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Spillikins #120. The Future of Supermarket Shopping

Another week in the US and again in sunny Florida: I've met lots of interesting people and technologies. America is determined to regain leadership in telecom and they are putting a lot of effort into it. I think that de facto it has already happened and the European companies have lost this round. I have discussed this topic many times in the Spillikins so I will not be repeating myself. I want to discuss new supermarkets practice that I have found very interesting.

Spillikins #92. USA as the technological centre of the world


  1. Supermarkets Adopt Shopping Scanners
  2. Japanese Tourists and the Japanese Syndrome
  3. Windows Phone 7 Is in Trouble Ц Data by Gartner
  4. Playbook Sales Fail?!
  5. Mobile phones market Q1 2011 Ц Nokia goes 14 years back
  6. Intel's Cooperation with Nokia

Supermarkets Adopt Shopping Scanners

The US supermarkets adopt special shopping scanners. At the front of a store you pick up a scanner and place it on your cart. The scanner looks like a smartphone with a handle Ц it displays information about the products and suggests similar products Ц you just need to scan the bar code.

While you are browsing the aisles you scan products you need and put them into your cart, the scanner also display special offers and coupons. For example, if you buy coffee the scanner may suggest you to buy creamer with a discount.

The device remembers all your purchases and you don't need to wait for the cahier to scan all your purchases he will only count the number of items in the cart. In the future it will also be unnecessary as there will be scales that will automatically compare the weight of the items in the memory of the scanner with your cart.

It allows giant supermarkets to cut on the number of cashiers and increase their efficiency Ц it saves a lot of time. This system was first tested by Home Depot last fall and they were impressed with the results so the 2000 stores of the company will soon have shopping scanners. Ahold USA's Stop&Shop called this system Scan It and it is already working in 250 supermarkets. The manufacturer of the scanners is Motorola. The Ahold experience has been very successful so far Ц an average customer with a scanner spends 10% more thanks to the immediate discounts. The testing has shown that people quickly learn how to use the scanner and it is very easy to remove an item from the list in case you scanned something by mistake.

Souce: online.wsj.com

What will happen to these systems in the future? We can imagine an expansion of this technology. Today, more than 70% of phones sold in the US are smartphones Ц the US is the world leader in the number of smartphones so there are now prerequisites for next generation of services like smart shopping. In the near future it will look like this: when you go to a supermarket you are offered to either take the scanner or install the company's shopping application on your smartphone and if you choose to install the app the store will offer you a $10 discount for a $50 purchase for installing the application and agreeing to receive the store's ads. What American retailers do today is collect personal information about their customers. If you go to a Ralph Lauren store the cashier will ask your name and your email to send you newsletters. Timberland offers a $10 discount for your email. It is a very common yet unreasonable practice. The unwanted ads irritate people and customers often provide email addresses they have created for spam. So in the long run the efficiency of such ads is next to zero. I am a regular customer at Ralph Lauren and I have added their mail address into the spam list. I am not interested in these newsletters as I will anyway buy at their stores at suitable time.

Souce: online.wsj.com

Back to smartphones: there are several ways shopping can work on phones. At first it may work by means of regular bar codes and an average camera with autofocus Ц applications for bar code scanning have been on the market for about five years now. But with growing popularity of NFC stores will adopt radio tags that will make shopping even more convenient and speedy. I think in the next 10 years stores will use both bar codes and radio tags.

But besides these scenarios phone apps will also solve a number of other tasks Ц they offer a ready customer loyalty program with no need for special cards Ц the phone will store all the information the company needs to know. And the vendors won't need to know your age, gender and habits. The phone will know what kind of goods you buy, what colors you prefer, at what time you shop, how much you spend etc. There has not been a single loyalty program that would consider so many factors at once Ц it ia a brand new level of customer relations which also solves the problem of privacy Ц all the data is processed automatically. Don't think that this is far in in the future Ц it is just around the corner and the companies that will pioneer these technologies will benefit greatly from sales and create new market opportunities for themselves.

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Japanese Tourists and the Japanese Syndrome

Every year I carefully watch how people celebrate the ninth of May in Russia and, in particular, what they do during the salute. The Japanese syndrome is spreading and by the Japanese syndrome I understand the phenomenon of perceiving the world from the viewfinder. It is substitution of impressions of buildings, squares, works of art by their surrogate on the small LCD screen of the camera. And while with camera this process is discrete and after taking a picture you look around for a good angle, during video recording you are completely absorbed by the process. The Japanese syndrome reveals a part of our nature Ц we are nit sincerely interested in the surroundings but we are creating a report for our families and friends, we want to immortalize the fact that we have been to certain places. We watch such movies a couple of times and then forget about them. I am using the term the Japanese syndrome because it was the Japanese tourists who started to film their every step when abroad.

This phenomenon spreads and roots deeper and deeper. During the salute many people were just watching the show and many were holding phones looking at everything through tiny screens. They create surrogate impressions only to present proof later that they have been there. While any reasonable man understands that you cannot get proper video quality with a cell phone, especially at night making the whole idea ridiculous.

