Smartphone Market Share Influences Download versus Mobile Web Debate

In a recent article from Media Post a software application developer from Istanbul, Turkey attending a conference in San Jose, California, voiced his opinion that the US does not understand the importance of the Mobile Web. This article reminded me of the panel discussion I moderated at the PhoCusWright @ITB conference in Berlin earlier this year where the subject of downloadable applications was debated against the advantage of the Mobile Web with a panel of European mobile travel experts. During that discussion a common argument in favor of the Mobile Web approach was the ability to have the application available on all devices with a mobile Web browser. On the side of downloadable apps, the ability to use the GPS location capability and ability to balance the processing load between the network and device were common arguments for the downloadable app approach. Given the explosion of app stores from device manufactures and wireless network providers , it is clear that the downloadable approach has been recognized as an important channel for application delivery. So given this debate, what is the right approach for travel companies who want to build and deploy mobile apps?

The answer lies in the recent 2nd quarter market share numbers published by Canalys. Here is the worldwide smartphone adoption numbers:
From a global perspective the growth of Apple's iPhone is phenomenal. But the true insight comes from the individual regional market share.

Clearly in the US market RIM and Apple dominate the smartphone market.


Contrast this with the EMEA market share












Now compare this with the numbers for Asia Pacific:

As you see Apple and RIM do not even qualify for their own category and are grouped into Other.
The simple conclusion is this:
1) Clearly smartphones are a growing category.
2) Areas of the world dominated by Nokia have not felt the true impact of the smartphone adoption.
3) Travel companies need to understand the specific smartphone adoption market share percentages for their clients when planning a mobile strategy.
On a long term basis as recently voiced by Google, browser-based applications may dominant, but for the short term (3-5 years), downloadable apps will be the most logical path. Keep in mind that smartphone penetration is much greater for frequent travelers who are early adopters of smartphones. Developing applications for the leading smartphone devices: RIM, iPhone and perhaps Windows Mobile is the most logical path to follow. Nokia's recent announcement concerning their new relationship with Microsoft is an obvious attempt by both companies to fight the growth of RIM and iPhone.

Convergence

The pace of mobile convergence continues to accelerate. A camera is now a common feature on mobile phones. Smartphones have gone further with integration of PDA and MP3 player functionality. Tom Tom is now available as an downloadable application on the iPhone signaling the convergence of Personal Navigation Devices (PNDs) with smartphones. Gaming is already immensely popular on smartphones cutting into the portable gaming market. Mobile payments are still limited to specific regions of the world. In Japan, mobile payments have been a standard feature for some time and mobile micro payments for public transportation is emerging especially in developing countries.

"According to Inside Facebook, the social network is working with mobile payments provider Zong on a test allowing a small number of users to sample the mobile payment option in its virtual gift shop". Social networking is already a major activity on smartphones so Facebook's test with Zong is a significant development towards the mobile wallet.

So what does this all mean for the travel industry? The bottom line is this: labeling the device in the frequent travelers' pocket as a phone is not only naive but misses the true opportunity for innovation that can enhance the travel experience.
If you want to learn more, please join me next week for a Webinar through PhoCusWright. Details are below.

Global View

I am writing from Cannes, France where I gave a speech this morning on emerging technology trends that impact airline e-commerce. I represented PhoCusWright at the conference and I was able to draw on some great stats and trends from a number of PhoCusWright research pieces. This speech was for the Amadeus' airline e-commerce conference. Last week I was in Los Cabos, Mexico giving another speech for the Amadeus' LATM corporate travel leaders symposium. Tomorrow through Monday I am taking some time off and my wife who traveled with me to Southern France and I will explore the French Riviera.

I wanted to write briefly about the global perspective I have gained over the last 12 months. My work in Kuwait had me traveling to the Middle East once a month for the last year. Often I stopped in Europe on the return trip to either attend a conference or meet with a client. I have worked in Europe with different travel IT and software companies many who deal with airline customers. The Kuwaiti engagement tapped my corporate travel technology and leisure distribution experience.

