Apple’s iPad Mini Cannibalizes Other iPad Sales While Google’s Android Tablets Steal Share

Apple Introduces iPad Mini... and some new com...

From my Forbes.com blog The New Persuaders:

Apple’s grip on the tablet market it single-handedly popularized is slipping.

The maker of the iPad line of tablets still leads the market with a 55% share, according to a new report from market research firm ABI Research. But that’s down 14 percentage points in one quarter alone, and the lowest since the first iPad launched in 2010.

The problem, according to ABI, is that Apple was late to come out with a seven- to eight-inch tablet, well after the point at which it was becoming obvious that people really like that size. And when Apple did finally debut the iPad Mini, it was at a substantially high price relative to rivals such as Google’s Nexus 7 and Amazon.com’s Kindle Fire. “With the introduction of a smaller, lower-cost iPad mini, Apple has acknowledged Android’s beachhead of 7-inch-class tablets, though at the same time, it has failed to deliver a knock-out punch through innovation, pricing, and availability during the most critical selling period of the year,” ABI senior practice director Jeff Orr said in the firm’s release.

Worse, ABI says, the iPad Mini didn’t take back share from tablets powered by Google’s Android mobile operating software. Instead, people simply ended up opting for lower-cost tablets. Android’s market share rose to 44%. Another recent report from Finvista Advisors predicts that Android tablet sales will overtake the iPad’s by mid-2013. Android also recently bested Apple in smartphone shipments, at least before the iPhone 5 launched.

It’s not clear from the ABI report which companies benefited the most from the market-share shift. But it wasn’t just Google. According to one report, Google is expected to sell about 4 million Nexus 7s by the end of this year, but that’s somewhat fewer than some analysts expected.

Amazon says Kindle sales are strong, but it’s not providing specific figures to prove it. A report from Pacific Crest Securities says it’s likely to pick up a bit of market share in the fourth quarter, but not much.

The big losers are clearly every other tablet, including those running Windows–though that, too, could change if Microsoft’s new Surface tablet takes off.

Now, Apple’s share decline may well reverse in the current quarter, the first full one for the iPad Mini and other new iPad models, squarely in the heart of the holiday shopping season. And of course, it’s far better for Apple to cannibalize its own products than let others do it.

Problem is, it’s too late, at least for the moment. Now, rivals are eating some of Apple’s lunch, too.

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Will Google Dodge An FTC Antitrust Bullet?

Image representing Google as depicted in Crunc...

From my Forbes.com blog The New Persuaders:

The Federal Trade Commission‘s antitrust investigation of Google is about to come to a head, by most accounts. But it’s a complex case touching on several aspects of antitrust law and whether Google’s search and other activities violate any of them, and the implications for Google, its investors, and Internet users could be huge.

Two attorneys intimately aware of the case provided contrasting views at a webinar this morning conducted by the investment firm International Strategy & Investment and its senior managing director Bill WhymanGary Reback is an antitrust lawyer most famous for representing Netscape in its antitrust case against Microsoft in the 1990s. He now represents several vertical-search companies, such as NexTag, that have complained about Google practices. Geoffrey Manne is a lecturer in law at Lewis & Clark Law School and executive director of the International Center for Law & Economics,which receives financial support from Google and other companies. He has written extensively about his belief that there is no strong antitrust case against Google.

The main takeaway: Despite a Bloomberg story last week that said the FTC was wavering and unlikely to attack Google’s core search business–and another today that repeats that assertion–there’s no agreement by the two sides on what the FTC will end up doing. Reback seemed to acknowledge that Google might find a way to maneuver politically around the FTC to avoid a full-scale assault on the way it conducts its search business. But he also noted that the European Union is closely watching the outcome and may act on its own if the FTC does nothing more than a settlement on the more minor issues.

One key point on timing: Press reports say there’s a Dec. 3 meeting between FTC Chairman Jon Leibowitz & EU Competition Commissioner Joaquin Almunia. What’s more, Leibowitz is expected to leave for private practice around the end of the year, so that could affect the case one way or another. And if it means anything, Bloomberg says Google CEO Larry Page met with the FTC today. …

Read the complete post at The New Persuaders.

Sorry, Retailers–Cyber Monday’s Days Are Numbered

Two cliches in one ad!

