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A Tale of Two Mobile Markets – China and India February 22, 2012Posted by chetan in : 3G,4G,AORTA,Applications,BRIC,China,Indian Wireless Market,Intellectual Property,International Trade,IP,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment
Next weekend, on March 3rd around noon China Standard Time to be precise, China will sign up its one billionth mobile subscription. India in the meantime, crossed the 900 million subscription mark in Feb. Roughly an year ago, India was adding subscribers at historically record pace of approximately 20 million subscriptions per month (that translates into a new Australian market every month) while China continued at its steady pace of 8-12 million net-adds per month. In Q1 2011, data indicated India might actually edge out China to reach the first billion landmark. Then, the market collapsed due to the intense competition, the pervasive corruption, and the accounting gimmicks.
In 2011, the global GDP growth was 2.7% according to the World Bank. While the OECD countries saw only modest gains (1.7%), China (9.1%) and India (6.5%) accounted for a good percentage of the global growth. Buoyed by the rising disposable income, the middle class in the two biggest countries are spending more than ever before.
All of the top 6 global operators by subscriptions are from China and India. Collectively, they account for 27% of the global mobile subscriptions and 12% of the global service revenues. In 2011, India added 141 million subscriptions while China netted 133 million.
Having worked in both of these markets over the last decade, I have always seen China and India as two of the most dynamic mobile markets in the world. They might seem similar on surface but are quite different underneath. Both represent vast human resources and the biggest middle class with buying power. However, their competitive landscape is vastly different. On our Competitive Index (CI) scale of global markets, they are on the extreme ends of the revenue and subscriber concentration indices. China is one of the least competitive mobile markets and India is by far the most competitive mobile market in the world.
In China, China Mobile monopolizes the market with over 66% of the market. Regulators are trying to boost the other two operators China Unicom and China Telecom but have a lot of work left on their plate. India on the other hand is a hot cauldron of intense competition, too much competition if you ask the operators. There are 5 operators with roughly 100 million or more subscriptions with the Bharti Airtel at number 1 but with less than 20% market share.
China's mobile journey began in the early nineties with the Ministry of Post and Telecommunications providing the telecom services as China Telecom. In 1994, under pressure, China Unicom was introduced to the market but was largely a failure. Later in 1999, China Telecom was split into three businesses with China Mobile becoming the mobile arm. Recently, when the 3G licenses were granted, market was segmented into its current form with China Mobile still leading the pack by a good distance.
China's overall growth for the past decade has been pretty steady staying between 8-12 million net-adds per month. Remarkably, the ARPU has stayed fairly consistent at around $10. Data revenue started growing significantly in the last 3-4 years. China Mobile has been the number one operator by the number of subscriptions, the total revenue, and the market cap for many years now (it is more valuable than Google). In data revenues, China Mobile has consistently ranked in the top 5 for the last 5 years.
India started its mobile journey late towards the end of the last decade but after a series of market reforms and introduction of new players like Reliance in early 2000s, market caught fire. The lack of landline infrastructure, the declining $/min costs aided by the burgeoning middle class meant the market was ripe for explosive expansion. In 2005, India was roughly 300 million subscriptions behind China but its per month net-adds has been inching up steadily and by Q2 2007, India caught up with China in net-adds.
While China's mobile market growth continued at a steady pace, the Indian market leaped into high gear, breaking records month-after-month and came tantalizingly close to China in Q2 2011 with only 55 million separating the two at the time. However, by then, the market retreat had already started. As we outlined in our Competition and Evolution of Mobile Markets research paper last year, the market composition and the intense competitive landscape was unsustainable. The cost to acquire a new subscriber started to become unbearably high. The rapid customer acquisition at any cost started to have a significant impact on operator profitability.
Also, the heavy burden of regulatory levies meant that the regulatory charges are approximately 20-25% in India whereas in China they are negligible. This meant, virtually all the operators started veering towards the dangerous negative margin territory in 2011-12. Additionally, the pervasive corruption reared its ugly head and a number of key players got caught up in the spectrum auction scandal. The bottom line is that the market is going to stay in the state of "mess†for the next few quarters as it tries to clean things up and plan the next phase of growth and momentum. It can take solace from the fact that the open free market and legal framework is still attractive to the mobile ecosystem. The fact that Vodafone won the $2 billion tax case should inspire confidence in the market.
Not surprisingly, the intense competition had a significant toll on the overall ARPU in India. While China's ARPU stayed constant at $10 for much of the decade and its data % increased to 27% in 2011, India's ARPU plummeted from $11 in 2005 to $3 in 2011. Players like Reliance boast a subscriber base of 150 million but the ARPU is < $2 leading to a meager 3.7% profit margin. However, many of the Indian operators are a part of the big conglomerates so it is easier to absorb and hide the declining financials. Regulators must realize that the industry can stay healthy only if its players remain financially viable. One has to look at mobile growth holistically. They must abolish outdates policies, rationalize the exorbitant levies, liberalize the market further and outline long-term spectrum policy without delay.
It is fairly easy to be fooled and seduced by the large numbers. However, these markets are not for the faint hearted. After the pleasantries are over, the unsuspecting and the unprepared will get chewed and spat out in no time. The feeble IP regimes make it even more problematic. But, it is 37% of humanity we are talking about. Markets are still attractive but one needs a strategic focus, strong local partners, and iron clad teeth to take a bite of these markets. Even established players can exhibit extreme naiveté in understanding the rules of the game.
Regulators in both markets face key decisions on a number of vectors – 4G spectrum, competition, FDI, IP, broadband plan, and policies on a number of fronts. Both countries have similar long-term goals but are inefficient in terms of regulations and capital allocation (they are not unique in this respect, even more advanced markets like the US have their share of quirks in the regulatory framework) needed for the next phase of market and revenue growth.
India is likely to cross its billionth mark by early 2013. The market will go through significant restructuring and self-correction over the course of next two years. China will look to expand its 3G and 4G markets and bring broadband to the masses. The smartphone and data usage is on the rise laying the foundation for the future transformation.
China has been the bolder of the two. By deft coordination and shrewd strategy, the likes of Huawei and ZTE have shaken its western rivals in their boots while protecting its local turf. India has been content with the services business though it is starting to ramp up its manufacturing and R&D capabilities. Indian operators have had better success at spreading their wings, investing in foreign markets and collaborating with foreign operators. China is somewhat closed but disciplined. India is mostly open but waffling.
In the last ten years, China has become the 2nd largest economy in the world behind the US while India will edge past Japan to become #3. Given that mobile will have a central role in the ICT evolution of global markets particularly in the developing nations, what happens in the mobile markets of China and India will influence rest of the world. (I just finished up a project for UN in this area, more to come).
So, congratulations to China for the significant milestone and to India for its tremendous growth.
The future of mobile data applications and services in China and India is extremely bright albeit tortuous.
Tighten your seatbelts and enjoy the journey.
Your comments are always welcome.
New Research: Competition and the Evolution of Mobile Markets April 28, 2011Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Devices,Enterprise Mobility,European Wireless Market,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Networks,Patents,Privacy,Smart Phones,US Wireless Market,Wi-Fi,Wireless Value Chain,Worldwide Wireless Market , 2 comments
Competition and the Evolution of Mobile Markets
A Study of Competition in Global Mobile Markets
Over the course of the last decade, mobile communications has become an essential part of the global fabric of evolution. With almost 70% global subscription penetration as of 2010, mobility is being embedded into almost every facet of our lives. Mobility is also spreading across verticals whether it is m-pesa in Kenya or SMS based counterfeit medicine detection in Ghana or paying for your coffee using your NFC enabled mobile phone in a Tokyo café or watching the cricket world cup broadcast while hiking the Yangtze river near Tibet. Consumers expect access to information everywhere they are and the ecosystem is responding with continued innovation, which has become extremely critical in managing the competitiveness of nations.
It is also apparent that some of the innovation and market dynamics has been evidenced by the competitiveness of these markets at different levels – network, devices, and services. While the market entry conditions into the devices and software services markets have gone through significant overhaul this last decade, the competitiveness framework of the mobile networks has been more structured and controlled in many instances.
Given the importance of the mobile network infrastructure to every nation's competitiveness, security, and productivity, it is useful to understand how the "competitive mobile markets†are formed. In theory, the perfectly competitive markets are in the best interest of the consumers as they provide the best value given the competitive dynamics and the equilibrium provides good checks and balances for the ecosystem.
The global mobile networks have shown a remarkable adherence to the "Rule of Three†which states that in any mature industry, 3 top players dominate the market. Sometimes it has been dictated by the regulators and in other instances by the markets. Some markets like in Europe have settled into a state of equilibrium while other hyper growth markets like India are shuffling to find the right balance.
The elements of globalization are also shaping how mobile network operators grow. The regulators and the political class are increasingly looking at mobile networks as national assets and any foreign ownership generally goes through tremendous scrutiny.
Having worked in major mobile markets around the world, we have been intrigued by the framework for a competitive market and this is the theme we explore in this working paper. Having the front row seat in an industry that is growing stupendously has given us some unique perspective on the competitive forces at work in the mobile space. We studied the competitive landscape in 40 top mobile markets around the globe.
This paper presents the analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets.
Download Paper (45 pages, 2MB)
Disclaimer: Some of the companies mentioned in this paper are our clients.
2011 Mobile Predictions Survey Results January 3, 2011Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,CTIA,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Traffic,Networks,Patent Strategy,Patents,Privacy,US Wireless Market,WiMax,Wireless Value Chain,Worldwide Wireless Market , add a comment
2011 Mobile Predictions Survey
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy,
healthy, and prosperous 2011. Thanks to all who participated in our 2011 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.
We put some of the questions to our colleagues and industry leaders in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=225) from leading mobile companies across the value chain and around the world opined to help us see what 2011 might bring.
Ten names were randomly drawn the limited edition Mobile Future Forward book. The winners are:
1. Jared Cornfeld, Industry analyst, FCC
2. Abhi Rele, Marketing, Microsoft
3. Christopher Billich ,Head of Mobile Advertising, Deutsche Telekom AG
4. Gary Cohen, VP/GM North America, Flirtomatic
5. Peter Jarich, Service Director, Current Analysis
6. Darren Austin, Director of Mobile, Expedia
7. Craig Fisher, Software Client Leader, IBM
8. Steve Wood, CEO, Perlego Systems, Inc.
9. Elliott Hamilton, Sr. Director of Strategic Planning, TeleCommunication Systems
10. Vishal Gupta, Vice President North America, Qualcomm Inc
Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly
living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific
year for us here at Chetan Sharma Consulting and we are looking forward to 2011 and seeing many of
you along the way. We hope you enjoyed gaining from the collective wisdom.
Be well, Do Cool Work, Stay in touch.
Thanks. With warm wishes,
Your feedback is always welcome.
Chetan Sharma
Now onto the 2011 Mobile Industry Predictions Survey Results
The panel comprised of movers and shakers of the mobile industry from around the world.
What will be the biggest stories of 2011?
In last year's survey, Google/Android narrowly missed out to be the biggest story of the year but this year, the verdict was clear that Google will continue to dominate the headlines with Android devices and new updates and apps. Given that we are in the midst of 4G deployments and ITU's flipflop on the definition, we could be in for an interesting year.
When will Verizon iPhone launch?
Inordinate amount of ink has been spilt over Verizon's iPhone speculation. However, given the chatter, our panel voted for a Q1 launch.
Who will be the most open player in the mobile ecosystem in 2011?
In all our surveys Google has consistently cemented its perception of being the most open in the ecosystem.
Will Android tablet sales exceed iOS tablet sales in 2011?
Last year, Android OS edged past iOS, however, given the lead iOS has had in tablets, it might be hard to overcome the number of shipments in 2011.
Who will make the biggest mobile acquisition in 2011?
Got Cash? Big players are likely to go shopping but who will score the blockbuster deal of the year. Google and Microsoft will duke it out with Google taking the spoils.
How will the "Apps vs. Mobile Web" debate shape up in 2011?
Apps vs Mobile Web has been as hotly debated in the industry as the CDMA vs. GSM battles of the past. Our panel thought Apps will continue to grow though mobile web starts to show its muscle.
By how much will the mobile advertising ad-spend increase in 2011?
Our panel was more bullish on mobile advertising than last year with a good 50% of respondents aiming for 200% growth and higher.
Which market will be the biggest infrastructure in 2011 for sales opportunities?
India and China are laying out 3G and North America is expanding on 4G. Infrastructure contracts abound.
Who will be the mobile come back story of 2011?
Many long-time players are under the gun this year. Will Windows 7 help Microsoft or will Meego make Nokia competitive. Story will unfold this year.
Who will end up having the strongest position in the mobile payment/commerce space?
While Japan/Korea markets have developed mature mobile payments solutions, the battle royale of mobile payments in North America will play out between the financial guys and Operators with Internet players making a strong run at it as well. 2011 might help decide the long-term winners in the space. Our panel thinks, the likes of Mastercard and Visa will edge out others in the tussle.
Which areas will feel the most impact from Regulators in 2011?
Regulators can have a huge impact on the course of the industry and nation's competitiveness. With the laws all but laid out, the real rulings might come from the courts.
Which solutions will gain the most traction for managing mobile data broadband consumption?
2010 saw the emergence of tiered data pricing in North America and operators all over the world are bracing for a long-term challenge of managing mobile data growth. We have written extensively on this subject in our Yottabyte series. Our panel voted for Tiered pricing and 4G as the top two solutions.
Which category will generate the most data revenues in 2011?
Global markets are quite different and while data service revenues have been growing in all regions, our panel breaks down by categories in terms of expected contribution from various segments.
What will help mobile cloud computing gain traction in 2011?
Mobile Cloud Computing is expected to take several strides in 2011 with Media and Enterprise demand at the forefront.
What will be the most successful non-mobile phone category in 2011?
As we have highlighted in our previous research, Connected devices have shown tremendous growth in 2010. Tablet seems to be clear category winner.
What will be the breakthrough category in mobile in 2011?
Mobile payments and commerce are starting to take off and are expected to show the most growth in 2011.
By the end of 2011, how will we end up defining 4G?
ITU's flipflop means, anything above HSPA+ will be deemed a 4G technology.
Which enterprise segment will mobile impact the most?
Mobile as a platform is booming with Retail finally getting into the swing of things and will show the most activity in 2011.
What will be the dominant revenue model for apps in 2011?
While paid apps dominated the revenue stream in the early days, advertising and in-app payments are taking off on iOS and Android. Developers will play with a combination of models depending on what works on a given platform.
What mode of mobile payments will get traction in NA and WE in 2011?
Operators experimented with mobile payments over the last few years, now is the time to put the solutions to the test.
Who was the mobile person of the year?
Who can compete with King Jobs. Launching iconic devices year after another, Steve Jobs has set the direction of the industry since 2007 and was a clear favorite for the mobile person of the year. The tremendous success of the apps personified by blockbuster hit of "Angry Birds" took away the second spot with Andy Rubin's Android effort won him the third spot.
Well, there you have it. The top trends and stories we will be talking about in 2011. Thanks again for all who participated and we hope that you found this useful as you embark on your journey for the year.
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Mar 2011. The next Global Wireless Data Market update will be issued in Mar 2011.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Announcing Mobile Future Forward Executive Summit June 14, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Speaking Engagements,Speech Recognition,Strategy,US Wireless Market,Usability,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
You have seen some hints of the project that we have been working on for sometime. We are proud to announce "Mobile Future Forward†Executive summit to be held in Seattle on Sept 8th, 2010.
Registration is Open Now. Early Bird expires June 30th 2010.
MFF is a gathering of some of the most brilliant minds in the mobile industry. The goal is to look at how mobile is likely to evolve over the course of this decade. We couldn't have done this without the tremendous support of our excellent sponsors who are paving the way in their respective segments.