There are a couple of points which all markets have in common:
1) Every segment of the travel value chain worldwide is under pressure from low cost competition. Whether its LCCs for the airlines, alternative or direct distribution for the GDS, or online competition for the TMCs, every sector needs to drive greater efficiency to lower costs.
2) Mobile technology is beginning to emerge as a major new battleground where traditional suppliers and distributors are being challenged by innovation from new market entries.
3) Airline Fare Families and the airline focus on ancillary revenue is here to stay. This is good news for the airlines who are really suffering. Fare families creates a more logical relationship between services and price.
4) Local Carries are a global phenomenon that is driving consumers in emerging markets online
5) Corporate travel trends are the same globally, the differences are around the level of maturity in the market. Latin America is a particular challenge as major airlines have pulled inventory out of the GDS in markets such as Brazil.
6) The global economy is beginning to rebound with travel increasing, but premium travel is still not near the levels from 2007.

I feel blessed that I have the opportunity to travel to such diverse places in the world and help a variety of customers market, build or purchase travel technology.

Ancillary Airline Revenue and Fare Families

Over the last few weeks I have given a number of keynote presentations to a variety of airline groups. These audiences covered the entire spectrum of airline types: legacy, LCCs , and 2nd & 3rd tier airlines with speeches in the US and Europe. The airline executives were a mix of e-commerce, revenue managers and IT executives dependent on the conference sponsor. I spoke about emerging technology trends including mobile, semantic search, personalization, social networking and meta-search.
I began each presentation with a discussion of ancillary revenue showing how the carriers have profited greatly by charging fees for baggage, meals, and other services. I used this cartoon to emphasis that from a customer viewpoint these are fees for formerly free services. I have no doubt that the airline executives are well aware of this fact, but with the fever pitch around the value of ancillary revenue particularly in this tough market, the perspective of the customer is often lost.
I received a more surprising reaction regarding the subject of fare families (branded fares). Online search whether through an OTA or Meta-search company, yields a logo and price worsening the move towards commoditization. Every airline is concerned that their product is perceived as a commodity, but few are embracing fare families.
I am old enough to remember earlier LCCs attempts at market dominance with carriers such as People's Express and Texas Air disappearing after a few years of heavy fare matching by the legacy carriers. Of course today's success of LCCs is powered by direct distribution through the Internet and thus is flourishing in every corner of the world. The simple fact is that LCCs are not going away and are actually increasing in numbers and market share. It is my opinion that fare families are the best means for traditional carriers as well as high value LCCs (e.g. JetBlue, Virgin America) to compete beyond price. As I pointed out in my presentation, every part of the distribution travel value chain will be impacted by the introduction of fare families, but despite these challenges, I am hopeful the concept will take hold. One important aspect of the shopping process that would need to change for both OTAs and Meta-search, is the ability through mouse-overs or other similar UI techniques, to provide the fare family advantage to the customer at the point of sale. See Frontierairlines.com as an example. What I envision is that a customer goes on an OTA or Meta-search site, gets back the same fare from both a LCC and a legacy or high value LCC and when the consumer mouses over that quote, the option of paying a bit more to include services such as baggage, seat assignments, access to on board entertainment systems, meals, on board Wi-Fi, and other emerging services at different family price points. It is my belief this will be the only way airlines can truly compete against the LCCs by promoting a differentiated product fighting the trend towards commoditization.

