Tag Archives: Smartphone

Tech Companies’ Customer Retention

As my Apple Iphone 4 is approaching three years old and is starting to have some problems, I have been researching some new mobile phones and seeing what is out there. While I haven’t made a purchase yet, the two I was deciding between are the Samsung Galaxy S5 and the Apple Iphone 5s. With Apple’s most recent software update for their Mac computers (OSX Mountain Lion), you are able to use iMessage on your laptop. When it dawned on me that if I switched to the Galaxy S5 I wouldn’t be able to use this feature, my mind was made up, I would be sticking with an iPhone.

It is worth noting that usually Apple’s major operating system updates would cost twenty or thirty dollars. The most recent one was free. While I am sure that there were other reasons, I am also sure that this idea of getting Macbook users to stick with the iPhone by adding a whole new level of seamless interaction between the devices was part of the justification for giving this software update away.

Screen Shot 2014-04-24 at 8.53.25 PM

 

While the above infographic shows that this problem of customer loyalty isn’t really an issue for apple, it is for many other major tech companies. This got me thinking of ways that tech companies can do a better job with customer retention. As the example above demonstrates, Apple’s messaging feature being linked to their laptops got me to stick around as an iPhone customer. Many have noticed this trend of high customer retention with Apple. South Park even made an episode that made drew parallels between Apple and a cult or religion.

Clearly Samsung, LG and the others could take some lessons from Apple. With Blackberry’s terrible decline from the dominance they once held over the smartphone market, these companies have a lot of incentive to learn a thing or two about customer retention. As this driving sales article points out, and in line with the example I gave in my introduction, Apple’s products work flawlessly together. This is one benefit to the fact that you can’t buy Apple’s software unless it comes preinstalled on one of their machines. This is much different from Microsoft’s Windows or Android’s mobile operating system, that can be used on many different brands’ devices. While Apple’s policy on this has drawn some criticism, from the standpoint of brand loyalty, it has surely been a winning strategy.

What can’t Amazon do?

This week, it was announced that Amazon plans to release a smartphone in 2014 to compete in the market heavily dominated by Apple and Samsung. Joining the smartphone market would be another venture for Amazon, a company already having a video streaming service, a strong position in the ebooks and tablet market, and a host of other aggressive ventures that CEO Jeff Bezos has become known for. But in the a competitive cellular phone market, can a late entry from Amazon be sustainable?

Of course, these new ventures are just a fraction of Amazon’s core service – offering a huge number of products for low prices and two-day shipping. The company has toyed with the idea of deploying drones to further decrease these short shipment times and recently begun offering AmazonFresh, a food delivery service that can bring refrigerated goods to your door.

“Amazon has done a lot more than become a stellar retailer.
It has reinvented, disrupted, redefined, and renovated the global marketplace.”
McCorvy, 2014

But how will Amazon’s smartphone perform in the market? Even when analyzing its past initiatives, it’s hard to draw up a comparison. First, brand loyalty for the iPhone would make it difficult to pull away customers fully acclimated to using Apple’s cross-platform services, including email, calendars, messaging and media libraries. Market leader Samsung has similar advantages, although if Amazon decides to use Android software the transition could go smoothly for customers. Second, the new features being proposed include 3-D imaging on the front of the phone – a technology that has yet to convince buyers. 3-D televisions have stumbled out of the gate, and other uses of the technology (such as the Nintendo 3-DS) have failed to meet expectations. Concerns for declining vision are at the heart of 3-D reluctance.

“the phone would employ retina-tracking technology embedded in four front-facing cameras, or sensors, to make some images appear to be 3-D, similar to a hologram” – WSJ

Finally, the smartphone market is heavily connected with phone service providers such as AT&T and Verizon. Personally, I can’t remember ever paying close to full price for a phone due to contracts and other promotions from these providers. Amazon’s strategy has typically been to provide superior value at a lower cost – such as its Amazon Instant Video Service, which is cheaper by month than its competitor, Netflix, by offering significant but slightly less content. However, when phone providers are already offering Samsung and Apple products at heavily subsidized rates (sometimes even free), Amazon doesn’t have much, if any, room to go lower.

Amazon may choose to use its smartphone as a vehicle of promotion for its more developed services and app store. However, offering innovative features and finding a strategy to maintain its low cost/high value will be huge initial hurdles upon entry into the market. If the company does manage it – and there’s a good chance they do – it’s hard to imagine there’s anything the internet giant can’t do.