The speaker list includes the who's who of the mobile industry:
Glenn Lurie, President, AT&T
Subba Rao, CEO, TataDoCoMo,
Mike Sievert, Chief Commercial Officer, Clearwire
Louis Gump, VP Mobile, CNN,
Paul Palmieri, Founder and CEO, Millennial Media
Dr. Sailesh Chutani, CEO, Mobisante
Abhi Ingle, VP, AT&T Wireless
Ken Denman, CEO, Openwave
Amir Mashkoori, CEO, Kovio
Stephen David, Former CIO, Proctor & Gamble
Dr. Genevieve Bell, Intel Fellow, User Experience, Intel
Hank Skorny, SVP, Real Networks
Jon Stross, VP & GM – Babycenter, Johnson & Johnson
Dr. Suzanne Sysko, Chief Medical Officer, WellDoc
Dr. Boris Nikolic, Sr. Program Officer, Bill & Melinda Gates Foundation
Krishna Vedati, SVP & GM – Mobile, AT&T Interactive
Christopher Dean, Chief Strategy Officer, Skype
Russ McGuire, VP, Sprint Nextel
Jack Kennedy, EVP, News Corp
David Weiden, General Partner, Khosla Ventures
Anand Chandrasekhar, SVP and GM, Intel
Chamath Palihapitiya, VP Growth/Mobile, Facebook
Rob Glaser, Chairman, Real Networks
Wim Sweldens, President – Wireless Division, Alcatel Lucent
Takayuki Hoshuyama, CEO, D2 Communications
Neville Ray, SVP, T-Mobile
Bob Azzi, SVP—Networks, Sprint Nextel
Mario Queiroz, VP—Android, Google
Matt Bross, Global CTO, Huawei
We will be covering the following topics in detail:
Emerging Devices
Internet of Things
Network Evolution
Content, Media, and Entertainment
New sources of Revenue and Business Models
Evolution of Communication and Interaction
Mobile Cloud Computing
Globalization and Competition
Mobile Anthropology
Mobile as a platform
The economics and politics of consumer data and privacy
Nurturing Developer Ecosystems
Shifts in the Ecosystem
Mobile Health and Implications
Mobile Retail
Japanese Mobile Industry
Innovations at each level of the value chain
Mobile Social and Commerce
Managing network growth
You can read more about what you can expect at the executive summit in the following whitepaper.
I hope to see you there.
Chetan Sharma
Chief Curator
Mobile Future Forward
US Wireless Data Market Update – Q1 2010 May 16, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Wallet,Networks,Partnership,Patent Strategies,Patents,Privacy,Speaking Engagements,Unified Messaging,US Wireless Market,WiMax,Wireless Value Chain,Worldwide Wireless Market , 5 comments
US Wireless Data Market Update – Q1 2010
Executive Summary
The US wireless data market grew 5% Q/Q and 22% Y/Y to exceed $12.5B in mobile data service revenues in Q1 2010 – on track so far to our initial estimate of $54B for the year.
In a significant milestone that went largely unnoticed, Verizon Wireless edged past NTT DoCoMo – the decade old leader in mobile data revenues to become the biggest mobile data operator by data revenues. Helped by its 93M subscriber base and high ARPU, the Verizon juggernaut is steamrolling. Rest of the 3 top US operators also occupy leading positions amongst the top 10 global mobile data operators.
The US subscription penetration was approximately 94% at the end of Q1 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 100%. While the traditional net-adds have been slowing, the "connected device†segment is picking up so much so that both AT&T and Verizon added more connected devices than postpaid subs in Q1 2010. Given the slow postpaid growth in, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.
Data traffic continued to increase across all networks. US has become ground zero for mobile broadband consumption and data traffic management evolution. While it lags Japan and Korea in 3G penetration by a distance, due to higher penetration of smartphones and datacards, the consumption is much higher than its Asian counterparts. Given that it is also becoming the largest deployment base for HSPA+, LTE and WiMAX, most of the cutting edge research in terms of data management and experimentation with policy, regulations, strategy, and business models is taking place in the networks of the US operators and keenly watched by players across the global ecosystem.
We are starting to see the inevitable changes in broadband pricing starting with T-Mobile and MetroPCS. Over the course of this year, we are likely to see newer pricing models that tie usage to pricing and add multiple devices to a single data bucket.
The fabled iPad landed in the market and it is a winner. Apple's latest gizmo has created a new user experience category of casual and couch computing that will foster growth in the connected device space. Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.
Privacy brouhaha has been brewing for some time and the polity class is getting interested in stepping in. If people are really serious about tackling privacy, OEMs and carriers should build a physical/soft privacy button on the device with 3-5 levels (just like for the ringer volume) that allows users to open/close privacy across all applications and services with the touch of a button. All apps and services should adhere to the principle via APIs. The other mistake companies make about privacy is by treating everyone the same. Privacy is about the perception of control and transparency. If it is given back to the consumer, they are likely to engage more and have a more positive impact on revenue streams that are likely to flow.
In an another global milestone, Softbank became the first major operator to have more service revenues from data services than voice services. In Q1 2010, 55% of its service revenues were attributed to data services. (While Smart and Globe have been reporting 50%+ revenues from data services for a long time, the total revenues are not at scale with the leading global operators. Incidentally, for the first time in many years, the data revenue % slipped below 50% for the both operators in Q1). Based on current projections, US is likely to cross the 50% data revenue threshold in late 2012 or early 2013. NTT DoCoMo is next in line to cross the 50% mark this year.
All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the industry is going to evolve in the next decade in our Sept 8th event – Mobile Future Forward which is bringing leading industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what's next. Hope you can join the discussion.
What to expect in the coming months?
The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market. Players are having to re-evaluate their businesses and long-term strategies. Several new impressive handsets got introduced during the course of 1H of 2010. iPad finally launched and even the next generation iPhone walked into a bar.
Microsoft announced its comeback with the W7 launch though the time it is taking to launch is making partners nervous. The change in UI was refreshing though the inability for the OEMs to differentiate is not winning friends. HP acquired Palm in attempt to become relevant again in the mobile device space. Some other players missed out in buying an attractive IP portfolio. It has been an action packed 2010 thus far and we can expect more of the same for the remainder of the year.
2010 has also been active on the regulatory front as the national broadband plan was unveiled in March (our thoughts on the plan). The Comcast ruling delivered a blow to the FCC and any directives or policies will hardly have any impact on the ecosystem in the short-term.
With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. Many countries in South America have imposed unnecessary spectrum caps. Others are behind in sorting out their spectrum allocations. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.
To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (Former FCC Chairman, Kevin Martin headlined our Mobile Breakfast Series event in March and discussed the Spectrum Crises. Our June 10th event is bringing CEOs of some of the most innovative mobile startups to discuss the ecosystem)
2010 is also the year of network rollouts. T-Mobile has been rolling out HSPA+ at an impressive rate, Clearwire has been expanding the network so fast that it has become the biggest construction company in the US, Verizon is betting big on LTE and AT&T has been adding backhaul, upgrading to HSPA+ and planning for LTE all at once. Even the smaller carriers like MetroPCS are looking for competitive advantage with quicker LTE launch and beat others by carrying the first LTE smartphone. (We will be releasing the next edition of our "State of the "Mobile†Broadband Nation†paper later this year)
As we had mentioned last year, the mobile data traffic kept on growing disproportional to the revenues. A series of solutions have come into the market from players big and small. We will be releasing the second edition of our in-depth research paper on data growth – "Managing Growth and Profits in the Yottabyte Era" later this month.
We will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.
Against this backdrop, the analysis of the Q1 2010 US wireless data market is:
Service Revenues (Slides 7, 16)
- The US Wireless data service revenues grew 5% Q/Q to $12.5B in Q110. Compared to Q109, the mobile data service revenues grew 22%.
- Verizon and AT&T accounted for 60% of the increase in data revenues in Q4 2009.
- T-Mobile's 3G drive is starting to pay off. While the net-adds were still in the red, it experienced the highest % growth amongst its peers in mobile data service revenues for the quarter.
- In a significant milestone, Verizon Wireless edged past NTT DoCoMo, the mobile data revenue leader since the late nineties. By the end of the year, China Mobile and AT&T are also likely to cross their Japanese counterpart in quarterly mobile data service revenues.
- AT&T and Verizon now account for 69% of the market data services revenues and 62% of the subscription base.
ARPU (Slides 8-11)
- Overall ARPU decreased by $0.17. Average voice ARPU declined by $0.84 while the average data ARPU grew by $0.67 or 4.6% Q/Q.
- As expected, the average industry percentage contribution of data to overall ARPU crossed the 30% mark in Q110 and is likely to get past 35% by end of the year.
- Verizon led in (blended) data ARPU with $17.06 followed by AT&T and Sprint. In terms of % contribution, all the top three operators exceeded the 30% mark. T-Mobile ended the quarter with 23.70% of its revenue coming from data services.
Subscribers (Slides 12-14)
- In Q409, the net-adds had increased from past several quarters, however, in Q110, the net-adds declined again.
- The texting see-saw between US and Philippines continued in Q110. US average was around 615 messages/user/mo just behind Philippines.
- In a sign of the times, for the first time, AT&T and Verizon reported more net-adds from connected devices than postpaid subs.
- T-Mobile and Sprint improved their net-add declines from last quarter though it was primarily from the prepaid segment. T-Mobile's 21% and Sprint's 23% subscriber base is now prepaid. The national prepaid penetration is touching 20%.
Applications and Services
- Non-messaging services continues to grab 60-65% of the data revenues for the US carriers.
- There is a significant shift taking place in terms of app revenues. In 2010, there will be more revenues generated (globally) from off-deck than on-deck for the first time and while the on-deck revenues are in billions, the decline trend looks irreversible. In the US, this shift will occur next year. (We released our mobile apps economy research paper last quarter)
- The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.
- The news reports of resuscitation of the media industry by iPad were premature.
- Nokia sold 108M units in Q1 2010 including 21.5M smartphones. Samsung again had a solid quarter with over 64M devices sold increasing its market share to 22%. LG Electronics at 9%, Sony Ericsson at 3.6% rounded up the top 4. For the first time, Motorola didn't figure in the top 5 device makers. Android, Apple, and RIM made gains as well.
- The constant drumbeat of new devices continued with Droid, Nexus One, HD2, EVO, and iPad.
- The battle for "Open†is breaking out in the street with latest episode being Apple vs. Adobe. We tend to forget that open is a means to an end, not an end in of itself. We are experiencing a fascinating period of transition in the mobile industry and some of the biggest brands in computing and communications are right in the middle of it.
Data Traffic (Slide 15)
· As we noted in our last update, the data traffic is now significantly more than the voice traffic. The good news is that there are several solutions that available and are being invented that will help manage the data growth. The question is how fast will the operators deploy some of these solutions.
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2010. The next Global Wireless Data Market update will be issued in Sept 2010.
Your feedback is always welcome.
Should you have any questions about navigating or understanding the economic and competitive icebergs, please feel free to drop us a line.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Global Mobile Data Market Update 2009 March 31, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,Storage,Strategy,Unified Messaging,US Wireless Market,Usability,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 4 comments
Executive Summary
The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (combined) are adding almost 30M new subscriptions every month. Amongst the two, India is outpacing China 2:1. China touched 750M subscriptions while India crossed 525M by the end of 2009. With 4.6B subscriptions, the global subscriptions penetration was above 68%.
The global mobile data revenues reached $220B and mobile data now contributes 26% of the overall global mobile service revenues.
As expected, the overall global mobile revenues stayed pretty flat for the year at around $1.1 trillion as many regions were hit by the recession and the competition pushed the ARPU lower for many operators. While the countries like US, Japan, China, and India showed very little signs of pullback, most of Europe and the developing world experienced a decline in overall service revenues in 2009. All the major markets have their data contribution percentages above 10% now.
For some of the leading operators, data is now contributing almost 50% of the overall revenues. However, the increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. NTT DoCoMo continues to dominate the carrier ranking in terms of the mobile data service revenues, Verizon Wireless which became #2 replacing China Mobile and is slowly edging towards the #1 spot and is likely to overtake DoCoMo within the next few quarters.
Though 4G as a standard hasn't been defined yet, the discussions around LTE and WiMAX deployments grew intense. Telia Sonera became the first operator to commercially launch LTE. At CTIA, Sprint/HTC became the first players to launch a WiMAX smartphone and MetroPCS/Samsung took the honors for the LTE smartphone.
2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic. In the US, the yearly mobile data traffic exceeded the voice traffic for the first time.
We are also entering the phase of global mega-mergers in telecom. Bharti Airtel of India just acquired Kuwait-based Zain Group to become the 5th largest telecom group in the world (at the end of 2009, it was #9). There are now 14 telecom groups with 100M or more subscriptions. While China Mobile's ARPU is 1/5th of its western counterparts, it operates its business at higher margin, around 51%. There are a number of global players mainly in Europe and Asia who have mastered the art of running lean operations and if they have good bank balance they are going to go shopping in the days ahead.
From the revenue perspective, the $50 billion revenue club is more exclusive with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
As we sit at the cusp of the iPad era, there is a bigger transformation taking place and that is of the connected consumer electronic devices (CEDs). Few years from now, most popular CEDs will have connectivity. We are also approaching the start of phase where pricing of access will start to morph – we will see the introduction of family data plans (something we have been advocating for some time), ability to connect multiple devices to the same GB plan, more granular use plans (per session/day/week/mo/yr etc, roll-over GBs anyone?). As the number of connected devices/consumer increases, we will start worrying about Average Margin Per User (AMPU) or Average Margin Per Connection (AMPC) because ARPU won't quite capture the dynamics of the industry.
Exciting times indeed.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries – from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights from our work in various global markets.
Impact of Global Recession
Telecom in general fared better than other industries. In some regions, it hardly caused a tremor. However, in most nations, the impact was felt by the operators. Amongst the 40 major operators we studied, SK Telecom, 3 Australia, KTF, T-Mobile Netherlands, Rogers, Softbank Japan, Singtel, Vodafone Italy, T-Mobile Germany, 3 Sweden, Telstra, China Unicom, and Vodafone Germany experienced increase in both the data ARPU and the overall ARPU during 2009. Some of increase was due to the fluctuation in international currencies e.g. Korea.
Looking at the data at a country level, most nations noted a decline in overall ARPU. Only Venezuela, Pakistan, Argentina, Bangladesh, Australia, and Poland showed positive increase in ARPU since 2008.
Rule of Three is kicking in most markets with smaller players having to consider the M&A option to remain viable. T-Mobile/Orange, Bharti/Zain tie-ups are just the start of that process. We are likely to see many international mergers in 2010 and beyond as power in the mobile ecosystem self-adjusts.
5 new players joined the 100M subscriptions club. The new members are: Bharti Airtel (India), MTN Group (South Africa), Orascom (Egypt), Etisalat (UAE), and MTS (Russia). The top 9 telecom groups in the world are: China Mobile, Vodafone, Telefonica, America Movil, Telenor, T-Mobile, China Unicom, TeliaSonera, and Orange.
Service Revenues
- US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $44.56B vs. $32.5B for Japan in 2009. China with $20.3B was ranked number 3. US registered the highest growth amongst the top 3 with over 40% increase from EOY 2008 levels followed by Japan and China.
- The top 10 nations by service revenues are: US, China, Japan, France, Italy, UK, Germany, Brazil, Spain, and India.
- The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Australia, Spain, and Korea.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $16B in data services revenue in 2009. Almost 46% of its overall revenue now comes from data services. DoCoMo also crossed the 95% 3G mark.
- NTT DoCoMo was followed by Verizon Wireless, China Mobile, AT&T, KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to round up the top 10 operators by wireless data service revenues.
