U.S. Smartphone market analysis Q2 2010, creating Smartphone Hits, analyzing U.S. consumer, APP market, APP communities, Mobile Advertizing, Mobile Marketing, Social Networks, Marketing Strategy, U.S. Economic Recesion, Consumer Insights.

How the Smartphone industry will pull the U.S.
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economy out from recession

Q2-2010 Smartphone Industry Analysis
Based on Wall Street Journal, Businessweek, Gartner, ITIL, Wired Magazine, FierceWireless, Digitime, NPD.
Smartphones

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Creating
HITS
Lattes

Edgar Canul, canul.edgar@gmail.com

The Q2-2010 U.S Smartphone market,
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The Information you need to know.
•60% ´s growth projection through the entire 2010 year, Cellular service bills, Consumers are the boost´s trigger of
the global Smarthphone industry grew 64 % June 2009 to the Smartphone market.
June 2010 period, while the U.S. market grew 41% YoY,
Q2-2010. The U.S Q2 Smartphone estimated Market Value •Hits are the only option to be a key player in the U.S.
is $ 5Billion. Smartphone market; Hits are necessary either
to create brand or to make a series of product portfolio hits .
•Apple´s iPhone & iPad debuted successfully as Hits; the Smartphone Hit = Innovation + Hollywood Movie Saga type
Apple´s “how to create a Hit” formula has raised the bar. of launching.
Industry will expect that competitors use this new
benchmark, 1.5 M iPhones on the first weekend, to chart •Innovation might be something difficult to find, let the
weekly the sales´ performance of their new products for APPs´ developer communities to find it for you, you only
the 1st month, mimicking the weekly Hollywood Box need to make it easy for them offering a friendly
office. development platform, friendly distribution platform, and
miscellaneous means to sale their APPs;
•Smart-pipe tactics are played by the Carriers to stimulate For a 2010 estimated Market Value of $4 Billion.
their 3G wireless data service usage, while maximizing the
Network Demand and Capacity management; AT&T •Social Networks extensive usage via Mobile handsets
eliminated unlimited Data plans, while Verizon keeps increased the Carriers traffic and the Smartphone demand.
them. Social Networks became as well a consumer powerful
instrument. Word of mouth has finally an amplifier tool to
•Consumers are cutting expenses, but not in wireless, invite the specific Smartphone users to become the fan or
neither in their Smartphones, nor perhaps in their Carrier the critic of any specific product.

Smartphone market scope Icons.

This presentation switches,
between U.S. and Global Market figures,
so there are provided Icons
as a visual help

U.S Smartphone market Icon.
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Global Smartphone market Icon.
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Edgar Canul canul.edgar@gmail.com

The Market projection by December 2010
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According to Digitimes, the Smartphone market will
reach 280 million units by the end of 2010 compared
to 178 million units during 2009,
representing a growth of

57%


The Market Context on 1H2010,
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Jun-2009 on Jun-2010

Despite the Global Economic Environment and
according to Canalys the YoY June 2009
to June 2010, the Smartphone
Industry grew

64%


1 2 3 4 5
The Q2 2010 Market Growth
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According to Canalys the United States Smartphone market

grew 41% Year on Year


The U.S. is the largest Smartphone
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Market in the World

According to Canalys the United States Smartphone market
is the largest in the world, in Q2 2010, shipping

14.7 million units corresponding to
23%
of the global shipments


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The Q2 2010 ASP
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According to NPD and InformationWeek
the United States Smartphone ASP is $143

My Estimation of the U.S. Market
Smartphone-ASP is

$337


The Q2 2010 Estimated U.S. Smartphone
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Market Value and Average Selling Price

U.S Q2-2010 Estimated Market Value & ASP
Manufacturer Market Smartphone Estimated Estimated Market
Share Market Volume Manufacturer Value
ASP
•RIM 32.10% 14700000 310 1462797000.00
•Apple 21.70% 14700000 634 2022396600.00
•HTC 14.40% 14700000 358 757814400.00
•Others 31.80% 14700000 153 715213800.00
Smartphone Market Value 4958221800.00
Smartphone ASP 337.29

