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Spillikins №165. Instagram Makes iPhone Less Elite

This week was as tough as weather outside. Waking up in the morning with the snowstorm made my days bleak. Against this awful weather trend mobile communications raced ahead sometimes generating quick reaction of consumers. We will not beat around the bush and start right away.

Instagram and Booming Audiences

I understand pretty well how PR campaign from Instagram annoyed many last week. Twitter and Facebook were buzzing with appropriate discussions and it seemed that Instagram for Android was a world event, while some participants have never even heard about the services, but were still actively involved. If you are also not in the loop let me fill you in. Instagram is a photo sharing service, which also works with social networks. You must have come across such photos as they have traces of special filters, which are easily detected. Creators of the service position filters as their unique selling point allowing even a mediocre shot to look slightly artistic. Many users sincerely believe they share high pictures with one click. It is ridiculous to discuss the artistic value of the whole procedure, but the social component enabling making friends, viewing pictures in one place, comment and upload them in social networks became extremely popular especially if compared with options offered by Twitter.

Inaugurated in the fall of 2010 Instagram had a client only for Apple iPhone, while other OS were not supported. By October 13 one hundred thousand users signed up for Instagram. In a week this number doubled and by December 21 reached half a million. February 15, 2011 saw the number hitting one million, while by October 31, 2011 the company had 14 million clients. The latest piece of data for March 11, 2012 shows 27 million users. The first question is how impressive the numbers are. If compared with Facebook or Twitter 27 million is not much, but for a standalone photo service it is a considerable achievement. Moreover, only one OS was targeted from the start. Increasing the market share is the key for any developer of software or service. Instagram could not ignore the rise of Android. According to the figures from Comscore Mobile Lens for US 50% of the smartphone market there is controlled by Android devices with Apple coming only second. The trend will persist and the march of Android cannot be halted unless Apple launches a cheaper iPhone.

The emergence of Instagram for Android was a question of time. Within 24 hours the service received one million new users, which is quite telling. It is a win-win situation for Instagram as it is now available for two dominating OS and leads all possible rivals. I will not describe how the app works, but feel free to analyze the screenshots to understand what Instagram is about. It is quite easy.

Instagram on Android is important not only because iOS and Android are considered as top OS, which is hardly a surprise, but due to the reaction of old users. On another note I would like to remind you that Microsoft pays important developers to create apps for Windows Phone 7, while Apple and Google do not need to do that, so feel the difference.

How old Instagram users reacted to the appearance of its Android version? Had you asked me a week ago I would have said there could be no reaction whatsoever. Why owners of iPhone and iPad should care about their old app suddenly becoming available on Android. Real life events became more complicated and different.

For many people Apple iPhone is not just a smartphone, but a status object defining their identity. It is silly, but this is how it works on many markets. The mass proliferation of Apple iPhone made this model controversial and desirable at the same time. For certain Apple iPhone owners Instagram for Android heralded the end of their distinction. Their phone lost some of its allure. Immediately appeared online comments that Instagram is going to the dogs and will be available now for people, who are not savvy enough and do not deserve better. It is so crazy that I even do not want to discuss this wave of comments. Imagine a Bently owner bitterly complaining about branded carpets becoming available to those who drive Chevrolet. It is useless to expect that particular apps will always remain available for one platform only unless it is created by the OS developer. Even in this case others can come up with similar offerings. For example, Angry Birds Space was launched together with Samsung Galaxy Note, but within days the app became available for Android and iOS.

You can follow me in Instagram (eldarmurtazin). I do not promise tons of photos, but some shots will be uploaded from time to time. To crown it all read tweets of some iPhone users lamenting the appearance of Android version. It is absolutely crazy.

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First Quarter Results from Samsung and HTC

As a follow up to the previous issue of Spillikins, when we mentioned 5 million Galaxy Note sold, which still surprises many, read about first quarter forecasts from Samsung. The company cautiously mentions it is surprised by the sudden surge in profits. First quarter sales reached 39.8 billion dollars, which is 21% more than at the same period last year. Profits can equal 5.13 billion dollars and beat even the most optimistic forecasts. We can already confirm that the Galaxy range happened to be a cash cow for the manufacturer and led it all the way to the summit. Samsung accounts for 15% of the total mobile phones income, while Apple gets 80% with the rest of manufacturers being content only with a meager 5%. HTC continues fighting with the crisis, but statistics does not show any upturn so far. In the first quarter sales decreased to 2.3 billion dollars, which is 35% less than a year ago. Profits plummeted by 70% from 501 million to 149 million. I think it is not that horrible, as HTC stayed profitable unlike RIM. Net losses will be probably recorded by Motorola and Nokia as this is the trend from the end of 2011. There were no changes to the better. In other words only Apple and Samsung are doing fine, while others are barely surviving. Take into account that neither Apple nor Samsung showed their flagship models for this year and when it happens the rest of the pack will suffer even more. Second tier manufacturers will keep losing money.