- Each of the top 5 carriers exceeded $10B in yearly mobile data service revenues in 2009
- Data revenues for the top 10 operators now account for almost 43% of the global mobile data revenues.
- The biggest jump in data revenues was experienced by Verizon, Softbank, and AT&T. DoCoMo saw an 11% increase for the year.
- Most of the operators in the developed nations are contemplating future strategies to boost data revenues such that the decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPU.
- China reported approximately $20.3B in data revenues for 2009 and the percentage contribution from data services is around 32%, data ARPU is around $3.2. For India, data ARPU continues to stay below $0.50 as most of the new adds are voice only subscribers and there is continued price pressure in the market.
- China Mobile remains the most valuable telecom operator with over $195B in market cap. It is followed by Vodafone at around $122B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans.
- In 2009, SMS's vice like grip on data revenues continues to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets. They are exploring new technologies and social experiments ahead of almost anybody else in the market. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends, technologies, and ecosystem dynamics in these markets to get a sense of what's coming.
· From the revenue perspective, the $50 billion revenue club has limited membership with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like DoCoMo, and Softbank are over 46%. KDDI, 3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, Telstra, and 3 Sweden exceeded 35% and many others are on the verge of crossing the 30% mark.
- NTT DoCoMo reported the highest data ARPU for the year while Rogers took away the honors for the highest overall ARPU. Other notable percentage increases in ARPU were from 3 Italy, SK Telecom, KTF, T-Mobile Germany, 3 Sweden, and T-Mobile Austria. The Japanese operators saw a decline in ARPU by 3%.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 53% (or $2) contribution coming from the data services.
- Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.
Mobile Data Traffic
- We have been calling attention to the tremendous increase in mobile data traffic for some time. The discussion has hit mainstream and many operators are scrambling to nail-down their short-term and long-term strategies to manage the data traffic growth in their networks. See our paper on the subject "Managing growth and profits in the Yottabyte era." The recommendations discussed in the paper are slowly being adopted by various vendors and operators worldwide.
- The global mobile data traffic exceeded an Exabyte for the first time in 2009. In fact, the data usage is growing so fast that this year, the two territories experiencing the most growth – North America and Western Europe are both going to exceed an Exabyte in mobile data traffic.
- 2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic.
- For many of the superphone heavy operators, devices like iPhone and Android account for more than 50% of their total data traffic.
- 2010 will mark the first year when the total number of mobile broadband connections will exceed the total number of fixed broadband connections.
For more mobile data traffic analysis, please stay tuned for the second edition of our Yottabyte research
- India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Combined, one year of growth in these two market is equivalent to the size of the third largest market – the US, to date. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
- Thanks to the explosive growth in the emerging markets, the global mobile market went past 4.6B in 2009 and is likely to cross the 5B mark in 2010. The global mobile subscriptions now represent over 68% of human population on planet earth.
- China crossed the 700M subscription mark in July while India's total went past 500 in Nov. In the meantime, US crossed the 90% subscriptions mark in 2009.
- In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018.
- The top 10 nations by subscriptions are: China, India, US, Russia, Brazil, Indonesia, Japan, Germany, Pakistan and Italy.
- China Mobile became the first operator (and likely to be the only one for a very long time) to cross the 500M mark. It remains the #1 carrier in terms of the total number of subscriptions followed by Vodafone. Telefonica, América Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.
Mobile Apps
· The total number of app downloads in 2009 reached 7 billion resulting in approximately $4.1B in revenues 12% of which was from mobile advertising.
· The number of non-carrier appstores jumped to 38 from 8 in the previous year.
· While Asia had the highest percentage of the download share, North America had the highest share of the apps revenue accounting for over 50% of the total revenue.
· The paid ASP in 2009 was approximately $1.9 and the advertising revenue generated from the free applications was approximately $0.09/user/app/year
For a more detailed analysis of the mobile apps market, please see our paper "Sizing the Global Mobile Apps Marketâ€
- Messaging still accounts for the lion-share of data service revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have gradually chipped away the share from messaging. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- Nokia dominated the year as usual but the revenue share is shrinking and so is the lucrative smartphone share. Apple, RIM, and Google are relentlessly attacking the top tier while Samsung, LG, and others giving a tough fight for the bottom tier. We see a new middle tier emerging that has the form factor of a featurephone and functionality of a smartphone. The smartphone category is getting further split into regular qwerty smartphones like Blackberry and the touch and full browser based superphones like the iPhone and Droid.
- The year was dominated by several blockbuster device launches like the iPhone 3GS.
- Next few years will be big for infrastructure providers as many countries both developed and developing get into upgrading their infrastructure.
- Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
- In the US, the increase in messaging volume catapulted US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
- Deployment of 3.5G technologies is in full swing. However, it is the discussion of 4G that is occupying the headlines, even though 4G hasn't been fully defined yet and the current candidates for 4G are nowhere near the performance goals of 4G (150Mbps/50+Mbps). Many larger operators have laid out their plans for deploying LTE starting this year.
We are also seeing regulators playing an active role in making the markets competitive and attractive in the long-term.
· The velocity with which the smartphones are being introduced into the market esp. the western markets, one wonders if in five years, we will be using the moniker to describe devices and if the "dumbness" in the device market will be practically eliminated. Led by Apple's Appstore success, significant investments are pouring into the appstore world. In parallel, the debate over apps vs. mobile web is intensifying. The implications of the transition will be significant on the ecosystem on many levels.
2010 will be a critical year on many fronts. As usual, we will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in May 2010. The next Global Wireless Data Market update will be released in Sept 2010.
Your feedback is always welcome.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
CTIA Roundup 2010 March 26, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,Japan Wireless Market,Location Based Services,Messaging,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Traffic,Mobile Usability,MVNO,Patent Strategy,Patents,Smart Phones,Speaking Engagements,Strategy,US Wireless Market,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , add a comment
CTIA hosted its annual networking party in Vegas. I can appreciate what Bill Murray must have felt like in ground hog day for sometimes I can't tell which year we are in at CTIA. Of course, things are moving forward with all the advances and services but the messaging and value props reappear from the dead. In any case, it is always good to reconnect with colleagues and wander around on the show floor to get the pulse of the industry. The highlight of the show was the release of the HTC Evo 4G device by Sprint to mark the entry of the first WiMax smartphone. Not to be outdone, Samsung announced SCH-r900 (who comes up with these names) – the first LTE handset to be launched later this year on the Metro PCS network. Like at the Mobile World Congress, it was clear that industry is courting the "developers†though few have figured out how to help them with a healthy revenue stream. There was a lot of discussion on 4G, Mobile Advertising, Mobile Web vs. Apps, Femtocells, Smart Driving Solutions (it had its own pavilion), HSPA+, A/V Reality, Spectrum, Congestion management, National Broadband Plan, Taxi lines, and more. This note summarizes the observations and opinions from the event, discussions, and briefings.
My trip started early as I was moderating a panel on Mobile Advertising at the packed Mobile Web and Apps World forum. I am finding that the pre-shows generally have better attendance than sessions during the show. MTV's Joe Lalley mentioned that the number of RFPs that require mobile advertising as a component have grown 3-4 times in the last 6-12 months. One of the areas that has been lagging is the "industry consensus on metrics†as without consistent numbers across all ad networks and service providers, many in the advertising industry will stay on the fence or will work with only select players in the ecosystem. Gary Schwartz, who is on IAB's Mobile Marketing Committee updated on the collaboration done between IAB and MMA and we should be seeing some of the work soon. To some extent the story of mobile advertising is playing out exactly as we had imagined in our Mobile Advertising book and once many of the pieces are in place, the use of mobile in advertising will become so pervasive that we will wonder what took so long. And as I mentioned before, Apple could help redefine mobile advertising.
It is good that CTIA is thinking of some diversity when designing their keynotes. Iñaki UrdangarÃn, René Obersmann, Padmasree Warrior, Michelle Caruso-Cabrera, James Cameron, and Biz Stone were a welcome change not that there is anything wrong with other speakers. It is better to look at the industry from multiple angles. However, the lack of developers on the stage was acutely felt. The consistent message across all keynotes was: tremendous growth ahead and we are barely scratching the surface. That was hardly in doubt, the question is who benefits from it and who goes home.
T-Mobile announced the launch of its HSPA+ upgrade along with many smartphones to launched soon. Per Cole Brodman, CTO, T-Mobile US, this makes T-Mobile the US operator with the fastest network (did you know T-Mobile has more cellsites than Verizon?). With WiMAX and LTE smartphones coming in the next few months, we can expect a good tussle for mindshare. However, as the FCC quoted in its National Broadband Plan from our paper "State of The (Mobile) Broadband Union†– there is a difference in advertised vs. actual speeds especially on smartphones. We will be doing some more research on the topic later this year.
The highlight of the show was Sprint's release of the "mother of all smartphones†(from the spec point of view)- the HTC EVO 4G. Consider this: 1GHz processor, 8/1.3MP camera, 720p HDvideo, HDMI out, Hotspot capability (upto 8 devices), 3-6 Mbps (wimax)/.6-1.4 Mbps(evdo), 1GB ROM, 4.3†capacitive display, etc. Full specs here. Of course, the pricing and street performance will determine its success but clearly a milestone for the industry. The device came to the market earlier than most expected and will let the competitive fervor to go up a notch.
A couple of days later, Samsung announced its SCH-r900 (who comes up with these names) – the first LTE handset to be launched later this year on the Metro PCS network. Had it been on Verizon or AT&T, it would have gotten more attention. In any case, Metro PCS is trying to cement its place for the bragging rights. We can expect a number of new LTE smartphones coming into the market early next year. Voice and actual performance are still an open question.
Congestion management remains a big issue for the industry. I was glad to hear that the industry is coming around to the realization that "a holistic approach†is required to solving the problem, something we first outlined in our widely referenced paper "Managing Growth and Profitability in the Yottabyte Era.†Ralph de la Vega, speaking in his capacity as the Chairman of the CTIA and executive at AT&T embraced the principles of a sustainable model – complementary technologies, application efficiencies, network efficiencies, and available spectrum. We should add pricing efficiencies into the mix as well. Chetan Sharma Consulting will be releasing an update to the Yottabyte paper in the next couple of months, so stay tuned.
There was clearly a lot of focus on developers and attempts at giving them more voice and attention. As I alluded to in my talk on the appstore ecosystem at last CTIA, the various appstores need to focus on how to make their ecosystems more vibrant and profitable for the developers, else, we will start seeing them drop like dead flies in the not so distant future. A week prior to the CTIA, we released our research on the appstore economy which was well received. While a number of developers had booths at CTIA, there was no useful traffic. Better forums were organized WIP Connector and OMS.
With the imminent arrival of iPad next week, there was plenty of discussion and display of eReaders/tablets and how it might drive another category. While we won't see the iPhonesque like sales numbers, it is clearly an exciting introduction to couch computing. I will have more to say on the subject once I get my hands on the device next month. It is also quite apparent that the category of extending the display beyond the device is going to take shape this decade. The interactions and content doesn't need to be in the confines of the small display. 3D video also surfaced as something many players are working on.
Video was touted as the killer app for 4G though I wondered who will be the hunter and the hunted. I remember the same argument for 3G and mobile video went from the darling of the show to a pariah that no one wanted to touch in a matter of two years. Is video over cellular really the best use of resources? Am sure, the debate will continue for the foreseeable future.
Activity in the mHealth segment is picking up. It was mentioned several times in the various keynotes as well as the number of startups tackling the capture and processing of medical data is increasing. One of them was Mobisante which presented on a VC panel I moderated. They are building a low-cost ultrasound imaging device that uses smartphones.
Some of the other news worthy items were:
As expected, the wireless industry lauded the call for more spectrum in the National Broadband Plan. My column "National Broadband Plan – A Work in Progress†was published by Wireless Week during CTIA.
The role wireless communications can play in emergencies was highlighted from the rescue efforts and lives saved in Haiti. John Stanton proclaimed the country to be the first copper free telecom nation
Androids keep multiplying like gremlins
CTIA released its semi-annual industry survey results. Highlights: $22B in data revenues (second half), 50M smartphones, 257M datacapable devices, 1.5T Txt messages, 24.2B MMS, 285 subscriptions, daily MOU 6.1B (boy! Do we talk a lot). Our 2009 year roundup here.
Ericsson announced that the data traffic globally grew 280% during each of the last two years and exceeded global voice traffic in Q4 2009. We announced similar trends in our 2009 roundup earlier this month
Probably the biggest M&A news – Amdocs bought MX Telecom for $104M
There was buzz in the M2M segment
Cisco's Chief Technology Officer Padmasree Warrior said, there will be 1 trillion devices, 1.5M apps, 5.7M security threats, and 486 Exabytes of data consumed by 2013
An interesting startup I ran across was Invensense – motion based device interaction
Ericsson had its connected tree on display. In case you were wondering how we get to 1 Trillion devices ..
Femtocells are trying to remerge after a disappointing year – it's the pricing _____!
Obermann: US growth is far better than that of Europe. US T-Mobile is performing much better than the other properties of Deutsche Telekom so why sell.
The word revolution was used 45 billion times during the conference.
More CTIA coverage at Wireless Week, Moconews, RCR Wireless, CNET, etc.
We will be discussing many of the future topics in much more detail at our upcoming conference "Mobile Future Forward.†More details to come.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Mobile Breakfast Series Event Roundup March 12, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,Carriers,CTIA,European Wireless Market,International Trade,Japan Wireless Market,Location Based Services,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Traffic,Music Player,MVNO,Privacy,Smart Phones,Speaking Engagements,US Wireless Market,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 3 comments
Wednesday Morning we hosted the third edition (sold out) of the Mobile Breakfast Series and were grateful for the time and insights from two outstanding speakers. Thanks to our sponsors for the support: Motricity, Openwave, WDSGlobal, and Clearwire
First up was Kevin Martin, former FCC Chairman and current co-chair of the communications practice and partner at the leading law firm of Patton Boggs in Washington DC.
Second speaker was Rob Glaser, Chairman and Founder, Real Networks. This was his first public appearance since he stepped down as CEO of Real Networks.
Kevin talked about the National Broadband Plan that is going to be released this coming tuesday and Rob opined on the opportunities in mobile. I had the good fortune of asking and moderating the Q&A after the initial presentation.
Summary of his comments:
- In response to my question if we are becoming too dependent on the spectrum as a way to alleviate data congestion issues, he said that spectrum should be viewed as a renewable resource, however, we should look for expanding fiber as close to end point as possible, look for alternate ways to offload traffic (something I agree with completely)
- Technology advancements are allowing for more efficient use of the spectrum
- Current carriers have about 450 Mhz, broadband plan seeks to double the spectrum by adding another 500 Mhz though it will be hard to get given the constraints
- Broadcasters can make some spectrum available for auction and share the proceeds
- We are still early in the Open Access process but full impact is yet to be felt
- Beyond the carriers and airwaves, the regulatory authority of the FCC is limited as we go deeper into the ecosystem
- Wireline infrastructure shouldn't be looked as a separate entity. Since there will be a lot of wireless traffic that will go over wireline, it is part of the same infrastructure
- USF could be used to expand the broadband services to the masses
Rob's talk (embedded below) was about the opportunities created by the introduction of smartphone/superphones over the next 34 years.