Estimated U.S Market ASP= $337.29
Estimated U.S. Market Value=$ 4.95 Billion


The Q2 2010 Market share by
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Manufacturer

According to Canalys During Q2 2010 the U.S consumers´
preference for Smartphone showed the following Market share
•Manufacturer %Share ASP

•RIM 32.1% 310
•Apple 21.7% 634
•HTC 14.4% 358
•Others 31.8% 153 (averaged)


The Q2 2010 Market share by
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Operating System

According to NPD During Q2 2010 the U.S. consumers´ preference
for Smartphone showed the following Market share
•Android 33%
•RIM 28%
•Apple 22%

These figures according to the NPD tracking of U.S. consumers, aged 18 and older, who reported
purchasing a mobile phone.
http://www.npd.com/press/releases/press_100804.html
NPD does not track corporate/enterprise mobile phone purchases.


The Smartphone Q2 2010
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Market share by Operating System

According to Gartner, during Q2 2010, the worldwide consumers´
Smartphone preferences showed the following Market share:
•Symbian 41.2%
•RIM 18.2%
•Android 17.2
•Apple iOS 14.2%


The Smartphone projection
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through the end of 2010
According to Digitimes the Smartphone industry will
reach 280 million units worldwide for the entire
2010, growing 57%. The projected share, by
Operating System, will be as follow:

•Symbian 35.0%
•Android 19.6%
•RIM 16.4%
•Apple 15.2%
•Windows Mobile 5.0%


How Apple created, in just 3 months, a couple
of Hits: iPad and iPhone-4

1. Bringing large APPs´ Developer communities.

2. Bringing innovation through the APPs´ developer communities.

3. Bringing crowds of Fans and anti-Fans.

4. Using the free Advertizing.

5. Utilizing the Pixar & Hollywood product Launching practices.

6. Its iTunes data highway utilized either, as an Upgrading instrument to update the Device´s Firmware & SW, or as
an Internet tool for content distribution & retail shelf.

7. A remarkable APP development platform.

The iPad interface has made its users to find themselves,
inspired permanently, to stimulate the necessary creativity and innovation skills
to
Create a new APP,

The Apple Hits way, 3 key aspects:

•Collaboration, 1-5.

•Infrastructure, 6.

•Innovative Apps development platform, 7.


Why to Create a Smartphone Hit?

1. Considering the Smartphone fierce competition, and based on the iPhone benchmark of 1.5 Million
units sold during its first weekend, the only way to respond to these kind of challenges is creating
one Hit.

2. To gain the media attention and get free advertizing.

3. To maintain the value of the ¨Smartphone¨ brand and increase the profitability of the Smartphone
product as well as the Brand portfolio ASP.

4. To be recognized as a distinctive competitor, if you have new product that uses Android OS, what
would be the factors which differentiate you from the other Handset Manufacturers?

5. To appeal the APPs´ developer communities.

6. To showcase your innovation and your Brand Muscle.

7. To conquer the Social Networks, dent the Market and get the Consumer attention.


How to Create a Smartphone Hit?

• We know now what we need to create,.. a hit.

• We need to figure out now How to create a Smartphone
hit.

¨


Hollywood context is the best
reference to define a Hit

• How many theaters you are showing one specific movie during its
first weekend (3500 theaters, 2800 theaters.).

• How many weekends in a row this movie maintains the same level of
audience (3 weeks in a row with sold out.).

• What is the Movie´s Box Office?


Hollywood context is the best
reference to define a Hit

• Height= Number of Show Rooms when opening, # of Theaters when launching.

• Length= Number of weeks in the Box Office first place.


Hit multiplying formula

Hit = Height * Length

(Hit= large Box office)


The Long Tail definition for a Hit
(Long Tail book by Christian Anderson)

Hit = Head´s Area

(The Hit Head area has to have large dimensions)


First of all,
what is the Hit´s area equation

The shape of the Head´s area is already defined by the Long
Tail formula

Hit = (Commercial Launch)1/X
(Where X is the length of time )


What are the components
of the formula

Height = Commercial Launch
Length= X

Commercial Launch= Innovation * Execution * Value * Brand* Number of units shipped.

