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Mobile World Congress 2016 Observations February 29, 2016Posted by chetan in : 4th Wave,5G,ARPU,Chetan Sharma Consulting,Connected Devices,Connected Intelligence Era,Disruption,Enterprise Mobility,LTE,Mobile 2016,Mobile Breakfast Series,Mobile Future Forward,Mobile World Congress,MWC,NFV,SDN,Technology Cycles,The Golden Age of Mobile,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment
Mobile World Congress 2016 Observations
The second of grand slams of mobile events – Mobile World Congress has become the marquee events that helps get the pulse of the industry as to where things are headed for the year. With the attendance topping 100K for the first time, it is a massive undertaking and brings all major players in the ecosystem from all corners of the world. Vegas could learn a thing or two from Barcelona on how to host big events. Some of the major themes were predictable like 5G, IoT, and VR. Others were important but not widely talked about in public settings. This note presents the summary of our observations from the show.
5G – 5G entered industry's consciousness last year and the activity around the globe has just caught fire since then. Each week there is a new trial announced. Last year, there were more questions about 5G than answers. Some of the questions are starting to get answered now and we are getting clarity on others. However, the specification timeline still stays around 2019 with full standard deployments not before 2020. Given the trial activity and the progress in the labs, there is a good possibility, that there might be some consensus on higher frequency use specifications especially around indoor and dense outdoor networks.
I had a chance to visit with a number of CTOs of major players and these guys are not the ones who give into hyperbole. As an engineer, I left the show quite optimistic about the solutions and technologies that will become part of the 5G portfolio.
Verizon was the first one to announce results from some early tests in the field – 10 Gbps for potential fixed wireless deployments. Nokia and DT both showed sub millisecond radio delay which is quite an achievement. Ericsson showed the power of beamforming to gain really high capacity at short distances. 25-30 Gbps was common in most of the lab setups. SDN/NFV will provide the key underpinning to the 5G architecture but it didn't surface much in the discussions.
Fundamentally, 5G will be driven by economics not just technology. Europe's quixotic approach to spectrum auction in 2000s led to a decade long stagnation that left Europe behind. To attain leadership in 5G and on the next wave of technology evolution of Connected Intelligence, policy, technology, and strategy have to work hand-in-hand in a country to gain an upper hand. Some of my thoughts mentioned in the Economist and WSJ.
We will be covering 5G and its implications in future papers and at Mobile Future Forward in Sept.
Gigabit Society – While 5G is still a ways off, work goes on the LTE front. Industry hit a major milestone of a 1B LTE subs. Lot of the 5G enhancements will also be available in 4G being termed as 4.5G, Xtreme LTE, pre5G, 5G ready, and really-really advanced LTE. Infact, many of the features talked about in 5G are going to be available in the 4G evolution path. Qualcomm showcased their X16 chipset capable of reaching 1Gbps by combining 10 100Mbps streams.
4th Wave – In 2011, we put forth the 4th wave theory and 5 years later, we are seeing the 4th wave in full effect. As I mentioned to the Economist and the WSJ, the value is moving to the applications and services layer. Operators who will invest to become "solutions providers" will be better positioned for the future vs. the ones who are purely "access providers." We are seeing the theory play out in front of our eyes. In 2014, US became the first country where the 4th wave revenues were greater than the access revenues. We expect this to occur in every major market over the course of next few years. Operators such as AT&T, Verizon, Telefonica, DoCoMo, KDDI, and Orange are benefiting from becoming solution providers. The new found revenue speaks for itself (more on this next week in our US Market Update for 2015).
Ericsson – Amazon Cloud Deal – Ericsson and Amazon struck a clever cloud deal that helps mobile operators use the AWS framework while creating a framework to be in compliance with the safe harbor provisions of sovereign nations. Win-Win-Win for sure.
The Ad wars – Instead of innovating, the ad industry as a whole took shortcuts and the end result was the bombardment of useless ads with no frequency control. Consumers are responding by embracing ad-blockers. Operators view this trend as an opportunity to stall the OTTs. Some of it is genuine concern for the consumers who get slapped with ads which consume good portion of their data bucket and deteriorate the experience sometimes to a point of making the browsing completely unusable especially when network conditions are less than favorable. Operator 3 in Europe working with startup Shine is taking the stance to block out the ads inviting the scorn of the ad industry and a peek of curiosity from the regulators. It is unlikely to be an effective strategy. However, it clearly is an opportunity for the ad industry to step up and design new frameworks that are consumer friendly. When we wrote the first mobile advertising book at the dawn of the birth of the modern mobile advertising industry, we had proposed several ideas that use the data to enhance the consumer experience and ecosystem strength but we clearly have a lot of work to do.
Verizon XO investment – Verizon's XO deal of $1.8B didn't get much attention but it was a brilliant deal appreciated by the folks who really understand what is going on. Verizon gets a fiber network and more important wireless spectrum (28 and 39 GHz) suited for 5G.
Resurrection of RCS – RCS has been a poster child of inability of operators to work together on a global scale w.r.t applications. The growth of IP messaging is well documented. Not only did operators miss out but Google did as well. Now that messaging is emerging as a new potential commerce and engagement platform, this is an attempt by Google to take a shot at the messaging opportunity. A number of things have to go right for this program to work so the probability is stacked against it.
Facebook TIP – Having shaped the IT infrastructure, Facebook is focusing on influencing the telecom infrastructure stack. The focus is going to commoditize the stack and open source it. Some big names are joining the effort like Nokia, Intel, and DT.
Connecting the next billion takes a back seat – Last year, one of the big theme emerging out of MWC was the focus on connecting the next billion. The talk of 5G drowned out any discussion of connecting the unconnected. The show did discuss using balloons, drones, satellites unlicensed spectrum to lower the cost of access. The unintended consequence of FreeBasics ruling might be a dampening effect on experimenting with alternative business models to support low cost access in emerging markets in the short-term.
Net Neutrality – NN has become an emotionally charged debate. Regulators around the world are grappling with how to understand and regulate through the complex prism of the future. Regulators are rushing to issue their rulings based on the world they saw in the past not the society and how it is going to react to applications and services in the future. Participants are getting bolder in their approach and interpretation of Net Neutrality. T-Mobile's Binge-On is being watched by operators worldwide and the regulators are trying to understand what it means in their local market.
Regulations for the new age – Some of the regulations in the communications space are over a 100-year-old. Communications itself has drastically changed though the principle of transferring the bits from point A to B remains the same. T-Mobile reported that 50% of its voice calls are are on VoLTE. IP messaging is many times the SMS global volume. Gradually, almost all voice and messaging will be on the IP layer – voice and messaging will just become apps on the data layer. So pretending and regulating these services as if it were 2000 doesn't help. An ideal strategy for consideration should be that the IP layer gets regulated for fair pricing, competition, and consumer good while everything on the top of the IP layer gets regulated on a "same service, same rules" principle. The interconnection between apps to deliver services like connection to PSTN, E911, etc. can be addressed by fair market pricing principles. VR is going to become the next communication platform; IP messaging the next application development and commerce platform. To keep the regulatory regime simple and in with the times, by focusing on the access layer, one can guarantee that whatever takes place on the top has the opportunity to grow as the market desires. Similarly, data rules across all apps and services on top of the IP layer should be the same irrespective of the provider. This market shift is required to make the market more competitive and fair.
IoT – IoT use cases are becoming more crisp and clear. There is steady growth in how IoT is getting integrated into both industrial and consumer worlds. As expected there are efforts underway to streamline and unfragment the stack. Intel and Qualcomm got together for the larger good of the industry under the Open Connectivity Foundation. We will be taking a deep dive into the IoT world at our upcoming Mobile Breakfast Series event in Vancouver.
eSIM – eSIM is potentially one of the biggest disruptive force our industry has seen in some time. If you connect the dots into the future, it is becoming clear that there is significant tension along the fault lines. Regulators better get ahead of this wave in time.
VR – the next communication platform – The emerging world of VR/AR is quite exciting. The technology is getting there. One of the key 5G use cases is going to be VR as it will require high capacity delivery of bits to the headset. However, VR sales are not going to go through the roof anytime soon. Some of the same things that plagued Google glasses – price, performance, and dorkiness are going to impact the early days of VR (Google's VR approach is actually more market friendly at this time) but it is exciting to see tech companies tackle a complex computing problem. I am looking forward to new experiences across different domains.
Security, Privacy, and the clash of the titans – Apple vs. FBI case was on the top of the mind of executives. It wasn't being discussed openly for obvious reasons but it came up in discussions almost every day. It is a complex issue that has to be looked from the perspective of enforcement in international jurisdictions. Operators have been forced to comply with similar requests for years. It will be an interesting battle, something that every tech company, every govt. around the world is paying close attention to.
Handset launches – Samsung launched S7, LG showed G5, Xiaomi announced Mi5, Huawei had its MateBook which probably was the sleekest device at MWC this year. Overall, only incremental improvements while the industry awaits new ideas to surface.
Disruption from 3.5 GHz – When I talked to the White House last year about 5G, I focused on stressing that Bits/s/Hz/Km2/joule/$ will be a key 5G performance consideration. FCC has done well by making the 3.5 Ghz available to the industry. Given that 70-80% of data consumption is indoors, unlicensed WiFi+LTE can be used to provide a much better economics esp. for enterprise customers. Players of various stripes are taking a serious look at it – Ericsson, Lemko, Google, Nokia, and others. Expect more news to come during the first half of the year.
Sigfox/Lora vs. NB-LTE – Sigfox/Lora remind me of WiMax. WiMax is remembered for its role in accelerating LTE deployments. While Sigfox/Lora started the process of creating a network and business model suited for IoT, it forced the 3GPP members to come up with NB-LTE (in a hurry) and with the growing support of the ecosystem behind it, it is hard to see how in the long-run a non-standard approach can win out.
Wearables – It seemed like the hype around consumer wearables has died down at MWC this year. No new concepts. Industry has to get the basics right first. However, there is good progress on the enterprise front where the use cases and requirements are clear. There are a number of companies who are working to make wearables/VR/AR a reality in the enterprise space.
Misc – Selfie security (Mastercard), Gesture user interfaces, Stripe's Atlas platform, Mobile Connect (2B enabled consumers), AT&T $10B investment to expand globally, Paypal loves NFC after all, Smart Cities, Mobile Commerce initiatives, Media and Telco convergence, Operator data monetization, Alternate connectivity solutions (drones, balloons, lasers, etc.), Digital divide, 1B LTE subs.
Booth of the year: Ericsson by a distance
Party of the year: Siris Capital, Qualcomm
Your feedback is always welcome.
Chetan Sharma
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in March 2016.
Disclaimer: Some of the companies mentioned in this update are our clients.
Mobile World Congress 2015 Recap March 9, 2015Posted by chetan in : 4th Wave,5G,Connected Intelligence Era,Emerging Markets,Enterprise Mobility,European Wireless Market,Mobile World Congress,The Golden Age of Mobile,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment
Mobile World Congress 2015 Recap
Barcelona hosted its 10th edition of MWC last week. The beautiful weather in a lovely city provided the perfect setup to pontificate about the future direction of the mobile industry. This note presents the summary of the discussions and the observations from the show.
- Facebook and internet.org
For a second year in a row, Mark Zuckerberg was the highlight of the show. The crowd and the buzz for his panel was probably more than for rest of the keynotes combined. Last year, Mark introduced the project, this year it was about the progress report. The operators look at Internet players with deep suspicion. The goal of getting more folks online is a shared objective in the industry but there is tension around the business model and the mechanics. Executives from Telenor, Bharti Airtel, and Millicom shared their experience (mostly positive) and the impact it has had on their data growth and revenues. All were cautiously optimistic.
One thing that will help the operators is to look at Internet players a bit differently and it requires a mental shift. Just like operators work with and compete against other service providers, they can find common grounds for collaboration in some areas and in other segments they will of course compete but having a one-track mind will detrimental to their progress. On the flip side, Internet players should appreciate the competitive dynamics in the market, the financial metrics that drives the business and the work to deliver a more customized partnership – something the Internet players are not that accustomed to. The Internet segment does a better job of managing coopetition than the telecom sector.
- Google MVNO and broadband connectivity
Probably the second most watched keynote was from Sundar Pichai. Rumors of a Google MVNO have been around for many months. The plans to launch the "nexus of networks†were discussed. Additionally, Sundar discussed how project Loon and project Titan could be used to provide the Internet backbone. The connectivity projects are nice science experiments at this stage but the MVNO project could have some implications depending on how far Google wants to take it. Will it be the Rokr project for Google or something more? Only time will tell.
- Apple – the invisible participant in the show
Just like it has been for many years, Apple was at the center of many discussions at the show. In carefully orchestrated leaks, there was a steady flow of the news on Apple Watch. It will set the competitive bar for the segment and help everyone figure out their place in the market. Folks were deeply divided on the likelihood of success. Battery life might end up being the key-determining factor. There was also a lot of discussion around the news reports on Apple Pay fraud issues.
For the first 3 generations, technical guys were in charge of the wireless technology Gs. With 4G, the marketing department took over and it looks like they are not ready to relinquish their position anytime soon. The hype around 5G was at its highest at the show. In the last 3 months, every major entity has had something to say about what 5G should be and what will it enable. There is also a tussle for who gets to lead the industry on 5G.
Europe is anxious to regain the mantle it lost after GSM. But there is a big problem. The 4G penetration in Europe won't even get past 50% until 2020, the investment wouldn't have been recovered by then. Someone bring out the econ 101 book, please! It seems like 5G is going to revolve around mmWave spectrum and technologies (very few see a new interface coming) but this has massive capex and opex implications in addition to the practical implications of millions of nodes to deliver the desired throughput. That doesn't mean they shouldn't continue to work on pushing the boundaries and take leadership position in developing the standards and use cases. However, from a deployment point of view, we need a filter of reality.
Also, the industry is getting ahead of itself. Keep the marketing guys in the barn, settle on the definition, the how, the use cases, and then figure out the technical and marketing roadmap. (there was plenty of talk about pre-5G as well). Of course, one can achieve 10 Gbps today but mostly under impractical configurations. What's also troubling is that the Internet players are not part of the standards process. Matt Grob, CTO of Qualcomm responding to a question about the timeline for getting 5M 5G subs suggested we might get there by 2022. As a reference, 4G reached the 5M mark in 2010. KT CEO gave a delightful presentation of 5G optimism. A number of position papers were released – fun reading for geeks if you are into these long reads. We will be releasing our own thoughts on 5G later this month expanding on piece we explored earlier this year.
- Net Neutrality
All eyes were on FCC Chairman Wheeler after the landmark ruling last month. There was no new news per say but the topic was hotly discussed and debated in public and private forums. While the journey is just starting, the world is looking to see how things will end-up. As I mentioned to the WSJ, no country wants to be viewed backwards and whatever happens in the US market will have implications worldwide over the next decade and beyond. I also get the sense that we don't quite understand the impact of unintended consequences. For e.g. there are several use cases like transportation, medical, financial, etc. where prioritization is required. Voice has been prioritized for ages and will be in the future. 5G will have different prioritization schemes depending on the radio, the applications, and the requirements. Ideally, you want the application to request a prioritization level. It is hard to justify that a moisture sensor in a sprinkler should get the same prioritization as the x-ray going over the wires. Prioritization exists in all forms of access and embedded in the way of life for good reasons. It is not quite clear what will be allowed and what will be dealt on a case-by-case basis. Maybe all this is taken care of in the ruling. Hopefully, the 300+ page tome will answer some of these questions.
- Samsung S6 launch
The best phone launch belonged to Samsung. Learning from past mistakes, it was a no-nonsense presentation. The S6 edge looks sleek and beautiful, the camera is remarkable. However, for the purists the lack of the SD card and the removable battery is troubling. The price point for the highest end might go past $1K. It is unlikely that S6 will steal share away from i6 but it will probably take it away from other Android OEMs and will see a nice revenue bump in the 2nd half of the year. It might help stabilize the severe decline in profits from 2014. Samsung Pay puts Android on the mobile payments map as well. There were device launches from Nokia, HTC, and others but nothing captured the attention of the show. Orange/Mozilla came out with a unique offering of a 35 Euro package that includes a decent smartphone, 6 month of 500MB/mo, unlimited voice and messaging. It will be launched in the African markets to get more people transition over to smartphones and data services.
- Industrial IoT
The current money in IoT is clearly in the industrial projects. IoT is a great enabler to re-architect business processes, revenue streams, business models, companies, and industries. While industrial IoT didn't make a splash, in conversations with folks, there are all sorts of projects being done around the globe and there is serious money being spent. One project can sometimes account for the entire consumer IoT revenue stream. Accenture/Intel had some cool demonstrations to tell the story. Lot of work is going into IoT driven factories, buildings, and the supply-chain.
- Lack of consumer IoT
Consumer IoT didn't make a big splash like it did at CES in January. There were no drones, robots, or humanoids running around. A number of OEMs came out with watches and sensor bands – nothing that will take the industry by storm. Huawei probably gets the vote for the best watch launch at MWC. In general, for the current stream of connected watches, the technical specs have triumphed the fashion specs. Can Apple change the equation this year?
- Operator Landscape
In case, it wasn't clear to some – AT&T is undergoing a significant transformation into becoming an international solutions provider – it was apparent from the show. In the European show, AT&T had the best presence amongst its peers. European operator landscape is dominated by the quad-play moves and consolidation. As usual, the Koreans and the Japanese impress with their quirky art of storytelling. Using a robot to emphasize low 5G latency by SK Telecom was my favorite. AT&T has been signing up the most number of connected car contracts and the numbers are starting to impact the financials in a material way. A select group of the operators are showing meaningful revenues from the 4th wave.
- VR as a sales tool
VR helps tell a good story. Several companies used VR headsets (mostly Oculus and Samsung) to have attendees experience their product, services or vision. Ericsson had a cool setup to remotely controlled excavator thousands of miles away. Will VR enter the boardrooms? Quite likely.
After a slow start, LTE-U is gaining quite a bit of traction. Qualcomm's efforts are bearing fruit and we should be seeing some deployments in 2016. The Wi-Fi ecosystem has expressed concerns but nothing that can't be overcome. Most of tier-1 operators in the western markets have some form of SDN/NFV initiatives in place. AT&T's Donovan announced that they have already 5% coverage and are on track to reach 75% by 2020.
- Security and Privacy
Security and privacy continue to be hot topic in the post-snowden era especially in Europe. Regulations are also tightening up. EU wants much stronger privacy regulations. European operators want harmonization of privacy regulation between operators and the Internet players. IoT multiplies the attack nodes and it has serious implications for both enterprise and consumer domains.
- M&A news
Few M&A transactions during the week got the attention of the industry. The biggest one was from Freescale and NXP who announced a mammoth $40B merger. Then Mavenir got acquired by Mitel for $560M. HP acquired Aruba to boost the Wi-Fi business and paid a premium at $3B.
- Misc.
Other items of interest were 3D biometric fingerprints (Qualcomm), autonomous cars in 2016 (Nissan), zero rating (Wikipedia), B2B $1B revenues (Ooredoo), sub-$50 devices (Android, Mozilla), Windows 10 (Microsoft), 100M mobile money users (GSMA), 5G Holograms (KT), Smart Home Air Service (Conway), Lighting as a Service (Philips), Resiliency and Fault-Tolerant SDN/NFV layer (Stratus), 6G (DoCoMo), Runcible (Monohm), Selfie'd Journalists (they were everywhere), Wireless charging furniture (Ikea), MoDe Electric Bike (Ford), Connected carry-on (Bluesmart), and more
Best launch – Samsung S6. Well executed. Generated lot of interest from media and partners.