Opportunities are:
- •"Digital Persistenceâ€
- •Universal Access across Devices
- •Making Discovery Easy
- •Empowering Social Expression and Engagement
- •Leveraging The Global Nature of These Trends
and of course challenges are:
- •Delivering solutions that scale with variable bandwidth and device capabilities
- •Creating commercial models across an extremely complex value chain
- •Vertical versus horizontal industry structure
- •Media industry adaption of new business models
- •Educating users on privacy and social implications
In summary,
- The Next Mobile Revolution is both a huge opportunity and a massively disruptive force
- §It will ultimately be bigger than the PC or Web 1.0 or 2.0 revolutions
- Cross-industry collaboration, while complex, is essential
- §"We must all hang together, or most assuredly we shall all hang separatelyâ€
After the intense 30 minute talk that the sold out crowd tried to absorb as much as possible, I asked him what Real would do if he were starting today. And there was a similar question from Andy Kleitsch from Billing Revolution about advise to startups. Here is some of what he had to say (courtesy: Techflash)
On the question of vertical vs. horizontal integration (question from Tricia Duryee of Moconews), he had this to say (courtsey: Techflash)
His presentation below:
We also announced the June 10th event that will all about Mobile Startups. Registration is open. It should be a great discussion with startup CEOs.
Also, announced the Sept 8th event which is of the long-form (day long) – Mobile Future Forward. Great speakers and useful discussion. Stay tuned for more details. We are working feverishly on the details.
Many thanks to our generous sponsors who believe in the vision behind the MFF event – Real Networks and Millennial Media. Your support is much appreciated.
Finally, a personal thanks to all those of you who helped out. You know who you are. We are a pretty lean operation and need assistance from our friends to make every event successful and useful to the mobile community.
Overall, we had as much fun hosting the event as we had in preparing for it. Please let us know your feedback.
Some pictures from the event:
Some additional coverage of the event by some of the most outstanding reporters in the industry – Seattle Times, Techflash, Moconews, GigaOM, and PC World. Thanks.
US Wireless Data Market Update: Q4 2009 and 2009 March 2, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Intellectual Property,International Trade,IP Strategy,Location Based Services,Messaging,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,Smart Phones,Strategy,Unified Messaging,US Wireless Market,Usability,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 2 comments
US Wireless Data Market Update – Q4 2009 and 2009
Executive Summary
The US wireless data market grew 5% Q/Q and 24% Y/Y to exceed $11.8B in mobile data service revenues and thus exceeded $10B for each of the four quarters in 2009. For the calendar year 2009, the overall mobile data revenues for the US market grew 29% ending at $44 billion for the year (1% shy of our $44.5 billion estimate). For the calendar year 2010, we expect a 20% increase in mobile data service revenues accounting for over $53 billion in service revenues.
Verizon Wireless edged past China Mobile to become the second biggest mobile data operator by revenues.
The US subscription penetration was approximately 92% at the end of 2009. If we take out the demographics of 5 yrs and younger, the mobile penetration is 99%.
The messaging volume increased 7% from last quarter catapulting US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the full calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.
Apple continued its iTunes juggernaut and if measured by billing relationships (of course not all accounts are mobile) Apple is now the 10th largest mobile operator in the world.
Q4 2009 reported a 5.9% increase in GDP compared to the 3.5% increase in Q3 when the recession technically ended. While the overall economy is sputtering towards growth, wireless industry in the US remains vibrant as is evident by the increase in revenues and net-adds which jumped more than 5 million for the first time in 2 years.
What to expect in the coming months?
Christmas quarter generally yields best results of the year. Though the US mobile industry came out pretty unscathed from the recession, it will benefit from the improving economy. As such we expect the US mobile data service revenues to gain 20% to reach $53 billion in 2010. Mobile data will continue to be the engine of growth for the ecosystem providing at least 33% of the overall service revenues by the end of 2010.
The furious cycle of device releases is accelerating and one wonders if the longevity of each device is starting to shrink as even the hit devices like Droid and Nexus One are not allowed enough room to fully capitalize on their initial momentum. The app economy has been expanding as well. Part strategic, part hysteria, everyone is jumping into the pool to tap into the app river to pull in some revenues or use it more strategically to sell more devices, services, or advertising. (Stay tuned for more research on the subject in the coming days)
Microsoft is attempting a comeback with its 7 series devices though the delay in handset release as well as the lack of backward compatibility gives enough time for competitors to plan their moves. We are glad to see the industry going past the "PC like icons†for mobile phones (something we have advocating for more than 10 years, most recently in our paper "The Untapped Mobile Data Opportunity.†This will enhance user experience and help in extracting true value out of the mobile devices.
From the various announcements this year, we can expect an action packed 2010. However, it will be also an year of shakeouts with several key M&A transactions that will winnow down the competitive landscape in many segments.
Q1 2010 will also be important from the regulatory point of view with the national broadband plan being unveiled later this month. With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. For example, in India, regulators haven't been able to get their acts together for the past 3-4 years and its citizens continue to suffer from 2G. Similarly, many countries in South America have imposed unnecessary spectrum caps. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.
To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (Former FCC Chairman, Kevin Martin will be headlining our Mobile Breakfast Series event on March 10th to discuss the Spectrum Crises).
2010 will also be the year of network expansion with HSPA+, WiMAX, and LTE all coming into play in the US. As we had anticipated last year, the mobile data traffic kept on growing disproportional to the revenues. At the end of 2009, the US mobile data traffic was almost 400 petabytes, up 193% from 2008. To truly tackle the problem head-on, industry will need to adopt a multi-pronged strategy to manage their traffic more effectively. We discussed mobile data traffic in much more detail in our popular paper "Managing Growth and Profits in the Yottabyte Era." We will be issuing an update later this quarter so stay tuned.
It is also good to see the mobile industry expanding into vertical segments like Health and Retail. More discussion to come on these topics.
We will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.
Against this backdrop, the analysis of the Q4 2009 and 2009 US wireless data market is:
Service Revenues (Slides 8, 17)
- The US Wireless data service revenues grew 5% Q/Q to $11.8B in Q409. Compared to Q408, the data service revenues grew 24%.
- Verizon and AT&T accounted for 88% of the increase in data revenues in Q4 2009.
- The US mobile data service revenues crossed $10B for all the four quarters and stays ahead of Japan and China by a distance.
- AT&T experienced the most growth with over 7% increase Q/Q followed by Verizon at 5%.
- Verizon's data revenues exceeded $4B for the second straight quarter and is only inches behind the global leader of over 10 years NTT DoCoMo.
- AT&T and Verizon now account for 69% of the market data services revenues and 62% of the subscription base.
- The average industry percentage contribution of data to overall ARPU is now 29%. US market is likely to pass the 30% mark in Q1 2010.
- Verizon edged past China Mobile to become the second biggest mobile data operator by revenue behind NTT DoCoMo. The top four US carriers are now a permanent fixture in the top 10 global operators by mobile data service revenues occupying #2, #4, #6, and #8 spot respectively. Apart from NTT DoCoMo and China Mobile, Verizon Wireless and AT&T are the only two other operators generating more than $3B in quarterly mobile data service revenues.
ARPU (Slides 9-12)
- Overall ARPU decreased by $0.45. Average voice ARPU declined by $0.98 while the average data ARPU grew by $0.53 or 4%.
- Verizon led in (blended) data ARPU with $16.24 followed by AT&T and Sprint. In terms of % contribution, all the top three operators exceeded the 30% mark (Verizon became the first operator to do so last quarter). T-Mobile ended the year with 22.2% of its revenue coming from data services.
Subscribers (Slides 13-15)
- In Q409, in terms of net-adds, the US market reversed the trend of the last 8 quarters and increased net-adds by 85% Q/Q to add approximately 5.1M new subscriptions.
- The messaging volumes in the US market now average almost 592 messages/subscriber/month thus becoming the number one texting nation going past Philippines.
- In terms of net-adds, thanks to the boost from the iPhone, AT&T led for the third straight quarter with 2.7M net-adds, edging its friendly rival Verizon which added 2.1M net subscriptions.
- T-Mobile and Sprint improved their net-adds from last quarter though it was primarily from the prepaid segment.
Applications and Services
- Non-messaging services continue to grab 60-65% of the data revenues for the US carriers.
- There are probably 18-20 sub-segments within mobile data services and consolidation looms. While the valuations are still high for rapid consolidation, we think that due to recession pressure, the M&A scene is starting to heat up esp. in mobile advertising with the acquisitions of Admob and Quattro Wireless.
- The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.
- Nokia sold 129M+ units in Q4 2009 including 21M smartphones. Samsung again had a solid quarter with over 69M devices sold maintaining its market share at 21%. LG Electronics at 10%, Sony Ericsson at 4%, and Motorola at 4% rounded up the top 5.
- The constant drumbeat of new devices continued with Droid, Nexus One, and the fabled iPad.
- The growth in smartphone usage is also putting pressure on the networks which are not able to handle the load during peak times in certain cities thus forcing carriers to look for alternate strategies to satisfy the demand for broadband.
Policy and Regulations
- Q4 was also notable for the FCC scrutiny of the wireless industry. In outlining the four key principles of a) looming crisis of spectrum shortage b) removal of red tape c) enforce net-neutrality and d) open Internet, things have already started to change in the US Wireless Industry. The US broadband plan is scheduled to be unveiled later this month and can set the tone of innovation and regulation in the coming years.
- The appstores battle is intensifying with OEMs and carriers are announcing their plans and some of them are opening their wares to woo the developer community. The number of non-operator appstores jumped 375% in 2009. In the midst of the appstores hoopla, Apple announced the passing of the 3 Billion download mark with increasing number of developers participating the ecosystem.
Data Traffic (Slide 16)
· For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the whole calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.
- India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
- Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
- Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in May 2010. The next Global Wireless Data Market update will be issued in March 2010.
Your feedback is always welcome.
Should you have any questions about navigating or understanding the economic and competitive icebergs, please feel free to drop us a line.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
2010 Mobile Industry Predictions Survey January 3, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,Storage,Strategy,Uncategorized,Unified Messaging,US Wireless Market,Usability,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 6 comments
2010 Mobile Industry Predictions Survey
Mobile Predictions Survey (pdf)
Mobile Predictions Survey (ppt)
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2010. Thanks to all who participated in our 2010 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.
Before we dive into the survey results, let's do a quick wrap-up of the year that was. Well, since we just completed one heck of a mobile decade, let's do a quick jog down the memory lane.
The Last Decade: 2000-2009
Each new decade brings its own consumer and technology trends. During the 2000s mobile cemented its place in the global society fabric, the use of mobility became addictive and pervasive, to be without mobile seemed a curse and innovation blossomed and took user expectations to new heights.
From a pure statistical point of view, the global mobile subscription penetration grew from 12% in 2000 to approximately 68% in 2009 – phenomenal by any measure. The overall revenues grew over 400%, the data revenue grew 32,600% and the total subscriptions grew 563%. NTT DoCoMo paved the way with the i-mode launch in 1999 and they were the operator to emulate throughout the last decade, leading every single year in data revenues, in new application and service revenue sources, and in innovation and risk taking. They tried to export the success to other regions with little reward but DoCoMo clearly led the industry in taking mobile devices where they have never gone before.
China and India were late to the party but during the second half of the decade caught up with the western world and eventually surpassed all nations becoming number one and two nations by subscriptions respectively. In 2006, China Mobile became the most valuable operator passing Vodafone.
Mobile devices went significant transformation as well. From the early Bluetooth, camera, and music phones to the iPhones, the Storms, and the Androids, the industry was transformed by the introduction of Apple's iPhone in 2007. While Bluetooth, sleek designs, camera phone defined the first half of the decade, the second half was all about the applications and the mobile web. While Nokia dominated the entire decade in terms of the sales and profits, having missed the touch revolution, it leaves the decade a bit battered and a bit behind playing catch-up to the newcomers who profoundly disturbed the status quo.
Razr carried Motorola through 2006 when its global share peaked but was left to reinvent itself during the second half. It seems to have redeemed itself with the successful launch of Droid and upcoming Android devices. While many in the industry predicted RIM's demise, the company has only gotten stronger and is looking good for the 2010s. The emergence of Samsung and LG as strong players in the mobile ecosystem was also a big story of the decade with Samsung increasing its share by 380% and LG by 575% becoming the number 2 and 3 players respectively.
While Microsoft's Windows Mobile had an early start and the enterprise market share, it lost its way through several missteps and is on dialysis as we enter the new decade. One shouldn't count WM out though but there is a lot of work to be done before it can capture the imagination of the ecosystem which has been sequestered away by iPhone and Android.
While many new application areas were introduced during 2000s, none was able to displace SMS as the leading app category by usage and revenues. However, it's relative share has started to come down especially in North America and Western Europe.
As data usage grew, so did the data traffic bringing many data networks to their knees. We expect the data traffic consumption to only accelerate. Many people are underestimating the growth rates (as they did previously) and the strain the increase in consumption will put on the unprepared networks. Projector phones will take media consumption to a new level. Data management is going to be big business in the 2010s.
Overall, the mobile industry became a trillion dollar industry in 2008 and the data revenues are increasing in almost all regions. Voice is being commoditized at fast pace and that has put the traditional economics and ecosystem wealth distribution in topsy-turvy.
The US market also experienced tremendous growth with mobile data service revenues climbing 21,327% and becoming a mainstay in the mobile economy. In 2008 it crossed Japan as the most valuable mobile data market. US was late in adopting SMS but caught fire once American Idol started using it and even played a good role in the 2008 Presidential election in showcasing the power of mobile. Verizon started the decade being the number one operator and after trading places with Cingular and ATT grabbed the title back in 2009 (after the Alltel acquisition) to become the most dominant carrier in North America. Many smaller players competed by being innovative with Cincinnati Bell launching the fist UMA device, Sprint the first mobile eReader, and TMO launched the hotspot business which has now become an essential component of an operator strategy going forward.
Mobile is also replacing landline at a much faster pace than expected and within the first half of the new decade, we will have majority of the users using mobile vs. landline. Just like the last decade, this one starts with a new standard deployment of LTE that will keep operators and vendors busy throughout the decade. However, a lot of the developing markets will still be deploying 3G during the first half of the decade.
Infrastructure providers suffered the most in the decade bookended by the two recessions. Consolidation of giants (Alcatel Lucent, Nokia Siemens), bankruptcies of the famous (Nortel), and uprising of the upstarts (Huawei) pretty much defined the decade for the segment. Ericsson and Huawei enter the new decade from a strong position and looking to dominate the global markets.
The last decade was also marked by some prominent IP battles such as RIM vs. NTP, Qualcomm vs. Broadcom, Sony Ericsson vs. Samsung, Upaid vs. Satyam etc. (disclaimer: we worked on some of these cases and testified as an expert)
Here is our "subjective†list of movers and shakers of the last decade
Operator of the Decade
NTT DoCoMo
DCM led the way in almost all new category of apps and services. Its data service revenue was highest in each of the last 10 years
DCM will continue to lead along with KDDI and SKT. However, it might be the carriers with tremendous scale who will have the calling cards in the new decade. Watch for China Mobile, Vodafone/Verizon, Telefonica, Orange, Bharti, Unicom, Singtel
OEM of the Decade
Nokia dominated in sales and revenues in each of the 10 years and while the last couple of years took some shine off its glorious past, the company nevertheless came out ahead
RIM, Apple, Nokia, Samsung
Smartphone OEM of the Decade
Smartphones as we know them were introduced by RIM but Apple defined the category and the subsequent ecosystem
This space will be very competitive with Apple still the gold standard to beat
Infrastructure Provider of the Decade
Its prime rivals struggled to stay afloat while Ericsson grabbed most of the revenues from infrastructure contracts and is very well positioned for the next decade
Ericsson is joined by Huawei as the two top infrastructure provider with Huawei giving tough competition for LTE contracts. ZTE and other Chinese infrastructure providers will also replace some of the incumbents
Nation that led in mobile data
This is a no brainer. Japan led with Korea a close second. Finland, UK also impressed
US, China, and India are well positioned to make an impression but most likely during the second half. Japan will still be a major player
Device of the decade
iPhone followed by Razr
iPhone impressed with form and function while Razr with its global sales making it a top selling device of all times
The field might get more crowded as all OEMs focusing on the smartphone category. However, OEMs who also focus on the 90% of the market w/o smartphones might win the top prize
The year 2009
Apple continued to dominate the headlines for the third straight year – whether it was the launch of 3GS or the upcoming introduction of the fabled tablet. Google too kept the ecosystem active. It has executed on its mobile strategy with brilliant acumen though causing significant consternation amongst its partners who it needs to be successful. It has been often misunderstood by competitors, regulators, and partners. Often, they have focused on Google's tactics vs. its strategy. Look for these two players to be very aggressive as they try to fight for the mantle and the mindshare.
