Android Market Share Jumps, Blackberry Sinks

Nielsen's numbers look very similar to Comscore's.

April's Comscore report on US smartphone market share, which echoes the Nielsen numbers, continues the trend we've seen over the past year: Android market share grows (up over 5% since January, to 36.4%), Apple's share grows a little bit (up 1.3% to 26%), and RIM's Blackberry market share heads for the depths (dropping 4.7% to 25.7%). Congrats to RIM, they now have a solid hold on third place and can look forward to fourth place if Microsoft succeeds in its alliance with Nokia to boost Windows Phone 7 into competition. Nokia had better get busy, though. Apple and Googl are rapidly moving targets, improving both their hardware and their software regularly. Nokia and Microsoft have to really come from behind.

At this point I'm not sure what features Nokia could really put into their phones that would significantly differentiate them from their Android and iOS competition. Nokia knows how to build sleek phones with good screens, but so do a lot of companies now. Even Nokia's volume advantage is not in play here...Apple's got huge numbers, and so do a number of Android phones, and it will be a while before Nokia could even match those volumes, let alone pass them significantly. So I don't see any price advantage on the manufacturing side.

Which leaves the software side for the advantage. Microsoft has an interesting interface, but they are woefully behind in lining up developers, much less a library of killer apps. Apple has a long lead in cutting deals with major media companies for content. What's Microsoft got aside from Xbox Live? Not much, honestly.. oh yeah, they have Skype now. But they wouldn't try to make that proprietary... it would kill most of the value of Skype. Still, Microsoft is trying hard, and they do have a lot of money to throw at the problem. They may come up with some competitive apps.

Meanwhile, Android continues to grow... but developers continue to struggle to make money on the platform. Apple continues to grow its market share slowly, but they seem to be a much better place to make money for developers. I suspect that new announcements for Apple at their developer's conference this week may help their growth numbers. Rumors continue to swirl about what to expect in the next iPhone, whether it may be a less major update than the last one. The more important thing to Apple's overall growth in iPhone numbers is going to be pricing. I'm sure they'll introduce a new iPhone at the high end of the price scale sometime this year. Will they then move the iPhone 4 down to a lower price? Probably, and that could mean a substantial boost in numbers. If Apple does indeed introduce a new iPhone designed to be smaller, lighter, and less expensive, that could also be a big boost.

Smartphone Games Zooming

Some impressive numbers of games being downloaded per day.

Smartphone games are soaring high, with over 5 million games downloaded per day just in the West. OK, 88% of those downloads are free, but that doesn't mean developers aren't making money from them. More than half the games these days have in-app purchases as an option, or are cross-selling other games. Or they are making some money from advertising.

Speaking of which, Angry Birds has now hit the astonishing figure of 200 million downloads. That's over all platforms, of course. Some 5 million of those are on the Chrome browser. However you look at it, though, that's a lot of downloads. Not bad for a $140,000 development cost. Rovio is now planning for an IPO.

Meanwhile, naysayers like Nintendo and the now-infamous Denis Dyack say smartphone games are hurting the game industry. Yeah, tell that to Rovio. Of course, if the average gross is $700 per game, that's not a lot. According to Dyack's quoting an EEDAR conference, that's what they said the average smartphone game brings in. I really don't know where that number came from, but it seems absurdly low. I'm perfectly willing to believe that 90% or more of smartphone games don't really make money, at least not a significant amount. But to really hit an average of $700 there would have to be a whole lot of games making less than that in order to balance out the ones that are making millions.

I think the odds certainly favor a smartphone game not making much money at all. Perhaps that will reduce the number of new games rushing into the market, but it sure doesn't seem to have done much at this point to reduce the number of new games.

Piracy might, though, if you listen to the strident anti-pirate crusaders. Is piracy a problem for smartphone games? Not enough to worry about, say developers.When a game is free, who would bother to pirate it? With most games going to the freemium model, piracy turns out to be a non-issue.

