google nexus one – upfront analysis

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Google Nexus One – Upfront Analysis Ankan Jain James Wade Peter You Satya Dash

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Google Nexus One – Upfront Analysis. Ankan Jain James Wade Peter You Satya Dash. 1. Industry analysis. Competitive analysis. 2. 3. Past year’s analysis of marketing elements. 4. Marketing research. 5. Perceptual maps. 6. Lessons Learned. 7. SWOT analysis. 8. - PowerPoint PPT Presentation

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Page 1: Google Nexus One – Upfront Analysis

Google Nexus One – Upfront Analysis

Ankan JainJames Wade

Peter YouSatya Dash

Page 2: Google Nexus One – Upfront Analysis

Slide 2

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 3: Google Nexus One – Upfront Analysis

Communication industry

Slide 3

Communication

Wired

Television

Internet

Phone

Wireless

Paging Cellular

Wireless phone

Skype wireless

Tablet PCs/eReader

iPad

Kindle

Advanced PCS

Home

School

Hotel

Page 4: Google Nexus One – Upfront Analysis

Wireless telecommunication

Slide 4

Advanced PCS - Wireless networking in homes, schools, offices, wireless hotspotsCellular services – 1G, 2G, 3G and 4G

$152bn

Page 5: Google Nexus One – Upfront Analysis

What is a smartphone?

Slide 5

Two categories of mobile phonesFeature Phones

Basic phones with one or two advanced features like a camera or a basic web browser

Very inexpensivePrimary uses are calling and texting

SmartphonesAdvanced phones with multiple features

including full web browsers, e-mail, music players, maps and 3rd party apps

Prices from $100 to $500Consumers use multiple functions beyond

calling and texting

Page 6: Google Nexus One – Upfront Analysis

Market Structure - General

Slide 6

OS Developers

Handset Makers

Carriers

Retailers

Consumers

3rd Party App Developers

3rd Party Accessory

Makers

One firm may be all 3

or any combination

Apple, RIM, Google, MS, Palm, Nokia

Apple, RIM, HTC, Samsung, LG, Palm, Nokia, Motorola

Verizon, AT&T, T-Mobile, Sprint

Carrier Stores, Web sites, Best Buy, Wal-Mart

Page 7: Google Nexus One – Upfront Analysis

Slide 7

The players

Page 8: Google Nexus One – Upfront Analysis

Operating System Players

Slide 8

Page 9: Google Nexus One – Upfront Analysis

Smart phone handset makers

Slide 9

Source: Razorfish, "FEED: Digital Brand Experience Study," November 10, 2009

Page 10: Google Nexus One – Upfront Analysis

Carriers

Slide 10

Page 11: Google Nexus One – Upfront Analysis

Market Structure – iPhone, Blackberry, Droid

Slide 11

iPhone Blackberry Droid Nexus One

OS Developer

Apple RIM Google Google

Handset Maker

Apple RIM Motorola HTC

Carrier(s) AT&T Verizon, AT&T,

Sprint, T-Mobile

Verizon T-Mobile

Retailers Apple, AT&T, Best

Buy

Dozens Verizon, Motorola

Google

Page 12: Google Nexus One – Upfront Analysis

Slide 12

Industry Growth

Page 13: Google Nexus One – Upfront Analysis

Major market segmentation

Slide 13

Page 14: Google Nexus One – Upfront Analysis

Feature Phone Sales Maturing

Slide 14

91% of US population has a cellphoneGrowth rate dropped to single digits in 2007 and is not expected

to rise again

Page 15: Google Nexus One – Upfront Analysis

Smartphone Sales Exploding

Slide 15

Page 16: Google Nexus One – Upfront Analysis

Smartphone Industry Trends

Slide 16

Switch from feature phones to smartphones

Skyrocketing popularity of 3rd party apps

Shift from business to personal and mixed use

Fierce competition at all levels of industry

Page 17: Google Nexus One – Upfront Analysis

Trend – Switch from Feature Phones to Smartphones

Slide 17

Since launch of iPhone in 2007, consumers are increasingly moving from feature phones to smartphones

Shipments of smartphones are projected to exceed feature phones in 2012

Page 18: Google Nexus One – Upfront Analysis

3rd Party Apps Take Over

Slide 18

Since launch of iTunes App Store, 3rd party applications have skyrocketed in popularity

Creates additional revenue stream for app developers and OS developers

VoIP apps threaten to disrupt market structure by competing with carriers

Page 19: Google Nexus One – Upfront Analysis

Top Five Mobile Content and Services

Slide 19

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Slide 20

Industry Trends

Page 21: Google Nexus One – Upfront Analysis

Trend – Shift from Business to Personal Use

Slide 21

Smartphones were originally used mostly for business applications such as constant e-mail access