Best booth – Ericsson. They have really mastered the art of storytelling through physical and digital assets.
Best parties – Siris Capital and Qualcomm
Your feedback is always welcome.
Chetan Sharma
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward.
Disclaimer: Some of the companies mentioned in this update are our clients.
2013 – The year in mobile December 23, 2013Posted by chetan in : 4G,4th Wave,Applications,Chetan Sharma Consulting,Connected Devices,Devices,Disruption,Enterprise Mobility,European Wireless Market,Fourth Wave,Intellectual Property,IP Strategy,Mergers and Acquisitions,Mobile 2013,Mobile Applications,Mobile Future Forward,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 40 comments
Mobile Predictions 2014 Survey: We launched our annual mobile predictions survey for 2014 last week. For all of you have already contributed – many thanks! Rest – will appreciate you filling out the short survey and helping us in analyzing 2014. We even have prizes J. We will have the full analysis from the survey during first week of January.
2013 – The year in mobile
Just like there is no "year of electric cars†or "year of razor blades†or "year of the Greek yogurt,†there is no "year of mobile†or "year of this or that.†However, as we have seen over the 30+ years of mobile evolution, the next year is better than the previous one and so on and so forth. So, 2013 ends in the long tradition and continuum of human endeavor to make significant progress in multiple mobile dimensions and make an impact on individuals and societies alike. 2013 proved that connectivity has become the core of our fabric and we are entering the "connected intelligence era†that will enable the Golden Age of Mobile.
In no particular order, here were some highlights of mobile 2013:
Number of mobile subscriptions ~ humans: the total number of mobile subscriptions got tantalizing close to the number of humans on the planet. Next year, we will go past the milestone but it shows the pervasiveness and strength of the mobile technology that it has become the basic part of our Maslow's hierarchy.
More data please: As smartphones approach the 2B mark, the data appetite of consumers showed no signs of abating. In Sweden, the mobile broadband subs are consuming over 7GB/mo. In the US, some Android devices are consuming over 4 GB/mo on average. Operators will need to continue to refine their pricing and margin models as the demand for more spectrum will continue.
The dominance of Samsung and Apple: The tussles in the device segment has all the intrigue and juxtaposition of a Shakespearean drama and the ups and downs of a Pavarotti's masterpiece. Through sheer muscle tenacity and the execution speed of Usain Bolt, Samsung was able to firmly dominate 2013 despite Apple's grip on the high-end smartphone market. These two account for almost 50% of the smartphone shipments and almost all of the profits in the space. Apple continued to set the tone for the market with the launches of new iPhones and iPads. Though iOS trails Android in raw deployment, it trounces it in consumer usage. It is also remarkable how quickly consumers upgrade to the latest iOS in stark contrast with the Android fragmentation. Apple finally got access to the big Chinese market.
The disappearance of the legacy device brands: Nokia, Motorola, and RIM were dominant players a few years ago but Apple ensured the smartphone script is rewritten. They all made serious strategic errors one after another and while Nokia and Motorola have found new families to host their aspirations, their story should be a reminder of the turbulent cycles of the device business and that the complacency virus spares no one. The rise of the local OEMs should keep everyone on their toes in 2014.
Android juggernaut: In 2013, Android continued to create distance with Apple in terms of downloads, easily going past the mind boggling 1 billion milestone. Android has changed the industry for the better. While there is trouble in the house, Android will continue to play a major role in the device and app ecosystem in 2014.
The growth of OTT Services: As we discussed in our 4th wave paper earlier this year, OTT Services will be the biggest growth segment for the next decade. In 2013, the segment grew 50% ahead of any other telecom segment. Young IP messaging stalwarts fundamentally altered the messaging landscape with Whatsapp performing exceptionally. SMS usage and revenue numbers were impacted worldwide.
The digital revenue streams are very distributed with diverse players such as Facebook, Twitter, Starbucks, Expedia, Uber, Pandora, Amazon, AT&T, Telefonica, Verizon, DoCoMo, Netflix, China Mobile, Rovio, Square, Softbank, Ebay, Hertz, Apple, Google, and Microsoft. In our work with players around the world this year, it is clear that there is significant energy and application in mining the opportunities on the 4th wave. With nascent efforts in Bhutan, Vietnam, Malaysia to moonshots in the US and Europe, mobile is rewriting the rules in virtually every industry. Fasten your seat belts for another fast paced year in 2014.
Post-PC beat PC+: Apple expertly wrote the post-PC narrative and while the PC+ crowd has a legit argument, perception is often reality and there in no doubt that from here on out, the industry will be talking about the post-PC world in one voice. Even Microsoft will grudgingly admit to the transition and likely shift its strategy accordingly. As we wrote long time ago, Tablets have fundamentally altered the computing paradigm. In our SMB research released earlier this year, it was clear that smartphones and tablets are the tools of choice for the enterprise and that is not only altering the device business but also the software landscape. Mobile broadband, the cloud, and the applications are altering the enterprises – big and small. Microsoft should take solace from a tough year of progress. Blackberry is practically done and Microsoft has established itself as the distant but a viable third mobile ecosystem. Had it not been for a series of strategic mistakes, Microsoft might have made better inroads in 2013.
LTE launches: LTE is the fastest growing generation of cellular technology in the history. With over 250 networks launched, the desire to launch IP networks quickly is on top of the agenda. US leads with all major operators having substantial LTE deployments but other nations are fast catching up. While there has been quite a bit of focus on LTE, WiFi has been emerging as the white knight and its importance only grew in 2013 with 60-70% of the mobile data traffic being carried by WiFi networks in most of the countries. It might lead to some interesting business models in the coming years. 5G entered the industry lexicon.
M&As: It is natural for fast growing and competitive industries to consolidate. 2013 wasn't any different. There were some blockbuster and expected M&As: Microsoft acquired Nokia, Softbank surprised with Sprint/Clearwire acquisition, Verizon finally got hold of its destiny from Vodafone. As we have eluded to several times in our past research notes, we expect the global M&A to continue with several block buster deals slated for 2014. Stay tuned.
Patent wars: In maturing markets, patent wars are the unfortunate part of the ongoing battle for dominance. Mobile saw its share of patent wars. With roughly quarter of the USPTO grants becoming mobile related, it shouldn't come as a surprise though.
Regulatory tussles: Regulators are generally always behind in understanding a fast growing industry. It was clear in 2013, that the convergence of the computing and communications world has left the regulatory world woefully short of expertise and imagination. Governments around the world will do better by hiring folks from the industry to get a grip of the fast-paced every-changing dynamics of the mobile world as the very competitiveness of a nation depends on it. From spectrum to privacy, from competition to commerce, regulators need to get up to speed on unexpected trajectories of the new world.
Security and Privacy: From Snowden revelations to industrial espionage, from credit card data loss to enterprise security, the security and privacy of mobile data, applications, networks, and devices became front and center of the security and privacy debate.
Operator disruption plays: In the telecom space, the #4 player generally doesn't have a big impact on the overall mechanics of the industry. However, when it has nothing to lose, it can provide a potent dose of disruption to the market. Free in France and T-Mobile in the US were examples of that this year. In France, by offering cheap mobile data services at low margins, the newcomer altered the economics of the segment tumbling the incumbent revenues by 10%. In the US, through a series of financial and marketing maneuvers, T-Mobile was able to alter its net-add trajectory and had meaningful sub gains for the first time in three years. Also, for the first time, T-Mobile forced the top three to react to its moves and not the other way around. It also inspired other smaller players in other countries to rethink their strategies.
Connected devices: The promise of M2M and connected devices has been there for some time. Internet of Things has morphed into the gimmicky Internet of Everything. While the hockey stick curve hasn't arrived yet, there was plenty to celebrate with the introductions of Google Glasses, wearables, smart watches, connected autos, glamorous thermostats, winking light bulbs, home security and energy management solutions and much more. GE is spending billions for its "industrial Internet†initiative. A nice platform has been set for continued feverish growth and product introductions in 2014.
Mobile's impact on commerce: Mobile is changing every industry but its impact on commerce is particularly notable. In the 2013 holiday season (according to IBM), mobile made 17% of the online sales increasing over 55% from 2012. Tablet users spent $126/order.
Meteoric rise of mobile apps: In 2010, we evaluated the impact mobile apps will have on the industry. Much of the growth has been expected, however the players who lead in revenue and downloads have fluctuated across the various platforms. In 2013, Google started to match Apple in downloads though Apple easily wins in the revenues category and thus still remains more attractive to the developers though the gap is closing.
There was much more – Twitter IPO, Surface, Moto X, spectrum scandals, Facebook's love for mobile, Google mobile advertising dominance, the rise of the Chinese OEMs, decline of HTC, and several other events captivated our attention.
I am positive that 2014 is going to be another terrific year for mobile. The progress and surprises will come from all quarters. New players will emerge, new business models will take hold, and we will make significant progress. I am also sure that you all will do your part in shaping the mobile cosmos.
Would love to hear from you. How was your 2013? And what are you looking to do in 2014 that will change the mobile world? Please be sure to fill out our annual predictions survey for 2014.
With best wishes for an outstanding 2014.
Yours truly
Chetan Sharma
New Research Paper: The ABCs of SMB Transformation: Apps, Broadband, and the Cloud May 6, 2013Posted by chetan in : 3G,4G,4th Wave,AORTA,Applications,Chetan Sharma Consulting,Connected Devices,Enterprise Mobility,European Wireless Market,Mobile Cloud Computing,Mobile Ecosystem,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment
The ABCs of SMB Transformation: Apps, Broadband, and the Cloud
– A collaboration between Chetan Sharma Consulting and AT&T
In 2013, the US mobile data revenues will exceed $90 billion accounting for over 165% growth in the last 5 years. This makes US the biggest market for mobile data solutions and services. The smartphone penetration in the US went past 50% by mid-2012. The number of applications available to consumer has quadrupled in just the last two years. While the growth in the smartphone segment has been quite impressive, the tablet adoption rate has been the highest in the consumer electronics history. The advent of mobile broadband, powerful computing devices, reliable cloud services and applications have changed the computing landscape forever.
At the same time, the Consumerization of IT is changing the face of the enterprise architecture as well. This is felt more acutely in the small-and-medium business (SMB) segment. US is also the biggest enterprise market in the world and the SMB segment represents the more agile and technology-savvy of the ecosystem. In fact, we think it is a leading indicator of how technologies are going to be adopted in the enterprise ecosystem, what trends will prove to be disruptive, which vertical segments will embrace efficiency, and most importantly, how should we think about the ever-changing landscape as we look towards rest of the decade.
Small businesses are at the heart of the US economic engine. They represent roughly 45% of the non-farm GDP. Every administration, every president focuses on small business growth and job creation. Given the importance of small businesses to the economy, it is worthwhile to look at how their technology needs are changing. Additionally, it is important to understand how they are adopting technology and the impact it is having on their productivity, competitiveness, and efficiency. The technology adoption is also putting some of the traditional industry segments at risk while creating several new growth areas.
To understand the impact of mobile broadband, devices, and cloud applications, we conducted a survey of eighty SMB companies of different shapes and sizes across the US serving different verticals constituting over ten thousand employees. We also looked at the data from over twelve thousand companies in the SMB segment and over twenty thousand larger enterprises. Additionally, we conducted a series of interviews to better understand the motivations, requirements, and feedback of these companies. These companies have been in business for twenty years on average with over two years of experience with mobile data solutions. By understanding how they use and benefit from mobile data solutions, we can better identify the course of enterprise mobility in the US and around the world.
Some interesting findings:
· Small and medium businesses are leading indicators of technology adoption. As referenced in this paper, SMB smartphone and tablet penetration is more than 90 and 65 percent respectively; whereas national smartphone and tablet penetration is roughly 55 and 22 percent.
· Mobile First to Mobile Only. Last year, we proposed that we will start moving from mobile first to mobile only economy. We said that we are approaching a pivot point wherein the mobile first doctrine is going to move to mobile only. We are starting to see strong evidence of that shift. In our survey, roughly 30% of the SMBs are transitioning from desktops/notebooks to smartphones/tablets. Business software and solutions are being transformed by the use of smartphones and tablets. With this shift, we've seen the emergence of a generation of app developers focusing primarily on the mobile app platform.
· Mobile broadband, cloud, and apps are providing real and tangible ROI. The SMBs in the survey saw an average savings of 40 minutes per worker per day, which translates into significant impact on profits over the course of the year.
Your feedback is always welcome.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this paper are our clients.
Abhi Ingle – The Mobile Cloud Connected EnterprisePosted by chetan in : 4G,4th Wave,Applications,Enterprise Mobility,Mobile Cloud Computing,Mobile Ecosystem,Mobile Future Forward,Worldwide Wireless Market , add a comment
The following piece is excerpted from the 2011 Mobile Future Forward Book – Connected Universe. Unlimited Opportunities. It was written by Abhi Ingle, then VP, Advanced Mobility Solutions at AT&T and now VP of Innovation and Head of Foundry at AT&T
Technology and Structural Change
An observation of the technology industry reveals three broad trends having a visible impact on business today. First, mobile computing devices continue to add computing capacity and new capabilities at an exponential rate of growth (Figure 1a and 1b). (Moore's Law is still very much in effect and shows no signs of slowing). Second, wireline and wireless connectivity is being migrated to a flat, high-speed internet protocol architecture providing the ability for the stack of services to be disaggregated. This allows applications to run seamlessly across multiple devices simultaneously in stationary, nomadic and mobile scenarios. Third, the explosion of cloud computing in terms of infrastructures, platforms and applications continues to develop and is now gaining acceptance in mainstream scenarios, both consumer and business (Figure 2).
Figure 1a and 1b: New Uses for Computing (Source: IDC) and New Model of Computing Innovation (Source: 2011. Intel Investor Meeting).
Figure 2: AT&T Mobile Data Volumes Up 8,000% Over Four Years (Source: 2011. AT&T).
Amplifying the impact of these technological changes is a sea-change in technology purchasing, evaluation and consumption in the marketplace. Technology purchasing–previously a top-down IT-driven process–has now morphed in to a bottom-up consumer-driven phenomenon. Alternately referred to as the "consumerization of IT†or the "Bring Your Own Device†(BYOD) movement, it is having a tremendous influence on business IT, effectively redefining where and how technology decisions are made. (Ted Schadler (Forrester Research) and Josh Bernoff (Forrester Research) have written Empowered, an entire book dedicated to this trend alone).
Any of these advances taken individually is an exciting evolution, but the opportunity presented by the combination of these technologies and trends taken together is revolutionary. This troika of technological advancements and industry trends can be viewed through two lenses, either as an incredible opportunity or an insurmountable challenge.
This dichotomous view is understandable. There are formidable obstacles as companies realize that they may have to reengineer twenty years of PC-centric architecture to contend with multiple connected devices, multiple computing platforms and multiple applications (which may or may not run on all of the same platforms). It can be an overwhelming task even for the most forward-thinking organizations. We choose to view this as a rare opportunity for businesses agile enough to harness these trends to make dramatic business improvements by transforming classic enterprise IT architectures to real-time, business process driven, cloud-based mobile architectures. A systemic phased approach with the right partners can make this a manageable and self-funding transformation.
We find the three technology changes referenced earlier to be mutually reinforcing. For example, the advent of powerful smartphones, tablets and connected devices changes the computing paradigm to be one in which there are many devices per person. Having several devices inherently leads to the necessity to have data and applications accessible by multiple devices simultaneously.
What is the phenomenon ideally suited for housing applications allowing access from multiple end points? The cloud! And, of course, all of this would not work if all of these devices were not always on and connected through incredibly fast flat IP networks (wireless and wireline). The business network is, in fact, the most mature virtualized element, secure MPLS-based connectivity which increasingly forms the core of enterprise connectivity today was the original "cloud or virtualized†service. The virtualization of data centers, servers, storage, processing power and the XaaS phenomenon is taking the other elements towards the same evolution as the network, in effect creating a virtualized or cloud fabric in which network, processing, storage and software can flex to the needs of the enterprise on a dynamic basis (Figure 3).
Figure 3: Cascading Waves of Innovation (Source: 2011. AT&T).
Much has been written about the technologies involved in this change, but surprisingly little about a business framework that can fully take advantage of these changes. Capitalizing on this opportunity will require a holistic framework encompassing people, processes, assets (Figure 4) and linkages between the three in an architecture that provides the enterprise with the ability to sense, analyze and respond in real-time (Figure 5).
Figure 4: Framework for a Real-Time Event Driven Enterprise. (Source: 2011. AT&T).
Figure 5: Sense, Analyze, Respond Relationship. (Source: 2011. AT&T).
Consider two companies we have worked with recently on extreme ends of the spectrum. The first, a large beverage distribution company, with a history of successfully implementing progressive mobility solutions, wanted to retain its competitive advantage.
The second, a 20-person company providing specialized healthcare supplies, with no automation, sought to capitalize on creating a real-time enterprise which they could never have afforded prior to these technological changes. Both of these companies have dramatically transformed their business processes around the concept of the real-time enterprise in which people, process and assets are always connected and can be optimized on the go.
Figure 6: Beverage distribution company scenario illustrates real-time demand and supply adaptation (Source: 2011 AT&T).
To understand how the beverage distribution company is thinking about the future and how they can capitalize on the technology changes, visualize this scenario:
A large group of bicycle riders are out on a long ride on their bicycles on a hot day and require a sports drink to rehydrate (Figure 6, Illustration A). Those of you familiar with road biking will recall that the form fitting lycra outfits that most road bikers wear typically limit what one can carry. Imagine that on the bicycle's handlebar (where in the past a GPS device would have resided) is instead a sled for the rider's mobile smartphone, GPS and near field communications, where he or she can use an application to locate the nearest drink machine (Figure 6, Illustration B) and get directions to it (Figure 6, Illustration C).
Once there, the rider can use his or her mobile device to pay for and receive a drink using Near Field Communication (NFC) technology. The process is repeated for the entire group of bikers, depleting the machine of all the sport drinks (Figure 6, Illustration D). In a non-real time world, the company would fail its' consumer at the moment of truth – it would direct thirsty riders to an empty machine. But in our real-time connected world, the connected vending machine has already signaled its status to the cloud, has been taken off the database before the next set of riders would see, and they are automatically directed to the next closest machine.
Simultaneously, cloud based analytics ensure that "restock work orders†are routed to all supply trucks in the area (Figure 6, Illustration E). (All trucks are equipped with automated vehicle location technologies that are continuously connected). Each supply truck driver has a handheld device to receive the alert and the ability to accept a restocking order and go refill the depleted machine. As soon as this is done the vending machine resignals its status and is immediately shown on the next dynamic search a consumer makes. Imagine the efficiencies and revenue maximization as a result of these real-time interactions!
One could even imagine correlating this cycle to the weather/temperature or time of day to drive even further efficiencies. Clearly, not everything outlined in this scenario has been implemented to date, but by preparing for the future, this company is systemically transforming its business processes and moving to a real-time mobile IT architecture.
Now let's take a look at the small twenty person specialized health supplies company harnessing these technology trends to completely revise the operations of their company around a mobile, real- time cloud delivered core.
Figure 7: Rehabilitation Company Specializing in Wheelchairs (Source: 2011 AT&T).
