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Mobile Breakfast Series: Vancouver & Seattle April 17, 2016

Posted by chetan in : US Wireless Market , add a comment

We have two terrific events coming up in the Pacific Northwest, first in Vancouver on 28th April and then on June 7th in Seattle. They will feature some of the smartest execs on the most pressing topics of the day – 5G and IoT. Hope you can join us.

www.mobilebreakfastseries.com

Internet of Things – Exploring the next big thing in mobile

When: April 28th 7:30-8:30am Registration, Breakfast and Networking, 8:30-10:00am Panel Discussion, 10:00-11:00am Networking.

Where: Hyatt Regency, 655 Burrard St, Vancouver, BC V6C 2R7, Canada

Speakers

Shahid Ahmed, Managing Partner – Emerging Technology and IoT, PwC

Rob Tiffany, Global Technology Lead – IoT, Microsoft

Gonzalo Tudela, CEO and CoFounder, Vandrico Solutions

Rob Chandhok, COO and President, Helium

Chetan Sharma, CEO, Chetan Sharma Consulting (moderator)

Event Sponsor: Optimus Information

Shahid Ahmed is a Partner at PwC where he leads the Emerging Technology and IoT Practice. Previously, Shahid was the Managing Director with Accenture, where he had P&L responsibility for North America’s Communications business.  In this role, Shahid helped telecommunications clients build new capabilities, operate more efficiently and drive new growth.  He was also responsible for the Network practice in North America.  During his twenty-year tenure at Accenture, Shahid was involved in creating many practices including the formation of the Wireless Practice and helping to start the Accenture Cisco Business Group. Prior to joining Accenture, Shahid held several management positions at Sprint where he rolled out and expanded Sprint’s cellular services in North America.   Shahid was also responsible for rolling out the first cellular digital packet data (CDPD) capability in the US. Shahid is an active member of several wireless industry groups. He currently serves on multiple Advisory Boards such as the Smart Network Council, Cellular Telecommunication and Internet Association (CTIA), Northwestern University Masters in Engineering Management (MEM) Program and The Coral Group. In February 2011, Shahid was appointed as an Advisor to the Federal Communications Commission (FCC) Technical Advisory Council advising on technology issues facing the United States.  Shahid was chair of the M2M/IoT working group and currently chairs the cyber-security working group.

Rob Tiffany is the Global Technology Lead for the Internet of Things at Microsoft where he’s shipped smartphones and architected + developed many of the world’s largest enterprise mobile, IoT and wireless solutions. Prior to Microsoft, he spent his career as an entrepreneur, executive, strategist and writer of bestselling books on mobile and wireless technologies. A pioneer of the mobile revolution, he drove the development of the mobile app ecosystem and co-founded the world’s first cloud-based, mobile device management company. He started his career in the M2M business in the early days of wireless, bringing unintelligent vending machines to life.

Gonzalo Tudela is CEO and Co-founder of Vandrico Solutions, an enterprise wearables software company based in Vancouver Canada. With a background in Finance and Mining Operations, Gonzalo is an early champion of the positive impact wearable technology will have on large commercial operations. His insights have been featured in publications such as The Globe and Mail, Entrepreneur Magazine and TechCrunch. Gonzalo is a TEDx speaker who regularly presents to business leaders across the world. His expertise has been televised internationally to millions of viewers on the Globo TV network and on CBC. Gonzalo currently leads Vandrico in helping large global organizations use wearable technology as a way to overcome safety and operational challenges.

Rob Chandhok currently serves as President and COO of Helium, which provides a complete Internet of Things platform that makes sense of your things. Prior to Helium, Chandhok served as president of Qualcomm Interactive Platforms and senior vice president of Qualcomm Technologies Inc., where he was responsible for Qualcomm products and strategies that enabled people to benefit from the Internet of Everything, including wearable computing, vision-based computing via the Vuforia augmented reality platform, and the AllJoyn software development framework, an open source project of the AllSeen Alliance. Chandhok has years of practical and product-oriented experience in wireless communications and the Internet. He takes a systems-level approach to innovative communication oriented products, from chips up to applications and user interface. Chandhok holds 36 patents and has 23 published articles.

 

Connected Intelligence: At the Intersection of 5G and IoT

When: June 7th 7:30-8:30am Registration, Breakfast and Networking, 8:30-10:00am Panel Discussion, 10:00-11:00am Networking.

Where: Columbia Tower Club, 701 5th Ave #7600, Seattle, WA 98029

Registration

Mark McDiarmid, VP – Radio Network Engineering, T-Mobile has 24 years of experience in the wireless industry in both domestic and international operations. Currently, Mark serves as VP, Radio Network Engineering and Development for T-Mobile US, where he leads several teams of industry-leading engineers focused on creating robust, operationally-efficient, and economic radio network designs. Recently, Mark was responsible for defining the evolution and system design of T-Mobile US’s HSPA+ and LTE mobile broadband network including the design and operationalization of new radio network transport solutions based on IP and Ethernet.