While Nokia leads the OEM space by a good distance, its momentum in the smartphone space left a lot of question marks. Motorola made a credible comeback with Cliq and Droid. Samsung and LG continued to innovate and expanded on their share of shipments and revenues.
India outpaced China in net-adds and crossed 500M though it is still quite behind China's 750M. The M&A and the consolidation process became active in Asia with several of the big regional operators looking to flex muscles in the international markets. After several delays, China started deploying 3G while India again fumbled and postponed its 3G auction.
US mobile data market continued its pace in 2009 with each of the four quarters exceeding $10B in data service revenues. The gap between the top two operators and the rest grew to be the biggest in the decade and the industry weathered the recession with ease. There was a clear shift towards prepaid especially for Sprint, T-Mobile, and the tier 2/3 operators.
2009 was also defined by significant activity on the application front. With Facebook eclipsing 100M subscribers and Appstore exceeding 2.5B downloads, sky is the limit.
The year also saw an unprecedented growth in mobile data consumption. As we had predicted, for some of the networks, the growth proved to be a double-edged sword. Many in the industry are banking on LTE to help relieve the pain but will be surprised that depending solely on the upgrade strategy will not be enough. Declaring spectrum as a looming crisis, FCC also started tinkering with the mobile industry and the broadband plan.
Japan exceeded 90% in 3G penetration while US subscriptions ventured into the 90% territory. Most of western Europe is way past 130%.
All in all, a terrific year considering that we went through one of the worst recessions in a generation. As we bid goodbye to the last decade, Nexus One and iTablet only serve to whet our appetite of what's to come.
On a personal note, we started our consulting practice this last decade as we were coming out of the bubble recession and have been fortunate to work with some of the brightest brains and companies in the global ecosystem. We also had a chance to work on some key initiatives that impacted the ecosystem in profound ways. Many thanks to our clients, colleagues, friends, and readers. We will be involved with many new initiatives over the next decade and are looking forward to the conversations through the research notes, books, speeches, panels, whitepapers, blog posts, facebook and twitter feeds, and more.
Thanks and Happy New Year. May the upcoming decade leave you happier, healthier, and more successful than the previous one.
As we eluded to earlier, 2010 will be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments?
We put some of the questions to our colleagues in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=150) from leading mobile companies across the value chain and around the world opined to help us see what 2010 might bring.
11 names were randomly drawn for 3 special prizes. The winners are:
Claire Boonstra, Cofounder, Layar- INQMobile 3G Chat device
Michael Libes, CTO, GroundTruth – Open Mobile Book
Henri Moissinac, Head of Mobile, Facebook – Open Mobile Book
Subba Rao, CEO, TataDoCoMo – Open Mobile Book
Saumil Gandhi, Product Manager, Microsoft – Open Mobile Book
Sarah Reedy, Senior Editor, Connected Planet – Open Mobile Book
Mike Vanderwoude, VP & GM, Cincinnati Bell Wireless – 2010 Mobile Almanac
Pinney Colton, VP, GfK – 2010 Mobile Almanac
Tim Chang, Principal, Norwest Ventures – 2010 Mobile Almanac
Laura Marriott, President – 2010 Mobile Almanac
Asha Vellaikal, Director, Orange – 2010 Mobile Almanac
Thanks to INQMobile and my friend Ajit Jaokar for contributing the prize gifts.
Despite conventional wisdom, what will not happen in 2010?
There were many. Sampling – Verizon iPhone, Microsoft Phone, Sprint will not be bought, Femtocells won't gain traction, RCS will not happen, Google will not enter handset market directly, iPhone won't lose steam, Android won't bring coherence, NFC won't take off, WiMAX won't disappear, Nokia won't bounce back, Palm won't die, "Year of Mobile†noise won't subside, carriers won't be delegated as dumb-pipes.
It is hard to cover the mobile industry in 20 questions. As pointed out by our panelists, there are a number of other issues and opportunities that will help shape our ecosystem – monetization of social networks, augmented reality, the fight for mobile advertising dollars, continued impact of globalization, security and privacy, NFC, IMS, VoIP, enterprise apps beyond email, battery improvements, new interaction modalities, health risks of RF radiation, Mobile 3.0, LTE, single purpose devices, 3G in India, Bada, app vs web, developer turmoil, featurephones, smart grids, M2M, Chrome, etc.
However, be rest assured, we will be tracking these and much more throughout the year and sharing them through various channels.
Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific year for us here at Chetan Sharma Consulting and we are looking forward to the next decade and seeing many of you along the way.
We hope you enjoyed gaining from the collective wisdom. Your feedback is always welcome.
Be well, Do Cool Work, Stay in touch.
With warm wishes,
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Now onto the 2010 Mobile Industry Predictions Survey Results
The panel comprised of movers and shakers from around the world
What will be the biggest stories of 2010?
Jan seems to be the Google Phone vs. Apple Tablet matchup. Our panel though voted for the continued growth in mobile data as the top story.
Have we recovered from the recession? (Please select one)
Majority thought we are out of it though some might still feel the pinch
Who will be the most open player in the mobile ecosystem in 2010? (Please select one)
Google has done a great job at maintaining its image as THE open leader
Will Android handset sales exceed iPhone's in 2010? (Please select one)
Despite Androids coming in droves, iPhone will still be the king of the hill
When will we see tiered pricing plans for smartphones in the US from tier 1 operators? (Please select one)
There are indications that this might happen sooner rather than later
What will happen to the mobile prepaid subscriber base in the US? (Please select one)
Prepaid made a strong comeback in 2009 and a good majority thought that the trend is likely to continue
By how much will the mobile advertising ad-spend increase in 2010? (Please select one)
Mobile Advertising was the only advertising segment with positive growth last year so it is no surprise that folks expect it to more than double this year
What will be the impact of the FCC's national broadband plan on the mobile industry in 2010? (Please select one)
Not much is expected from the various rulings that might come this year with most expecting the courts to have the final word.
Who will be the mobile comeback story of 2010?
Having bet its future on Android, Motorola was voted as the comeback kid of 2010
What will be the impact of Google Phone?
It's pretty clear, Google and Apple are duking it out for the developer mindshare. Google wins in either case.
Which areas will feel the most impact from FCC?
Net neutrality is the area where they will have the most impact
Which solutions will gain the most traction for managing mobile data broadband consumption?
While only a holistic approach can provide complete relief, tiered mobile data pricing might have the most impact
When will the carrier-branded appstores lose steam? (Please select one)
Most expect carrier-branded appstores to be a thing of the past in 2010
What will help mobile cloud computing gain traction in 2010?
Mobile cloud computing is gaining steam and the reason is storage and media
What will be the most successful non-mobile-phone category in 2010? (Please select one)
Netbooks seem to be the strongest category followed by eReaders, Tablet, and M2M
What will be the breakthrough category in mobile in 2010? (Please select one)
Mobile Advertising and Mobile Payments share the top honors
By the end of 2010, which will have more subscribers? (Please select one)
LTE might have the momentum but WiMAX has the subscribers
How will Netbooks do through the operator channel? (Please select one)
No major impact from the operator channel
Which standards will gain traction?
No major impact from the standards
What mode of mobile payments will get any traction in North America and Western Europe in 2010?
The category will expand in different ways with more items being charged on the operator bill
New Whitepaper: The Untapped Mobile Data Opportunity December 16, 2009Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Enterprise Mobility,European Wireless Market,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Mobile Users,MVNO,Networks,Smart Phones,Speech Recognition,Storage,Unified Messaging,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 3 comments
The Untapped Mobile Data Opportunity
Sponsored by INQMobile
The last two years in the global mobile market have been truly sensational. Over 1 billion new subscriptions added, over 2 billion new devices sold, and over $300 billion in mobile data revenues. The number of new iconic devices each quarter is on the rise, the consumer engagement is at an all time high and the new startups and entrepreneurs are brimming with ideas and new products. Devices like the iPhone, Storm, Hero, INQ1, Mytouch, Cliq, Droid, N97 and others have captured the imagination of the media like never before. The smartphones or the integrated devices now account for approximately 9% of the global market. However, what's often lost in the smartphone euphoria is the remaining 91% of the market and the significant opportunity of data-enabling these customers.
Operators who have focused on data services as their core service have benefited with high data Average Revenue Per User (ARPU). As we quickly transition into the hyper growth phase of mobile data services, players who are designing affordable devices and services with "mobile data" in mind are the ones who will benefit from a higher uptick in adoption and sustainable consumer loyalty. However, as operators have migrated from 2G to 3G, many have missed an opportunity to customize or introduce new services that take advantage of devices being mobile, interactive, and always available.
Traditionally, there has been a big gulf between the functionality of featurephones and the smartphones; however, there is an emerging category of devices that will provide the functionality of a smartphone for the price of a feature phone. Though the average selling price or the ASP of the smartphone has been dropping, the price is still high for a significant majority of the global subscriber base. Consumers who are looking for a sub $50 device still want to the access applications such as Facebook, Twitter, Google search, and make VoIP calls, etc.
In this paper, we will look at the opportunity to attract the 91% of the global user base into the mobile data ecosystem. We will quantify the opportunity, examine what this opportunity means to the mobile value chain specifically to the mobile operators and discuss the success factors to accelerate the migration of non-active data users into the data realm.
Future in Review (FiRe) 2009 roundup May 31, 2009Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP Strategy,Japan Wireless Market,Location Based Services,Mergers and Acquisitions,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Speaking Engagements,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment
Over the course of last year, I did 25 different events, all of them focused on mobile. However, there was one event that truly stretched my thinking and worldview and that was the "Future in Review" conference (see last year's review here) hosted by Mark Anderson, CEO of Strategic News Service (SNS). It exposes one to multidisciplinary subjects from global warming to nuclear weapons, from oceanography to medicine, from mobile to cloud, from economics to space rockets, it's all here, nicely packed in a 3 day conference.
FiRe 2009 started with a brilliant keynote address from Prof. Veerabhadran Ram Ramanathan, Distinguished Prof of Climate Sciences and Director who is quite possibly the most authoritative person on the subject of climate change. He started his work way back in the 70s, decades before Al Gore made it glamorous. He is the one who has been measuring the impact on our planet one measurement at a time. He took us through the journey of his career culminating with a stark warning and a message of hope.
Things have deteriorated to such an extent that if we don't check the downward spiral, many of the significant sources of water such as the Gangotri Glacier in India will disappear in 10-15 years. If you stop and think about it – that's just stunning and has calamity written all over it. If the source of Ganges disappears, the life that has built around the river for thousands of miles before it goes into the Bay of Bengal will be unsustainable. I grew up in Roorkee, a town on the banks of the Ganges, so the point hit home very strongly. I have been thinking about this issue since the PBS documentary "On Thin Ice" by David Brancaccio and Conrad Anker – one of world's leading high altitude climbers. 75% of the world's fresh water is stored in glaciers and at the current pace of destruction, within 15-20 years most will be severely depleted. And there are still people in high places who don't get it.
It was not all doom and gloom but a ray of hope in his experiments that left us less depressed by the end of the keynote. He is working on a number of experiments to identify and cure the main sources of pollution and carbon in the atmosphere like the Project Surya to reduce air pollution and global warming by cooking with renewable sources. Or the unmanned drones (pictures above) to measure brown cloud particulate composition to get a handle on how pollution travels (did you know that it only takes 2-3 days for pollution in China to come over the US and then another 2-3 days to reach Europe and the cycle continues – pollution is flat and globalized – thinking that it is only a developed world problem or developing world problem is foolish, also foolish is waiting on the other party to move first).
Best wishes to Ram and his team to educate, illuminate, and find solutions to the toxic problem of our times.
Next day we moved into the full-fledged conference mode with 30 min rapid fire sessions from 8-5. The morning started with Mark talking to Stephen Evans of BBC World Service (he is a great interviewer btw) about how we recover from the current crisis and if technology will lead the rebound? Answer is Yes! and we are already seeing signs of it and others in the industry like Bill Gates and John Chambers have been echoing the same thing as well. Later Mark interviewed Mark Hurd, CEO of HP who had a hard time sitting on his feet so the discussion was done standing up.
He emphasized that the future is in the packaging of software, services, hardware, and network rather than siloed solutions. Haven't we heard that before. Hurd is a numbers guy and can recite P&L spreadsheet from memory. He suggested that we will see more of the same for the reminder of the year and that the services business is yielding good profits for HP now. There was also quite a bit of discussion on the latest buzz word "Cloud Computing," what it means and how does everyone profit from it.
Several industry heavyweights like Werner at Amazon, Amitabh at Microsoft, Russ Daniels at HP were at hand to discuss what CC means to them. While there is a lack of industry consensus on the meaning, it more and more looks like the reallocation and redistribution of resources – physical and electronic in a manner that drives efficiency and cost reductions for startups to behemoths. From a consumer point of view, it will always be a blend of solutions that take into account the privacy and security of data. My recent hard drive failures has forced me rethink my backup strategy.
(My panel on the future of Wireless Broadband – Fred, Chris, David, Hugh, and Rama)
Photo copyright © 2009 by Sandy Huffaker Jr
Later in the day, I had the privilege to host the only mobile session of the conference "The Future of Wireless Broadband" with five amazing panelists, Dr Fred Kitson, Corporate VP, Motorola, Chris Pearson, President, 3G Americas, Dr. Hugh Bradlow, CTO of Telstra, Dr. Rama Shukla, VP, Intel, and David Achim, President, SkyFiber. I have written about the subject in great detail over the last couple of years so it was great to bounce some questions to the best minds in the space. Highlights of the discussion:
- Hugh, ever a purist, defined 4G as 100Mbps.
- Not a surprise, but the latest surge of smartphones is causing the networks to panic and follow the upgrade path esp. for HSPA+, LTE, and WiMAX
- Rama said that 4G is more about the business model than about the technology. A business model that enables and opens up the ecosystem at a low price thus fostering innovation and services in an accelerated way
- Hugh added that it is also about the spectrum as what's available and how it can be utilized for new services, new technologies, and new business models
- Being a provider of the backhaul technology (a choke point in the network evolution), David discussed how the backhaul technology will need to be upgraded at an accelerated pace if we are to deliver 10Mbps+ speeds.
- Fred brought in the perspective from the device and infrastructure provider and they are doing well with both WiMAX and LTE and that newer devices with much enhanced capabilities will drive more demand for bandwidth as well as the need to optimize applications to conserve batteries (which is another areas that needs innovation and breakthrough)
- Chris gave a summary of the LTE efforts of operators around the world with folks like Verizon accelerating their rush to 4G due to end of lifecycle of EV-DO while others like ATT are pursuing a slightly slower approach trying to maximize the output from HSPA+.
- Hugh has been playing with newer set of "alternate devices" like sensor networks, telemetry, projection glasses and so on and so forth and sees their importance in the growing ecosystem.
- Australia is dedicating $43B to broadband expansion to 90% of the consumers in the country. An equivalent US investment will be close to $350B and we are investing $7B (stimulus package). As I have said before, the stimulus package was a huge missed opportunity and the govt. could have done much better.
