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February 2013
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INTRODUCTION


For each of the past several years, many tech industry
pundits have proudly proclaimed that the upcoming year
will be “the year of mobile.” And while it may be true that
mobile is continually becoming more important to the
digital landscape, the industry is only now undergoing its
most significant changes.

This report examines the mobile and connected device
landscape with a focus on the U.S. market but includes
highlights from several other markets: the UK, France,
Germany, Spain, Italy, Canada and Japan.

DATA NOTE
This report is based on a combination of sources in the comScore Mobile suite
of products, including comScore MobiLens®, comScore TabLens®, comScore
Mobile Metrix® and comScore Device Essentials™. The report also includes data
from comScore Media Metrix® Multi-Platform (Beta). Smartphones are defined
throughout the report as mobile phones that use the Google Android, Apple iOS,
BlackBerry, Windows Phone and other similar platforms.




                                                                                 FOR FURTHER INFORMATION,
                                                                                 PLEASE CONTACT:

                                                                                 Andrew Lipsman
                                                                                 comScore, Inc.
                                                                                 +1 312 775 6510
                                                                                 press@comscore.com

                                                                                 Carmela Aquino
                                                                                 comScore, Inc.
                                                                                 +1 703 438 2024
                                                                                 press@comscore.com




                                                                                                            3
Mobile future in focus report 2013 via comScore
TABLE OF CONTENTS


	 7   Executive Summary

	11   Mobile and Connected Device Landscape

	16   Mobile Network Dynamics

	21   Mobile OEM Dynamics

	27   Mobile Platform Dynamics

	33   Mobile Media Consumption

39
	     International: Mobile Landscape Across EU5,
	     Japan and Canada

43
	Conclusion

	47   About comScore

	51   Methodology and Definitions




                                                    5
With smartphones
surpassing 125 million
U.S. consumers and
tablets now owned
by more than 50 million,
we have crossed into
the Brave New Digital World.
EXECUTIVE SUMMARY


2012 was another milestone year in the life of mobile as
continued innovation in hardware, software and device
functionality lays the groundwork for the future of the
industry. Smartphones and tablets are ushering in a new
era of multi-platform media, with consumers becoming
increasingly agnostic about how, when and where they
engage with content. This report will examine how these
rapidly changing market dynamics have shaped the current
U.S. and international mobile marketplaces and what these
changes mean for the coming year as comScore helps
bring the mobile future into focus.

MULTI-PLATFORM DYNAMICS SHAPING THE ‘BRAVE NEW DIGITAL WORLD’
With smartphones surpassing 125 million U.S. consumers and tablets now owned
by more than 50 million, we have crossed into the Brave New Digital World – a
new paradigm of digital media fragmentation in which consumers are always
connected. This constant flow of information is not only changing how, when and
where consumers engage with media, but is also disrupting established revenue
streams, making it paramount for businesses to adapt or risk being left behind.
Despite this uncomfortable change, media companies have new opportunities
to monetize incremental consumption activity while marketers have the ability to
optimize campaigns for maximum effectiveness across multiple channels. Now is
the time for businesses to get smarter about how their audiences are behaving in
this multi-platform world.

SMARTPHONES SURPASS 50 PERCENT PENETRATION AND BREAK INTO
‘LATE MAJORITY’ OF ADOPTERS
Five years after the launch of the original iPhone, the smartphone market has come
of age in the past year with a majority of U.S. mobile consumers now owning
these devices featuring advanced capabilities and multimedia access. The most
rapid part of the technology adoption curve may now be in the industry’s rear
view mirror as smartphones begin to penetrate the “late majority” of consumers.
Because these consumers tend to be somewhat resistant to new technology and
more price-sensitive than the average consumer, gaining adoption in this segment
requires the industry to evolve its product mix and marketing strategies.




                                                                                     7
ANDROID AND iOS CONTROL U.S. SMARTPHONE MARKET
    Google’s Android OS, which has been adopted by multiple OEMs, and Apple’s
    iOS, which is carried exclusively on iPhones, have come to dominate the U.S.
    smartphone landscape with nearly 90 percent of the market today. Both platforms
    have continued to grow their respective market shares at the expense of
    BlackBerry, Windows and HP. This market share dominance is being reinforced by
    the two platforms’ well-developed app ecosystems, making it even more difficult
    for the competing platforms to narrow the gap.

    SAMSUNG MAKES SPLASH IN SMARTPHONE OEM MARKET
    Apple continues to gain ground as the leading smartphone Original Equipment
    Manufacturer (OEM), but Samsung has seen the most explosive growth in this
    market over the past couple of years with a year-over-year increase of more
    than 100 percent and a two-year increase of more than 400 percent. While Apple
    maintains a healthy lead over #2 Samsung, the gap has been steadily narrowing
    during a year in which the rivalry heated up between the two smartphone
    OEM leaders.

    APP USAGE, LED BY FACEBOOK AND GOOGLE, DOMINATES MOBILE WEB
    Consumers have demonstrated a clear preference for engaging with content on
    smartphones via apps, which account for 4 out of every 5 mobile minutes, rather
    than the mobile web. As a result, the dynamics of mobile media consumption are
    proving different from the traditional web. Because of the scarcity of app real estate
    on the smartphone home-screen, consumers are spending more time concentrated
    on the apps of major media brands rather than with the long tail of brands. Facebook
    finished the year as the top U.S. smartphone app, followed by five different Google
    apps, as major media brands dominated the top of the rankings.

    ‘SHOWROOMING’ STIRS MAJOR DISRUPTION IN RETAIL AS MOBILE
    ENTERS BRICK-AND-MORTAR
    Many U.S. consumers have come to rely on their smartphones to assist with their
    in-store shopping, arming them with information in the palm of their hands to ensure
    they are getting the right product at the best available price. This behavior, known
    as “showrooming,” is putting significant price pressure on brick-and-mortar retailers
    as they are forced to compete with e-commerce retailers within the confines of their
    own stores. With the pricing power so clearly in the hands of the consumer today,
    the retail industry is rapidly being disrupted as e-commerce grows at 4x the rate of
    traditional retail while accounting for 1 out of every 10 retail dollars. Brick-and-mortar
    retailers are being faced with the need to quickly adjust with aggressive defense
    strategies to protect their businesses and ensure long-term survival.




8
HIGH-SPEED MOBILE CONNECTIVITY HAS UNLEASHED MOBILE
CONTENT CONSUMPTION
The improved availability of high-speed Internet access has significantly enhanced
the average user’s media consumption experience, contributing to a rapid uptick
in mobile media consumption. Default Wi-Fi accessibility for smartphones and
tablets has not only off-loaded bandwidth from networks, but has also contributed
to a better on-premise (e.g. in-home) browsing experience for users. While Wi-Fi
usage has become more prevalent, networks speeds have also improved with
4G and LTE technology as an increasing number of phones on the market are
enabled for these speeds. The net result for mobile Internet users is a faster,
more seamless browsing experience that has resulted in mobile channels now
accounting for 1 out of every 3 digital media consumption minutes.




                                                                                     9
Multi-platform
consumption is today’s
new reality.
1 in 3 minutes spent
online is now spent
beyond the PC.
MOBILE AND CONNECTED DEVICE
LANDSCAPE


RAPID ADOPTION OF SMARTPHONES AND TABLETS USHERS
IN ‘BRAVE NEW DIGITAL WORLD’
The past year saw mobile media consumption grow exponentially as smartphone
adoption surged nearly 30 percent to more than 120 million owners, while tablets
emerged as one of the fastest selling devices in history to reach nearly 50 million
owners. Tablets have already achieved a level of adoption in three years that it took
smartphones nearly a decade to reach from when they were originally introduced.

    140
                                                                                          Smartphone and
    120                                                                                   Tablet Ownership
                                                                                          (MM)
    100
                                                                                          Source: comScore
      80                                                                                  MobiLens & TabLens,
                                                                                          U.S., 2003-2012
      60

      40

      20

       0
           2003    2004   2005    2006   2007    2008    2009    2010   2011    2012


                            Smartphone Owners           Tablet Owners



Smartphones and tablets are completely reshaping the way consumers connect
with content and experience media, with audiences fragmenting even further
as attention gets shared across platforms. In this Brave New Digital World,
the fundamental economics of digital media are at stake if shifting between
platforms means trading dollars for dimes. At the same time, an overall increase
in media engagement also means more monetization opportunities for media
companies and a greater ability for marketers to optimize campaigns across
platforms. Digital businesses still have a chance to effectively navigate this
transition and maximize their opportunities while mitigating their risks. Doing so will
require a firm grasp of the multi-platform landscape and an understanding of how
consumer usage patterns are shifting. Those who fail to devise an effective multi-
platform strategy will likely be left behind.




                                                                                                                11
MULTI-PLATFORM CONSUMPTION IS TODAY’S NEW REALITY
                                  The digital media landscape is already well into this transition, and smartphone
                                  and tablet usage can no longer be considered a mere rounding error in digital
                                  consumer behavior. comScore Media Metrix® Multi-Platform (Beta), which
                                  provides an unduplicated view of digital media audiences and consumption
                                  across desktop computers, smartphones and tablets, reveals that more than 1 in 3
                                  minutes (37 percent) is now spent beyond the PC.

       Share of Digital Media
        Time Spent: Desktop



                                                                            63%
        Computer vs. Mobile
      (Smartphone + Tablet)
     Source: comScore Media
          Metrix Multi-Platform
       (Beta), U.S., Dec-2012
                                                                         Desktop
                                                 37%
                                                   Mobile




                                  As digital consumers become more reliant on their smartphones and tablets for
                                  everyday content consumption, we can expect this share to rise over time and
                                  perhaps take over majority share during the course of the next year. Envisioning
                                  this reality places a premium not only on getting the mobile channels right, but also
                                  on proving their value in short order.

                                  MORE PLATFORMS MEANS EXTENDED REACH FOR MEDIA COMPANIES
                                  While desktop-based Internet usage has not seen notable declines for the majority
                                  of content categories and leading digital properties, usage does appear to be
                                  leveling off as incremental usage shifts to smartphones and tablets. By accounting
                                  for these incremental audiences, media companies are able to demonstrate
                                  significantly wider scale to advertisers, along with the ability to provide unique
                                  marketing experiences according to the medium.

                                  The average Top 25 digital media property extended its reach via mobile channels
                                  by 29 percent. Certain mobile-oriented properties such as Pandora (+155 percent
                                  reach), ESPN (+59 percent) and Twitter (+46 percent) are extending their reach
                                  by an even greater percentage. Even those with a relatively modest incremental
                                  reach in the teens are recognizing that mobile channels represent more than a
                                  mere rounding error.




12
TOTAL DIGITAL                        % INCREMENTAL      Top 25 Digital
     TOP 25 DIGITAL                                    MOBILE
     PROPERTIES
                            POPULATION      PC (000)
                                                       (000)
                                                                 AUDIENCE VIA       Properties by Digital
                            (000)                                MOBILE             Population (000)
1    Google Sites           223,445         193,757    113,650   15%                Source: comScore Media
                                                                                    Metrix Multi-Platform
2    Yahoo! Sites           206,830         185,847    92,218    11%
                                                                                    (Beta), U.S., Dec-2012
3    Facebook.com           185,335         150,294    97,739    23%
4    Microsoft Sites        178,737         170,947    55,190    5%
5    Amazon Sites           159,630         128,227    80,476    24%
6    AOL, Inc.              140,252         117,628    62,360    19%
7    Glam Media             128,317         110,555    50,428    16%
8    Ask Network            121,833         104,148    47,972    17%
9    Apple Inc.             108,580         83,722     51,548    30%
10   Turner Digital         104,897         85,666     44,675    22%
11   CBS Interactive        104,415         87,121     42,135    20%
12   Wikimedia Foundation   103,644         85,883     41,700    21%
     Sites
13   eBay                   95,498          77,725     39,489    23%
14   Demand Media           89,208          74,924     33,406    19%
15   Comcast                88,586          71,091     37,300    25%
     NBCUniversal
16   Viacom Digital         80,614          71,695     22,312    12%
17   Federated Media        78,680          64,639     30,105    22%
     Publishing
18   The Weather Channel    69,749          48,928     34,877    43%
19   Wal-Mart               66,208          52,203     26,734    27%
20   Pandora.com            65,838          25,863     52,595    155%
21   Answers.com Sites      64,931          49,171     28,006    32%
22   Gannett Sites          63,573          48,228     27,523    32%
23   ESPN                   61,505          38,660     34,616    59%
24   VEVO                   59,790          56,793     5,504     5%
25   Twitter.com            59,323          40,659     29,629    46%


The future revenue streams of these media companies depend on effectively
delivering content and commerce to their consumers through these channels
and demonstrating why they are an important part of the marketing mix. Failure to
meet consumer expectations and aggressively prove the value of these additional
channels in 2013 could spell a very rocky economic transition by the time 2014
comes around.




                                                                                                             13
The average Top 25
digital media property
extended its reach
via mobile channels
by 29 percent.
FRAGMENTED MEDIA LANDSCAPE ALSO DRIVES DIFFERENT
USAGE PATTERNS
With so many consumers becoming “digital omnivores” accessing media
content at different points in the day across varying devices, there has also been
an evolution in behavioral patterns around when people tend to consume content
using each respective platform. More content availability means the emergence
of new consumption occasions and a greater amount of overall engagement with
digital media for the average consumer. Mobile platforms, in particular, are creating
occasions for consumption when people are either on-the-go or in a more relaxed,
lean-back setting. While desktop computer usage tends to peak during the workday
and in the early evening, smartphones see peaks during the rush-hours (when
people are in transit). Tablet consumption is highest during the late evening hours
when people are curled up on the couch or winding down for the night in bed.

                                                                                                          Share of Browser-Based
                       10%
                                                                                                          Page Traffic by Hour for
                                9%                                                                        Computer, Smartphone
Share of Daily Device Traffic




                                8%                                                                        and Tablet Platforms
                                7%                                                                        Source: comScore Device
                                6%                                                                        Essentials, U.S., Monday,
                                5%
                                                                                                          Jan. 21, 2013
                                4%
                                3%
                                2%
                                1%
                                0%
                                  12:00 AM   4:00 AM        8:00 AM      12:00 PM   4:00 PM     8:00 PM



                                                       Tablet         Smartphone     Computer



Importantly, these new occasions mean new opportunities. Media companies
have the ability to monetize additional media channels or reinforce the value
of primary channels, while marketers have the ability to optimize their campaigns
according to day-part to reach consumers when they may be most receptive
to particular messaging.




