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  • Google's Android Becomes the World's Leading Smartphone Platform

    Canalys today published its final Q4 2010 global country-level smartphone market data, which revealed that Google’s Android has become the leading platform. Shipments of Android-based smartphones reached 32.9 million, while devices running Nokia’s Symbian platform trailed slightly at 31.0 million worldwide.

    But Nokia did retain its position as the leading global smart phone vendor, with a share of 28%.

    The fourth quarter also saw the worldwide smartphone market continue to soar, with shipments of 101.2 million units representing year-on-year growth of 89%.

    According to the report, in Q4 2010, volumes of Google OS-based smartphones (Android, OMS and Tapas) were again boosted by strong performances from a number of vendors, notably LG, Samsung, Acer and HTC, whose volumes across these platforms grew 4,127%, 1,474%, 709% and 371% respectively year-on-year. HTC and Samsung together accounted for nearly 45% of Google OS-based handset shipments.

    "2010 has been a fantastic year for the smart phone market. After a difficult 2009, the speed with which the market has recovered has required real commitment and innovation from vendors and they have risen to the challenge," said Canalys VP and Principal Analyst Chris Jones.

    "But vendors cannot afford to be complacent. 2011 is set to be a highly competitive year with vendors looking to use new technology, such as dual-core processors, NFC and 3D displays, to differentiate their products and maintain value," he added.

    At a regional level, Europe, the Middle East and Africa (EMEA) remained the largest market, with shipments totalling 38.8 million and a year-on-year growth rate of 90%. Nokia continued to lead in EMEA and Asia Pacific, but in 2010 it was overtaken by RIM in Latin America, which shipped over a million more units than Nokia in Q4 2010. The vendor was particularly helped by the popularity of its mid-range smart phones, such as its Curve family of devices.

    The United States continued its reign as the largest country market in terms of shipments, at more than double the size of the Chinese smart phone market. RIM recaptured first place from Apple, as the latter experienced its usual US seasonal dip, and RIM benefited from the first full quarter of shipments for the BlackBerry Torch. HTC successfully maintained its third-place ranking in the US for the third consecutive quarter, driven by its speed to market with the latest Android updates and new Windows Phone 7 devices.

    "The US landscape will shift dramatically this coming year, as a result of the Verizon-Apple agreement,’ said Canalys Analyst Tim Shepherd. "Verizon will move its focus away from the Droid range, but the overall market impact will mean less carrier-exclusive deals, while increasing the AT&T opportunity for Android vendors, such as HTC, Motorola and Samsung."

    Android was by far the largest smart phone platform in the US market in Q4 2010, with shipments of 12.1 million units – nearly three times those of RIM’s BlackBerry devices. Windows Phone 7 devices appeared too late in the quarter to take full advantage of holiday season purchasing. As a result, Microsoft lost share in the United States, from 8% in Q4 2009 to 5% in Q4 2010.

    Related news
    IDC: Mobile Phone Market Grows 17.9% in Fourth Quarter
    Android Overtakes iOS in Latest Mobile Mix Report
    Amazon Opens Android Application Store to Developers
    Google Android Reaches #2 Spot among Smartphone Platforms

  • Apple Takes the Lead in the US Smartphone Market with a 26% Share

    In Q3 2010, the worldwide smartphone market grew an impressive 95% over the same quarter a year ago to 80.9 million shipped units, according to Canalys.

    Nokia retained its leadership position, albeit by a diminished margin, with a 33% share of the market. Apple’s healthy performance this quarter saw it achieve a 17% share worldwide, a little ahead of RIM, which held a 15% share this quarter.

    In the world’s largest smart phone market, the US, Apple ousted RIM from the top spot, seizing a 26% share as iPhone shipments continued unabated. RIM has also launched its latest generation smart phone, the Torch, though it only saw half a quarter’s shipments in the US.

    But the plethora of smart phones running the Open Handset Alliance’s (OHA’s) Android platform meant that Canalys’ final published country-level data shows that it took the lead in the US market by operating system, with a 44% share.