- The flat rate economy is not sustainable and something has to give in the future
- The availability of broadband impacts consumer behavior and we are likely to see very diverse models and services emerge in the coming days
There were other host of areas I wanted to get into but you can only do so much in 30 minutes especially if you have great panelists. Wish I could have a day long session 🙂 to discuss the nitty-gritty in much more detail. In any case, great panel and insights. Joe Sterling was at hand as well to do an artist rendition of our panel, art below.
As I mentioned before, the conference was filled with very interesting discussions like Ambassador Dennis Hays from Thorium Power discussing a world where the capacity of making nuclear weapons can be taken out of the nuclear materials to only focus on nuclear energy for energy purposes. Boy! won't that change the geo-political dynamics. John Hagel talked about shaping strategy based on this recent HBR paper and his upcoming book on the subject.
Another highlight of the show is to gather the bright CTOs of leading corporations and give them a practical problem to solve like how to provide adequate safe water for future decades. Hosted by David Brin (cohost of TV ArchiTechs series), the panel delved into understanding the problem and delivering a framework for solutions. Not a typical session you see at a conference. Hey CTIA! how about putting together a problem solving panel for your next show?
I also was touched by the screening of the movie "The Cove" – winner of the 2009 Sundance Film Festival Audience Award. More details here. Synopsis:
In the 1960's, Richard O'Barry was the world's leading authority on dolphin training, working on the set of the popular television program Flipper. Day in and day out, O'Barry kept the dolphins working and television audiences smiling. But one day, that all came to a tragic end.
The Cove, directed by Louie Psihoyos, tells the amazing true story of how Psihoyos, O'Barry and an elite team of activists, filmmakers and free divers embarked on a covert mission to penetrate a hidden cove in Japan, shining light on a dark and deadly secret. The mysteries they uncovered were only the tip of the iceberg.
It will change your perspective of how you view dolphins for ever and those trips to seaworld will be ever so more poignant filled with self-introspection. More power to the activists like Richard O'Barry and directors like Louie Psihoyos for opening our eyes and making a remarkable piece despite the challenge.
Another highlight of the conference is the interviews of top technologists and emerging startups by BBC's Stephen Evans. Each gets a sound byte to wow the world (the session is streamed to 150M people). Highlights – Xerox – how can we solve legal cases with technology? Radar Networks – NOW is the unit of change. Vlingo – Speech is changing. IMANI-Ghana – SMS to prevent drug counterfeits, Cisco – virtual reality, voice, and data are the three different waves of innovation, the opportunity for collaboration is immense, Liberty – 5 yr projection 1Gbps wired, 100Mbps wireless peak throughputs, avg – 200Mbps for wired and 10Mbps for wireless, Microsoft – it will be the Chinese century, companies shouldn't worry about protecting their marketshare in China but worry about protecting their share from Chinese players overseas, Smaato – Mobile Advertising is going to be the most prevalent business model in mobile, and SIMtone – make terminals dumb again and have the network cloud take care of everything.
The current financial crisis was also discussed at length. Many thought Europe is in denial and lack fundamental understanding of the crisis, that China and US are intertwined more than ever before and will have to work together to lead the world out of the crisis, India is largely untouched and better days are ahead thanks to the recent electoral results.
(Larry with Kamran, Mark with Elon)
Larry Brilliant suggested that the vaccines are the best investment in human history. Can't argue with that one. He also suggested that the world should be thankful to Mexico for releasing the data early and often enough for other countries to take precautionary measures (sometimes to the extreme, I might add). They have suffered significantly and have been ridiculed but hopefully they serve as a lesson for the world in future pandemics.
If FiRe represents the best in multidisciplinary thinking, Elon Musk represents the rare breed of multidisciplinary entrepreneurs. The guy can shift from intricacies of electric cars to the design of rocket ships to solar energy with ease.
(with Hugh at Calit2) Copyright© 2009 Calit2
My best session was at Calit2. I think Larry Smarr has the best office with many 10Gbps links and coolest toys to play with, especially the 125Mpixel Hyperwall. It was also nice to interact with Michael Sims, Manager and Planner for the Mars Rover at NASA and his team using the network and the wall. You can see some cool images below. The second set of pictures are an image of human brain where you can pick out the single neurons with ease.
Also, interacted with the next generation surface and touch technology that uses pressure as an input as well. Below is me doing a destructive face surgery on a poor soul.
Finally, I would be remiss if I didn't mention the 0-60 mps in 3.9s experience in Tesla Roadster. That car is a rocket.
Overall it was a great conference. I left more curious about more things. The conference also has an intimate feel to it where you can discuss burning issues with top experts and award winners over coffee, stroll, and meals. Registration for 2010 is open now.
Global Wireless Data Market Update – 2008 April 28, 2009Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,European Wireless Market,India,Indian Wireless Market,International Trade,Japan Wireless Market,Location Based Services,M&A,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Strategy,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
Global Wireless Data Market Update – 2008
Executive Summary
The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (together) are adding over 20M new subscriptions every month. India crossed the 400M subscription mark this month while China whizzed past 650M in Q109. Overall, the global subscriptions penetration edged past 60%. During 2008, revenues further tilted towards data services, increasing 17% from 2007 EOY. The overall global mobile revenues (including equipment) for the year reached the 1 Trillion dollar landmark in 2008, with over $830 billion attributed to services revenues. Data revenues now account for over 20% of the global service revenues.
For some leading operators, data is now contributing close to 40% of the overall revenues. However increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. From the true and tested SMS messaging to the new services such as Mobile Advertising, Social Networking, Commerce, Mobile Wallet, and others, different services helped in adding billions to the revenues generated in 2008. The US market expanded its lead over Japan in mobile data service revenues for the year and is unlikely to cede ground in the months to come.
The success of Apple's Appstore (1B downloads in 9M across 37M devices is not surprising but still impressive, look for another growth bump in July) led to appstore mania across the ecosystem with every major player in the ecosystem holding ambitions for Applesque success leading to healthy competition and hopefully more innovation. Google's Android also kept the industry chatter on the high with a slew of new devices slated for 2009. The ease of use of applications developed for G1 on the new devices will define Android's role in the ecosystem. If successful, it will decimate the weaker ones from the equation going forward.
WiMAX vs. LTE debate took over the EV-DO vs. WCDMA talk and while the majority of the industry is consolidating around LTE; open-platform advocates are watching the arrival of WiMAX with great interest. However, the down economy is delaying the establishment of Clearwire's nationwide footprint.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries – from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights from our work in various global markets.
Service Revenues
- US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $34B vs. $29B for Japan in 2008. China with $15.8B was ranked number 3. US registered the highest growth amongst the top 3 with over 40% increase from EOY 2007 levels followed by Japan at 25% and China at 21%.
- The top 10 nations by service revenues are: US, China, Japan, UK, France, Italy, India, Germany, Spain, and Russia.
- The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Spain, Australia, and Korea.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $4B in data services revenue in Q408 and almost $15B for the year. Almost 42% of its overall revenue now comes from data services. DoCoMo also crossed the 90% 3G mark last month.
- NTT DoCoMo was followed by China Mobile, Verizon, AT&T, KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to round up the top 10 operators by wireless data service revenues. It marked the first year for T-Mobile USA to be in the top 10 list as it went past SK Telecom. All the top 10 carriers exceeded $2B in data revenues for the year 2008.
- The top 10 global operator groups now account for over 60% of the global mobile data revenues.
- For the last couple of years, NTT DoCoMo has been the only carrier exceeding $10B in yearly mobile data revenues. In 2008, as expected it found company with China Mobile, Verizon Wireless, and ATT in the exclusive $10B club. KDDI missed out by a whisker.
- Data revenues for the top 10 operators increased 27% from EOY 2007 and now account for almost 48% of the global mobile data revenues though their subscriber share is around 30%.
- The biggest jump in data revenues was experienced by the US carriers – ATT and Verizon Wireless respectively. They were followed by China Mobile. (For a complete US Market Update, please see our Q208 research note).
- NTT DoCoMo regained its position vis-Ã -vis KDDI w.r.t. mobile data revenues. Their data coordinates stand at ($27, 42%) and ($25, 38%) respectively.
- Most of the operators in developed nations are contemplating future strategies to boost data revenues such that the decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPUs. Comparing the ARPU for last 2 years, amongst the top operators, only Singtel, Rogers, T-Mobile UK, O2 Germany, O2 UK, Verizon Wireless and ATT experienced increase in both overall and data ARPU.
- China reported approximately $16B in data revenues for 2008 and the percentage contribution is around 27%, data ARPU is around $2. For India, data ARPU continues to stay around $0.50 as most of the new adds are voice only subscribers and there is continued price pressure in the market.
- China Mobile remains the most valuable telecom operator with over $180B in market cap. It is followed by Vodafone at around $98B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. The current recession has slashed their market caps by 20-30%.
- In 2008, SMS's vice like grip on data revenues continued to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
- NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets and exploring new technologies and social experiments ahead of almost anybody else in the market. We looked at the data revenue growth at NTT DoCoMo since the introduction of i-Mode almost 10 years ago. During the last 9 years, overall ARPU has declined 33% though data ARPU increased over 1800% and now accounts for almost 40% of DoCoMo's service revenues. The voice ARPU has declined almost 60%. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends and technologies in these markets to get a sense of what's coming.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like DoCoMo, and Softbank are over 42%. KDDI, 3 Australia, 3 Italy, 3 UK, O2 UK, Singtel, and 3 Sweden exceeded 30%.
- ATT reported the highest increase in data ARPU from 2007 with 32% growth. Other notable percentage increases in ARPU were from KDDI, DoCoMo, Softbank Japan, 3 Australia, Vodafone Italy, Rogers, Verizon Wireless, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.50. In terms of absolute dollar amount, NTT DoCoMo leads the pack with $27 data ARPU.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 56% (or $3) contribution coming from the data services. Philippines is also one of the most active messaging nations where users average a message/hr round the clock.
- The global mobile markets continue to grow at an explosive pace touching 4B subscriptions by 2008 up 23% from EOY 2007 levels and will likely cross the 5B mark in 2010. Overall the global mobile subscriptions now represent over 60% of human population on Earth.
- China and India continued their red-hot growth throughout 2008. Combined, they added 212.8M new subscriptions with India edging China by 15% for the first time in yearly net-adds.
- Earlier this month, India also crossed the 400M subscriptions mark, only the second nation to do it after China. In total, China is still years ahead. In the meantime, US crossed the 90% subscriptions mark earlier this year.
- In March, India edged past the US to become the number two wireless market (by subscriptions) in the world. In the last two years alone it has added almost 175M new subscriptions (in comparison China added 169M and the US market added 39M). For the past 7 months, India has been displaying Phelpsesque like flair in setting and beating its world record for 6 times, twice exceeding 15M/month net-add. For the last 7 months, the market has been exceeding 10M net-adds/month with Mar 09 being at a whopping 15.6M making it a record for monthly net-adds in a given country at anytime in the history of the industry or any industry for that matter (breaking its previous record set in Jan09).
- In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018.
- The top 10 nations by subscriptions are: China, India, US, Russia, Brazil, Indonesia, Japan, Germany, Japan, and Pakistan.
- China Mobile with 457M (as of Dec 08) remains the #1 carrier in terms of the total number of subscriptions followed by Vodafone at 255M and Telefonica with 196M subscriptions. América Móvil, Telenor, China Unicom, T-Mobile, Orange, MTS, and Bharti Airtel are the next five largest telecom groups in the world.
- As far as 3G is concerned, there were over 400M 3G users (72% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 90%+ penetration.
- Messaging still accounts for the lion-share of data service revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have gradually chipped away the share from messaging. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- Nokia eclipsed 100M/quarter unit sale in each of the four quarters. It has sold over 468M handsets in 2008 (up 7.2% from 2007), more than the next three handset manufacturers combined. Nokia's global market share stayed in the 38-41% range. Samsung at 15%, Motorola with 9%, LG with 9.3% and Sony Ericsson with 8% rounded out the top five. Despite the slowdown, the industry eclipsed 1B in handset sales in 2008 and will do so again in 2009.
- China and India represent the biggest opportunities for the Infrastructure providers. China launched 3G across the three operators earlier this year. India is also going through its 3G spectrum policy and is likely to resolve some of the contentious issues shortly. Some of the biggest infrastructure contracts are coming from these two countries as they look to expand coverage into rural areas.
- Deployment of 3.5G technologies is in full swing. However, it is the discussion of 4G that is occupying the headlines. Many larger operators have laid out their plans for deploying LTE starting next year. Meanwhile, Clearwire has been rolling out its WiMAX network, one market at a time.
- While the talk of "Open Access†and "Open Platform†consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizon's "Open Network†initiative elevated the consternation in the ecosystem. Apple launched its 3G iPhone and Android's first device was introduced in the form of T-Mobile G1. Many more Android devices are slated to be released in 2009.
Your feedback is always welcome.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Ps. We will have an update on the impact of recession on the mobile industry in our US Q109 update next month.
CTIA 2009 Roundup April 6, 2009Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,CTIA,Devices,European Wireless Market,Indian Wireless Market,International Trade,IP,Japan Wireless Market,Location Based Services,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Speaking Engagements,Strategy,Unified Messaging,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
CTIA 2009 Roundup
CTIA provided a boost to the Las Vegas economy by hosting the 2009 International CTIA in the sin city. Prior to the show, we knew that the attendance will be down due to the economy and it was clear from day 1 that it will be a less busy event. Attendance was probably down 30-40%, Exhibitors seemed down by a good percentage as well with many opting for meeting rooms instead or skipping the show altogether. The big double story compounds were downgraded to smaller fields. Samsung and LG didn't plaster the town with massive banners, taxis weren't covered in advertisements. It was not all bad though, the probability of being trampled by humans reduced, taxi lines were shorter (though no less annoying) and the quality of the show was still pretty good. We had a jam packed schedule. This note summarizes the observations from the show.
Numbers CTIA released its semi-annual numbers. For 2008: 270M subscribers, $148 billion in service revenues, $32 billion in data revenues (just for reference, this is more than the total global Hollywood box-office revenue which came in at $28B), 2.2 trillion in MOU, 1 trillion TXT messages. You can checkout our annual US data market analysis which was released last month here.
Etech Contest – Prior to the event, CTIA invited us to judge the Emerging Technology Contest. It was fun reviewing the various entries. The award winners are announced here. Congrats to all.
My CTIA started early with a couple of sessions at the pre-conference event – BRIC Mobile Market Summit. The quality of the discussion was pretty good. I gave a talk on the Opportunities in the Indian and Chinese mobile markets and discussed where the opportunities in these two fastest growing markets as well as dispel some myths that engulf most companies.
After that, I joined the panel with other experts in the industry to have a lengthy discussion of the trends and opportunities in these markets including Latin America.
Unfortunately, our workshop on "Monetizing Mobile User Generated Content†got canceled due to low attendance or maybe folks are just not interested in monetizing these days. I will be discussing some of the similar themes in my talk at the NAB Show (MES) in Vegas on 22nd April. I will also be moderating a panel on Innovations in Mobile Experiences.
If interested, clients of Chetan Sharma Consulting can request the slides from any of the talks.
Themes: The main themes of the conference were: Broadband (primarily around 4G and LTE with sprinkles of WiMAX) and data usage, Green, Mobile Health, Appstores, Rich Communication and Social Networking.
4G – My first 4G project was back in 2003 for NTT DoCoMo when 4G didn't even enter industry's vernacular. Most operators were figuring out their 3G strategies. Six years hence, we have come a long way. Broadband, 4G, and LTE were the core themes of the conference and there was visible progress from the last CTIA with more test results, actual devices, and real demos. While the current reports suggest that some form of deployment will take place in 2010, we don't expect the "real†commercial deployments before 2011, LTE voice will even take longer. So, where does this leave WiMAX. With each passing day, the role of WiMAX as a niche technology is affirmed. The backhaul bottleneck problem is also becoming prominent and the enhancement of backhaul is behind the RF infrastructure to provide any substantive improvements in data throughputs at least in the near future.
