The top mobile phone advertising platform was the iPhone, with 15% of the market, followed by RIM’s Blackberry Curve with 4.4% and Motorola’s Droid Razr with 4%. When combined with advertising served to tablets, Apple grabbed about 28% of impressions, followed by Samsung with 18%.

As a group, smartphones took 73% of all advertising in the first quarter, up from 62% in the same period a year ago. Tablets, however, took 20% of impressions, up from 15% last year, and now claim nearly 3x the ad impressions for feature phones.

The data comes from a survey by Millennial Media Inc. (NYSE: MM), a mobile ad network that competes with Apple’s iAds and Google’s AdMob.

Millennial also note that of the top 10 devices that display ads, 3 were tablets. A year ago only Apple’s iPad made the top 20. The two additions this year were Samsung’s Galaxy Tab and Amazon’s Kindle Fire.

As tablets attract more buyers, it’s reasonable to expect that their share of the ad market will grow. Recent research from Nielsen indicates that tablets get 24% of all Worldwide Web ad clicks, compared with just 11% for phones. Tablets are more like desktop and laptop computers and users may click on ads because of the more familiar size of the screen. The small screens on smartphones are not as easy to use to find things quickly — and that’s the appeal of smartphones and smartphone apps — to find exactly what a user wants with the least amount of fuss.

This is good news for Apple, of course, and not-so-good news for Google, which pays a hefty price in traffic acquisition costs to maintain its position as the default search engine on OEM smartphones, including iPhones. By one estimate Apple gets 50%-60% of the revenue from a Google search on iOS, whether from an iPhone or an iPad. Google probably does not have to part with quite as much revenue for devices from other makers, but a cut of about 40% would match Google’s reported traffic acquisition costs. Google needs to find a way to hold onto more of its search revenue because its mobile ad network simply can’t make up the lost cash flow.

Paul Ausick

Whether or not that’s true is certainly arguable. What is not arguable is that usage-based pricing is better for cable operators and for wireless carriers. Comcast Corp. (NASDAQ: CMCSA) last week said that it planned to drop its 250-gigabyte data plan and introduce a new pricing scheme that would allow its customers to consume 300 gigabytes of data at a base rate and pay $10 for each 50 gigabytes customers use above that limit. The usage-based plan could squeeze streaming video providers like Netflix Inc. (NASDAQ: NFLX) that have built their entire business models on essentially unlimited bandwidth. Streaming a 2-hour movie in HD consumes about 4 gigabytes.

It’s probably only a matter of time before other cable providers like Time Warner Cable Inc. (NYSE: TWC) and Cablevision Corp. (NYSE: CVC) adopt similar plans. Wireless carriers AT&T Inc. (NYSE: T) and Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), appear set to announce shared data plans that will allow more than one device to share usage on a single data plan. The carriers already charge more for usage above the plan limit.

Genachowski appears to believe that usage-based plans will level the playing field between the cable operators and the wireless carriers. Time Warner Cable experimented with a usage-based plan in 2009, but decided not to adopt the plan because customers hated it. Customers will still hate the plans, but without FCC backing customers no longer have any heavyweight help.

Comcast and the other cable companies will argue that the 300-gigabyte limit affects a small number of very high usage customers. They will also argue that by adopting a usage-based plan the vast majority of customers will pay less. But the data plan will also include internet access from computers, smartphones, and tablets, as well as Wi-Fi access from the local coffee shop.

Comcast has not yet announced pricing for its usage-based plan, but the odds of prices actually dropping don’t seem particularly good. Especially because the company is throwing in another 50-gigabytes of usage.

Cable companies need to prevent customers from “cutting the cord” and choosing to use their wireless data plans to drive home entertainment. An Internet TV box that really works is their biggest nightmare.

But if the cable guys and the wireless carriers can grab enough wireless spectrum and do enough cross-licensing deals and keep the content creators happy, the cost to consumers will not fall. The cable and wireless industries will appear to be competitive, but they’ll really operate an oligopoly and some small carriers and cable companies will be allowed to stick around to make things look good by providing service to low density markets. If the FCC really wants competition in the wireless business, then the agency better stick up for consumers, not cable or wireless providers.