(ProntoForms is a trademark of TrueContext Corporation.)
The Scenario Prior to Transformation: The company– a privately owned corporation–supplies custom wheelchairs to customers. The company operated primarily via paper forms requiring extensive calling back and forth using basic phones and a classic company reception system despite the fact that the company could not afford to keep the company phone line staffed around the clock. The company also owned two delivery vans to pick up and deliver wheelchairs the company was either servicing or supplying. Since the company could not afford any more vans, multiple calls to these vans to ensure on time delivery and pickup was critical.
The AT&T Mobility Applications Consultant who called upon this company soon realized the company was too small to either host, manage or support any onsite software or even deploy and maintain PCs. The answer was delivering four applications through the cloud direct to smartphones (in this case iPhones) and to specialized tracking devices. What follows is a summary of the 4 different solutions and the problems they addressed. (Refer to Figure 7 for the following).
Solution #1: The company's wheelchair technicians used paper forms for everything they did; surveying customers about their needs, taking down specs or noting repairs delivered. This equated to three different forms over four pages in length. Each day field technicians filled out the forms and turned them in. Then they were formally entered/rekeyed at the end of every day. This was a time consuming effort with frequent errors and inaccuracies that had to be found, corrected, and re-entered.
The company was transitioned to a cloud delivered, mobile forms solution. The Pronto Forms Solution delivered by AT&T converted a paper intensive environment into a highly efficient method of capturing data. The forms were automated on iPhones for the field technicians and eliminated all the paperwork and rekeying steps, cutting the previous process time by approximately 75% per form. The information is also available online as soon as the technician fills out the form.
Solution #2: As previously mentioned, this company has two vans on the road constantly making deliveries. But the owner has no visibility as to current vehicle location, if they are on schedule, and if the miles driven are valid.
The TeleNav Vehicle Tracker from AT&T, a vehicle tracking solution involving a box that can be attached to the van and a cloud delivered portal provides visibility of corporate vehicles at all times. This ensures the vehicles whereabouts, if the driver is on schedule, and how far the vehicles have been driven. All this leads to better customer service, better image, and increased safety, security, and business stability.
Solution #3: The owner often needed to send out communication blasts to employees to see if someone could fulfill a particular task when they were short staffed in one department, but the owner and employees were only able to receive messages from customers on a 1:1 basis, slowing communication down. The implementation of AT&T Enterprise Paging allowed the owner to send one message to all employees via a simple text messaging portal and confirm receipt/delivery of messages.
Solution #4: After-hours management of the business was practically non-existent since the company was so small, yet their customers were dependent on their wheelchairs and needed the ability to reach someone in the company immediately.
AT&T Office@Hand, a cloud delivered PBX to the smartphone with a very simple web GUI, provided the customer with the ability to better manage and control after-hours service. It unifies employees in a business-on-one-phone system and includes auto-receptionist, multiple extensions, voicemail, call handling, faxing, and other features. The owner can assign a receptionist, a "sales, technician or repair†department on the fly depending on which employees are available.
The bottom line: The company was able to accomplish with $99 smartphones and asset tracking devices and a monthly software subscription fee of <$500, what would have previously involved buying $800-$1000 PCs , tens of thousands of dollars of enterprise software, a PBX system and an IT person to deploy and manage the software and communications. The difference is startling! Contrast capital and OPEX running into $200,000 vs. a CAPEX of <$1500 and monthly subscription fees of <$500 for the software. Even better, all of this is delivered by one company (AT&T) with a simple monthly bill that includes: Voice charges, data charges and applications charges all as one consolidated bill with one point of contact. This scenario even 3-4 years ago was unimaginable prior to the convergence of the three technology trends. It is the ultimate democratization of technology.
Changing Roles for Everyone In the Value Chain
The trends that we outlined above have profound implications for everyone involved in the technology delivery, evaluation, implementation and support chain. Consider the two examples outlined above. Each of these involved solutions comprised of innovative applications that live in the cloud and are delivered to smartphones or "always on connected devices†and paid for via subscription models.
Consider my own company, AT&T. Many of you are likely surprised that the role AT&T is playing in a rapidly evolving market such as this, and many of you might be skeptical of the need/value /competency of AT&T to play such a role, and rightfully so.
To illustrate my position, I would ask anyone who is curious to conduct a simple experiment. While inside of Apple's App Store or the Android Market, type in "business application†and stand back as you compile thousands of results. How does a small company determine which application is right for them? How does a small company perform the due diligence to determine which platforms each application will run on, and on which models provided by which service providers? How does a business support, manage and develop to these platforms? Finally, try to find application providers able to provide enterprise billing as opposed to a consumer centric credit card only option.
We came to the conclusion that AT&T needed to adapt to the times by morphing our role to provide solutions to help businesses harness the mobile cloud phenomenon. As a supplier of mobile hardware, virtual private networks and data centers which can serve up mobile applications, we are uniquely qualified to deliver integrated solutions to customers.
But the change from delivering monolithic communication products to a collaborative enterprise partnering with dozens of hardware and software providers is not easy. It requires a significant transformation. First, in our people; hiring and training Mobile Application Consultants, ecosystem managers and vertical specialists. Second, in our process; moving from a product sale architected, managed and supported by AT&T, to a complex solution assembled across many different participants and supported through partnerships. And third, in our assets; from managing a network to a fixed set of devices, to managing a network that connects virtual private mobile application clouds to millions of smartphones, tablets and connected end points.
We felt we had no choice but to make this journey to stay relevant in the brave new world of mobile IT, cloud platforms and connected devices. The AT&T objective is, in effect, to help businesses master the melding of communications and computing together by knitting a series of ecosystem partnerships and providing a platform for other companies to innovate on via hardware and software and services. We believe we can simplify the process of harnessing technology for many business segments and serve as a broad distribution channel for small innovative companies (such as the types of companies showcased in the examples provided earlier) that struggle with brand, distribution and enterprise billing.
Given the far reaching impact of these changes, we believe it is important for all participants in the value chain to rethink their role, assets, people and partnerships for the years to come. Provided below is a quick synopsis of practical implications and considerations for different participants.
Changing Role of the CIO and the Enterprise IT Department
As outlined, in the Advisory Board Article (The Space Race – The Competitive Implications of Next-Generation IT Architecture, Research Summary, The Research Board. June 2010) on the changing role of the CIO, dramatic changes are occurring in the IT department as well. In effect, many companies have gone from having IT departments that DO things (own and drive projects) to an IT department that MANAGES things (potentially working with outside service providers).
This change has an influence on the balance of power between IT departments and Line-of-Business (LOB) departments. In some cases LOB departments find themselves in the unique situation of no longer requiring the assistance of IT and go directly to an external service provider (supplanting the internal IT department). In these cases, the IT department finds itself in the unique situation of having to compete against other service providers as an alternate provider. Enterprise IT should ask themselves if their highest value is in buying piece parts and spend time integrating these solutions or developing them in-house? Or does it make more sense to turn your department into high value business process analysis groups supplemented by strong architects who can put the various solution providers together?
The answer for each company will vary, but there is little doubt that a journey towards the latter is necessary. This may warrant changing hiring profiles to shift from maintenance and integration talent to personnel with strong architecture, business analysis and skills in user interfaces and experiences.
1) Software Providers: Consider how software is going to be delivered in the future. Do you stick with shrink wrapped software or begin delivering software over the cloud? Should you do that yourself or partner with others to do that? Who should the partners be? Should the cloud be private or public? Once again, there is no one-size-fits-all answer, for the larger companies such as SAP, it may make sense to build out their own cloud as well as partner with service providers like AT&T. For the smaller companies, they need to also consider the value of distribution, brand, billing and support services in addition to just the cost/capital to build out the cloud.
2) Hardware Suppliers: The success of the iPhone and iPad, tightly integrated mobile platforms and hardware, has every hardware manufacturer wondering if they need to also provide an end-to-end controlled experience. HP has clearly chosen to go down that path with the purchase of Palm/WebOS. Dell on the other hand has bet on a loose coupling with Android and Windows Phone 7. Nokia on the other hand has tightly coupled itself to Windows Phone 7 while Samsung and HTC continue to play across both. How far do hardware manufacturers go down the route of content/application services? How far into systems integration and services do they extend without alienating their downstream channels? How does the entire PC ecosystem transition the set of support, management and application services from the WINTEL era to the post PC, multi-OS environment? These are important issues that the established hardware ecosystem is dealing with even now.
3) Systems Integrators: As hardware and software players forward integrate, is it enough to ally with purely software providers to build "practices†or does it make more sense to ally with new emerging or established service providers? Is there a way for Systems Integrators to move upstream and focus on complex custom application development and service/change management (which most service providers will have little appetite for) and leave the simpler pre-packaged and configured applications to be delivered directly by software providers and/or service providers?
4) Service Providers: Does one move up the value chain and become an integrated supplier of cloud, application and mobile computing service or do you strip away complexity and focus purely on providing bandwidth? What is the set of systems integration and software relationship needed to accomplish this? What is the set of cloud/network APIs that will need to be opened up to truly build a platform on which an ecosystem can build and thrive on and act as a pull through for the infrastructure services? Again, as with all other players in the value chain, the answer will be different depending on the scale, scope and ambitions of the service provider.
Whichever path the companies in the value chain pick, they must all remember the familiar dictum of "adapt or dieâ€. The list of companies throughout many different industries that were unable to adapt to changes in innovation is long. Consider some companies that were considered "unsinkableâ€: One invented the instant film camera (among many other camera-based devices) that was on the market from 1948 through 2008, or the computer company that employed over 33,000 and had revenues of over $3B in the 1980s, or the airline that was a cultural icon of the 20th century and shaped the international airline industry… All utterly dominated their respective markets for extended periods of time, then failed to either recognize change, or adjust to it, and ended up perishing.
The current force of technology change is powerful enough that if Mary Meeker from Morgan Stanley is to be believed, we are in the middle of a significant evolution in computing. She calls it the "5th wave†(Figure 8).
Figure 8: The 5th Wave of Computing (Source: Morgan Stanley).
One can debate whether it is the 3rd, 4th or 5th wave, but the historical shift in market position and innovation that have accompanied every such wave, one thing we can all agree upon is that the only constant will be change itself. I hope that companies will seize upon this opportunity to unleash an era that we will look back on as the ultimate democratization of computing and connectivity.
At this time of uncertainty, it is edifying to remember a quote from the 35th President of the United States:
Change is the law of life. And those who look only to the past or present are certain to miss the future.
– John F. Kennedy
US Wireless Market Update – Q2 2012 August 13, 2012Posted by chetan in : Connected Devices,Enterprise Mobility,Mobile Advertising,Mobile Cloud Computing,Mobile Future,Mobile Future Forward,Strategy,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
US Wireless Market Update Q2 2012
The US mobile data market grew 5% Q/Q and 19% Y/Y to reach $19.3B in Q2 2012. Data is now almost 42% of the US mobile industry service revenues. For the year 2012, the market is on track for mobile data revenues in the US market to reach our initial estimate of $80 billion.
The US operators reversed the postpaid decline in last quarter to add almost 400K postpaid subs largely due to the strong performance of Verizon Wireless. Sprint and T-Mobile saw further postpaid declines. For T-Mobile, Q2 marked the eight straight quarters of postpaid losses.
In terms of Y/Y growth, Connected Devices segment grew 21%, Prepaid 12%, Wholesale 4%, and Postpaid was flat. AT&T, AT&T, Sprint, and Verizon are number one respectively in these categories. The connected devices segment has been an area of growth for the industry but for the second straight quarter, the Q/Q growth fell below 5%. This is largely driven by lower growth in the M2M segment.
Driven largely by the economy, the prepaid subscriptions went past 100 M for the first time in the US market. Given that the revenue from new subscribers has fallen below the 5% mark for the first time, the revenue growth will be primarily driven by services to the existing subscriber base. The new revenue will be dominated by data access revenues for the next couple of years.
As has been obvious for some time, the device ecosystem has become a two horse race – iOS and Android. Apple and Samsung. Google's acquisition of Motorola finally closed and everyone is watching as to what comes next. Amazon showed off its ambition with Kindle Fire and is now getting ready to launch a new set of devices in time for the holiday season. Apple launches its iPhone 5 with LTE and gives some more polish to iOS next month. Microsoft will start selling its Surface tablet in a matter of weeks. The only one left out of the launching musical chairs is RIM which has pushed out its launch into 2013.
Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in Q2 2012. However, Apple dominates both the device revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 97% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs. Apple has the complete stronghold on the supply chain and has sucked out the oxygen from the OEM world.
Nokia's Lumia launch in Q2 fizzled in the US and elsewhere. It will get another shot at glory and perhaps its last with the Windows 8 launch in Sept.
If we exclude the M2M subscriptions and just look at the human subscriptions, the smartphone penetration went past 50% for the first time in the US market. Smartphone sales continued at a brisk pace crossing the 70% mark (of the devices sold) in Q2 2012.
Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.
Zuned Out
Apple launched iPod in 2001. During the early days, Microsoft ignored it until it realized it better start paying attention to the growing phenom. It asked its suppliers to build them a Microsoft iPod. One by one, they all failed. Depressed and frustrated, it took matters in its own hand and introduced Zune in 2006, full five years after the first iPod came into the market. By that time, Apple had already sold 66M units and still hadn't hit its peak. As is customary, Microsoft took another few iterations to get it right. By the time a competitive product came out, it didn't matter. The main reason was that the customers were Zuned Out. They had already made their choice, invested their time and money into a platform and it will take more than a crowbar to move them onto something new. Microsoft retired Zune in 2011
Fast forward to 2007. iPhone came out. Nokia, RIM, Microsoft and others dismissed it and more importantly failed to understand and acknowledge its impact. Their corporate schizophrenia is well documented. Microsoft wisely realized that it can't just keep paring down the mothership OS for mobile and took time to rewrite it. The new OS was actually good and well designed, it was quite fresh. iOS and Android would do well to borrow some ideas from it to enhance the user experience. However, Microsoft's partners by this time were more enamored with Android. So in Nokia, Microsoft found a partner who can help shine the light on its new shiny OS. By the time initial credible versions of the new windows OS started to ship, Apple had already shipped over 200M units of iPhone. By the time RIM ships devices with the new OS (if it gets to that point), Apple would have shipped over 300M units. Consumers have already invested their time and money into platforms and ecosystems. Will Microsoft, Nokia, and RIM get a second chance or will they be Zuned Out?
Then came the iPad that completely took Microsoft by surprise. It pioneered the concept a decade earlier but was completely outflanked by the wily Apple. Zune wasn't significant to Microsoft's core business. It had ignored mobile as well for the better part of the decade as it didn't disturb the Office and Windows PC franchises. But tablets are different. Apple singlehandedly created a new category in 2010 and has dominated it ever since. It is altering the basic notion of computing. Enterprises are dumping their PCs and moving to iPad. We have seen that in our work as well. All of a sudden, there is a direct threat to Microsoft's core business. This time the implications are very serious. It can no longer afford a misstep. So, instead of letting partners produce mediocre products that have no chance of success in the market, Microsoft is taking the matters in its own hands early on and produce something that on surface looks a pretty compelling product. If it can get the pricing right, it can make a dent and be a contender in the new computing landscape. It can use its products, distribution power, developer ecosystem, and the bank balance to alter the scales. But Apple has a big lead. By the time Surface comes out, Apple would have sold over 100M iPads. If Microsoft executes, maybe there is a chance to not get Zuned Out this time around. If it fails, the company itself might be Zuned Out in due course along with many of its longtime partners.
In the theory of market entry, fast follower is actually a smart strategy. Microsoft was a master at it. However the strategy has its limitations. Against an agile and ruthless competitor like Apple or Google, you better be a really fast follower (Samsung) else time starts to work against you. A slow follower strategy only works if you have something truly innovative (iPhone) or the incumbents are asleep at the switch (Xbox) or the business model is disruptive (Netflix). Also, the fast follower strategy is only sustainable when you are adept at anticipating competitor's future chess plays.
Shared Data Plans
We have been advocating shared data plans to create more consumer demand for over two years. When I talked to CNBC earlier this year (Jan), I said that in all likelihood the family data plans will be introduced in the US market in 2012. I discussed this more with Bloomberg and USA Today and suggested that most likely Verizon will launch them first. Verizon and AT&T launched the shared data plans this summer with AT&T getting the benefit of launching it second. While it is a great start, to be truly effective, some of the fees need to be reduced or completely eliminated.
Operator's Dilemma (And Opportunity): The Fourth Curve
While the European operators are feeling the heat from the OTT players (which is further compounded by an abysmal economy), the impact on the US operator revenues hasn't been significant, yet. Last quarter we released our Mobile Future Forward Research 2012 Paper that took an in-depth look at the evolving landscape. The first of its kind study looks at the revenue curves over the course of the mobile history and discusses the need to invest in the fourth curve. The paper results were discussed in WSJ, The Economist, GigaOM, Seattle Times, and many other fine publications around the globe. The fourth curve will define the fate of many providers. Earlier this year, we discussed the topic in-depth in our Seattle and London forums and we will go even deeper into the subject at our annual brainstorm – Mobile Future Forward on Sept 10th with all major participants.
mCommerce > eCommerce: Mobile First to Mobile Only
In the last couple of years, the realization in the industry set in that mobile is going to reallydominate the world. Very quickly, we are at another pivot point wherein the mobile first doctrine is going to move to mobile only. It is not that the desktop world will disappear into oblivion. Far from it. But, the investments, strategy, and execution will be driven by mobile. As we said in our global research update earlier this year, in 3-5 years, with few exceptions, if a company is not doing majority of its digital business on mobile, it is going to be irrelevant. There are already several data points to support the theory. Leading apps and services like Facebook, Twitter, Pandora are already operating in the world where mobile is driving majority of their user engagement. Expedia, Fandango and others are seeing the early signs of migration into the mobile dominated world. Starting soon we will start to see businesses with mCommerce Revenues > eCommerce Revenues.
Postpaid Doldrums
The prepaid subscriber base exceeded 100M in the US for the first time. As postpaid growth sputters, prepaid is picking up the net-adds. So, the question emerges, where will the net-sub and net-revenue growth going to come from in the next few years. The smartphone penetration in the US is at 50% (excluding M2M), so the significant opportunities are in the upgrades and non-data to data conversion. Family data plans (see above) will help in bolstering data revenues as well. Multiple devices/consumer will increase the sub penetration which is at 110%.
Mobile Data Growth – The Gigabyte Generation
The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. Since the advent of the iPhone five years ago, the US market has seen triple digit growth in mobile data consumption. In 2012, we expect the mobile data growth to be around 80%. This has largely been driven by the introduction of data tiers, the use of WiFi offload, more developer education, throttling in some instances, and some compression and offloading solutions. However, as LTE becomes more widespread in the US, we expect the traffic growth to pick up again.
Market Consolidation
Even though the regulators have indicated their distaste for big mergers, it hasn't stopped the industry to play the M&A speculation parlor game. Except for a few impossible scenarios, all sorts of deals are being contemplated. The market economics is clearly crying out for more consolidations. The smaller M&As won't move the needle and bigger M&A are not going to be on the table until we get into a new calendar year.
New Revenue
At the turn of the century, roughly 15% of the service provider revenue came from new subscribers. By the end of the year, we expect this will drop down to 3%. This means that the new revenue will have to come from a) converting non-data to data subs and b) launching new services in different verticals for the existing subs.