I have asked some of them why they were filming the fireworks and the answers boiled down to: we want to remember this. This is self-deception, the motive here is different Ц people want to create an anchor point to reality and then demonstrate it to their friends. And this I call the Japanese syndrome Ц when the desire for new impressions and emotions is substituted by emotion stockpiling.

This phenomenon is much more than just filming. In the business lounge of an airport I have once observed an amusing scene. A famous singer was grabbing sandwiches at the bar when a man approached, greeted him and asked the singer whether he recognizes him Ц the singer's face expressed that he did not. Then the man says that he is the husband of another famous singer. The singer nodded took his sandwiches and hurried to his table Ц the conversation failed.

I remembered this story because I have recently observed a similar scene: I have been in a company of young actors of different Moscow theaters, there have also been a bunch of older movie actors, my peers. I must admit that I am not really familiar with these circles Ц I don't have time to keep up with the theatrical life or watch TV. I knew some of them but about the half of them were strangers to me. I have been getting acquainted with them and one of the man introduced himself as the boyfriend of an actress. For him the fact that he sleeps with an actress was the beginning of coordinates. This was his achievement he takes pride in. And he was eager to show everyone else his achievement. I have not seen a single successful man in my life who would do that. And under a successful man I understand someone who knows what and why he is doing something and does not start enumerating his regalia in your face when you meet him. Once travelling in by plane I met a very high ranking official but I learned it only after we have landed and decided to exchange our numbers. He was a pleasant man, we discussed many different issues and he introduced himself simply as Sergey Ц no tags or epithets, he did not need any self-promotion.

You may ask what celebrities may have to do with the Japanese syndrome. But I think that these are the facets of the same problem. Instead of enjoying works of art or beauties of nature we can't stop shooting with our cameras only to report to our friends how great it was. The subtext here is that I enjoyed it Ц you did not. Same story with the relationships Ц people substitute relationship with an image and this is just wrong.

Don't get me wrong Ц I like taking pictures to remember. But one should not get into extremes and confuse the reason and the purpose. I just don't want people to exchange a real thing for bleak LCD replicas. We need to fight the Japanese syndrome.

I will really appreciate your opinion on this issue Ц do you think such a phenomenon really exists? And is it an alarming issue or just a transient trend? Thanks a lot.

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Windows Phone 7 Is in Trouble Ц Data by Gartner

Gartner research company has openly published international sell-out data on smartphones for the first time. Until recently they offered only sell-in data. In Spillikins No 117 I gave information we managed to get about the retail sales of Windows Phone 7 in the final quarter of 2010. 674,000 devices out of 1.5 million shipped to chains is a complete failure. Figures from Gartner are also telling about the first quarter of 2011. The market managed to absorb 3,658,000 Microsoft OS handsets with the Windows Phone 7 getting around one half of the amount, which is 1.6 million. The data tells that sales to the channels have not changed in comparison with the start of sales (1.5 million against 1.6 million, while wholesale results according to my estimates range between 2.5-2.7 million). The considerable share of Windows Mobile devices is explained by the Chinese market and the efforts of HTC and Samsung to keep their sales in the segment. As far as Microsoft has already spent hundreds of millions to advertise and promote Windows Phone 7 the sales figures look ridiculously low. At the same time we still have a 100% gap between WP7 shipments to partners and retail sales. It is quite alarming, which means that in the next 2 quarters of the year retail sales of WP7 smartphones will either stay at the same level or will go down. The change in fortunes can only be caused by new models or the OS upgrade. The results may become visible only in the 4th quarter of 2011. Moreover, new models will be able to keep the sales at the current level without boosting them, because by the end of 2011 previous models will be turning obsolete.

Against the background of the market growth in absolute numbers the above mentioned trend will erode the market share of Microsoft and its products even further. Let's look at the following table.

Worldwide Smartphone Sales to End Users by Operating System in 1Q11 (Thousands of Units)
Company 1Q11 Units 1Q11 Market Share (%) 1Q10 Units 1Q10 Market Share (%)
Android 36,267.8 36.0 5,226.6 9.6
Symbian 27,598.5 27.4 24,067.7 44.2
iOS 16,883.2 16.8 8,359.7 15.3
Research In Motion 13,004.0 12.9 10,752.5 19.7
Microsoft 3,658.7 3.6 3,696.2 6.8
Other OS 3,357.2 3.3 2,402.9 4.4
Total 100,769.3 100.0 54,505.5 100.0
Source: Gartner (May 2011)

A year ago Microsoft could boast 6.8% of the market, but today its share stands at 3.6%. Despite the introduction of the new OS and active promotion Microsoft lost half of its market. The company will not be able to sustain the initial investment levels as it has no sense whatsoever, that is why we cannot expect any improvement in this respect.