Amazon’s New Smartphone, Apple’s Conern

In the second half of 2014, Amazon plans on releasing a smartphone. Yes, a smartphone. We all could have expected it at one point, but with all the other new releases Amazon has pushed out, like the Fire TV and the drones for delivery, I was definitely not expecting a smartphone release this soon. This launch would jump into the market dominated by Apple and Samsung as well. How big of a concern should this be for Apple?

According to Chief Executive Jeff Bezos, “he prefers Amazon to profit from customers buying services through Amazon hardware, rather than profit from the devices themselves.” As Amazon claims to seek to boost sales of digital content, Apple should still be very concerned. This is more or less of a judo strategy by using the puppy dog ploy. Amazon will be looking to keep a low profile and avoid the head-to-head battle based on product alone. But I believe that once Amazon is capable of gaining some market share, they will be able to define the competitive space and follow through fast. A very interesting feature on the new Amazon smartphone will be its screen capable of displaying 3-D images without special glasses.

What does Apple have to lose? Although Apple focuses on creating products that delight customers, there is more to it. An article in Forbes written by an employee at Apple states, “ I’ve come to realize that Apple’s future depends not on its ability to make elegant products, but rather its ability to create a platform for the 10,000 best developers to reach and serve customers via apps.” The employer also mentions that “future blockbusters will come in the form of new platforms through which developers can touch our lives.”

Will this be Apple’s only chance to stay on top? Is Amazon just trying to increase their product sales online? According to The Wall Street Journal, “Amazon has been inviting select app and software developers to hotels to demonstrate the handset in suites protected by security guards.”

Amazon is truly looking to expand in every direction. From their online store, to new products such as the Fire TV and potential smartphone, Amazon is looking to test the waters and reach out to customers in a variety of ways. The key asset they have is their online store where it all began. They have the power to reach consumers at a physical level. It seems that Amazon will want to be the only online store customers should go to. And the new smartphone is one way to help the process. If Amazon can then dominate their own app platform, Apple better look out.

Yet another Smartphone Patent suit

Here is an interesting exercise for those of you with smartphones.  Look at your smartphone.  Look at the manufacturer. It’s probably an iPhone, or a Samsung Galaxy, a Nexus, Blackberry, etc.  But chances are your phone has a variety of patents which are currently being fought for in a court somewhere around the world.  Financed by Silicon Valley, the best and brightest patent lawyers are hard at work trying to scrutinize very minute features that they hope will lead to a huge bonus after they find one phone has infringed on a feature from one of their client’s phones.

Of course this is not a new process at all and has largely devolved into a petty fight between Apple, Samsung, HTC, Research In Motion, Nokia, and virtually every company that has an interest in the smartphone wars.   A few months before his death, Steve Jobs was quoted as saying about Android

“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong,” […] “I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this.”

It appears as though Apple is finally going to go “thermonuclear” in their most recent patent suit against Samsung.  Daisuke Wakabayashi of WSJ wrote about how Google is central to Apple’s latest case. Among the patents in question, Apple believes Samsung infringed on background data syncing, detecting and converting links in messages, universal search through voice command, auto-complete features, and “slide to unlock”.  The reason why Google is involved is because Samsung said that many of these features were licensed to them by Google.  This claim has an element of truth given that Samsung’s previous user interface is under investigation for other patent violations.  Because Google licenses Android for free this isn’t usually a problem.

Apple has never gone after Google with a patent suit, although Steve Jobs would have been confident enough that Apple would win out. But it does appear that Apple is getting a bit more desperate.  Florian Mueller of BGR notes that in 2010, Apple wanted a $30 cut on all future Samsung smartphones for violation of all their patents.  Now though, Apple is demanding $40 on all Samsung phones for a violation of just 5 patents that are fairly innocuous, standard features on most smartphones nowadays.  Samsung did try to offer a counter argument but only wanted a flat rate damage fee of $7 million, far smaller than anything Apple is demanding and a sign that they do not view Apple as a long-term threat. Getting Google involved-because Samsung has claimed that they were using Google licensed software-now means that Apple is fighting not just the most dominant smartphone producer in the market, but also the most dominant mobile software developer too.  This does not bode well for Apple’s end game and definitely not for the future development of other products.  Understandably they want to continue to be dominant in a market they largely revolutionized, but it makes more sense to tap into new markets. Rumors of a revamped Apple TV and heavy bandwidth purchases indicate they are planning something big.

