Silly tech analysts, skewed and incomplete market numbers are for fanboys….and they should STAY in the realm of fanboys alone. This week brings yet another in what seems to be a steady onslaught of reports with apples compared to asparagus, as Canalys released smartphone sales figures based on the same tired old boilerplate that has […]
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Another Week, Another Tech Analyst Fail

Silly tech analysts, skewed and incomplete market numbers are for fanboys….and they should STAY in the realm of fanboys alone. This week brings yet another in what seems to be a steady onslaught of reports with apples compared to asparagus, as Canalys released smartphone sales figures based on the same tired old boilerplate that has to make Google and Nokia execs smile. How many reports have we seen in the past year that, while throwing some obligatory acknowledgement to Apple’s iPhone, sing the praises of Android as a tidal wave that will inevitably soak Cupertino and, as with the PC race of long ago, relegate Apple to an also-ran existence?

The punchline in this particular report is that, while Apple’s overtaking RIM with a 26% share of the US smartphone market grabs the headline, Apple is hardly mentioned in the article itself. In fact, the actual text of the report centers on everyone else in the market except for Palm, who seems to have fallen off into the abyss of the “Other” category. Also of note is how the report jumps back and forth between worldwide numbers, where Nokia is a big player and Android is further down the list, and the US numbers, where the Android OS is first in share and Nokia is non-existent. The report certainly isn’t very clear in what it is trying to communicate, other than some ringing endorsements of RIM, Nokia, and Android based on an incredibly limited data set.

While I take Canalys, and pretty much everyone else who makes these kinds of reports, to task, I do want to make it clear that I do not in any way dispute the numbers they are putting out. The accuracy of the numbers in these reports is never an issue. However, as we all know, or at least should know as informed consumers in today’s fast-moving digital world, numbers alone without proper context is useless. It is only knowledge without wisdom. And in this digital world, old patterns and standards don’t always continue to apply when products and technology are able to change the way people look at things. If you think I am wrong, just look back at the smartphone space in 2005 and then get back to me. By 2004, PDA sales figures and market share were deemed irrelevant by the growing Internet-connected smartphone market. By late 2008, it was clear that you could stick a fork in the stylus-based smartphones from Palm and Micorsoft that once looked so promising. Just as Apple and Google have done in developing their market leading products, you have to look beyond the standard definitions of what existed before, and look ahead to what is coming next.

To illustrate my point, let’s use Canalys’ numbers for a moment.  According to them, Apple shipped 5.5 million iPhones in Q3, for 26.2% of the market. On the other hand, Android vendors, which would include Motorola, HTC, Samsung, LG, and Sony Ericsson, shipped 9.1 million Android phones in Q3 for 43.6% of the market. Now, I know a lot of iOS bloggers and enthusiasts who would throw these numbers out as being completely irrelevant right off the bat, but that isn’t necessarily the case. As with everything in life, you have to be willing to look at the entire picture before coming to conclusions, and these numbers are a valid part of that picture. They tell us how different smartphone OS’s are performing head-to-head in the market right now.

Unfortunately, the point that Canalys and most of the other tech analysis firms seem to miss is that looking at Smartphone OS numbers alone or from one angle is so 2005. Canalys Senior Analyst Pete Cunningham states in this report that “Android has been well received by the market and in some geographies it is becoming a sought-after consumer brand. It has rapidly become the platform to watch, and its growing volumes will help to entice developers, ensuring consumers have access to an increasingly rich and vibrant mobile content and application ecosystem.” (Emphasis added.) That’s a pretty bold statement based on one set of data from one quarter. It’s also incredibly short sighted and uninformed, considering that he gets paid to make it using all of the available data.

How can a peon tech blogger like myself dare to question the word on high from Tech Olympus? Well, I can look at the REST of the numbers and have an informed opinion, that’s how. Actually, before I do that, let’s look at the numbers from this single report, but in a slightly different light. We have 9.1 million smartphones coming from 5 manufacturers on 4 major and several minor cellular networks running Android in Q3. We have 5.5 million from 1 manufacturer, the vast majority of which are from a single model, available on 1 cell network running iOS. So, a single phone on a single cell network has over half the share of an army of phones on several networks, including its own. See the difference when you look at the exact same numbers, just from a different angle? A single report can be spun many different ways to meet the needs of whoever is doing the spinning.

