Moto Droid Off To A Good Start. But Is It Good Enough?
Posted on November 16, 2009 |
Market research firm Flurry, which tracks smart phone market share by monitoring usage of thousands of mobile apps, says Motorola sold 250,000 of its Droid smart phones in the device's first week on the market. That's not bad. HTC's MyTouch sold just 60,000 in its first week. And analysts believe Palm sold between 90,000 and 100,000 of its Pre smart phone when it came on the market earlier this year.
But the question is what happens to Droid sales in week two, three and those that follow--as dozens of other Android phones are expected to hit the market, as Olga Kharif points out in her story in the magazine. As of now, the device--which has gotten mostly good reviews--is benefiting from a huge marketing push from Verizon, estimated to total around $100 million. No doubt, you've seen the "I Don't" ads, which clearly position Droid as a superior alternative to Apple's iPhone.
That's an effective advertising campaign, especially when combined with Verizon's "there's a map for that" ads that bust on AT&T's reputation for spotty 3G coverage. Former Motorola CEO Ed Zander, for one, thinks Moto "has a good shot to sell a ton of Droids" if the device emerges as the gotta-have phone on the Verizon network. Indeed, if Motorola can maintain this 250,000-a-week clip for a quarter, it would move 3.25 million Droids. That would make it a blockbuster and the iPhone's nearest rival. Apple sold 7.4 million of its iPhone 3Gs in the company's just announced fiscal quarter. And Flurry's Peter Farago says the firm's data shows that Apple sold 600,000 iPhones during Droid's debut week.
But Droid's main competition isn't really the iPhone: it's fragmentation of the Android market. Clearly, Apple will have no problem keeping consumers focused on its device. The iPhone is the only smart phone Apple sells, and the company spends beaucoup bucks reinforcing a clear, powerful message: buy an iPhone, and get the benefit of Apple quality as well as those 100,000 apps in the App Store.
Now consider Motorola's challenge. Within weeks, consumers who go into a Verizon store will have many of different phones to choose from. Many of these devices will have a different "skin", a layer of software interface to make it stand out. That may make strategic sense on paper, but all these different interfaces is bound to confuse consumers. Also, it's not clear to me whether all of those 12,000-plus Android apps will run on all Android devices, further muddling the message.
And Zander wonders if consumers will be put off by the complexity of the Android model. It's bad enough with the iPhone, where Apple is responsible for the device and AT&T for the network. With Android, "are you buying from Verizon, or Google or Motorola?" While Zander thinks current Motorola CEO Sanjay Jha has done "a helluva job," he also thinks "there are a lot of competitors in this space. It's going to be an interesting Christmas."
Google, Garmin, And Free Navigation
Posted on October 29, 2009 |
Six years ago this week, and before I worked for BusinessWeek, I wrote this profile of the GPS company Garmin in Forbes Magazine. (I have a scan of the print version of the story here.) I thought of it this morning as I read Rob Hof's post as well as today's front page story in The New York Times about how about how Google's introduction of free turn-by-turn directions to its Android smart phone platform is upending the navigation device industry.
For the story six years ago, I asked Garmin co-founder and CEO Min Kao about the competitive threat or business opportunity he saw from GPS-enabled wireless phones. Phones, he said, were the kind of "commodity market we want to avoid." Motorola and Nokia and other phone companies were just starting to embed GPS chipsets on phones in 2003, and and some phones could already give you turn-by-turn directions, though nothing as good as what you could get from a Garmin navigation system mounted on the dashboard of a car. Garmin was at the time starting to push the iQue 3600, a Palm OS-based PDA (remember those?) that had all the capabilities of one of its navigation systems. As you can see, it didn't sell terribly well and has long since been discontinued.
Fast forward four years to late 2007, when I wrote this story for BusinessWeek on how wireless phone companies were teaming with services like Networks in Motion and TeleNav to provide their own wireless navigation services on their phones.
Now Garmin is trying its hand at the smart phone business. The results, are, as Steve Wildstrom wrote recently, not terribly impressive. Meanwhile Garmin's biggest rival TomTom -- a company that was not on my radar screen until 2006 -- has turned Apple's iPhone into a powerful in-car navigation device.
Garmin was the up-and-coming navigation company in 2003, and it got that way very quickly. At that time it had been only three years since President Clinton had ordered a permanent end to the policy of Selective Availability on the Global Positioning System constellation of satellites. This policy, which had been in force since the launch of the system, required that civilian GPS signals be made deliberately inaccurate so that they couldn't be used against US forces on the battlefield. While the civilian signal was good enough for hiking and hunting, it wasn't accurate enough to provide turn-by-turn directions in a car.
As soon as that policy change made civilian signals more accurate, an industry sprung up around in-car navigation. Automakers started building sophisticated nav systems into dashboards, and that companies like Garmin and TomTom, Magellan, and others sought to compete in the aftermarket, and even jockeyed for the attention of Detroit. Garmin and TomTom are the two biggest players, and every holiday season compete like crazy in the retail business.
But the rate of creative destruction of business models in the navigation business has been nothing short of shocking, even for the fast-moving tech industry in general. Garmin and TomTom made paper maps all but obsolete with their devices. Wireless carrier-based services quickly rose after that to challenge them. And now, both are being challenged by Google and its free phone-based offering. This has all happened in less than a decade.
Earlier this month, market research firm iSuppli noted that sales of personal navigation devices -- those Garmin and TomTom dashboard devices -- had entered a period of "slowing growth," and that sales may actually decline this year, and remain flat after that. And in September, iSuppli projected that navigation-ready smart phones will surpass PNDs by 2014, a ratio of more than 2 to 1. ABI Research said earlier this year that GPS will be included in 9 out of 10 handsets within five years.
One reason for these relatively quick turns of fate is the relatively low barrier to entry in the navigation business. The civilian GPS signal is provided to the entire world free of charge, courtesy of the US taxpayer to the tune of about a billion dollars a year. GPS chipsets that can be built into phones, or frankly any other device for that matter, have been coming down price for years. If you want to build a better navigation device, there's not much to stop you. You'll also need a source of mapping data, and for that there is Navteq, now owned by Nokia, and TeleAtlas, now owned by TomTom.
There is certainly a compelling case to be made that if free is the default price for navigation on a smart phone, as it appears it will be with this new Google service, then this is bad news for the Garmins, TomToms, and TeleNavs of the world. The 7-dollar and change drop in Garmin's stock price over the last two days certainly reflects that.
But will the Google service be as good? Garmin and TomTom have a lot of practice in providing directions, and have honed their skills over the years, and build devices that are highly reliable and accurate, and which don't rely on a cellular data signal at all. That may turn out to be a key marketing point for the PND industry. When you're driving in the middle of nowhere and outside of the range of a cellular signal, the last thing you want to worry about is getting lost. Either way, I'll be interested to compare Google's service side-by-side with a dedicated PND and see which is better.
