Windows Phone 7: Tipping the Scales of the Smartphone Market

[Windows Phone 7 has the potential to redraw the smartphone competitive landscape and accelerate the evolution of the mobile value-chain. With the arrival of WP7 just around the corner, VisionMobile Research Partner Michael Vakulenko explains what success of the platform can potentially mean for the industry and why Microsoft’s mobile comeback should be closely watched.]
This article is also available in Chinese

Windows Phone 7: Tipping the scales of the smartphone market

Just over a year ago I had written how Apple’s iPhone and Google Android will capture leadership positions in the smartphone race, leaving behind all the legacy smartphone operating systems. Indeed, one year later iPhone and Android are confidently cruising ahead on the tailwinds of consumer, operator and developer ecosystem support.

Symbian continues to submerge into irrelevance distracted by its venture into open-source waters. The only two handset makers who are members of Symbian Foundation board recently jumped the ship. Both Samsung and Sony Ericsson lately said that they do not plan any new Symbian handsets. Worst yet, major chipset makers are scaling down their efforts to support Symbian. The direction is clear: Symbian is soon to become Nokia-only internal OS hidden behind Qt application framework.

RIM is steadily drifting towards mid-, low-end of the smartphone market. Contrary to common perception, enterprise users are no longer the platform’s most important audience. Over half of the subscriber base and 80% of Blackberry growth comes from the consumer space. The reason is the viral effect of Blackberry Messenger application popular with teenage kids and college students.

Contrary to Nokia and RIM, Microsoft took proactive approach. Instead of patching the leaking boat of Windows Mobile, the Redmond giant build ground-up a new smartphone platform carefully designed to address challenges presented by iOS and Android.

Make no mistake, Microsoft’s primary motivation for Windows Phone aren’t its software licensing fees. The real motivation is the need to protect Microsoft core businesses of Windows and Office product lines. Mobile and smartphones became pervasive. Microsoft must have a convincing mobile story to prevent increasing numbers of users churning to Apple and Google product ecosystems.

There are reports claiming that Apple sells just as many computers as Dell to college students. Naturally, a decision to buy a Mac is much more easier for a person already owning an iPhone. A person regularly using GMail or Google Apps on a PC and Android phone is much more prone to dropping Outloook, Word, Excel and PowerPoint in favor of cloud-based alternatives from Google.

With absolute majority of Microsoft operating profits coming from licensing of Windows OS and Office applications, the software giant cannot afford losing users to Apple or Google. Both Windows and Office must be augmented by the ‘mobile screen’ to remain competitive.

A comeback in the making?
Based on pre-release information, Windows Phone 7 has all the necessary ingredients to become a powerful contender in the smartphone race.
First, there is clear differentiation thanks to fresh user interface and deep integration with Microsoft on-line services and products.

The UI and the interaction model are based on well-received Zune HD Player (funnily enough there is Zune Home app on Android Market, which replicates Zune HD look & feel on Android). Finally we see refreshing departure from icon-based navigation that became de-facto standard following iPhone introduction.

The user experience is closely integrated with Windows Live, Xbox Live, Bing Maps cloud services, Zune content platform, together with pervasive Office and Exchange. Microsoft has impressive number of users registered for its on-line services – 360M Hotmail accounts, 299M Messenger accounts, 23M Xbox Live subscriptions. This will certainly help driving Windows Phone adoption.

Second, when it comes to developers Microsoft is playing on its home ground leveraging established developer ecosystem and excellent development tools. Windows Phone 7 application development is based on Silverlight UI framework and XNA game runtime. Both are well-known to large number of PC and Xbox developers eager to apply their skills in mobile environment. Consider that Windows Phone 7 Beta SDK was downloaded 200,000 time in just 2 days since its general availability. Instead of wresting developers from iOS and Android platforms,  Microsoft can tap into large pool of loyal .NET and XNA programmers, converting them into an army of mobile developers.

Developer monetization is high on Microsoft’s agenda. Windows Phone Marketplace avoids the pitfalls of the competing platforms promising predictable and transparent approval process, lack of handset fragmentation, localization, try-before-buy model, app beta testing program, and tools for active promotion of the content in the Windows Marketplace.

Third, operator billing supported by Windows Phone Marketplace will be instrumental in winning operator subsidy and marketing budgets from iPhone and Android. These budgets are critically important for the platform success. Windows Marketplace already supports operator billing for older Windows Mobile platform. This experience will help Microsoft quickly introduce operator billing for growing number of operators. Sure enough, Microsoft can be flexible on splitting 30% of app sales revenue share with operators. Not surprisingly, all five major UK operators will be selling Windows Phone 7 handsets at launch.

All these combined with familiar consumer brand and a huge $500M marketing budget (more than 5 times bigger than any previous Windows Mobile launch) makes Windows Phone 7 a convincing entry to the smartphone game. This entry is already supported by a lineup of handset makers from experienced mobile players like Samsung, HTC and LG, to PC specialists like Dell and Asus.

So what’s the catch? Windows Phone success will ultimately depend on Microsoft’s ability to execute on the promise. Microsoft will need to deliver solid product experience, prove monetization potential for operators and developers, and keep the momentum by following up with subsequent platform versions. Without these, Windows Phone 7 will only remain a great promise.

What will Windows Phone’s success mean for the mobile industry?
The mobile industry has radically changed in the recent years. In an industry where the only constant is change, what impact will the success of Windows Phone have on the mobile industry?

The hardware specs of leaked Windows Phone handsets from HTC, Samsung, LG, Dell, Asus and Toshiba reveal striking similarity between the models. All are based on QUALCOMM’s Snapdragon chipset. The variations are limited to industrial design, amount of memory, optional physical keyboard and FM radio. Are we entering PC-like era in smartphones, where industry will converge on a small number of hardware configurations? Will we see emergence of ‘Wincomm’ alliance in mobile similar to ‘Wintel’ in PC? Value-chain evolution theory says this is not question of ‘if’, but the question of ‘when’. Windows Phone 7 looks like a natural catalyst for this to happen much sooner than some companies would hope for.

