Remember Bluetooth marketing? Well it’s back, kind of, in the form of Beacons and Bluetooth Low Energy (BLE). It’s a proximity device that connects to smartphones via BLE and can send information and take payments seamlessly. There was much talk in marketing circles about the potential of Apple’s iBeacon, but what are the possibilities for marketers? And is it a realistic proposition?
At 2013’s launch of the iPhone 5S/C one feature slipped by barely noticed – iBeacons. The system makes use of a function called Bluetooth Low Energy. It has been available in high end smartphones for a few years, and unlike its earlier predecessor, it uses tiny amounts of power to connect to nearby devices. Beacons are small units (2-3cm long) that can be powered off a lithium watch battery for a couple of years. These can then be situated around a store and send data to and from smartphones via an app.
Imagine I go in to a department store, and I have their app on my smartphone. As I enter it, a Beacon picks up my presence and alert pops up on my mobile to tell me of an offer in a particular department. As I reach the relevant department, the app tells me where the product is. If I decide to purchase, then I can simply confirm that through the app. At the till, a photo pops up to confirm my identity and I leave the store. For many brands, that kind of scenario seems to offer a great solution to problems such as ‘showrooming’. It allows them to have a consumer conversation precisely at the point of purchase.
The system has already been tested by Shopkick in Macy’s and will shortly be rolled out to over 100 Amerian Eagle Stores. . There are also companies such as Estimote who are supplying beacons that can be cheaply purchased. Some commentators have suggested that they will become an important, distruptive technology this year
Of course, Beacons are not without their problems, many of them are similar to the old-style Bluetooth. For starters, the handset needs to have the right features available; BLE and location services turned on, and a relevant app installed (according to TNS, around 35% of people in the UK use the Bluetooth feature on their handset). But as with other marketing technologies, there are also issues of user permissions and expectations. Whilst Beacons can be used to precisely monitor and guide customers through a store, the question is whether they will find this acceptable. For example, will consumers allow their photo to pop-up on the store till in order to allow them to make an automated payment on their smartphone? Given recent privacy issues from the NSA to the WiFi tracking in London, it is unlikely that consumers will trust brands enough to allow it (there will be the inevitable cry of ‘Minority Report’).
In many ways, Beacons are a slightly more targeted version of Bluetooth marketing. Some people think it could change the world, but history suggests that the take up by consumers will be pretty small.
Predicting the future is never easy, but I gave it a go at a TEDxUCL talk in the spring …
The future is …
By 2045 we will have reached the point of singularity when the devices that are now smartphones will become the size of a grain of sand and 1 billion times more powerful. At that point the computers become sentient and run the world in a Matrix style.
So what happens between now and then? Read the synopsis below, or you can simply watch the video!
Well the first problem is that largely speaking, consumers just don’t care about brands that much. Pointless apps, or social media campaigns fail to ‘engage’ the audiences. The solution is around service. Brands should do what they do, and use channels such as mobile to simply do it better. Some brands understand this. Look at someone like Gatwick Airport who use Twitter as a service channel. They encourage their visitors to Tweet any problems and a small team sets about putting it right. Similarly car companies such as Mercedes are using QR codes in a useful way, by embedding them in cars to help emergency services know how to get access quickly in case of an accident. Or an augmented reality app that shows you how to change car parts.
When it comes to the future of smartphones themselves then we’ve pretty much reached the conclusion. They’ll become faster, brighter etc, but the functions that we have will remain large the same. People were surprised when Apple launched the 5S and 5C that there was nothing radically different. But that’s not the point. The radical change was the introduction of the device itself. From then on, changes are simply incremental. So the next generation are the ‘connecteds and wearables’. Google Glass is seen as a major innovation. It probably won’t be the device that everyone adopts, but it is a good indication of where things are going. However, there are many issues particularly around privacy. Where is the place for brand engagement.