                                                                                                                                      15
The number of 4G
users has exploded
in the past year
to 33.1 million,
up 273 percent.
MOBILE NETWORK DYNAMICS


VERIZON MAINTAINS LEAD OVER AT&T IN OPERATOR SHARE
Across the total mobile market, the top 4 network operators – Verizon, AT&T,
Sprint and T-Mobile – comprised more than three-quarters of all subscribers.
Verizon maintained its leading position, garnering 31.2 percent of the market,
followed closely by AT&T at 27.3 percent. Sprint (10.3 percent) and T-Mobile (8.4
percent) rounded out the top four. Other network operators combined to account
for more than 20 percent of the market, led by Tracfone, slightly behind T-Mobile at
7.6 percent, Sprint Prepaid (5.4 percent) and MetroPCS (3.2 percent).

                                                                                       Network Operator Share
                                                                                       of Total Mobile Market
                       3% 2%
                         2%                                                            Source: comScore
                      3%                                     Verizon                   MobiLens, U.S., 3 Month
                 6%                                          AT&T                      Avg. Ending Dec-2012
                                         31%
                                                             Sprint
            8%
                                                             T-Mobile
                                                             Tracfone
           8%                                                Sprint Prepaid
                                                             MetroPCS
                                                             Other
                10%
                                                             US Cellular
                                 27%                         Cricket




4G SMARTPHONE USAGE EXPLODES IN 2012
Another important driver of mobile media use apart from smartphone adoption
is the adoption of 3G or 4G-enabled devices. In recent years, mobile carriers
have made it a priority to build out increasingly faster networks while handset
manufacturers prioritized the development of smartphones that could fully take
advantage of these networks. In 2012, Apple made waves with the announcement
that its next iPhone would support LTE – a sign that major industry players saw the
future of mobile in these faster networks.

By the end of 2012, 97.7 percent of U.S. smartphone owners used 3G or
4G enabled devices. While 3G users still represent the wide majority of the
smartphone market, the number of 4G users has exploded in the past year to
33.1 million, up 273 percent from a year ago. Android has led the way with
4G adoption but the introduction of the 4G-enabled iPhone 5 in September 2012
spurred an acceleration in adoption during the final months of the year.



                                                                                                                 17
4G Adoption Among                                         35,000
            iOS and Android
                 Smartphone                                       30,000
           Subscribers (000)
           Source: comScore




                                  Smartphone Subscribers (000)
                                                                  25,000
      MobiLens, U.S., 3 Month
     Avg. Ending Dec-2011 to                                      20,000
                   Dec-2012
                                                                  15,000

                                                                  10,000

                                                                   5,000

                                                                        0
                                                                       Dec-2011   Feb-2012   Apr-2012    Jun-2012   Aug-2012    Oct-2012   Dec-2012

                                                                                               Android   iOS    Other

                                  IPHONES CONTINUE TO SHOW GREATEST WI-FI ACTIVITY
                                  An analysis of mobile Internet and Wi-Fi usage across smartphones and tablets
                                  shows that a significant share of browsing activity happens via Wi-Fi. For tablets,
                                  which do not require a wireless data plan to function, 93.6 percent of all time
                                  spent online is via Wi-Fi connection, with both Android tablets and iPads showing
                                  similar percentages. For smartphones, Android phones and iPhones show an
                                  interesting disparity. While two-thirds of online activity on Android phones is
                                  conducted via a mobile connection, more than half of all time spent online on
                                  iPhones happens via Wi-Fi. The higher level of Wi-Fi activity on iPhone could be
                                  attributable to their heavier use as entertainment devices, inducing more video and
                                  music streaming activity, and that network settings default to off-load activity to
                                  accessible Wi-Fi networks.


             Mobile and Wi-Fi            Smartphone                                          58%                               42%
          Connection Activity
        Across Smartphones
     Source: comScore Device
                                                                 Android                      66%                                34%
         Essentials, U.S., Dec-
                          2012                                         iOS             45%                                55%


                                                                                     Mobile Connection     Wi-Fi Connection


             Mobile and Wi-Fi
          Connection Activity                          Tablet           6%                                94%
               Across Tablets
     Source: comScore Device             Android                        7%                                93%
         Essentials, U.S., Dec-
                          2012                                   iOS    6%                                94%


                                                                                     Mobile Connection     Wi-Fi Connection



18
NETWORK AND OS RANK HIGHER THAN COST FOR SMARTPHONE
PURCHASE CONSIDERATION
Purchase consideration factors continue to be very important for the mobile
industry given the high rate of customer churn and new device acquisition. Among
both the total mobile phone and smartphone populations, network quality still
ranks as the most important purchase consideration factor, validating the efforts of
carriers rolling out faster and higher-capability 4G networks.

For smartphone users, operating system ranks as the second-most important
consideration factor. In contrast, the total mobile audience put the overall cost
of monthly service and the cost of the data plan specifically higher on the list.
Interestingly, the selection of apps available only ranked fifth as a consideration
factor for smartphone users this time around, compared to last year when it
ranked third, perhaps suggesting that consumers perceive greater parity in app
ecosystems among the leading operating systems.


                                                                                        8.4   Top Purchase
      Network quality of mobile service provider
                                                                                        8.2   Consideration Factors
                                                                                              for Smartphone
                                                                                        8.2
                       Phone operating system                                                 Purchasers vs. Total
                                                                                      7.7
                                                                                              Mobile (1-10 Scale,
                                                                                       8.0    10=Most Important)
             Overall cost of the monthly service
                                                                                       8.0    Source: comScore
                                                                                       7.9    MobiLens, U.S., 3 Month
               Cost of the data plan specifically
                                                                                      7.8     Avg. Ending Dec-2012
       Selection of apps available for my phone                                     7.8
                                          model                                  7.3
 Price of the phone (after any rebates and other                                      7.7
                                     incentives)                                      7.7
                                                                                  7.5
     Brand name of the mobile service provider
                                                                                 7.3
                                                                                  7.5
                      Brand name of the phone
                                                                                7.1
                                                                                 7.4
                   Music and video capabilities
                                                                               6.9
                                                                                7.0
                     Social networking features
                                                                              6.6
                                                                           6.6
                Recommended by family/friend
                                                                          6.4
                                                                        5.8
          Recommended by retail sales person
                                                                       5.7


                                     Smartphone     Total Mobile




                                                                                                                        19
The race among
handset manufacturers
heats up as
smartphones
take center stage.
MOBILE OEM DYNAMICS


APPLE AND SAMSUNG COMPETE FOR SUPREMACY
IN MOBILE OEM MARKET
The race among handset manufacturers heated up in 2012 as smartphones
took center stage in the mobile market. Across the total mobile population,
Samsung maintained its position as the lead Original Equipment Manufacturer
(OEM), increasing its share to slightly more than a quarter of all mobile devices
in use in the U.S. Apple rose two spots, overtaking LG and Motorola, to claim
the #2 position accounting for nearly 20 percent of the total mobile market.
Across the smartphone population, however, Apple takes the largest share of
the OEM market, having increased its lead by a significant 6-percentage points
to 36.3 percent, buoyed by the continued popularity and increasing affordability
of the iPhone. Samsung edged out RIM and HTC to claim the #2 spot among
smartphone manufacturers, with the release of the well-received Samsung Galaxy
S III, accounting for 21 percent of all smartphones in use. Noticeably absent from
the OEM leaderboard was BlackBerry, which took the #2 spot the year prior.

TOTAL MOBILE                              SMARTPHONE
                                                                                     Top OEMs by Share of
Samsung                      27.1%        Apple                       36.3%
                                                                                     Total Mobile Market and
Apple                        19.5%        Samsung                     21.0%          Smartphone Market
LG                           17.3%        HTC                         10.2%          Source: comScore
Motorola                     10.0%        Motorola                    9.1%           MobiLens, U.S., 3 Month
HTC                          5.6%         LG                          7.1%           Avg. Ending Dec-2012


A look at the share of OEMs among the Android smartphone market in particular
shows Samsung exhibiting remarkable growth within the market in the previous
year. In December 2011, Samsung accounted for just 1 in 4 Android smartphones
in use. By the end of 2012, that percentage shot up 13 percentage points,
gaining share directly from Motorola and HTC to account for nearly 2 in 5 Android
smartphones. While the market still remains fiercely competitive among OEMs
in the Android ecosystem, Samsung is exhibiting remarkable leadership with the
recent smartphone models it has introduced to the market, such as the Samsung
Galaxy S III. As a result, no other OEM has captured the attention of consumers
and smartphone enthusiasts in the past year as much as Samsung.




                                                                                                               21
OEM Share for Android
                                100%
                Smartphones
                                                    12%                             15%
            Source: comScore     90%
      MobiLens, U.S., 3 Month
     Avg. Ending Dec-2012 vs.    80%                14%                             13%
                    Dec-2011                                                                                Other
                                 70%
                                                                                                            LG
                                                                                    18%
                                 60%                26%
                                                                                                            HTC
                                 50%                                                                        Motorola
                                                                                    17%
                                 40%                                                                        Samsung
                                                    23%
                                 30%

                                 20%                                                38%
                                 10%
                                                    25%

                                  0%
                                                  Dec-2011                        Dec-2012


                                APPLE AND AMAZON LEAD AMONG TABLET OEMS
                                In the household tablet market (excluding tablets for business use), Apple sees an
                                even greater lead over other device manufacturers, with iPads accounting for 42.9
                                percent of the tablet market. Amazon followed with the #2 spot as Kindle Fire
                                tablets comprise nearly a quarter of all tablets in use. Barnes & Noble accounted
                                for the third-largest share among OEMs with 7.8 percent of all tablets, largely due
                                to the Barnes & Noble NOOK Tablet. Samsung and Acer rounded out the top five
                                tablet OEMs, with 5.6 percent and 3.6 percent share of the market, respectively,
                                due to the popularity of the Samsung Galaxy Tab and the Acer Iconia Tab devices.


           OEM Share of the
               Tablet Market                                     1%
           Source: comScore                                    4%
       TabLens, U.S., 3 Month                             5%
       Avg. Ending Dec-2012                                                                         Apple
                                                     8%
                                                                                                    Amazon

                                                                                     43%            Other

                                               15%                                                  Barnes & Noble

                                                                                                    Samsung

                                                                                                    Acer

                                                                                                    HP

                                                             24%




22
APPLE TOPS LIST OF MOST ACQUIRED MOBILE PHONES AND TABLETS
Smartphones dominated the list of top acquired mobile phones in the U.S., led
by various versions of the Apple iPhone, which claimed four of the top five spots,
ousting BlackBerry and HTC devices from the year prior. The Samsung Galaxy
S III proved to be highly popular as well, finding its way into the top five. Apple’s
popularity among consumers making new mobile device purchases likely comes
from a combination of strategic marketing moves. As older models of iPhones
are marked down with the release of newer models, an increasing number of
consumers gain access to them, which accounts for the popularity of a model
such as the Apple iPhone 3GS – originally released in 2009.


TOP ACQUIRED PHONES                                                                     Top Acquired Individual
                                                                                        Phone Models in the U.S.
Apple iPhone 4S                                                                         Source: comScore
Apple iPhone 4                                                                          MobiLens, U.S., 3 Month
                                                                                        Avg. Ending Jan-2012 to
Apple iPhone 3GS                                                                        Dec-2012
Apple iPhone 5
Samsung Galaxy S III

A look at the tablet landscape shows Apple ruling this market as well, with iPads
ranking as the top acquired tablet family in the past year, outpacing other tablet
families by a significant margin. As a platform, however, Android also fared well
with each of the next four most acquired tablet families. Amazon put on a good
showing with the Kindle Fire family of tablets ranking #2, followed by the
Acer Iconia and Iconia Tab, Samsung Galaxy Tab and Note, and Barnes & Noble
NOOK tablets.


TOP ACQUIRED TABLET FAMILIES                                                            Top Acquired Tablet
                                                                                        Families in the U.S.
Apple iPads                                                                             Source: comScore
Amazon Kindle 2/Fire/HD                                                                 TabLens, U.S., Apr-2012
                                                                                        to Dec-2012
Acer Iconia/Iconia Tab
Samsung Galaxy Note/Tab
Barnes & Noble NOOK Color/Tablet/HD

TABLET OWNERS OLDER AND LESS AFFLUENT THAN
SMARTPHONE OWNERS
A demographic comparison of tablet owners and smartphone owners showed that
while both groups had fairly similar gender splits, tablets saw higher percentages
of older and less affluent members of their audience. More than 28 percent of
tablet owners were age 55 and older vs. 20 percent of smartphone owners,
while 25 percent came from households earning at least $100,000 annually vs.
36 percent among smartphone owners. One hypothesis might be that because




                                                                                                                  23
While Apple leads
among tablet
manufacturers in share,
Android devices also
fared well, with 4 of the
top 5 most acquired
tablet families.
tablets are very intuitive, older generations are starting to use these devices in
 place of computers, which can be more complicated to set up and maintain.
 In addition, tablets are increasingly providing a less expensive alternative to
 computers and can be more affordable than smartphones in the long run, as they
 don’t require a data plan for use.

                                                                                                  Age Breakdown
                                                                                                  of Smartphone and
      Tablet    7%     13%         17%           17%             18%            15%         14%   Tablet Owners
                                                                                                  Source: comScore
                                                                                                  TabLens and MobiLens,
 Smartphone     7%     12%              22%              21%            18%           12%    8%   U.S., 3 Month Avg. Ending
                                                                                                  Dec-2012


                       13-17    18-24    25-34   35-44     45-54     55-64      65+




                                                                                                  Household Income
                                                                                                  Breakdown
     Tablet      17%              22%               21%              14%              25%         of Smartphone and
                                                                                                  Tablet Owners
                                                                                                  Source: comScore
Smartphone     9%         17%             20%              17%                    36%             TabLens and MobiLens,
                                                                                                  U.S., 3 Month Avg. Ending
                                                                                                  Dec-2012

               <$25k     $25k to <$50k     $50k to <$75k       $75k to <$100k     $100k+




                                                                                                                              25
Smartphones hit
the mobile majority
in 2012, up 29 percent
from a year ago.
MOBILE PLATFORM DYNAMICS


SMARTPHONE PENETRATION SURPASSES 50 PERCENT IN 2012
2012 was a milestone year for the U.S. smartphone market as it finally surpassed
50 percent market penetration. The more than 125 million smartphone subscribers
represents a 29-percent increase from a year ago, and a 99-percent increase
from two years ago. Not only does the market’s current ownership profile reflect
a smartphone majority, but 72 percent of all newly-acquired devices are now
smartphones.