    As well as the positive picture in the US, Canalys’ detailed country level smart phone research has consistently highlighted the importance of, and differences in, ‘emerging markets’. For example, in what are now being called the ‘BRIIC’ countries (Brazil, Russia, India, Indonesia and mainland China), smart phone shipments increased by 112% year-on-year, faster than the market overall, and each country individually saw strong growth. Nokia was the leading vendor in all five BRIIC markets in Q3 2010, benefiting from its global reach and channel relationships.

    According to Canalys, once again this quarter, it was devices running the Android platform that proved the greatest driver of growth in the worldwide market, up 1,309% year-on-year from 1.4 million in Q3 2009 to more than 20.0 million units in Q3 2010, forming a quarter of the market share. “With Samsung, HTC, Motorola and Sony Ericsson all delivering large numbers of Android devices, and with focused efforts from many other vendors, such as LG, Huawei and Acer, yielding promising volumes, the platform continues to gather momentum in markets around the world,2 said Canalys Senior Analyst Pete Cunningham.

    Driven by Nokia, the Symbian Foundation retained its position as the leading smart phone OS vendor worldwide. Of the 56 named countries that Canalys tracks, it is still the number one OS vendor in 37 of them because of Nokia’s dominance, plus in Japan, where its position is supported by Fujitsu and Sharp. According to the report, the launch of Nokia’s new range of Symbian devices, particularly the N8, will give a boost to its holiday season shipments, and the outlook into 2011 remains positive as Nokia aims to push Symbian devices further into the mid-tier of the market to attract mass-market volumes.

    Devices running Microsoft’s OS accounted for just 3% of worldwide smart phone shipments in Q3 2010, though with the launch of Windows Phone 7 devices, the outlook for the fourth quarter and beyond is significantly improved. “Windows Phone 7 is streets ahead of earlier iterations and provides a vastly improved user experience that will pleasantly surprise many people when they come to use it. The integration of Microsoft service assets, such as Xbox Live, Bing, Zune and Office, greatly strengthens the proposition and we are confident that the initial array of products will perform well,” said Chris Jones, Canalys Principal Analyst.

    Related news
    Gartner: Android to Become No. 2 Worldwide Mobile OS in 2010
    Mobile Navigation Users Increased 57% in H1-2010 to 44 million
    Smartphone and Tablet Sales Ignite Advanced LCD Market in 2010

  • Turbulence Ahead for Cloud Computing

    Cloud computing took a serious hit with Google’s exit from search business, and its subsequent service issues, in mainland China, announced Canalys.

    While cloud solutions will remain appealing for certain customers with limited international ambitions, the platform’s inherent security and access issues will herald a shift back to traditional software models, said the industry analyst group in a recently issued report.

    ‘The two biggest trends in the IT industry – the rise of cloud computing and China’s emergence as a global growth engine – have just collided with a bang,’ said Steve Brazier, President and CEO of Canalys.

    ‘The hacking of Google’s systems in China has demonstrated that security weaknesses in the cloud have moved from a possibility to an actuality.’

    Canalys maintains that legacy software companies that reposition themselves for local services, or at least a mixed model, stand to benefit the most from cloud computing flaws, as customers demand increased security and access controls: ‘Customers will want global solutions that help them decide what information is stored where, coupled with systems that function competently, even when Internet access is down or restricted,’ said Brazier.

    As companies have sensitive information across many domains – finance, HR, legal, R&D and marketing, among others – a security breach anywhere could have devastating and far-reaching effects. Likewise, the regulatory threat posed by the local political landscape in emerging countries will influence multinationals’ choice of software platform moving forward.

    ‘It would be extraordinarily naïve for a company to believe Google’s situation with China is unique,’ said Brazier. ‘All the US giants have struggled, while local Internet brands have snagged top positions across major areas, such as search, auctions and video sharing.’

    Late entry, language and cultural issues, such as failure to adapt to local market trading conditions, combined with site performance, have encouraged customers to stick with local solutions in China. Similarly, other emerging regions, such as the Middle East, Russia and Indonesia, are capable of making unilateral business decisions to the detriment of foreign companies, while the situation in India and Brazil – more stable for now – could change due to the influence of neighboring countries.