There is obviously no love lost in this ongoing war, and settlements seem very unlikely.  I’ve previously written about how the smartphone does not have a lot of innovative potential left, and this only serves to reiterate what I talked about earlier  This lawsuit appears to be a fight between two middle aged men over a fight that happened in the 8th grade and it won’t end well for either party involved.

Where is the future for BlackBerry?

When is the last time you ever heard about BlackBerry? I saw a news on WSJ today about a recent strategy made by John Chen, the current CEO of BalckBerry Ltd., who said BlackBerry would restart the production of Bold, a phone introduced to market 6 years ago which is still adopting scrolling ball and keyboard. Chen said that this action is for ensuring that their handset business can make profit. For me, this is a sad story for RIM. As I can remember, RIM used to be a company that can outcompete Apple’s products.

BlackBerry Limited, used to be known as Research in Motion (RIM) Limited, is an old smartphone maker from Canada. This firm was famous for its QWERTY keyboard BlackBerry cell phone and now it is in its downturn that last for almost 6 years.

Below is the historical data of smartphone market share of each brands, sourced from Forbes.com:

Nokia and BlackBerry are the two biggest faliures in this game, however, Apple and Samsung are the two biggest winners of the game, they almost took all the market share from the formers.

From a lead company of smartphone to a follower who are catching its past success, BlackBerry now has more worries of its continuity. The thing is the firm has already lost its only growth point. Repoted in WSJ article BlackBerry Results: A Mix of Good and Bad, BlackBerry reported a loss of $423 million, for its fiscal fourth quarter ended March 1. Its revenue is repoted as $976 million, which is lower than $1.11 billion that was projected and down 64% from a year earlier. It’s also the first time since 2007 that BlackBerry’s quarterly revenue fell below $1 billion.

Now the company has adopted a change: outsource much of its hardware business to a Taiwan company Foxconn Technology Group. By doing so, BlackBerry can reduce its risk of further revenue decline.

At the beginning of 2013, BlackBerry launched its new operation system BlackBerry 10 for smartphone using touch screen. However, this is never a solution to the company’s biggest problem: lack of core competitiveness. The truth is, this BB 10 OS didn’t save BalckBerry. If any of you can remember how this brand became into a popular product, it is after the accident of 911, everybody found they couldn’t use their phone, but the vice precident could send a text with his BlackBerry phone. Ever since then, BlackBerry had been known as a product with extrem security and good signal.

But those are no more BlackBerry’s advantages, many other phones can do a better job as well as other good performances. So the key issue for BB is to find another way out.

Personally, BlackBerry better sold their phone business and transform into a firm that offer Enterprise services, which is RIM good at. The market already has iPhonel, Android and Windows Phone, there is no room for another “entrant”. Actually, BalckBerry owned the first so called smartphone product in the world many years ago, but now it seems it still don’t understant how should a smartphone works. My advice: give it up and do what you good at, at least it will not burn you more money.

Tizen Continuing to Gain Little Traction

Samsung Electronics has been attempting to release smartphones powered by a new mobile operating system for the past several years. Their efforts have been stagnant at best, however, as they are struggling to compete with the duopoly that Apply and Google currently possess. According to the Wall Street Journal, the world’s largest smartphone maker has been investing a large amount of resources into the development of an operating system that can challenge the two giants.

However, support of the devices slated to run the software is dwindling as some of the world’s major wireless carriers are no longer backing the platform. Tizen also has a history of difficulty garnering the attention of major application developers who are now becoming more and more crucial to the user experience on such devices. The article cites the fact that many Chinese smartphone manufacturers threaten to push down prices and tighten hardware margins, which would make software and services the industry’s main way of earning profits.

         “Consumer needs are changing along with the changing times,” Samsung co-Chief Executive Boo-Keun Yoon said last month. “I don’t feel you can lead the market by focusing solely on software or hardware.”

While there is great potential for Samsung to create its own revenue stream from sales of third-party apps and software – Apple pulled in $16 billion in this fashion in its most recent fiscal year – the idea still seems far too tenuous of a proposition. I believe this could end up being very harmful to Samsung’s bottom line at the end of the day. The Korean company has been dumping billions of dollars a year into this project and nearly 60% of its engineers. If they would have gotten a smartphone running Tizen on the market 5 or 6 years ago, I think they would have been a serious contender as a viable third platform. But, at this point I think we have become to locked in to the iOS and Android platforms we currently have. They initially hoped to have phones running Tizen on the market in 2012 but have only run into roadblocks since then.