Since launch of iPhone and iTunes App Store, biggest growth has been in phones for personal use

Many consumers use smartphones for both business and personal use

Page 22: Google Nexus One – Upfront Analysis

Trend – Ferocious Competition and Innovation

Slide 22

Just since February 2010, handset and OS makers have announced the following new products:

Palm Pre Plus and Pixi PlusCan create mini-hotspots to connect other WiFi devices to

3GMicrosoft Windows Phone 7 Series

Completely redeveloped OS from MicrosoftHTC Evo 4G

4.3” screenWiMax 4G service8 MP camera

Page 23: Google Nexus One – Upfront Analysis

Implications of Industry Trends

Slide 23

Rapid growth from new customers, not just churn

of existing customers

Network effects will drive app availability. Power of

carriers decreases as consumers pay less attention to calling.

Consumers call the shots, not corporate IT

departments.

Feature advantages are not sustainable, even in the short term (<1 year).

Page 24: Google Nexus One – Upfront Analysis

Slide 24

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 25: Google Nexus One – Upfront Analysis

Slide 25

Key Competitors

Page 26: Google Nexus One – Upfront Analysis

Slide 26

Direct Competitors

iPhone Blackberry Droid Palm Pre

Samsung LG Nokia

Page 27: Google Nexus One – Upfront Analysis

Slide 27

Smart Phone Competitive Landscape

Personal Use Business Use

Nokia

Samsung

LG

PalmDroid

BlackberryiPhone

Page 28: Google Nexus One – Upfront Analysis

Slide 28

Indirect Competitors

iPad Kindle

Page 29: Google Nexus One – Upfront Analysis

Slide 29

Phone Features

Page 30: Google Nexus One – Upfront Analysis

Slide 30

iPhone

Page 31: Google Nexus One – Upfront Analysis

Slide 31

Blackberry

Page 32: Google Nexus One – Upfront Analysis

Slide 32

Droid

Page 33: Google Nexus One – Upfront Analysis

Slide 33

Palm Pre

Page 34: Google Nexus One – Upfront Analysis

Slide 34

What makes iPhone different?

Page 35: Google Nexus One – Upfront Analysis

Slide 35

140,000 apps and counting

Page 36: Google Nexus One – Upfront Analysis

Slide 36

Distribution

Page 37: Google Nexus One – Upfront Analysis

Slide 37

Retail Stores

Page 38: Google Nexus One – Upfront Analysis

Slide 38

Retail Stores Web Site - Walmart.com

Page 39: Google Nexus One – Upfront Analysis

Slide 39

Online Retailers - Amazon.com

Page 40: Google Nexus One – Upfront Analysis

Slide 40

Only Mobile Phone Retailer - Wirefly.com

Page 41: Google Nexus One – Upfront Analysis

Slide 41

Carrier Web Site

Page 42: Google Nexus One – Upfront Analysis

Slide 42

Carrier Retail Store

Page 43: Google Nexus One – Upfront Analysis

Slide 43

Manufacturer Web Site – Blackberry.com

Page 44: Google Nexus One – Upfront Analysis

Slide 44

Manufacturer Retail Store – Apple

Page 45: Google Nexus One – Upfront Analysis

Slide 45

Used Phones Market– eBay.com

Page 46: Google Nexus One – Upfront Analysis

Slide 46

Price Comparison Sites– Shopping.com

Page 47: Google Nexus One – Upfront Analysis

Slide 47

Pricing

Page 48: Google Nexus One – Upfront Analysis

Slide 48

Who wants to pay for the phones?

Page 49: Google Nexus One – Upfront Analysis

Slide 49

How about 0.01 cents?

Page 50: Google Nexus One – Upfront Analysis

Slide 50

Unlocked Phones – Pay full price

Page 51: Google Nexus One – Upfront Analysis

Pricing comparison

Slide 51

Company Model Carrier PriceApple iPhone 3G (s) AT&T $199 – 16GB

$299 – 32GBApple iPhone 3G AT&T $99 – 8GBRIM Blackberry Palm Palm Pre Plus Verizon $149.99Palm Palm Pre Plus AT&T $149.99Palm Palm Pixi Plus Verizon $79.99Palm Palm Pixi Plus AT&T $49.99Motorola Droid Verizon $19.99