                                                                                       Mobile Phone Market
                     Android                iOS                 BlackBerry
                                                                                       Share Trend by Platform
                     Windows                Other Smartphone    Non-Smartphone         Source: comScore
                                                                                       MobiLens, U.S., 3 Month
 100%
                                                                                       Avg. Ending Dec-2010 to
   90%                                                                                 Dec-2012
   80%
   70%
   60%
   50%
   40%
   30%
   20%
   10%
    0%
    Dec-2010 Mar-2011 Jun-2011 Sep-2011 Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012



SMARTPHONES ENTER ‘LATE MAJORITY’ IN TECHNOLOGY LIFECYCLE
With smartphone penetration surging past 50 percent during the latter half of 2012,
the market is now entering the “late majority” stage of the technology adoption
curve. The characteristics and motivations of consumers in the late majority are
substantially different than the early majority, and almost the complete opposite of
the innovators and early adopters. These fundamentally different market dynamics




2.5% Innovators
                      13.5%            34%                34%             16%
                  Early Adopters   Early Majority     Late Majority     Laggards




                                                                                                                 27
mean that new marketing strategies are required to capture this segment of the
                               population representing approximately 80 million U.S. consumers.

                               Individuals in the late majority tend to be of below average means, may be somewhat
                               skeptical of technology and are opinion takers rather than opinion makers. These
                               characteristics will necessarily drive the marketing strategies needed to win over
                               new adopters during this next phase of the smartphone market. Price sensitivity
                               dictates that many in this segment will simply not consider premium models and are
                               willing to sacrifice certain features for more basic functionality. Many may not even
                               grasp what advanced features mean or why they deliver a superior experience. The
                               availability of a diverse app ecosystem is likely to be an important driver of utility for
                               these consumers, which favors Android and iOS.

                               Another impediment to adoption is that it’s not just the price of the phone but the
                               additional recurring cost of a data plan. While handset prices are already heavily
                               subsidized by the operators, the introduction of a new tier of pricing plans to capture
                               this segment of consumers may be required to spur further device adoption. But
                               even if an acceptable threshold is met, the average sales price for device models
                               will need to remain sufficiently low. Recognition of this reality may be one reason that
                               Apple is heavily rumored to be developing a low-cost iPhone. Without being able
                               to meet the price expectations of these consumers, a premium device such as the
                               iPhone would likely begin to lose market share.

                               ANDROID OWNS MAJORITY SHARE OF U.S. SMARTPHONE USERS
                               The U.S. smartphone market has seen two platforms, Android and iOS, come to
                               dominate the market over the past few years and now combine for nearly 90 percent
                               of the market. Android captured a majority of the market for the first time in February


                                                             1%
       Smartphone Market
                                                         6% 3%
         Share by Platform
          Source: comScore
     MobiLens, U.S., 3 Month
      Avg. Ending Dec-2012                                                                Android
                                                                                          iOS
                                                                            53%
                                                36%                                       BlackBerry
                                                                                          Windows
                                                                                          Other Smartphone




                               2012 and continued to extend its leadership to 53.4 percent by the end of the year.
                               Apple grew its market share nearly 7 percentage points to 36.3 percent in the past
                               year. All other platforms experienced share declines.




28
This upcoming year in the smartphone market could be make-or-break for non-iOS
and Android platforms. If they concede much more of their remaining market shares,
it could be very difficult to encourage developers to build for their platforms, putting
them even further behind the market leaders.

LONG TERM VIEW OF SMARTPHONE MARKET REMINDS HOW QUICKLY
FORTUNES CAN CHANGE
But while Android and iOS might appear poised to lock up the smartphone market
for good, it is worth looking at the history of the smartphone market to understand
just how quickly fortunes can change. In 2005, the market was dominated by Palm,
Symbian and BlackBerry. However, by the following year all three had ceded control
to Microsoft as the new market share leader. 2008-2010 saw BlackBerry stage a
comeback to assume the #1 position before eventually giving way to the upstart
Android platform in 2011. The only key player in the current smartphone market
never to have owned the market share lead, interestingly enough, is iOS.

100%                                                                                       Long Term Smartphone
 90%                                                                                       Platform Market
 80%                                                                                       Share Trend
 70%
                                                                                           Source: comScore
                                                                                           MobiLens, U.S., Dec-
 60%
                                                                                           2005 to Dec-2012
 50%
 40%
 30%
 20%
 10%
   0%
        Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-2011 Dec-2012


                    Android    iOS   BlackBerry   Windows     Symbian    HP


This view reminds us that the smartphone market has historically been one of
constant disruption, and with most consumers trading out their phones for new
ones every couple of years, there is more opportunity to bring a compelling product
to market and quickly win market share. Conversely, one could also argue that the
emergence of well-developed platform ecosystems creates a higher degree of
customer lock-in that did not exist in the earlier days of the market, suggesting that
iOS and Android may have a better chance of maintaining their stranglehold on the
market for the foreseeable future. But the possibility of emergent platforms (Amazon
and Facebook) and resurgent platforms (Windows and BlackBerry) suggests an
uncertain future where new leaders certainly have the potential to break through.




                                                                                                                  29
ANDROID’S OEM INTEROPERABILITY HELPS IT ESTABLISH TABLET
                               MARKET SHARE LEADERSHIP
                               Although Apple effectively invented the tablet market with its 2010 introduction of
                               the iPad, several fast-followers delivering more affordable models have helped drive
                               the tablet market as it’s evolved in the past few years. Android models are now the
                               most-owned tablets in the U.S. household tablet market – largely buoyed by the
                               Amazon Kindle Fire – just slightly ahead of the iPad. Other tablet platforms maintain
                               just a fractional percentage of the market.
     Unique Tablets (000) by
                                                      70,000
                    Platform
           Source: comScore                           60,000
      TabLens, U.S., 3 Month
                               Unique Tablets (000)




       Avg. Ending Dec-2012                           50,000
                                                                                                                                     BlackBerry
                                                      40,000
                                                                                                                                     Windows
                                                      30,000
                                                                                                                                     HP
                                                      20,000                                                                         Android

                                                      10,000                                                                         iOS

                                                          0
                                                               2


                                                                         2


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                                                                                                                        D
                               Although Apple has conceded its initial leadership position to Android in the tablet
                               market, it is fighting to win back market share with its October 2012 introduction
                               of the 7.9-inch iPad Mini. The smaller and lighter model is proving popular with
                               consumers who favor portability over screen size. With other tablet makers likely
                               to follow suit, the market appears pointed towards increased adoption of smaller
                               tablets. This product differentiation can not only help capture a segment of new
                               tablet consumers who valued portability, but it also may increase second-tablet
                               ownership for households that might have different occasions to favor a particular
                               device type.

                               PLATFORM LOYALTY EXISTS BETWEEN TABLET AND SMARTPHONE
                               OWNERSHIP
                               Although tablets and smartphones are different devices with varying functions,
                               there is evidence of platform loyalty among consumers. Most mobile consumers
                               may not resemble the stereotypical Apple “fanboy”, but their propensity to favor
                               one platform over another is apparent. For example, iPhone users represent 36
                               percent of the total smartphone market, but a full 60 percent of smartphone users
                               with an iPad have an iPhone. Similarly, 62 percent of smartphone users with an
                               Android tablet also use Android phones, considerably higher than that of the total
                               smartphone market.




30
Percentage of Tablet
       10%             7%              9%                                             Users by Platform
                                                     20%                              Who Use Smartphone
                                                                                      Platforms
                      32%                                            Other Phone
                                                                                      Source: comScore
       53%                                                           Android Phone    MobiLens, U.S., 3 Month
                                      62%                                             Avg. Ending Dec-2012
                                                                     iPhone
                                                     57%


                      60%
       36%
                                      29%            23%

       Total           iPad          Android         Other


Platform loyalty is important because it increases the likelihood of a consumer
being wedded to a particular platform over the long term, especially given mobile’s
rapid replacement cycle. With an app ecosystem that transfers seamlessly between
devices, consumers may become accustomed to a consistent interface and media
experience that makes them more likely to stick with the same platform when it’s
time for a device upgrade.




                                                                                                                31
Tablet owners show
a higher propensity
to browse and engage
in more involved
media behaviors.
MOBILE MEDIA CONSUMPTION


SMARTPHONES AND TABLETS DRIVE EXPANDED MOBILE MEDIA USAGE
Analysis of the top mobile media behaviors across smartphone and tablet
users shows some interesting similarities and differences for both groups. Both
platforms’ users show an inclination toward engaging in activities that lend
themselves well to being done on-the-go, such as accessing weather, maps and
news updates.

Among smartphone users, sending text messages was still the foremost activity
in which users engaged (90.5 percent). Taking photos was the second-ranked
activity for smartphone users (83.4 percent), followed by checking e-mail
(77.8 percent) and accessing weather updates (67.1 percent). Accessing
social networks or blogs also ranked among the top mobile media activities for
smartphone users (65.3 percent), as apps have made it easier than ever for
smartphone users to engage with social networks at any given minute.

TOP ACTIVITIES                           TOP ACTIVITIES                           Top Mobile Media
FOR SMARTPHONE AUDIENCE                  FOR TABLET AUDIENCE                      Activities by Share
Sent text message to          90.5%      Accessed search               73.9%      of Smartphone and
another phone                                                                     Tablet Users
                                                                                  Source: comScore
Took photos                   83.4%      Used email                    73.6%      MobiLens and TabLens,
Used email                    77.8%      Accessed social               67.5%      U.S., 3 Month Avg. Ending
                                         networking                               Dec-2012
Accessed weather              67.1%      Played games                  66.3%
Accessed social               65.3%      Accessed weather              64.6%
networking
Accessed search               58.7%      Accessed news                 58.8%
Played games                  52.9%      Accessed photo/video          51.5%
                                         sharing site
Accessed maps                 51.2%      Read books                    51.2%
Accessed news                 49.2%      Watched video                 50.9%
Listened to music on          48.0%      Accessed retail               49.8%
mobile phone

For tablet owners, there is a higher propensity to browse and engage in more
involved media behaviors. While the most popular activity for tablet owners was
accessing search results (73.9 percent), a significant percentage also played
games (66.3 percent), accessed photo/video sharing sites (51.5 percent), read
books (51.2 percent) and watched video (50.9 percent). As tablets have come



                                                                                                              33
to provide a convenient platform for users to read longer-form content, we have
                                          seen this platform disrupt the way tech-savvy consumers are consuming news and
                                          information. In addition to books, 37.8 percent of tablet owners read magazines on
                                          their devices, underscoring the importance of this platform to magazine publishers
                                          as consumers continue to shift away from print.

                                          TABLETS DRIVE SOCIAL ENGAGEMENT
                                          Social networking activity continued to be very popular on mobile devices, with
                                          approximately 2 out of every 3 smartphone and tablet owners accessing these
                                                   67%
                                          sites65% their devices. The most popular social media activity among both groups
                                                from
                                          was reading posts or status updates from people known personally. Half of the
                                                          61%
                                          smartphone audience reported reading status updates from friends, and 3 in 10
                                                       53%
                                          smartphone owners reported doing so on a daily basis. For tablet owners, the
                                                                    51%
                                                                               49%
                                                                                        47%
                                          percentage is even higher for many social networking activities, as tablets lend
                                                                                                 46%
                                                                           44%
                                          themselves particularly well to leisurely browsing for prolonged periods of time.
                                                                                                         41%
                                                                                             39%
                                                                      37%                              37%
                                                                                                                   34%              35%          34%
                               In addition to using their devices for keeping up to date on friends’ activities,
                               smartphone and tablet owners are engaging with brands on social networks. 2 in              27%         26%
                               5 smartphone subscribers read posts from brands and organizations, while nearly
                               half of the tablet audience reported doing so as well. A slightly lower percentage
                               of smartphone (34.5 percent) and tablet (41.3 percent) owners read posts by
                               celebrities and public figures. Finally, 1 in 4 smartphone owners reported receiving
                               a coupon, offer or deal via mobile social networking. A greater percentage of
                           67% tablet owners (34 percent) reported the same thing.
                       65%           Accessed 'Read posts !Accessed Posted status VRead posts 3Followed a -Read posts Posted a link !Received a
                                      social   from people photo/video    update    or status    link to a   from public to a website coupon, offer,
          Selected Social            61%
                                    networking    known     sharing site          updates from   website      figures or                 or deal
    Networking Activities                       personally                       organizations, posted by
                                                                                   companies, someone else
                                                                                                              celebrities

 Among Smartphone and           53%                                                  brands,
            Tablet Owners                         51%                               events or                                Smartphone
                                                                49%                 products
                                                                                                                             Tablet
         Source: comScore                                                    47%           46%
                                                           44%
   MobiLens and TabLens,                                                                                   41%
 U.S., 3 Month Avg. Ending                                               39%
                                             37%                                    37%
                 Dec-2012                                                                           34%                   35%         34%

                                                                                                                         27%        26%




                               Accessed 'Read posts !Accessed Posted status VRead posts 3Followed a       -Read posts Posted a link !Received a
                                social   from people Accessed
                                            Read     photo/video  Posted
                                                                   update   Read posts
                                                                               or status    Followed
                                                                                             link to a     Readpublic to a website coupon, offer,
                                                                                                           from posts    Posted       Received
                              networking posts from
                                            known     photo/
                                                     sharing site status    updates from a link to
                                                                              or status      website       from public
                                                                                                            figures or    a link      aor deal
                                                                                                                                        coupon,
                                           people
                                          personally   video      update   updates from a website
                                                                           organizations, posted by         figures or
                                                                                                            celebrities    to a        offer, or
                                           known      sharing              organizations, someone by
                                                                             companies, posted else        celebrities    website         deal
                                         personally     site                   brands,
                                                                            companies,      someone
                                                                              events or
                                                                               brands,          else
                                                                                                                           Smartphone
                                                                               products
                                                                              events or                                    Tablet
                                                                                  products


34
SMARTPHONES DRIVING SHOWROOMING, TABLETS DRIVING PURCHASE
                   The past few years have seen the rise of a practice known as “showrooming,”
                   which means visiting a retail store to check out a product in person but then
                   completing the actual purchase online. In Q4 2012, 36 percent of consumers
                   indicated they had engaged in showrooming and 74 percent of those individuals
                   said that price was an important driver of that activity. Interestingly, smartphones
                   have emerged as a significant enabler of showrooming activity because people
                   are armed with access to competitive pricing information and product reviews
                   while in a brick-and-mortar store. In fact, 46 percent of smartphone owners have
                   showroomed as compared to just 27 percent of non-smartphone owners.