From my Forbes.com blog The New Persuaders:

Not long after Cyber Monday was invented in 2005 as an online alternative to Black Friday, I called it a “marketing myth” because it was actually not even close to a top holiday shopping day.

Then a funny thing happened–Cyber Monday, created by the National Retail Foundation’s Shop.org online unit, became a self-fulfilling prophecy as retailers jumped on the term and began offering special sales that day after the Thanksgiving holiday. By the following year, it had turned into a real phenomenon, at least for many retailers, and last year it became the heaviest shopping day ever to date. It might even happen again this year.

But now, even as many retailers have made Cyber Monday sales a stock part of their holiday strategy, I’m betting its days are numbered. Why?

* Early sales. Smart retailers noticed that before Cyber Monday, at least (and perhaps still), the period leading up to the big day actually were even more active shopping days. And in their never-ending attempt to get a step ahead of rivals, many retailers ran not just pre-Cyber Monday sales, but pre-Black Friday sales as early as the evening before Thanksgiving. Apparently they worked. They almost certainly will cannibalize Cyber Monday sales. …

Read the complete post at The New Persuaders.

No Brand Shakedown, Says Facebook–Here’s How Page Posts Reach Fans (Or Don’t)

From my Forbes.com blog The New Persuaders:

A lot of businesses with Facebook pages are up in arms about their posts showing up in their fans’ news feeds way less often lately. They and their ad agencies think Facebook did it deliberately to force them to buy ads to promote those posts, and they’re not shy about telling the world about it.

Facebook says it did change its EdgeRank algorithm, which decides based on various criteria which posts individual Facebook users see in their news feeds, in September, chiefly to help reduce spam messages. But the No. 1 social network, which has been intensifying its efforts to boost ad sales following a disappointing IPO last May and a swoon in its share price, categorically denies that it’s essentially blackmailing brands into buying ads by reducing their reach with fans. In fact, it says posts are showing up overall at about the same 16% they’ve been for awhile now.

Indeed, it has just opened up a new news feed option that runs only posts from pages you’ve “liked.” The move won the approval of Mark Cuban, whose anger in one tweet catapulted the issue into the public eye. But lots of questions remain.

Today, the company is trying to get the word out about how its system works with a “whiteboard lunch” for the press, with the aim of explaining how page posts find their way into news feeds. I’ll cover the highlights here starting about noon Pacific time, so refresh until about 1:15 p.m. for the latest. It’s pretty casual, not a formal presentation, so most of this will be a little scattered, but potentially useful to marketers.

Will Cathcart, product manager for news feed, comes on first to tell how Facebook thinks about the news feed. On an actual whiteboard! He says Facebook tries to figure out how interested you will be (Yoda, in his example) in each page post. If he comments on or shares or likes (or “hides”), say, posts from the Rebel Alliance, those will show up more often. But if he reacts in a significant way to a post by, say, Vader, that will inform future visibility of Vader’s posts. If he often complains that posts from, say, the Empire, those posts may drop out of his news feed entirely. …

Read the complete post at The New Persuaders.

Would You Buy An Apple Television?

AppleTV interface includes video, music, photo...

Apple TV interface includes video, music, photographs, and other Internet content (Photo: Wikipedia)

I’ve been intrigued lately by the idea of Apple making a TV. Not that Apple TV streaming-media hockey puck that Apple still calls a “hobby,” but a real television set. It’s something that every Apple fan, investor, and analyst seems to be expecting, or at least hoping for, because, well, who else is better positioned to fix the mess that is television programming today than Apple?

But what do people really want in a next-generation television? I’m hoping I can get some guidance from you–meaning real people who might buy the thing. So I’ve got a few short questions for anybody’s who’s interested:

* Would you buy an Apple television?

* If so, why? What would you like to see it do that current HDTVs don’t have?

* More specifically, is there anything that annoys you about the way television viewing works today? The current cable TV packages, program guides, remote controls, lack of current shows available online, anything else?

Feel free to comment here, of course, but I’d be especially interested in a brief conversation by phone or email with anyone who has an idea of what they’d like to see in an Apple television. So if you don’t mind spending a few minutes on the phone this week, email me at robert.hof@gmail.com with contact info and I’ll get in touch. Thanks!