Travel Innovation

As most of you know I was intimately involved with this year's PhoCusWright's Travel Innovation Summit. I have been tracking both new media and traditional coverage of the event. I wanted to provide you some feedback from the inside as well as some comments on the overall subject of innovation.
First let me acknowledge the hard work of my colleague Bob Offutt in being the creative force behind TIS and for managing the entire process. Bob and I interviewed over 50 applicants for the TIS. Our criteria was pretty straight forward- we were looking for true technology innovation. Often the applicant offered a business innovation, but lacked the technology component and thus were rejected. We heard from traditional as well as start-up companies. TIS is not a start-up - "get funded" event. It is designed to provide a forum for all industry segments to present their technology innovation.
The underlying themes from the TIS finalists are clear: (1) A better Web air shopping experience is needed (e.g. Amadeus IT), (2) Globalization of the Web is a complex process and requires some advanced technology (Translations.com), (3) Consumers continue to shop multiple Websites for a given trip and a social shopping tool can simplify the information gathering and sharing (Gliider) (4) Mobile technology is changing the way people experience travel (Global Motion). There were also presenters who demonstrated innovation in social media monitoring, leisure travel planning and integration between cable TV and the Web experience.

I have seen a few blog posts which criticizes the event as not being very innovative. Other comments have focused on the fact that the winner of the TIS 2009 event was Amadeus, IT certainly a major existing player, not an innovative start-up. Expressing one's views is certainly part of the fabric of the Web, but often bloggers or journalists miss the underlying process that goes into building an event such as TIS and are quick to criticize.
Let me comment on two particular articles:
1) Arnie Weissmann- Editor in Chief for Travel Weekly - " The Travel Technology Gong Show"
Arnie voiced his view that the show lacked true innovation. As I look at my in box at the pile of unread Travel Weeklys (I pretty much only read the online version), I find it ironic that this traditional bastion of status quo thinking would provide such a negative spin on the TIS. Much of the work as a consultant I done over the last 14 years has been with traditional travel players both in the leisure and corporate market. Often these traditional travel companies lack an understanding of online trends and rarely demonstrate true innovation (at least not without our help). In discussions with traditional travel agents as part of various projects, I am always dumbfounded at their lack of Web savviness. Many have poor Web presence and still take the majoirty of reservations offline. Since Web travel took off we've lost about 50% of traditional travel agents. Considering the rapid pace of technology innovation whether it it is improved air shopping , globalization, consumer shopping tools or the mobile revolution, traditional travel companies continue to lag. Rather than being critical of the event, Travel Weekly needs to better verbalize the underlying trends demonstrated at the TIS and educate their readers on how to deal with these technological changes.

Contrasting this with UpTake's Travel Industry Blog " PhoCusWright 2009 Travel Innovation Summit" . In this blog entry Elliott Ng's one of the founders of UpTake goes into great detail about many of the presenters highlighting their innovation and value to the industry. Granted UpTake is truly a Travel 2.0 star pioneering semantic search and adding value to the planning process. But both Elliott and Yen Lee the other founder of UpTake have spent many frustrating years at traditional companies trying to drive innovation in their travel offering, and founded UpTake to truly implement their vision of a better travel search approach.

In my career I have worked at large and small companies. Innovation at large companies often require a "skunk" project. This is an initiative not necessarily supported by senior management but driven by individual groups who drive the innovation. This was truly the case with Amadeus IT and thus end product results were very impressive. I do agree that small companies often innovate at a faster pace than traditional players, but often lack the funds and management experience to execute. Innovation is the key in driving improved interfaces and processes in the travel industry. The PhoCusWright Travel Innovation Summit is an essential place to monitor and track this innovation.

Social Media - Understanding the Community

With the growth of Facebook, LinkedIn and Twitter, social media monitoring and promotion have become a major activity for most travel companies. The goal is to listen to the social networks and respond to issues around a company's brand. The other major effort is to use fan pages and Twitter feeds to offer limited-timed promotions. Both these activities are essential social media 1.0 tasks, but there is a lot more analysis that can be implemented to identify connectivity among community members, key influencers within the community and overall community trends. To achieve this next level of analysis BI tools that examine social networking are required.
As mentioned in a previous blog, one such tool is NodeXL. This is an open source Microsoft Excel plug-in that can be used to create a visual community map of everything from your Outlook contacts to your Twitter feed. The visualization allows you to understand relationships between community members. Are there individuals who everyone connects to, but who connect to few? If so , these people may be key community influencers, but how do you influence them? As you can see this only touches the surface of social networking analysis.
I am pleased to announce a new strategic alliance, with Marc A. Smith, PhD of Connected Action Consulting Group. Not only is Dr. Smith the creator of NodeXL, but he is an experienced social scientist who uses his sociology training to offer clients a deep understanding of their online communities with specific recommendations on how to implement strategies to protect and grow a company's brand within their community. Travel Tech Consulting is pleased to offer Dr. Smith's services in conjunction with our travel technology and online expertise to offer clients the next level of analysis of social networks.