                   While smartphones are becoming disruptive to the traditional retail environment,
                   tablets are changing shopping behaviors in somewhat different ways. Because
                   their functionality more closely resembles that of computers, tablets are not
                   influencing the in-store shopping experience as much as they are driving in-
                   home shopping behavior. In fact, tablet users were significantly more likely than
                   smartphone owners to engage in various shopping behaviors, such as researching
                   product features and comparing prices. Perhaps most importantly, tablet users
                   were twice as likely to purchase items on their devices (38 percent) than
                   smartphone owners (19 percent).

%                                                                                                                          Share of Smartphone
                                                                                                                           and Tablet Owners
                                                                                                                     39%
%                         Researched product features                                                                      Performing Mobile
         51%                                                                                           23%
                      49%                                                                                                  Retail Activities
                              47%          46%                                                                             Source: comScore
                 44%                                                                                                 39%
         51%               Compared product prices
                    49%                              41%                   24%                                             MobiLens and TabLens,
                          39% 47% 37%      46%
    37%          44%                                                                                                       U.S., 3 Month Avg. Ending
                                                  34%       35%    34%                                               38%
                  Purchased goods or services online 41%
                                                                                                                           Dec-2012
                          39%                                          19%
    37%                               37%                27%
                                                  34%       35% 26%34%
                                                                                                                     38%
                                    Found store location
                                                                       27%           26%                       34%

                                                                                                               33%
                                Found coupons or deals
                                                                                                       22%

                                                                                                             30%
                            Checked product availability
ts !Accessed Posted status VRead posts 3Followed a -Read posts         Posted a link !Received a
                                                                                                     19%
le photo/video  update       or status     link to a    from public    to a website coupon, offer,
   sharing site            updates from    website       figures or                    or deal        21%
y                                  Made shopping lists
ts !Accessed Posted statusorganizations, 3Followed a -Read posts
                           VRead posts posted by         celebrities   Posted a link !Received a      21%
le photo/video  update      companies, someone a
                             or status     link to else from public    to a website coupon, offer,
   sharing site               brands,
                           updates from    website       figures or                    or deal
y                            events or
                          organizations, posted by       celebrities
                                                                           Smartphone
                             products someone else
                            companies,                                     Tablet
                              brands,
                             events or                                     Smartphone
                             products
                                                                           Tablet




                                                                                                                                                       35
FACEBOOK #1 AMONG MOBILE APPS, WHILE GOOGLE
                                OWNS HALF OF TOP 10
                                Consumers who engage with mobile media may do so via the mobile web or
                                apps. And in this environment – unlike with the traditional fixed web – the majority
                                of consumption is driven by apps, which are optimized for the smaller-screen
                                environment. 4 out of every 5 mobile media minutes occur via apps, while mobile
                                web usage drives the remainder.

                                Among smartphone apps on the iOS and Android platforms, Facebook finished
                                2012 strong to capture the #1 position, reaching 3 out of every 4 smartphone
                                users in December 2012. Facebook grabbed the lead from Google Maps, which
                                conceded the top spot following Apple’s decision to replace it with Apple Maps
                                on iOS 6. Despite losing the #1 position, Google still featured prominently among
                                the leading apps with each of the next 5 spots. Google Maps ranked 2nd with
                                a reach of 65.9 percent in the smartphone market, followed by Google Play
                                (54.3 percent), Google Search (53.5 percent), Gmail (47.6 percent) and YouTube
                                (46.4 percent).

         Top Mobile Apps by
                                        Facebook                                                                  76%
       Reach of Smartphone
         Audience (Age 18+)          Google Maps                                                          66%
     Source: comScore Mobile          Google Play                                                  54%
       Metrix, U.S., Dec-2012
                                   Google Search                                                   54%

                                           Gmail                                             48%

                                         YouTube                                           46%

                                   Pandora Radio                                       42%

                                     Apple iTunes                                    41%

                                          Cooliris                                  38%

                                Yahoo! Messenger                              32%




                                A breakdown of the top mobile apps specifically for iOS and Android users yields
                                some noticeable differences between the platforms. For iPhone owners, the Apple
                                iTunes app proved to be the #1 app on the list, barely edging out Facebook,
                                while Yahoo! Stocks, Google Maps and Yahoo! Weather rounded out the top
                                five. Meanwhile, Google apps dominated the list of top apps for Android users,
                                with Google Play ranking first, followed by Google Search, Gmail, Facebook
                                and Google Maps. For iPhone users, a number of the top apps on this list are
                                entertainment-focused, such as Pandora Radio, YouTube and Instagram.




36
TOP IOS MOBILE APPS                          TOP ANDROID MOBILE APPS
                                                                                      Top Mobile Apps for
                                                                                      iOS and Android Active
Apple iTunes                                 Google Play                              Users (Age 18+)
Facebook                                     Google Search                            Source: comScore Mobile
                                                                                      Metrix, U.S., Dec-2012
Yahoo! Stocks                                Gmail
Google Maps                                  Facebook
Yahoo! Weather                               Google Maps
Pandora Radio                                Cooliris
Apple Maps                                   Yahoo! Messenger
YouTube                                      Voice Search
The Weather Channel                          YouTube
Instagram                                    Google News and Weather

MOBILE MEDIA USE CONTRIBUTES TO GROWING PERCENTAGE
OF TIME SPENT ONLINE
The rapid growth in mobile media usage has resulted in a greater share of time
spent online now happening on mobile devices. comScore Media Metrix Multi-
Platform (Beta) indicates that one-third of digital media consumption time happens
via smartphones and tablets. However, these time splits by platform can vary
considerably by content category. Categories that lend themselves well to mobile
use – such as Maps and Weather – will naturally see a higher percentage of time
spent online coming from those platforms. Other categories such as Portals, which
represent the traditional entry-point for experiencing much of the fixed web, still
see a higher percentage of activity being driven by PC access.


    Total Internet                63%                                37%              Share of Total Time
                                                                                      Spent Online for
            Maps     16%                                84%                           Selected Properties
         Weather           40%                                60%                     Source: comScore Media
                                                                                      Metrix Multi-Platform
           Music            43%                               57%                     (Beta), U.S., Dec-2012
Social Networking           45%                                55%
           Sports                56%                                44%
           Retail                 62%                                38%
     Newspapers                   62%                                38%
  Online Gaming                    66%                               34%
           e-mail                   69%                               31%
          Portals                      74%                                26%


                                   PC    Mobile




                                                                                                                37
Smartphone adoption
hit the mobile
majority in EU5
and Canada.
MOBILE INSIGHTS AROUND
THE WORLD


SMARTPHONE ADOPTION REACHES MOBILE MAJORITY
ACROSS EU5 AND CANADA
Smartphone adoption rose rapidly in the past year to assume the mobile majority
in 2012 in many international markets, including the EU5 (UK, France, Germany,
Spain and Italy) and Canada. Among these markets, Spain had the highest
smartphone adoption at 66 percent, followed by the UK (64 percent) and Canada
(62 percent). Canada saw significant gains at the end of the year after first
reaching 50 percent penetration in Q2 2012. France, Germany and Italy each saw
their subscriber bases surpass this mark in the second half of the year and ended
the year with at least 51 percent smartphone penetration.


  Spain                                                                     66%     Smartphone Adoption
                                                                                    Across Markets
    UK                                                                    64%       Source: comScore
                                                                                    MobiLens, 3 Month
 Canada                                                                 62%         Avg. Dec-2012

 France                                                        53%

    Italy                                                      53%

Germany                                                      51%

  Japan                                 30%



ANDROID LEADS SMARTPHONE MARKET SHARE ACROSS COUNTRIES
Android owned the smartphone market share lead in each of the EU5 countries,
Canada and Japan. Android had greater than 50 percent market share in Japan,
Spain and Germany, and even eclipsed 60 percent in both Japan and Spain. iOS
ranked second in 5 out of the 7 markets, while Symbian captured the #2 spots in
Spain and Italy. In general, Android, iOS and Windows saw gains in these markets
over the past year, while BlackBerry and Symbian saw declines.




                                                                                                          39
Mobile future in focus report 2013 via comScore
100%                                                                                    Smartphone Platform
90%
                                                                                        Market Share
                                                                                        Source: comScore
80%                                                                                     MobiLens, 3 Month Avg.
70%                                                                                     Ending Dec-2012
60%

50%

40%

30%

20%

10%

 0%
        Japan      Spain     Germany    France           UK        Canada       Italy

       Android   iOS   Windows   Symbian    BlackBerry        HP   Other Smartphone


 Some of these markets outside the U.S. have a heritage with other platforms that
 may enable their revival. As home to BlackBerry, Canada has a rooting interest
 in seeing that platform succeed. Nokia’s rich history as one of Europe’s leading
 companies gives it the potential to reawaken its prospects in the European
 markets, particularly in Spain and Italy. But regaining traction will depend on
 improved product and marketing strategies, which may be easier said than done in
 a competitive market led by the well-entrenched Android and iOS platforms.




                                                                                                                 41
Mobile future in focus report 2013 via comScore
CONCLUSION
2013: PUTTING THE MOBILE FUTURE
INTO FOCUS


ARE THE PLATFORM WARS ENDING OR JUST BEGINNING?
With Android and iOS now representing the overwhelming majority of smartphone
and tablet users, the market in some ways appears headed towards a two-party
system for the foreseeable future. At the same time, BlackBerry and Windows are
once again making a renewed push that suggests it is too early to count either
one of them out of the smartphone market. At the same time, the possibility of new
entrants such as Amazon and Facebook could reignite the platform wars, and history
suggests that leadership positions can change instantly and new players can quickly
carve out market share with a compelling offering.

MULTI-PLATFORM PARADIGM WILL DRIVE AD AND CONTENT
INTEGRATION STRATEGIES
With the platform shift in full swing, businesses will be challenged in the coming year
to stay ahead of consumers’ usage curve and deliver them with the content they
want, when and where they want it. It will also be imperative to maintain revenue
streams in the core digital channels while capturing market share and monetizing
emerging channels. Doing so will require businesses to get even smarter in how they
scale their content to other platforms by developing integration strategies that deliver
unique offerings to advertisers. Greater integration between delivery of content and
the ability to deliver campaigns in a multi-platform fashion remains a challenge, but
the companies who facilitate this form of platform agnostic strategy will enhance
value to marketers, simplify campaign management for agencies and foster greater
pricing equilibrium between their content channels. Some media companies are
completely re-configuring the design of their websites to optimize them across any
platform. Others are developing “native ad” units, such as Facebook’s Sponsored
Story or Twitter’s Promoted Tweet, which seamlessly integrate into the content
stream on any device. Strategies like these that break down the barriers between
platforms not only improve the consistency of user experience, but also facilitate the
flow of ad dollars.

MOBILE ADVERTISING WILL EVOLVE AS A BRANDING MEDIUM
TO ATTRACT MAJOR AD DOLLARS

The coming year will be a critical one for the mobile advertising industry as it
looks to bring its share of ad dollars into greater alignment with its share of media
consumption time. With people now spending so much time on their phones and
tablets, there is a growing need to prove the value of the medium – especially as
that time begins to eat into existing content channels like TV and Online. Failure to




                                                                                           43
prove advertising value could mean cannibalization of existing content monetization
     streams, raising the stake for many publishers and media companies. At the same
     time, the use of outdated ad metrics such as click-through rates is impeding
     the development of the medium, as advertisers place little faith in figures clearly
     inflated by the “fat finger syndrome” on touch-screens. Proving value in 2013 will
     shift to evaluating campaigns on the basis of reaching target audiences, and the
     development of innovative research methods to demonstrate the branding value
     of these campaigns, particularly within the context of a brand’s TV and online
     campaigns. Finally, another critical component to mobile advertising’s evolution will
     be providing consumers with clear choices for data privacy. Clear and transparent
     standards for data privacy must be adopted by the industry as it seeks to grow.

     THE LINES BETWEEN DEVICE TYPES WILL CONTINUE TO BLUR
     The definitions of what constitutes a smartphone, tablet or other connected device
     will continue to blur in the coming year with so many new devices featuring their own
     unique dimensions and technological specifications. Is it an e-reader or a tablet?
     A smartphone or a “phablet?” These questions will become more commonplace
     in the year ahead as each device maker adapts its offerings to meet one of the
     many micro-segments of consumers with a specific set of need drivers. Screen
     size, functionality, portability, keyboard style, content ecosystem, processing power,
     connection speeds and many other variables have varying importance to consumers,
     which means that OEMs will continue to innovate and experiment with their offering
     to find consumer sweet spots.

     MOBILE COMMERCE WILL ACCELERATE CHANNEL CANNIBALIZATION
     Mobile will accelerate its cannibalization of both e-commerce and traditional
     brick-and-mortar retail over the coming year, driven by the increase in consumers
     shopping, comparing prices and transacting over their smartphones and tablets.
     With m-commerce currently accounting for 1 in 10 e-commerce dollars, and
     e-commerce dollars accounting for 1 in 10 retail dollars, m-commerce still
     represents only 1 percent of total retail spending. But the introduction of the mobile
     device into the existing retail marketplace has the potential to be far more disruptive
     because it is influencing and shaping the path to purchase in so many new ways.
     And even modest share shifts from one channel to another can be significant in
     a low-margin industry such as retail, so even a modest acceleration in the current
     trends could prove exponentially more disruptive. Retailers will be challenged
     to sharpen their mobile strategies, invest in additional platforms and defend
     against “showrooming” in order to preserve their existing business. While it is an
     uncomfortable position for many retailers, this approach may be necessary for long-
     term survival against the digital commerce tidal wave.