Can’t Get Enough of Gangnam Style? Check Out AdTech Style

From my Forbes.com blog The New Persuaders:

Geeks love to insert themselves into the zeitgeist as much as anyone, and tech-inflected parodies of popular songs have become a staple of Silicon Valley folks who–let’s face it–struggle to live normal lives while working around the clock.

No surprise that they’re particularly popular in the arcane world of advertising technology firms, which have the additional problem that nobody knows what the heck they do. So today, we have a parody video of–what else?–Gangnam Style.

This time, ad tech leader BlueKai did up a pretty good marketing ploy parody based on South Korean singer PSY’s runaway YouTube hit. Most of it still appears to be in Korean, so I can’t vouch for whether the PSY stand-in is mouthing the words that appear in English subtitles. But the signature opening line clearly subs in “Oppan ad tech style,” and from there you have to depend on the subtitles to get the very inside jokes.

Amid shots of people dancing in server farms and bland Silicon Valley offices, plus cameos by ad tech figures such as Luma Partners’ Terry Kawaja, the video pokes fun at the industry’s infamous acronym epidemic. “Activate… with the DMP! … Optimize, verify, and inform those buys! … HEEEEEY, Sexy data!”

Like I said, it’s inside stuff, so half of you might be amused and the other half won’t know what on Earth they’re talking about. But it’s ad tech, so what else is new? And who thinks Gangnam Style‘s popularity was based on humdrum things like words?

Actually, this isn’t even the first Gangnam Style parody from Silicon Valley. A couple of months ago, there was a startup-oriented one starring a bunch of Valley entrepreneurial luminaries. Watch that one, and you don’t need to watch any more of Bravo’s lamentable Start-Ups: Silicon Valley reality show.

Will The iPad Mini Kill Off All Of Apple’s Other Tablets?

From my Forbes.com blog The New Persuaders:

When Apple’s iPad mini debuted on Oct. 23, reviews were generally positive but a bit muted: What, no Retina display? And why is it so expensive?

But now, after a week or two of playing with it, some of the most prominent reviewers of Apple gear are never going back. Never going back, that is, to their bigger iPads.

From SplatF’s Dan Frommer:

My take after spending a bunch of the weekend with the iPad mini: This is the real iPad… The best thing about the iPad mini is its weight — it’s almost effortless to use, and that’s a big difference. … I feel more confident holding the iPad mini, which means I’m more likely to use it in more places — the whole point of an iPad.

From The Verge’s Joshua Topolsky:

There’s no tablet in this size range that’s as beautifully constructed, works as flawlessly, or has such an incredible software selection. … The iPad mini hasn’t wrapped up the “cheapest tablet” market by any stretch of the imagination. But the “best small tablet” market? Consider it captured.

From Daring Fireball’s John Gruber:

If the Mini had a retina display, I’d switch from the iPad 3 in a heartbeat. As it stands, I’m going to switch anyway. Going non-retina is a particularly bitter pill for me, but I like the iPad Mini’s size and weight so much that I’m going to swallow it.

From The Wirecutter’s Seamus Bellamy and Brian Lam:

The iPad mini is the best tablet to get and lets be honest, it’s way better than the full sized iPad for nearly everyone. I’d even go so far as to say that the full sized iPad is plain obscene after using the mini. … This isn’t just jive talk. I put my iPad on ebay (pls. bid but not too high because you should really buy a mini) and ordered a fully loaded iPad mini for myself.

I understand their attitudes completely. I don’t own an iPad (yet), but I have checked out both pretty extensively. I also have been trying out both Samsung’s full-size Galaxy tablet and Google’s Nexus 7 seven-inch tablet for several months. They’re not as slick as the iPads, but they suffice to provide a sense of the difference between the two models.

And the difference in user experience is huge, even more than you’d think from the difference in weight and size. Once I started using the Nexus 7, I virtually stopped using the Galaxy, largely because the Nexus 7 is so much easier to use. It’s easier to hold in one hand and way easier to transport without fear of dropping it. It slips into a laptop bag or even a jacket pocket easily enough that you don’t have to think twice about taking it outside the house. The iPad mini will enjoy all those advantages as well.

Taken together, the experts’ and my experiences with the smaller tablets makes me wonder if the full-sized iPads will soon be extinct. OK, not extinct but perhaps an endangered species. Already, it appears, they’re headed for eBay.