A good brand example of a connected device is the Nike Fuel wristband. Although millions of $s were spent on its development, innovation is not about money, or spending, it’s about ideas. There are many good examples, such as Red Tomato Pizza’s fridge magnet. Simply press the button and it connects to your phone and orders your favourite pizza. A simple idea, well executed. Even more interesting are developments in the world of health. In Kenya they have been using it to track the spread of malaria, for example. Or in Switzerland they have hooked sensors up to the brains of sheep. When a wolf is in the area, it can sense their distress and send a text to the farmer. A simple, effective use of mobile.
The best round-up of the new iPhone 5 (6th generation) comes from The Next Web. From a mobile marketing standpoint, do the changes have any real impact?
Given that the original iPhone (and app store) changed the face of mobile marketing, any update from Apple may have a significant impact. Although the updates to the iPhone were essentially incremental, there will be some changes for marketers:
Larger Screen – the impact is not significant, delivering a slightly better user experience, however by introducing a new size, this may well impact on app builds and particularly legacy apps. Will brands be up to spending more money on development? Could this drive more businesses to choosing web and responsive design over apps?
4G Support – brands need to provide a rich content engagement. Access to the rapid growth of 4G networks will open up a whole new world of brand content and is probably the most significant update from a marketing perspective.
No NFC – this is also significant for marketing … a significant disappointment. It was unlikely that Apple would have shoved an NFC chip in their handset – they like to do things their own way and define the market. However, we know that iPhone users tend to drive demand and activity – web browsing, app downloads and mobile social media , have all been boosted by Apple’s smartphone users. If we want to see NFC driving forwards then seeing it in an iPhone is the best way to do it.
Siri – this has yet be used as a marketing channel, so the updates have little impact (especially if you are outside the US)
Finally (though not on the subject of mobile marketing) the end of Ping was announced. Apple have never been a social network business, and the launch of their music recommendation system was never likely to succeed (I was bemused by it when they Ping it two years ago). The company’s real foray into social media came last year with the deep integration of Twitter in to iOS.
The latest data on smartphone sales, reported by Tomi Ahonen, shows that Samsung sold nearly twice the number of phones as Apple, in Q2 2012. In part, this is due to the fact that Samsung have a range of handsets across almost all budgets, whereas Apple is only in the high-end smartphone market (at that point, the S3 was not yet launched). Whilst Samsung have taken sales from the likes of Nokia and RIM in the past (and that trend continues), it seems that the lion’s share in the first part of 2012 came from Apple. Their share dropped from 24% to 17%, whereas Samsung increased from just over 30% to nearly 40%. Apple’s drop is not through lack of sales, but rather, from the increase in the global smartphone market. However, the impending iPhone 5 may also have caused some Apple users to wait and see what they company would do.
The most interesting aspect of all this is that Samsung is also involved in making TVs, tablets and PCs (and for that matter washing machines). The company is working on the integration across all devices and by next year they expect to be responsible for 3 billion screens in the world.
With 6 billion phones globally, it is equivalent to 86% of the population owning one (of course some people have two or more phones, so it’s not that big). 30% of those phones are now in China and India, and smartphones are by far the biggest selling category (we now have 1 billion globally).
Data Source: Tomi Ahonen, http://communities-dominate.blogs.com/
In terms of operating systems, Android was nearly 67% of the smartphone sales in Q2 2012, and taking into account the installed user base, that it is currently 41% of all smartphones. As someone pointed out, Android phones are selling faster then babies are born. iOS at 17% of sales and 19% of the installed base. Samsung’s share of OS was: Android 91%, Bada 8% and Windows Phone 1%.
With all the talk of mCommerce and contactless (NFC in particular), a war between the operators and handset manufacturers was always on the cards. It looks like it’s beginning to kick off. The Wall Street Journal reported on Friday that RIM (BlackBerry) was ‘locking horns’ with operators over who controlled the NFC customer data. The issue is about where ‘credentials’ (the encrypted personal payment information) will be stored. Will it be on the SIM card (operator) or the phone memory (handset manufacturer). This is much more than a row over a technical function, as the customer will be tied either to their network or handset depending on how this data is stored. Whilst RIM talked about their close relationship with operators at the Mobile World Congress, one senior figure at Bell Canada recently stated “we expect some closed operating-system vendors will probably try to build into the handset. RIM and Apple fall into that category”.