Connected Universe, Monetizing Opportunities
While 2011 was the year of figuring what the opportunities are in the new connected era, 2012 is starting to focus on how to monetize those opportunities. That will be the theme of our Mobile Future Forward Thought-leadership summit on Sept 10th. Almost all the vertical industries are benefiting from the connected devices and ubiquity of broadband networks – security, health, retail, utility, transportation, entertainment, and others. We will take a deep dive into the issues, the best case studies, the opportunities, and the players. We are assembling industries who's who to help you figure out where the industry is headed next.
What to expect in the coming months?
All this has setup an absolutely fascinating 2012 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems.
As usual, 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 Q2 2012 US wireless data market is:
Service Revenues
- The US Wireless data service revenues grew 5% Q/Q and 19% Y/Y to $19.3B in Q2 2012. For the year 2012, we are forecasting that mobile data revenues in the US market will reach $80 billion.
- Verizon and AT&T dominated the quarter accounting for 68% of the mobile data services revenue and had 66% of the subscription base.
- Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q2 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q2 2012.
- The Overall ARPU declined by $0.03. Average voice ARPU declined by $0.63 while the average data ARPU grew by $0.60 or 3% Q/Q.
- The average industry percentage contribution of data to overall ARPU is now at the 42% mark in Q2 2012 and is likely to exceed the 50% mark early next year. All the top three US operators are above the 40% mark with Verizon leading the trio. (For reference, all three major Japanese operators are now over the 60% mark).
- The US operators bounced back from its first ever decline and added 400K postpaid subs.
- T-Mobile's postpaid woes continued for the eight straight quarters.
- AT&T and Verizon both added more than a 1 M subs while Sprint added 283K.
- For the eleventh straight quarter, AT&T reported more net-adds from connected devices than postpaid subs.
Applications and Services
- While many of its brethren are seeing messaging volume declines, messaging in the US market grew by 5% YOY and 1% Q/Q. US consumers are now sending messages at the rate of 696 messages/sub/mo. However, most operators are seeing decline in messaging revenue growth due to IP messaging. As expected, this transition will continue around the world at different rates. In the US, while the change is underway, we don't expect any dramatic declines like in Philippines or the Netherlands in the near-term.
- The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
- Q2 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months. On the retail side, Starbucks is a player to watch as it tries to become a more active participant in the digital ecosystem.
- Smartphones continued to be sold at a brisk pace accounting to over 70% of the devices sold in Q2 2012 with Android dominating though iPhone leads in revenue and mindshare.
- Samsung now leads in every major unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
- While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renews its entry into the battlefield with Windows 8 next quarter.
- Apple's iPhone sales declined in Q2 but with iPhone 5 round the corner, it is all set to dominate the remainder of the calendar year.
- US continues to sell over 40% of the world's smartphone every quarter thus making it the most attractive market for OEMs.
- AT&T continues to dominate the connected devices segment with over 47% market share.
- Verizon continues to sell more LTE smartphones as it added another 3.2M subs in Q2 2012 making it the leading LTE operator in the world. AT&T's and Sprint's LTE rollouts are gathering steam. T-Mobile announced that it is putting the cash and spectrum it got from AT&T to good use and deploying LTE by 2013. Expect the "fastest network†marketing to continue for at least another seven quarters.
- There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 47% of the iPhones in the US. However, iPhone sales in the US declined as consumers await iPhone 5. T-Mobile's date with Apple is starting to look like a possibility in the near future.
Mobile Data Growth
- The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. The smartphone data consumption at some operators is averaging close to 850 MB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
- The Signaling traffic has increased 3x.
- Mobile data traffic growth is likely to slow down to roughly 80% after doubling for the last five years. Voice traffic will dip below 10% of the overall traffic in 2012.
- While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.
Global Update
- Race to a billion – China became the first nation to go past a billion subscriptions. See our detailed analysis of the Chinese and Indian mobile market.
- For more details, please see our Global Mobile Wireless Market Update released in April 2012.
Your feedback is always welcome.
Chetan Sharma
We will be discussing a number of issues raised in this report in our annual mobile executive thought-leadership summit – Mobile Future Forward on Sept 10th in Seattle. Confirmed speakers include: Abhi Ingle, VP, Advanced Solutions, AT&T; Antonio Benjamin, Global CTO, Citi; Brad Duea, SVP – Products, T-Mobile; Biju Nair, EVP and Chief Strategy Officer, Synchronoss; Bobby Morrison – President, Verizon; Carlos Domingo, President and CEO, Telefonica R&D; Dan Deeney, Partner, New Venture Partners; Dave Whalen, VP/GM, Intel; Ed Cantwell, SVP, West Wireless Health Institute; Erik Ekudden, Head of Strategy, Ericsson; Erik Moreno, EVP, Fox; Frank Meehan, Executive, Horizons Ventures; Glenn Lurie, President, AT&T Mobility; Gus Hunt, CTO, CIA; Hank Skorny, VP/GM, Intel; Houk Reed, VP, Tekelec; Jana Messerschmidt, VP, Twitter; Jeff Smith, CTO, Numerex; Kevin Fitchard, Senior Reporter, GigaOM; Kevin Packingham, SVP – Product Innovation, Samsung; Marianne Marck, VP – Engineering, Starbucks; Mark Anderson, CEO, Future in Review; Mark Young, VP – Mobile and Connected Devices, NBC Universal; Michael Bayle, SVP and GM, ESPN Mobile; Mike Woodward, President – Americas, HTC; Neville Ray, Chief Network Officer, T-Mobile; Nick Wingfield, Reporter, New York Times; Oke Okaro, Global Head of Mobile, Bloomberg; Renee James, SVP, Software and Services Group, Intel; Stephen Bye, CTO, Sprint; Stephen David, former CIO, Proctor & Gamble; Steve Elfman, President, Sprint; Todd Simpson, Chief Innovation Officer, Mozilla; Wim Sweldens, President, Alcatel-Lucent Wireless.
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 Nov 2012. The next Global Wireless Data Market update will be issued in Oct 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Mobile Internet 3.0: How Operators Can Become Service Innovators and Drive Profitability February 23, 2012Posted by chetan in : 3G,4G,ARPU,BRIC,Carriers,China,Connected Devices,Devices,Enterprise Mobility,European Wireless Market,Mobile Cloud Computing,Mobile Health,Security,Smart Phones,US Wireless Market,Wi-Fi,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
Mobile Internet 3.0
How Operators Can Become Service Innovators and Drive Profitability
Sponsored by Juniper Networks
The mobile ecosystem is going through significant shifts in consumer behavior, the value-chain alignment, and the strategies required in managing the profitability of the service business. Operators around the world are experiencing tremendous mobile data growth. While the mobile data revenues are increasing, the margins are decreasing for many operators. As the percentage of the smartphones on the network increases, the data business is primarily becoming an access business which is difficult to sustain over the long-haul.
Additionally, it is becoming clear that the long-term value will be in the portfolio of value-added services (VAS). As we slowly migrate into the Mobile Internet 3.0 world where mobile data becomes the primary source of service revenues, operators have a fundamental choice to make – either learn to live with the utility business that pushes the margins downwards by 30-50% or selectively compete and/or collaborate with the OTT (over the top) players where they can offer compelling solutions and packages to their customer base and beyond.
Operators who are fully able to grasp the changes occurring in the ecosystem and are willing to refocus will position themselves for higher profitability in the coming years.
A fundamental rethink of the network and the business models is required. Rather than leaving all the VAS business to others, operators should look at ways to launch new services, to micro-segmented consumer base, to enable APIs and services that the developer ecosystem can build on, and to look at the core network to enable incremental revenue streams.
The pace at which the new services are launched needs to accelerate and the marginal cost of the introduction needs to go down significantly. By architecting the "network as a platform,†operators will have more flexibility in deploying an open and programmable network that not only provides operational efficiencies and insights but also paves the way for new generation of services such as mobile cloud, mobile security, health care, and identity management.
The paper looks at the global trends in mobile data and the need for new approaches to operator services that can help increase the mobile data margins and help operators play a more decisive and enabling role in the mobile ecosystem. The paper provides an operator blueprint for succeeding in the Mobile Internet 3.0 era by discussing the operating principles and the long tail of VAS. Several strategies and application areas are analyzed that can help operators in building a viable VAS strategy and sustainable profit streams.
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 2012. The next Global Wireless Data Market update will be issued in Apr 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.
2012 Mobile Industry Predictions Survey January 3, 2012Posted by chetan in : 3G,4G,AORTA,Applications,ARPU,BRIC,Carnival of Mobilists,Carriers,Connected Devices,CTIA,Disruption,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Breakfast Series,Mobile Cloud Computing,Mobile Commerce,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Payments,Mobile Search,Mobile Traffic,Networks,Patent Strategies,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,US Wireless Market,Wi-Fi,Wireless Value Chain,Worldwide Wireless Market , 12 comments
2012 Mobile Industry Predictions Survey
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2012. My thanks to all who participated in our 2012 Mobile Predictions Annual Survey. It gives our community an insider's view of trends.
2011 was a terrific year for the mobile industry. With all its ups and down, consumers embraced devices, applications, services, and technology with more gusto than ever before. In the waning hours of 2011, we crossed the 6 billion subscriptions milestone. While the first billion took 19 years, this last billion only took 15 months.
Smartphones are selling like hot cakes. We estimate that by the end of Q4 2011, over 60% of the devices sold in the US were smartphones and over 30% of the global sales were for the evolved brethren of the primordial featurephones. Sparked by insatiable consumer demand for mobile data, LTE and HSPA+ networks are sprouting all over the planet with US leading the charge for broadband deployment.
Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what's to come. Executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain and around the world participated to help see what 2012 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution.
Fifteen names were randomly drawn for the limited edition of the Mobile Future Forward 2011 book. The winners are:
Tor Bjorn Minde, Head of Ericsson Labs, Ericsson
Sunder Somasundaram, Industry Solutions Practice Director, AT&T
C. Enrique Ortiz, Mobile Technologist, About Mobility
Russell Buckley, CMO, Eagle Eye
Marianne Marck, VP – Engineering, Starbucks
John Foster, President, ZED USA
Angel Luis Saez, Sr. Director, Orange Spain
Dilip Mistry, Senior Director, Microsoft Asia
Phyllis Reuther, Advanced Analytics Lab, Sprint
Gene Keenan, VP of Mobile, Isobar
Elizabeth Day, Director of Finance, Trilogy International
Alan Cole, Research Staff Member, IBM T.J. Watson Research Center
X J Wang, VP – GM China, Vesta Corp
Michelle Lee, Director, SK Telecom
Hemant Chandak, Sr. Analyst, Cisco Systems
Thanks again to everyone who contributed. We will be calling on you again next year. It has been a terrific year for us at Chetan Sharma Consulting and we are looking forward to an engaging and productive 2012.
Be well, do good work, and stay in touch.
Thanks and with warm wishes,
Your feedback is always welcome.
Chetan Sharma
Now onto the 2012 Mobile Industry Predictions Survey Results.
1. What was most newsworthy in Mobile 2011?
Android had a spectacular rise in 2011 around the globe. Android OEMs collectively shipped the most number of devices and while margins shrank, they were able to put a united front to iOS. 2011 will always be remembered for the passing away of the industry transformer Steve Jobs. His work directly or indirectly touched billions of souls around the planet, many times over – something rarest of human beings are able to achieve in their life time. Regulatory tussles and significant increase in IP disputes also occupied the headlines. Amazon announced its intention for the mobile space with the launch of Kindle Fire.
2. What will be the biggest mobile stories of 2012?
As we look towards 2012, our panel voted for the continued growth of mobile data as the biggest story followed by Amazon's entry into the mobile space. Some key questions for the year are: Will Microsoft/Nokia devices will make any meaningful progress? Will RIM survive the year? How does Google manage the fragmentation, decline in margins (for the OEMs), and the IP issues? Will any high-profile security and privacy mishaps lead to more regulatory entanglements? Facebook IPO and its mobile ambitions? How do operators manage the data demand? Which M&As will capture industry's attention? Will Apple continue to dominate on both smartphone and tablet front? What does Apple do with mobile payments? and much more. Clearly, it is going to be a terrific year.
3. Who will be the most open player in the mobile ecosystem in 2012?
File this in the "perception is reality†folder. Despite all the criticism, Google has maintained its strong position as the most open player in the mobile industry.
4. What applications will define 4G?
Still looking for a killer-4G app? Video, cloud computing, and access will continue to drive 4G demand and growth.
5. What will be the breakthrough category in mobile in 2012?
For a second year in a row, the panel voted for mobile payments and mobile commerce as the top two category that will find their voice. Mobile advertising has become mainstream so it lost its ranking in the top 3.
6. What will be the most popular consumer mobile applications in 2012?
Apps preferences vary by regions depending on a whole range of factors. Messaging and Commerce are the top two categories for the developing world while consumers in the developed nations are likely to gravitate towards commerce and location based services.
7. Which will be the most dominant (unit sales) tablet platform in 2 years?
iOS and Android will dominate the tablet landscape for the next 24 months. A late entry by Windows 8 tablets could make a dent but don't count on it.
8. Who will make the biggest mobile acquisition in 2012?
2011 had its fair share of block-buster acquisitions, some successful while others were not. Our panel expects Microsoft and Google to continue making the biggest acquisitions.
9. How will the "Apps vs. Mobile Web" debate shape up in 2012?
It seems like the pendulum is swinging towards the mobile web though hybrid solutions are likely to stay with us for a long time.
10. Who will define the mobile payment/commerce space?
The financial companies safely locked in the mobile payments space and while the value chain is fairly complicated and definition confusion abounds, the likes of Visa, Operators and Google will continue to drive the payments/commerce space.
11. Which solutions will gain the most traction for managing mobile data broadband consumption?
Managing data growth and margins drives all strategies at mobile operators these days which in turns drives the value chain. 4G, tiered pricing, and mobile offload continue to be the top solutions if one has the spectrum that is.
12. Which category will generate the most mobile data revenue in 2012?
Messaging, access, apps, and advertising are the four broad categories that drive mobile data revenues around the world. The developing markets rely on messaging while the developed markets are increasingly looking to access as their dominant form of revenue generation.
13. What will help mobile cloud computing gain traction in 2012?
Mobile cloud computing will continue to be defined by enterprise, storage, and media needs.
14. Which enterprise segment will mobile impact the most?
Best buy is becoming the next Circuit City. Other retailers will follow unless they can successful reinvent themselves. Health is more regulatory driven so the progress will be slow though it is ripe for a complete overhaul and developing nations are moving much faster in this space.
15. What will be the dominant revenue model for apps in 2012?
In-app revenue model made good strides in 2011 but the combination of the various available revenue models will be the norm for most application developers.
16. What mode of mobile payments will get traction in North America and Western Europe in 2012?
2011 was the year to set the ground work for growth in the mobile payments space. Given the investment and focus, we are likely to see more movement and consumer involvement in 2012 with proximity based solutions and commerce of physical goods on mobile.
17. What will be the most successful non-mobile-phone category in 2012?
Tablets dominate. Period.
18. Which of the following are likely to happen in the near future?
The is a significant shift in computing taking place right in front of our eyes wherein tablets are replacing laptops and even desktops in the enterprise. European operators have been experiencing tough times while some of the Asian operators are flush with cash, they might make their move in 2012 though regulatory hurdles might prove to be an issue. 33% of the nations will have elections in 2012, maybe which will move mobile voting to the forefront in some nations. Our panel thought there is a better chance of humans discovering water on another planet than rise of another significant mobile OS.
19. Which areas will feel the most impact from Regulators in 2012?
Net-neutrality and market competitiveness will keep the regulators busy in 2012.
20. Who was the mobile person of the year?
Clearly, Steve Jobs was an easy choice but who will replace him 2012? Jeff Bezos has an early lead followed by Andy Rubin and Mark Zuckerberg. Angry Birds representing the developer community will be in for another terrific year. Other honorable mentions were Tim Cook, Paul Jacobs, Sanjiv Ahuja, Dan Hesse, and Glenn Lurie.
A lot to look forward to in the New Year. My thanks to all who participated and we hope you found it useful as you embark on your journey for a successful 2012.
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 Feb 2012. The next Global Wireless Data Market update will be issued in Apr 2012.
Disclaimer: Some of the companies mentioned in this survey are our clients.
Mobile Breakfast Series – Mobile 2012: Trends and Opportunities December 15, 2011Posted by chetan in : 3G,4G,AORTA,ARPU,Connected Devices,Enterprise Mobility,European Wireless Market,Patent Strategies,Patent Strategy,Privacy,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
We held our 8th Mobile Breakfast Series event earlier today. As is the tradition, we delved into discussing the trends and opportunities for the coming year. As usual it was a sold out crowd with terrific panelists representing different parts of the value chain.
2011 has been a fascinating year – with all the mergers, sky rocketing data growth especially in the US market. 2011 will also be remembered for the passing away of Steve Jobs, the man who helped change the global mobile industry over the course of the last four years. Locally, lots happening – Microsoft/Nokia alliance is launching new devices, Amazon has entered the mobile space with both feet, mobile gaming remains hot, and on a broader scale, we are going through the process of mobilification of everything.
Mark Anderson, CEO of Strategic News Service. I have known Mark for over 15 years now as one of the early subscribers to his wonderful newsletter. My good friend and coauthor Joe Herzog introduce me to Mark and since then I have been influenced by his writing. If you follow my blog, the name AORTA or Always On Real Time Access was coined by Mark in the late nineties and he generously allowed me to use it. Mark has also been writing about the carry-along-PC aka tablets for sometime and won the bet with bet with Michael Dell on the growth of this sector. He just finished off his annual predictions for 2012, so we had a lot to talk about.
Laura Marriott is CEO of Neomedia which is doing some pioneering work in the mobile barcode/mobile marketing space. But she is more famous for her work at the Mobile Marketing Association where she helped grow the industry and the association to make it a thriving enterprise.
Satya Mallya is Director at Orange. For those of you don't know Orange is one of the top European Operators but he is based in the silicon valley working on some cool projects. He has been in the telecom space for almost 20 years working at Bell Labs, Octel and two startups
Brian Fling is CEO of pinchZoom a mobile agency that helps big brands like BBC, Paypal, Delta and others understand mobile design and development. He is passionate about mobile user experience, has spoken and written extensively about the subject.
Jay Emmet is GM OpenMarket, SVP, Amdocs and knows the messaging, commerce space on the back of his hand. Very successful stints at mblox, ATG and others. Knows the operator world really well and has been straddling both the on-deck/off-deck world for a long time.
We touched on a range of subjects from IP to platforms, from privacy/security to mobile commerce and payments, from Microsoft to Amazon .. and so on and so forth. Below is the summary of the discussion:
- While the economy in various regions has been shambles, the tech industry has been largely protected, especially, the mobile industry. We are lucky to be working in space. Amen! 🙂
- As far as the mobile platforms are concerned, there are only two that matter – iOS and Android with iOS still having a strong upper hand. Android is plagued with IP issues and OEMs are starting to have second thoughts about the cost and risks of supporting Android in the long-term. All this is of course very fluid and will depend on the outcome of a number of IP cases in courts.
- Microsoft has made some progress with Nokia but as recent shuffling indicates, all is not good and there is going to be considerable work needed in the coming days to get alliance working in sync and work a thriving ecosystem long-term.
- Siri has just changed the game at some many levels. Consumers now expect more from their devices and players are scrambling to deliver.
