Why all the heat in the smartphone market lately? The endless Web pages of copy, the permanent and globally distributed legal jihad between Apple and Samsung.
We live in one of the most well developed smartphone markets in the world, so it is easy to lose track of the fact that even in the US, the smartphone market is just getting started. Here's a chart published in the <i>Business Insider</i>, which over the last 24 hours has developed a nice viral quality. It looks at the evolution of the US phone market and demonstrates that the biggest factor at play is how much more natural and organic growth there is to come just from the dumb-to-smart phone migration before the market leaders have to start eating each other to survive.
This means the game is still there to be made by companies such as Microsoft and Nokia which currently don't get much oxygen. This matters in markets beyond the US borders because the dominant US providers, as ever, will export their hegemony.
Likewise, the accompanying article comments on the sheer scale already and the growth profile of the Android market. (Something which has been commented upon before). There’s another chart published in the Business Insider about smartphones which is just as interesting. Put together by Canaccord Genuity analysts, Michael Walkley and Mattew Ramsay, the chart shows how Apple, with only 4 per cent mobile phone market share, currently trousers 52 per of the profits. Samsung is a long way back in second (but presumably closing quickly given its recent sales performance) with 29 per cent of industry profits.
Grok's view remains that the world will boil away eventually into two camps, with the Android camp taking most of the volume and the lion's share of total profitability, and Apple taking the most profitable niche. By the way, has anyone else noticed the similarities to the desktop market twenty years ago?
Finally, since we've all gone a little chart crazy this morning, GigaOM has put a story together called ‘seven charts that predict the future of mobile broadband’. Our personal favourite is the first one, "Mobile PCs are for work while smart phones are used for play..and everything else."
A little more on why Groupon is doomed
No sooner had Grok hit ‘post’ on that little Groupon slap down on Monday — the one where we explained why, despite all the current love and soaring share price, we think Groupon's business model is a crock and its shareholders are doomed. Our favourite researcher (defined as the one that most currently agrees with us) Forrester Research, indicated it was about to come out with some work saying pretty much the same. Just more politely. According to Forrester’s Sucharita Mulpuru, sites such as Groupon and its ilk “face challenges that threaten to slow down, if not end their businesses.” The reasons for such heretical skepticism (come join us on these burning stakes, Sucharita) is this observation is based on customer research: “These sites depend on merchants, mostly small businesses, to partner with them to provide deals. If the merchants realise that they’re just cannibalising full-price shoppers with the daily deals, they won’t use the sites anymore and poof goes the daily-deal industry.”
So there you go. Rational behaviour will get you every time. And Mulpuru punctures the hype around Groupon’s much heralded email list (150 million people and growing). “A significant percentage of online shoppers say they don’t want any more e-mail from these sites, a big impediment for growth.”
Now Grok has a friend who is also a former colleague, and frankly one of the best brains thinking about the Web in Australia today. He doesn’t share the Forrester view, or presumably Grok's. And as he works for a rival analyst firm I'll keep his name out of it.
He notes that the coupon business has always existed in the US and the sky hasn’t fallen in on smaller merchants. However, Grok parts ways with his old chum on this issue. Here’s why. Sure, the coupon system has always existed in the US. But you know what, so has the search business — it used to be called reading. Now it's called Google.
What’s changed is the frictionless nature of the transaction, be it the search for the transaction or the transaction itself. It's getting rid of the friction that changes everything. Exhibits A, B and C? Amazon, eBay and iTunes. Another friend of Grok’s is always reminding us of Andy Groves’ famous twin dictums — only the paranoid survive, and he who commoditises last, wins. These rules never change, only the players do.
Post script: Since popping to over $31 bucks on Friday, Groupon has already skidded back down below $25.50.
Andrew Birmingham is the CEO is Silicon Gully Investments. Follow him on Twitter @ag_birmingham or email andrewbirmingham2010@me.com
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