Length= X ; X = # of days
X= # of Weekends.


The Head of the figure is the
Hits Ground
Revenue

When creating hits, there is not
focus at all for the long fail

Time

This is the Hit Area.


Hits are measured just as
Hollywood saga movies´ premiere

Revenue
&
Volume

Number of weekends
with a sales record

The more units are sold during the first 4
weekends the better.


Let´s use the formula to launch a product
to compete with Apple

Height = Number of products sold during the 1st weekend= 1,500,000
Length= Follow it through the first month= 4 weeks

Number of 1/X 1/X* Cumulative
weekends=X 1500000 Volume

1 1 1500000 1500000

2 0.5 750000 2250000

3 0.33333 500000 2750000

4 0.25 375000 3125000


The volume shipped during the 1st month is

Height = Number of products sold during the 1st weekend= 1,500,000
Length= Follow it through the first month=4 week

The cumulative volume by the 4th week is 3,125,000.

Even that this is a hit case, during one month it could have been assumed that
the cumulative sale would be 4 times 1,500,000, which would make 6 Million

Instead the cumulative value is 3,125,000.


This is the volume shipped by weekend

3500000

3000000

2500000

2000000

1500000 Series1

1000000

500000

0
1 2 3 4 5 6 7 8 9 10 11 12


This is the volume shipped by weekend

1600000

1400000

1200000

1000000

800000
Series1
600000

400000

200000

0
1 2 3 4 5 6 7 8 9 10 11 12


The time erosion

• Once the product is launched the product will be moved to the Long-Tail,
going away from the Head.

• The time erosion will make the product volume shorter and shorter, day after
day, until the product is 100% ramped down.


How to make bigger the Hit´s Head

• Timely product launch

• Free advertizing, (Effective advertizing)

• Large volume of products shipped when launching

• The Consumers pulling the products from the retailers


Is working in the Head enough
to create a hit?

To make a successful a hit-case it is necessary more than working in the
head, which is only the product launching arena, it is very important the
following:

• Firstly it is necessary to define a collaboration environment with
other industries and communities.

• Secondly, make your product deployment pathway, between
R&D and launch, to mimic the Hollywood´s movie launching
activities in many aspects, with emphasis in:

• Smartphone distribution

• Thorough performance measurement of the
premiere date audience level.


What would be key symptoms
of successful hit case?

• Your product´s Premiere date has to be discussed in the
Web 2.0 services as well as the Social Networks, with high
ratings and high traffic, specially on the eve of the Opening
Date.

• Have in place and active and long Pre-Sale waiting list.

• Sold-Out sign hanged on the Point of Sale on the premiere
date
¨


The Smartphone as an Internet product

Your Smartphone is blessed for being an Internet Product, because it can
utilize all the new Internet practices for:

• Marketing
• Distribution
• Trade
• Selling

Chris Anderson is author of the Long Tail and Free and editor of WIRED
magazine, we are using Free´s content to put together your Smartphone
launching strategy.


The Smartphone as an Internet product,
Marketing & Advertizing Strategies
Chapter 4, Psychology of Free. Following the Max formula
(page 164) put together an Advertizing strategy for a TV mini-
series.
1.Get the 3rd party financing

2.Create a Blog before launching to increase the expectation

3.Perform Public Relationship on the eve of Launching

4.Leak a rumor on-line maybe trough Facebook.

5.Launch the TV show

6.Twit the new development of your mini series

7.Increase the characters

8.Upload the not broadcasted film segments in to You tube

9.Make a contest to find which segment should have been broadcasted, the audience will generate Internet
traffic and clicking

The Free Web 2.0
Marketing & Advertizing Strategy

The use of Blogs, Facebook, Twitter, You tube will magnify the expectation for your
product reflected as internet traffic.

The Social Network´s word of mouth transactions are Free advertizing instruments,
you don´t need to pay for them.

The Internet traffic will trigger the snow ball effect for your product.

