonstrated the signal drop-off occurring with the Blackberry Bold 9700, HTC Droid Eris, and the Samsung Omnia II. The data was intended to show that all smartphones, when gripped in certain ways, lose signal strength.

During the press conference, a media person from the audience holding his Blackberry Bold told Jobs that he couldn’t get the signal on his phone to drop like Jobs had demonstrated in his PowerPoint. He asked that Jobs show him how to do it, to which Jobs replied, “You may not see it in certain areas.”

Jobs said the drop-offs only occur in areas of weak signal strength.

“So we could have gone on and on,” Jobs said, indicating the pervasive issue. “Most smartphones take a hit exactly the same way. These were all tested in areas of relatively weak signal strength. This is life in the smartphone world.”

Jobs stood by his iPhone 4, which he has called the best product Apple has made thus far, stating that only one half of one percent of all customers who’ve purchased the iPhone 4 have complained. He also compared the return rates to those of the 3G; iPhone 3GS had a 6.0 percent return rate, while iPhone 4 has only had a 1.7 percent return rate.

Jobs displayed the dropped call data from AT&T, which showed that the iPhone 4 drops less than one additional call per 100 than does the 3GS. Ironically, however, Jobs stated in the same conference that the iPhone 4 antenna is an improvement from that of the 3GS.

Jobs delared that neither Apple nor the iPhone 4 were perfect, but said the attention focused on the issue, especially from the media, has been overblown.

“ Maybe it's human nature—when you're doing well, people want to tear you down. I see it happening with Google, people trying to tear them down. And I don't understand it... what would you prefer?” Jobs said, adding: “We’ve been here for 34 years…haven’t we earned the credibility and the trust of the press?”

Still, many people scratch their heads. If it’s happening with all smartphones, why have consumers solely clamored about the iPhone 4 this whole time?

Droid X and Verizons Surge

The Droid X went on sale today, and as early adopters flock to the stores, one can’t help but notice the clash between smartphone titans At&T and Verizon.

Not a month ago, on June 24th, Apple released the iPhone 4, a product carried exclusively by AT&T, and the buzz was similar—until Apple’s antenna problems surfaced, of course.

And teamed up with Apple, AT&T has reigned supreme over the smartphone realm. For long they have dominated the market with 45 percent share or greater, according to comScore. However, the tectonic plates of telecom appear to be shifting.

Verizon, the most expansive cell phone carrier in the world, has developed nascent ties with Google—ties that are growing deeper with the launch of every new Android device—and although many have anticipated the day when the iPhone become’s unshackled by AT&T to be used under the auspices of Verizon’s superior network, new evidence suggests that Verizon is gaining market share without the help of Jobs and his recently begrudged iPhones.

According to comScore, Verizon has managed to cut more broadly out of the smartphone market-pie, increasing its share to 26 percent in May, up from 20 percent in 2008. With the advent of the Droid X and the bad PR that’s beleaguering Apple of late, that market share will likely increase.

This news couldn’t come at a better time for Verizon, which has been left eating the dust after they turned down Apple’s iPhone offer in 2007. Things were looking bad for Verizon, but they began collaborating with Google and Motorola during 2008, and, now, with the release of the Droid X, the team will have created six phones running Android OS.

According to an article in the New York Times, the Google operating system now commands 13 percent of the smartphone market in the United States, while Apple has 24 percent share, and RIM, maker of BlackBerry, commands 42 percent. The 13 percent market share of Google is not only from Verizon; T-Mobile and Sprint use Android too.

It will be interesting to see the market disruption in the coming days, especially after Apple holds its press conference tomorrow. The conference is predicted to be Apple’s latest attempt to parry the bad PR they’ve received from bad antenna signals worsened by bad explanations and burdened by mounting lawsuits.

Social Networking Makes Inroads in Travel

Social networking is reaching new heights as frequent travelers are connecting virtually to chat, exchange tips, and even arrange to share Taxis while in airports or planes.

Now that more people are traveling with laptops and smartphones and airports and airplanes are wired for Internet access, a new Traveler 2.0 community seems to be springing forth, and social networking sites and carriers are scrambling to harness the momentum.