Page 52: Google Nexus One – Upfront Analysis

Same model but different price

Slide 52

Model Distribution Store

Carrier Price

Palm Pre Palm.com Verizon $149.99

Palm.com AT&T $149.99

Amazon.com Verizon $29.99

Verizon.com Verizon $24.99

Sprint.com Sprint $149.99

Page 53: Google Nexus One – Upfront Analysis

Slide 53

iPhone – monopoly

Page 54: Google Nexus One – Upfront Analysis

Slide 54

Carrier Promotion

Page 55: Google Nexus One – Upfront Analysis

Slide 55

Retailer Promotion

Page 56: Google Nexus One – Upfront Analysis

Slide 56

Advertisement

Page 57: Google Nexus One – Upfront Analysis

Advertisement

Slide 57

Phone Carrier TV Print Digital Billboard

iPhone AT&T Yes Yes Yes Yes

Blackberry

AT&T, T-Mobile, Verizon

Yes Yes Yes Yes

Palm Pre Verizon, Sprint

Yes Yes Yes Yes

MotorolaDroid

Verizon Yes Yes Yes Yes

Page 58: Google Nexus One – Upfront Analysis

Slide 58

Punch line

Page 59: Google Nexus One – Upfront Analysis

Slide 59

Carrier Advertisement

Page 60: Google Nexus One – Upfront Analysis

Slide 60

Carrier Advertisement

Page 61: Google Nexus One – Upfront Analysis

Slide 61

Carrier Advertisement

Page 62: Google Nexus One – Upfront Analysis

Slide 62

Carrier Advertisement

Page 63: Google Nexus One – Upfront Analysis

Slide 63

Carrier Advertisement

Page 64: Google Nexus One – Upfront Analysis

Slide 64

Retailer Promotion

Page 65: Google Nexus One – Upfront Analysis

Slide 65

Print Advertisement – Wall Street Journal

Page 66: Google Nexus One – Upfront Analysis

Slide 66

Editorial Reviews

Page 67: Google Nexus One – Upfront Analysis

Slide 67

Online Videos – Youtube.com

Page 68: Google Nexus One – Upfront Analysis

Slide 68

PR

Smart Phone + Social Media (Twitter)

Page 69: Google Nexus One – Upfront Analysis

Slide 69

Competitor Size

Page 70: Google Nexus One – Upfront Analysis

Company Size & Advertising Spending

Slide 70

Company 2009 Annual Revenue

2009 Ad Spend

Ad Spend as % of revenue

Apple $36bn $501mn 1.37%

RIM $11bn $337mn 3.06%

Motorola $22bn $412mn 1.8%

Palm $735mn $89mn 12.1%

Source – 2009 Annual Company Reports

Page 71: Google Nexus One – Upfront Analysis

Slide 71

SEO

Page 72: Google Nexus One – Upfront Analysis

Visits to company websites

Slide 72

Page 73: Google Nexus One – Upfront Analysis

Search Engine Optimization

Slide 73

Page 74: Google Nexus One – Upfront Analysis

Slide 74

Search Engine Results – Google.com

Free Search Paid Search

Page 75: Google Nexus One – Upfront Analysis

Slide 75

Mobile Apps

Page 76: Google Nexus One – Upfront Analysis

Spend on Apps

Slide 76

Page 77: Google Nexus One – Upfront Analysis

Spend on Apps

Slide 77

Page 78: Google Nexus One – Upfront Analysis

As A Group, iPhone Owners Are Wealthier And Younger

Slide 78

Source: Forrester’s North American Technographics® Benchmark Survey

Page 79: Google Nexus One – Upfront Analysis

iPhone = Mobile Internet Access

Slide 79

Source: Forrester’s North American Technographics® Benchmark Survey

Page 80: Google Nexus One – Upfront Analysis

Magic Quadrant for Mobile Application Platforms

Slide 80 Source: Gartner Magic Quadrant for Mobile Consumer Application Platforms Dec 2009

Page 81: Google Nexus One – Upfront Analysis

Mobile developers' mindshare

Slide 81

Source: http://brainstormtech.blogs.fortune.cnn.com/ Apr 2nd 2010

Of 3,000 mobile app projects begun in the past 90 days, 67% were for iPhones, 22% for iPads

Page 82: Google Nexus One – Upfront Analysis

Mobile Operating System Preference

Slide 82

Source: http://brainstormtech.blogs.fortune.cnn.com/tag/iphone/ March 31, 2010

While demand for BlackBerries and Palm Pres is drying up, according to ChangeWave

Page 83: Google Nexus One – Upfront Analysis

Mobile Operating System Preference

Slide 83

Page 84: Google Nexus One – Upfront Analysis

Slide 84

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 85: Google Nexus One – Upfront Analysis

Online-Only Ad ‘Campaign’

Slide 85

Marketed through a website, text-based search advertising, and a few sidebar ads on select websites