- This year began with the debate of apps vs. mobile web. Mobile Apps have fundamentally changed the mobile UI and design paradigm. Consumers don't want to just browse a page on their devices, they want great user experiences all of which can't be delivered on mobile web. Apps stay quite a bit ahead of the game.
- There is systematic IP theft and cyberattacks going on and western nations and companies are finally waking up to do something substantial. However, it is going to be a long journey to get it right.
- Many small companies have built good, attractive IP portfolios in mobile and given the investment and invention, they should be allowed to maximize the value of their IP.
- Amazon's entry has changed the game. It has already become the number two in tablets and more to come. It will impact retail, advertising, and many other segments of the consumer economy.
- Over the last 20 years, capacity has been an issue every year but this time around, the capacity constraints are significant. While the services and consumption have gotten much better in orders of magnitude, the prices have largely stayed the same. To build capital-intensive networks, operators will have to find ways to increase data revenues.
- Operator channel is still a viable channel for the developers especially the ones who are looking for broader international reach.
- Mobile Security on smartphones remains a worrying concern and is an opportunity area for entrepreneurs.
- Mobile Privacy is a complicated issue. Many businesses are actually based on exploiting the privacy not protecting it so the business models are at odds with the privacy mantra and regulations. Something has to give. More regulations to come.
- QR codes and NFC will live in harmony for sometime.
- There are currently no clear winners in the mobile payments space. It is likely to stay very fragmented and is likely to become even more so over the coming days before any leaders emerge. Payments remains the most complicated ecosystem with many players involved and success stories will depend on the use-case scenarios.
- Cloud offers a differentiating opportunity for the operators and compete effectively with some of the OTT players.
- Many industry verticals are getting transformed by mobile. Big brands are aggressively pursuing mobile as a key strategic project. Health, Retail – opportunities abound.
- While traditional messaging is getting impacted by IP messaging, the decline is not universal and operators are reacting with new business models and technology initiatives.
- 2012 will be another great year for mobile. Fasten your seat belts.
It was a joy to moderate this terrific panel that kept audience glued to their seats till the very end. Thanks all for coming. We have some terrific events planned for 2012, Stay Tuned.
Until then, Wish you and yours a very happy and stress-free holiday season and enormously successful and prosperous 2012.
And don't forget to fill out our Annual Mobile Predictions Survey for 2012. There are prizes for 10 lucky winners.
ps. As I mentioned in the opening, WA state dept has a wonderful program to help startup with their travel to Mobile World Congress in Barcelona next year. Details here. Startups should check it out.
US Wireless Market Update Q2 2011 August 18, 2011Posted by chetan in : 3G,4G,AORTA,Applications,Connected Devices,Enterprise Mobility,Intellectual Property,IP,IP Strategy,Mergers and Acquisitions,Mobile Applications,Mobile Cloud Computing,Mobile Commerce,Mobile Content,Mobile Ecosystem,Mobile Future Forward,Mobile Payments,Patent Strategy,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
US Mobile Data Market Update Q1 2011
If Confucius was alive, he would have said, "We live in interesting times.†2011 is proving to be the blockbuster deal year. After Microsoft/Nokia, AT&T/T-Mobile, Microsoft/Skype, Google made the $4*π billion play for Motorola and raised the stakes in the mobile ecosystem warfare. The ecosystem has entered into a phase that Sun Tzu and Chanakya would have loved to operate in.
In other news, the US wireless data market grew 5% Q/Q and 22% Y/Y to reach $16.2B in mobile data service revenues in Q2 2011 and is on course to increase Y/Y by 22% to $67B in 2011.
US unseated Philippines as the king of TXT messaging with almost 664 messages/sub/month. Philippines is seeing a sharp decline in per user messaging thanks to Facebook and app messaging.
Apple overtook Nokia as the dominant smartphone OEM though Samsung is right behind and is likely to overtake Apple later this year. However, Apple will continue to dominate profit share for the foreseeable future.
Smartphones continued to be sold at a brisk pace accounting for 55% of the devices sold in Q2 2011. Operators are averaging 70% of their postpaid sales as smartphones with Android dominating though iPhone leads in mindshare. The featurephone as a device species is on the verge of extinction. By Christmas, 90% of the US postpaid device sales could be smartphones.
Platform Moves
I am a Platform, therefore I am. Everything and everyone wants to be a platform that developers can build upon. The big 4 – Apple, Google, Facebook, and Amazon are having good success with frequent upgrades and rollouts. Consumers gravitate towards ecOSystems and the richness of the product offerings not specific OSes. OS is just a means to an end. However, the more developers you get excited about the platform, the more the ecosystem thrives and it becomes a virtuous circle. Companies left without the dancing partners need to ensure that they are not the one left standing when the music stops.
While a lot of attention has been focused on Apple and Google skirmishes, Amazon has been quietly tinkering with some interesting products – advertising enabled Kindle, the upcoming tablets and handsets, Android based appstores, mobile payments, distribution giant, cloud, and so on and so forth. Facebook with its nearly 800M friends can unleash several "billion dollar†features that can shake up different mobile microcosms.
In the meantime, Microsoft is trying to find a way to get back into the mobile market. Microsoft's Xbox franchise gives it something unique and compelling. Their success might depend on how well they are able to integrate and tell a compelling story to the consumers. The upcoming Christmas quarter will be a critical test. RIM and HP don't have much of an ecosystem to matter in the larger scheme of things. They can be successful in their own ways but attaining a leadership position remains significantly challenging.
AT&T/T-Mobile merger
AT&T's proposed merger of T-Mobile continued to keep the regulators busy for the quarter. Earlier this year, we published a first of its kind in-depth study on competition in mobile markets –"Competition and the Evolution of Mobile Markets – A Study of Competition in Global Mobile Marketsâ€. The paper presents analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets. Our research shows that an effective equilibrium point for the top three market share in a given country to be around 46%:29%:18% respectively. We expect that once all is said and done, we will end up in the vicinity of this equation.
Patent Warfare
On the eve of Android launch, I mentioned to one of the journalist to watch for some IP fireworks in about 3 years. For those of us who have been deeply involved in the mobile IP space, the IP events of 2011 have been largely predictable though the valuations have gone through the roof.
Over the last 15 years, I have seen patents and IP in the mobile space from all angles from authoring patents to testifying in ITC cases and pretty much everything in between. In the last six months, patents have become an essential tool for competitive strategy in the mobile device space. See our analysis on the major players with the number of granted patents in Europe and US (slide 13).
To paraphrase the oracle of Omaha, "Only when the litigation tide comes in do you discover who's been swimming without protection.â€
Mobile is changing the way we spend
It is very clear that mobile will be at the center of human evolution for years to come. Mobile collapses time and distance and as such impacts every facet of our lives. While we have come to know the mobile phone as a communications device, their role in our daily lives has been expanding. From checking emails, paying for tickets, sending money transfers, taking pictures of your kids, watching soccer World Cup live, checking commodity pricing, to emergency response to mHealth (mobile Health), mobile devices have become an essential tool to help us navigate our day.
Mobile also plays a key role in how we go about the most basic transaction in a given day that keeps the economy humming – spend. We discussed this and more in the paper "How Mobile Will Change The Way We Spend†that was released earlier this month.
What to expect in the coming months?
All this has setup an absolutely fascinating rest of the year in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. We are likely to see a few more blockbuster marriage proposals before the year is out.
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 12th mobile thought leadership summit – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what's next.
Hope you can join us.
As usual, 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 Q2 2011 US wireless data market is:
Service Revenues
- The US Wireless data service revenues grew 5% Q/Q and 22% Y/Y to $16.2B in Q2 2011. The mobile data services revenues for the US market are on track to reach $67B in 2011.
- Verizon and AT&T had a good mobile data quarter accounting for 77% of the increase in data revenues in Q2 2011.
- For the quarter, AT&T and Verizon accounted for 69% of the market data services revenues and 62% of the subscription base.
- Verizon maintained its #1 ranking just edging past NTT DoCoMo who came in at number two with $5.77B in data revenues for the quarter. AT&T maintained its #3 position with $5.4B in data revenues. Sprint and T-Mobile maintained their #6 and #8 rank in the top 10 mobile data operators list for Q2 2011. The proposed merger of AT&T and T-Mobile will make AT&T #1 by a distance and place 20% of the global mobile data revenues in the hands of the top two US operators. AT&T and Verizon will become the #1 and #2 players respectively.
- The Overall ARPU increased by $0.41. Average voice ARPU declined by $0.48 while the average data ARPU grew by $0.89 or 5% Q/Q.
- The average industry percentage contribution of data to overall ARPU was 36.3% in Q2 2011 and is likely to touch 40% by year's end. Verizon is likely to be the first to eclipse the 40% mark with AT&T a close second. (NTT DoCoMo became the second major operator to go past the 50% mark this quarter (if we don't include Philippines) and Japan as a market follows Philippines in going past the 50% mark).
- Verizon and Sprint were neck-and-neck in data ARPU followed by AT&T. In terms of % contribution, all the top three operators exceeded the 35% mark. T-Mobile ended the quarter with almost 30% of its revenue coming from the data services.
- We expect data revenues to exceed voice revenues in the US market in early 2013.
- Helped by the growth in connected devices, the overall net-adds increased by 4.4M with Verizon accounting for almost 50% of the growth.
- For the seventh straight quarter, AT&T reported more net-adds from connected devices than postpaid subs. AT&T now accounts for 43% of connected devices in the US (w/ cellular subscription of some sort).
- Overall, AT&T has 43% of the connected device share of the market. The connected device segment growth slowed down to 3% Q/Q but is still up 37% Y/Y.
- Sprint continued on its comeback trail by adding more than a million subscriptions for the third straight quarter, first time it has done it since Q2 2005.
- T-Mobile however continues to be sandwiched between the top three and the next three and hasn't been able to add postpaid subs for five straight quarters. The net-adds declined for third straight quarter.
Applications and Services
US unseated Philippines as the king of TXT messaging with almost 664 messages/sub/month compared to Philippines which is seeing a sharp decline in per user messaging due to IP messaging. Some of the European operators are also experiencing the pain of declining SMS usage.
While the percentage share of the data revenues is declining for messaging, the revenue growth stays strong with almost $5B in revenues.
- The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
- Q2 2011 also saw tremendous activity in the mobile commerce and payments space with lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months.
- Smartphones continued to be sold at a brisk pace accounting for 55% of the devices sold in Q2 2011. Operators are averaging 70% of their postpaid sales as smartphones with Android dominating though iPhone leads in mindshare.
- For a first time in recent memory, Nokia sold less than 100M devices in a quarter and its marketshare shrank to 22% from a once dominant position of almost 40%.
- Apple unseated Nokia as the king of the smartphone hill but Samsung is right behind and is likely to overtake Apple later this year.
- 35% of all smartphones being sold globally are being sold in the US.
- Last quarter, smartphones sales exceeded the 50% mark. The % share jumped to 55% in Q2 2011. Smartphones now account for 80% revenue of all phones sold in the US.
- In the vertical vs. horizontal platform battle, the ecosystem is shifting towards horizontal domination in the near-term (units sold) while a majority of the profits reside in the vertical column.
- 85% of the tablets use WiFi only (some have inactivated cellular chipset) meaning the operator channel is not a necessary distribution channel. Operators who start to bundle multiple devices by single data plans and data buckets are going to see a better yield in this category.
- While the definition of 4G stays muddled, Sprint added 1.7M WiMax subs and Verizon incremented their LTE count by 1.2M.
Mobile Data Growth
The mobile data consumption continues unabated. We expect per MB usage in the US to reach 675 MB by the end of 2011 just behind Sweden which is likely to end up at 760 MB.
While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.
We will have the 3rd edition of our "Managing Growth and Profits in the Yottabyte Eraâ€research out later this year. We will also be discussing this subject in great detail at our Mobile Future Forward summit with some of the most influential voices in the space.
Global Update
Race to a billion – India went past 850M in Q2 2011 subs and China went past 900M. By mid 2012 both India and China will have more than a billion subscriptions.
China Mobile crossed the 600M subscription mark however its 3G introduction has had a tepid response thus and its 4G strategy remains in flux.
For more details, please see our Global Mobile Wireless Market Update released in July 2011.
Mobile Future Forward
We will be discussing the global mobile ecosystem – the challenges and the opportunities at our annual mobile thought-leadership summit – Mobile Future Forward – brought to you in partnership with our terrific partners – Qualcomm, Millennial Media, Real Networks, AT&T Interactive, Synchronoss Technologies, OpenMarket, Ericsson, and Openwave. Hope to see you in Seattle on Sept 12th.
Some of the distinguished guests include:
Abhi Ingle, VP, AT&T; Biju Nair, Chief Strategy Officer, Synchronoss Technologies; Bob Borchers, Partner, Opus Capital; Bobby Morrison, President – PNW, Verizon Wireless; Braxton Woodham, Head of Product Development, AVOS; Danny Bowman, President, Sprint; David Messenger, EVP, Head of Online/Mobile, American Express; Gibu Thomas, SVP – Mobile Walmart; Erik Moremo, SVP, FOX; Glenn Lurie, President, Emerging Devices, Resale & Partnerships, AT&T Mobility; Hank Skorny, CSO, Real Networks; Jana Messerschmidt, Sr. Director, Twitter; Jay Emmet, GM, OpenMarket; Jason MacKenzie, President, Global Sales and Marketing, HTC; Jerry Batt, CIO, PulteGroup; Ken Denman, CEO, Openwave; Ken Wirth, President, Alcatel-Lucent Wireless; Kris Rinne, SVP – Networks/Architecture, AT&T; Mark Rolston, Chief Creative Officer, Frog Design; Manoj Leelanivas, EVP & GM, Juniper Networks; Michael Wolf, VP, GigaOM; Mikael Back, VP – Products, Ericsson; Naoki Aoyagi, CEO, GREE USA; Paul Palmieri, CEO, Millennial Media; Rob Glaser, Partner, Accel; Sanjiv Ahuja, CEO, LightSquared; Stephen Bye, CTO, Sprint; Steve Mollenkopf, EVP/Group President, Qualcomm; Suja Chandrasekaran, CIO, Timberland; Will Hsu, CPO, AT&T Interactive.
More information at http://www.mobilefutureforward.com
Your feedback is always welcome.
Chetan Sharma
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 Nov 2011. The next Global Wireless Data Market update will be issued in Apr 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.
New Paper – How Mobile Will Change The Way We Spend – A Mobile Future Forward Paper August 5, 2011Posted by chetan in : 3G,4G,AORTA,Connected Devices,CTIA,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Mobile Advertising,Mobile Applications,Mobile Breakfast Series,Mobile Cloud Computing,Mobile Commerce,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Future Forward,Mobile Payments,Mobile Search,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
How Mobile Will Change The Way We Spend
A Mobile Future Forward Paper
The Mobile Future Forward 2011 Book will contain 18 essays from thought-leaders around the globe and is going to be distributed exclusively to the Mobile Future Forward attendees on Sept 12th. The book is published by FutureText, UK.
The essays from the Mobile Future Forward speakers and industry luminaries are:
1. How Mobile Will Change The Way We Spend – Chetan Sharma, President, Chetan Sharma Consulting
2. The Mobile Cloud Connected Enterprise – Abhi Ingle, VP, Advanced Mobility Solutions, AT&T
3. Mobile and Health Possibilities – Subba Rao, CEO, Razi Health
4. Buying a Mobile Device in 2014 – Frank Meehan, CEO, INQMobile
5. Surviving and Thriving in the Age of Mobile Internet – An MNO Game Plan – Manoj Leelanivas, SVP and GM, Juniper Networks
6. Mobile Future Forward Interview with Steve Elfman – President, Sprint Nextel
7. Is Mobile Local Advertising Finally Poised to Take Off? – William Hsu, SVP and CPO, AT&T Interactive
8. Implications of a Connected Society – Danny Bowman, President, Sprint Nextel
9. Big Data and Mobile – Braxton Woodham, Head of Engineering, AVOS
10. Broadband for All – Sanjiv Ahuja, CEO, LightSquared
11. Wireless Competition and Innovation – Stephen Bye, CTO, Sprint Nextel
12. The Future of the Personal Information Economy: Enabling Success Across the Mobile Ecosystem – Ken Denman, CEO, Openwave
13. T-Commerce – Carving Out and Extending E-Commerce – Ramneek Bhasin, SVP and GM, TheFind
14. The Case for Building a Mobile Broadcast Content Delivery Network – The Critical Piece to Fulfilling Mobile Data Demands of the Future – Erik Moreno, SVP, FOX Network
15. Connected Devices – Redefining the Channel – Biju Nair, Chief Strategy Officer, Synchronoss Technologies
16. How Mobile Can Turn Retailers Into Media Companies – Dale Nitschke, CEO, Ovative Group
17. The Future of (Mobile) Communications – Carlos Domingo, CEO, Telefonica R&D
18. Competition and the Evolution of Mobile Markets – Chetan Sharma, President, Chetan Sharma Consulting
Download (http://www.mobilefutureforward.com and click on the White paper image)
Executive Summary
In his 1943 paper titled "A Theory of Human Motivationâ€, the famed philosopher Abraham Maslow theorized his observations of human needs and curiosities. His pyramid came to depict the human hierarchy of needs. If we map the physiological, safety, love, esteem, and self-actualization needs onto how much we spend as a community, it correlates rather well. As you would expect, human spending behavior is tightly tied to the basic needs. The amount of money we spend on these basic needs might vary by demographics or region but in aggregate, we tend to spend the most for the things that are the bottom of the pyramid – shelter, food, and water.
Over time, entrepreneurs have used technology to drive fundamental changes in consumer behavior for e.g. Microsoft with personal computers, Google with search, Apple with devices, Facebook with social connections. Of course, the web of interconnection, the various vertical industries that map against the human needs is very complex and as new technology cycles come into play, inventors get busy with enhancing performance sometimes by manifold to keep up with the insatiable demand and appetite to do more.
It is very clear that mobile will be at the center of human evolution for years to come. Mobile collapses time and distance and as such impacts every facet of our lives. While we have come to know the mobile phone as a communications device, their role in our daily lives has been expanding. From checking emails, paying for tickets, sending money transfers, taking pictures of your kids, watching soccer World Cup live, checking commodity pricing, to emergency response to mHealth (mobile Health), mobile devices have become an essential tool to help us navigate our day. As we alluded to earlier, it is not just the traditional phones that have cellular connection these days; we are slowly but surely moving into an era where a majority of electronic devices from small tags to giant billboards will have a communication channel that both machines and humans can interact with.
Mobile also plays a key role in how we go about the most basic transaction in a given day that keeps the economy humming – spend.
In this paper, we will take a look at how the connected universe of devices and sensors are going to impact the way we spend and how all this creates new opportunities to meet the basic human needs.
Your feedback is always welcome.
State of the Global Mobile Industry – Half Yearly Assessment 2011 July 7, 2011Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Connected Devices,Devices,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,IP,IP Strategy,Japan Wireless Market,Location Based Services,Mergers and Acquisitions,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Cloud Computing,Mobile Commerce,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Payments,Mobile Search,Mobile Traffic,Mobile Usability,Mobile Users,Mobile Wallet,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,Student Paper Contest,US Wireless Market,Wi-Fi,Wireless Value Chain,Worldwide Wireless Market , 6 comments
The big picture
The global mobile industry is the most vibrant and fastest growing industry. We expect the total revenue in the industry to touch approximately $1.3 Trillion in 2011 with mobile data representing 24% of the mix. Global Mobile Data revenues are expected to eclipse $300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues will make up the majority of the overall global data revenues at 53%.