     4G CONNECTIVITY TO PAVE WAY FOR ADVANCED COMMUNICATION
     AND CONTENT CONSUMPTION
     With leading smartphones on the market boasting 4G networks, consumers will
     increasingly be enabled with a faster and more robust experience for mobile media
     consumption. Faster speeds will not only give consumers more incentive to rely on
     their phones for monetizable activities like searching and news consumption, but it




44
will also facilitate the use of streaming video on services like Netflix and HBO GO.
In addition, high-bandwidth activities such as video chat may begin to gain popularity
among consumers as data speeds allow. Mobile operators may be challenged to
provide sufficient bandwidth for its subscribers as these behaviors expand, and they
will need to balance consumers’ increasing demand for data speed with the costs
associated.

GLOBAL SMARTPHONE GROWTH WILL DRIVE MOBILE MARKET
EXPANSION
While the U.S. market still has plenty of room for growth, the business prospects for
operators and OEMs in international markets are expansive. Expect to see many key
players set their sights on opportunities abroad to take advantage of the burgeoning
middle class in developing countries. China will be a specific area of focus in the
coming year, as will other parts of Asia and Latin America. While developing markets
may not boast the profit potential of the U.S., they represent hundreds of millions if
not billions of subscribers that can drive huge revenue and play an important role in
global market share dynamics.




                                                                                         45
Mobile future in focus report 2013 via comScore
METHODOLOGY AND DEFINITIONS

This report utilizes data from the comScore suite
of products, including comScore MobiLens, comScore
TabLens, comScore Device Essentials and comScore
Mobile Metrix. The report also includes data from
comScore Media Metrix Multi-Platform (Beta).

•	 comScore MobiLens®
comScore MobiLens provides market-wide insight into mobile digital media
consumption, brand-level audience metrics and details of device ownership and
technology penetration. Using proprietary data collection methods, we survey
nationally representative samples of mobile subscribers age13+ in the U.S.,
UK, France, Germany, Spain, Italy, Canada and Japan. The MobiLens sample
is substantial enough to provide projected data for sub-segments as small as
1 percent of mobile subscribers. The MobiLens’ sampling and survey methods
undergo extensive analysis and market validation including comparisons to known
network operator market shares, leading handset model shares, downloading activity
and other usage metrics.

For more information, please visit:
www.comscore.com/Products/Audience_Analytics/MobiLens


•	 comScore TabLens®
comScore TabLens is a monthly syndicated service providing insights into U.S.
tablet ownership and usage. Based on a 3-month rolling sample of 6,000 U.S. tablet
owners, TabLens provides insight into tablet audiences, including demographics,
content consumption habits and device ownership, to provide the industry with the
most up-to-date look at this expanding tablet market.

For more information, please visit:
www.comscore.com/Products/Audience_Analytics/TabLens


•	 comScore Device Essentials™
comScore Device Essentials provides insight into digital traffic share across all
devices worldwide, offering detail into device characteristics, connection type
and category consumption. The product is based on the comScore Unified Digital
Measurement (UDM) approach, measuring browser-based page views coming from
computers, mobile and other connected devices to more than one million domains
tagging with comScore. Device Essentials also utilizes the comScore Client Focus
Dictionary to segment connected device usage into content categories.

For more information, please visit:
www.comscore.com/Products/Audience_Analytics/Device_Essentials


                                                                                     47
Mobile future in focus report 2013 via comScore
•	 comScore Mobile Metrix®
Mobile Metrix provides direct and continuous monitoring of actual U.S. consumer
behavior on smartphones across the Android, iOS and RIM platforms for mobile
users age 18 and older. Utilizing comScore’s Unified Digital Measurement approach,
Mobile Metrix combines panel and census measurement to provide a comprehensive
picture of mobile activity across browser and application usage including metrics
such as unique visitors, reach, frequency and duration as well as demographic
insights in order to best understand today’s smartphone audience.

For more information, please visit:
www.comscore.com/Products/Audience_Analytics/Mobile_Metrix


•	 comScore Media Metrix® Multi-Platform (Beta)
The comScore Media Metrix suite of syndicated products sets the standard for
digital audience measurement and media planning. Included in this suite, comScore
Media Metrix Multi-Platform (Beta) offers comprehensive reporting on more
than 300,000 digital media entities, including their un-duplicated audience size,
demographic composition, engagement, performance within key user segments and
behavioral trends.

For more information, please visit:
www.comscore.com/Products/Audience_Analytics/Media_Metrix_Multi-Platform




                                                                                     49
Mobile future in focus report 2013 via comScore
Mobile future in focus report 2013 via comScore
Mobile future in focus report 2013 via comScore

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Mobile future in focus report 2013 via comScore