(Smartphone manufacturers might have to protect their Brand Value, consequently it
might be advisable to limit the usage of these Social Networks and Web 2.0 services,
utilizing them only as the Echo instruments for your Instituted Marketing Messages.)


What is the First Step to conquer
the consumers, the audience,
the Web 2.0 and the Social Networks ?

•Define your Smartphone´s Premiere date.

•Define your Smartphone APPs´ road map.

•Publish your launching date, with at least 2 month in advance.

•Accommodate the Instituted Advertizing Campaign during the first month
after the Premiere date, or in a suitable schedule on the eve threshold prior
to your Premiere date.

•Make the Web 2.0 services, as well as the Social Networks, to magnify your
Instituted Advertizing Campaign Messages.


How does Hollywood trigger the ticket
Pre-Sale?

Answer: Generating Internet traffic in advance

Analyzing the Harry Potter 7 and Kunkg Fu Panda 2 cases, the premiere dates are
already published in the Internet, these Movies are gaining Internet traffic. Kids are
pushing their parents to have their tickets bought in pre-sale.
HarryPotter7 link, KungFuPanda2 link

2010 2011

Harry Potter 7: P1 Harry Potter 7: P2
Kids Movies Nov 2010 Jul 2011
Road Map
2010-2011
Kung Fu Panda 2
Jun 2011
Jun July Ago Nov Dec Jan Feb Mar Apr May Jun Jul Ago


Conquering the Free Advertizing

Considering the impactful launch of the iPhone-4, which was covered remarkably
by the media, providing free advertizing when reporting the product market
deployments and the consumers´ impressions.

It might be concluded that for an impactful Smartphone launch, it is necessary to
count with this volume of marketing and advertizing coverage,
either free or paid..

The Social Networks marketing is a valuable instrument to have the consumers´
attention maintained focused on your product.

These New Marketing practices, such as Social Networks, followers, fans and APP
developer communities have made possible to count with a
Powerful echo instrument to magnify & multiply your corporate instituted
marketing
core messages.

Smartphone Market,
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The Key boost trigger

CONSUMER IS THE

KING
He is the one who has selected the device
in her hand or in his pocket to become
his/her Smartphone.


The Consumers are cutting expenses in
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other than Smartphone industry to:

Acquire the newest Smartphone Hit.


The American Consumer.
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How is the King behaving?

Consuming wise…

CONSUMER IS THE

KING

The U.S. 2010 Consumer Behavior
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According to August 2nd businessweek
Magazine, which has in the front cover :

¨American Consumers Are Cutting Back
Except When They´re Not¨

Consumer would cut costs in their other than
luxury items expenses.


The Carriers applying the Smart-Pipe tactics
and discontinuing the Unlimited data plans

•According the ITIL Service governance practices, there are 2 main basic considerations when selling
Internet services to the consumers:
•Service Utility
•Service Warranty

•Service Level Package(SLP), which in this case is the equivalent to Data Plan, is the package in which it
is defined the level of Utility and Warranty of the Service.

•Excessive Demand by the consumers might have already put at risk the SLP Warranty.

•ITIL has a Demand Management practice, that once it is applied on the SLP brings as a result the SLP
adjustment.

•This new adjusted SLP will bring the necessary funds for the carrier to adjust the Service Capacity
according to the demand.

•The purpose of Demand Management is to understand and influence customer demand for services
and the provision of capacity to meet these demands.


No more Unlimited data plans.
The Consumer Perspective

The consumers perception about the elimination of the unlimited data
plans has not triggered yet any big reactions.

According to WSJ, it might be either because consumers don´t know their
amount of monthly data usage,

or,

because they don´t care the

price they are charged for it.


Mobile Apps,
the Third Parties Innovation

The Mobile Apps Value, in the Smartphone economy,
is bringing innovation by multiple means, such as:

• Apps on the Carrier portfolio.
• Apps developed by the Handset manufacturers.
• Commercial Apps by multiple brands.
• Apps for marketing.
• Mobile Ads.
• Global content Apps, by global developer communities.
• Local content Apps, by local developer communities.