We expect the total number of subscriptions to exceed 6 billion by the end of 2011. The first 1 billion took over 20 years and this last one is going to take only 15 months. The primary growth drivers are India and China which are cumulatively adding 75M new subs every quarter. Indian and China are also entangled in the race to the billion. At the end of Q2 2011, China was ahead by 50M but India is adding subscriptions at faster rate and is likely to eclipse China before Q2 2012. By then, both nations are expected to exceed 1 Billion in total subscriptions making up 31% of the global subscriptions.
In Q1 2011, US became the first major market to exceed the 50% mark in smartphone sales. The global figure stands at approximately 26%. Some operators expect 90% of their devices sales to be smartphones by the end of the year. In terms of the actual smartphone penetration, we expect the US market to eclipse the 50% mark in 2012.
China leads in the number of subs but US dominates in both total and data revenue. A number of emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings.
The number of mobile operators with more than $1B in data revenues will increase to 47 in 2011. This number was only at 13 in 2005.
Japan continues to be the leader in mobile data with NTT DoCoMo, KDDI, and Softbank Japan ahead of the pack in terms of mobile data revenue and data as a % of total ARPU. In 2011, it became the first major market to have more than 50% of its mobile revenue from data services. Next, Australia and the US have made good inroads in the last two years. In fact, if we look at the overall data revenue, US is much further ahead than any nation due to the size of the market.
While India has the highest subscriber growth rate in the world right now, the revenue generating opportunity remain down right anemic compared to other major markets with average dropping down to $3.50 in overall ARPU. Even with significant subscriber base, there is going to be a general lack of opportunity in the market for the next couple of years relative to other markets.
Mobile Trends for 2011
1.Total Global Subscriptions to hit 6 Billion
–India and China racing to a billion a piece
2.Total Global Mobile Revenues to hit $1.3 Trillion, almost 2% of Global GDP
–Top 10 operators control 43% of the global mobile revenues
3.Total Global Mobile Data Revenues to eclipse $300 Billion
–Non-messaging data now owns 53% of the global mobile data revenues
4.Mobile Devices are now exceeding traditional computers in unit sales + revenue
–Majority of the device sales in the US are now smartphones. Device Replacement is shrinking
5.Mobile Broadband (4G) is being deployed at a faster rate than previous generations
–Over 1 Billion broadband connections by 2011
6.Global Mobile Apps revenue has shifted to off-deck
–The decline is directly proportional to the increase in smartphone penetration by region
7.All major markets are consolidating with the top 3 players at 85% of the market
–Regulators will have to be more prudent and proactive about managing competitiveness and growth
8.Mobile Data Traffic will be 95% of the global mobile traffic by 2015
–Many countries are facing spectrum exhaust in the next 5 years
9.Connected device segment is growing at the fastest pace
–Operators will have to quickly adapt their strategies to stay relevant in this segment
10.Several multi-billion dollar opportunity segments are emerging
–Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few
11.Mobile Ecosystem has become very dynamic and unpredictable
–Apple, Google, Amazon, and Facebook have become the most important revenue generating mobile platforms
12. There will be more changes in the next 10 years than in the previous 100
– The value chains will keep disrupting every 12-24 months by the new players and business models
13. Intellectual Property has become a key component of long-term product strategy
– Top 20 control 1/3rd of the overall mobile patent pool
Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to catch-up on the features but can't do on the margins. OEMs can grow the pie by bringing products at a better price points that helps attract different demographics to the mix. Microsoft can make good inroads into the space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue.
Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product planning and execution has left their market share in disarray. Nokia's valuation has been cut into half while the newcomer HTC edged past the industry giant in a remarkable story of the year. Nokia's release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of Nokia Windows Phones. While the market hasn't shown much appetite for Windows phone thus far, a good family of devices might be able to slow the loss trajectory and position the combined team for the up-for-grabs 3rd spot in the ecosystem. HP's acquisition of Palm is finally bringing some new products to the market but the lack of an effective ecosystem means lack of traction in 2011. Given that the computing is shifting to mobile devices, we can expect some of the weaker desktop/laptop players will exit the industry.
Tablets are primarily being used in the WiFi mode because the primary use case is indoors and WiFi gives a better (and cheaper) user experience. Once operators start to roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher but will still be dominated by WiFi overall.
The number of connected devices per subscriber and per family will continue to increase over the course of this decade. As the cost structure and margin profile for these devices will be different, we are likely to measure performance of various operators using margin analysis for e.g. while the ARPU for connected devices is 5-10 times lower than the postpaid subscribers, the margins are typically higher due to lower costs of sales, marketing, support, and subsidy. As such the overall impact is dilutive ARPU but higher margins. So, instead of focusing on just the ARPU, the efficiency of operators will be measured in how well they maintain average margin per user (AMPU) and average margin per connection (AMPC).
Managing the data growth
As a result of the data tsunami, there are two types of opportunities that are being created, one that take advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially.
To be able to stay ahead of the demand, significant planning needs to go in to deal with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won't be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach and thus bringing the hockey stick curves of data cost more in line with the revenues and thus preserving the margins.
The decision making process within the operator organizations will need to be streamlined as well. Operators should also consider creating a senior post which focuses on both the cost side and the solution side so they can devise and institute a sustainable long-term policy and keep the margins healthy.
Competitive landscape
The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average, the top 3 control 93% of the market in an given nation. It doesn't matter if the market is defined by "controlled regulation†like in China, Korea, and Japan or if it is "open market†driven in markets such as the US, UK, and India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the mobile market.
Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is settling into a "top 3†operator market. India's brutal price wars are going to trigger the consolidation in the next 12-24 months and will eventually settle into a structure similar to other markets.
The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are 46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some semblance of equilibrium in the market the top operator shouldn't have more than 50% of the market share and the number three player shouldn't have less than 20%. This helps create enough balance in the market to derive maximum value for the consumer.
Mobile operators will face some hard choices in developing and protecting the role they want to play in a given region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA margins, investment required over the long-haul, how investors view them, and on the competitive landscape of the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this decade that further define "communications†and "computing†as we know it.
Apps and Services
As expected, mobile commerce and payment discussions are dominating the ecosystem. There is clearly a lot of investment and marketing dollars being spent. However, the traditional payments networks are largely intact. The new opportunities are being built on top of the existing payment platforms with convenience (Square) and offers and advertising (Google Wallet, ISIS, Groupon). Beyond payments, mobile is getting ingrained into every vertical and every facet of our lives – from healthcare to education, from energy to entertainment, from communication to socialization. And we are in the early innings of figuring out the business models, ecosystem leaders, user behavior, regulatory needs, and the overall impact on society.
Ecosystem Dynamics
It is very clear that the ecosystem dynamics can change very quickly, one just can't take the competitive and friendly forces for granted. In the past, the silos and segments were clearly defined with little overlap. However, over the course of last couple of years, players have been migrating and surfing in segments across the board – from Apple to Visa, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer's pocketbook. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T's business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft's enterprise business. One product launch, one acquisition, can change the game in an instant. And this is only the beginning.
Mobile is fundamentally reshaping how we as consumers spend from housing and healthcare to entertainment and travel, from food and drinks to communication and transportation. Mobile not only influences purchase behavior but also post purchase opinions. When the share button is literally a second away, consumers are willingly sharing more information than ever before. Mobile is thus helping close the nirvana gap for brands and advertisers who seek to connect advertising to actual transactions. The long-term battle is however for owning the context of the users. Having the best knowledge about the user to help drive the transaction is the simply the most valuable currency of commerce.
Mobile Future Forward
We will be discussing the global mobile ecosystem – the challenges and the opportunities at our annual mobile thought-leadership summit – Mobile Future Forward – brought to you in partnership with our terrific partners – Qualcomm, Millennial Media, Real Networks, AT&T Interactive, Synchronoss Technologies, OpenMarket, Ericsson, and Openwave. Hope to see you in Seattle on Sept 12th.
Some of the distinguished guests include:
Abhi Ingle, VP – Advanced Mobility, AT&T Wireless; Amit Gupta, SVP and CTO, INQMobile; Bob Gessel, VP/Head of Technology and Network Strategy, Ericsson; Braxton Woodham, Head of Engineering, AVOS; Carlos Domingo, CEO, Telefonica; Charlie Herrin, SVP – Products and Technology, Comcast; Dale Nitschke, former President, Target; Danny Bowman, President – Connected Devices, Sprint Nextel; David Messenger, EVP, Head – Online/Mobile, American Express; Erik Moreno, SVP, Fox; Gibu Thomas, SVP – Online/Mobile, Walmart; Glenn Lurie, President, AT&T Wireless; Hank Skorny, Chief Strategy Officer, Real Networks; Janet Schijns, VP, Verizon Wireless; Jason McKenzie, President, HTC-Americas; Jay Emmet, GM, OpenMarket; Jeremiah Zinn, EVP, MTV; Jerry Batt, CIO, PulteGroup; John SanGiovanni, Cofounder, Zumobi; Ken Denman, CEO, Openwave; Ken Wirth, President, Alcatel Lucent Wireless; Kris Rinne, SVP – Networks, AT&T Wireless; Mark Rolston, Chief Creative Officer, Frog Design; Matt Oommen, President, Reliance Communications; Mikael Back, VP of Products and Portfolio Management, Ericsson; Mike Mulica, President, Synchronoss Technologies; Paul Palmieri, CEO, Millennial Media; Prof. Cliff Nass, Human Computer Interaction, Stanford University; Rob Glaser, Partner, Accel; Sanjiv Ahuja, CEO, LightSquared; Stephen Bye, CTO, Sprint; Steve Mollenkopf, EVP and Group President, Qualcomm; Subba Rao, former CEO, Tata DoCoMo; Suja Chandrasekaran, CIO, Timberland; Will Hsu, Chief Product Officer, AT&T Interactive
More information at http://www.mobilefutureforward.com
Your feedback is always welcome.
Thanks and have a great 2H 2011.
Chetan Sharma
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 2011. The next Global Wireless Market update will be issued in Jan 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.
New Paper: Mobile Cloud Computing May 25, 2011Posted by chetan in : 4G,AORTA,BRIC,Connected Devices,Enterprise Mobility,European Wireless Market,Infrastructure,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Future Forward,Mobile Search,Mobile Traffic,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
Mobile Cloud Computing
Sponsored by Real Networks
These are exciting times in the wireless industry. The innovation in technology, services, and business models is driving the global industry to new heights. While the global markets were feeling the pain of a brutal recession, the wireless industry for the most part sidestepped the crisis, especially in the North American and Asian markets. Mobile data revenues around the world have been growing at a steady pace. Given the lucrative nature of the market, there are more developers focused on the mobile ecosystem than ever before.
The mobile industry is going through significant transition from being voice-centric to data-centric, from consumers spending 90% of their time talking to being engaged on mobile data services 80% of the time. In Japan, Softbank became the first major operator to have more revenues come from data than voice. Others will follow. In the US, over 35% of the revenues are coming from data services and the data revenues will account for over 50% of the revenues by early 2013.
Mobility is also getting ingrained in the everyday objects, which make up for a fundamental reassessment of how things are done across industries in almost every region of the world. It is not just the phones and the data cards that are being enabled by the broadband connectivity but also the electronic devices such as the tablets, eReaders, automobiles, picture frames, and cameras.
Anything that can be connected will be connected making access omnipresent.
In such a multi-device world, the role of cloud computing becomes central to the content access and sharing. Consumers won't like to store and upload by device type but would want the same level of functionality available across all their devices necessitating the need for mobile cloud computing. In a mobile environment, one has to contend with the limitations of screen size, the variability of devices, and the network latency. Therefore, the cloud requirements will vary by context.
With the emergence of the smartphones, the mobile operators are being gradually cut out of the value added services space with most of the revenues shifting to rest of the ecosystem. Mobile cloud computing provides an opportunity to leverage their network infrastructure assets and their consumer relationships to open up new revenue streams.
This paper will explore the mobile cloud computing market, its drivers, the opportuniies and the key elements of success in this space. Further, the paper discusses why operators should take a more active role in this space. Mobile cloud computing is here to stay. The winners and losers will be decided based on how players will adapt to empower consumers.
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.
US Mobile Data Market Update Q4 2010 and 2010 February 28, 2011Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile Usability,Networks,Smart Phones,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , add a comment
US Mobile Data Market Update Q4 2010 and 2010
The US wireless data market grew 5% Q/Q and 23% Y/Y to reach $14.8B in mobile data service revenues in Q4 2010. The final tally for the 2010 year was $55B and we expect this to increase by 22% to $67B in 2011.
The US mobile subscriptions officially crossed the 100% penetration mark in Q4 2010.
Of all the segments, the connected device category registered the highest growth at 55% while the postpaid subscriptions grew by only 3% for the calendar year. Connected devices (including tablets, M2M, telematics, eReaders, etc.) now account for 7% of the base.
A significant shift
2010 marked the milestone of the start of a new computing and communications era. For the first time in the US, the smartphones shipments exceeded the traditional computer segments (that consists of desktops, notebooks and netbooks). In 2011, the smartphone segment along with the connected devices (tablets and eReaders) will not only exceed the computer segment in unit shipment but more importantly in the overall revenues as well. Of course, these categories are merging and the lines are blurring but it is good to take stock of the transition which will create new ecosystems and decimate the old ones over the course of this decade.
The evolution of connected devices
The connected devices category is the fastest growing segment of the market and while the ARPUs are low, due to higher margins this segment will prove to be the most profitable in the coming years. By the end of 2011, connected devices will be commanding double digit market share. However, not all sub-segments are going to be successful in the operator channel until multi-device data pricing plans are introduced. Most of the tablets and eReaders can work well with only WiFi most of the times. Monthly data plans make sense for enterprise users but not for consumers who might use these devices occasionally. As such tablets will be more successful in direct and traditional retail channels.
Operators who start to bundle multiple devices by single data plans and data buckets are going to see a better yield in this category (We will be discussing the connected devices universe in our upcoming Mobile Breakfast Series event in April).
Similarly, OEMs who rely on the operators for sell-through of tablets/eReaders will see low volumes vs. players who have more diverse distribution channels (Apple and HP). We do expect multi-device or family data plans to start being introduced in the US market in 2011.
As we had mentioned in our last research note, iPad (and other tablets) are making Netbooks irrelevant. In fact, tablets are starting to eat into the laptop category as well. As expected, the device has been a hit with many enterprises with mobile workers. Many enterprises are giving out iPads to their workforce instead of laptops or Netbooks.
At CES 2011, hundreds of tablets were introduced. While the total number of releases was noteworthy, we expect iPad to dominate the space in 2011 as competitors will find it hard to compete across all dimensions – price, performance, ecosystem, distribution, and brand power.
Mobile Data Consumption
Mobile data consumption continued to grow across all networks increasing 2-5 times on major US networks. Many of the superphones introduced in 2H10 are clocking 1-1.5GB/mo average. The average data consumption in the US at the end of 2010 was 350 MB/mo. Thus, while the data revenues for the year increased 23%, the mobile data traffic grew 132%.
The significant rise in the smartphones sales and usage in the US market (over 50% devices sold in the US in 2010 were smartphones almost twice the global average) means that by the end of 2011, in the US, the smartphones will consume more data than the data cards for the first time. We also expect US to become the number 1 nation in mobile data consumption this year edging out Sweden. A detailed treatment of the subject can be found in our "Managing Growth and Profits in the Yottabyte Era" paper. Another research update on the topic will be released in 1H11.
The center of gravity has shifted back to the US
As I mentioned in my Time magazine interview earlier this month, there is no question that the center of gravity of the mobile market has shifted back to the US. The Nokia-Microsoft announcement was a wake-up call to many in the industry who were in denial. The innovation is happening all around the world and in many areas other countries are years ahead. The markets are growing faster in India, China, and elsewhere. However, the coordinates of what's next have clearly changed in the last three years. The software innovation and the next generation network launches in the US are laying the foundation of a solid mobile decade.
US is also the most dominant market in terms of revenue generation for the industry. While the US represents less than 6% of the subscription base, it accounts for over 21% of the data revenues with Verizon Wireless becoming the number one mobile data operator in 2010 edging past the decade long leader NTT DoCoMo. AT&T also went past China Mobile to gain its current number three ranking. By the end of 2013, the US market will account for 25% of the global mobile data services revenues (We will have a detailed analysis of the global markets in our upcoming research note in march).
Nokia-Microsoft partnership
Nokia's market problem can be summed up thusly – "While Nokia sold 10 times more devices than Apple in 2010, its market cap is 1/10th that of Apple.†It has been clear for some time that things had to change at Nokia.
Weeks leading up to the Mobile World Congress were rampant with curiosity of who will Nokia marry to continue its next phase of device journey. The multi-billion dollar offering from Microsoft proved too hard to resist for Nokia. This news completely dominated the MWC chatter and the topic comes up invariably in many conversations since then. One has to give points to Nokia for decisiveness and for moving quickly under the pressure.
It is also indisputable that the deal is a significant win for Microsoft who has been looking to come back into the game. However, impact on Nokia remains uncertain. While there were risks with Android, going with Win7 is not an assured path to resurrection either. It all comes down to execution. Can the troops be rallied to produce a slew of competitive devices quickly that consumers and operators will find attractive?
Microsoft understands developers better than most and the two companies can bring in tremendous scale and complementary toolsets to attack the market. Nokia has significant talent and it's a proud company but jumping into the shark-infested cold waters miles away from the shore will require all the stamina, good weather, and skill it can muster to make landfall before thanksgiving.
MeeGo is likely to go back into Intel's camp and might look interesting to the likes of LG, Samsung and even Motorola though creating a new ecosystem is a tall order. Never a dull moment in the industry, is there?
Impact of iPhone on AT&T
It finally happened. The Verizon iPhone has kept the media busy for the last 3.5 years. It was quite an anticlimactic moment when the device finally came to the 2nd operator in the US. It was inevitable that one of the longest exclusive relationship in the wireless world will come to an end. The iPhone singlehandedly turned around AT&T relative to Verizon in the net-adds race. For 10 quarters leading up to Q2 2007, AT&T was adding less net-adds compared to Verizon, in fact the cumulative net-add loss was 3.7 million subs on an average of 374,000 subs per quarter. As soon as the iPhone was launched in Q2 2007, AT&T started adding more net-adds compared to Verizon with the 14 quarter cumulative net-add difference close to 6 million subs on an average of 426,000 subs per quarter.
What to expect in the coming months?
Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.
Android and iOS are completely dominating the developer and ecosystem mindshare and the race to become a viable 3rd option is on. Operators would love to see another competitive force emerge in the market.
All this has setup an absolutely fascinating 2011 in the communication/computing industry. Convergence is everywhere and is leading to a 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 15th mobile thought leadership summit – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what's next. More details to come.
US is also leading the way in smartphone sales. In Q4 2010, 48% of the devices sold in the US were smartphones compared to 25% globally. The fast pace of device introduction has catapulted the agile players like Samsung and HTC to the forefront while others like LG and Sony Ericsson have lost ground. By singularly focusing on Android, Motorola did quite well in 2010 but 2011 is going to be challenging.
The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market literally every week. Players are having to re-evaluate their businesses and long-term strategies. There are several players whose future is at stake. The competition has grown fierce and companies are finding it hard to take ideas from R&D to products in market in a short amount of time.