Paul Ausick

AT&T Inc. (NYSE: T) has been talking about a similar plan for at least a year now, while Sprint Nextel Corp. (NYSE: S) and T-Mobile USA, which is owned by Germany’s Deutsche Telekom AG (OTC: DTEGY), still focus on family plans that offer limited 4G data for up to two phone lines, which is not the same thing.

The carriers see the shared data plans as a new opportunity for growing revenues. The new iPad from Apple Inc. (NASDAQ: AAPL) with its high-resolution retina display can chew through a standard 2 Gbyte data plan in just a couple of hours of streaming video.

At its investor meeting yesterday, Verizon had this to say:

As [subscribers] start to migrate into 4G, they will have to come off of unlimited and go into the data share plan. And that is beneficial for us for many reasons, obviously.

And that “obviously” means that more subscribers will purchase the more costly cellular-enabled tablets and use more data, boosting monthly payments to Verizon Wireless. With only Verizon and AT&T likely to offer the plans, at least at the beginning, subscribers should not be looking forward to any great bargain. The shared data plans are not intended to be a public service.

Paul Ausick

Verizon has a strong enough lock on the American market to hold most customers to such a plan. So does AT&T (NYSE: T). Sprint (NYSE: S) and T-Mobile are in another class. They cannot alienate their smaller pools of customers, and need to try to take subscribers from their larger rivals. Their one point of leverage could be to keep 4G unlimited plans and promote them as superior for heavy users of data on 4G networks.

Douglas A. McIntyre

Samsung Electronics (OTC: SSNLF.PK) led all vendors with 86.6 million units sold, followed by Nokia Corp. (NYSE: NOK) with 81.2 million units sold, and Apple Inc. (NASDAQ: AAPL) with 33.1 million units sold. Research in Motion Ltd. (NASDAQ: RIMM) sold 9.9 million units and Motorola Mobility Holdings Co. (NYSE: MMI) sold 8.4 million units.

Samsung grew its handset market share from 16.1% to 20.7% year-over-year. Apple’s share also grew, from 3.9% to 7.9%, while Nokia’s share fell from 25.1% to 19.8%. The only other vendor to increase share was ZTE Corp., a Chinese maker of low-cost handsets.

By software platform, the Android operating system from Google Inc. (NASDAQ: GOOG) grabbed 56.1% of sales, up from 36.4% in the first quarter of 2011. Apple’s iOS was second in platform shipments, with a 22.9% of the market compared with 16.9% last year. The big losers were Nokia’s Symbian OS, down from 27.7% a year ago to 8.6% this year, and RIM, down from 13% a year ago to 6.9% this year. Microsoft Corp.’s (NASDAQ: MSFT) share also fell, from 2.6% a year ago to 1.9% this year.

According to Gartner:

All vendors were impacted at different levels; however, white-box vendors seem to have suffered the most. While tier one players such as Nokia were negatively impacted on sell-in numbers (sold into retail), white-box vendors were unable to adjust production and were left with a build-up in inventory by the end of the quarter. Gartner expects some of this volume to be sold during the next couple of quarters, because the channel is likely to lower the prices to dispose of the stock.

The lower results in the first quarter of 2012 have led us to be cautious about sales for the remainder of the year. The continued roll-out of third generation (3G)-based smartphones by local and regional manufacturers such as Huawei, ZTE, Lenovo, Yulong and TCL Communication should help spur demand in China. In addition, the arrival of new products in mature markets based on new versions of the Android and Windows Phone operating systems (OSs), and the launch of the Apple iPhone 5 will help drive a stronger second half in Western Europe and North America. However, as we are starting to update our market forecast we feel a downward adjustment to our 2012 figures, in the range of 20 million units, is unavoidable.

Now a decline of 20 million units over the course of a year is not much when total sales are expected to be north of 1.5 billion units. Samsung and Apple took more than 49.3% of total smartphone sales of 144.4 million units in the first quarter. The smartphone market has become a two-horse race, especially at the top-end of the market. Whether or not Nokia/Microsoft want to or can get into that race remains to be seen.

The open race is at the low end of the market and that’s where RIM and Motorola will have to fight it out with the low-cost makers like ZTE. Nokia/Microsoft would probably prefer not to play down here. Neither do RIM or Motorola, but that’s where the race is still undecided.

The Gartner press release is available here.