Paul Brody is Americas Strategy Leader, Technology Sector at EY. He is proficient in mobile finance strategy planning, technology of mobility and internet of things, with 20 years of consulting and strategy experience in mobile and electronics. Prior to joining EY, he served as Vice President and Global Industry Leader of Electronics at IBM. At IBM, he is responsible for building IBM’s services business in the mobile space, including the partnership with Apple, and developing solutions for connected devices.  Prior to IBM, Paul worked at McKinsey & Co. Paul has a degree in Economics and a Certificate in African Studies from Princeton University.

Mobile Patents Landscape 2016 April 13, 2016

Posted by chetan in : 4th Wave,5G,Connected Devices,Connected Intelligence Era,Intellectual Property,Patent Strategy,Wireless Value Chain,Worldwide Wireless Market , add a comment

Mobile Patents Landscape 2016

http://www.chetansharma.com/MobilePatentsLandscape_2016.htm

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In 2016, Mobile industry will approach 2.7 trillion dollars in revenue. It has become the most broadly available and used technology on the planet. Its impact is being felt beyond the traditional boundaries of communications. Mobile app Uber has completed upended the logistics equation; Amazon and Alibaba are generating billions of dollars in mobile commerce; FlipKart and Snapdeal are changing how Indians buy, sell, and trade; and so on and so forth. By the end of 2015, there were at least 62 companies generating over a billion dollars from digital mobile services.

We are seeing a fundamental shift in the mobile industry as discussed in detail in our 4th wave series papers and an emergence of the Connected Intelligence Era as outlined in our recent series of papers. These two broad trends are changing the landscape and impacting how and where value gets created and where it gets captured. In the transition years, the value of IP becomes quite important as companies jumping from one stack layer to another one require the IP portfolio to protect its investment in the space. The cross domain activity will only intensify in the coming years and we are already seeing this in the patent data to date.

According to World Intellectual Property Organization (WIPO), the top fields of technology for published patent applications were: Computer technology (8.2%), Digital Communications (8%), Electrical machinery (7.3%), Medical Technology (6.3%), and Transport (4.3%). While US remains the leader in terms of overall quality and quantity. China and its companies are starting to flex some muscles on the big stage. In terms of regions, Asia continues to outpace North America and Europe. US and Japan were followed by China, Germany, Korea, France, and UK. The top 10 PCT applications were Huawei Technologies, Qualcomm, ZTE, Samsung, Mitsubishi, Ericsson, LG, Sony, Philips, and HP.

According to the US Patent Office (USPTO), in 2015, the number of patents granted grew over 8% YoY. The numbers of foreign filings are now in the majority for both the applications filed as well as the patents granted.

As we look into the mobile related patents, the growth is much more striking. The number of mobile related patents that were granted by the USPTO and the EPO increased significantly over the course of last decade. The US market saw a 447% increase while the European market saw a 75% increase in mobile related patent grants.

By the end of 2015, approximately 27% of patent granted in the US were mobile related. This grew from around 2% in 1991 and 5% in 2001. In Europe, roughly 8% of the patents granted are now related to mobile. Europe saw a decline of 4% in mobile patents in contrast of 16% growth in the US market.

It is also interesting to note that a number of new Asian companies like Mediatek, Alibaba, and Xiaomi have stepped up their IP efforts and substantially increased the filings in the US. We are also observing strong activity in the new areas such as 5G, VR, mobile security, and IoT.

Chetan Sharma Consulting analyzed over 7 million patents granted by the USPTO and EPO over the last two decades to understand how mobile has become a key enabler for all technology companies. Furthermore, we looked at patent granted to the top 65 technology companies who are active in the mobile space to understand their relative strengths and weaknesses in the mobile patents landscape. This study is fifth in the series that does an in-depth quantitative analysis of the mobile patents landscape.

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 April 2016.

Disclaimer: Some of the companies mentioned in this update are our clients.

Correcting the IoT History March 14, 2016

Posted by chetan in : 4th Wave,Internet of Things,IoE,IoT,The Golden Age of Mobile,Wireless Value Chain,Worldwide Wireless Market , add a comment

In the last 5 years, IoT has entered the industry consciousness. There are varying forecasts calling for tremendous growth and revenue generation opportunities. We have argued IoT as part of the Connected Intelligence Evolution and have published a couple of papers on this topic of ongoing research. Last year, we delved into the history of IoT. Before it was fashionable to say IoT, it was M2M, and before that Telemetry and Telemetric systems.

During our research last year, we came across something that our industry and the media got wrong – the origination of the term “Internet of Things” or “IoT.” The current thinking is that the term first originated at the Auto-ID center at MIT around 1999.