This will be great news for low-cost ‘assemblers’ like Dell, Acer and Asus, who lack significant software capabilities and experience. With Windows Phone software and QUALCOMM’s support these companies can readily replicate their PC business models, brands and experience, while thriving on single digit operating margins. To do so, they only need to focus on building hardware platforms for Microsoft software, while leveraging pre-integration with QUALCOMM chips for fast time to market. Microsoft definitely learned from mistakes made with Windows Mobile. This time the approach is closer to the PC model: ODMs are given exact specification of how the hardware platform should look like. From the screen size, to amount of memory, to number of navigation buttons on the device.

For low-cost ‘assemblers’ Android proved to be too difficult to productize. Dell Aero is one example, which is four Android versions behind now. Using Windows Phone software will significantly lower barrier to entry on the software side. Paying software licensing fees to Microsoft may prove a better way forward than a crappy product that doesn’t sell.

On the other side, these will be very bad news for high-margin branded OEMs like Motorola and Sony Ericsson. Such OEMs will have little chance to protect their business from increasing competition from low-margin assemblers. Adopting Windows Phone won’t help: Microsoft is determined to maintain tight control over the platform and limit OEM differentiation opportunities.

Increasing smartphone commoditization accelerated by the entry of low-cost ‘assemblers’ will certainly put strain on today’s leaders, Apple and Google. Apple seems to be well-positioned to keep its positions in the mid-term. But will we see its vertical integration becoming a liability in the next phases of value-chain evolution? The phases where flexibility and customization of commodity products will favour modular solutions.

For Google things can quickly get challenging. Android is yet to grow into a recognizable consumer brand being concealed by operator and handset maker brands (e.g. Droid and Sense). What if Android will get squeezed between style-conscious consumers opting for iPhone and masses of mainstream users opting for the comfort of familiar Windows brand? Will we see Android slowing down and struggle outside the group of tech-savvy users?

What about mobile operators? Windows Phone success will increase the dominance of non-mobile players in the mobile ecosystem and their control over user experience. The distance between user and operator will inevitably increase, and we will see more and more mobile operators settling on the role of a ‘pipe’ satisfied by getting a share of app and content sale revenues.

Tipping the scales of the smarpthone market
If successful, Windows Phone 7 will catalyze further shifts in the mobile industry bringing PC-style commoditization and increasing distance between operators and their subscribers.

Microsoft and low-cost, PC style ‘assemblers’ will be the main winners driving smartphone price declines. High-margin branded OEMs will have no choice but to look for new ways to create value to operators. This is to snatch critically important subsidy and marketing budgets from Apple and RIM.

Apple and Google won’t wait long to make Microsoft’s life harder. Google can be exposed on multiple fronts and finally will have to pay closer attention to operator and developer interests.

Things will continue to be interesting in mobile in the foreseeable future.

How do you think things will shape up with Windows Phone? Who will be a winner and who will be a loser?

– Michael

[Michael Vakulenko is a Research Partner at VisionMobile. He has been working in the mobile industry for over 16 years starting his career in wireless in Qualcomm. Michael has experience across many aspects of mobile technologies including handset software, mobile services, network infrastructure and wireless system engineering. He can be reached at michael [/at/] visionmobile.com]

The Flash vs. HTML5 Endgame

[In the debate of Flash vs HTML5, has the death of Flash been over exaggerated? Guest author Guilhem Ensuque peeks through thick layers of hype and facts to predict what the future holds for the mobile web].

The Flash vs. HTML5 Endgame

The last year has seen a flurry of announcements and debate around the rise of HTML5 and the fall of Flash. Some have even gone as far as declaring a “war” between the two, and predicting the “death” of Flash as the outcome. However, as Mark Twain once famously said: “The rumor of my death is an exaggeration”. As we’ll see, the jury is still out as far as the fate of Flash and Adobe are concerned.

A brief (abridged) history of the web
“HTML5” is the new high-tech industry darling, and not just in the mobile space. It has become a catch-all phrase with little meaning when taken out of context. Before we dig into the debate, it’s worth looking at what is HTML5 and where has it come from.

“HTML5” when used as a shorthand, covers of family of web technologies currently being standardised by the W3C and at various implementation stages by browser vendors. The “5” comes from the version increment in the W3C spec number: currently most of the content you read on the web conforms to the HTML specification version 4.01.

To understand what has driven the creation of this new version of web standards, we need to look at the evolution of the web in past years.

historyofwebIn the 1990s the World-Wide-Web emerged from academia to become the ubiquitous medium to share digital documents over Internet Protocol networks. The HTML4 spec was matured in that era, and has been very much geared towards read-only, document-oriented description and hyper-linking. HTML4 mixes typographical tags with document structure description, within the bounds of static pages and has limited support for script-driven page logic and forms (does anyone remember CGI?). In that era of the web, support for multimedia content was notably absent from the web specification; leading to heterogeneous plug-ins striving to provide video delivery in web pages (remember Real Networks? or having to choose the speed of your modem?).

In the 2000s, the web evolved towards more interactivity with the advent of the “Web 2.0” (yet another buzzword) and user-generated content, especially videos uploaded and then streamed over faster ADSL connections. However, the HTML spec did not fundamentally change (apart from an attempt by the W3C to migrate to the stricter XHTML syntax which has seen mixed results in terms of adoption). To cope with HTML4‘s inefficiencies in allowing designers and developers to create interactive “experiences” (i.e. not just documents, but bi-directional “applications” living in your web browser) a number of innovations were introduced :

  • JavaScript, Dynamic HTML and XML HTTP requests (a.k.a. AJAX) as a way to have thick-client app functionality in the browser, enabling users to interact with the web in a read-write fashion (not just read-only)
  • clear separation of page structure in HTML (through heavy use of <div> tags) as well as typoraphy and style in CSS (through an arcane and verbose syntax), leading to more pleasant user experience and richer page contents
  • PHP-scripted and database-powered back-end logic bolted on top web server systems. This e.g. allowed template-driven content management systems like WordPress and Joomla to rise to prominence, fueling the blog revolution.

These innovations brought the ability to present vast amounts of data in pretty-looking dynamic web pages which mash-in RSS feeds, emails, blogs, Facebook updates, and tweets, and bringing web pages a step closer to applications.