    According to Canalys, cloud computing will not disappear for some time, due to the continued support of US-based proponents, which have yet to see the model’s challenges in emerging markets. Smaller companies, more willing to live with risks, and public bodies, mainly restricted to national borders, will be less concerned about international access issues and local hacking threats.

    The future of cloud computing will be a key technology track at EMEA’s largest and most influential annual channel event, the Canalys Channels Forum, being held from 5-7 October at the Hotel Arts in Barcelona. This two-day, invitation-only event will feature senior one-to-one meetings, business-savvy keynotes, research into industry and channel trends, and expert-led debates among an audience of more than 500 executives from top vendors, distribution management, leading SMB resellers and Canalys analysts. More information about the event can be found at www.canalyschannelsforum.com.

  • MWC 2010: Interview with Pete Cunningham, Senior Analyst at Canalys

    On the last day of the Mobile World Congress we met with Pete Cunningham, Senior Analyst at Canalys, he gave us a review on what his impressions had been at the congress.

    Watch the video to get his expert opinions on the devices and apps which impressed him most at the Congress.

    Interestingly he told us that the smartphone market expectations for 2010 and 2011 are very positive, the smartphone sector is expected to grow as it reaches the mass market and more products become readily available to a greater audience. A great industry to work in!

  • What Does Nokia’s Launch of Free Navigation Mean to the Market?

    On 21 January 2010, Nokia announced that it is to make turn-by-turn navigation free with its Ovi Maps offering. The research firm Canalys claims the move is a logical one for Nokia to take, especially in light of the recent launch of Google’s free navigation solution.

    Google’s navigation currently supports only Android devices and is confined to the United States – though Canalys expects both of these limitations to be addressed this year.

    “As Google’s free solution becomes more widely available, it will inevitably have a negative impact on consumers’ willingness to pay for navigation, making it increasingly hard for application providers to charge for their solutions. Yet Nokia’s move should be viewed less as a defensive measure and more as it going on the offensive,” state Canalys.

    “It already has the necessary assets in-house, with its own navigation software, ownership of Navteq, and a huge, growing installed base of GPS-integrated smart phones. In making its own solution free now, it has a head start over Google and any other vendor that follows in every supported market except the US, giving it time to firmly associate itself with the concept of free navigation through promotional activity.”

    Canalys’ end-user research has repeatedly shown that navigation is a feature that consumers want on their mobile phones. Being the first to make global navigation free across so wide a portfolio of devices will give Nokia handsets a true value-add and help it differentiate its products in the increasingly competitive smart phone space, according to the research group.

    Alanysts predict Nokia’s free navigation announcement will not be welcomed though by all its mobile operator partners.

    “While some are happy to endorse or support services that help encourage data consumption, many offer chargeable GPS navigation services themselves, albeit with varying success outside the US, and may well be reluctant to support a move that encourages consumers to expect navigation and other mobile content and services for free, eroding potential revenue streams,” says Canalys.

    According to the analysis, Nokia’s announcement may conceivably push more operators into partnerships with third-party navigation solution providers, where navigation is bundled with the cost of a data plan, providing their own effectively free navigation solutions with an incentive for customers to sign up to data plans, while maintaining customer ownership advantages.

    “Similarly, handset competitors may consider entering into deeper, closer relationships with selected navigation software vendors to offer their own bundled or free solutions. This would minimize Nokia’s ability to use navigation as a differentiator and enable them to also take advantage of the growing consumer appetite for, and expectation of, having free navigation available on smart phones out-of-the-box,” states Canalys.

    That it may prompt operators and some of Nokia’s competitors to pay more attention to their own navigation partner relationships.

    Canalys analysts claim the most significant impact for navigation vendors will likely be the effect that a widespread Nokia advertising campaign will have on consumers and their willingness to pay for navigation.

    "All providers will come under substantial pressure to reduce prices, and few consumers will be happy to pay the kind of prices that vendors such as TomTom or Navigon are currently able to command through application stores,” thay say.

  • VoIP Investment Remains Strong, IP Line Penetration Rose to 40% in Q3

    According to the recent Canalys report on IP telephony, investment in enterprise telephony remained restricted in EMEA in Q3 2009, with call control line shipments down 17.5% compared with the same period in 2008.

