Week in a Nutshell #4


Tablet shipments decline for the first time in Q4 2014, leaders Apple and Samsung both lose market share

76.1 million tablets shipped worldwide in Q4 2014 according to the International Data Corporation’s worldwide quarterly tablet tracker.

Q4'2014 Tablet Shipment: 76.1 million units (3.2% decrease vs. 78.6 million units in Q4'2013)
2014 Annual Tablet Shipment: 229.6 million units (4.4% growth vs. 219.9 million units in 2013)

Q4'2014 Tablet Shipment Stats. Source: IDC

2014 Tablet Shipment Stats. Source: IDC

Statistics show that Apple still dominates the tablet market with 27.6% annual market share but even Apple experienced a significant 14.6% decrease in shipments from 2013 to 2014. I think there might be two reasons for this decrease. First, demand for iPads reached to a maturity and new models (iPad Air 2/iPad Mini 3) do not provide any breakthrough features. Second, increased screen sizes of iPhone 6 and especially iPhone 6 Plus started to cannibalize the iPad tablet segment. We might see a move from Apple this year to shake up the tablet market by launching a larger screen sized iPads and drive demand by creating different use cases through larger screen sized iPads.

Amazon faced the biggest drop as they sold 3.3 million units in 2014 which is 66.4% less that what they have sold in 2013 with 9.8 million units. It seems like Fire tablet family is having a hard time meeting the expectations.

Lenovo was definitely the winner of the tablet market in 2014. Lenovo managed to increase tablet shipments from 7.8 million units in 2013 to 11.2 million units in 2014 resulting as an outstanding growth rate of 43.5%. Lenovo Yoga tablet family provides a wide price range and screen sizes to appeal to broader audience and I think it helped them to boost sales.

It is a bit surprising to me that Microsoft Surface tablet has not reached to the top five yet despite aggressive marketing campaigns. This is a sign of low demand for Windows 8 based tablets. However, Windows 10 might change this.


Twitter sells promoted tweet ads outside of Twitter, Flipboard first

Twitter started to serve Promoted Tweets (ads) outside of their own domain aiming to create an additional revenue stream. In their recent blog post, Twitter stated that there were approximately 185 billion Tweet impressions served off of Twitter in Q3'2014. Serving ads outside of Twitter will definitely help advertisers to extend their reach to a wider audience. This is Twitter's answer to Google Display Network and Facebook Audience Network.

This initiative might drive new user acquisition as well by increasing the visibility of tweets across web and mobile app properties and encouraging people to create Twitter accounts after interacting with the ad.

Twitter also announced their Q4'2014 earnings

Q4'2014 Revenue:  $479 million (97% growth vs. Q4'2013)
Q4'2014 Advertising Revenue: $432 million (97% growth vs. Q4'2013. Mobile advertising revenue was 88% of total advertising revenue.)
Q4'2014 Profit:  $79 million


As of the end of Q4'2014 Average Monthly Active Users (MAUs): 288 million users (20% growth vs. Q4'2013. But, only 4 million more compared to Q3'2014)
Q4'2014 Timeline Views:  182 billion views (23% growth vs. Q4'2013)
 

Ad revenue growth driving by mobile is impressive and I believe serving ads outside of Twitter will help Twitter to boost ad revenue. Analyst are concerned about the slowing user growth numbers and we'll have to wait until Q1'2015 earnings call to see how Twitter will address this issue.


Under Armour acquires health and fitness trackers Endomondo and MyFitnessPal

Under Armour, an American sports clothing and accessories company acquired Endomondo and MyFitnessPal.

Endomondo is a social network based on fitness and personal health where you can track your workouts and challenge friends over the mobile app. Endomondo states that it has 20 million registered users and it was acquired for $85 million.

MyFitnessPal offers a similar service that enables users to track their health and fitness goals. But, I believe their biggest competitive advantage is their database of nutritional information for over five million foods and caloric data associated with hundreds of exercises. MyFitnessPal has more than 80 million users and was acquired for $475 million. 

In the press release, Kevin Plank, Chairman and CEO of Under Armour stated that Endomondo and MyFitnessPal will enable Under Armour to provide data-driven, proactive solutions to help athletes of all levels lead healthier and more active lifestyles. 

I respect Under Armour's vision. Data is power and Under Armour can use the data coming from Endomondo and MyFitnessPal communities in various ways to customize their products, improve store locations and marketing communications.

Under Armour's strategy is actually similar to what Nike has been doing for a while now by creating a social network around Nike+ and Nike Fuelband.


Chat app Line moves towards selling and delivering groceries in Southeast Asia

Competition across the messaging service ecosystem is getting out of control. Line, the famous messaging service from Japan introduced its own Uber clone in Tokyo just one month ago and this week Line began to sell groceries and same day deliver service in Southeast Asia, starting from Thailand as a pilot country. In very quick succession, Line created their own versions of Uber and Instacart, which has become very popular as a grocery delivery service in US.

Line claims that they have 181 million active users worldwide and 92 million active users across Japan, Thailand and Taiwan. In Thailand, Line's second largest market after Japan, Line has 36 million registered users, 2 million more registered users than Facebook.

Messaging apps that have most of their users across Asia countries such as Line and WeChat tend to aggregate different types of value added services like mobile payment, transportation and shopping into a single app. Apparently, this approach is led by the customer demand. But, WhatsApp keeps its focus on the pure messaging experience and I'm very curious if they ever try to follow the same approach to attract more users within those aforementioned countries where WhatsApp has low market share.


13M downloads later, FiftyThree bets on stylus sales as its ‘Paper’ drawing app goes completely free

I believe Paper is the best sketching/drawing mobile app that every iPad owner should have it on their device. FiftyThree, publisher of the Paper app stated that Paper has 13 million downloads to date. Up until this week, Paper app was free to download but there were couple of advanced drawing tools that users needed to purchase. But, FiftyThree decided to make those advanced drawing tools free as well so that the Paper app is completely free now. 

This could have two meanings, either the in-app purchase rate of those advanced drawing tools is started to slow down or FiftyThree has found a better revenue stream that could replace their monetization method and that new revenue stream could be Pencil, the smart stylus that FiftyThree introduced back in 2013.


Hereby, we came to the end of the fourth episode of ‘Week in a Nutshell’ series.

If you enjoyed this post, I'd be happy if you could comment, share, like and/or recommend it. 

Thanks,
Birkan