In that era, Flash (or rather the Flash Player) rose to become a ubiquitous browser plug-in for animated graphics and video. At the same time, Flash evolved to provide an out-of-browser Rich Internet Application platform with the AIR runtime and the Flex framework, albeit at a much lower penetration level than the in-browser Flash Player.

We are now at the dawn of the 2010s, and the overhaul of the HTML4 spec is long overdue. HTML5 aims to bring back into the core spec of the web the “side” developments of the previous era and improve on them with a heavy focus on web applications. It also aims to lay the foundations enabling the delivery of web content through a new medium: mobile devices, and ultimately the “Internet of Things”. That history is yet to be written, but we can now ponder about its beginnings and the future.

So, What is HTML5 Really ?
In the context of this new era, the “HTML5” shorthand refers to a family of web standards and browser technologies that span a range of topics:

  • A modernized web markup language: the true-and-only HTMLv5 specification and matching evolution in web browser capabilities. The new syntax includes the <canvas> tag allowing bitmap manipulation through JavaScript drawing APIs, better support for vector graphics authored in SVG, the <video> tag allowing streamed media playback as simply as embedding images and the streamlining of tag usage.
  • A richer styling language: the Cascaded Style Sheets v3 specifications. CSS3 is now famous for its ability to create rounded corners, but more importantly includes so-called “transforms” allowing graphical effects like moves, rotations, gradients, etc. as well as 3D graphical objects manipulations. Much effort as been put by browser vendor to support hardware acceleration for CSS3 rendering. However, the standard is not yet mature and today requires using prefixes specific to each browser.
  • Application-oriented advancements in the browser, as well as matching JavaScript APIs: the Web Workers offering background and concurrent execution capabilities; a Web Storage allowing simple local data storage and manipulation in XML; and a Web SQL Database  providing the capability to perform SQL queries on large amounts of data stored locally and replicated from a server.
  • Mobile-oriented advancements (not yet finalised in the specs) including JavaScript APIs for Geolocation, Device and File APIs
  • Miscellaneous additions catering for the Semantic Web (microdata), security (cross-domain HTTP requests), and more.

To the above set of technologies standardised by the W3C we should add a domain that has sprung out of both proprietary or open-source efforts: high-performance JavaScript runtimes within browsers and JavaScript Application Frameworks. The latter extend the capabilities of the web, turning it into a full-blown client-side application platform much in the same way that UI and application frameworks like Qt or Gtk extend the “bare” Linux OS framebuffer. Such application frameworks include complementary JavaScript APIs, and rely on CSS3 to provide extensive sets of UI controls. Some mobile-specific frameworks (like Phonegap or BONDI, an offspring of the mobile operator community) go as far as providing additional device APIs for smartphone features like messaging or camera, while others provide a rich set of UI controls mimicking the native platform look & feel (more on this later).

Why the clash with Flash ?
There’s no denying that the capabilities brought forward by the emergence of the HTML5 “family” bring browser runtimes on a par with core capabilities of the Flash Player, which if adopted widely could make Flash redundant.

In the eyes of most mobile industry observers, the delays in bringing out a fully-featured Flash Player with acceptable performance on smartphones have played in favour of HTML5. Remember that, as of today, Flash Player v10.1 is only available for high-end smartphones that run the Android version 2.2 operating system. I would estimate that these represent only 1% of the overall smartphone shipments in Q2. This is a far shot from Adobe’s self proclaimed goal of having Flash shipping on 50% of smartphones by 2012 (see my previous article on this topic).
smartphoneos_share_q2_2010

Figure: Smartphone Operating Systems – Q2 2010 Shipments share (source: Gartner, Google)

Company Browser / OS HTML5 compliance
Nokia Symbian S60 5th Ed. 7%
RIM Blackberry v5 0%
RIM Blackberry v6 (Torch)* 69%
Google Android v2.1* 50%
Google Android v2.2* 59%
Apple Safari for iPhone (iOS 4.0)* 62%
Microsoft IE Mobile (Winmob 6.5) 0%
Opera Opera Mini (on iPhone) 9%

Figure: HTML5 compliance of mobile browsers
[some notes on the methodology: HTML5 compliance was carried out using html5test.com. (*) denotes a WebKit-based browser. The Nokia Symbian S60 browser, albeit based on an old version of WebKit, scores poorly in HTML5 compliance tests. I could not test Mozilla Fennec, Palm’s WebOS browser, nor Opera Mobile.Opera Mini is a special case due to server-side rendering.]

Making things worse, Apple has stayed firm on its policy to not allow the Flash Player browser plugin on its iOS devices (iPhone, iPad and iPod Touch), preferring to rely on its in-house video streaming capabilities developed within its HTML5-capable WebKit browser core and QuickTime player. And to make things even more complicated, Steve Jobs’ “Thoughts on Flash” have played a key role in fanning the flames of the “Flash is dead, long live HTML5” fire.

Moreover, Google’s Android, Palm’s WebOS and, more recently, RIM’s Blackberry also embed web browsers based on WebKit that score very high in terms of HTML5 compliance, as can be seen in the table above.

Thanks to WebKit, half of the smartphones being shipped are poised to have the Flash-like capabilities brought by “HTML5” built into their browsers. However, let’s not rush in declaring Flash “dead” and Adobe a company in decline as a result.

