International Digital Marketing

It took a while, but Facebook has finally – at least officially – identified mobile as “critical to maintaining user growth and engagement over the long term.” The global social media platform acknowledged that users are moving from PCs towards mobile Facebook access, and admitted that “if we are unable to successfully implement monetisation strategies for our mobile users, our revenue and financial results may be negatively affected.”

 Growing International mobile advertising market

 According to experts, global mobile advertising market is experiencing an annual growth rate of 64% and is expected to reach 17.6 billion US dollars by 2015. This might be the main reason, instead of the user engagement, why the social networking company is so interested in mobile market. In fact, Facebook’s biggest revenue channel is advertising, generating 85% of sales in 2011. To put it in perspective, Facebook’s revenue accounted for 3.71 billion US dollars in 2011.

Surprisingly, Facebook is not currently generating profit directly through the Facebook mobile products and it has not been advertising via mobile. The social media company revealed that this is going to change and that they “may have potential future monetisation opportunities such as the inclusion of sponsored stories in users’ mobile News Feeds.” I am not sure how the Facebook users are going to react, but users’ reaction seems to be one of platform’s smallest concerns, especially taking in account the recent changes, privacy issues and the polemic regarding the timeline.

 Global Facebook mobile usage

 But how many users are currently accessing Facebook via mobile? According to Facebook, more than 425 million monthly active users (MAU) were utilizing its mobile products in December 2011. This has great significance since in total the platform has 845 million monthly active users and it seems unbelievable that the social networking company has not realized until now the potential mobile marketing has.

Company is forecasting the mobile user rate to grow even faster than the MAU, which has been increasing annually 39%. This may very well be possible. According to a recent ComScore study, 55.1 million European mobile users accessed social networks or blogs via mobile devices in September 2011 only, representing 23.5% of the total mobile audience. Not only did the mobile social media usage nearly double, but 47% of the users accessed social networks and blogs daily.

Challenging global mobile market

 Facebook might have a strong position in International online market, yet the global mobile market is full of competitors and challenges. The social networking company admitted that it is dependent on different mobile operating systems they do not control, such as iPhone OS, Windows OS and of course … Google’s Android.

 Until recently we were experiencing Apple smartphone domination, yet things are changing. Industry analysts are predicting that Windows Phone will increase its market share up to 16.7% by 2015, while Apple’s market share will decrease from 18% percent to 16.6% by 2015. Meanwhile Android is expected to grow from 47.4% to 58.1% by 2015.

 There are several reasons for the change. One is Nokia’s powerful partnership with Microsoft, which has resulted for example in a successful Lumia mobile. Other is Android’s massive volume of devices. Even if the Android OS is fragmented and constantly changing, Apple takes its time to launch a new expensive new iPhone / iPad, while hundreds of Android powered mobiles arrive in stores across the globe in a year … and with a cheap price.

Facebook / Apple mobile partnership?

Facebook has a problem. It is planning to step into the mobile game, however its 425 million MAUs have already an existing Facebook app, there are many competitors in location-based services, social networks, games and deals, and the social networking company does not have any control over mobile OS. Apple on the other hand is losing its market share rapidly while Android OS is growing fast.

One interesting possibility the two companies have is augmented reality. According to Juniper, by 2015 global revenues from AR will reach 1.5 billion dollars. ABI Research estimated that even if in 2010 revenue from Augmented reality was only 21 million dollars, amount might very well increase to 3 billion dollars by 2016. But it gets better: AIB claims that revenues related to Augmented reality will increase from 6 million dollars in 2009 to more than 3.5 billion dollars in 2014 – which signifies a yearly growth of 97%.

What this has to do with Apple and Facebook? Apple has acquired recently Polar Rose, a company which has created facial recognition software and other elements that enable the “automatic creation of events based on visual cues in images.” This brings enormous possibilities in social networking area, which should interest Facebook. Apple has the iPhone OS and technology, and Facebook its Facebook Places and large user base perfect for the newly acquired facial recognition. If these two companies join forces they can very well have a chance to compete with Google. Actually these two combined could possibly even be very, very dangerous for Google.

Facebook and Google do not like each other. Apple and Google do not like each other. What would be a better partnership than ganging against a common enemy?

 “Nokia has been infected by the biggest computer virus in the world – Microsoft”, was the reaction of my Finnish dad when Nokia announced they would change Symbian OS to Windows Mobile OS. Watching the feedback around the web, most of the Nokia fans agree and are furious of Nokia’s new partnership with the giant. The investors did not have much faith either, stock diving 14% straight after the news.

Myself, proudly coming from the country of Linux, I must say I was not very “excited” either. But…could this be a chance to bounce back?

“The Black Friday” of Nokia

Last Friday Nokia announced the new partnership with Microsoft to build a new global mobile ecosystem. The decision means that Nokia will abandon its Symbian OS and take the Windows Phone OS, developed by Microsoft, as their principal Smartphone operating system and will develop on top of it their own solutions. Stephen Elop, CEO of Nokia, did not respond directly whether Nokia has to pay Microsoft for using the Windows Phone OS, but Microsoft CEO Steven Ballmer makes it clear the contract between two companies is not exclusive. Other companies can also add the license into their phones in the future.

 Why to change Symbian OS to Windows Mobile OS?

Stephen Elop declared one of the main reasons for Nokia to chose Microsoft Windows Phone – operating system instead of Android was to stand out from the crowd. The competitors using the Android are for example Samsung, LG, Sony Ericsson and HTC.