In 2010, iOS and Android only took up a little over 30% of the market share of smartphone operating systems, according to Gartner. That jumped to roughly 80% as of 2013 and in that same year Microsoft and Blackberry combined to take up another 10%. However, we also have to consider that Samsung is the world’s largest smartphone manufacturer, meaning that an operational and fully supported Tizen could eat up a substantial chunk of Android’s market share if the newest Galaxy S-whatever was only running on that operating system. But this would mean changing the platform of the most popular phones the company makes and potentially losing customers who were comfortable with the Android OS and who were already looking for an excuse to defect to Apple.

Even if we assume that they would be able to safely transition to a new OS, or successfully release new devices that customers would elect to buy over their current offerings, we would be ignoring the fact that they still need software developers and carriers; both of which are lacking. They will be offering incentives such as $4 million in prizes for applications to be developed for Tizen, but this tactic saw little success for Microsoft and Blackberry. And carriers from Spain and France have pushed back the release of Tizen devices stating reasons such as a lack of demand in their home market.

In the U.S, Sprint stopped backing Tizen last year saying they wished to focus on “more immediate product launches.” And Sprint still offers flip phones for goodness sake! All in all, the future doesn’t look bright for the Tizen platform.

[Revised] Finding values of the “Smartphone Patent War”

On January 27th, Samsung Electronics Co. and Google Inc. announced that they signed a contract which will allow them to share all of their technology patents with each other at least for next 10 years. This was not a big of surprise news to Apple Inc. but, I bet it may be the least pleasing news of the year, 2014 for Apple Inc. According to the Wall Street Journal article, this global patent deal between Samsung Electronics and Google will give a huge advantage to Samsung in defending some of litigations brought by Apple Inc. Numerous lawsuits between Samsung and Apple have been going since 2007, and those issues are still very hot potatoes. There were approximately more than 50 relating lawsuits around the world, and each outcome of lawsuit have brought substantial damages to each company. You may want to read more about their “fighting” which is known as “smartphone patent wars” on Wikipedia or inside the Wall Street Journal if you are interested in reading more about their histories and causes. However, what I am trying to focus on my blog is not about their processes of lawsuits or to favor one company over another. Better yet, I would like to share my ideas about the significance of their fighting and its connection to the potentials in future economy. I think the reason that similar technology patent lawsuits occur so frequently is because we are now in what I call “Second Phase of Cyberspace Globalization”. So what I mean by this second phase of cyberspace globalization? I will explain.

My own definition of “Cyberspace Globalization” means interactions of people in cyberspace getting simple, popular, globally common, privately owned, and exercising more real economic influences. And, “First Phase of Cyberspace Globalization” starts from the invention of internet. Not many people had access to the internet back in 1980s. However, within two decades, by the beginning of 21st century, uses of internet among ordinary people became very popular. Having benefited from the using internet or the world wide webs, the Merriam-Webster Dictionary’s definition of “globalization” was more strengthen all around the world. What this means is that people were benefited from the faster flow of capitals and communication around the globe using Internet. For a simple example, more trades could be made globally because of faster transaction speed, and this made us, earth people, more close together. By this time, people had used so many different platforms to interact globally, yet this became more simple, globally used, privately own, and exercising more economic influences.

“Second Phase of Cyberspace Globalization” begins with debut of Apple’s iPhone 3. What I think Steve Jobs had done for all of us have really opened the next generation of cyberspace involvements by us. Smartphone made the world even a smaller place, inside of smartphone world, there is no such a thing as “F-1 visa” to access information inside of United States but a few tapping of your phones. Since, there are less border restrictions than the physical world people live in now; big companies like Google, Facebook, Apple, and Twitter have stepped up in the front of attracting people to live by their “rules”. I see this concept of attracting more people to use certain rules is the core value of the fight between Samsung and Apple. Because Samsung and Google agree that having more users inside their world are just as good as collecting taxes inside the United States or from any other nations. My analogy of Google and Samsung collaborating is to gain more “rights” of colleting taxes than Apple.

In future, we may see a company that can exercise more “power” than what a nation can do for their citizens. A nation without people paying taxes will not have much of use or power. On the other hand, a cyber-platform where multi-billion users spend their time and resources can have much stronger impact on real economy. When this time comes, a policy change made by a company can have a greater impact than a change in Fed’s monetary policy. I believe this explains the value of “Smartphone patent war” and why they kept fighting. Not now, but someday in future, they believe having billions of user living inside of the rules they created is the real economic power of the future.