Does HTML5 matter to Adobe ?
HTML5 is actually good for Adobe’s business. Indeed most of Adobe’s revenues do not come from Flash as can be seen by breaking down the Flash product portfolio::

  • The Flash Professional tool, is the authoring software for creating Flash content. It ships standalone or within the Creative Suite bundle. This is where Adobe makes its money as can be seen from the “Creative Solutions” BU share of the chart on the side (courtesy of Business Insider’s “Chart of the Day” series). Creative Suite also includes the massively popular Dreamweaver web design tool, and Illustrator, a vector graphics design tool, both of which which are now starting to incorporate HTML5/CSS3 design capabilities. Adobe has also hinted that Dreamweaver will be able to convert Flash timeline animations to Javascript/CSS3 code to render those animations in “HTML5” compliant browsers. This means that “HTML5” will not be a threat to Adobe’s main source of revenue. On the contrary, since there are few good commercial web design tools, the rise of “HTML5” will spur demand for Adobe products.
  • The Flash Player: the plug-in is free and is therefore represents  an R&D cost for Adobe. No impact there. One might argue that, if HTML5 were to totally eliminate the need for the Flash Player, it would the positively impact Adobe’s bottom line in the unlikely event the company were to lay off the entire Flash Player team 🙂
  • The Flash “Platform”: “auxiliary” products that rely on the Flash Player include the Flash Media Server and Flash Access product ranges, licensed to organisations that use Flash to deliver streamed video content (e.g. Hulu, Influxis, Brightcove). The “Platform” also includes the commercial Flash Builder IDE allowing the development of Rich Internet Applications (and the associated free and open-source Flex framework). As can be seen in the chart, these represent a minute proportion of Adobe’s revenue. As we will see further down, these products are not going to disappear overnight due to the emergence of HTML5.

However, HTML5 does put competitive pressure on the product management and engineering teams responsible for the Flash Player to out-innovate the evolutions in browser technology. Adobe points out that this is “business as usual for them” as –they say- it was never their intention to fully replace the browser altogether, but rather complement its capabilities with innovative features, and harmonise areas in which standards have been implemented in an inconsistent fashion across browser runtimes.

As an engineering-driven company, Adobe aims for Flash to stay one step ahead of HTML5 technology implementations, as it already is today in numerous areas. Indeed, an agile R&D division within a single corporate entity will always be faster than a “snail driven by a committee” as the W3C HTML5 spec bodies have been dubbed by some.

Some areas where Adobe is pushing the envelope for the Flash Player include 3D rendering with hardware acceleration, concurrency support, IP TVs and peer-to-peer media delivery. The latter is an interesting transposition of the file-sharing P2P concept; imagine tens of millions of users watching the same live video coverage of the opening ceremony of the 2012 Olympics in London. No server farm or CDN today is capable of sustaining such a peak demand. By allowing instances of the Flash Player across millions of peers to share chunks of the video stream at the edge of the network could be the answer to the problem.

Beyond innovation, another aspect to factor in is that HTML5 is still in its early stages of implementation across browsers, with Microsoft’s uber-popular Internet Explorer browser today lacking any form of HTML5 support whilst representing close to 60% of the web user base (see chart below). Even with the IE9 beta improving HTML5 support and other browsers consistently gaining market share it will still take some years before HTML5-capable desktop browsers dominate the installed base. This will justify the existence of Flash in the desktop browser space for years to come and give some leeway to Adobe’s engineering teams in designing more innovative capabilities.

Desktop browser market share

Company Browser HTML5 compliance
Microsoft Internet Explorer 9 beta 32%
Microsoft Internet Explorer 8 9%
Microsoft Internet Explorer 7 4%
Microsoft Internet Explorer 6 0%
Mozilla Firefox 4 beta 5 68%
Mozilla Firefox 3.6 46%
Mozilla Firefox 3.5 42%
Google Chrome v6 72%
Apple Safari v5 69%
Opera Opera browser v10 53%

Figure: Desktop web browsers users share and level of HTML5 compliance
(sources: wikipedia and test conducted with https://www.html5test.com)

Reality check: comparing Flash and HTML5 in key areas
So how is Flash vs HTML5 faring today? For review purposes we can single-out a few key areas of Flash and HTML5 competition, specifically display advertising, video delivery, games and application development.

Display Advertising: a slight advantage for Flash
One of the main use cases for Flash (and big source of annoyance to web users) is display advertising. “Display” adverts are animated banners that appear at the top, side or overlaid in front of the web content you. As annoying as they may be, display ads are a necessary evil for the online world since they represent 40% of the revenues that the digital content and e-commerce ecosystems live on. Even Google uses Flash in its DoubleClick Studio rich advert SDK for advertisers.

Some have said that because HTML5 will kill Flash, those annoying ads will disappear. I would rather think that they may be replaced by equivalents designed in HTML5/CSS3, with the caveat that they may look crappier in most of today’s browsers than their Flash counterparts, as can be seen from these examples.

Indeed a point often overlooked is that today’s HTML5 graphical rendering capabilities are at the level of what Flash capabilities were some years ago and CSS3 transforms allowing to design good “eye-candy” are inconsistently supported across browsers. Therefore I would argue that advertisers will hold back from using “HTML5” for display ad creation in the medium term. The lack of proper HTML5/CSS design tools will also delay this technology adoption by design agencies and creative professionals especially within  industry circles where Flash is deeply entrenched.

On mobile devices, the situation will be no different. The blue legos now seen on iPad and iPhones may soon be replaced by HTML5 counterparts; or even by iAds. However, as of today, Apple is the only company creating iAds (in the process levying a hefty ad tax) and is reported to be struggling with the demands of advertisers with its in-house HTML5-based ad creation tools and technologies.

Video Delivery: advantage for Flash
Another area in which “HTML5” has been touted a “Flash killer” is online video delivery. Let’s have a look. As far as basic video playback is concerned, Flash and HTML5’s <video> tag provide the same capabilities, so why not ditch Flash and avoid to end users the (relatively minimal) hassle of installing a plugin?

The situation is not as simple as it sounds as the various browser vendors do not yet all support the same video codecs. On one side, Apple and Microsoft are proponents of H.264; Google is pushing its opensource WebM codec (formerly the proprietary VP8 codec that it inherited through the acquisition of On2/Sorenson); and Mozilla and Opera by default supporting the free and opensource Ogg Theora.

This poses a challenge to online video publishers like YouTube since they then have to re-encode their content multiple times to support each codec.

To end users, this means that videos may not be available in the format supported by their browser. Flash on the other hand, even though it requires videos to be packaged in the FLV container format (not to be confused with encodings like H.264), is available across all desktop browsers and is used as a reliable fallback by “HTML5” web developers i.e. for the 50% or so of IE end-users whose browser can’t render the <video> tag.