Honestly, I don’t believe people will completely stop buying the larger iPads. One look at that gorgeous Retina display, and it’s all over for no small number of people. Plus, watching videos on anything but your chest in bed is a bit cramped on a smaller tablet. And full-sized iPads, already increasingly replacements for laptop personal computers, likely will continue to benefit from that switch.

But it’s considerably less cramped on the iPad mini thanks to its larger display area compared with seven-inch rivals. And when Apple comes out with an iPad mini with a Retina display? Could be lights out for the bigger iPads.

Apple seems smart enough to figure out how to make plenty of money on, well, whatever it produces, so I’m sure it will make a lot of money on iPad minis. And even if the iPad mini cannibalizes the full-size iPads to some extent, it’s better for Apple to do the cannibalizing rather than watch rivals simply take the business away.

But a lower price is a lower price. So it will be interesting to see if that lower price on iPad minis will prompt enough more people to go for an Apple tablet to make up for any lost sales of much more expensive big iPads. Given bearish investors lately, not to mention people wondering if the company has peaked, Apple had better hope so.

Uh-Oh–Survey Says Most People Find Facebook And Twitter Ads Misleading

From my Forbes.com blog The New Persuaders:

To hear Silicon Valley and nouveau ad-tech types tell it, traditional advertising sucks. The best way to attract people’s attention and engage them more fully is to create ad formats that more closely resemble the activities people are already doing on a site–in other words, to make ads look less like ads.

That’s the idea behind so-called “native” ads such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets. Although various studies seem to indicate these ads are indeed more effective than standard banner ads–a low bar, it must be said–a new survey released today indicates that a lot of consumers don’t trust native ads. According to the survey by app advertising firm MediaBrix and Harris Interactive:

* 45% found Twitter promoted tweets misleading.

* 57%  found Facebook sponsored stories misleading.

* 86% found sponsored video ads that appear to be content misleading.

The survey also found that a large majority of people who have seen Twitter Promoted Tweets in the past 12 months said they hurt or had no impact on their perception of the brand advertised. Some 72% said the same thing about Facebook’s Sponsored Stories. And 85% found sponsored video ads didn’t leave them with warm feelings. “While anyone pushing the native ad agenda or otherwise would agree that we need to provide user experiences that are not jarring or disruptive, we also need to ensure that we are direct and honest with our consumers about when they are being marketed to,” MediaBrix CEO Ari Brandt said. “Some formats achieve this better than others.”

Mind some caveats about this research. For one, it doesn’t compare native ads to banner ads, so there’s no telling whether trust in banner ads is any better than these native ads. Also, what people say they feel about ads and brands may have little to do with the ads’ effectiveness. And MediaBrix has a dog in this hunt, since it offers its own kinds of ad formats for social and mobile apps.

Still, it’s a splash of cold water on a trend that some very high-profile companies are counting on to become the next Google. And it’s a lesson that marketers apparently constantly need to be reminded about: Don’t try to fool your customers, because it can destroy trust in your brand.

Google’s Android Crushes Apple’s iOS In Smartphone Shipments–But Does It Matter?

Source: IDC

From my Forbes.com blog The New Persuaders:

Just four years after its debut, Google’s Android mobile operating software now claims 75% of mobile units shipped, according to a new report from market researcher IDC.

In the third quarter, according to IDC, some 136 million Android handsets shipped, almost double the 71 million shipped in last year’s third quarter. Devices using Apple’s iOS grew by a far lower 57%, to 26.9 million handsets, for a surprisingly low 15% market share. Don’t even ask about Blackberry or Windows Mobile. It’s a two-horse race for now.

Some folks wonder if this trend is heading toward a rerun of the Windows PC vs. the Mac. Maybe, and it’s got to be something that worries Apple CEO Tim Cook, who hardly wants to be the guy who let the mobile revolution get away.

But in the short to medium-term, it’s doubtful this is a killer for Apple. Why?

For one, Apple’s share was probably especially low in the last quarter because the eagerly awaited iPhone 5 didn’t ship until September, very late in the quarter. Add in new iPad models just introduced, in a holiday quarter when Apple devices are probably still the gift people would prefer to give over Android gadgets, and it’s hard to imagine that Apple won’t see some rebound in the fourth quarter. …

Read the complete post at The New Persuaders.

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