The problem from an operator perspective is that whilst revenues are being squeezed, customers are demanding much more for their money, in particular they want more data. How do the operators make more money in already saturated markets? The answer is through providing mCommerce. In order to do that they will need to invest in expensive security infrastructures, making it even more critical to keep their customers with SIM-based credentials. On the other hand, we have increasingly seen handset manufacturers and handset operating systems define the mobile market and mobile content. The two that have done most to drivfe this change are Apple’s iPhone (and appstore) and Google’s Android.
My money is on the handset/operating systems winning out. Apart from their obvious success in defining the mobile content channel, they seem to have the revenue model right. Operators tend to charge consumers or merchants/content producers high transaction charges – look at app stores before Apple (£1000 + to get your game listed) and the low payouts on premium SMS. On the other hand, Apple and Google are past masters at the freemium model – get something for free and pay if you like it. And there’s no question about which model consumers prefer.
A number of stories appeared this week suggesting that Apple will be releasing a small ‘nano’ version of the iPhone. It’s not the first time these rumours have been around, but the story this week was started by a report by Bloomberg. They indicated that Apple are looking at a cheaper, smaller phone to beat off competition from Android. The report was based on an anonymous source (Apple rumours are always anonymous), who had seen the smaller, nano-style phone which apparently had no ‘home’ button (very unApple).
In some ways it seems logical that Apple will release a Nano iPhone. They have a 5% share of the global mobile phone market, so there is plenty of room for improvement. There is increasing competition from manufacturers such as Samsung and HTC who are matching Apple for quality, but fulfilling the lower-end smartphone handset market. The iPhone 4 is a premium product, and the price means that there are many people who can’t afford it. Whilst Apple has success in certain markets such as the US and Western Europe, they face stiff competition in regions such as Asia. Even in Japan, where Apple had 75% of the smartphone market, Samsung made some significant gains at the end of 2010.
The problem with this report it is still essentially rumour. Rumours that have been kicking around since the release of the first iPhone. To make an Apple rumour more believable there needs to be something to make the report credible. Last year the lost iPhone 4 handset was taken apart and it was clearly Apple. There is nothing to back this particular rumour. Here are three reasons why Apple is unlikely to release a Nano Phone:
1. Apple don’t need a lower end iPhone. Given that Apple are making more profit than all the other handset manufacturers put together, dominating the market by volume isn’t really that important. True, Steve Jobs once said that one day all phones would be iPhones, but I think we can put that down to bravado. It is not consistant with Apple’s market strategy to date.
2. A smaller iPhone isn’t cheaper to build. Building a smaller iPhone is technically problematic, and wouldn’t be any cheaper. Reducing some features such as such as a camera or memory may help keep costs down, but not significantly so.
3. A different size screen would create compatibility and usability issues. Apps would have to be redesigned (there’s 250,000 of them in the app store) and the virtual keyboard would be much harder to use.
It is unlikely therefore that Apple will produce a smaller model of iPhone. If Apple are to go the route of an cheaper model of iPhone then the solution may lie in a stripped-down version of the existing phone. Keeping the screen size the same will remove two of the three issues outlined above. They could reduce some of the functions such as the memory, cameras (no forward facing cameras) and a lower resolution screen. Apple will still need to take care to ensure that they don’t take out the ‘iPhone-ness’ of a cheaper device. In the end, the decision will come down to how much of a threat (or perceived threat) there is to their profitability with their existing mobile offering.
There has been quite a bit written in the telecoms press about various initiatives that will see the death of the SIM card as we know it. This is very significant for mobile marketing for a number of reasons, but primarily there could be a major shift in customers’ relationships with their operator. For mobile marketers it means the brand engagement in mobile could shift with it.
