Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
This week’s three different announcements – Nokia, Motorola/ Google and Amazon – serve as a precursor to the presumed launch of the iPhone5 on Wednesday.
First up: The Nokia Lumia 920 and 820 – stunning Windows 8 phones that have several great features and many of the same applications as their Android and Apple counterparts. Built-in wireless charging on the 920 (an optional feature on the 820 as a snap-on plate), a revamped Nokia maps application, camera improvements called “PureView” that reduce blur by capturing more light and an augmented reality feature called “CityLens” are a few of the highlights making this Lumia different. Importantly, Nokia has not skimped on the basics with a dual-core 1.5 GHz Snapdragon S4 processor, a 4.5-inch display (4.3-inches on the 820) and LTE network support. Also, in a move reminiscent of 1990’s Apple Macintosh print ads, they chose to differentiate on color variety, bringing back the fluorescent yellow not seen since the launch of the Hummer S2.
Speed, Windows 8 integration, camera improvements and better mapping applications should result in a warm reception, right? Nope. The critics were out in force with a consistently cool response. Here are a few the analyst community reactions:
“The Lumia 920’s capabilities don’t fit well into the two-minute pitches salespeople use to sell phones. Cameras do not sell smartphones, so as nice as the Lumia 920’s camera might be, don’t expect salespeople to focus on it.” – Preston Gralla, Computerworld
“Nokia’s Pureview, Drive, Maps, Public Transport and Music are decent apps to differentiate in a crowded market, but we can’t help but feel that this may not be enough of an evolution to really take Windows Phone to the next level.” – Gareth Beavis, Techradar
“Will you switch from your iPhone or top end Android phone for this thing? After a few minutes with it, it’s a resounding… maybe.” – Gizmodo
Couple these reactions with the discovery that the PureView technology video was not shot with a Lumia camera (which, according to The New York Times, is leading to an internal investigation), as well as no announced U.S. carrier distribution partner, Nokia really presented a great Lumia product without a supporting cast. First, an Easter weekend launch in the United States. Second, no announced carrier or ship date for a very strong successor. What’s next for Nokia is anyone’s guess.
Second, we have the Motorola/Google/Verizon Wireless announcement, which highlighted three new devices: the Droid RAZR HD, the Droid RAZR MAXX HD and the Droid Razr M. It was a three-way love fest, complete with a modern version of the Carpenters classic “We’ve only just begun.” Simply put, this announcement was an indication of Verizon Wireless’ commitment to enthusiasm for Android and Motorola as an alternative to Apple.
The devices are big, powerful and represent a meaningful upgrade from the current Droid product lineup. Just get out a larger lightning bolt for the already iconic Verizon Wireless Droid/LTE ads and let the store representatives do their thing. The upgrade case is easy (can you imagine the new challenger Nokia Lumia competing for air time against the Droid franchise in a Verizon Wireless store this winter? Me neither).
Motorola also revealed two interesting insights in their opening monologue. First, median usage of a LTE device is 11-times more than a 3G device – 89megabytes per day vs. 8 Mb per day. While it was not disclosed if median usage was confined to Verizon Wireless 3G and LTE subscribers, if Verizon Wireless’ usage mirrors the Motorola figure, it would imply that 2 gigabytes of usage is a mid-point, not an upper end of usage (89 Mb x 30 days = 2.7 GB of monthly usage).
Secondly, Motorola disclosed that LTE users are 62% more likely to check their phones than their 3G counterparts. While that might appear to be an obscure term, it’s critical to ad placement and search. More checks mean more opportunities to display an advertisement. More displays mean more ad revenues.
Verizon Wireless is capitalizing on their 2009 Droid franchise establishment and 2011 leadership on LTE deployment, two of the largest risks ever taken in the wireless telecommunications industry. It will undoubtedly lead to a lot of phone upgrades in the fourth quarter, which will drive more new customers to the efficient LTE platform and corresponding Share Everything plans. With this announcement, Verizon Wireless cemented a large portion of their postpaid wireless base on Android.