Not available in any store, whether for purchase or trialNo other marketing activities of any sort from Google or T-Mobile

Page 86: Google Nexus One – Upfront Analysis

Nexus One Sales Flop

Slide 86

Nexus One receives excellent reviews in most publicationsAnalysts report very low sales in comparison to iPhone and to

another Android-based phone – Motorola Droid

Page 87: Google Nexus One – Upfront Analysis

Slide 87

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 88: Google Nexus One – Upfront Analysis

Mobile phones used today

Slide 88

Kinds of phone used today100% of people use a cell phone.30% of people use a land line19% of people use skype phone

Kind of cell phone used94% of people use a cell phone with advanced features: text,

camera, internet and video6% of people use a cell phone without advanced features.

Page 89: Google Nexus One – Upfront Analysis

Very Important Smart Phone Features

EmailWeb BrowsingTextingSearchMapsCameraSocial NetworkingWork Applications

Slide 89

Page 90: Google Nexus One – Upfront Analysis

Google features being used by People

Slide 90

Search Google Mail Google Office Google Maps Picasa Other0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of People Using Google Features

Page 91: Google Nexus One – Upfront Analysis

Willingness to pay for Dream Phone

Slide 91

Zero $1 - $100 $101 - $200 $201 - $300 $301 - $400 More than $4000%

5%

10%

15%

20%

25%

30%

35%

40%

Willingness to pay for Dream Phone

Page 92: Google Nexus One – Upfront Analysis

Insights from Market Research

78% of people would like to test drive a phone in the store before buying it.

64% of people would like to pay subsidized price for their phone instead of full price.

51% of people have never heard of Nexus One smart phone

Slide 92

Page 93: Google Nexus One – Upfront Analysis

Wordle – iPhone

Slide 93

Page 94: Google Nexus One – Upfront Analysis

Wordle - Blackberry

Slide 94

Page 95: Google Nexus One – Upfront Analysis

Wordle - Google

Slide 95

Page 96: Google Nexus One – Upfront Analysis

Slide 96

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 97: Google Nexus One – Upfront Analysis

Web Browsing vs. Email

Slide 97

Full HTML Browsing

Poor HTML Browsing

Email SupportLess Trendy

Page 98: Google Nexus One – Upfront Analysis

Price vs. Camera

Slide 98

High Price

Low Price

High Resolution Camera

Low Resolution Camera

Page 99: Google Nexus One – Upfront Analysis

Number of Apps Available vs. Number of Downloaded

Slide 99

High Number of Apps

Low Number of Apps

Large Number of Apps Downloaded

Small Number of Apps Downloaded

Page 100: Google Nexus One – Upfront Analysis

Slide 100

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 101: Google Nexus One – Upfront Analysis

Lessons Learned

Smart Phone is going to be the de-facto standard. It’s difficult to win by standard set of features alone.

Basic Applications are table stakes. Wide acceptance by developers is going to drive popularity.

Technology is fast changing. 4G adoption will happen sooner than expected. Device makers need to respond quickly to changing technologies.

Customers have high brand loyalty. Google is known for innovativeness. So Google needs to bank on it.

Page 102: Google Nexus One – Upfront Analysis

Slide 102

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 103: Google Nexus One – Upfront Analysis

Strengths

Google recognition and dominance in internet searchesiPhone / Android Gaining Mobile Internet Usage Share - Symbian

(Nokia) + RIM + Windows Mobile Losing ShareProcessor speed (1 GHz)Available on multiple mobile carrier networks7 Hr Battery lifeCamera resolution (5 MP)Expandable MemoryOpen-Source Smartphone Platform-of- Choice

Most robust open-source alternative to iPhone platform with incentivized partners

Free software for device manufacturers / carriers

Page 104: Google Nexus One – Upfront Analysis

Strengths (continued)

Second Most Vibrant Developer Community 10K+ apps in Android Market, second only to iPhone App Store

Least restrictive application approval policies + flexible revenue

sharing with carriers Easy alternative

Potential Scalability from Beyond Smartphones iTunes App Store benefitted tremendously from iTouch users;

Android is making inroads on media devicesStorage: 4 GbStandby time: 250 HrsMultitasking

Page 105: Google Nexus One – Upfront Analysis

Strengths (continued)

Source: JP Morgan

Page 106: Google Nexus One – Upfront Analysis

Strengths (continued)

Source: JP Morgan

Page 107: Google Nexus One – Upfront Analysis

Weaknesses

New entrant into mobile phone industrySub-Optimal User Experience

Device manufacturers complain about Google’s lack of technical support when it comes to developing new Android smartphones

PricingiPhone available for $99

Market shareFewer applicationsFewer accessoriesNo physical keyboard

Page 108: Google Nexus One – Upfront Analysis

Opportunities

Long term, Google Android’s open / free operating system (combined with clever device manufacturers), standardization of more powerful mobile web browsers, emerging markets competition and carrier limitations may pose challenges to Apple’s market share upside.