    The research shows volume declined 21.5% in Q1, while Q2 was down 18.6%. In total, 4.8 million lines were shipped in the quarter, a 4.4% sequential increase. IP line penetration increased to 40%, up from 35% one year earlier, as businesses continued to replace aging TDM infrastructure and expand trial projects.

    Canalys claims aggressive cash-back, fixed price, minimum spend and competitor trade-in promotions, as well as 0% financing offers have helped prevent greater reductions in shipments during 2009.

    Alcatel-Lucent, Siemens and Aastra continue to lead in EMEA, with Cisco gaining ground.

    ‘Alcatel-Lucent has been a stable performer in the region over the last eight quarters, overtaking Siemens as the market leader in 2008,’ said Alex Smith, a Research Analyst at Canalys.

    ‘During the recession, it has managed to maintain its market share, though its Q3 shipments were hit by the holiday season in its core markets, particularly France, Spain and Italy,’ Smith added.

    Siemens remained the second largest vendor with a market share of 13.5%, though this has steadily eroded over the last two years. Overall, Siemens is continuing to invest in growing its indirect business, but shifting direct accounts to the channel will take time, according to Canalys.

    In September, it announced plans to accelerate this process by selling its direct sales organisations in 27 non-core countries to Netlink, a deal worth €204 million ($308 million), more than the original €175 million ($275 million) the Gores Group paid Siemens AG for its 51% stake in the overall business.

    Aastra was the third largest vendor in the region, with a market share of 13.0%. During the quarter, Aastra benefited from competitor cash-back trade-in promotions in France, while investment in direct-touch activities helped it improve its German business, finds the report.

    Cisco continued to grow its market share during the recession, primarily driven by gains in Western Europe, particularly in Germany where it has invested heavily in marketing and sales resources. It accounted for 11.6% of total shipments, compared with 11.2% in Q2 and 10.3% in Q3 2008.

    Avaya, which grew its shipments by 4.2% over Q2 with strong sales in the UK, catalysed by the release of IP Office R5, won the auction for the Nortel Enterprise business. Canalys says new entity has the potential to emerge as the leading vendor in EMEA.

    ‘Shipments for the final quarter of 2009, typically the largest in EMEA, are expected to grow sequentially but will still be down annually as many businesses set budgets earlier in the year when economic conditions were worse. Year-on-year growth is expected to resume in 2010, though volumes will still be lower than in 2008 as economic recovery is expected to be slow after the worst recession for decades,’ said Matthew Ball, a Senior Analyst at Canalys.

  • U.S. Smartphone Market – Only the Strong Will Survive

    According to the recent Canalys Smartphone Analysis, the smart phone market continues to increase as a proportion of the overall mobile phone market in the US.

    Despite a drop in market growth to 6% in Q3 2009, down from 37% in Q2 2009, smart phones represented 26% of all mobile phones shipped in Q3 2009. This is up from 24% in Q2 2009 and will continue to rise in coming quarters.

    The top two smart phone vendors increased their combined market share in Q3 to 76.3%. Research in Motion (RIM) held 48.1% while Apple held 28.2%.

    “Despite what looks like a ‘closed shop’, with continued growth expected in the US smart phone market there is still plenty to play for, and new products are coming thick and fast from the competition,” the report says.

    Four other smartphone platforms in the US market today – Android, Symbian S60, webOS and Windows Mobile – represented only 23.7% of the market in Q3.

    Canalys claims the challenge for the handset vendors on the multivendor platforms is to “differentiate their products, especially as the market gets busier, while also providing competition to Apple and RIM and choice to the consumer.”

    Canalys also thinks that with an increasing number of Android and Windows Mobile devices launching, there can be little, by looking at the specifications, to choose between one and another on the same platform. “A key product differentiator will be seen in the software and the user interface. In short it is all about the user experience, particularly how the user organises their favourite applications, content, messages, people and places,” analysts say.