Paul Ausick

Samsung Electronics (OTC: SSNLF.PK) recently introduced a 4.8-inch screen on its Galaxy S III, half-an-inch larger than the 4.3-inch screen on the company’s existing Galaxy S II model. The new device is scheduled to launch in the US this summer.

The larger iPhone screens are being manufactured by several suppliers, including LG Display Co. Ltd. (NYSE: LPL), Sharp Corp. (OTC: SHCAY.PK), and Japan Display Inc.

Apple is reported to be considered making a smaller version of its iPad tablet as well. Like the iPhone, the tablet’s screen size has remained unchanged since the iPad’s introduction. Other tablets, including the Kindle Fire family from Amazon.com Inc. (NASDAQ: AMZN) and the Nook from Barnes & Noble Inc. (NYSE: BKS) have had success with smaller screens.

Apple and Samsung currently account for more than 50% of all smartphones sold, and Apple’s iPad really has no serious competition yet in the tablet market. The issue for Apple is whether or not it wants to get out in front of the mobile device market with a new product that raises the bar for everyone else. A “me-too” smartphone with a larger screen or a similar shrinking of the iPad screen is not the sort of change a leader makes. Especially when the evidence (i.e., sales) indicates that consumers can’t get enough of the products you already have.

Apple’s strength has always been to build a product that none of us knew we wanted because we don’t have the vision. Anybody can make screens bigger or smaller. Apple should be doing something else. Like building a cheaper phone that would appeal to the half of the world that can’t afford to buy the current iPhone.

Paul Ausick

T-Mobile’s customer base is about 35 million. Sprint’s is 50 million. AT&T and Verizon (NYSE: VZ) have about double the Sprint count. AT&T Wireless and Verizon Wireless have rich parents, each of which can draw money from their dwindling but profitable landline businesses, as well as wireless subscriber units that also have high margins. Each can afford to pay for aggressive infrastructure expansion of 4G ultrafast wireless networks. Each easily can afford to pay Apple (NASDAQ: AAPL), the most important chess piece in market share battles, the subsidies it demands for the iPhone.

T-Mobile has just announced it will cut 900 positions. The cuts will continue. DT is not likely to want to support a business that it must already know has no future.

Sprint and T-Mobile are faced with the difficult reality that each is too small and has no ready chance to grow. The technologies of the two companies are not entirely, or even partially, compatible. This makes a merger between them unlikely. Either could marry with smaller MetroPCS (NYSE: PCS). Sprint was close to such a deal, which would have cost $8 billion, but its board of directors rejected the plan as too risky and expensive.

There will be no foreign buyers for Sprint or T-Mobile, although several huge telecom companies in Europe and Asia could afford to make offers. They have watched Deutsche Telekom, one of the world’s largest carriers, struggle to keep T-Mobile afloat without any success.

T-Mobile’s presence in the United States probably will continue for years, as it becomes orphaned by its parent and slips inexorably toward ever greater loses.

Douglas A. McIntyre

Shaw Wu of Sterne Agee has now adjusted his estimates for the iPhone and iPad after reviewing Apple’s recent supplier checks.  The concern is that supplier checks indicate near-term iPhone expectations are likely too high.  Fortunately for the Apple lovers and fanboys, Mr. Wu said this weakness will be offset by strength in the iPad.

Wu noted, “Based on our supply chain work, we believe significant iPhone upside over the next two quarters is less likely based on reduced supplier build plans. Conversely, the likelihood of iPad upside appears higher due to additional screen supply. Recall, last year ahead of the iPhone 4S refresh, Street estimates of 20 million units (some as high as 23 million) were significantly off from actual shipments of 17 million.”

The report indicates that building plans for current iPhones have been reduced significantly, down as much as 20% to 25% in the March quarter with potential shipments of 26 million to 28 million (below consensus closer to 30 to 31 million).

Another issue is the 8.6 million iPhones in channel inventory.  Wu believes that the reason for the reduction is not demand related.  It is due to the upcoming 6th generation iPhone refresh that is expected in the September-October timeframe.  Wu went on to note, “We would also like to note that consensus last year grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S refresh where estimates were significantly off.”

The strength overall is coming from the iPad and what held back shipments were supply constraints on its new HD retina display. The firm has heard that this has been greatly improved with an additional supplier and Apple can better meet strong demand and deliver upside relative to consensus expectations.

