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Thursday, June 11, 2009

Misleading mobile Internet & smartphone statistics

I am constantly amazed by the groupthink in parts of the mobile industry, and the shameless and unquestioning way that careless, woolly figures get rolled out, time and again.

"There are 4.5 billion mobile subscribers"
"The next billion Internet users will be on mobile"
"160m smartphones are sold annually"
"LTE will deliver 100Mbit/s speeds"

These all make great soundbites, but they don't bear close scrutiny. Of course, much of this debate revolves around definitions and semantics, but the point here is to drill behind the figures to understand *how they are derived* and *what they actually mean for the mobile business*

Instead, the industry has a very bad habit of using the best "marketing" numbers to make itself look successful and important, even if the reality is rather different. That's sort-of fine from a PR point of view, but unfortunately many insiders believe the headlines and use them as a basis for business planning.

Two examples have caught my eye today, both quite closely linked.

Firstly, my regular "sparring partner" Tomi Ahonen has a serious rant at Microsoft about its claims that smartphones are still in their infancy, and that PCs are still dominating the computing industry. Yes, you can argue that if you add together all the Apple, Symbian, Linux, RIM and Windows devices, you get a larger number than Ballmer quoted in his speech. However, that obscures two important caveats:
  • Many "smartphones" are locked to additional applications, especially in Japan. Comparing them to a user-controlled smartphone is disengenuous. Many bank ATM machines, or retail PoS terminals have ordinary Intel/Windows boxes in their innards... but most observers would not call them PCs.
  • Most "smartphones", especially older Nokia Series 60 devices, are not bought or used for their "smartness". Apart from Apple iPhones, very few are sold with "mandatory" flatrate or other "decent" data plans. I saw lots of "remaindered" Nokia N-series phones during my recent trip to India - a market without 3G networks.
  • As I estimated the other day, the total number of 3.5G smartphones with good dataplans is almost exactly the same as the number of 3.5G-connected PCs.
  • Despite Tomi's rant at Microsoft, it's instructive to note that the growth curve on netbook shipments (15-20m in 2009, after first introduction in 2007) far exceeds that of the early years of smartphones. I think there is a reasonable probability that operators switch their subsidy and emphasis to netbooks or dongles and away from (some) smartphones
  • Smartphones are *expensive*. The Nokia N97 I have in front of me, costs 2x the price of the Samsung NC10 I'm writing this post on. Guess which gives me a better Internet experience. And which has a better battery life.
Overall, I certainly agree with Tomi that Microsoft could do a lot better in mobile than it has so far. But I certainly disagree that it is in any way threatening the future of the company by its failure to address the sector - at least for the next few years.

The other example is related. Two presenters at the conference this morning cited headline analyst figures along the lines of "1.2 billion users of mobile Internet by 2012", typically comparing it with today's roughly 1.3 billion fixed internet users and 400m-odd broadband lines.

Leaving aside the obvious point that there is no "mobile Internet", these figures really don't convey the whole truth. They lump in everything from PCs with 3G/WiMAX right through to GPRS featurephones on which someone accidentally hits the browser icon to go to the operator's homepage.

Most developers (certainly in developed markets) now have a view of a mobile Internet user as a BlackBerry or iPhone user with regular, daily access to email and the web, plus widgets and maybe an appstore. As mentioned above, that population at the moment is probably less than 50m people (ie the 40m plus another 10m of EDGE/3.0G Internet users).

I also see a lot of assumptions that everyone with a 3G-enabled PC will be an active user - not realistic, as only a % will actually pay for connectivity services. Many also forget how few prepay users (still!) get access to mobile data, especially at a reasonable price. 1.2 billion is approximately the number of global individual users with postpaid contracts today.

At the end of 2012, my own Mobile Broadband Computing report from a couple of months ago estimated active users of non-phone devices as:

- 170m for PCs (embedded or dongle)
- 20m with MIDs

Note that these are "users" not "subscribers". Most will not have traditional "subscriptions" but will use connectivity through various adhoc or bundled business models.

I haven't done any formal forecasts for smartphone usage, but my (very approximate) take would be, again for end-2012 [3.5 years from now]

- maybe 250-300m regular active users of flatrate data + highend phones equivalent to today's iPhone. Most will be contract monthly customers.
- maybe 200m more occasional users (maybe on-portal or widget) mobile web users with an OK-ish browser. Mix of contract and prepay.
- a fairly long tail of WAP users doing occasional access - mostly in emerging markets, but hobbled by continued poor availability of mobile data services to 2G prepay users. These are interesting from a statistical point of view (especially if you're trying to make a point), but are not really Internet users in the way that their counterparts with PCs or in cybercafes view the world.