RIM may maintain enterprise lead owing to installed base, but long-term outlook is challenged.RIM BlackBerry may maintain enterprise lead for foreseeable

future, but long-term outlook is challenged – consumer offerings likely to prove increasingly uncompetitive owing to software / application disadvantages.

Open mobile web potentially more attractive to developers / consumers – Google / Opera leading transformation of mobile browsers into development platforms. Apple ‘walled garden’ approach somewhat constrained by Apple’s approval process + carrier capacity.

Highest Handset Vendor Operating Margins at High End of Market – 20%+ for Smartphones vs. 8% for Low-End VendorsHighest for iPhone over Motorola, Sony Erickson, Nokie, LG, Samsung and

RIMM

Page 109: Google Nexus One – Upfront Analysis

Opportunities (continued)

Growing Android app marketplace Exclusive carrier deals could limit Apple’s market share

upside – AT&TInsufficient battery capacity could continue to prevent

effective multitaskingIn Technology, Products with Most / Best Apps Usually Win –

In Mobile, Apple is Clear Leader and Newcomer Android Has Quickly Surpassed the Old Guard

Page 110: Google Nexus One – Upfront Analysis

Opportunities (continued)

Source: JP Morgan

Page 111: Google Nexus One – Upfront Analysis

Opportunities (continued)

Source: JP Morgan

Page 112: Google Nexus One – Upfront Analysis

Threats

Network EffectsApple

Near term, Apple is driving the platform change to mobile computing and leading in user experience. Its mobile ecosystem (iPhone + iTouch + iTunes + accessories + services) market share / impact should surprise on upside for at least the next 1-2 years.Revenue opportunities for developers

Decreasing cost of manufacturingOther smartphone manufacturers will experience decreased bill-

of-materialsLower BOM (Bill-Of-Material) Costs + Prices Stimulate Smartphone

Demand – iPhone 3G Price to $99 from $199 = 89% Demand Increase

Page 113: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 114: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 115: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 116: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 117: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 118: Google Nexus One – Upfront Analysis

Threats (continued)

Source: JP Morgan

Page 119: Google Nexus One – Upfront Analysis

Morgan Stanley iPhone Interest Survey, 11/2008 (Top 3 barriers)

#1 Purchase Barrier = Monthly Plan Cost ($95) – 55% of interested respondents cited service costs as reason for not purchasing

#2 Purchase Barrier = Device Price ($199 / $299) – High iPhone price kept 53% of interested respondents from purchasing; price reduction to $100 increases unit demand 89% among respondentsApple has eliminated this barrier

#3 Purchase Barrier = Carrier Exclusivity (AT&T) – 41% of interested respondents would not purchase iPhone due to carrier exclusivity – citing coverage / pricing issues with AT&T + switching costs from existing carriersNexus One currently available on multiple networks

Page 120: Google Nexus One – Upfront Analysis

Morgan Stanley iPhone Interest Survey, 11/2008 (continued)

Source: JP Morgan

Page 121: Google Nexus One – Upfront Analysis

Morgan Stanley iPhone Interest Survey, 11/2008 (continued)

Source: JP Morgan

Page 122: Google Nexus One – Upfront Analysis

Cycle of Successful App Marketplace

Source: JP Morgan

Page 123: Google Nexus One – Upfront Analysis

Slide 123

Competitive analysis

Past year’s analysis of marketing elements

Marketing research

Perceptual maps

Industry analysis

Lessons Learned

SWOT analysis

1

2

3

4

5

6

7

Brand positioning Statement8

Page 124: Google Nexus One – Upfront Analysis

Brand Positioning Statement

Slide 124

Target Audience: New smartphone users. This group is not yet wrapped up in a competing ecosystem and values the ability to choose a service provider.

Frame of Reference: Smartphones. Nexus One is comparable to all smartphones, not just touch screen versions.

Point of Difference: Innovative, integrated Google applications, choice of carriers. Nexus One takes the Google product suite and makes it even more useful everywhere you go. Nexus One offers the freedom to choose your carrier and your apps.

End Benefit: Clarity, convenience, control. Nexus One seamlessly weaves together the Google products you already use and gives you control over your world.For new smartphone users, Nexus One is the

smartphone that offers Google innovation with the freedom to choose, providing clarity,

convenience and control.