IoT didn’t really enter the conversation until ITU’s IoT report in 2005. It took another 5-6 year before the 50B forecasts started appearing for connected devices and of course the lion-share of the growth was attributed to IoT. Regardless of the forecasts, IoT is a thriving ecosystem and the future of opportunities and its relevance in transforming industries has never been more important.

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Peter Lewis with Harry Brock, President, Metrocall in 1982 (Black Enterprise, June 1983) (top). Peter Lewis in 2015 (bottom)

That’s why it is important to get the historical context right. To the extent we could find, the term “Internet of Things” was first conceptualized, coined, and published in Sept 1985 by Peter T. Lewis in a speech to the Congressional Black Caucus Foundation 15th Annual Legislative Weekend in Washington, D.C. There was no widespread availability of Internet in those days so the Internet didn’t archive it some place and Peter Lewis was busy with his new startup endeavors and we lost track of an important speech that brought together the vision of IoT together. Only a few close friends and colleagues knew about the speech.

The full speech is published with permission in this note and as you will see, his vision was spot on – 30 years ago. Peter was uniquely positioned to understand the confluence of machines, wireless, Internet, applications because he had been exposed to them from different angles by then.

By connecting devices such as traffic signal control boxes, underground gas station tanks and home refrigerators to supervisory control systems, modems, auto-dialers and cellular phones, we can transmit status of these devices to cell sites, then pipe that data through the Internet and address it to people near and far that need that information. I predict that not only humans, but machines and other things will interactively communicate via the Internet. The Internet of Things, or IoT, is the integration of people, processes and technology with connectable devices and sensors to enable remote monitoring, status, manipulation and evaluation of trends of such devices. When all these technologies and voluminous amounts of Things are interfaced together — namely, devices/machines, supervisory controllers, cellular and the Internet, there is nothing we cannot connect to and communicate with. What I am calling the Internet of Things will be far reaching.

Peter started his career as a young commander and nuclear officer-in-charge in the US Army and served in the US and abroad in charge of critical communications and as a nuclear officer, in charge of running NATO’s first strike force during the cold war. In fact, here is a fascinating trivia for the history buffs – Peter was called by the Secret Service to retrofit President Reagan’s Limo (it was a 1972 Lincoln Presidential parade car) with phone service in the Motorola shop in Prince Georges County in 1984.

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Dawn Magazine, The Afro American, Nov 9, 1985 covering the CBC Foundation panel in Sept 1985

From the very early days of his career, Peter understood the importance of cellular communications before many of his peers at the time and was determined and focused to play a role in the birth and subsequent growth of the industry. At the start of 1980, he cofounded Metropolitan Radio Telephone System, Inc. or MRTS which merged with other partners to make the first cellular company in the US – Cellular One. The grand opening of Cellular One took place at the Vista International Hotel (now the Westin Washington) in Washington DC on 16 Dec, 1983. Later on, the company was folded into Cingular and then into the current AT&T Wireless.

He also played an influential role in the cellular settlements amongst mutually exclusive applications in over half of the top-90 US markets and in his interactions with the FCC. It was during this time in 1985, he was invited by Ms. Zora Kramer at the FCC to present his thoughts on the burgeoning Cellular industry and participate with other executives on the panel moderated by Ms. Doris McMillon who was the news anchor for WJLA TV-9 in DC. She now runs her own Media and Communications firm.

I had a chance to talk to Ms. McMillon to see what she remembered about that session from 30 years ago. “Peter wowed the audience, some of the stuff he was saying seemed science fiction at the time,” she said.

Peter was very familiar with the work on ARPAnet at DARPA and from the beginning saw the cellular system not just for voice but also for data services; not just for connecting phones but all sorts of machines. Remember, in those early days, cellular phones were installed in the car and amounted to thousands of dollars in equipment and monthly costs.

In all of our filings with the FCC, we made mention of our intent to offer not just voice, but also data services over the cellular networks. Particularly, was is easy to see that tons of machines and devices, many of which are situated in remote or hard-to-access areas, are in dire need of monitoring and manipulation so that managers of such machines and devices can check status, turn these devices on and off and modify settings and thresholds. The narrow bandwidth of cellular ideally lends itself to carrying small amounts of data to and from machines and devices. Some of you in the audience are familiar with the simultaneous and rapid development of the Internet — whose progenitor was called the “ARPAnet” — overseen by the U.S. Department of Defense Advanced Research Programs Agency better known as “DARPA.” When the Russians launched the Sputnik communications satellite in 1958, this gave the U.S. government the urgent motivation to create DARPA so we would never again fall behind in critical technology behind a rival superpower.

You can read the full speech to judge for yourself.