Firstly I’ll explain what the change in the technology and business model will be. Since the advent of GSM, the defining technology has been the SIM card. The rectangular card with the corner cut off. Technically it’s not a SIM card at all, but a UICC. SIM is the subscriber information (such as the mobile number) embedded in the card. We will stick with the SIM term as that is what we all understand. At the moment, the SIM comes from the mobile network operator, which has the mobile number and operator information hard coded within it. That’s been good news for the mobile opeartors as they have complete control over the access and billing for that phone. It means that handsets can be sold below cost as the operator has a guaranteed revenue. The operators call it a ‘subsidy’ but technically it’s really a loan, as consumer pay for the cost of the handset (and much more) through their monthly tariff.
However, the change is that the SIM will no longer be hard coded. In the future, the SIM information will be able to be remotely programmed by anyone prepared to provide a service. Apple are showing a particular interest in this for a few reasons. Perhaps the biggest one is that there will no longer be a SIM card in the iphone. Instead you will buy the handset from Apple and the whole thing will be activated via something like itunes. Thus they have cut out the operator from the whole sales model. Apple managed to do it with content, with the app store cutting operators out of the content business, so there’s every reason to suppose that it could happen with the SIM information as well. What this means from a brand perspective is that media ownership will be even further entrenched with the likes of Apple and Google.
By having a remotely programmable SIM, it allows many different things to be done. For starters subscribers are no longer tied to an operator and can jump around from one to the other. No need to get codes and new SIM cards. It also makes it easier to create other SIM embeded devices, such as smart metering. It also means that other information to be programmed into the SIM. One area that would obviously benefit from this is NFC, or Contactless Payments. Apple are beginning to show a keen interest in this area, whilst all the major credit card companies (not to mention the GSM Association) have already invested heavily. The idea is that there will be a standard protocol (not yet agreed!), so any phone with an NFC chip will work on any reader. The specific card company information can then be remotely programmed into the SIM. So, you won’t have to buy a Barclaycard phone, you just get your handset reprogrammed.
The GSM Association are also interested in remote SIM programming. Some observers have thought that a strange position as it makes the operators into providers of even dumber pipes than present. However, when you think of it in terms of NFC, then it makes sense. The operators want to be in on payments and this could be the way to do it.
Nokia have just announced that their downloads from their app store have reached 3 million a day. That’s over 90 million Ovi Store downloads per month. At the same time the number of registered developers with Nokia has shot up to 400,000. The Finnish company put much of it down to the latest Symbian OS and the availability of apps such a Swype. It’s all pretty good going. But how does that compare with iPhone app downloads?
The last published figure from Apple earlier this year was 280 million downloads per month, or just over 9 million per day. In spite of the Ovi Store catching up quickly, Apple is still seing three times as many downloads. However, Nokia are the world’s largest handset manufacturer (with Apple in 4th), so perhaps a more telling way is to look at the number of downloads per handset. This is not an easy task. For starters, Nokia sells a majority of basic handsets and although they may be capable of downloading apps, most of their users buy them to make calls and send texts. Similarly, the Apple figures also include the iPod Touch. Most of those users will buy the device in preference to an iPod precisely because they can download and play games. Although the downloads are relevant, the Touch isn’t a a mobile phone.
The other problem is we don’t know how many of each device is in circulation. iPhones and iPod touches, we could guess at around 100 million currently in use (that’s taking sales and taking off upgrades and older models). That would mean around 0.09 per day per user or 2.7 per user per month.
Nokia is even harder. We know that they sell around three times as many smartphones as Apple, but that doesn’t tell us how many are out there. Lets say there are 65 million iPhones (not Touches) in use, the Nokia figure will be around three times that at 195 million. That’s 0.02 downloads per user per day, or 0.6 downloads per user per month. That means Apple users download 5 times more than Nokia’s. And when you look at the bottom line, profit, Apple is way ahead of their competitors.
As with any stats, you can make of them what you want, but it looks like Nokia have a long way to go before they can challenge Apple’s premier position. (There’s more on the OviStore stats here)