I will be moderating a panel on 4G at Future in Review (FiRE) conference considered by Economist the best Tech conference on the planet (panelists include executives from Telstra, Qualcomm, Clearwire, and others) to get delve deeper into the evolution of 4G.
The Broadband Stimulus – Many companies are eying the $8B broadband stimulus package. The process of how they are going to be granted seems chaotic with unintended consequences. My feeling is that it is a lost opportunity. Instead of just looking at incremental enhancements, US could have been bold and improved existing and new broadband deployments by over 50-60 times. (More discussion here)
Mobile Health
Keynotes – I thought Dr. Eric Topol, Director, Scripps gave perhaps the most effective keynote addresses in recent memory. Keynotes are generally a drab affair. Instead of inspiring through vision many put the audience to sleep with their product announcements. Dr. Topol's speech was so rich in content, his words were filled with such passion, and his articulation was so inspiring that most entrepreneurs in the room were energized to make a difference. I commend CTIA for inviting him. He is joining Qualcomm's Don Jones (a fierce proponent of mHealth) and others to form the first ever Wireless Health Institute in San Diego. Expect some really cool stuff to come out of them. However, to be most effective, health institutions need to get on board with the program starting with the simplest of things like "txt messages.†Come on folks, move into the 21st century!
Health – For the first time, there was significant discussion on mobile's impact on the health care industry. My masters is in Biomedical Engineering so it is great to see the marriage between the two industries. I strongly believe if we can get past some of the bureaucratic nonsense, mobile can have a significant lasting impact on the quality of life and healthcare in both the developing and developed nations. Some of the stuff is really amazing (iBrain, iPill, iShoe, you get the picture). I will have more discussion on the subject in the coming days.
Applications and Services
You say appstore, I say appworld, you say market, I say marketplace – I have been working on appstores for so long that I can't help but be amused by the recent frenzy of appstores sprouting like mushrooms. I think overall it is good for the industry as each of the providers will push each other in areas of innovation and pricing models thus opening up the industry for developers and consumers. However, the fragmentation also increases as a result and something has to give because developer's attention and resources are finite. There aren't many companies who can pull-off a successful developer program (this is one area where Microsoft has some advantage because of significant experience in cultivating developers). Apple's model has already forced carriers to accelerate their short-term and long-term strategies. T-Mobile USA saw the writing on the wall earlier than most and is further along in its plans. Current implementations are still quite primitive with much potential for improvement.
Rich Communication – Talked to some companies (Aylus, Ericsson, Alcatel-Lucent, etc.) about rich communication services that integrate various experiences on the mobile device including chat, voice, data, social networking, video, etc., onto a single screen. The user experience is enhanced leading to newer sources of revenues for operators.
Netbooks also seem to be on operator roadmaps with 33% of these devices expected to be sold through the carrier channels in 3 years. Will Nokia and Motorola get active in this space? Or will the new entrants use netbooks to enter the phone market? Inspired by Kindle, many players are getting bolder and investing in application specific devices (a trend we wrote about in our mobile advertising book last year). Examples: a cool new wireless video game console – Zeebo being launched in Brazil and nuvifone being launched by Garmin and Asus.
Mobile Social Networking – Some interesting social networking features and functions are coming down the line. I am convinced that carriers need to treat social networking as a core service rather than a bolt on application. I almost wrote a book "The Facebook Effect†but 3 books in a year were too many so taking a break for now. (Maybe the next one will be "The Twitter Effectâ€).
Mobile Advertising – Though we have been involved with several mobile advertising projects, at the show, it felt the segment excitement was quite flat and many companies are struggling to stay in business. The consolidation hasn't come yet but things are likely to start changing in the next few months. I also think that industry needs to start thinking about much more compelling and engaging closed-loop creative experiences rather than just impressions. Also, third party verification is needed (who is going to step up?). Finally, the role of the mediation layer is becoming important. The real substantive announcement came before CTIA with four major US operators agreeing to collaborate on best practices. Kudos to MMA for orchestrating the agreement.
Green is the new black – With so much focus on cleantech and global warming, vendors are stepping up and making a dent in the carbon put out by the industry. There were some really cool solar chargeable devices as well as applications that keep the users green-aware. Being green is a competitive advantage.
Devices – The quality of devices that coming out keeps getting better. Stuff coming out from Samsung, LG, and INQ is pretty darn cool (Motorola, Nokia, Palm have some good stuff coming out as well). There were some neat concept phones on display as well (I know, I know, we are ways out but I think we will see some of these come to light sooner than we think). I thought one of the coolest new device was from LG – GD900 with transparent keypad. Samsung's DLNA and AMOLED based devices were also quite good. They were also showing the WiMAX Smartphone Mondi. ZTE is also planning to enter the US market in a big way. While new Androids were hard to spot, several of them are scheduled to be released in the next few months.
NTT DoCoMo – Each CTIA, I love spending time in DoCoMo's booth as they are always at the cutting edge of what's to come. Downloading your digital key to your handset to open your hotel room by waving your phone, controlling every piece of equipment in your home via your cell phone, i-concier: your friendly on-screen butler, separable phones were some of the highlights.
Best booth: Most Creative – SpinVox, Most Hip – LG
Interesting companies – While it is difficult to meet each of the upcoming startups, couple of companies caught our attention: Waze out of Israel with its crowd-sourcing based approach to real-time traffic information and Kovio with its ability to lower the cost of printed silicon.
3G connection – My 3G connection was so good throughout the show that I didn't need to lug my laptop around and did 100% of my communications for 3 days from my phone.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this note are our clients.
Request for Participation: 2009 Mobile Industry Predictions December 9, 2008Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Enterprise Mobility,Indian Wireless Market,International Trade,Japan Wireless Market,Location Based Services,Wireless Value Chain,Worldwide Wireless Market , add a comment
2009 is upon us. We are doing our annual Mobile Industry Predictions survey (20 questions) to gather insights from the collective brain trust – our readers, friends and colleagues around the globe. I am hoping you will help us out by giving us your thoughts and insights. You can answer any or all questions. All answers are kept confidential. Last year's survey results here.
If you leave your email address, we will enter you in the drawing for winning a signed copy of one of our three books released in 2008.
– Mobile Advertising by Chetan Sharma, Joe Herzog, and Victor Melfi, John Wiley & Sons
– Wireless Broadband by Vern Fotheringham and Chetan Sharma, IEEE Press and John Wiley & Sons
– Enterprise Mobility: Applications, Technologies, and Strategies, IOS Press
We will share the results during the first week of 2009.
Please click here to start responding. If the link doesn't work for you, please let us know.
Survey ends Dec 28th.
The questions are:
1. Will we see a pull-back in mobile data spending globally?
2. Will we see a pull-back in mobile data spending in the US?
3. Will Android handset sales exceed iPhone's in 2009?
4. Mirror, Mirror on the wall, who will be the most open of them all?
5. Will Apple launch new iPhone models in 2009?
6. Will Mobile Advertising see a rise in ad-spend in 2009?
7. Will India and China launch nationwide 3G in 2009?
8. Will Mobile Payments get any traction in North America and Western Europe?
9. Will Microsoft launch its own mobile phone?
10. Will Clearwire meet the 1.3 million subscriber target in 2009?
11. Will Mobile Open Source mitigate fragmentation?
12. Will cable companies make a major play in wireless in 2009?
13. Will Microsoft buy RIM?
14. Will Obama's administration have a major impact on network neutrality and open networks debate?
15. Will carriers start launching Apple/Android style appstores?
16. Will Microsoft make windows mobile free to OEMs?
17. Will the smartphone penetration hit the inflection point in the western markets?
18. Will UMA/Femtocells cement their place in the mobile ecosystem?
19. Will consumer privacy and data security rise to be one of the important issues of 2009?
20. Despite conventional wisdom, what will not happen in 2009?
Please feel free to pass this on to anyone who might be interested or has something to say.
Thanks and Have a safe and wonderful holiday.
For a prosperous and strong 2009.
Kind regards,
Chetan Sharma
Recap of "Tomorrow's Wireless Future" November 20, 2008Posted by chetan in : 3G,4G,AORTA,Carriers,Enterprise Mobility,European Wireless Market,Indian Wireless Market,International Trade,Japan Wireless Market,Location Based Services,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Smart Phones,Speaking Engagements,US Wireless Market,WiMax,Wireless Value Chain,Worldwide Wireless Market , 5 comments
Tomorrow's Wireless Future
One of the reasons I love what I do is that I get a chance to work with really smart people around the world on some cutting-edge projects. Additionally, I get the opportunity to interview some of the brightest minds in the industry. This year has been particularly rewarding. I probably did close to 25 events which were a mix of keynote addresses, panel moderation, panel participation, university lectures, and other speeches. Add in the 20+ client project visits and it all translates into more than a trip every other week to the SeaTac airport. My suitcase has been permanently positioned at the doorstep in my house.
Earlier this week, I had the distinct honor of moderating a panel of some of the most eminent senior wireless research scientists and CEOs of wireless companies from Finland where we explored the future of the wireless landscape from user interface to reduction in carbon footprint to privacy and security issues and much more.
Also, had the privilege to do a Q&A session with Dr. Craig Barrett, Chairman of Intel Corporation after his keynote address. This note summarizes the topics discussed during the "Tomorrow's Wireless World†event.
Many people might not be aware but the City of Oulu in the central part of Finland is a leading epicenter of wireless activities with many major industry players setting up shops for doing R&D work. In fact, it is quite likely that one of the companies out of Oulu has had an impact in some way on the mobile phone you have in your pocket (and we are not including Nokia).
The topic of our panel was "Your Wireless Future†– a broad topic that is always difficult to cover in 60 minutes or less. My illustrious panel included (from R to L):
· Prof. Juha Röning, Head of the Dept. Electrical and Information Engineering, Oulu University. A leading edge research center, many companies in Oulu have been spun out of this department
· Markus Asplund, VP, Sesca Technologies. A major services firm in the mobile industry
· Ari Pouttu, Director of Center of Wireless Communications, University of Oulu. A leading research center in doing work in access technologies.
· David Chartier, CEO, Codenomicon. A major player in the network security space. Their tools are used for hardening their products by companies such as Cisco, Apple, IBM, Nokia, and others.
· Craig O'Connell, Sr. Manager, Elektrobit. Working with pretty much all OEMs around the world
· Dr. Jussi Paakkari, VP, R&D ICT, VTT. Doing some cutting edge research in the area of network protocols, security, access, machine vision systems, and much more
· Purnima Kochikar, Director, Software and Services. Nokia. Well, you know Nokia
I started by asking the panelists about what in their view have been some of the defining trends over the last 12 months. Summary of answers – iPhone; android; move towards full mobile browser; browser will reduce fragmentation and more innovation will happen on this front; with the rise of smartphones, security and privacy have become an issue,
Some other salient points (read issues and opportunities) from the discussion:
· It is forecasted (by WWWRF) that in another 10 years, we will have 1000 radios per every subscriber. That would translate into few trillion nodes around us. The level of complexity and carbon footprint will be enormous. One has to figure out a way to address both.
· City of Oulu has first of a kind experiment with NFC where the technology has been embedded in day-to-day life from home, school, train station, restaurant, probably every object in the city. Pretty interesting experiment that will lead to interesting use cases and technology implementations.
· There are so many protocols being integrated into the device that hackers are targeting not only the data but the protocol weaknesses to gain access. IT finally starting to address smartphone issue in their networks.
· The role of Cognitive radio and SDRs will gain prominence as more access technologies get introduced.
· In a ubiquitous environment with finite spectrum, "sensing†technologies will have a great role in optimization. Sense and do the best for the consumer, the device, and the network. Hyper connectivity will become the norm.
· In addition to touch, gesture and face recognition will add to a better multimodal experience.
· Mobile payments is coming and going to make a big impact. We have to of course sort out the business models.
· 3Cs of mobile – convergence, context, and community (Nokia's Mantra).
· The very business of R&D has changed significantly with corporations choosing to outsource R&D and the cycle of concept to market launch has shrunk from 6 years or more to 12-18 months.
· More innovation will come from integration of existing technologies rather than some big breakthrough.
· Demand for bandwidth will keep growing.
· Significant opportunities in medicine, enterprise, and other industry verticals.
· In developing countries, while consumers are willing to pay for expensive devices, they don't have any appetite for expensive service plans.
Some discussion points from Craig's speech and our Q&A session:
· World will go to free MIPS and free baud (computing and communications). What happens then?
· Moore's law is good for another 15 years based on 5 generation of future chipsets that they have in the labs. And it will probably keep going after that.
· Awareness of context really important.
· Many types of devices will proliferate including MIDs, education devices, some designed specifically for special purpose (medical monitors) and geographies (emerging markets).
· Global challenges are education, health, computing, and communication.
· In the developed world, wireless technology can help reduce the cost which is increasing at the rate of $200B/year and in the developing world, technology can help provide access to health care.
· Convenience and access trumps security concerns.
· Areas of opportunities – Telemedicine, education, economic development, governance, energy and environment.
· This is Craig's 11th recession. Principle to tackle has been the same every time. You cannot save your way out of recession. You can only innovate out of a recession. Intel R&D budgets will remain the same.
· Innovation is key to surviving and competing in the global economy, now more so than ever.
· The fact that so much can be done in these tiny piece of electronics is just amazing and the drive to do better and more using technology keeps him going, keeps him inspired.
Craig is passionate about education and innovation and he serves on more global committees than he would care to admit. His work outside of Intel has been equally impactful.
It should be noted that the Matti Pennanen, Mayor of Oulu who also graced the event with his presence is a technologist at heart and understands the role of innovation in the growth and strengthening of their economy. How many tech-savvy Mayors do we have in other countries? I thought so. I have noticed similar trends in Korea, Ireland, and Israel. They all have something in common – great early education system and maniacal focus on innovation and desire to succeed. It was great chatting with Mayor Matti about technology trends and opportunities. In this global economy, politicians better become tech-savvy really fast or they won't be serving their constituents well. Cities, states, and countries need to start thinking like startups and compete for every dollar.
My thanks to my friends Victor Vurpillat and Brenda Fox at Global Connexus and Pauliina Pikkujämsä at Oulu Innovation for inviting me to participate in the discussion.
Image Courtesy: Global Connexus
US Wireless Data Market Update – Q1 2008 May 18, 2008Posted by chetan in : 3G,AORTA,Carriers,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Intellectual Property,International Trade,Japan Wireless Market,M&A,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
US Wireless Data Market Update – Q1 2008
The US wireless data market grew 38% in Q108 compared to Q107 to reach $7.5B in data revenues. iPhone is not only having an impact on data revenues but also on device design, mobile advertising roadmaps, and applications and services that are being contemplated for future. US exceeded Japan in mobile data service revenues for the quarter and the market is expected to reach $34B in data revenues in 2008.
- The US Wireless data service revenues grew 7.5% Q/Q to $7.5B in Q108. Compared to Q107, the data service revenues grew 38%.
- Overall ARPU declined by $1.12 and for the first time since Q405, the average ARPU dropped more than a dollar Q/Q. Average voice ARPU declined by almost $1.50 while average data ARPU inched up by $0.49 or 5%.
- Verizon lead in data ARPU with $11.94 (or 23.37% of the revenues) closely followed by Sprint at $11.50 (or 20.54%), AT&T at $10.80 (or 21.52%) and T-Mobile at $8.50 (or 17%).