IPhone Hits the Enterprise

With eWeek reporting that 70% of the Fortune 500 are evaluating iPhone for the enterprise, the corporate travel industry needs to take note. From my view the debate is over regarding download verses mobile Web. Transcoding your Web page for the mobile browser is still important, but the value of a downloadable app for a company's brand and the ability to personalize the interaction with the customer is unmatched. The phone is becoming more and more of a sensor (accelerometer, compass, temperature, etc..) . The penetration of the iPhone in the corporate market is making a downloadable iPhone app for travel companies a priority. Apple has announced record profits and the iPhone is a big part of this. Apple's success in the corporate market is directly due to the consumer acceptance of the device.

The Splinternet

Forrester analyst Josh Bernoff recently posted a blog regarding the end of the golden age of the Web and the rise of the Splinternet. As it name implies, the new environment consists of multiple devices with content and audiences fragmented across these platforms.
What does this mean for the future of travel distribution? This represents both a challenge and opportunity for travel marketers. The splintering of platforms and content means that a travel supplier or intermediary can no longer expect their single Web presence to be enough to communicate with their customers. The opportunity comes in the ability to personalize the experience based on the customer segment and platform capabilities. We've seen this already where unique iPhone apps have functionality such as augmented reality that only applies to a smartphone device. The whole downloadable app phenomenon provides the delivery mechanism to enhance this personal relationship with the customer.
New platforms such as the iPad and other tablets coming to the market will continue to cause the need for multiple development paths but providing unique experiences that are only possible based on the nature of the device is also a new opportunity. In a talk this week at Stanford University, Chris Anderson, Editor and Chief of Wired Magazine predicted that the tablet would eventually replace the lap top as the primary mobile computing device. As part of the Conde Nast publishing group, Chris was very bullish on how the tablet provides the immersive experience of a magazine while the flexibility and endless content of the Web. The true power of these devices will come in new applications that have yet to be developed.
The traditional travel industry players has always been slow to embrace new technology allowing new entries to capitalize on it and build solid businesses. One just needs to look at the dominance of the four major OTAs to see how this has happened on the Web. Why didn't American Express become one of these major OTAs? A similar phenomenon is happening in the mobile world with new entries such as TripIt gaining momentum (and investment) offering itinerary management and mobile travel services. With the advent of the Splinternet, the travel industry must embrace this new multi-platform and multi-content world and drive innovation or be a victim of losing control of the the customer to new market entries that understand this opportunity.

Yes UA Breaks Guitars Does Impact Loyalty

My wife's Facebook friend recently posted this message declaring that she does not fly UA because they break guitars. I recently spoke at the EzRez Thought Leadership Conference and I mentioned the now famous YouTube video which has received over 8 million viewings. A question from the audience was simply whether people would change their flying preferences because of this type of video. As evidenced by this blog entry, it has changed some people's attitudes.
Social media has been so hyped it is easy to forget that it is in some ways an extension of the most effective type of advertising, word-of-mouth but on steroids.
In a recent article, Travel Weekly columnist Richard Turen stated that United now uses Dave Carroll's video as a training device. Another recent story mentioned that David's bag was lost on a recent UA trip. (I guess he returned to United after all). So though the songwriter seemed to have forgiven UA, his video legacy lives on and continues to influence the blogosphere. Of course David's next song may be, "United lost my bag" considering his most recent experience.