Now, even if Canalys’ report were to speak on this contrast, which it doesn’t, it still wouldn’t show the whole picture. Considering that all of the other OSs mentioned besides Android are distributed on smartphones from a single manufacturer, wouldn’t it be insightful to take a manufacturer by manufacturer look at market share? Then we could get an idea which of the five major Android manufacturers are pulling the weight of this 9.1 million phones. Then, considering that the second leading competitor’s 5.5 million shipped are largely made up of one device, why not do a device by device comparison to see which models stack up best against the iPhone? Then, why not look at each carrier’s offerings and see how they stack up against one another when offered to the same set of subscribers? What will it take for a tech analysis firm to pull this information together into a single report? If one ever does, then we will at least have something meaningful to look at.

You thought I was done, right? Not quite yet. Remember my earlier comments about how new technology and compelling devices could reshape the tech landscape, and how Apple and Google have harnessed this to great success? Well it is, in my humble opinion, time to close the book on the smartphone, or at least the smartphone as a category looked at entirely by itself. The numbers in this report, even with the other breakdowns I suggested above added in, represent a dam that is about to burst in a growing new tide of devices that run iOS, Android, and other mobile OSs. In case none of the analysts have been looking, I would remind them that there are already non-smartphone devices on the market from Apple, Nokia, and the Android consortium running their respective OSs, and that RIM’s new Playbook tablet is on the way. I realize that no one but Apple has made a real dent in this market to-date, but based on Apple’s recent huge successes with the iPod Touch and especially the iPad, the other players aren’t going to give up and go home. Look no further than the Blackberry Playbook, the Samsung GalaxyTab, Google TV, the tablet optimizations coming in Android’s upcoming releases, and the strong rumors of a Sony PSP Phone running Android for proof of this.  While Apple has fired the first effective shots, this battleground is just starting to heat up, and soon it will be all out war for the hearts and minds of consumers on many different platforms.

So, with all of this in mind, it is time to look beyond the smartphone alone to the connected device market as a whole. I am talking about phones, media and game players, tablets, set top boxes, and anything else that will run these versatile mobile OSs. Sure, looking at the different individual categories will still mean something, as will looking at the breakdown of sales of devices by each service provider and manufacturer, but the analysts  need to start focusing the bulk of their attention on the mobile OS market as a whole. If those numbers had been included in Canalys’ report, then I don’t don’t think the grandiose statement above could possibly be justified, at least not right now. That is also key. A lot of Apple fanboys also push this idea of looking at the OSs as a whole because the numbers heavily favor Apple right now, but that isn’t a good reason. It should really be about getting a look at the market where it is, and where it is about to be. Those numbers may change to Google’s favor over time. What will the fanboys think then?

If you look at the current situation, we are standing at a crossroads for mobile technology. In the last year, we have seen the launch of the iPad, Google TV, and the re-launch of Apple TV. We are waiting for the first Blackberry tablet, and have just seen the release of the first major Android tablet. We are also witnessing the birth of Windows Phone 7, HP’s new spin on WebOS, and Nokia’s last  smart device stand with the coming MeeGo OS. Then, of course, we have the ever-present rumor of the iPhone coming to Verizon, except that now it is starting to gain real credibility. At the very least, we are seeing AT&T start to noticeably beef up their non-iPhone smartphone offerings. In the next year, we will see an explosion of devices and technologies on the market, and we as customers will have more choices of devices and services, wherever we take our money and business.

If we objectively look at the mobile OS market as a whole over the next year, we will start to see the picture really take shape. Will tablet’s take over? Will we all be running apps on our TV’s? Will Nintendo survive against an onslaught of new gaming devices that are less expensive and can do more? Will HP breathe new life into Palm’s WebOS? Can Microsoft leverage gaming to help get Windows Phone 7 off the ground? Will the iPod Touch become the “gateway drug” that Apple is hoping, keeping younger users who are getting ready to move up to cell phones loyal to Apple? Who is really growing faster when you look at the whole picture? We won’t know all of the answers in a year, but we will have a much better idea of how the new playing field will shape up, and who the real players will be.

What does it all boil down to? The mobile technology market is changing, and that change is happening right now. The changes, and the devices that are pushing them need to be looked at collectively, because they are connected in a way that people, and most certainly analysts, often overlook. Forward thinking companies like Apple and Google aren’t just selling hardware and software. They are in the business of selling services, media, apps, and ads, and the platforms and devices are simply vehicles to drive and deliver them to consumers. They aren’t just selling these things on smartphones anymore, but on a wide variety of connected consumer devices. They are reaching beyond what we know now to what is next, and what’s next is going to be here before we know it. Pretty soon, it won’t be 2010 anymore. Tech analysts need to wake up and realize that it certainly isn’t 2005, and it hasn’t been for a long, long time if they want to remain relevant in the mobile space.

I would love to know what you think on this topic. Feel free to post you opinion on tech analyst reporting in the comments, or in our new Forums.

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