[Sidenote on this mythical next 1 billion Internet users being on mobile: I recently drove 4000km through India, through big cities & small villages & rural towns. Advertising for mobile was absolutely everywhere. But <1% was for mobile data - and most of that was for SMS cricket results or similar. I saw ads for dongles in Varanasi and Mumbai, posters for Blackberries in Mumbai as well, WAP portals in a couple of other towns - and precisely zero people who were obviously using the web on a mobile device. I've been unable to get to the bottom of the 10's of millions of "mobile Internet" users cited by some national authorities, but I suspect the definitions are as loose as possible]

Put another way, I'd expect the population of high-end mobile Internet users to be about 500m by end-2012, split about 40:60 between PCs and smartphones.

Let's get rid of some of the noisy hype, and focus on real, actionable numbers. It's starting to get embarassing to see overblown figures repeated continually - it suggests insecurity or ignorance, like sticking your fingers in your ears.


Anonymous said...

The right term would be internet enabled through mobile/wireless access especially when it comes to markets such as India rather than mobile internet. With low cost PCs (< 150 US), broadband connections (> 256kbps) enabled by 3G/HSPA should take off in India from next year. Hopefully the auctioning of 3G spectrum for private operators will commence soon as today it is only BSNL and MTNL which have launched 3G services in India. The role of evolved EDGE in the success of internet through mobile access shouldnt be understimated either especially in rural areas.

Anonymous said...

Hi Dean

Good blog posting as usual. Sorry it took me a while to get here, but the Microsoft open letter, and my follow up blog (smartphones US vs World) took up most of my available time, the past week has been a flurry of comments, emails, Twitter discussions etc..

About the numebrs and misleading stats - totally agree with you in principle. The real numbers are good enough, we (as an industry, and I am far more guilty of this than you Dean have ever been, obviously) should not be hyping the industry, but rather quote very clear, precise, and easily verified numbers.

It is difficult for those who don't do mobile numbers daily, ha-ha, like you and me. So they pick up a recent statistic - 2008 is a good year for 2009 numbers in most industries, which may be quoting 2007 numbers and suddenly we have 50% error in the reported numbers...

The four stats that you mention in the opening have three that are radically wrong, but one that I argue is perfectly correct.

"There are 4.5 billion mobile subscribers"

"The next billion Internet users will be on mobile"

"LTE will deliver 100Mbit/s speeds"

Completely agree, these 3 are false statements and it serves nobody in using these wrong numbers.

"160m smartphones are sold annually"

But Dean, this number I think is fair to report. It is the number out by Informa (someone else counted 171 million, another of the analyst houses). If using the accepted definition of what is a smartphone (has operating system which allows apps to be installed) then this is a fair measure and fair reporting.

I know in your blog you point out that not all smartphones have this ability enabled. It does not remove that device from being what it is. The device can relatively easily be unblocked in many cases and many markets - witness the many unlocked iPhones.

I think this is semantics and reflects a finer point of the numbers. I do think it is unfair for us (experts on mobile numbers like you and me) to blame random stories about using stats, which have been quoted by the major analysts and widely reported. That is fair use of the number. If we have a disagreement on the definitions (as both of us often have with stats, ha-ha) then its our job to quarrel about that metric but not with the public, with the given analyst company and their methodology.

But this is semantics...

You make good points in the article and I agree with most of it. Obviously from time to time you and I have our differences in the finer details and that is also fair and good.

Thank you for supporting the main thesis of my Microsoft blog, I am hoping to wake up Redmond and get them to take mobile seriously. And just like you, I do want real numbers reported fairly, not the hype numbers, not too high, and not too low.

Great blog

Your friend and sparring partner :-)

Tomi Ahonen

Dean Bubley said...

Hi Tomi

Thanks for your comments

Yes, on a strict definition, the "smartphone" market is 160-200m.

*However*, I would like to see a distinction made of *Who the smartness is for*

So in Japan, most of the DoCoMo Linux & Symbian phones are not open for user-installed apps. The smartness is there for DoCoMo's use, not customers.

In many of the older S60 phones, the smartness was really there for Nokia's own benefit - so they could preload apps more simply & create more product spins.

For Apple, newer Symbian devices, WinMob and so forth, it is reasonable to claim that the smartness is user-accessible, and user-intended.

It's that distinction I wanted to draw out - it's particularly important from a developer perspective, as their actual addressable market is << the number of "theoretical smartphone users"

Incidentally, on a strict definition you could argue that BlackBerry's Java-based platform isn't strictly-speaking a smartphone OS.