google nexus one – upfront analysis
DESCRIPTION
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 PresentationTRANSCRIPT
Google Nexus One – Upfront Analysis
Ankan JainJames Wade
Peter YouSatya Dash
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
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
Wireless telecommunication
Slide 4
Advanced PCS - Wireless networking in homes, schools, offices, wireless hotspotsCellular services – 1G, 2G, 3G and 4G
$152bn
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
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
Slide 7
The players
Operating System Players
Slide 8
Smart phone handset makers
Slide 9
Source: Razorfish, "FEED: Digital Brand Experience Study," November 10, 2009
Carriers
Slide 10
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
Slide 12
Industry Growth
Major market segmentation
Slide 13
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
Smartphone Sales Exploding
Slide 15
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
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
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
Top Five Mobile Content and Services
Slide 19
Slide 20
Industry Trends
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
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
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).
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
Slide 25
Key Competitors
Slide 26
Direct Competitors
iPhone Blackberry Droid Palm Pre
Samsung LG Nokia
Slide 27
Smart Phone Competitive Landscape
Personal Use Business Use
Nokia
Samsung
LG
PalmDroid
BlackberryiPhone
Slide 28
Indirect Competitors
iPad Kindle
Slide 29
Phone Features
Slide 30
iPhone
Slide 31
Blackberry
Slide 32
Droid
Slide 33
Palm Pre
Slide 34
What makes iPhone different?
Slide 35
140,000 apps and counting
Slide 36
Distribution
Slide 37
Retail Stores
Slide 38
Retail Stores Web Site - Walmart.com
Slide 39
Online Retailers - Amazon.com
Slide 40
Only Mobile Phone Retailer - Wirefly.com
Slide 41
Carrier Web Site
Slide 42
Carrier Retail Store
Slide 43
Manufacturer Web Site – Blackberry.com
Slide 44
Manufacturer Retail Store – Apple
Slide 45
Used Phones Market– eBay.com
Slide 46
Price Comparison Sites– Shopping.com
Slide 47
Pricing
Slide 48
Who wants to pay for the phones?
Slide 49
How about 0.01 cents?
Slide 50
Unlocked Phones – Pay full price
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
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
Slide 53
iPhone – monopoly
Slide 54
Carrier Promotion
Slide 55
Retailer Promotion
Slide 56
Advertisement
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
Slide 58
Punch line
Slide 59
Carrier Advertisement
Slide 60
Carrier Advertisement
Slide 61
Carrier Advertisement
Slide 62
Carrier Advertisement
Slide 63
Carrier Advertisement
Slide 64
Retailer Promotion
Slide 65
Print Advertisement – Wall Street Journal
Slide 66
Editorial Reviews
Slide 67
Online Videos – Youtube.com
Slide 68
PR
Smart Phone + Social Media (Twitter)
Slide 69
Competitor Size
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
Slide 71
SEO
Visits to company websites
Slide 72
Search Engine Optimization
Slide 73
Slide 74
Search Engine Results – Google.com
Free Search Paid Search
Slide 75
Mobile Apps
Spend on Apps
Slide 76
Spend on Apps
Slide 77
As A Group, iPhone Owners Are Wealthier And Younger
Slide 78
Source: Forrester’s North American Technographics® Benchmark Survey
iPhone = Mobile Internet Access
Slide 79
Source: Forrester’s North American Technographics® Benchmark Survey
Magic Quadrant for Mobile Application Platforms
Slide 80 Source: Gartner Magic Quadrant for Mobile Consumer Application Platforms Dec 2009
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
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
Mobile Operating System Preference
Slide 83
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
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
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
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
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.
Very Important Smart Phone Features
EmailWeb BrowsingTextingSearchMapsCameraSocial NetworkingWork Applications
Slide 89
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
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
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
Wordle – iPhone
Slide 93
Wordle - Blackberry
Slide 94
Wordle - Google
Slide 95
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
Web Browsing vs. Email
Slide 97
Full HTML Browsing
Poor HTML Browsing
Email SupportLess Trendy
Price vs. Camera
Slide 98
High Price
Low Price
High Resolution Camera
Low Resolution Camera
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
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
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.
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
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
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
Strengths (continued)
Source: JP Morgan
Strengths (continued)
Source: JP Morgan
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
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
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
Opportunities (continued)
Source: JP Morgan
Opportunities (continued)
Source: JP Morgan
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
Threats (continued)
Source: JP Morgan
Threats (continued)
Source: JP Morgan
Threats (continued)
Source: JP Morgan
Threats (continued)
Source: JP Morgan
Threats (continued)
Source: JP Morgan
Threats (continued)
Source: JP Morgan
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
Morgan Stanley iPhone Interest Survey, 11/2008 (continued)
Source: JP Morgan
Morgan Stanley iPhone Interest Survey, 11/2008 (continued)
Source: JP Morgan
Cycle of Successful App Marketplace
Source: JP Morgan
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
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.