While 2010 started quite active on the regulatory front as the national broadband plan was unveiled in March little substantive progress has been made w.r.t. the spectrum, net-neutrality, and other broadband related issues. The matter has swiftly moved to courts where it will take months before anything useful comes out.
Operators are starting to diversify more aggressively than in the past. AT&T's mobile enterprise business is a leading indicator of this trend. Their focus by verticals has yielded new revenue streams and positioning them to become a one-stop shop for devices, access, and services in the enterprise market.
As usual, 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 2010 and 2010 US wireless data market is:
Service Revenues
- The US Wireless data service revenues grew 5% Q/Q and 23% Y/Y to $14.8B in Q410. The mobile data revenues for the US market reached $55B in 2010.
- Verizon, AT&T, Sprint had a good mobile data quarter accounting for 86% of the increase in data revenues in Q4 2010.
- T-Mobile's 3G/4G drive is starting to pay off. While the postpaid net-adds were still in the red, its data growth is starting to match with its peers. The 24% smartphone base definitely helps.
- For the calendar year 2010, AT&T and Verizon accounted for 69% of the market data services revenues and 64% of the subscription base.
- Verizon Wireless edged past NTT DoCoMo and AT&T went past China Mobile to become #1 and #3 respectively in operators by mobile data revenues in 2010. Sprint and T-Mobile maintained their #6 and #8 rank in the top 10 mobile data operators list for 2010.
- The Overall ARPU decreased by $0.58. Average voice ARPU declined by $0.90 while the average data ARPU grew by $0.32 or 2% Q/Q.
- The average industry percentage contribution of data to overall ARPU was 34% in Q410.
- Verizon led in data ARPU with $18.79 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 approximately 28% of its revenue coming from data services.
- We expect data revenues to exceed voice revenues in the US market by Q2 2013.
- US crossed the 100% penetration mark in terms of total subscriptions.
- Helped by the growth in connected devices, the overall net-adds increased by 4.9M.
- For the fifth straight quarter, AT&T reported more net-adds from connected devices than postpaid subs. Connected devices are now almost 10% of AT&T's subscription base.
- Overall, AT&T edged past Verizon in total number of connected devices. The connected device segment grew 9% Q/Q and 55% Y/Y.
- Sprint made a nice comeback in 2010 reversing the 11 quarter negative net-adds trend by adding three straight positive net-add quarters. Sprint extended its streak of positive net-adds to three quarters by adding over a million subs for the first time since Q1 2006.
- T-Mobile however continues to be sandwiched between the top three and the next three and is having a hard time adding postpaid subscribers. For the year, the operator ended the year 390K subscribers (postpaid) below the 2009 levels. It's churn rate is almost 60% higher than the average of its top competitors and the cost of postpaid churn was over half a billion dollars in 2010. However, the increased smartphone penetration, quick HSPA+ deployment, backhaul upgrades, and a clever marketing campaign is helping on the mobile data front.
Applications and Services
- While the percentage share of the data revenues is declining for messaging, the revenue growth stays strong with almost $17B in messaging revenues.
- In 2010, there was a significant shift that took place in terms of app revenues. There was 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 in 2011.
- 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 market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education. Much more to come in 2011.
- Nokia sold 123.7M units in Q4 2010 accounting for 31% of the market share. Samsung continues to be one of the most agile players in the device business shipping a whopping 80.7M for a 20% share of the market. Apple again edged past RIM to be in the top 5 along with the new entrant ZTE which broke into the top 5 for the first time.
Data Traffic
- As we noted in our previous updates, the data traffic is now significantly more than the voice traffic. By end of 2010, the average US consumer was consuming approximately 350 MB/mo up 132% in 12 months. The good news is that there are several solutions available and are being invented that will help manage the data growth starting with the tiered pricing plans.
- Q4 10 also saw significant activity in the 4G space with Verizon launching its LTE network and after the ITU flip-flop, the HSPA+ deployments of T-Mobile and AT&T Wireless along with Sprint's WiMAX made US the epicenter of 4G growth for the next few years.
Your feedback is always welcome.
Chetan Sharma
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 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.
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.
US Mobile Data Market Update Q3 2010 November 7, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,CTIA,Devices,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Intellectual Property,Location Based Services,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Traffic,Mobile TV,MVNO,Smart Phones,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , add a comment
US Mobile Data Market Update Q3 2010
Executive Summary
The US wireless data market grew 7% Q/Q and 25% Y/Y to exceed $14B in mobile data service revenues in Q3 2010 – on track to meet (and most likely exceed) our initial estimate of $54B for the year.
Sprint had a second straight positive net-add quarter. T-Mobile also reversed its losses and had a net-positive quarter though postpaid additions were down for both the carriers. 2011 is shaping up to be an interesting year with some big M&As on the cards. The launch of 4G networks provides an opportunity to realign the industry.
The US subscription penetration crossed 96% at the end of Q3 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 101%. While the traditional net-adds have been slowing, the "connected device†segment is picking up so much that AT&T, T-Mobile, and Sprint added more connected devices than postpaid subs in Q3 2010. Given the slow postpaid growth, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.
The role of connected devices
In the connected device category, tablets led almost singlehandedly by the iPad is taking away the lion share of the revenues. The whole category is catching up speed in the US with 12% growth Q/Q much higher than in the postpaid segment which has trickled down to 1% Q/Q growth by Q3 2010.
We expect that in less than 5 years, the connected devices category will generate more revenue for the operators than the entire prepaid segment in the US. While today, connected devices represent only 3% of the quarterly data revenues, this segment didn't really exist a few months ago and will keep on gaining strength every year for the foreseeable future.
In terms of financials, the addition of connected devices units and revenues to the mix masks the tremendous growth in smartphone related data revenues. For example, T-Mobile lost 360K postpaid subs but added 300K connected devices for a net loss of 60K subscriptions. Because of lower ARPU, Connected devices have a dilutive impact on the revenues and ARPU so the overall ARPU for postpaid segment for T-Mobile was $52 instead of $55.
iPad literally created a new category and rest of the industry is scrambling to respond. Some just want to follow Apple's trail to cash in while others don't want to competing head-to-head with Apple so they are launching smaller sized units. There will be others who will launch devices at every inch increments just to see what sticks. However you might slice and dice the market, the segment is here to stay and as we had mentioned before, Netbooks will take a hit as the category was the creature of a falling economy and with a viable alternate, the need for Netbooks diminishes.
Mobile Data Consumption
Data traffic continued to increase across all networks. There are some superphones that are routinely average more than 1 GB/mo, superphones as a category is averaging 700-800 MB/mo. By the end of 2010, we expect the average US consumption to be approximately 325 MB/mo up 112% from 2009. This puts US right behind Sweden in the top two by per capita mobile data consumption. While the US 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+ and LTE, most of the cutting edge research in areas 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.
As we had forecasted, the tiered pricing structure for mobile broadband expanded further with Verizon and T-Mobile following AT&T in deploying policy management strategies for controlling data margins. We will see the pricing evolve over the next 2-4 quarters as the US mobile ecosystem adjusts to the new realities and strategies for mobile data consumption.
What to expect in the coming months?
Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.
Microsoft launched its much anticipated Windows Phone 7 in a bid to recapture the mind- and unit-share. By taking a different UI route, it actually has a shot to be a viable third option to iPhone and Android and pushing RIM from the top 3.
All this has setup an absolutely fascinating 2011 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 15th event – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what's next. More details to come. We will also be discussing the trends and opportunities in our Dec Mobile Breakfast Series event.
US is also leading the way in smartphone sales. In Q3 2010, 47% of the devices sold in the US were smartphones compared to 24% globally. The fast pace of device introduction has catapulted the agile players like Samsung and HTC to the forefront while others like LG and Sony Ericsson have lost ground. By focusing singularly on Android and by broadening the device portfolio, Motorola has written a great comeback script.
The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market literally every week. Players are having to re-evaluate their businesses and long-term strategies. There are several players whose future is at stake (to put it mildly). The competition has grown fierce and companies are finding it hard to take ideas from R&D to products in market in a short amount of time.
While 2010 started quite active on the regulatory front as the national broadband plan was unveiled in March little substantive progress has been made w.r.t. the spectrum, net-neutrality, and other broadband related issues.
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.
ITU christened LTE-A and Wireless MAN-Advanced as the "official†4G technologies but the marketing departments cared less. (We will be releasing the next edition of our "State of the "Mobile†Broadband Nation†in the coming months.
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 released the second edition of our in-depth research paper on data growth – "Managing Growth and Profits in the Yottabyte Era" earlier this year.
Finally, operators are starting to diversify more aggressively than in the past. AT&T's mobile enterprise business is a leading indicator of this trend. Their focus by verticals has yielded new revenue streams and positioning them to become a one-stop shop for devices, access, and services in the enterprise market.
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 Q3 2010 US wireless data market is:
Service Revenues (Slides 7, 17)
- The US Wireless data service revenues grew 7% Q/Q to $14B in Q310. The mobile data revenues for the US market are likely to reach $55B in 2010.
- Verizon and AT&T accounted for 85% of the increase in data revenues in Q3 2010.
- T-Mobile's 3G drive is starting to pay off. While the postpaid net-adds were still in the red, its data growth is starting to match with its peers. The 21% 3G smartphone base definitely helps.
- AT&T and Verizon now account for 70% of the market data services revenues and 62% of the subscription base.
ARPU (Slides 8-11)
- The Overall ARPU decreased by $0.17. Average voice ARPU declined by $0.99 while the average data ARPU grew by $0.82 or 5% Q/Q.
- The average industry percentage contribution of data to overall ARPU is now 33% in Q310.
- Verizon led in data ARPU with $18.61 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 approximately 27% of its revenue coming from data services.
Subscribers (Slides 12-15)
- Helped by the growth in connected devices, the overall net-adds increased by 4.5M.
- For the fourth straight quarter, AT&T reported more net-adds from connected devices than postpaid subs. Connected devices are now 8% of AT&T's subscription base.
- Overall, Verizon and AT&T are tied in terms of total connected devices on the network thought AT&T has a much more diverse and revenue-rich base.
- The connected device segment grew 12% Q/Q and 42% Y/Y.
- Sprint extended its streak of positive net-adds to two quarters by adding over 600 subs while T-Mobile reversed its customer losing streak thanks to the growth in the prepaid and connected devices segments.
- 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 earlier this year)
- 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 110.4M units in Q3 2010 amounting for 32% of the market share. Samsung continues to be one of the most agile players shipping a whopping 71.4M for a 21% share of the market. Apple also edged past RIM to be in the top 5.
- While rest of the industry counts units, Apple counts $ and leads in the revenue share. It shipped 9.1M iPhones in Q3 despite the backlash over the antenna design.
Data Traffic (Slide 16)
· As we noted in our previous updates, the data traffic is now significantly more than the voice traffic. By end of 2010, we expect the average US consumer was consuming approximately 325 MB/mo up 112% in 12 months. The good news is that there are several solutions available and are being invented that will help manage the data growth starting with the tiered pricing plans.
Your feedback is always welcome.
Chetan Sharma
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 Dec 2010. Be sure to participate in our annual mobile industry predictions survey coming out in Dec 2010.
Disclaimer: Some of the companies mentioned in this paper are our clients.
CTIA Enterprise and Applications 2010 Wrap-up October 11, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,CTIA,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Japan Wireless Market,Location Based Services,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Future Forward,MVNO,Privacy,Speaking Engagements,US Wireless Market,WiMax,Wireless Value Chain,Worldwide Wireless Market , add a comment
CTIA Enterprise and Applications 2010 Wrap-up
Déjà vu – the experience of thinking that the current CTIA had occurred before.
This note summarizes the observations and opinions from the event, discussions, and briefings from the CTIA event that just concluded in San Francisco.
The Mobile Ecosystem
For me, the proceedings started with my talk "Mobile Apps: The Big Picture.†I generally start my talks these days by explaining the complexity of the mobile ecosystem. The traditional value-chains are morphing (and some cases being decimated) and the new ones are getting coalesced very fast. It is hard to summarize without going into the intricacies and the dynamic nature of the game. (I will be expanding on this theme again during my talk at University of Oxford this friday)
It is like a long marathon composed of 100m sprints where new players can enter and leave midstream. Players can merge en route to gain strength and speed or blow up before reaching the next 100m. The friends in this segment of the race might turn into competitors in the next segment. To throw a wrinkle into the mix, regulators or any one player can change the rules of the game such that 100m can become 50m or 200m and the players have to adapt and respond accordingly.
The race is in the open so the weather elements can impact but doesn't stop the race. In such a brutally competitive environment, only the players who are super-agile or super-innovative or both have enough juice left to compete effectively in the next leg of the marathon. The successful ones are those where the C-suite and the troops are watching the KPIs of each step at the granular level so they have real-time intelligence of taking the next stride.
It requires the perfect blend of Usain Bolt and Samuel Wanjiru to compete in the "new†mobile landscape.
For example, Samsung, HTC, and Motorola (recently) have adapted remarkably well to this fast-paced marathon but their friendly rival LG has suffered and will need some time to regroup and be a force again. Microsoft faltered and didn't adapt while new entrants like Apple and Google set the terms of the race. Watch out for what Facebook does in the space. Given their scale, their user understanding, and their product portfolio, if they execute certain elements of their strategy right, Facebook can be front runner in this ecosystem.
Some of the operators who have traditionally felt safe on their home turf are getting challenged. They are reinvigorating the industry segments they could have dominated before though it is probably too late in some areas.
Mobile Enterprise – The unglamorous cousin of the consumer segment
Enterprise is hot again. AT&T and Sprint have become very focused on becoming the "total solution providers†vs. just providing data subscriptions and devices. A&T is making a big push for the enterprise market and showcased several of its wins in the healthcare, education, retail, shipping, and other verticals. As I have talked about before, (mobile platform will) let a thousand industries bloom! Cloud computing is another area where we are going to see some interesting developments over the course of next 6 months (I will be moderating a panel on Mobile Cloud Computing at the upcoming Open Mobile Summit in Nov)
At CTIA, Verizon formally announced their LTE plans with almost 40 markets. It has moved aggressively in the last 24 months to get the network and slew of devices ready. Verizon's marketing machine will let loose come Christmas and CES. AT&T also announced its "LTE ready†devices.
Mobile Devices: Competitive landscape
iPhone is likely to be launched on a second US carrier in Jan and is going to offer first true iPhone vs. Android test. In the meantime, a stable of Windows Phone 7 launched today after the announcement 8 months back in Barcelona. I do like a fresh approach to UI design akin to flipboardification of the apps icon-based layout (which is so desktopish). Things started to move in this direction with Motorola Blur last year and INQ a bit earlier.
The question is not if Microsoft has done a good job with WP7. It has. The question is – how soon does Microsoft come with its second round of handsets and software upgrades? And how soon will it be able to sign up additional OEMs. Remember, a few extra hops doesn't guarantee unfair competitive advantage for the next 100m. Microsoft is starting from 0 and will have to execute on all fronts to be considered a serious contender come 2011 Christmas season. Finally, there is always room for another player, another platform. These things go in cycles. The trick is to capitalize on your opportunity and not be the one left standing when the music stops.
Coming back to my talk, I do think that an analytics driven UI is where we will end up on the smartphone UI and the whole debate around "mobile web vs apps†will be rendered moot to some extent. I expect Apple will come out with its iteration of the next generation UI soon.
Connected Devices
Mobile as a platform is maturing and we can see this in the growth in connected devices and vertically focused solutions – healthcare, energy, education, etc. The fact that the connected devices have become the next battle ground was clear from the fact that Ford had a major presence at the show. Their telematics strategy is very well executed. In our own work in the space, there is some cool stuff that is going to get rolled out in the next 24 months. Secondly, Samsung was displaying its tablet as if it was the only device it built. Apple has created a new category and others are lining up to cash in.
Mobile Apps vs. Web
The noise around "mobile apps vs. web†is reaching a fervent pitch. It is rather a silly debate. Developer care about reach, revenue potential, and the cost of the reach. Users care about the best user experience and cheapest access. Ecosystems are built around these two simple notions. Recent data from Comscore revealed something interesting. Looking at the smartphone data between apps and browser, while overall, the apps usage was higher compared to that of the browser, browser was considered a better way to navigate in various categories like news, search, and social networking by a good margin. However, games which happens to be generating the lion share of the apps revenue will continue to be a native play for some time to come because developers don't want to compromise and the browsers are not there yet.
Over all, great to catch-up with friends and colleagues. CTIA, thanks for the networking party. 2011 looks pretty darn interesting already (we will be discussing the trends and opportunities in 2011 in our upcoming Mobile Breakfast Series event on Dec 8th)
Some of the other news worthy items were:
Sprint launched Sprint ID that helps customize the clutter on the device. Again, the limitations of the icon based UI are becoming clearer.
Androids keep multiplying like gremlins. Motorola launched a series of Android devices, some squarely focused on the enterprise.
CTIA released its semi-annual industry survey results: 293M subs, $79B in rev in first 6 months, data revs $25B up 12.4% in the first 6 months. Capital investment of $21.6B in last 12 months. SMS traffic in June 10 – 173B.
Some are realizing that a flatter network architecture is needed to manage data growth and margins. We have written extensively about this subject in our Yottabyte Series.
In a show devoid of cool demos, OpenMarket demoed interaction with the vending machine using a mobile device something Finns have been doing for a decade.
NFC was barely discussed but if all things line up, it could be one of the top stories of 2011.
More CTIA coverage at Wireless Week, Moconews, RCR Wireless, CNET, etc.
Your feedback is always welcome.
Chetan Sharma
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 Nov 2010. The next Global Wireless Data Market update will be issued in Oct 2010.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Mobile Future Forward 2010 Summit Summary September 20, 2010Posted by chetan in : 3G,4G,AORTA,BRIC,Carriers,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Japan Wireless Market,Location Based Services,Mobile Advertising,Mobile Applications,Mobile Ecosystem,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile Wallet,Networks,Partnership,Patents,Privacy,Smart Phones,Speaking Engagements,Student Paper Contest,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 1 comment so far
Summit Summary
In proud partnership with
Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, Openmarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce
Earlier this month, Chetan Sharma Consulting hosted its first mobile thought leadership executive summit – Mobile Future Forward. The sold-out event attracted leaders from the global mobile industry across the ecosystem to discuss and debate the future of mobile. This note summarizes the various discussions from the summit.
Some of the key themes discussed by the speakers and panelists were:
1. The Mobile Ecosystem is becoming more complex and competitive by the day
2. Broadband is exploding around the globe, Nation's competitiveness and prosperity is being defined by the quality and depth of Broadband
3. Mobile Device is becoming central to our existence
4. Understand the user, generational usage patterns, geographical differences and customs
5. Communication modes are evolving and morphing rapidly
6. Emerging Devices are taking the lion of share of growth in some western markets
7. Given the devices and networks, content, media, services are moving to the cloud
8. New experiences are being introduced that will impact monetization and interaction with computing and technology
9. World is becoming flatter by the day
10. Mobile as a platform is booming and several industry verticals are exploding
11. Context and Analytics are key currency for tomorrow
12. There is significant reallocation of revenues underway
13. The fight for developer mind share is getting intense
As technologists, we get too enamored with the technical details and specs but what's most important is how can technologies be applied to make lives of every day consumers better. If a new solution or a service only benefits or thrills a few, it is destined to miss the mass market. No one understands the mass market better than Procter & Gamble, and no company in the world touches more consumers with more products than Procter & Gamble (with over 40-50 billion items per year). Technology plays a central role in how P&G thinks about engaging consumers. Last year, I had the privilege of spending some time with Steve David, our first keynote speaker. His understanding of the interplay between technology and consumer interaction and behavior is very deep and his enthusiasm for using technology to change the world infectious. Steve spent over 30 years at P&G , the final assignment as P&G's CIO responsible for their Internet Strategy.