- The strongest growth in Q108 came from AT&T with 15% and 53% increase in data revenues from Q407 and Q107 respectively. Both AT&T and Verizon generated $2.3B in data revenues and are on target to exceed $10B in data revenues for the year for the first time by any operator worldwide besides NTT DoCoMo. AT&T and Verizon now account for 61% of the market data services revenues. Verizon and T-Mobile registered 10% increase in data revenues from Q407 while Sprint's declined by 6%.
- The average industry % contribution of data to service revenues exceeded 20% and now stands at 20.62%.
- The number of data subscribers has been on the rise with Verizon leading the way. At the end of Q108, Verizon had that 48.1M (or 72%) data subscribers. Verizon and AT&T subscribers joined to send over 100 Billion text messages in Q108 translating into almost a message every 3 hours. This compared to users in Philippines where average routinely surpasses a message every hour.
- In terms of net-adds, T-Mobile was helped by SunCom acquisition and crossed the 30M subscription mark. Verizon regained its quarterly net-adds title from AT&T by edging its rival 1.5M to 1.2M. Sprint lost customers again, this time exceeding 1M. In March, the US market also slipped behind India to third position in terms of total number of subscriptions (India is predominantly a prepaid market while US is a postpaid market).
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the quarter, Verizon, AT&T, and Sprint Nextel stood at #4, 5, and 6 respectively. AT&T and Verizon are in the select group of five global operators who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI).
- Non-messaging data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- The eagerly anticipated 700 MHz played out as we expected with Google doing enough to make Verizon pay more and kick-in the "open-gardens" provisions. However, the actual impact on the market dynamics is likely to be negligible. It did however, help open the "open" debate in the industry.
- There continues to be tremendous activity in the area of Mobile Advertising. While fending off the Microsoft acquisition, Yahoo is busy creating some compelling applications and is stitching together carrier deals around the world.
- Venture money continued to flow into the mobile sector with over $1.5B investment in Q108 (Source: Rutberg). Location Services, Mobile Personalization, Mobile Video, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- Nokia eclipsed 100M unit sale in Q108 for the fourth straight quarter. It sold over 115M handsets in Q108, more than the next three handset manufacturers combined. Nokia's global market share stood at 39%. For the year, the industry looks to again eclipse the 1 billion handset mark for 2008
- 3G penetration in the US was approaching 30% in Q108, with Verizon leading the pack with over 56% 3G subscriber penetration. T-Mobile finally did its 3G launch in limited cities with plans for expansion in 08. 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- Apple is slated to announce a 3G iPhone next month, has been aggressively expanding the distribution partners, and is expected to blow past the 10M unit (it is already past 5M) sale mark easily by the year-end especially as operators consider giving rebates to attract potential users and their mobile data usage.
- As expected, Clearwire and Sprint banded together to raise $14.5B from friends and family which included the likes of Google, Comcast, Time Warner and others. IF the companies can execute on their strategy in 2008/9 and get the devices out in the market without messing up with pricing, this venture can be quite disruptive to the market much more than any other open initiative.
Global update
- China and India added approximately 55M subscriptions combined in Q108 with India marginally edging out China with a whopping 10.16M net-adds in March (probably for the first time history, monthly net-adds for country have exceeded 10M). By comparison, US added 4.5M in Q1
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $3.4B in data services revenue in Q108. 35.7% of its revenue now comes from data services. DoCoMo also crossed 80% in 3G penetration in Q108 and is expected to cross 90% by early 2009.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are consistently topping 30%.
More details in our worldwide wireless data market update in our Global Wireless Data Market Update Mar 2008.
Your feedback is always welcome.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Inside the USPTO: A Guide to the Patenting Process April 30, 2008Posted by chetan in : AORTA,Intellectual Property,International Trade,IP,IP Strategy,M&A,Mergers and Acquisitions,Mobile Applications,Mobile Content,Mobile Ecosystem,Patent Strategies,Patent Strategy,Patents,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
Inside the USPTO: A Guide to the Patenting Process
by Carlos Villamar and Chetan Sharma
Note: We have an integrated approach to strategy as we strongly believe that taking market research, business, technology, and intellectual property inputs into strategic initiatives is essential in obtaining a long-term sustainable competitive advantage in the industry. To further the dialogue on the subject, we will be publishing several articles, white papers, books, and blog posts over the course of next few months. This white paper is to help entrepreneurs and inventors understand the patenting process.
This white paper was a collaboration with Carlos Villamar, Partner, Roberts Mlotkowski Safran & Cole. Carlos is a patent attorney who has also worked as a patent examiner at the USPTO.
Patents are a key corporate asset that can give the inventor and the company an invaluable tool to protect and commercialize inventions. The process of obtaining a patent is an important one – from start to finish. Beginning with patent strategy, due-diligence and patent search through the United States Patent Office (USPTO) process to finally getting the grant, one needs to have a good understanding of each step. This increases the probability of success by removing uncertainty from the process. Inside the USPTO: A guide to the patenting process takes a detailed look at the ideation and the patent process, specifically, how patent applications flow through the USPTO. By having a good grasp of the intermediate steps and the various decision points associated with each of them, the paper discusses how entrepreneurs and inventors can maximize their chances of securing a patent.
We live in a knowledge economy and Intellectual Property is a key asset in this new ecosystem. Patents are one of the essential elements to creating barriers to entry for rivals, building credibility and confidence of investors, customers, partners, and employees, providing clarity as to the property ownership, demanding leverage from the industry, and for generating revenue from licensing and sale.
The knowledge economy thrives and sustains on ideas and competitive advantage based on intellectual property. For individuals, the prestige associated with being an innovator and "first to secure" patents in a given field motivates them to be creative and innovative. Entrepreneurs, engineers, and inventors can benefit from understanding how to secure and maintain their intellectual property rights. This paper discusses the important steps in designing, filing, procuring, and defending your patent rights.
The following diagram illustrates at a high-level the patenting process and important considerations in the decision flow chart. The flow chart is discussed in detail in the subsequent sections.
Table of Contents
|Pre filing due diligence
|Patent preparation
|USPTO filing
|USPTO examination
|After approval
|Conclusions and Recommendations
Download the full white paper here.
Your feedback is always welcome.
CTIA Wireless 2008 Roundup April 4, 2008Posted by chetan in : 3G,AORTA,ARPU,BRIC,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Intellectual Property,International Trade,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,MVNO,Smart Phones,Speaking Engagements,Speech Recognition,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 3 comments
CTIA Wireless 2008 Roundup
The Sin City hosted CTIA Wireless 2008 earlier this week. On Wednesday morning, just before leaving for the convention center, I caught some portion of Ben Bernanke's congressional testimony on the US economy woes. Few minutes later, strolling the show floor, talking to various companies, and hearing the keynotes, it seemed like I was on a different planet. Either someone failed to deliver the memo or the wireless industry is resilient enough to weather the turmoil in the financial and housing markets with some ease. The show was bigger with more attendees, the booths were returning to their glamorous heydays of the past, and the general buzz and energy at the show all seem to indicate the industry is going to do just fine and is primed for further growth. The general themes were around open network and access, user experience, and bandwidth.
This note summarizes our impressions from the show.
First let's do the numbers: CTIA released their semi-annual statistics on the US market. In summary: For 2007, $23B in data revenues, 2 trillion in MOU, $139B in total service revenues, 48B txt messages/month. (We released our US Market and Global Market updates last month)
Keynotes: In terms of style, Sir Richard Branson stole the show with his pompous exuberance and pep talk (the talk of imaginary flight to Mars was hilarious; investors in Microgin and Viroo must be upset). For substance, Marco Boerries, President, Yahoo Mobile gave a nice compact overview of Yahoo initiatives and products in the market which are pretty darn good. (Marco wrote an opinion piece for our Mobile Advertising Book – "The future of Advertising is in the Consumers' Pockets"). Yahoo has sewn together a number of deals worldwide that gives them a potential reach of over 600M users.
Vodafone is one operator which has been quite vocal in stating its positions on future infrastructure roadmap and data opportunities. Arun Sarin is probably the only CEO of major global operator who has publicly stated that Mobile Advertising will constitute a significant portion of their revenues in the coming days (Arun's point person on the initiative Richard Saggers also wrote an opinion piece for our book "Opportunities for Mobile Advertising." Let me know if you are interested in reading these two opinion pieces).
Microsoft's Robbie Bach had the tough task of following the Branson-fest. He announced the arrival of a full-blown browser (finally!) for windows mobile. Also, the new windows mobile device from Sony Ericsson (Xperia) looks pretty darn cool. FCC Chairman Martin announced the rejection of Skype petition on the carterphone principle (to Skype's dismay, it was not an April fool's joke). Clearly, the definition of "open" is in the eye of the beholder. It means different things to different people. It has also been clear from the various activities and keynotes that the industry is trying its utmost to remain a "Self-regulated" industry and stay away from the clutches of eager politicians.
Lowell McAdam, CEO of Verizon Wireless conducted a panel with CEOs from Alcatel-Lucent, Ericsson, and Nortel and probed them on the 4G migration path, trends in applications and services, and contrasts in adoption and introduction of new technology in various parts of the world. Final day was marked by what is now becoming a trend – keynotes from politicians. This time around Sen. Edwards and Sen. Thompson graced the podium.
Mobile Advertising: In talking with numerous players in the value chain from small developers to large operators to ad networks to media companies, the impression was that things have matured over the last six months. It was gratifying to hear that some companies are adopting strategies and recommendations we propose in our book. Still, some of the basic problems remain – majority of the inventory remain unsold indicating weak demand, CPM rates are still over-rated though they are starting to come down, and fragmentation continues to remain an issue.
The good news is that the size of the mobile campaign budgets are getting bigger with several seven figure RFPs floating around. While some companies are still trying to throw a lot at the wall in the hope that something sticks, others are maturing as companies and are more focused in their positioning and product roadmaps. Integration of various channels is starting to appear on the horizon and the integration with the publishers is becoming tighter. The issue of measurement and auditing standards remains a big issue and unfortunately not much progress to report. There are carrier initiatives and various industry bodies are taking the challenge to rally the ecosystem, but, frankly, consolidation of such efforts is necessary, we can't afford yet another layer of fragmentation in an already complex ecosystem.
We were interviewed on Mobile Advertising prior to the show by several publications. Some of the articles were published this week to coincide with CTIA
Wireless Wave (CTIA) – Moving Targets: Mobile marketing reaches consumers on their terms by Lynn Thorne
BrandWeek – Mobile Marketing – Fantasy vs. Reality by Ken Hein
Wall Street Journal – Personalized promotions: Sending the right ads to your phone – Peggy Anne Salz
NFC: There were many more NFC-enabled devices on display this time and vendors were talking and demoing NFC and Biometrics based payment solutions. While there are handsets on the roadmap, this market is still very nascent in North America and Western Europe.
Inspiration: The inspiration for new and creative services still comes (at least for yours truly) from Japan (and Korea). I love spending time in DoCoMo's booth for it gives a glimpse into what's to come. No other company better understands the development of devices, services and applications that overlay on lifestyles than DoCoMo (e.g. a wellness handset that is a pedometer, heart rate monitor, body and bad breath monitor and yes, you can make voice calls too). They view wireless air-interfaces as nothing more than enablers to solutions that enhance daily lives. Various device manufacturers also displayed some really cool devices. The quality and diversity of handsets that have been introduced into the global markets over the last four quarters is just astonishing. The cycle of innovation and time-to-market keeps on accelerating.
Femto Cells: A number of players like Airwalk, Airvana, and others are bringing Femto cell solutions to the market and carriers are starting to pull this into their strategy as well and look forward to deployments beyond the trials.
4G: LTE vs. WiMAX (vs. UMB): Since the decision of Vodafone and Verizon to support LTE, UMB has been disappearing from the discussion. The 4G discussion is convulsing around LTE and WiMAX now (though Nortel did indicate its support TD-SCDMA as a 4G candidate). Without a doubt the operator community is rallying behind LTE and there might be an opportunity to finally converge to a single standard (haven't we seen this movie before) but frankly, the advances in silicon to integrate multiple radios has made the standards debate less relevant. WiMAX has forced acceleration of LTE standardization process but is starting to lose its time (and cost) advantage. All eyes are on Sprint's XOHM business rollouts in the coming days and months.
Accessories: I have never seen so many accessory and reseller outfits at a CTIA show. Business must be booming.
Best Booth: Thought there were several good layouts, LG and Samsung continue to impress with their creativity and "art of marketing."
Developer and Publisher woes: Along with John Philips (Astraware) and Peter Baldwin (Cellmania), I helped facilitate a few developer session at the Mobile Jam Session organized by WIP. The issues of distribution, discovery, and monetization remain challenging for the small developers worldwide. Even with million user base, they are finding it difficult to monetize but we did discuss a number of success stories. The core elements of success that emerged from the discussion were: choosing the right market, embedding viral component into everything you throw out there, there is no room for mediocrity, and personalizing and customizing go a long way to get traction. An interesting tidbit: the number of page views for mobile MySpace app is a magnitude higher on off-deck vs. ondeck. Several of the companies are trying mobile advertising with varying degrees of success. After spending 4 hours with the developers, I sat on a carrier panel discussing mobile advertising. The contrast between the two worlds was so apparent. Clearly, more needs to be done to help both sides understand each other a bit better.
Green CTIA: There is a stronger emphasis on recycling and contributing to save the environment. The show itself is a big resource hog, so every bit helps.
Alternate Mobile Devices: The universe of alternate devices is expanding. Companies are buying wholesale data packages from the operators and integrating broadband chipsets into hardware to do digital signage (ICG), M2M (Sensorlogic), PND and much more. The definition of being "mobile" keeps on changing.
On Being "Open": Obviously, given the recent activity around openness, getting a penny for each time the word was uttered by a speaker would have paid off for a lifetime of CTIA trips. While talk is cheap, demonstrable progress is being made by the likes Yahoo, Apple (btw, 3G iPhone is on its way), and AOL.
Another MVNO experiences turmoil: Movida – a Spanish focused MVNO which has garnered almost 300K subs filed for chapter 11.
Voice is becoming mainstream: With the product launches from Nuance, SpinVox, Vlingo, Jott, Yahoo, and many others, voice based navigation and its tighter integration with data services is becoming mainstream.
Where are the opportunities? Last week, I was moderating a panel with executives from AOL Mobile, T-Mobile, Motricity, and Formotus and the themes that emerged were around platform play, user experience, and productivity. At CTIA, in addition to these areas, there was a lot of discussion around social networking (though the market is being saturated with the MoSo noise). It is also clear that we are moving into the phase of "aggregation of fragmentation" with initiatives from Yahoo, AOL, and Google dominating the landscape.
Home Screen Effect: I have been talking about using the home screen for driving data usage for the last 8 years. I think we will see good innovation this year on that front starting with Yahoo's One Platform. There are several other initiatives in the works where operators and OEMs will be deploying frameworks and technologies to bring information to a "click-less" idle screen environment.
Overall, no major news but industry stays vibrant, healthy, and exciting.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
Busy News day February 11, 2008Posted by chetan in : AORTA,European Wireless Market,International Trade,Japan Wireless Market,Mergers and Acquisitions,Mobile Advertising,Mobile Ecosystem,Wireless Value Chain,Worldwide Wireless Market , add a comment
Of course, MWC is underway but even otherwise, there are plenty of news items trickling in
- Microsoft is in the mood to buy, while Yahoo! takeover is pending, Microsoft acquired Danger of Sidekick fame for an undisclosed amount
- Starbucks divorces T-Mobile, marries AT&T, does iPhone have anything to do with it?
- Cellfire – mobile coupon company raises $12M
- As expected, Google's Android demos make special appearance in Barcelona
- Plenty of Mobile Advertising News as well
- Nokia launches global mobile ad network
- O2 started its mobile advertising service
- GSMA and Operators are working on standards for measuring mobile ads