What comes to the current mobile market, according to a study by Nielsen measuring the recent acquired Smartphones in the U.S, iPhone OS has experienced a decrease in popularity while Android OS is experiencing a steady growth. ComScore study in July 2010 claims that Blackberry owns 39.3% of the Smartphone market share in U.S. compared with 23.8% market share  iPhone has. Android OS follows the two with 17%, a number that is constantly increasing. Windows Mobile holds 11.8% of the market share, Palm 4.9% and Symbian (Nokia) only 3.2%.

In Europe, it is a completely different story. The recent study by comScore reveals surprisingly that the five largest European Smartphone markets in Europe are still ruled by Nokia. A high 51.2% of Smartphone-owning respondents in the UK, France, Germany, Spain and Italy have a Symbian OS by Nokia.

In Africa, Symbian OS rules as well on this continent. For example, eight of the top 10 most popular Smartphones used in South-Africa to access the internet, according to AdMob Mobile’s Metrics Report April 2010, were Nokias.

However, Nokia has been struggling in the Smartphone market focusing on price more than innovation and has experienced a 21 percent drop in revenue in the final quarter of 2010. Elop claims that Nokia is being attacked on all fronts — by Apple from the high-end, Android from the middle and MediaTek from below. Also, another factor forcing Nokia to pick Microsoft could be the carriers. According to a report from the Financial Times, the company was receiving pressure from its European carriers, such as Vodafone, Telefónica, and France Telecom, to not adopt Android, because the market already had too many companies with Android OS.

It should also not be forgotten, that Elop is a former Microsoft executive and the first non-Finnish CEO Nokia has had.  It is quite obvious the CEO has not been objective and the possible move of “executive centre” to the U.S.  would be a big strike to brand’s strong national identity.

New Nokia Windows Phone

Engadget published the first pictures of the Nokia Windows phones last week and Jo Harlow, responsible of Nokia Smartphones, confirmed they are real.

Nokia claims that the Nokia phone with Windows Mobile will:

• Have better usability than other mobile OS.
• Push gaming at the next level
• Make it easier to process work documents in the mobile version of the Microsoft Office
• Bring music and videos together in an easy way with media centre
• Offer additional support for mobile email such as Microsoft Exchange
• Offer improved Nokia Maps with Microsoft assets like Bing and AdCenter.

According to Elop, Nokia is not abandoning Ovi or Meego it is developing with Intel, but these two are going to form part of Nokia still in the future. Meego will become open-source based mobile operating system project. Nokia plans still to sell 150 million Symbian OS phones.

A Suicide?

There are more than 20.000 Finns who might lose their jobs because of the new strategy. While Nokia employees protest, Google is quick to take advantage of the Nokia top talent. “Any Nokia software engineers need a job? We’re hiring: www.google.com/jobs”, tweeted Aidan Biggins, responsible of personnel in Google Europe, Middle-East and Africa, on Friday. To be honest, many of the software engineers working for Nokia hate Microsoft and other closed ecosystems like Apple and this is why Google’s offer to move might very well be tempting for the top developers. Especially if the national identity is lost. This is a serious danger, because the loyal developers are the heart and soul behind the success of any mobile brand and device.

Another problem are the loyal fans who are highly disappointed of Nokia’s recent move and the fact it “has sold its soul to Microsoft”. They want freedom to do what they want with the mobile and, as Nokia developers, hate closed ecosystem. Other fans love the clear Finnish identity and quality and how the brand stands out from the other mobile manufacturers. Again, if the identity is lost, brand will experience some very rocky times.

And of course, this may well be a Microsoft’s evil plan to eat, chew and kill Nokia by taking its independence.

Genius move?

Microsoft is a strong brand and has a large software clientele, Nokia has the quality hardware side and a strong brand outside U.S.

Microsoft has been struggling in the market as well, because mobile devices are taking over the traditional computer industry and it has not really got on board yet. Therefore, the company might actually invest, instead of destroy,  big money in this alliance, because its Windows Mobile OS has a very lousy position in the Smartphone market. Since Nokia has negotiated a solution they still can tailor and update themselves, the brand may well take position over competitors relying on Google for progress. Nokia will also gain access to the U.S. market taking advantage of the Microsoft’s extensive network.

Usability: according to the 2010 Digital Influence Index by Fleishman-Hillard and Harris Interactive, mobile users are not keeping up with the rapidly growing technology of the devices. We are not talking only about the U.S, the Index includes 48% of the global online population, such as France, Germany, the United Kingdom, Canada, China, Japan and the USA. People love Smartphones and the market is booming yet the users do not realize the real potential their phone has. Even if Mobile Internet use is increasing, there is a considerable difference between the capabilities the Smartphone offers and the quantity of people who actually leverage them. Maybe a Smartphone that is highly usable and helps users to discover new features is the new area to exploit.

If Nokia succeeds launching its new mobile with Windows Mobile OS, everything may not be lost. It might be a mobile that is more attractive and easier to use, seducing young people with improved gaming and older business audience with improved mobile email and work documents that are easier to edit. This might be a winning factor especially in emerging markets; Executive Fred Baumhardt stated at Microsoft SA’s Tech-Ed Africa 2009 conference in Durban, that mobile devices such as Smartphones are entering the market four times faster than PCs or laptops. They have the potential to bring Internet connectivity and replace the need for other gadgets, providing considerable cost savings to many small businesses and consumers in Africa.

What comes to gaming, maybe Nokia should talk to other successful Finnish company, Rovio, who has created the Angry Birds we all love.

Maybe everything is not lost if Nokia keeps its head cool, does not lose its Finnish integrity and plays its card right.