  • 3. INTRODUCTION For each of the past several years, many tech industry pundits have proudly proclaimed that the upcoming year will be “the year of mobile.” And while it may be true that mobile is continually becoming more important to the digital landscape, the industry is only now undergoing its most significant changes. This report examines the mobile and connected device landscape with a focus on the U.S. market but includes highlights from several other markets: the UK, France, Germany, Spain, Italy, Canada and Japan. DATA NOTE This report is based on a combination of sources in the comScore Mobile suite of products, including comScore MobiLens®, comScore TabLens®, comScore Mobile Metrix® and comScore Device Essentials™. The report also includes data from comScore Media Metrix® Multi-Platform (Beta). Smartphones are defined throughout the report as mobile phones that use the Google Android, Apple iOS, BlackBerry, Windows Phone and other similar platforms. FOR FURTHER INFORMATION, PLEASE CONTACT: Andrew Lipsman comScore, Inc. +1 312 775 6510 press@comscore.com Carmela Aquino comScore, Inc. +1 703 438 2024 press@comscore.com 3
  • 5. TABLE OF CONTENTS 7 Executive Summary 11 Mobile and Connected Device Landscape 16 Mobile Network Dynamics 21 Mobile OEM Dynamics 27 Mobile Platform Dynamics 33 Mobile Media Consumption 39 International: Mobile Landscape Across EU5, Japan and Canada 43 Conclusion 47 About comScore 51 Methodology and Definitions 5
  • 6. With smartphones surpassing 125 million U.S. consumers and tablets now owned by more than 50 million, we have crossed into the Brave New Digital World.
  • 7. EXECUTIVE SUMMARY 2012 was another milestone year in the life of mobile as continued innovation in hardware, software and device functionality lays the groundwork for the future of the industry. Smartphones and tablets are ushering in a new era of multi-platform media, with consumers becoming increasingly agnostic about how, when and where they engage with content. This report will examine how these rapidly changing market dynamics have shaped the current U.S. and international mobile marketplaces and what these changes mean for the coming year as comScore helps bring the mobile future into focus. MULTI-PLATFORM DYNAMICS SHAPING THE ‘BRAVE NEW DIGITAL WORLD’ With smartphones surpassing 125 million U.S. consumers and tablets now owned by more than 50 million, we have crossed into the Brave New Digital World – a new paradigm of digital media fragmentation in which consumers are always connected. This constant flow of information is not only changing how, when and where consumers engage with media, but is also disrupting established revenue streams, making it paramount for businesses to adapt or risk being left behind. Despite this uncomfortable change, media companies have new opportunities to monetize incremental consumption activity while marketers have the ability to optimize campaigns for maximum effectiveness across multiple channels. Now is the time for businesses to get smarter about how their audiences are behaving in this multi-platform world. SMARTPHONES SURPASS 50 PERCENT PENETRATION AND BREAK INTO ‘LATE MAJORITY’ OF ADOPTERS Five years after the launch of the original iPhone, the smartphone market has come of age in the past year with a majority of U.S. mobile consumers now owning these devices featuring advanced capabilities and multimedia access. The most rapid part of the technology adoption curve may now be in the industry’s rear view mirror as smartphones begin to penetrate the “late majority” of consumers. Because these consumers tend to be somewhat resistant to new technology and more price-sensitive than the average consumer, gaining adoption in this segment requires the industry to evolve its product mix and marketing strategies. 7
  • 8. ANDROID AND iOS CONTROL U.S. SMARTPHONE MARKET Google’s Android OS, which has been adopted by multiple OEMs, and Apple’s iOS, which is carried exclusively on iPhones, have come to dominate the U.S. smartphone landscape with nearly 90 percent of the market today. Both platforms have continued to grow their respective market shares at the expense of BlackBerry, Windows and HP. This market share dominance is being reinforced by the two platforms’ well-developed app ecosystems, making it even more difficult for the competing platforms to narrow the gap. SAMSUNG MAKES SPLASH IN SMARTPHONE OEM MARKET Apple continues to gain ground as the leading smartphone Original Equipment Manufacturer (OEM), but Samsung has seen the most explosive growth in this market over the past couple of years with a year-over-year increase of more than 100 percent and a two-year increase of more than 400 percent. While Apple maintains a healthy lead over #2 Samsung, the gap has been steadily narrowing during a year in which the rivalry heated up between the two smartphone OEM leaders. APP USAGE, LED BY FACEBOOK AND GOOGLE, DOMINATES MOBILE WEB Consumers have demonstrated a clear preference for engaging with content on smartphones via apps, which account for 4 out of every 5 mobile minutes, rather than the mobile web. As a result, the dynamics of mobile media consumption are proving different from the traditional web. Because of the scarcity of app real estate on the smartphone home-screen, consumers are spending more time concentrated on the apps of major media brands rather than with the long tail of brands. Facebook finished the year as the top U.S. smartphone app, followed by five different Google apps, as major media brands dominated the top of the rankings. ‘SHOWROOMING’ STIRS MAJOR DISRUPTION IN RETAIL AS MOBILE ENTERS BRICK-AND-MORTAR Many U.S. consumers have come to rely on their smartphones to assist with their in-store shopping, arming them with information in the palm of their hands to ensure they are getting the right product at the best available price. This behavior, known as “showrooming,” is putting significant price pressure on brick-and-mortar retailers as they are forced to compete with e-commerce retailers within the confines of their own stores. With the pricing power so clearly in the hands of the consumer today, the retail industry is rapidly being disrupted as e-commerce grows at 4x the rate of traditional retail while accounting for 1 out of every 10 retail dollars. Brick-and-mortar retailers are being faced with the need to quickly adjust with aggressive defense strategies to protect their businesses and ensure long-term survival. 8
  • 9. HIGH-SPEED MOBILE CONNECTIVITY HAS UNLEASHED MOBILE CONTENT CONSUMPTION The improved availability of high-speed Internet access has significantly enhanced the average user’s media consumption experience, contributing to a rapid uptick in mobile media consumption. Default Wi-Fi accessibility for smartphones and tablets has not only off-loaded bandwidth from networks, but has also contributed to a better on-premise (e.g. in-home) browsing experience for users. While Wi-Fi usage has become more prevalent, networks speeds have also improved with 4G and LTE technology as an increasing number of phones on the market are enabled for these speeds. The net result for mobile Internet users is a faster, more seamless browsing experience that has resulted in mobile channels now accounting for 1 out of every 3 digital media consumption minutes. 9
  • 10. Multi-platform consumption is today’s new reality. 1 in 3 minutes spent online is now spent beyond the PC.
  • 11. MOBILE AND CONNECTED DEVICE LANDSCAPE RAPID ADOPTION OF SMARTPHONES AND TABLETS USHERS IN ‘BRAVE NEW DIGITAL WORLD’ The past year saw mobile media consumption grow exponentially as smartphone adoption surged nearly 30 percent to more than 120 million owners, while tablets emerged as one of the fastest selling devices in history to reach nearly 50 million owners. Tablets have already achieved a level of adoption in three years that it took smartphones nearly a decade to reach from when they were originally introduced. 140 Smartphone and 120 Tablet Ownership (MM) 100 Source: comScore 80 MobiLens & TabLens, U.S., 2003-2012 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Smartphone Owners Tablet Owners Smartphones and tablets are completely reshaping the way consumers connect with content and experience media, with audiences fragmenting even further as attention gets shared across platforms. In this Brave New Digital World, the fundamental economics of digital media are at stake if shifting between platforms means trading dollars for dimes. At the same time, an overall increase in media engagement also means more monetization opportunities for media companies and a greater ability for marketers to optimize campaigns across platforms. Digital businesses still have a chance to effectively navigate this transition and maximize their opportunities while mitigating their risks. Doing so will require a firm grasp of the multi-platform landscape and an understanding of how consumer usage patterns are shifting. Those who fail to devise an effective multi- platform strategy will likely be left behind. 11
  • 12. MULTI-PLATFORM CONSUMPTION IS TODAY’S NEW REALITY The digital media landscape is already well into this transition, and smartphone and tablet usage can no longer be considered a mere rounding error in digital consumer behavior. comScore Media Metrix® Multi-Platform (Beta), which provides an unduplicated view of digital media audiences and consumption across desktop computers, smartphones and tablets, reveals that more than 1 in 3 minutes (37 percent) is now spent beyond the PC. Share of Digital Media Time Spent: Desktop 63% Computer vs. Mobile (Smartphone + Tablet) Source: comScore Media Metrix Multi-Platform (Beta), U.S., Dec-2012 Desktop 37% Mobile As digital consumers become more reliant on their smartphones and tablets for everyday content consumption, we can expect this share to rise over time and perhaps take over majority share during the course of the next year. Envisioning this reality places a premium not only on getting the mobile channels right, but also on proving their value in short order. MORE PLATFORMS MEANS EXTENDED REACH FOR MEDIA COMPANIES While desktop-based Internet usage has not seen notable declines for the majority of content categories and leading digital properties, usage does appear to be leveling off as incremental usage shifts to smartphones and tablets. By accounting for these incremental audiences, media companies are able to demonstrate significantly wider scale to advertisers, along with the ability to provide unique marketing experiences according to the medium. The average Top 25 digital media property extended its reach via mobile channels by 29 percent. Certain mobile-oriented properties such as Pandora (+155 percent reach), ESPN (+59 percent) and Twitter (+46 percent) are extending their reach by an even greater percentage. Even those with a relatively modest incremental reach in the teens are recognizing that mobile channels represent more than a mere rounding error. 12
  • 13. TOTAL DIGITAL % INCREMENTAL Top 25 Digital TOP 25 DIGITAL MOBILE PROPERTIES POPULATION PC (000) (000) AUDIENCE VIA Properties by Digital (000) MOBILE Population (000) 1 Google Sites 223,445 193,757 113,650 15% Source: comScore Media Metrix Multi-Platform 2 Yahoo! Sites 206,830 185,847 92,218 11% (Beta), U.S., Dec-2012 3 Facebook.com 185,335 150,294 97,739 23% 4 Microsoft Sites 178,737 170,947 55,190 5% 5 Amazon Sites 159,630 128,227 80,476 24% 6 AOL, Inc. 140,252 117,628 62,360 19% 7 Glam Media 128,317 110,555 50,428 16% 8 Ask Network 121,833 104,148 47,972 17% 9 Apple Inc. 108,580 83,722 51,548 30% 10 Turner Digital 104,897 85,666 44,675 22% 11 CBS Interactive 104,415 87,121 42,135 20% 12 Wikimedia Foundation 103,644 85,883 41,700 21% Sites 13 eBay 95,498 77,725 39,489 23% 14 Demand Media 89,208 74,924 33,406 19% 15 Comcast 88,586 71,091 37,300 25% NBCUniversal 16 Viacom Digital 80,614 71,695 22,312 12% 17 Federated Media 78,680 64,639 30,105 22% Publishing 18 The Weather Channel 69,749 48,928 34,877 43% 19 Wal-Mart 66,208 52,203 26,734 27% 20 Pandora.com 65,838 25,863 52,595 155% 21 Answers.com Sites 64,931 49,171 28,006 32% 22 Gannett Sites 63,573 48,228 27,523 32% 23 ESPN 61,505 38,660 34,616 59% 24 VEVO 59,790 56,793 5,504 5% 25 Twitter.com 59,323 40,659 29,629 46% The future revenue streams of these media companies depend on effectively delivering content and commerce to their consumers through these channels and demonstrating why they are an important part of the marketing mix. Failure to meet consumer expectations and aggressively prove the value of these additional channels in 2013 could spell a very rocky economic transition by the time 2014 comes around. 13
  • 14. The average Top 25 digital media property extended its reach via mobile channels by 29 percent.
  • 15. FRAGMENTED MEDIA LANDSCAPE ALSO DRIVES DIFFERENT USAGE PATTERNS With so many consumers becoming “digital omnivores” accessing media content at different points in the day across varying devices, there has also been an evolution in behavioral patterns around when people tend to consume content using each respective platform. More content availability means the emergence of new consumption occasions and a greater amount of overall engagement with digital media for the average consumer. Mobile platforms, in particular, are creating occasions for consumption when people are either on-the-go or in a more relaxed, lean-back setting. While desktop computer usage tends to peak during the workday and in the early evening, smartphones see peaks during the rush-hours (when people are in transit). Tablet consumption is highest during the late evening hours when people are curled up on the couch or winding down for the night in bed. Share of Browser-Based 10% Page Traffic by Hour for 9% Computer, Smartphone Share of Daily Device Traffic 8% and Tablet Platforms 7% Source: comScore Device 6% Essentials, U.S., Monday, 5% Jan. 21, 2013 4% 3% 2% 1% 0% 12:00 AM 4:00 AM 8:00 AM 12:00 PM 4:00 PM 8:00 PM Tablet Smartphone Computer Importantly, these new occasions mean new opportunities. Media companies have the ability to monetize additional media channels or reinforce the value of primary channels, while marketers have the ability to optimize their campaigns according to day-part to reach consumers when they may be most receptive to particular messaging. 15
  • 16. The number of 4G users has exploded in the past year to 33.1 million, up 273 percent.
  • 17. MOBILE NETWORK DYNAMICS VERIZON MAINTAINS LEAD OVER AT&T IN OPERATOR SHARE Across the total mobile market, the top 4 network operators – Verizon, AT&T, Sprint and T-Mobile – comprised more than three-quarters of all subscribers. Verizon maintained its leading position, garnering 31.2 percent of the market, followed closely by AT&T at 27.3 percent. Sprint (10.3 percent) and T-Mobile (8.4 percent) rounded out the top four. Other network operators combined to account for more than 20 percent of the market, led by Tracfone, slightly behind T-Mobile at 7.6 percent, Sprint Prepaid (5.4 percent) and MetroPCS (3.2 percent). Network Operator Share of Total Mobile Market 3% 2% 2% Source: comScore 3% Verizon MobiLens, U.S., 3 Month 6% AT&T Avg. Ending Dec-2012 31% Sprint 8% T-Mobile Tracfone 8% Sprint Prepaid MetroPCS Other 10% US Cellular 27% Cricket 4G SMARTPHONE USAGE EXPLODES IN 2012 Another important driver of mobile media use apart from smartphone adoption is the adoption of 3G or 4G-enabled devices. In recent years, mobile carriers have made it a priority to build out increasingly faster networks while handset manufacturers prioritized the development of smartphones that could fully take advantage of these networks. In 2012, Apple made waves with the announcement that its next iPhone would support LTE – a sign that major industry players saw the future of mobile in these faster networks. By the end of 2012, 97.7 percent of U.S. smartphone owners used 3G or 4G enabled devices. While 3G users still represent the wide majority of the smartphone market, the number of 4G users has exploded in the past year to 33.1 million, up 273 percent from a year ago. Android has led the way with 4G adoption but the introduction of the 4G-enabled iPhone 5 in September 2012 spurred an acceleration in adoption during the final months of the year. 17
  • 18. 4G Adoption Among 35,000 iOS and Android Smartphone 30,000 Subscribers (000) Source: comScore Smartphone Subscribers (000) 25,000 MobiLens, U.S., 3 Month Avg. Ending Dec-2011 to 20,000 Dec-2012 15,000 10,000 5,000 0 Dec-2011 Feb-2012 Apr-2012 Jun-2012 Aug-2012 Oct-2012 Dec-2012 Android iOS Other IPHONES CONTINUE TO SHOW GREATEST WI-FI ACTIVITY An analysis of mobile Internet and Wi-Fi usage across smartphones and tablets shows that a significant share of browsing activity happens via Wi-Fi. For tablets, which do not require a wireless data plan to function, 93.6 percent of all time spent online is via Wi-Fi connection, with both Android tablets and iPads showing similar percentages. For smartphones, Android phones and iPhones show an interesting disparity. While two-thirds of online activity on Android phones is conducted via a mobile connection, more than half of all time spent online on iPhones happens via Wi-Fi. The higher level of Wi-Fi activity on iPhone could be attributable to their heavier use as entertainment devices, inducing more video and music streaming activity, and that network settings default to off-load activity to accessible Wi-Fi networks. Mobile and Wi-Fi Smartphone 58% 42% Connection Activity Across Smartphones Source: comScore Device Android 66% 34% Essentials, U.S., Dec- 2012 iOS 45% 55% Mobile Connection Wi-Fi Connection Mobile and Wi-Fi Connection Activity Tablet 6% 94% Across Tablets Source: comScore Device Android 7% 93% Essentials, U.S., Dec- 2012 iOS 6% 94% Mobile Connection Wi-Fi Connection 18
  • 19. NETWORK AND OS RANK HIGHER THAN COST FOR SMARTPHONE PURCHASE CONSIDERATION Purchase consideration factors continue to be very important for the mobile industry given the high rate of customer churn and new device acquisition. Among both the total mobile phone and smartphone populations, network quality still ranks as the most important purchase consideration factor, validating the efforts of carriers rolling out faster and higher-capability 4G networks. For smartphone users, operating system ranks as the second-most important consideration factor. In contrast, the total mobile audience put the overall cost of monthly service and the cost of the data plan specifically higher on the list. Interestingly, the selection of apps available only ranked fifth as a consideration factor for smartphone users this time around, compared to last year when it ranked third, perhaps suggesting that consumers perceive greater parity in app ecosystems among the leading operating systems. 8.4 Top Purchase Network quality of mobile service provider 8.2 Consideration Factors for Smartphone 8.2 Phone operating system Purchasers vs. Total 7.7 Mobile (1-10 Scale, 8.0 10=Most Important) Overall cost of the monthly service 8.0 Source: comScore 7.9 MobiLens, U.S., 3 Month Cost of the data plan specifically 7.8 Avg. Ending Dec-2012 Selection of apps available for my phone 7.8 model 7.3 Price of the phone (after any rebates and other 7.7 incentives) 7.7 7.5 Brand name of the mobile service provider 7.3 7.5 Brand name of the phone 7.1 7.4 Music and video capabilities 6.9 7.0 Social networking features 6.6 6.6 Recommended by family/friend 6.4 5.8 Recommended by retail sales person 5.7 Smartphone Total Mobile 19