    Canalys says Verizon needs to fight back against the iPhone’s tremendous success and will be hoping the new Android devices (Motorola’s Droid and HTC’s Droid Eris) will “light up its somewhat uninspiring consumer device portfolio.” Demand for Android devices will be helped by the addition of Google Maps Navigation on Android 2.0.

    Analysts reminds us of the fact that AT&T is the only one of the big four US mobile operators not yet to range an Android device.

    RIM’s US device shipments were up 27.5% in Q3. Around 3.8 million net new subscriber accounts were added worldwide in its fiscal quarter and profits beat analyst expectations. According to Canalys estimates, RIM, with only the Storm, held a 2.2% share of US touch-screen smart phones in Q3 2009. As its entry-level and mid-range (mostly keyboard-based) devices increasingly come up against new touchscreen Android devices, buyers’ appetite for BlackBerry devices will be tested.

    The iPhone remains the leading consumer smart phone in the US. The response to the iPhone 3G S was ‘tremendous’ and ‘very surprising’ according to Apple, so much so that many international markets had limited supply for several weeks.

    Canalys says with each software release the iPhone gets more ‘CIO friendly’. According to Apple, the iPhone is being ‘deployed or piloted’ at more than 50% of Fortune 100 companies and is doing well in higher education institutions and government agencies, though increased device security will still be needed for broad deployment to be considered in government.

    The report shows that US smart phone share of HTC, the leading worldwide manufacturer of Android smart phones, supplying T-Mobile and Vodafone (in EMEA) as well as selling under the HTC brand, has hovered around the 5-7% mark for five quarters.

    “HTC devices are ranged by the big four US mobile operators. These relationships and the installed base of customers it has are crucial to HTC, and Microsoft. From being the first, HTC is now one of many Android device vendors,” says Canalys.

    According to the research group, Motorola “rose from the ashes” of the smart phone market recently with the announcement of the new Android-based smart phones, the CLIQ with T-Mobile and the Droid with Verizon.

    “If the CLIQ and the Droid do anything like as well as the RAZR did it will give Motorola a solid base for 2010. Working on Android means that building its own app store need not be a top priority for Motorola.,” according to Canalys.

    They also think Nokia really needs a big hit in the US (“It has failed to get its most popular Nseries devices ranged by the leading US mobile operators and it has thus far failed to make a significant impression with its Ovi services in the US”), Palm needs the old volumes back (“Mobile operators must be convinced that they can profit from ranging Palm webOS devices. Palm needs their commitment”), and Samsung has lagged in smart phones, although it still leads the overall US mobile phone market and continues to roll out new handsets with all leading mobile operators at a “blistering pace.”

    Canalys notices that there are more vendors planning to launch smart phones in the US in the next few months: Dell, Kyocera Wireless, LG (Android handsets) and Acer (Android and Windows phones).

    “They will all be faced with the same challenges: getting their smart phones ranged by the mobile operators and capturing the imagination of consumers. The mobile operators can only range, subsidise and promote a certain number of devices. As Apple did, new entrants need to come up with something special, and that is no easy feat,” the report concludes.

  • Will Chrome OS Lead Consumers into Cloud Computing?

    "Chrome OS is ideal for ‘smartbooks’ and will lead consumers further into cloud computing," says Canalys in its recent Notebook Pulse Report.

    Google unveiled its Chrome operating system, making the source code available to developers and enabling them to assist in the project a year before Chrome OS is due for public release.

    “Speculation about Chrome OS and its impact on the PC industry has been rife since Google first announced it was working on the project in July. The announcement goes some way to address some of the questions that have since surrounded the OS,” says Canalys.

    Google has provided information on its initial use cases for devices running Chrome OS in documentation released on the platform. Canalys thinks it suggests that Chrome will suit secondary devices for ‘couch computing’, devices that are shared among family members, and those used in coffee shops.

    “To all intents and purposes, Chrome OS is an expansion of Google’s Chrome browser. All applications running on Chrome OS will be web applications that run from within a browser window.”

    But there are additional features that extend the functionality beyond that of a standard web browser. The addition of persistent windows, called ‘panels’, enables developers to create simple applications that can float on top of the browser window or be minimised when not needed.