Mobile Apps Innovation

Offer a scalable consumer experience,
every time that consumers download a new App,
their Smartphones become a new product again.

The Smartphone user experience is permanently recreated.

New product again.

Scalable consumer experience

The Smartphone user experience is permanently
recreated.

(the alchemy)


Mobile Apps Business

The Mobile Apps business is growing 180-200% year on year
Today it is already a multibillion dollars business, the value of the market at the
end of 2009 was 2 billion US dollars
(According to research2guidance)

18
2009=2 Billion
2010=4 Billion 16
Billion US $
2011=8 Billion 14

Calculation by Edgar Canul
2012= 16Billion 12
Estimated value for the APPs Business
10
8 16

6
4 8

2 4
2
0
2009 2010 2011 2012

Mobile Ads Business

During 2010, The Mobile Ads Business is targeting to make
600 million US dollars
according to the WSJ
digits

These are the recent Mobile advertizing companies acquired by
• Apple Quattro transitioning to iAd
• Google AdMob
• RIM trying to acquire a Mobile Advertizing company (according to WSJ)


Smartphone Hits 2.0,
The Converging Context

During the YoY period of June 2009 to June 2010,
more industries kept adding to trend of the
Internet & Mobile Smartphone
Industry convergence.

There are now, many more industries in the Mobile Internet Services.


The Newest industries, either actively debuting
in a bold role or getting a star role are:

•Cloud Computing enterprises,
•Consumer communities,
•Traditional IT companies
•Apps´ developer communities


The Converging Trend
New big business

Today the Marketing & Advertizing Industries are
growing in the following Mobile services.

• Social Networks via Smartphone
•Mobile Web Marketing,
•Mobile APPs Marketing
•Mobile Ads


Creating Smartphone Hits 2.0,
on the convergence era in America

What is Converging now?
• Internet
• Mobility
• Smart Pipes, Carriers and Operators.
• Smart Phones, Mobile Phones and Corporations
• Cloud computing & Services Scalability for SaaS, PaaS, WaaS, and IaaS
• Web 2.0
• Web 2.0 Marketing
• Mobile Marketing, Mobile Adds
• Social Networks
• Consumer Communities
• Compliance
• IT and Telecom Infrastructures providers
• Hollywood kind of Handheld Launching
• APPs (Applications) as the product functional scalability
• APPs´ developer communities
• Mobile Internet Experiences
• Media & Multimedia
• Content
• Usability satisfaction
• Security Strategies & VPN sagas
• Upgradable Mobile Platforms
• Mobile clients and APIs
• Sourcing, Parallel Sourcing, Out Sourcing, Near Sourcing, Cloud sourcing, Crowd sourcing
• Followers & Fans for your Products & Brand s
• …
• Free advertizing
• ….
• ...Creating value for consumers


Conclusion

Considering the Smartphone industry growth, it might
not pull the whole U.S. economy out from recession,
however growing at 40-50 % per year, it might double
in a two years time frame, creating new Jobs and
Business opportunities.


Annex 1


The Global 2Q-2010 Mobile Handset Market figures
According to FierceWireless these are the 5 top
Handset makers in Q2-2010

•Nokia 34.6%
•Samsung 19.9%
•LG 9.3%
•RIM 3.5%
•SE 3.4%

These handset figures
include both:
•Smartphones
•Entry basic phones


HITS Road Map 2010-2011
Global, Europe, America, Kids.

Soccer FIFA Mobile
Global W.Cup Final World
Congress

Europe 2010 2011 Soccer UEFA
Champions
League Final
U.S
NFL
Super Bowl
Kids
Harry Potter Kung Fu
7 Panda 2
Jun July Ago Sep Oct Nov Dec Jan Feb Mar Apr May Jun


U.S. Smartphone market analysis Q2 2010, creating Smartphone Hits, analyzing U.S. consumer, APP market, APP communities, Mobile Advertizing, Mobile Marketing, Social Networks, Marketing Strategy, U.S. Economic Recesion, Consumer Insights.

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