Airline Twitter Network Analysis with NodeXL

Travel Tech Consulting, Inc. and Connected Action Consulting Group LLC have put together a brief video presentation that provides insight into network analysis for airline Twitter feeds using the open source tool NodeXL. Network analysis goes beyond simply monitoring brand or promoting specials using social media. Network analysis allows travel companies to understand who are the key influencers in the network and how they connect with others. For example, it is not necessarily the user with the most Twitter followers or Tweets at a travel company needs to follow, but it is how the user is connected to others. The video uses United Airlines and Delta Airlines Twitter feeds as an example.

Analyzing Aviation Social Media Networks with NodeXL from Norm Rose on Vimeo.

New traveltechnology.com Website

I am pleased to announce the launch of the new Travel Tech Consulting Website at http://www.traveltechnology.com. With the launch of the new site I will be discontinuing my blog at traveltechnology/blogspot.com as the new site incorporates my blog, Twitter feed and company information. Here is the new RSS http://traveltechnology.com/wp-rss.php. Please visit http://www.traveltechnology.com for more information on Travel Tech Consulting.

Survival Guide: Elephant Charge

NationalGeographic | September 02, 2008 | In the African rain forests of Congo, conservationist Mike Fay is charged by a 3-ton elephant. What does Mike do to keep himself out of harm's way?

Posted at Hit the Road - See America and the World. Stay updated and subscribe, or follow me on Twitter.

Survival Guide - Anaconda Bite - National Geographic

Survival Guide - Anaconda - National Geographic: Herpetologist Jesus Rivas gets bitten by a stubborn anaconda. How does he escape from the snake's powerful bite?

Posted at Hit the Road - See America and the World. Stay updated and subscribe, or follow me on Twitter.

Don't Let the Bedbugs Bite - National Geographic Video

Don't Let the Bedbugs Bite - National Geographic Video - "Maybe they should be called bed blood bugs, an army of these can attack a person 500 times in one night!"

Posted at Hit the Road - See America and the World. Stay updated and subscribe, or follow me on Twitter.

Ready. Set. Ram Rumble! (NatGeo video)

NationalGeographic: Bighorn rams line up in the snow to battle for an Olympic-sized prize: mating rights.

Posted at Hit the Road - See America and the World. Stay updated and subscribe, or follow me on Twitter.

Weekend in NYC

My two nieces, Nini, and I made a girl trip to New York the past weekend for fun and shopping. My niece's friends, Michael and Ignacio joined us during our stay. We had a great fun time there. Michael is a fashion stylist. Ignacio is a fashion art photographer and he is a cool, young, talented kid. Please, check out his work. It's very impressive. He currently lives and works in NYC. His work will be featured in my blog sometime soon. Here are some random pictures of NYC from Ignacio's mobile phone that he captured while we were there. (I didn't bring my camera)

The view of Soho from our room.

My niece, Pauline and Ignacio.

Pauline tried on MMMargiela piece at a vintage store. She is gorgeous.

It was also very nice to meet Jason from Citizen Couture, Maury and Gisela from Height of Fashion, and Thumbelina from Thumbelina Fashionista for brunch at Artisanal Bistro. Thank you all for coming out with us. We definitely had a wonderful time with you.

No doubt, Nini and I had a blast at the shoes salon at Barneys in NY. There were so many fabulous pairs on sale for 50% off. And here a few pictures from our mobile phones.

These Rodarte shoes are a piece of art.

Fabulous Ann D boots.

Yes, I brought these Chanel boots home from Barneys. The boots are perfect for me to travel around with my kids. They are very comfortable and keep me look stylish :-)

The back of the Chanel boots.

These cool Tabi boots at Margiela boutique are not as comfy as the Chanel boots; but I absolutely love them. Thinking...Should I get them??

Thank you everyone for visiting and comments! Wish you all a wonderful day ahead! xoxo...Hanh ;)

ps: I had on the Alaia hiking heeled boots.