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Qualcomm Advertizes Its Chipsets

Qualcomm is known to the majority of our readers who use its products on a daily basis. In the mobile universe Qualcomm is as big as Intel in PC processors. Until recently no one challenged the supremacy of Qualcomm, but two years ago the situation changed. Qualcomm saw only the tip of the iceberg moving dangerously in their direction. First look at the ad in the GQ magazine (source)

It is unexpected to see chipset ads in a glamorous periodical. The time of wars between Intel and AMD are firmly in the past and users do not think about hardware inside their computers. At the same time new devices on the market often carry label Qualcomm Powered on the package. PS Vita is a good example. Qualcomm is getting more and more active here, which makes us pose a question as to why do they need it. The answer is very simple. Qualcomm is too big to notice rivals and did not bother to pay attention. The first rival, which has been around for a long, but did not threaten the market dominance of Qualcomm was MediaTek and MTK platform. The majority of Chinese phones use this platform, but no one viewed them as real contenders on the smartphone market. Qualcomm did not come with their own solution for low cost smartphones. As a result a 650 MHz MediaTek offering beats a 1 GHz Qualcomm processor and costs less. MediaTek stealthily eats into their niche without much soundbite.

Things are not going well in the top segment too. NVidia Tegra2 changed the game and took the market by storm. Its sales increase every month, while the media uses Tegra2/3 as a benchmark. During the presentation of The New iPad Apple compared its speed with Tegra3 with the former coming first, which is ridiculous. Tegra3 is not the top solution from Nvidia and features old graphics. Nevertheless, this old model is still the best. NVidia has so much scope for improvement, while its rivals are struggling to keep up. Two years ago Qualcomm showed its dual core processors during CES. The answer to NVidia turned out to be tame.

One year later a quad core Tegra did not get a rival from Qualcomm as the company was late. We witness how the position of Qualcomm is steadily deteriorating. On one hand we have budget smartphones with the MediaTek chipset, while Nvidia attacks Qualcomm from the top. Qualcomm looks for all possibilities to boost sales or brand loyalty. Labeled packaging and ads in the media are elements of this strategy. The company defends anyway it can, but the main point is if Qualcomm can change its development cycle to reclaim its competitive advantage. After all outcomes depend on the product and its capabilities and the PR and advertisements. It is telling that NVidia making its first steps on the mobile market feels so comfortable.

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Online TV Makes Its Move

The US market is the best place to see how traditional media interacts with online services. I don’t know any other country with such a staggering number of Internet radio stations and devices for tuning in. Interestingly, cable TV is one of the key elements of American Dream, so when according to Convergence Consulting Group 1 million subscribers gave it up in 2011 everybody was shocked. Starting from 2008 2.65 million users stopped using cable TV. One subscriber sometimes means a family. In 2012 only 930,000 subscribers are supposed to terminate their contracts. The main reason for this slow down is the increase in the price of online subscription, because of the actions of title holders actively fighting for the market.

I think this forecast is as good as any other, but it also ignores future trends. How can you classify Google TV or next generation of Apple TV, which will broadcast the content online and not over the air. It is a crossbred, which will drag other players into the fray. SmartTV is already here.

Forecasts are not reliable, as the environment changes fast and the revolution is coming. I bet on Apple in this fight as they have already made title holders decrease their appetites in the area of digital music. The same philosophy is being successfully developed for books and movies. By breaking down expensive barriers new players will get the vast market, while the old guard will be left by the wayside. We just receive new channels of distribution for the same information content. Earlier it required new media – from books to newspapers, magazines and radio. Cinemas were superseded by television. The world is constantly changing as nothing stays rigid. The number of users loyal to the old paradigm does not matter, because new winds will move them away instantly. Current subscribers cannot alter the course of new developments. It just doesn’t work this way.

Martin Cooper Interview

This interview from the inventor of the first mobile phone is rather interesting and explains certain crucial points.

Additional reading:

P.S. Have a great week and enjoy the sun whererever you are!

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Spillikins №165. Instagram Makes iPhone Less Elite

Contents:

Instagram and Booming Audiences

First Quarter Results from Samsung and HTC

Qualcomm Advertizes Its Chipsets

Online TV Makes Its Move

Martin Cooper Interview

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