    Two usage cases of panels that Google has so far demonstrated were an instant messaging client and a window for playing media. According to the analysts, another aspect of Chrome OS that Google is keen to promote is its security.

    “If the OS has been compromised, it is able to repair itself using its verified boot process. If the OS detects any changes to the system on start-up it will automatically initiate a recovery process that will replace the OS with the latest available version,” the report says.

    As Chrome users cannot install native applications, Chrome will not require additional security software. “Instead, Google will take responsibility for securing Chrome OS, possibly extending protection technologies from the Postini acquisition to protect Chrome users before threats reach the devices.”

    Chrome OS stores all of a user’s personal data in the cloud, so that if a chrome OS device is lost or stolen, personal data is not compromised and remains permanently backed up.

    Canalys says, as usual, concerns will remain regarding the storage of personal data with an advertising company. “A further concern is that Chrome’s lack of local data storage and limited offline functionality will make it largely unusable without an Internet connection.”

    Canalys therefore expects that devices running chrome OS will be bundled with mobile data contracts, and support for ARM-based processors will make it an ideal ‘smartbook’ OS.

    Analysts say the fact that the OS is not intended for offline use comes as no great surprise. “After all, unconnected users cannot access Google’s services or be reached by Google’s advertising.”

    “Though much could change between now and Chrome’s release in 2010, it is clear that, at present, the OS is not intended as a replacement for Windows or any other fully functional OS.”

    According to the report, one thing is clear: “However, Chrome OS will be the next step in bringing consumers further into the world of cloud computing, a world where Google provides many applications and most of which are free.”

  • Motorola Becomes a First-Mover Again

    “Android provides differentiation today, but may not tomorrow,” says recent Canalys report on Motorola’s market strategy.

    During its Q3 earnings call on 29 October, Motorola’s Co-CEO Sanjay Jha announced the company’s quarterly profit of $12 million, up from a $397 million loss a year ago.

    Canalys analysts state this was primarily driven by aggressive cost-cutting and the improvement was reflected in a stock price rise of more than 12%.

    Despite the overall positive result, the troubles faced by Motorola’s handset division continue. During the quarter it recorded sales of $1.7 billion, but made a loss of $183 million, shipping just 13.6 million devices.

    More positively, less than two months after announcing the CLIQ, Motorola introduced its second Android smart phone – the DROID – earlier in the week. The DROID is the first announced phone to support Android 2.0, with all the enhancements that brings.

    DROID will be available in the US exclusively from Verizon Wireless from 6 November. It will cost $199.99 with a new two-year contract after a $100 mail-in rebate.

    According to the report, Verizon is pitching the DROID aggressively against Apple’s iPhone and the device fills an important gap in the operator’s smart phone portfolio.

    “For Motorola, this partnership is an invaluable opportunity to rebuild its status within the handset market and draw attention to its Android-centric strategy,” it says.

    For the past year, Motorola has put significant effort into streamlining its platforms, having previously produced an array of smart phones on Windows Mobile, Symbian and various forms of Linux.

    The company aims to reduce its reliance on feature phones and will hope to be able to push Android down into higher volume, but more price-sensitive segments over time.

    Canalys claims the quick rollout of DROID following the CLIQ demonstrates that the company is moving in the right direction, having suffered from portfolio stagnation following the earlier tremendous success of the RAZR.

    Both the DROID and the CLIQ may do well in the US in the short term, but there can be no room for complacency. Over the coming months the market will see a huge influx of Android devices from top-tier handset brands as well as from vendors very focused on delivering devices to operators at lower cost.

    “For Motorola to maintain momentum it will need to be able to differentiate itself from the many other Android products that will be available in 2010, and it will need to do this on the international stage. China will be critical. Motorola has enjoyed success with its Linux devices there in the past and it will need to replicate this success and build upon it with its Android devices.”

    Analysts conclude that the company will also need to ensure that the devices it produces compete on quality as well as price, ensuring that a focus on getting Android into the middle-tier of the market does not result in compromises that lead to products that deliver an inferior user experience.