When games are priced lower, piracy goes away. When you can track every customer, and you're selling virtual goods for the game, you don't really need to worry about piracy. Piracy becomes a marketing tool. The worse problem these days is going unnoticed; you really need to be worried if nobody wants to pirate your game.

I do think the smartphone game market is ridiculously crowded, and the tools to let good games stand out are still not that robust or widespread. There are ways and means to make money on smartphone games, and it's not just about being lucky. Good design, excellent execution and smart marketing are all important. Sure, luck is still important to becoming a mega-hit. Persistence is probably the most important quality you can have; keep making good games and eventually one of them will do really well. The real trick is to keep your costs down, and find ways to be profitable without relying on a mega-hit.

Tablets Eat Into Console Usage

See a larger version of Nintendo's nightmare here.

The nightmare that's been plaguing Nintendo and traditional game publishers turns out to have a basis in reality: Tablets are cutting into handheldh game console usage, and not just handheld consoles: The family room console is affected, too. The data comes from a new study by Nielsen, conducted this spring, of tablet owners. Of course 82% of those surveyed have iPads, which makes sense since that's about Apple's market share in the tablet space right now.

About 25% of tablet owners reported using their handheld gaming device less or not all since getting their tablet, and 20% of gaming console owners reported the same. (It is important to note that only 2% of console owners said they didn't use their console at all since getting their tablet.) So now we have some data to show what Nintendo has been worried about: Tablets and smartphones are eating into their market share. I don't think it's a coincidence that Nintendo's sales have fallen 29% over the last year.

Game developers have to look to smartphones and tablet markets as the new growth areas for portable gaming. The 3DS is clearly not taking the world by storm, and I think that Sony's NGP is also going to have a problem. At least Sony seems to be aware of the issues, and is starting a program to get PlayStation games on Android phones, putting out their PlayStation phone, and generally acting like they are adapting their business model to the new reality. We'll know how much they're doing, and how well it's working, once the NGP ships and then in the six months after it ships.

Nintendo, though, has (at least initially with the 3DS) shown that they intend to ignore the market shifts and hope that everyone flocks to their new handheld device. And their new console (the Wii 2, the Stream, or the Wii Wii, or whatever they plan to call it). While Nintendo has admitted the launch isn't all they had hoped for, so far their response has been to say they'll market it harder. I wish them well with that effort, and certainly more marketing will help somewhat. But marketing alone can't sell things that people fundamentally don't like, or things that just aren't a good deal compared to alternatives that are well known.

Marketing can help a product reach its potential, but generally marketing can't take a poor product and make it sell like a great one... well, not for long, anyway, or only as long as the marketers stay ahead of the law for the crime of fraudulent advertising. Nintendo, you've got to really address the wave of free and low cost games on smartphones, and the sheer utility of smartphones with an array of uses like playing music, video, and thousands of other apps. Sony, you should be taking notes, too, but you're probably too busy worrying about hackers sneaking in to your systems.

E3 will be an interesting show... it may be more educational to listen to what's not being said there.

Natural App Discovery

Another way to find apps, rather than trying your luck in the App Store.

A new startup, Quixey, has a new way to find apps, using a functional search engine that takes your query and returns app recommendations from multiple platforms. It lets you use natural language queries, so it's quite user-friendly. This startup will debut next month, but if you head to their site you can request a beta invite. I can only hope that we get more and better tools for finding apps, especially games. I'm still appalled at how hard it is to find a game you like in the App Store, and as for the Android Market... let's hope Amazon's take on it works better.

The Playbook

RIM has a need for speed in bringing this to market... time's a-wastin'.

With a name like that, it has to be for games... right? And yet it's from RIM, makers of the Blackberry. Who are busily losing market share as Android and iOS eat their lunch. But they were at GDC, with a large booth, trying to entice developers to create games for the Playbook.

I got my hands on a Playbook at the show, and it was impressive. Kind of small, compared to an iPad, but zippy game performance with high-quality graphics (at least, Need For Speed looked good and played well). True multitasking with no apparent slowdown, although when asked about battery life (especially with all sorts of apps running) the rep was suddenly extremely vague.