Furthermore, the Flash Player supports advanced capabilities required by online publishers such as DRM protection (crucial for pay-per-view business models) and picture-in-picture overlay of multiple video sources with alpha-blending (e.g. for e-learning or overlay of contextual adverts). These capabilities may not be offered for years with the <video> tag in HTML5 browsers.

Casual Games and Visualizations
Flash is the technology that powers some massively popular “casual games” (such as Zynga‘s Farmville or Mafia Wars) played by millions of Facebook users worldwide. It also powers numerous other Facebook applications. There was earlier this year a rumor that Zynga was converting its titles to HTML5 to be able to run on the iPhone and iPad. This turned out not to be true, as it announced at Apple’s WWDC that it had ported Farmville to the iPhone as a native app; which may be interpreted as a sign that “HTML5” was not up to the task.

farmville.320x480-75 Another area in which today Flash is massively popular is that of visualizations and generative art. There is a large and enthusiastic community that has turned Flash animation into a true art form. Artists like Erik Natzke or Yugo Nakamura (of the Tha agency) are prominent examples of this community. To date, I have not seen any such artistic usage of “HTML5” technologies.

Other “HTML5” demos that have received a lot of media attention are Google’s “bubbles” doodle earlier this month, its experiment with Arcade Fire or a port of Quake to JavaScript using GWT. However, I do not yet see casual games developers or visualization artists migrating “en masse” away from Flash. This may be explained by the fact that those experiments in “HTML5” remain CPU-intensive and RAM-hungry (more than Flash in most cases), while designer-grade tools are lacking, and the fragmentation between browsers makes Flash a lot more dependable.

Applications Development: a draw
Web app development is another technology domain where the HTML5 family of technologies has been contending with Flash.

We have seen earlier that “HTML5” provides most core capabilities needed to run local applications, including code execution, storage and access to the screen. These core capabilities are now complemented by a flurry of web application frameworks that rely on JavaScript / CSS: DoJo, JQuery, MooTools and Sproutcore, to name a few. Google’s Web Toolkit (GWT) represents a particular case since it is a framework + tools package that allows to code a web application in Java and convert it to JavaScript for execution in the browsers (note how Gmail, Buzzz and other Google apps are built with GWT).

More recently, these frameworks have been forked into mobile variants: JQuery Mobile, Sproutcore Touch and Sencha Touch. Sendra is actually a case in point: the developer company raised $14 million in venture capital, a testament to the significant size of the business opportunity, and has jokingly proclaimed “The End Of Native” (see photo).

This abundance of JavaScript frameworks may be encouraging, but also represents a dizzying array of choices for the developer. This diversity limits the degree of industry-wide code reusability and fragments the pool of Javascript app developers into vertical niches.

This diversity further plays in favour of Adobe’s own web applications platform AIR (a sibling to the Flash Player) and the associated Flex framework, which uses the Actionscript programming language and allows XML-driven UI design through its MXML language.

In my own experience, seasoned developers find ActionScript and MXML a much better programming paradigm than Javascript frameworks in most developer aspects; code reuse, team productivity, tools support, debugging and ease of UI design.

In conclusion, the momentum behind web applications thanks to “HTML5”’s core capabilities and associated frameworks may seem unstopable, especially as it is driven by technology behemoths like Google and a large enthusiastic community. However this optimism is mitigated by the lack of developer productivity and the rising popularity of Adobe’s application development technologies.

What of the Future ?
Based on the earlier analysis, Flash is far from dead today. There are many cases in which Flash will continue to offer a better alternative (worst case a very useful fallback) to “HTML5” technologies due to the fragmentation in new web standards browser support.

To the question : “will HTML5 kill Flash?” there is no single answer. It all depends on which use case is considered and in what timescale.

On the desktop front, it is the lack of HTML5 capabilities in IE8/9 and their immaturity in all other browsers, that will secure the future of Flash in the medium term. At the same time, Adobe is under pressure from Microsoft, Google and Apple who are betting huge R&D budgets in the development of HTML5-capable browsers and who should be able to out-innovate Adobe in the longer term.

On mobile, the Flash Player is still in its infancy, while WebKit-based browsers are sharply rising towards ubiquity (250 million and counting as of end 2009). This gives the “HTML5 camp” an edge today, especially in the area of basic video playback and mobile web applications for which numerous JavaScript/CSS3 mobile frameworks are available. Looking forward however, Flash may still better HTML5 on mobile for use cases like casual games and animated graphics given its greater dependability and its widespread usage today in those communities.

Where would you place *your* bet?

– Guilhem

[Guilhem Ensuque is Director of Product Marketing at OpenPlug. He has more than twelve years of experience in the areas of mobile software and mobile telecoms. Guilhem was a speaker at last year’s Adobe MAX conference. His favorite pastimes (beyond mobile software strategy!) include making his baby daughter smile and sailing his Hobie Cat with his girlfriend. You should follow Guilhem on twitter @gensuque_op]

Waking the Dragon: The Rise of Android in China

[Android is leading the smartphone revolution in Western Markets. But what about China, the country with the biggest mobile user base? Guest author Hong Wu analyses the state of Android in China – from chipset vendors to software developers – and how the dragon is waking up.]
The article is also available in Chinese.

The Rise of Android in China

HuaQiang Road, ShenZhen, GuangDong, China, an ordinary weekend.

At 10 o’clock in the morning, there are few pedestrians around. Sanitation workers are cleaning up hundreds of deserted mobile phone packages and plastic bags near mobile phone supermarkets, along with bundles upon bundles of mobile phone manuals, and even a few dozens of broken CDs, with labels showing clearly the words “HTC” or “SonyEricsson”.

Clerks in more than a dozen bank branches on HuaQiang Road and ZhenHua Road are busy refilling cash into their ATMs. In the next 5 hours or so, those bank clerks and ATMs will be responsible for hundreds of millions of Yuan in cash transactions. Yes, cash and stock products are the rules of transaction here. This commercial business district, often called as “HuaQiangBei” (or north of HuaQiang), is the strike-it-rich spot for many poor grassroots classes in ShenZhen. This neighbourhood has become the global hub for consumer electronics.