  • 20. The race among handset manufacturers heats up as smartphones take center stage.
  • 21. MOBILE OEM DYNAMICS APPLE AND SAMSUNG COMPETE FOR SUPREMACY IN MOBILE OEM MARKET The race among handset manufacturers heated up in 2012 as smartphones took center stage in the mobile market. Across the total mobile population, Samsung maintained its position as the lead Original Equipment Manufacturer (OEM), increasing its share to slightly more than a quarter of all mobile devices in use in the U.S. Apple rose two spots, overtaking LG and Motorola, to claim the #2 position accounting for nearly 20 percent of the total mobile market. Across the smartphone population, however, Apple takes the largest share of the OEM market, having increased its lead by a significant 6-percentage points to 36.3 percent, buoyed by the continued popularity and increasing affordability of the iPhone. Samsung edged out RIM and HTC to claim the #2 spot among smartphone manufacturers, with the release of the well-received Samsung Galaxy S III, accounting for 21 percent of all smartphones in use. Noticeably absent from the OEM leaderboard was BlackBerry, which took the #2 spot the year prior. TOTAL MOBILE SMARTPHONE Top OEMs by Share of Samsung 27.1% Apple 36.3% Total Mobile Market and Apple 19.5% Samsung 21.0% Smartphone Market LG 17.3% HTC 10.2% Source: comScore Motorola 10.0% Motorola 9.1% MobiLens, U.S., 3 Month HTC 5.6% LG 7.1% Avg. Ending Dec-2012 A look at the share of OEMs among the Android smartphone market in particular shows Samsung exhibiting remarkable growth within the market in the previous year. In December 2011, Samsung accounted for just 1 in 4 Android smartphones in use. By the end of 2012, that percentage shot up 13 percentage points, gaining share directly from Motorola and HTC to account for nearly 2 in 5 Android smartphones. While the market still remains fiercely competitive among OEMs in the Android ecosystem, Samsung is exhibiting remarkable leadership with the recent smartphone models it has introduced to the market, such as the Samsung Galaxy S III. As a result, no other OEM has captured the attention of consumers and smartphone enthusiasts in the past year as much as Samsung. 21
  • 22. OEM Share for Android 100% Smartphones 12% 15% Source: comScore 90% MobiLens, U.S., 3 Month Avg. Ending Dec-2012 vs. 80% 14% 13% Dec-2011 Other 70% LG 18% 60% 26% HTC 50% Motorola 17% 40% Samsung 23% 30% 20% 38% 10% 25% 0% Dec-2011 Dec-2012 APPLE AND AMAZON LEAD AMONG TABLET OEMS In the household tablet market (excluding tablets for business use), Apple sees an even greater lead over other device manufacturers, with iPads accounting for 42.9 percent of the tablet market. Amazon followed with the #2 spot as Kindle Fire tablets comprise nearly a quarter of all tablets in use. Barnes & Noble accounted for the third-largest share among OEMs with 7.8 percent of all tablets, largely due to the Barnes & Noble NOOK Tablet. Samsung and Acer rounded out the top five tablet OEMs, with 5.6 percent and 3.6 percent share of the market, respectively, due to the popularity of the Samsung Galaxy Tab and the Acer Iconia Tab devices. OEM Share of the Tablet Market 1% Source: comScore 4% TabLens, U.S., 3 Month 5% Avg. Ending Dec-2012 Apple 8% Amazon 43% Other 15% Barnes & Noble Samsung Acer HP 24% 22
  • 23. APPLE TOPS LIST OF MOST ACQUIRED MOBILE PHONES AND TABLETS Smartphones dominated the list of top acquired mobile phones in the U.S., led by various versions of the Apple iPhone, which claimed four of the top five spots, ousting BlackBerry and HTC devices from the year prior. The Samsung Galaxy S III proved to be highly popular as well, finding its way into the top five. Apple’s popularity among consumers making new mobile device purchases likely comes from a combination of strategic marketing moves. As older models of iPhones are marked down with the release of newer models, an increasing number of consumers gain access to them, which accounts for the popularity of a model such as the Apple iPhone 3GS – originally released in 2009. TOP ACQUIRED PHONES Top Acquired Individual Phone Models in the U.S. Apple iPhone 4S Source: comScore Apple iPhone 4 MobiLens, U.S., 3 Month Avg. Ending Jan-2012 to Apple iPhone 3GS Dec-2012 Apple iPhone 5 Samsung Galaxy S III A look at the tablet landscape shows Apple ruling this market as well, with iPads ranking as the top acquired tablet family in the past year, outpacing other tablet families by a significant margin. As a platform, however, Android also fared well with each of the next four most acquired tablet families. Amazon put on a good showing with the Kindle Fire family of tablets ranking #2, followed by the Acer Iconia and Iconia Tab, Samsung Galaxy Tab and Note, and Barnes & Noble NOOK tablets. TOP ACQUIRED TABLET FAMILIES Top Acquired Tablet Families in the U.S. Apple iPads Source: comScore Amazon Kindle 2/Fire/HD TabLens, U.S., Apr-2012 to Dec-2012 Acer Iconia/Iconia Tab Samsung Galaxy Note/Tab Barnes & Noble NOOK Color/Tablet/HD TABLET OWNERS OLDER AND LESS AFFLUENT THAN SMARTPHONE OWNERS A demographic comparison of tablet owners and smartphone owners showed that while both groups had fairly similar gender splits, tablets saw higher percentages of older and less affluent members of their audience. More than 28 percent of tablet owners were age 55 and older vs. 20 percent of smartphone owners, while 25 percent came from households earning at least $100,000 annually vs. 36 percent among smartphone owners. One hypothesis might be that because 23
  • 24. While Apple leads among tablet manufacturers in share, Android devices also fared well, with 4 of the top 5 most acquired tablet families.
  • 25. tablets are very intuitive, older generations are starting to use these devices in place of computers, which can be more complicated to set up and maintain. In addition, tablets are increasingly providing a less expensive alternative to computers and can be more affordable than smartphones in the long run, as they don’t require a data plan for use. Age Breakdown of Smartphone and Tablet 7% 13% 17% 17% 18% 15% 14% Tablet Owners Source: comScore TabLens and MobiLens, Smartphone 7% 12% 22% 21% 18% 12% 8% U.S., 3 Month Avg. Ending Dec-2012 13-17 18-24 25-34 35-44 45-54 55-64 65+ Household Income Breakdown Tablet 17% 22% 21% 14% 25% of Smartphone and Tablet Owners Source: comScore Smartphone 9% 17% 20% 17% 36% TabLens and MobiLens, U.S., 3 Month Avg. Ending Dec-2012 <$25k $25k to <$50k $50k to <$75k $75k to <$100k $100k+ 25
  • 26. Smartphones hit the mobile majority in 2012, up 29 percent from a year ago.
  • 27. MOBILE PLATFORM DYNAMICS SMARTPHONE PENETRATION SURPASSES 50 PERCENT IN 2012 2012 was a milestone year for the U.S. smartphone market as it finally surpassed 50 percent market penetration. The more than 125 million smartphone subscribers represents a 29-percent increase from a year ago, and a 99-percent increase from two years ago. Not only does the market’s current ownership profile reflect a smartphone majority, but 72 percent of all newly-acquired devices are now smartphones. Mobile Phone Market Android iOS BlackBerry Share Trend by Platform Windows Other Smartphone Non-Smartphone Source: comScore MobiLens, U.S., 3 Month 100% Avg. Ending Dec-2010 to 90% Dec-2012 80% 70% 60% 50% 40% 30% 20% 10% 0% Dec-2010 Mar-2011 Jun-2011 Sep-2011 Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012 SMARTPHONES ENTER ‘LATE MAJORITY’ IN TECHNOLOGY LIFECYCLE With smartphone penetration surging past 50 percent during the latter half of 2012, the market is now entering the “late majority” stage of the technology adoption curve. The characteristics and motivations of consumers in the late majority are substantially different than the early majority, and almost the complete opposite of the innovators and early adopters. These fundamentally different market dynamics 2.5% Innovators 13.5% 34% 34% 16% Early Adopters Early Majority Late Majority Laggards 27
  • 28. mean that new marketing strategies are required to capture this segment of the population representing approximately 80 million U.S. consumers. Individuals in the late majority tend to be of below average means, may be somewhat skeptical of technology and are opinion takers rather than opinion makers. These characteristics will necessarily drive the marketing strategies needed to win over new adopters during this next phase of the smartphone market. Price sensitivity dictates that many in this segment will simply not consider premium models and are willing to sacrifice certain features for more basic functionality. Many may not even grasp what advanced features mean or why they deliver a superior experience. The availability of a diverse app ecosystem is likely to be an important driver of utility for these consumers, which favors Android and iOS. Another impediment to adoption is that it’s not just the price of the phone but the additional recurring cost of a data plan. While handset prices are already heavily subsidized by the operators, the introduction of a new tier of pricing plans to capture this segment of consumers may be required to spur further device adoption. But even if an acceptable threshold is met, the average sales price for device models will need to remain sufficiently low. Recognition of this reality may be one reason that Apple is heavily rumored to be developing a low-cost iPhone. Without being able to meet the price expectations of these consumers, a premium device such as the iPhone would likely begin to lose market share. ANDROID OWNS MAJORITY SHARE OF U.S. SMARTPHONE USERS The U.S. smartphone market has seen two platforms, Android and iOS, come to dominate the market over the past few years and now combine for nearly 90 percent of the market. Android captured a majority of the market for the first time in February 1% Smartphone Market 6% 3% Share by Platform Source: comScore MobiLens, U.S., 3 Month Avg. Ending Dec-2012 Android iOS 53% 36% BlackBerry Windows Other Smartphone 2012 and continued to extend its leadership to 53.4 percent by the end of the year. Apple grew its market share nearly 7 percentage points to 36.3 percent in the past year. All other platforms experienced share declines. 28
  • 29. This upcoming year in the smartphone market could be make-or-break for non-iOS and Android platforms. If they concede much more of their remaining market shares, it could be very difficult to encourage developers to build for their platforms, putting them even further behind the market leaders. LONG TERM VIEW OF SMARTPHONE MARKET REMINDS HOW QUICKLY FORTUNES CAN CHANGE But while Android and iOS might appear poised to lock up the smartphone market for good, it is worth looking at the history of the smartphone market to understand just how quickly fortunes can change. In 2005, the market was dominated by Palm, Symbian and BlackBerry. However, by the following year all three had ceded control to Microsoft as the new market share leader. 2008-2010 saw BlackBerry stage a comeback to assume the #1 position before eventually giving way to the upstart Android platform in 2011. The only key player in the current smartphone market never to have owned the market share lead, interestingly enough, is iOS. 100% Long Term Smartphone 90% Platform Market 80% Share Trend 70% Source: comScore MobiLens, U.S., Dec- 60% 2005 to Dec-2012 50% 40% 30% 20% 10% 0% Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-2011 Dec-2012 Android iOS BlackBerry Windows Symbian HP This view reminds us that the smartphone market has historically been one of constant disruption, and with most consumers trading out their phones for new ones every couple of years, there is more opportunity to bring a compelling product to market and quickly win market share. Conversely, one could also argue that the emergence of well-developed platform ecosystems creates a higher degree of customer lock-in that did not exist in the earlier days of the market, suggesting that iOS and Android may have a better chance of maintaining their stranglehold on the market for the foreseeable future. But the possibility of emergent platforms (Amazon and Facebook) and resurgent platforms (Windows and BlackBerry) suggests an uncertain future where new leaders certainly have the potential to break through. 29
  • 30. ANDROID’S OEM INTEROPERABILITY HELPS IT ESTABLISH TABLET MARKET SHARE LEADERSHIP Although Apple effectively invented the tablet market with its 2010 introduction of the iPad, several fast-followers delivering more affordable models have helped drive the tablet market as it’s evolved in the past few years. Android models are now the most-owned tablets in the U.S. household tablet market – largely buoyed by the Amazon Kindle Fire – just slightly ahead of the iPad. Other tablet platforms maintain just a fractional percentage of the market. Unique Tablets (000) by 70,000 Platform Source: comScore 60,000 TabLens, U.S., 3 Month Unique Tablets (000) Avg. Ending Dec-2012 50,000 BlackBerry 40,000 Windows 30,000 HP 20,000 Android 10,000 iOS 0 2 2 12 2 12 12 2 2 2 01 01 01 01 01 01 20 20 20 r-2 -2 l-2 -2 -2 -2 n- g- p- ay ct ov ec Ju Ap Ju Au Se O M N D Although Apple has conceded its initial leadership position to Android in the tablet market, it is fighting to win back market share with its October 2012 introduction of the 7.9-inch iPad Mini. The smaller and lighter model is proving popular with consumers who favor portability over screen size. With other tablet makers likely to follow suit, the market appears pointed towards increased adoption of smaller tablets. This product differentiation can not only help capture a segment of new tablet consumers who valued portability, but it also may increase second-tablet ownership for households that might have different occasions to favor a particular device type. PLATFORM LOYALTY EXISTS BETWEEN TABLET AND SMARTPHONE OWNERSHIP Although tablets and smartphones are different devices with varying functions, there is evidence of platform loyalty among consumers. Most mobile consumers may not resemble the stereotypical Apple “fanboy”, but their propensity to favor one platform over another is apparent. For example, iPhone users represent 36 percent of the total smartphone market, but a full 60 percent of smartphone users with an iPad have an iPhone. Similarly, 62 percent of smartphone users with an Android tablet also use Android phones, considerably higher than that of the total smartphone market. 30
  • 31. Percentage of Tablet 10% 7% 9% Users by Platform 20% Who Use Smartphone Platforms 32% Other Phone Source: comScore 53% Android Phone MobiLens, U.S., 3 Month 62% Avg. Ending Dec-2012 iPhone 57% 60% 36% 29% 23% Total iPad Android Other Platform loyalty is important because it increases the likelihood of a consumer being wedded to a particular platform over the long term, especially given mobile’s rapid replacement cycle. With an app ecosystem that transfers seamlessly between devices, consumers may become accustomed to a consistent interface and media experience that makes them more likely to stick with the same platform when it’s time for a device upgrade. 31
  • 32. Tablet owners show a higher propensity to browse and engage in more involved media behaviors.
  • 33. MOBILE MEDIA CONSUMPTION SMARTPHONES AND TABLETS DRIVE EXPANDED MOBILE MEDIA USAGE Analysis of the top mobile media behaviors across smartphone and tablet users shows some interesting similarities and differences for both groups. Both platforms’ users show an inclination toward engaging in activities that lend themselves well to being done on-the-go, such as accessing weather, maps and news updates. Among smartphone users, sending text messages was still the foremost activity in which users engaged (90.5 percent). Taking photos was the second-ranked activity for smartphone users (83.4 percent), followed by checking e-mail (77.8 percent) and accessing weather updates (67.1 percent). Accessing social networks or blogs also ranked among the top mobile media activities for smartphone users (65.3 percent), as apps have made it easier than ever for smartphone users to engage with social networks at any given minute. TOP ACTIVITIES TOP ACTIVITIES Top Mobile Media FOR SMARTPHONE AUDIENCE FOR TABLET AUDIENCE Activities by Share Sent text message to 90.5% Accessed search 73.9% of Smartphone and another phone Tablet Users Source: comScore Took photos 83.4% Used email 73.6% MobiLens and TabLens, Used email 77.8% Accessed social 67.5% U.S., 3 Month Avg. Ending networking Dec-2012 Accessed weather 67.1% Played games 66.3% Accessed social 65.3% Accessed weather 64.6% networking Accessed search 58.7% Accessed news 58.8% Played games 52.9% Accessed photo/video 51.5% sharing site Accessed maps 51.2% Read books 51.2% Accessed news 49.2% Watched video 50.9% Listened to music on 48.0% Accessed retail 49.8% mobile phone For tablet owners, there is a higher propensity to browse and engage in more involved media behaviors. While the most popular activity for tablet owners was accessing search results (73.9 percent), a significant percentage also played games (66.3 percent), accessed photo/video sharing sites (51.5 percent), read books (51.2 percent) and watched video (50.9 percent). As tablets have come 33
  • 34. to provide a convenient platform for users to read longer-form content, we have seen this platform disrupt the way tech-savvy consumers are consuming news and information. In addition to books, 37.8 percent of tablet owners read magazines on their devices, underscoring the importance of this platform to magazine publishers as consumers continue to shift away from print. TABLETS DRIVE SOCIAL ENGAGEMENT Social networking activity continued to be very popular on mobile devices, with approximately 2 out of every 3 smartphone and tablet owners accessing these 67% sites65% their devices. The most popular social media activity among both groups from was reading posts or status updates from people known personally. Half of the 61% smartphone audience reported reading status updates from friends, and 3 in 10 53% smartphone owners reported doing so on a daily basis. For tablet owners, the 51% 49% 47% percentage is even higher for many social networking activities, as tablets lend 46% 44% themselves particularly well to leisurely browsing for prolonged periods of time. 41% 39% 37% 37% 34% 35% 34% In addition to using their devices for keeping up to date on friends’ activities, smartphone and tablet owners are engaging with brands on social networks. 2 in 27% 26% 5 smartphone subscribers read posts from brands and organizations, while nearly half of the tablet audience reported doing so as well. A slightly lower percentage of smartphone (34.5 percent) and tablet (41.3 percent) owners read posts by celebrities and public figures. Finally, 1 in 4 smartphone owners reported receiving a coupon, offer or deal via mobile social networking. A greater percentage of 67% tablet owners (34 percent) reported the same thing. 65% Accessed 'Read posts !Accessed Posted status VRead posts 3Followed a -Read posts Posted a link !Received a social from people photo/video update or status link to a from public to a website coupon, offer, Selected Social 61% networking known sharing site updates from website figures or or deal Networking Activities personally organizations, posted by companies, someone else celebrities Among Smartphone and 53% brands, Tablet Owners 51% events or Smartphone 49% products Tablet Source: comScore 47% 46% 44% MobiLens and TabLens, 41% U.S., 3 Month Avg. Ending 39% 37% 37% Dec-2012 34% 35% 34% 27% 26% Accessed 'Read posts !Accessed Posted status VRead posts 3Followed a -Read posts Posted a link !Received a social from people Accessed Read photo/video Posted update Read posts or status Followed link to a Readpublic to a website coupon, offer, from posts Posted Received networking posts from known photo/ sharing site status updates from a link to or status website from public figures or a link aor deal coupon, people personally video update updates from a website organizations, posted by figures or celebrities to a offer, or known sharing organizations, someone by companies, posted else celebrities website deal personally site brands, companies, someone events or brands, else Smartphone products events or Tablet products 34