Apps such as the Lufthansa Miles & More App, which works on iPhones and will soon work on BlackBerrys, allow people to connect with people in their vicinity. A built-in GPS in the app allows users to find fellow travelers—or “flier talkers” as they call themselves—and arrange to meet so they can share taxis, sit next to each other on planes, or share itineraries.

In addition, Virgin America, which has all of its planes wired for Internet use, has in-flight seat-to-seat instant messaging service. This allows people to chat with fellow passengers via the screen on the seatback.

According to an article in the New York Times, more than 10 airlines in North America, including American, Delta, and Southwest are wiring their planes for Internet access, and as many as 1,200 commercial airliners will have Wi-Fi capability by the end of the year.

Airports and airlines typically charge fees ranging from $5 to $10 dollars for Wi-Fi access, though some airports allow access for free.

A site called FlyerTalk.com allows people to post their itineraries so that other travelers can access them virtually. This helps travelers to connect while in transit to exchange tips, pass time, or meet up.

The prevalence of these communities was underscored during the eruption of the Icelandic volcano earlier this summer. Stranded travelers communicated amongst each other virtually to offer alternate flight diversions or share rental car rates.

Even hotels have begun to tap into Travel 2.0. The Sheraton Hotel now features a Microsoft based community called Link@Sheraton, which is in every hotel. Link@Sheraton allows guests to log on and share magazines, watch games, and communicate in general with guests staying at other Sheratons across the world.

With these features guests can befriend fellow guests and meet up for a cup of coffee or a night on the town, or simply exchange tips about where to go in the city. And the sites mentioned above aren’t the only ones. Thorn Tree, AirlineMeals.net, TravelPod, and Virtual Tourist all provide portals for travelers to jump into the Travel 2.0 bonanza.

Google Custom App Creation Software

Google unrolled a new software program today allowing people to design their own apps for Android.

Google App Inventor allows users to create their own apps by splicing together different combinations of images or “blocks”, each meant to represent a certain function and each in-lieu of developing code.

For example, a person could use the GPS-location-sensor block to help remember where they parked their car. Or they could use a block that tells their phone to text their loved ones, “I miss you” every three hours. Or, they could splice the two blocks together to create an app that texts loved ones their location every three hours.

According to the App Inventor Web page, “The App Inventor team has created blocks for just about everything you can do with an Android phone, as well as blocks for doing "programming-like" stuff-- blocks to store information, blocks for repeating actions, and blocks to perform actions under certain conditions. There are even blocks to talk to services like Twitter.”

The App Inventor team has been working on the tool for about a year, and it has previously been opened for testing by schoolchildren and college students, none of whom are computer science enrollees.

Google hopes that making the programming foundation available to the masses will help speed app development and bring fresh new app ideas to the table.

With the new tool users can begin today and start making games like WhackAMole, draw pictures , or develop apps with educational and informational merit. For example, “You can create a quiz app to help you and your classmates study for a test. With Android’s text-to-speech capabilities, you can even have to phone as the questions aloud.”

The App developer requires no programming knowledge, “You visually design the way the app looks and use blocks to specify the app’s behavior.”

NTP Sues Smartphone Companies Over Email Systems

NTP, a patent holding company, is attempting to dig into the deep pockets of the big-name smartphone companies with a lawsuit alleging that the companies are illegally using NTP’s patented technology.

NTP is best known for the several rounds of litigation that it went through with Research in Motion, the company providing e-mail software and hardware for Blackberry, ending in 2006. The litigation resulted in the patent company walking away with $600 million in settlement money.

The new suit, which is aimed at Apple, Google, HTP, LG and Motorola, charges that these companies are using technology patented by LTP to run their e-mail systems.

NTP was founded in 1992 by Thomas J. Campana Jr., an inventor and engingeer and Donald E. Stout, a lawyer. According to the New York Times, Campana patented several devices, spanning from antennas used on mobile devices to wireless e-mail.

It is NTP’s claim that Campana invented wireless e-mail, therefore, making it the intellectual property of NTP.

Analysts and lawyers say NTP could potentially make hundreds of millions of dollars. But it could also make far less because the technology and product designs have changed drastically since they were first conceived by Campana in the mid 90’s. 

NTP’s argument is that the modern systems run on the foundation of those patented by NTP.

However, the smartphone makers may have deliberately avoided building their smartphone e-mail systems off of those licensed by NTP with the lesson learned from the Blackberry settlement.