Steve laid out the case for Advocacy being the new measure of marketing. It has a lasting impact on the brand, the sales, and the relationship with the consumer. Companies who have a better understanding of the customer via sophisticated analytics and can quickly take the solutions and products that consumer want and need gain long-term competitive advantage. Insights from the market must be processed in real-time that can empower decision making at every level of the company. And mobile is central to this strategic shift. Mobile is being used to attack the counterfeit problem worldwide, in formulating personal recommendations as trust in brands erodes, in collecting analytics, and engaging interactions with products and services using NFC, etc. Steve ended with the old Chinese proverb, "When the wind changes direction, there are those who build walls and there are others who build wind mills.†What are you going to build?
Fred Devereux, President, AT&T West in his address on "The Next Big Thing†honed in on the emerging connected devices ecosystem and how AT&T is retooling itself to take advantage of the boom. The AT&T Emerging Devices organization is setup to behave and operate like a startup with hundreds of devices being approved in a short amount of time. The new generation of connected devices range from eReaders, PNDs, Telematics, Cameras, Camcorders, Picture Frames, Tablets, Tracking Devices, Gaming Devices, and Smart Meters. While the ARPU of these connection is low, the margins are high due to negligible overhead in operations, sales, and marketing. The importance of this category is evident from the research data we reported in our last quarterly report which indicated that there are more connected devices being added than postpaid net-adds and operators are starting to list them as separate line items in their financial statements. Fred also discussed AT&T's plans to deploy LTE in 2011-.
Dr. Genevieve Bell, Fellow at Intel is one of the most fascinating anthropologists out there with an acute sense of technology evolution and how humans react and adapt to changes around them and how technology needs to adapt to humans and their needs in different habitats. She had some interesting stats from her research e.g. the household sizes vary significantly by countries – India has only 5% of the households as single-person households while France and Germany have over one third households as single-person. Boomers will represent more than half of the population of China, Japan, and EU by 2012. These demographic shifts have significant impact on how technology is used and how media is consumed. The keynote was filled with priceless anecdotes and research items that informed and gave the technologists something to think about and that the technologists are not the proxy for rest of the population. Her book "Telling Techno-Cultural Tales†is being published by MIT Press and is coming out next year. So, be on the lookout for that.
Mobile Advertising is in the news lately in the US. About 11 years ago, a young man named Takayuki Hoshuyama was making waves in the mobile advertising space. In 1999, he helped found D2Communications – a successful joint venture between the largest advertising firm in Japan – Dentsu and the largest and one of the most innovative operator on the planet – NTT DoCoMo. He was one of the original members of the Mobile Advertising Team for the i-mode service 11 years ago. In June, he was appointed CEO of D2C. Hoshuyama-san talked about the future of mobile advertising. Japanese mobile ad market is over $1B (though it represents only 1.7% of the overall ad spent) and with the advent of 4G/LTE the opportunities are enormous. Display outscores Search by 3:1 in ad revenues. Mobile is some embedded in Japanese culture that it is just assumed just like my good friend and coauthor Dr. Yasuhisa Nakamura, then CTO of NTT DoCoMo wrote back in 2002 in our book "the wireless infrastructure will become indistinguishable from air i.e. omnipresentâ€
Hoshuyama-san also talked about the evolving role of the operators in the ecosystem with some of them focused on becoming the cloud service providers and broadcasters.
After the keynotes, we shifted to panel discussions. The first one dealt with the disruptive forces in the ecosystem with Mike Sievert, Chief Commercial Officer, Clearwire, Lixin Cheng, CEO, ZTE USA, and Subba Rao, CEO, Tata DoCoMo – three leaders who are disrupting the status quo. All three agreed that the openness of Android will make it the most dominant OS in the coming years. Lixin talked about how the infrastructure business is becoming a software business with SDR design of technology standards and evolution. He also suggested that we as an ecosystem need to simplify the business models and the consumer purchasing process of bandwidth and connectivity before the connected device revolution takes significant hold. India is the fastest growing market but the ARPU levels are 1/10th of what they are in the US. Given that the market just spent over $100B on the 3G auction, the investment recovery model is unclear and the market is ripe for a big shakeout. Telenor, having lost over half a billion dollars is desperate to get out of the market. The pains of globalization are showing up in other regions as well. Mike mentioned the high average data consumption at Clearwire (currently at 7 GB/mo) – clearly a precursor of what's to come (our research shows the national average was 230 MB/mo as of Q2 2010). In terms of new technology areas, the panel was interested in products that help with spectrum efficiency, reducing the cost structure, and in improving the battery performance.
As part of the Mobile Future Forward Initiative, we had also worked on two other projects:
· The Mobile Future Forward Book that consisted of thought provoking essays on the future of mobile from the speakers of the summit and
· The global student paper contest that invited the papers form university students from the around the world
It required enormous collaboration with the folks around the globe in a very short amount of time. We are very proud of the outcome.
Mobile Future Forward Book
The second project related to a limited edition book by Chetan Sharma Consulting (published by Futuretext) exclusively for the event. Some of these summit speakers put their insights and ideas on paper that resulted in this book. We are very grateful to the authors (and their respective organizations) who carved out time from their busy schedules to pen some really insightful commentary on how they see the mobile industry evolve both holistically and in the various segments of the ecosystem. While the views are quite diverse and bring together perspectives from different angles, everyone agrees, 2010-2020 will be one heck of a time period for innovation.
The book has the following pieces:
1. The Next 10 Years – 15 Trends That Matter – Chetan Sharma
2. Sustainability in a Mobile World – Stephen David
3. Managing The Mobile Data Explosion – Wim Sweldens
4. Show Me The Money! – Brian Shepherd
5. Mobility Revolutionizing Every Product, Service, and Process – Russ McGuire
6. How Constant Connection Is Changing Our World – Ken Denman
7. 4G: The Next Big Thing – Mike Sievert
8. The Untapped Potential of Mobile Advertising and Marketing – Takayuki Hoshuyama
9. Mobile Operators are at the Center of Mobile Advertising – Krishna Vedati
10. Mobile Challenges – Three Imperatives in the Changing Game – Russ Shaw
11. Interacting With Everyday Things – Amir Mashkoori
12. In The End, It'll All Go Through "Browse and Buy†– Anil Malhotra
13. The Future of Mobile: 5 Trends That Matter Most – Jay Emmet
14. India's Mobile Future Forward – Subba Rao
15. Cellphone As The New Computing Platform – Sailesh Chutani
16. What 5 billion Phones Could Mean for Health Literacy – Jon Stross
17. Privacy: From Compliance To Competitive Advantage – Sarla Sharma
18. Managing Growth and Profits in the Yottabyte Era – Chetan Sharma
We will be giving out some copies of the book during our Annual Predictions Survey in Dec, so be on the lookout for that participation request.
Student Paper Contest
Despite, the summer recess, we received an a very positive response from students around the globe. The top six entries went through rigorous scrutiny of our judges:
1. Pankaj Kedia, Head of Mobile Ecosystems, Intel
2. Subba Rao, CEO, Tata DoCoMo
3. Len Barlik, VP, Sprint Nextel
4. Jeff Giard, Director, Clearwire
5. Paul Palmieri, CEO, Millennial Media
6. Matt Oommen, CTO, Sprint Nextel
7. Paul Struthers, Head of Regional Marketing, Amdocs
The top two students were Lun Huang and Smruthi Pariccha and they were invited to join us for the event and receive their prizes.
The final ranking was as follows:
1. UWB Based on Multi-Band MC-CDMA and Magnetic Near-Field –Lun Huang, Electrical and Computer Engineering, Illinois Institute of Technology, US
2. Ubiquitous Peer Proximity Awareness in Mobile Environments –Smruti Parichha, Dept of Computer Science and Engineering, University of California, Riverside, US
As a mobile strategist, I get to see some of the cool technologies before they hit the market. For the demo this year, we selected Microvision's cool projection technology where you can interact with the projected screen in thin air by waving hands. Yes, you got it. You had to be there to see it. It was shown for the first time to the general public and we are thankful to Selvan Vishwanathan and Andrew Rosen, the two engineers (and their colleagues) behind this exciting emerging technology that will expand the horizons of mobile interactivity and media engagement.
The afternoon sessions started delving into specific topics and details that were touched upon at the high level during the morning sessions. Each of the panels had an absolutely stellar cast who are deeply engaged in defining the mobile ecosystem right now.
Network and Mobile Data Evolution 2010-2015
Wim Sweldens, President – Wireless Division, Alcatel-Lucent,
Neville Ray, Chief Network Officer, T-Mobile,
Bob Azzi, Senior Vice President, Sprint,
Matt Bross, CTO and Vice Chairman, Huawei
Sean Cai, Vice President – Advanced Wireless Technology, ZTE,
Ken Denman, CEO, Openwave (moderator)
There is a big debate about network evolution – how fast does LTE need to come to the market? Will LTE be enough to help with the data tsunami. The consensus was a resounding No but LTE brings in some key capabilities like an all-IP network that enables new capabilities for multimedia applications and services, lowers the per bit cost, and reduces latency for superior user experience. Of course, the RAN is only part of the story, the backhaul needs to get upgraded as well to handle the load. The panel also emphasized simplicity in services without making things burdensome for the consumer with new technology. The other area of concern is of course the spectrum. Will there be ever enough spectrum? The issue is more acute for some operators. Finally, the focus need not to be on the bandwidth or the latency, from a user's point of view, it is always about the services and things they can do with more bandwidth and lower latency.
Future of Content, Engagement, and Monetization
Louis Gump, Vice President – Mobile, CNN,
Omar Javaid, Vice President, Converged Media, Motorola (moderator),
Paul Palmieri, CEO, Millennial Media,
Rob Glaser, Chairman, Real Networks and Partner, Accel
Superphones and smartphones have changed the landscape for content, engagement and monetization. Superphones are most open and it is reflected in the results, more engagement and higher app usage. Apple/Android have also put US back in the leadership role when it comes to devices. CNN has seen high degree of non duplicated reach and reach is king when it comes to mobile advertising. The ad platforms are going into the next stage of evolution with more multimedia, better monetization opportunities, and higher value for the consumer. For content providers, ads can't be the only strategy to generate revenue, subscriptions and/or micro transactions need to be part of the equation as well.
The Balance of Privacy and Monetization from Consumer Data
Krishna Vedati, Senior Vice President, AT&T Interactive,
Chris Murphy, Head of Digital Strategy, adidas
Dr. Nitin Shah, CEO, Feeva,
John Giere, Senior Vice President, Openwave,
Jeremy Lockhorn, Vice President – Emerging Media, Razorfish (moderator)
It is a complex issue and our insightful panel talked through the intricacies and the balance of monetizing using consumer data while meeting user's expectations on privacy. One has to give something of value to the consumer before they trade up. Advertisers like adidas want to move from 1-2-many to 1-2-1 relationship with the consumer that increases the volume and quality of the transactions. The valuable variables to track are location, propensity to buy, past actions, traffic inputs, etc. Discovery and recommendations also become important part of the whole process. Of course, regulators are eager to jump in as well. It will be one of the key issues defining the industry landscape over the next 5 years.
mHealth – The Impact on Society and Global Health
Dr. Sailesh Chutani, CEO, Mobisante (moderator)
Jon Stross, General Manager and VP, Babycenter.com
Tim Wood, Director, Grameen Foundation
Greg Brandenberg, CEO, Columbia Basin Health Association
Dr. Suzanne Clough, Chief Medical Officer, Welldoc
mHealth is one of those areas which has been talked about for a long time and where mobile is starting to have a truly disruptive run at the industry. While the regulations and the dinosaur health care industry have been slow to adapt, there are a number of innovative companies like Welldoc, Babycenter.com, Mobisante, and others who are forcing rethink and change in the status quo. Greg's CBHA is forced to think differently and has looked to technology to solve their challenges. Serving in the rural areas of WA state, his team has been testing out new solutions such as cell phone based ultrasound system from Mobisante that is 1/10th the cost of what GE sells for. It is much more portable and flexible and works well with the field work force. Tim's Grameen Foundation is similarly leading the charge in nations like Ghana where mobile has been used to solve real-life health issues. Jon's Babycenter has been expanding in other regions and increasing revenues at the same time. However, the test results and trials can still take inordinate amount of time (it was 3 years for one of the trials). The opportunity is immense but regulators, healthcare industry, pharma giants, and the rest are starting to come to grips with the role that mobile can play in transforming lives and P&Ls.
Mobile Cloud Computing – At the Tipping Point?
Hank Skorny, Senior Vice President – Media Cloud Computing, Real Networks
Brian Shepherd, President – Mobile Services and Marketing, Amdocs
Marianne Marck, Senior Vice President, BlueNile
Mike Wolf, Vice President – Research, GigaOM (moderator)
Erez Yarkoni, Chief Information Officer, T-Mobile
Cloud is changing IT and cloud is going to change mobile media. It helps take out some of the complexities of media consumption, management, and sharing for the consumers and provides a lower cost structures for the media companies. There are opportunities for operators to provide cloud based services at many levels – storage, media, billing, bandwidth, profile, analytics, network intelligence and so on and so forth. Some are easier to implement while others requires more investment and change in DNA. From a developer's perspective, cloud based services will be ideal to increase reach but we are not there yet as the capabilities of the browser are not comparable to the native environment on platforms like iOS and Android. Better user experience is essential and developers won't compromise.
Evolution of Communication and Social Interaction
Mario Queiroz, Vice President – Product Management, Google
David Weiden, General Partner, Khosla Ventures
Robin Schofeld, Principal, Booz&Co (moderator)
Erick Tseng, Head of Mobile, Facebook
Pankaj Kedia, Head of Mobile Ecosystems, Intel
The panel delved into how the communication ecosystems might evolve. While there is discussion about open and closed (too much at times), it is about executing on a strategy that touches the most number of consumers. The closed gardens of Apple is quite dominating and so is the evolving Android ecosystem which is relatively open. At the end of the day, developers are looking to make a buck with the least amount of resources and reach the most of amount of users. Cloud based communications services are about to change the landscape in a big way. Google and Facebook both have had good successes and both suggested that we are just getting started and more innovation is going to come in the form of personalization and social interaction. Operators while ceding some of the communication territory can still have a viable broadband business. As far as social on mobile is concerned, we are still in the early days with lots of opportunities to enhance and engage.
Internet of Things – Emerging Ecosystems
Amir Mashkoori, CEO, Kovio
Danny Bowman, President – Integrated Solutions Group, Sprint
Mark Selby, Vice President – Industry Collaboration, Nokia
Chetan Sharma, President, Chetan Sharma Consulting (moderator)
Abhi Ingle, Vice President – Industry & Mobility Application Solutions, AT&T
Peter Koo, Vice President, Ericsson
The fact that there are more mobile phones than toothbrush brings home the point of the pervasiveness of mobile around the globe. The panel gave several examples of how "connectedness†is spreading across other electronic devices as well e.g. in Netherlands, 30K home care workers are equipped with NFC enabled devices which help interact with the patients (opens the door as well) without the need for paperwork, the records, helps with navigation. Overall result – happier workers, higher efficiency, and reduced carbon emission. The mobility for "connected devices†will try to leverage all RF radios as needed – 3G, 4G, Bluetooth, WiFi, Zigby, etc. Digital signage is emerging as a new area for consumer interaction and information. Some of the industries are on the verge of significant change – e.g. insurance where car insurance rates are given based on driving habits learned via telemetry vs. the old actuary table based rating systems. NFC is also enabling a lot of commerce opportunities by bringing the online world together with the physical world. However, as the ecosystem evolves, we need to also worry about QoS, security, and reliability concerns that various vertical industries have. Of course, the net-neutrality debate impacts the evolution. There are several scenarios where prioritization of data traffic is essential in emergency situations (ambulance transmission, fire fighting, etc.).
At the Intersection of Gaming, Social, and Commerce
Tim Chang, Partner, NVP (moderator)
Prashant Fuloria, Director – Facebook Credits, Facebook
David Marcus, CEO, Zong
Andrew Lacy, Senior Vice President, Disney Games
Alex Tokman, CEO, Microvision
Micro transactions is the new currency that scales up to billions of dollars in gaming and social networking. Free drives interest and the core 2-5% drive the revenues. If you ask for payment up front, virality component fizzles and the longevity declines. iTunes has been the gold standard for payments, carrier billing is starting to shape up and it will benefit the developers. HTML5+ in theory makes sense and is nice enhancement but the app experience is compelling for users. Discovery continues to be the sore spot and the burning opportunity. Whichever platform and mode of operation helps developers make more money, that's where the momentum will shift. Today it is the iPhone but rival models are starting to pop up.
Our heartfelt thanks to everyone who helped in making Mobile Future Forward successful especially the sponsors (Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, OpenMarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce), participants, the moderators, and the speakers. Thanks to Caroline Lewko and David Smith for taking good notes. Planning for Mobile Future Forward 2011 is underway. Until then, best wishes and good luck in your pursuits, and we hope to see you next year. Thank You.
Mobile Future Forward Book September 17, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,Enterprise Mobility,European Wireless Market,Mobile Future Forward,Mobile Gaming,US Wireless Market,VoIP,Wi-Fi,Wireless Value Chain,Worldwide Wireless Market , 14 comments
We had a special project as part of the Mobile Future Forward Initiative. It related to a limited edition book published by Futuretext exclusively for the event. Some of these summit speakers put their thoughts and ideas on paper that resulted in this book. We are very grateful for the authors (and their respective organizations) who carved out time from their busy schedules to pen some really insightful commentary on how they see the mobile industry evolve both holistically and in the various segments of the ecosystem. While the views are quite diverse and bring together perspectives from different angles, but everyone agrees, 2010-2020 will be one heck of a time period for innovation.
The book had the following pieces:
1. The Next 10 Years – 15 Trends That Matter – Chetan Sharma
2. Sustainability in a Mobile World – Stephen David
3. Managing The Mobile Data Explosion – Wim Sweldens
4. Show Me The Money! – Brian Shepherd
5. Mobility Revolutionizing Every Product, Service, and Process – Russ McGuire
6. How Constant Connection Is Changing Our World – Ken Denman
7. 4G: The Next Big Thing – Mike Sievert
8. The Untapped Potential of Mobile Advertising and Marketing – Takayuki Hoshuyama
9. Mobile Operators are at the Center of Mobile Advertising – Krishna Vedati
10. Mobile Challenges – Three Imperatives in the Changing Game – Russ Shaw
11. Interacting With Everyday Things – Amir Mashkoori
12. In The End, It'll All Go Through "Browse and Buy†– Anil Malhotra
13. The Future of Mobile: 5 Trends That Matter Most – Jay Emmet
14. India's Mobile Future Forward – Subba Rao
15. Cellphone As The New Computing Platform – Sailesh Chutani
16. What 5 billion Phones Could Mean for Health Literacy – Jon Stross
17. Privacy: From Compliance To Competitive Advantage – Sarla Sharma
18. Managing Growth and Profits in the Yottabyte Era – Chetan Sharma
Thanks to everyone who helped make this project successful