  • 35. SMARTPHONES DRIVING SHOWROOMING, TABLETS DRIVING PURCHASE The past few years have seen the rise of a practice known as “showrooming,” which means visiting a retail store to check out a product in person but then completing the actual purchase online. In Q4 2012, 36 percent of consumers indicated they had engaged in showrooming and 74 percent of those individuals said that price was an important driver of that activity. Interestingly, smartphones have emerged as a significant enabler of showrooming activity because people are armed with access to competitive pricing information and product reviews while in a brick-and-mortar store. In fact, 46 percent of smartphone owners have showroomed as compared to just 27 percent of non-smartphone owners. While smartphones are becoming disruptive to the traditional retail environment, tablets are changing shopping behaviors in somewhat different ways. Because their functionality more closely resembles that of computers, tablets are not influencing the in-store shopping experience as much as they are driving in- home shopping behavior. In fact, tablet users were significantly more likely than smartphone owners to engage in various shopping behaviors, such as researching product features and comparing prices. Perhaps most importantly, tablet users were twice as likely to purchase items on their devices (38 percent) than smartphone owners (19 percent). % Share of Smartphone and Tablet Owners 39% % Researched product features Performing Mobile 51% 23% 49% Retail Activities 47% 46% Source: comScore 44% 39% 51% Compared product prices 49% 41% 24% MobiLens and TabLens, 39% 47% 37% 46% 37% 44% U.S., 3 Month Avg. Ending 34% 35% 34% 38% Purchased goods or services online 41% Dec-2012 39% 19% 37% 37% 27% 34% 35% 26%34% 38% Found store location 27% 26% 34% 33% Found coupons or deals 22% 30% Checked product availability ts !Accessed Posted status VRead posts 3Followed a -Read posts Posted a link !Received a 19% le photo/video update or status link to a from public to a website coupon, offer, sharing site updates from website figures or or deal 21% y Made shopping lists ts !Accessed Posted statusorganizations, 3Followed a -Read posts VRead posts posted by celebrities Posted a link !Received a 21% le photo/video update companies, someone a or status link to else from public to a website coupon, offer, sharing site brands, updates from website figures or or deal y events or organizations, posted by celebrities Smartphone products someone else companies, Tablet brands, events or Smartphone products Tablet 35
  • 36. FACEBOOK #1 AMONG MOBILE APPS, WHILE GOOGLE OWNS HALF OF TOP 10 Consumers who engage with mobile media may do so via the mobile web or apps. And in this environment – unlike with the traditional fixed web – the majority of consumption is driven by apps, which are optimized for the smaller-screen environment. 4 out of every 5 mobile media minutes occur via apps, while mobile web usage drives the remainder. Among smartphone apps on the iOS and Android platforms, Facebook finished 2012 strong to capture the #1 position, reaching 3 out of every 4 smartphone users in December 2012. Facebook grabbed the lead from Google Maps, which conceded the top spot following Apple’s decision to replace it with Apple Maps on iOS 6. Despite losing the #1 position, Google still featured prominently among the leading apps with each of the next 5 spots. Google Maps ranked 2nd with a reach of 65.9 percent in the smartphone market, followed by Google Play (54.3 percent), Google Search (53.5 percent), Gmail (47.6 percent) and YouTube (46.4 percent). Top Mobile Apps by Facebook 76% Reach of Smartphone Audience (Age 18+) Google Maps 66% Source: comScore Mobile Google Play 54% Metrix, U.S., Dec-2012 Google Search 54% Gmail 48% YouTube 46% Pandora Radio 42% Apple iTunes 41% Cooliris 38% Yahoo! Messenger 32% A breakdown of the top mobile apps specifically for iOS and Android users yields some noticeable differences between the platforms. For iPhone owners, the Apple iTunes app proved to be the #1 app on the list, barely edging out Facebook, while Yahoo! Stocks, Google Maps and Yahoo! Weather rounded out the top five. Meanwhile, Google apps dominated the list of top apps for Android users, with Google Play ranking first, followed by Google Search, Gmail, Facebook and Google Maps. For iPhone users, a number of the top apps on this list are entertainment-focused, such as Pandora Radio, YouTube and Instagram. 36
  • 37. TOP IOS MOBILE APPS TOP ANDROID MOBILE APPS Top Mobile Apps for iOS and Android Active Apple iTunes Google Play Users (Age 18+) Facebook Google Search Source: comScore Mobile Metrix, U.S., Dec-2012 Yahoo! Stocks Gmail Google Maps Facebook Yahoo! Weather Google Maps Pandora Radio Cooliris Apple Maps Yahoo! Messenger YouTube Voice Search The Weather Channel YouTube Instagram Google News and Weather MOBILE MEDIA USE CONTRIBUTES TO GROWING PERCENTAGE OF TIME SPENT ONLINE The rapid growth in mobile media usage has resulted in a greater share of time spent online now happening on mobile devices. comScore Media Metrix Multi- Platform (Beta) indicates that one-third of digital media consumption time happens via smartphones and tablets. However, these time splits by platform can vary considerably by content category. Categories that lend themselves well to mobile use – such as Maps and Weather – will naturally see a higher percentage of time spent online coming from those platforms. Other categories such as Portals, which represent the traditional entry-point for experiencing much of the fixed web, still see a higher percentage of activity being driven by PC access. Total Internet 63% 37% Share of Total Time Spent Online for Maps 16% 84% Selected Properties Weather 40% 60% Source: comScore Media Metrix Multi-Platform Music 43% 57% (Beta), U.S., Dec-2012 Social Networking 45% 55% Sports 56% 44% Retail 62% 38% Newspapers 62% 38% Online Gaming 66% 34% e-mail 69% 31% Portals 74% 26% PC Mobile 37
  • 38. Smartphone adoption hit the mobile majority in EU5 and Canada.
  • 39. MOBILE INSIGHTS AROUND THE WORLD SMARTPHONE ADOPTION REACHES MOBILE MAJORITY ACROSS EU5 AND CANADA Smartphone adoption rose rapidly in the past year to assume the mobile majority in 2012 in many international markets, including the EU5 (UK, France, Germany, Spain and Italy) and Canada. Among these markets, Spain had the highest smartphone adoption at 66 percent, followed by the UK (64 percent) and Canada (62 percent). Canada saw significant gains at the end of the year after first reaching 50 percent penetration in Q2 2012. France, Germany and Italy each saw their subscriber bases surpass this mark in the second half of the year and ended the year with at least 51 percent smartphone penetration. Spain 66% Smartphone Adoption Across Markets UK 64% Source: comScore MobiLens, 3 Month Canada 62% Avg. Dec-2012 France 53% Italy 53% Germany 51% Japan 30% ANDROID LEADS SMARTPHONE MARKET SHARE ACROSS COUNTRIES Android owned the smartphone market share lead in each of the EU5 countries, Canada and Japan. Android had greater than 50 percent market share in Japan, Spain and Germany, and even eclipsed 60 percent in both Japan and Spain. iOS ranked second in 5 out of the 7 markets, while Symbian captured the #2 spots in Spain and Italy. In general, Android, iOS and Windows saw gains in these markets over the past year, while BlackBerry and Symbian saw declines. 39
  • 41. 100% Smartphone Platform 90% Market Share Source: comScore 80% MobiLens, 3 Month Avg. 70% Ending Dec-2012 60% 50% 40% 30% 20% 10% 0% Japan Spain Germany France UK Canada Italy Android iOS Windows Symbian BlackBerry HP Other Smartphone Some of these markets outside the U.S. have a heritage with other platforms that may enable their revival. As home to BlackBerry, Canada has a rooting interest in seeing that platform succeed. Nokia’s rich history as one of Europe’s leading companies gives it the potential to reawaken its prospects in the European markets, particularly in Spain and Italy. But regaining traction will depend on improved product and marketing strategies, which may be easier said than done in a competitive market led by the well-entrenched Android and iOS platforms. 41
  • 43. CONCLUSION 2013: PUTTING THE MOBILE FUTURE INTO FOCUS ARE THE PLATFORM WARS ENDING OR JUST BEGINNING? With Android and iOS now representing the overwhelming majority of smartphone and tablet users, the market in some ways appears headed towards a two-party system for the foreseeable future. At the same time, BlackBerry and Windows are once again making a renewed push that suggests it is too early to count either one of them out of the smartphone market. At the same time, the possibility of new entrants such as Amazon and Facebook could reignite the platform wars, and history suggests that leadership positions can change instantly and new players can quickly carve out market share with a compelling offering. MULTI-PLATFORM PARADIGM WILL DRIVE AD AND CONTENT INTEGRATION STRATEGIES With the platform shift in full swing, businesses will be challenged in the coming year to stay ahead of consumers’ usage curve and deliver them with the content they want, when and where they want it. It will also be imperative to maintain revenue streams in the core digital channels while capturing market share and monetizing emerging channels. Doing so will require businesses to get even smarter in how they scale their content to other platforms by developing integration strategies that deliver unique offerings to advertisers. Greater integration between delivery of content and the ability to deliver campaigns in a multi-platform fashion remains a challenge, but the companies who facilitate this form of platform agnostic strategy will enhance value to marketers, simplify campaign management for agencies and foster greater pricing equilibrium between their content channels. Some media companies are completely re-configuring the design of their websites to optimize them across any platform. Others are developing “native ad” units, such as Facebook’s Sponsored Story or Twitter’s Promoted Tweet, which seamlessly integrate into the content stream on any device. Strategies like these that break down the barriers between platforms not only improve the consistency of user experience, but also facilitate the flow of ad dollars. MOBILE ADVERTISING WILL EVOLVE AS A BRANDING MEDIUM TO ATTRACT MAJOR AD DOLLARS The coming year will be a critical one for the mobile advertising industry as it looks to bring its share of ad dollars into greater alignment with its share of media consumption time. With people now spending so much time on their phones and tablets, there is a growing need to prove the value of the medium – especially as that time begins to eat into existing content channels like TV and Online. Failure to 43
  • 44. prove advertising value could mean cannibalization of existing content monetization streams, raising the stake for many publishers and media companies. At the same time, the use of outdated ad metrics such as click-through rates is impeding the development of the medium, as advertisers place little faith in figures clearly inflated by the “fat finger syndrome” on touch-screens. Proving value in 2013 will shift to evaluating campaigns on the basis of reaching target audiences, and the development of innovative research methods to demonstrate the branding value of these campaigns, particularly within the context of a brand’s TV and online campaigns. Finally, another critical component to mobile advertising’s evolution will be providing consumers with clear choices for data privacy. Clear and transparent standards for data privacy must be adopted by the industry as it seeks to grow. THE LINES BETWEEN DEVICE TYPES WILL CONTINUE TO BLUR The definitions of what constitutes a smartphone, tablet or other connected device will continue to blur in the coming year with so many new devices featuring their own unique dimensions and technological specifications. Is it an e-reader or a tablet? A smartphone or a “phablet?” These questions will become more commonplace in the year ahead as each device maker adapts its offerings to meet one of the many micro-segments of consumers with a specific set of need drivers. Screen size, functionality, portability, keyboard style, content ecosystem, processing power, connection speeds and many other variables have varying importance to consumers, which means that OEMs will continue to innovate and experiment with their offering to find consumer sweet spots. MOBILE COMMERCE WILL ACCELERATE CHANNEL CANNIBALIZATION Mobile will accelerate its cannibalization of both e-commerce and traditional brick-and-mortar retail over the coming year, driven by the increase in consumers shopping, comparing prices and transacting over their smartphones and tablets. With m-commerce currently accounting for 1 in 10 e-commerce dollars, and e-commerce dollars accounting for 1 in 10 retail dollars, m-commerce still represents only 1 percent of total retail spending. But the introduction of the mobile device into the existing retail marketplace has the potential to be far more disruptive because it is influencing and shaping the path to purchase in so many new ways. And even modest share shifts from one channel to another can be significant in a low-margin industry such as retail, so even a modest acceleration in the current trends could prove exponentially more disruptive. Retailers will be challenged to sharpen their mobile strategies, invest in additional platforms and defend against “showrooming” in order to preserve their existing business. While it is an uncomfortable position for many retailers, this approach may be necessary for long- term survival against the digital commerce tidal wave. 4G CONNECTIVITY TO PAVE WAY FOR ADVANCED COMMUNICATION AND CONTENT CONSUMPTION With leading smartphones on the market boasting 4G networks, consumers will increasingly be enabled with a faster and more robust experience for mobile media consumption. Faster speeds will not only give consumers more incentive to rely on their phones for monetizable activities like searching and news consumption, but it 44
  • 45. will also facilitate the use of streaming video on services like Netflix and HBO GO. In addition, high-bandwidth activities such as video chat may begin to gain popularity among consumers as data speeds allow. Mobile operators may be challenged to provide sufficient bandwidth for its subscribers as these behaviors expand, and they will need to balance consumers’ increasing demand for data speed with the costs associated. GLOBAL SMARTPHONE GROWTH WILL DRIVE MOBILE MARKET EXPANSION While the U.S. market still has plenty of room for growth, the business prospects for operators and OEMs in international markets are expansive. Expect to see many key players set their sights on opportunities abroad to take advantage of the burgeoning middle class in developing countries. China will be a specific area of focus in the coming year, as will other parts of Asia and Latin America. While developing markets may not boast the profit potential of the U.S., they represent hundreds of millions if not billions of subscribers that can drive huge revenue and play an important role in global market share dynamics. 45
  • 47. METHODOLOGY AND DEFINITIONS This report utilizes data from the comScore suite of products, including comScore MobiLens, comScore TabLens, comScore Device Essentials and comScore Mobile Metrix. The report also includes data from comScore Media Metrix Multi-Platform (Beta). • comScore MobiLens® comScore MobiLens provides market-wide insight into mobile digital media consumption, brand-level audience metrics and details of device ownership and technology penetration. Using proprietary data collection methods, we survey nationally representative samples of mobile subscribers age13+ in the U.S., UK, France, Germany, Spain, Italy, Canada and Japan. The MobiLens sample is substantial enough to provide projected data for sub-segments as small as 1 percent of mobile subscribers. The MobiLens’ sampling and survey methods undergo extensive analysis and market validation including comparisons to known network operator market shares, leading handset model shares, downloading activity and other usage metrics. For more information, please visit: www.comscore.com/Products/Audience_Analytics/MobiLens • comScore TabLens® comScore TabLens is a monthly syndicated service providing insights into U.S. tablet ownership and usage. Based on a 3-month rolling sample of 6,000 U.S. tablet owners, TabLens provides insight into tablet audiences, including demographics, content consumption habits and device ownership, to provide the industry with the most up-to-date look at this expanding tablet market. For more information, please visit: www.comscore.com/Products/Audience_Analytics/TabLens • comScore Device Essentials™ comScore Device Essentials provides insight into digital traffic share across all devices worldwide, offering detail into device characteristics, connection type and category consumption. The product is based on the comScore Unified Digital Measurement (UDM) approach, measuring browser-based page views coming from computers, mobile and other connected devices to more than one million domains tagging with comScore. Device Essentials also utilizes the comScore Client Focus Dictionary to segment connected device usage into content categories. For more information, please visit: www.comscore.com/Products/Audience_Analytics/Device_Essentials 47
  • 49. • comScore Mobile Metrix® Mobile Metrix provides direct and continuous monitoring of actual U.S. consumer behavior on smartphones across the Android, iOS and RIM platforms for mobile users age 18 and older. Utilizing comScore’s Unified Digital Measurement approach, Mobile Metrix combines panel and census measurement to provide a comprehensive picture of mobile activity across browser and application usage including metrics such as unique visitors, reach, frequency and duration as well as demographic insights in order to best understand today’s smartphone audience. For more information, please visit: www.comscore.com/Products/Audience_Analytics/Mobile_Metrix • comScore Media Metrix® Multi-Platform (Beta) The comScore Media Metrix suite of syndicated products sets the standard for digital audience measurement and media planning. Included in this suite, comScore Media Metrix Multi-Platform (Beta) offers comprehensive reporting on more than 300,000 digital media entities, including their un-duplicated audience size, demographic composition, engagement, performance within key user segments and behavioral trends. For more information, please visit: www.comscore.com/Products/Audience_Analytics/Media_Metrix_Multi-Platform 49