Android has recently become the hot topic within HuaQiangBei district. Sales figures of Android phones have been climbing on a daily basis at YuanWang Digital City. Most of these Android phones use Qualcomm’s chipset, while only a few of them run a chipset that’s made in China.

Nearby, at MingTong Digital City, one can find heaps of ShanZhai (山寨) mobile phones on sale (ShanZhai refers to Chinese imitation and pirated brands and goods, particularly electronics). There only a few Android phone models on display, but customers keep coming back asking for more. In the meantime, the software engine that powers ShanZhai smartphones has shifted from Windows Mobile to Android, and most of they are using chipsets that are made in China.

A 15-minute drive from HuaQiangBei business district, at CheGongMiao business district, are the headquarters of dozens of mobile phone design companies, who are in the midst of the mobile food chain. On a daily basis, engineers here crank out some very exotic prototype phones using MediaTek’s chipset solutions. Since 2009 when Android caught fire, sales guys from MediaTek, HiSilicon, Rockchip, Actions-Semi, and other chipset vendors are arriving day after day, hoping to sell their solutions and get a piece of the pie from the Android revolution.

Once an Android-based white label design is out, the phones will be manufactured in factories at Bao’An ShenZhen and LongGang districts. The plastics are then stamped with the right retail brand stickers, and put on the shelf at the consumer electronics crossroads that is HuaQiangBei.

The MediaTek powerhouse

MediaTek (MTK) sells between 300 to 400 million chipsets a year for 2G handsets, and is the predominant force behind low cost phones in China. MTK’s foray into the smartphone market began in February 2009 when they released the MT6516 design, at that time based on Windows Mobile 6.5 OS. MT6516 is a dual core solution; the application processor is an ARM 9 running at 416MHz, while the baseband processor is an ARM 7, running at 280MHz, supporting 2G (GSM/EDGE). This solution suffers somewhat in terms of performance when compared to the Qualcomm’s MSM7200, but its BOM is lower.

One step up, the MT6516 deluxe version includes a 2.8” QVGA resistive touch screen, 2MP camera, GPS, WiFi, and Bluetooth silicon, with a quoted wholesale price of $90. The basic MT6516 version with no touch screen or camera is quoted at $60. Note that approximately $10 of that quote goes towards the Windows Mobile license fee. In other words, expect prices to go down considerable with an Android design.

Despite its market mussle, MediaTek didn’t anticipate that the Android revolution would arrive so soon. For example, MediaTek didn’t join OHA until 2010 while the first MTK Android handsets are just making their first steps into the Chinese market (there is a rumour that a leading Android OEM had earlier veto’ed MTK’s entry into the OHA to avoid price competition).

TongXinDa in ShenZhen has been the first ODM to release an Android phone based on MTK’s MT6516 solution, the “TongXinDa TOPS-A1”. The phone boasts unique features such as dual SIM cards (both GSM and CDMA, and both at active states), a dual boot system (Windows Mobile 6.5 and Android 1.6 both stored in ROM) with 256MB RAM and ROM, and a 400×240 screen resolution. The phone ad is shown below (note that the HTC logo is a fake).

But these are just the first steps of Android as it awakes the Chinese dragon. The full MTK Android 2.1 solution won’t be out in mass production until the end of 2010.

More competition at low-cost Android phones

Rockchip, a design vendor based in FuZhou, China, showed its RK28 solution at HongKong Electronics Show in 2010, focusing on Android tablets and smartphones.

Rockchip is a homegrown chipset design company which conquered the market of MP3 portable media players with its RK26 and RK27 series. In 2009 Rockchip announced its foray into smartphone business with the RK2808 Android solution, but was not widely adopted due to chip heating problems and performance issues.

In a second effort at the smartphone market, Rockchip released its RK2816 solution in 2010, running on an ARM 9 application process at 600Mhz and an NXP baseband chip. The RK28 series is not as tightly integrated as MTK’s MT6516. MTK put both applications and baseband into one single chip, while RK28 used Infineon for their baseband. RK28 series’ advantage lies at its inheritance of multimedia technologies from Rockchip, with hardware decoding of 720p H.264 video.

Rockchip’s RK28 design has been taken up by Ramos (Blue Devil) to power an smartphone device under the model name W7. The device runs Android 1.5, sports a 4.8” 800×480 resistive touch screen, and is intended as competitor to iPod Touch, with a focus on video media playback features. BuBuGao is another OEM planning to deliver cheap smartphones using the RK28 solution.

In the tablet space, Actions-Semi has been designing a new chipset based on the mISP 74K kernel, running Android 2.1. Marketed under the EBOX moniker, the company aims to head-to-head competition with the iPad with support for H.264, MPEG-4, DivX and Xvid hardware decoding at up to 1080p resolution. Such specs are unheard of among current Android solutions.

Around five years ago, phones based on MTK chipset shook up Chinese cellphone market that was dominated by Nokia, Motorola, Samsung and other local brands like Bird, TCL and XiaXin. MTK enabled phones to be sold at very low prices while still boasting advanced features, including exotic ones like eight stereo speakers or 365 days of standby battery life.

Today, most local brands are gone, and the remaining few have reverted to using MTK chipsets for their phones. International OEM brands have to slash prices on their mid-end to low-end phones in order to compete in this fierce cellphone market. MTK’s entry into high end smartphones using Android may certainly repeat the history we witnessed five years ago. Android phones running FroYo selling for under $100? Maybe just a few months away.

Android Developers in high demand

With such a rapid growth of Android-related activities, Android developers are in hot demand today in China. A 2-year Android pro can command up to 20,000 Yuan (close to $3,000) per month; whereas a 10-year J2EE veteran makes probably the same salary if not less. Companies, big and small, are busy scouting for Android talent, but challenged due to the small pool of qualified engineers.

At ifanr.com we recently conducted a survey, with the help of the China Android Dev group (over 1,400 members, 18,000 messages, the largest and most active discussion group for Chinese Android developers) to capture the demographics of Android developers in China. Our survey received over 500 valid responses with some revealing insights into the state of Android developers in China:

In terms of demographics, over 80% of respondents are between 20 to 30 years old, while another 10% is between 31 to 35 years. These are pretty young and dynamic groups of developers.