As you see almost everybody is losing ground today. The share of Symbian decreased by 100% and its leadership crown is now owned by Android. The share of iOS increased a bit, but in absolute terms it almost doubled and I am not even going to mention the record breaking Apple revenues. RIM is losing out in the segment, because Android takes away its share outside the corporate market.

The market picture created by Gartner looks true to life and within this picture Microsoft strategy has no future at the moment. Many things have to be changed and the currently pedestrian development of the OS makes its short term success highly improbable during the next 12-18 months.

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Playbook Sales Fail?!

No research company has published the data for the sales of Blackberry Playbook as we have to wait until the beginning of summer. Nevertheless, Jonathan Geller from BoyGeniusReport released interesting figures received from an unidentified American retailer.

According to this piece returns of Playbook, which went on sale a couple of weeks ago, increased above the level of Motorola XOOM, which managed to get 7% . There are no exact figures for Playbook, but overall the article gives a similar worldview to mine. Unfortunately, at the moment Playbook is only a device for Blackberry users, who somehow ignored Apple iPad. I am not sure the numbers are considerable for this group.

Review of Blackberry PlayBook, Part 1

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Review of Blackberry PlayBook, Part 1

Going back to Gartner we can give a look at the overall phone market. A leader in absolute terms, i.e. Nokia lost 5.5% of the market share. In the first quarter of 2011 it could only boast 25.1%, which equals its figures of 14 years ago. The second placed Samsung also shed its market share albeit marginally. LG failed to capitalize on the market growth as well. The biggest winners are Apple, HTC, ZTE and small manufacturers. In the section Others we see a 7% increase represented by small manufacturers, which are booming at the moment and some of them will be able to join the ranks of bigger players. The Chinese companies are already on this way and they harbour certain ambitions. Deteriorating sales figures of Nokia, Sony Ericsson and Motorola will not be reversed in the immediate future as the heyday of these titans is in he past.

Worldwide Mobile Terminal Sales to End Users in 1Q11 (Thousands of Units)
Company 1Q11 Units 1Q11 Market Share (%) 1Q10 Units 1Q10 Market Share (%)
Nokia 107,556.1 25.1 110,105.4 30.6
Samsung 68,782.0 16.1 64,897.1 18.0
LG 23,997.2 5.6 27,190.1 7.6
Apple 16,883.2 3.9 8,270.1 2.3
RIM 13,004.0 3.0 10,752.5 3.0
ZTE 9,826.8 2.3 6,104.3 1.7
HTC 9,313.5 2.2 3,378.4 0.9
Motorola 8,789.7 2.1 9,574.5 2.7
Sony Ericsson 7,919.4 1.9 9,865.7 2.7
Huawei Technologies Co. Ltd. 7,002.9 1.6 5,236.1 1.5
Others 154,770.9 36.2 104,230.3 29.0
Total 427,846 100.0 359,605 100.0
Source: Gartner (May 2011)

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Intel's Cooperation with Nokia

I feel like mentioning again that Intel cooperation with Nokia had no prospects from the very outset. Our predictions turned out to be true. Moreover, during his meeting with investors the CEO of Intel Paul Otellini mentioned that the cooperation with Nokia was a mistake and the project took 7 years. In fact the joint project took much less time, but the boss of Intel must have had on his mind a subdivision of Intel dedicated to mobile devices. Now the people were redirected to other places and at the start of the next year the company will be able to unveil its own smartphone, but there will be another partner involved. I think it may be LG, which is a good choice for Intel, as far as LG needs an OS unavailable for others and it is ready to create devices for it. Samsung does not need another OS, because the company is moving forward with Bada and has high hopes for Android. They have the resources, but it would not be a wise strategy.

At the moment Otellini does not promise the Moon for Intel in the mobile Universe. The main issue for the company is the lack of solutions comparable with those offered by ARM. The energy consumption of Intel chips is several times higher and they cannot be used in modern phones. As a result Otellini compared the current tasks of Intel with those of 1990s, when Intel was working on Pentium. The company is planning to use its technology for proprietary chips and compete with ARM in 2012. The race is far from over and other players will be looking for entering the segment. Who will come on top is the question. At the moment we see a coalition between Microsoft and ARM joined by Nvidia. These three companies are trying to create a new mobile world and their moves are more than meaningful (the question is not about Windows Phone 7, but the expansion of MS software into mobile solutions).

Do you want to talk about this? Please, go to our Forum and let your opinion to be known to the author and everybody else.

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Spillikins #117. Playstation Network Ц Hackers Attack

Spillikins #118. Samsung becomes Number 1in Europe Ц Nokia falls behind

Spillikins #119. Skype is Going on Sale Ц Last Days of Freedom

Eldar Murtazin (eldar@mobile-review.com)
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Translated by Maxim Antonenko (maxantonenko@ukr.net), Robert Mugattarov (mugattarov@gmail.com)

Published — 23 May 2011

Have something to add?! Write us... eldar@mobile-review.com



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