They were trying hard, though, offering a free Playbook if you could get your app up and running before March 15th. Seems like a pretty short time frame even if you already had an app done for iOS or Android... but perhaps they have some amazing development tools.

Still no announcement of price point or release date, and that's why it's hard to judge how well the Playbook might do. If it's $399... it could do well. At $699, the iPad 2 looks like a far better deal. Hanging over the whole thing, though, is the shadow of the development environment. Will developers really want to spend time and effort on yet another platform, when iOS and Android already have such a large base?

Which is where this story takes an interesting twist... according to this rumor from Bloomberg via TechCrunch, the Playbook will run Android apps. More than that, supposedly they are porting their Blackberry Messenger to Android (that's the crown jewels of RIM's empire).

Seems to me if RIM did this, the battle for developers would be over... who would develop specifically for Blackberry when they could get it just by doing an Android app? Nobody, especially when you hear just how messed up their developer program is (it's worth a read). Of course, if RIM still insists that the Playbook can't do email without being connected to a Blackberry, this is all academic. No one except a Blackberry owner will even consider getting a Playbook, and I bet damn few Blackberry owners would buy a crippled device.

Still, RIM is working hard to get games on the Playbook. Which is puzzling, unless they really feel they can sell it to everyone, not just Blackberry owners. Look, Blackberry is dying; their hardware just isn't competitive with iPhones or Android phones. Maybe the email is a little better, but that's not enough to overcome all the other advantages. Now RIM has to decide if they are a hardware company or a software company, and step up their game. Half-measures won't cut it when you're facing an existential threat, which is the situation they are in if you look at their market share numbers over the past year. Nokia realized they had to do something dramatic, and they did just that by embracing Windows Phone 7. RIM either needs to pull dramatically better hardware out of nowhere, or team up with a winner. Android seems like the obvious choice; RIM could embrace Android and say "We have the very best phone for business, and tablets for business or fun, too."

But time grows short for them. If we don't see something dramatic from RIM this year, I think it will be too late.

Smartphones Sales Zooming, Android Ad Sales A Winner

Remember when Google was claiming an astounding 200,000 Android phone activations per day? Well, that's old news... now it's 300,000 per day. Poor Apple can only muster 270,000 iPhone activations per day. That's about 9 million Android phones per month, and about 8 million iPhones (with iPads and iPod Touches, I guess, being on top of that).

If only Android was a better moneymaker for developers... but here's some evidence that you can make money on Android. It's just not by getting people to pay for your app; you can make a lot of money selling ads. Rovio sells Angry Birds on the iPhone, and has done very well with that (over 6.5 million copies at a buck a pop isn't bad). Rovio doesn't sell Angry Birds on Android; they give it away for free. How do they make money" Advertising... AdMob is using Angry Birds as their poster child for advertising with them, as Angry Birds is bringing in $1 million a month to Rovio through selling ads. Not a bad income for a free app.

When Google finally gets it together and makes in-app purchasing in Android as easy as it is in iOS, there will be some serious money made. That is, if your game is designed around in-app purchasing... you have been thinking about that, haven't you?

The big loser in all of this is the handheld console. No in-app purchasing, no ad sales... you start looking at the list of what a 3DS can or can't do compared to a smartphone, and it's rather sad. Remember when the N-Gage came out and everyone laughed at the idea of playing games on a phone? They ain't laughing now. Dedicated handheld gaming devices are looking to line up a slot in museums right next to pocket calculators. The saddest part is that it's not so much the hardware that killed them, it's the business models that they couldn't adapt to.

Update: Oh, and if you were wondering about Blackberry? Fuhgeddaboutit. As example of what's happening to them, in the last year on Verizon Blackberry went from 90% share to less than 20% as Android phones ate their lunch. You think that's bad? Wait until the iPhone hits Verizon... Blackberry who? Those guys can have a nice chat with Nokia about what could possibly have happened to them.