When asked about how many years of mobile development experience they have, close to 40% are just getting started. And another close to 50% of respondents are within 0-2 years of experience, which is to be expected, given that Android is a two-year-old platform.

In terms of their role in Android development, 37% of survey respondents are part time developers, while over 40% are professional developers. Only 10% are students while about 15% are still holding out to see how Android progresses.

It’s also worth pointing out that over 60% of respondents are individual developers, a.k.a. one-man teams, while over 90% work in teams made up of less than 50 developers. There are companies with more than 100 developers, mostly likely big telecoms like China Mobile, as well as handset manufacturers and design houses.

Given that we targeted Android developers, almost 80% of respondents have developed on Android. We also see healthy shares of iOS, J2ME, Windows Mobile, and Symbian. Based on current trends, we can foresee Android and iOS commanding larger market share going forward, while J2ME, Windows Mobile and Symbian share will shrink further.

Over 45% of respondents have not yet published apps on Google’s Android Market. This is mostly because Android Market and Google Checkout do not yet support Chinese regions. This is a well known issue; there is a large number of developers in China wanting to publish apps onto the Market who can’t; for example many of them have to set up an overseas bank account in order to register and pay for the Market registration fee. It’s a major hassle for individual developers, and where hopefully Google has a mitigation to offer in the near future (PayPal integration perhaps?).

In terms of revenue models, about two thirds of paid apps are using ad banners, while the other one third are using pay-per-download according to the results of our survey. As for the types of ad networks used, Google AdSense comes out on top with nearly 50% of votes. AdMob comes in second with nearly 30% votes. Wooboo, Youmi, and Casee, ad networks from China, are also making strides here.

The level of satisfaction from app revenues is evenly distributed, with 20% of respondents saying they are not doing well and losing money, and 18% saying they are extremely satisfied and doing well or optimistic about the future (the rest 60% is for people who do not make money from apps).

In terms of go-to-market channels, Google’s Android Market tops with more than half of the share. China Mobile’s Mobile Market (MM) is also popular among developers. MOTO SHOP4APPS is surprisingly getting 5% (or 10% among the ones submitted).

Overall, Android has seen explosive growth in China. More and more developers are joining the ranks daily. However, due to the limitations of Android Market and Google Checkout in China, many developers are turning to alternative markets and payment gateways.

In the operator camp, China Mobile is making a big splash trying to woo developers onto its Android-variant, the OMS/OPhone platform. HTC and Motorola are also pushing their own app store agenda.

The Android ecosystem in China is still a sleeping dragon, but is waking up day by day. There will be more ad networks, more app stores, and more payment gateways coming out in the foreseeable future before consolidation moves in. Android in China is probably at its most exciting stage right now.

– Hong

[Hong Wu is a seasoned mobile app developer based in Silicon Valley, US. He’s currently building an awesome product that hopes will make TVs enjoyable again. He’s also a core member of ifanr.com, the leading new media blog site in China that focuses on mobile Internet industry, smartphones, gadgets, and exciting startups in China. You can contact Hong at lordhong /at/ gmail.com or follow @lordhong on Twitter.]

The recipe for a successful mobile strategy for your brand

[Most major companies have tried engaging their customers through their mobile phones, but not everyone has succeeded. Guest author Guillaume Arth talks mobile brand experience and identifies the steps towards developing a successful mobile strategy]

Creating the right mobile strategy for your brand

‘Get into their pockets and you’ll get into their minds’ could be the slogan soon underpinning any new marketing manifesto. Indeed, mobile commerce has become core to the strategy of mainstream brands as it empowers new forms of customer engagement.

Mega brands like eBay have taken strides in mobile as an extension of their online presence through mobile websites and applications. eBay’s  iPhone app has already been downloaded 11 million times. The online auction giant expects to make $1.5 billion from mobile this year compared to $600 million in 2009. Retailer brands like Best Buy use apps to offer specific promotions or gifts in the process learning a lot more about customers.

Interestingly, traditional media have been quicker to adopt a mobile strategy as many advertising budgets are moving online. Since this summer, the Wall Street Journal, The Times, and Wired magazine (to name a few) have all launched iPad apps signaling a shift in premium print media. Similarly, TV channels like MTV are also embracing interactive, social apps, either designed as companion apps or offline versions of TV content. As reported by Advertising Age recently, brands like MTV  “focus on two approaches to its iOS apps: first, co-viewing apps that capture the social-media chatter around TV and awards shows and second, apps for video on the go”.

Moreover, borrowing lessons from Foursquare and Gowalla new types of apps allow you to ‘check in’ to TV shows and movies. A good example of that is the TV chatter app, which enables users to do their own programming and interact with Twitter live streams and post their own.

However promising these developments might be we will have to wait another 12 to 18 months to see whether print and broadcast media can truly leverage on mobile.

Getting your brand experience right

Through their scale and prolonged web presence EBay and Best Buy have successfully faced the challenge of multi-channel integration as well as getting visibility and ‘placement’ of their mobile commerce apps on stores.  For these reasons they still remain exceptions. As a mobile gaming exec put it to me recently, ‘you have to be at least in the top 100 apps on iTunes if you want to make any kind of money. You have to market yourself in a way that can create actual retention, not just hype at the back of a free app’.

Indeed, some free apps may enjoy good download stats but those don’t necessarily translate into good reviews and recurring users as the Gucci app recently showed.

Some brand strategists argue that it is still ‘early days’ and that a ‘wait-n-see approach’ is more sensible; after all market penetration of higher-end devices like the iPhone and Android-based handsets is still only around 5% of devices sold worldwide in H1 2010. However this figure hides that we are in fact talking about high value, high ARPU customers with the biggest propensity to actually try out a branded mobile app. Additionally with more 150 million smartphones sold we have passed the point of only talking about early adopters. This is now a mass-market phenomenon, which has opened up new and more direct routes to consumers for brands.

So how should a brand go about developing a mobile strategy?