  • Application Stores as a Great Opportunity for Mobile Navigation


    Application stores are presenting a new, significant channel for the promotion and distribution of mobile applications in EMEA. In recent report Canalys analyzes how important will this channel become for navigation applications, and what opportunities does it present.

    “Turn-by-turn navigation is one of the few types of mobile application that consumers have shown a willingness to pay a valuable premium for. In part, this is because these solutions replicate the dedicated, portable navigation device (PND) proposition that consumers are used to associating with a price tag of up to €250 – and even more for some specialist niche products,” says Canalys.

    But, encouraged by existing application stores, there is an expectation that the applications found in app stores are cheap or even free: certainly Apple has seen mostly free applications downloaded from its store.

    Navigation offerings therefore need to be priced competitively to succeed, while preserving sufficient margins for developers.

    Canalys anticipates that as perpetual solution prices inevitably fall, vendors will look to subscription business models, at least for additional premium content, to deliver higher returns from their customers.

    “Vendors must also watch closely how free or very cheap basic navigation applications, such as Nav4All, AndNav2 and Roadee, perform. Though lacking brand recognition and usually based on community-generated maps of questionable and varying quality, such as those from the OpenStreetMap project, consumer expectations of these solutions are low and relatively simple to exceed,” analytics say.

    Canalys claims if these applications can give a user experience good enough for basic use cases, reviews and ratings and viral promotion could see them taking customers away from established vendors.

    App Marketplace

    Application stores, meanwhile, are already establishing themselves as consumers’ first port of call when looking for mobile applications or device personalisation and enhancement options.

    According to the report, technological and optimisation barriers to mass-market uptake of phone-based navigation in EMEA are continually being eroded. Of the 26.1 million smart phones that shipped in EMEA in H1 2009, 22.6 million (86.7%) had application-accessible integrated GPS chipsets, compared with just 36.0% for the same period in 2008.

    In H1 2009, 42.3% of GPS-integrated smart phones that shipped in EMEA used a touch-screen as the primary input method. Meanwhile, Nokia continues to bundle free periods of turn-by-turn navigation with the vast majority of its S60 smart phones and to offer navigation-focused devices or SKUs, such as the 6710 Navigator and the 5800 Navigation edition, respectively.

    Other handset vendors, such as HTC and Samsung, as well as some operators, have also now finally started to not just pre-install, but actively promote navigation solutions, usually powered by third-party software.

    “All this has helped create a market environment, certainly in the developed markets of Europe, where consumers are now well aware that they can use mobile phones for satellite navigation,” says Canalys.

    Combined with growth in mobile application marketplaces and the accompanying consumer interest in browsing and discovering applications, the EMEA market for phonebased navigation offers exciting growth potential.

    Canalys forecasts that the user base for phone-based navigation in EMEA will grow by 40% year-on-year to 6.3 million in 2009, and by 54% to 9.7 million in 2010.

    How to exploit the new opportunity?

    With June’s iPhone OS 3.0 launch, Apple allowed turn-by-turn navigation applications to be developed for the iPhone and sold via the App Store. Navigon quickly got its MobileNavigator application into the store, beating TomTom, which had already shown its application at Apple’s Worldwide Developer Conference, analyzes Canalys.

    Navigon evidently saw a first-mover advantage and quickly became a leading application on the German and UK stores, where its brand is established, priced at €99.99 for European map coverage, or €50 to €70 for a single country or group of countries.

    The Navigon application, and the similarly priced TomTom solution that followed just over a month later, were positioned as premium applications at price points comparable to entry-level PNDs.

    “ALK, however, took a different approach, quickly placing its perpetually licensed CoPilot Live applications in the store at the much more competitive, affordable prices of €33.99 for specific groups of European countries (eg, the German-speaking DACH countries or Benelux), or €79.99 for Europe-wide coverage.”

    The research says ALK, with a considerably less well-known brand than TomTom, has managed to become a strong contender among turn-by-turn apps on the App Store through being competitive, and now has the highest grossing paid-for application in the UK.

    TomTom’s approach, meanwhile, has been less hurried, for better or worse, and has relied on its brand strength to deliver results and elevate it above a need to enter into a price war. It is also focused on delivering a PNDlike experience as far as possible.