For the June quarter, Stern Agee is cutting its iPhone forecast to 27 million units from 28 million units, but it is raising iPad targets to 15 million units from 14 million.  Apple’s gross margin assumption is now raised to 43.5% from 42.5% and the firm now sees $36.1 billion in revenue and $10.16 in earnings per share.  For the company’s Fiscal-2012, the firm is now at $159 billion in sales and $46.75 in earnings per share.  Those are slightly higher.  For Fiscal-2013, Stern Agee sees $189 billion in revenues and $53.50 in earnings per share.

In the end, the report seems to be a wash as Stern Agee is leaving its BUY rating in place and it is even leaving its price target at $780 based on 11.7-times its 2013 earnings plus net cash.

Apple shares are up about $1.00 at $559.30 shortly after the open and the 52-week trading range is $310.50 to $644.00.

JON C. OGG

Nokia has been losing market share due to the explosion of smartphones.  Whether this is fair or not after the company recently went after a new Windows phone, the company is considered to be a large seller of cheaper phones in emerging markets.  What is so ironic about this story is that Nokia was just recently shown to be one of the top brands in Asia. Apparently that isn’t going to cut it.

The competition from Apple Inc. (NASDAQ: AAPL) for the iPhone and also from Samsung and Google Inc. (NASDAQ: GOOG) for Droid phones has been too steep.  Now even the emerging markets are starting to explode in smartphone use.  Even Research-in-Motion Ltd. (NASDAQ: RIMM) is not quite as in bad of shape for now as Nokia.

Ask yourself a simple question: How many do you know that have a Nokia phone?  Maybe the only hope is that Nokia can somehow get every person in the world who does not have a phone yet to buy one of their lower-end models in emerging market expansion. Or maybe an alternative hope is that suddenly no one can afford smartphones…

The downgrade already expects things to get worse.  Here is the dire warning in the Societe-Generale downgrade… if the company keeps losing share with sales declining and keeps its restructuring costs so high, then it risks burning through most of its available cash.  It ultimately even sets the conditions that it brings Nokia’s survival into question, although that is a scenario outside of the base case.  That is not exactly a call that Nokia is going bankrupt, but it sure feels like a dance around that notion without causing undue offense and pressure merely by the mention of such a possibility.

It is important to remember that billions and billions of dollars have been lost here.  Yahoo! Finance still lists Nokia as an $11+ billion market value and that is with shares at a 52-week low (and decade-plus low) of $3.03 today.  The prior 52-week range was $3.12 to $8.73 and the ADR was worth $15 in mid-2010 and over $25 back in 2008.

This downgrade did not exactly call for bankruptcy.  It just sets yet one more call against Nokia’s future.

JON C. OGG

T-Mobile may be the current merger flavor of the day, but this is the wrong effort or at least the wrong focus.  Sprint Nextel Corporation (NYSE: S) was the most recent potential acquirer but CEO Dan Hesse was blocked by his board of directors over fears that investors were already punished excessively and that the acquisition would put further pressure on its shares.  Sprint now owns Virgin in this overlapping field of prepaid and no-contract wireless and Sprint is still losing money.

The other would-be merger in the past was with Leap Wireless International Inc. (NASDAQ: LEAP).  With this company being the direct comparable outfit, it would make sense for these two companies to try to get past their differences and consider a stock-for-stock merger again.  While it will generate less for shareholders today versus the past, it would still allow for upside if the combined efforts generate higher earnings.

AT&T Inc. (NYSE: T) recently botched the T-Mobile buyout and T-Mobile does now have a few billion more in cash to spend.  Could that make T-Mobile a true buyer?  Anything is possible.  What T-Mobile does not have going for it is a stock in the U.S. that would allow it to do a stock transaction.

Leap Wireless is worth only $456 million and MetroPCS has a market value of $2.7 billion.  Both shares surged on Wednesday and both shares are down severely from their 52-week lows.  Perhaps these companies should swallow some pride and join their millions of customers together rather than hoping that one of the larger U.S. carriers will hope to grow with a reach-down effort into no-contract and prepaid wireless.  If the companies merge in a stock for stock transaction the action will still allow the holders who are long and wrong to recoup their losses if these two companies can get their earnings higher again.

Deutsche Telekom has reportedly issued the “no comment” but we would not have expected anything different in the current climate.

JON C. OGG