Finally, there’s the Amazon Kindle Fire announcement. As we recently mentioned, when Amazon plays it cool, it’s going to be very cool. And they lived up to their reputation with a pre-announcement on Sept. 4, that read:
Amazon and Epix announce new Prime Instant Video Agreement – Prime Instant Video selection has more than doubled since the launch of Kindle Fire last year
New agreement will add popular new release movies like The Avengers, Iron Man 2, The Hunger Games, Super 8, Thor and more
That announcement provided enough fuel to drive down the price of Netflix stock by 10% (and it only recovered half of the loss during last week’s bull market). Amazon Prime is the electronics “Christmas stocking” of the digital industry, and each day it receives new treats for families with increasingly diverse needs. With the rash of new Prime subscriptions from the launch of the Kindle Fire in late 2011 (using a free month promotion), there will likely come a day (very soon) when the Prime designation will first be associated with digital goods packages and secondly tied to free 2-day shipping. It’s an unconventional but very effective marketing approach.
Speaking of disruption, the new Kindle Fire HD promises to put a dent in Apple’s growth prospects, in addition to those from additional challengers such as Samsung, Asus and Microsoft. When the original Kindle Fire was introduced at the end of last year, reactions were mixed. Too small, not powerful enough and fewer features than the iPad conveyed cheapness. Performance was more important than value. By all measures, the Kindle Fire should have been a disaster. It ended up being a hit – not an Apple-killer-David-just-beat-Goliath hit, but one that was powerful enough to cause the rest of the industry to think differently about seven-inch devices that retail for $199 or less.
Now comes the Kindle Fire HD. As the name implies, it has a clearer picture – much clearer according to analyst reports. And the Kindle Fire HD now comes in a larger size and even an optional LTE radio from AT&T Mobility (their LTE plan for $50 per year for 250 Mb per month is also creative – not useful for most video users as Amazon clearly showed in their presentation, but creative nonetheless).
Yes, there are a lot of technological improvements – we will not cover all of them here, but the Kindle Fire HD, with two radios, 5 GHz Wi-Fi support and MIMO integration will be a technology leader throughout 2013. Add in the earlier Epix distribution announcement and a $299 starting point ($499 for LTE), and Amazon’s claim that the Kindle Fire is a service and not a hardware product becomes believable.
To broaden their credibility, Amazon needs to expand their market horizon to include the enterprise. They paid lip service to Microsoft Exchange in their most recent launch announcement, but they lack the distribution machine of the iPad, especially to the Fortune 1000. They need business-focused applications that apply all of the things they have learned about making businesses more productive. Can some of the collaboration tools launched over the past two years be incorporated into the future product training for most Fortune 500 companies? You bet. Can these be transmitted securely through Amazon’s cloud service? Absolutely. Transforming how we read, learn and think is not limited to the living room – there are opportunities to change the ingestion and application of learning in the boardroom.
It was a week of contrasts. From Nokia’s function-rich devices to Jeff Bezos’ demonstration of his ability to score with a popular app game (Temple Run), we saw the fusion of hardware and software. The pipe got bigger. The processor got faster. The pictures got crisper. Prices did not increase, and, in some cases even got cheaper. Similar functionality? Yes. This is why distribution and partnerships become even more critical in 2013. And why some of the best conceived products will fail.
This week, it’s the Apple National Convention (which promises more excitement than the RNC or DNC). Apple appears poised for a bounce. We’ll discuss the size next week.
Jim Patterson is CEO of Patterson Advisory Group, a tactical consulting and advisory services firm dedicated to the telecommunications industry. Previously, he was EVP – Business Development for Infotel Broadband Services Ltd., the 4G service provider for Reliance Industries Ltd. Patterson also co-founded Mobile Symmetry, an identity-focused applications platform for wireless broadband carriers that was acquired by Infotel in 2011. Prior to Mobile Symmetry, Patterson was President – Wholesale Services for Sprint and has a career that spans over twenty years in telecom and technology. Patterson welcomes your comments at [email protected] and you can follow him on Twitter @pattersonadvice.