Before enlisting a highly paid musician to create a DJ-like app experience or hiring a top-notch programmer to start churning out software code, it is important to consider what factors make some apps successful and other mediocre:

Firstly, understanding users. A successful app will capture the imagination by being relevant, useful and delightful. Indeed users are prone to quickly veer off to something else in disappointment so understanding what makes them tick is important. After all your brand is trying to take a piece of someone’s busy schedule. Hence pilot first and then scale appropriately. One can draw lessons from successful games that offer a basic, yet addictive experience which is then enhanced with a bigger feature set at a 2nd stage. Then it becomes easier to convince existing users to come back and possibly pay a small premium (a good example of that is ‘Hungry Shark’ part 1 and 2 by Future games of London.)

Secondly, a deep understanding of mobile as a medium is essential. No matter how amazing your ideas may be, it is worth keeping in mind that mobile is a tactile, impulsive and intimate medium that doesn’t tolerate too much ‘fuzzing’:  basically users need ‘to get it’ in a matter of seconds and… it needs to work! Taking the brand’s website content and ‘over-specifying’ an app is likely to fail. One can think of the 2010 Roland Garros app whose flawed design, and overly complex feature set probably didn’t achieve much for the tennis brand. Here is a prime example of how a flawed approach to an app can possibly damage a great brand especially when competitors or peers (the other Grand Slam tournaments in this case) have done a much better job.

Based on good design guidelines, a mobile app should aim at creating a brand narrative that will work in the mobile context rather than throwing ill-conceived ‘marketing junk’ as one can often read in app reviews. App marketing can be a double-edged sword and because of its immediacy and interactivity, brands must have their ears on the ground, learn and react quickly ensuring negative feedback doesn’t spiral out of control.

Thirdly, having a longer-term app roadmap where the mobile brand extension evolves and engages with its customers. The mobile app roadmap should grow gradually and elegantly, adding features and customer engagement opportunities on the way. Brands can build more loyalty by letting their essence shine through the simplicity of its mobile incarnation.

Last but not least: pricing. One million free downloads equals to zero direct revenue and too many apps are free making it difficult to solicit direct revenues through branded apps. But revenue shouldn’t be the only goal of a brand-extension strategy; the main goal should be engagement. After all, who would be willing pay for ‘walking into a shop’? One shouldn’t repeat the same mistake as mobile operators portals have done with charging users for just browsing. Providing a ‘free-entry’ experience is an important consideration which can then be followed by a premium (paid-for) experience.

Sowing the seeds for deeper customer engagements

With mobile, brands can equip themselves with a powerful and interactive marketing platform that forms a key pillar of a ‘multi-touch’, digital media presence. The entry of brands into the mobile domain is being encouraged by four recent developments:

1. A new breed of mobile natives who have greater access, understanding and trust in the mobile medium as a more personal and less ‘mediated’ experience for shopping or entertainment

2. Devices evolve at a very fast pace.  Thanks to the widespread support of XHML/HTML, Java script and CSS, (More than 250m devices now feature the open-source WebKit browser engine, as seen in the 100 Million Club) and greater set of APIs, devices offer richer media experiences: audio, picture, video, social, messaging, location…and the list goes on.

3. The greater availability and affordability of cloud-based technology open source APIs, as well as packaging and rendering solutions for mobile websites, allow new entrants – like brands – in the market (‘BK Render’, a mobile rendering solution from french start-up Backelite is a good example there)

4. The accelerated development of mobile transactions from operator billing to bar coding, I-Tunes, Google checkout, PayPal, NFC and others.

‘Convergence marketing’ is the new frontier

At the core of the ‘new mobile economics’ brands and service providers are increasingly empowered to create new experiences and new business models. With the caveat that there is no current “write once, run anywhere”, I argue that brands are better positioned than ever to work around consumer and platform fragmentation through ‘convergent positioning and marketing’. Essentially rather than feeling daunted by technology, it is about looking at what the brand is trying to communicate and push a consistent message across to all users whatever digital medium they are using.

Users. Where are they? They are everywhere and ‘ubiquity’ is their destination.  The user journey starts with a phone in each pocket, device connectivity and grows to digital ecosystems spanning across tablet computers, laptops desktops, TVs and many more places tomorrow. This creates a connected environment of opportunities for brands to express and market themselves in new ways, with social apps and blogging leading the way. Costs and barriers to entry to digital are lowering and marketing and retailing of digital goods is becoming mainstream.

Further down this new crowded high street, Apple, Google, Samsung and to an extent LG and Sony are embroiled in the battle to conquer our living rooms with internet TV services, through VOD, apps and widgets.  At present, joint communications and Internet TV services are mostly ‘beta’ services on trial with operators including Verizon (US), Sonaecom (Portugal) or KT(South Korea). Orange recently signed a partnership with LG, where Orange provides billing and customer care while LG provides IPTV services.

There are also handset apps that act as a remote control – Free.fr in France for example (Free.fr app) – signaling that mobile might take over as the ultimate ‘EPG’ (electronic Programming guide). Currently 10-20% of IPTVs are connected to a broadband going up to 50% with higher broadband penetration. Samsung expects to sell 35 million TVs globally in 2010. In comparison, it took Microsoft 3 years to sell as many Xbox units. As TV remains the most popular consumer electronics device in the home this presents significant opportunities for any IP-based service or a brand looking to market itself through digital. With an installed base of millions it is only a matter of time before mobile app stores users are migrated to the big screen.

Apps and mobile services are good place to start for any brand but as we have discussed it is only the beginning. For instance, Nokia recently argued that ‘context devices, rather the apps, will be where the money is’.

With the digital switch over completed in most developed markets by 2012, ‘Convergent marketing campaigns’ will soon become a reality. Of course being successful will require adjustments and some juggling with technology but I believe that within 18 months, brands, service providers and advertisers will be at the intersection of a bigger phenomenon than the app stores as digital grows exponentially.

Now is the time for any brand to plan and leverage on those exciting developments and – through deeper customer engagement – turn new experiences into new revenue streams.

Guillaume.

[Guillaume Arth is a mobile media consultant based in London, UK. With more than 10 years of experience in this space, he currently specialises in service strategy, sales and marketing advising large and small organizations. You can contact Guillaume at: g /at/ cozmopolitanmedia.com or you can follow him on Twitter @cozmedia]