In the meantime, an entrepreneur like Peter can hardly sit idle. He has played an important role in the connected cars that are so prevalent today (see patent USPTO 5587715). He regularly advises the various government agencies like US Army, Pentagon, FAA, etc. and other corporations on future growth of technology and its impact on our world. He is currently engaged in Unmanned Aerial Systems (a.k.a drones) industry, which is an emerging segment of the IoT industry.

So, the next time someone asks you about the origination of IoT at a cocktail party, you will have the data and the historical context of how Peter’s speech in Sept of 1985 came about.

Chetan

US Mobile Market Update – 2015 March 9, 2016

Posted by chetan in : 4G,4th Wave,5G,AORTA,Applications,ARPU,Chetan Sharma Consulting,Connected Intelligence Era,IoE,IoT,Mobile 2016,Mobile Breakfast Series,Mobile Ecosystem,Mobile Future Forward,Smart Cities,Smart Phones,The Golden Age of Mobile,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , add a comment

US Mobile Market Update – 2015

http://www.chetansharma.com/usmarketupdate2015.htm

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Highlights of the US Mobile Market 2015

· The overall mobile market expanded by 18% increase in revenues.

· Mobile data revenues increased by 17% YoY and now contribute 72% of the overall service revenues. In terms of data contribution, US is catching up with Japan which has been a leader in data % since the iMode days.

· For the first time in its history of the US market, the service revenues declined.

· For 2015, the voice revenues declined by 24%, messaging revenues declined by 18%, tablets saw the dip by 18%, handsets saw an increase of 5%, access revenues by 23% and 4th wave services dominated with an increase of 60%.

· The Capex contracted for a second year in a row.

· Device revenues are now 21% of the overall.

· EBITDA and Net Income saw double digit gains indicating operators are running a much tighter ship than before.

· Churn is at historic lows. Despite all the commotion in the market, 7% fewer customers churned in 2015.

· After falling sharply in 2014, the data prices remained pretty stable throughout the year.

· Mobile data traffic grew again with per sub smartphone consumption at 3.9 GB/user/mo (see note below on data traffic)

· In the first 10 weeks of Binge-on, T-Mobile users chomped away 34 PB of data for free or what was the entire year’s worth of data traffic on T-Mobile’s network in 2010. T-Mobile experienced a net traffic reduction of 10-15% but given that consumers are consuming 3x than before, overall traffic will rise again.

· AT&T added 4 million cars to their network. While postpaid business has its challenges, the connected devices business showed significant strength in 2015.

· Verizon’s IoT/Telematics accounted for $690M in 2015 and is likely to cross the $1B mark in 2016 making US the hotbed for Connected Intelligence activities, growth, and continued experimentation.

· Apple again dominated the device market with over 45% revenue share, 81% profits share with only 16%-unit share.

· Android ecosystem revenues grew by 5% but the profits declined by 2%

· There were more tablets added to the network than phones in 2015. Cars outperformed M2M by a good margin.

· T-Mobile edged past Verizon in postpaid netadds, AT&T was ahead in Prepaid, Verizon in Connected devices, Sprint in wholesale, and Verizon overall had the most netadds in 2015.

· AT&T and Verizon on average made $16 per sub/mo, T-Mobile turned into positive territory with $1 profit/sub/mo while Sprint stayed in negative territory with a loss of $0.55 per sub/mo.

· The valuation of Uber surpassed the combined market cap of T-Mobile and Sprint.

What to expect in 2016? Questions for 2016.

· We expect the overall US mobile market to pass the half a trillion-dollar mark in 2016.

· US will cross 400M in subscriptions in 2016.

· After the pause of dropping data prices in 2015, we could see intense price wars in 2016.

· The upcoming auction could be the big story of the year.

· What new 5G test results will be announced and will industry converge on some 5G standards ahead of the 2019 deadline?

· Will Comcast MVNO follow Google-Fi as a niche endeavor or does it have elements to fundamentally impact the market. 2016 will hopefully answer the question about the future of WiFi-first network strategy.

· Will the upcoming eSim integration in devices go far enough to disrupt the market?

· Will IoT gain sufficient steam to justify the forecasts?

· Can Android OEMs turn around the decline in profits in 2016?

· Can iPhone7 boost Apple’s growth numbers in 2016?

· Will the service revenue decline in the US reverse itself or are we seeing the start of the decline in revenues in the industry?

· Autonomous driving was a big story last year; what progress are we going to make in 2016? How will Uber shape the autonomous driving business models?

· AT&T and Verizon have bet big on video. How will the respective strategies pan out in 2016?

· The Apple-FBI is going to be one of the most watched cases in the world. Whichever way the final ruling lands has huge implications for the tech industry and consumers.

We will be doing an in-depth analysis of the future of the mobile industry at our 7th annual mobile executive summit Mobile Future Forward in Sept 2016. Hope you can join us.

Service Revenue Decline, what does 2016 hold in store?

The overall service revenue, postpaid revenue, overall and postpaid ARPU all declined. In general, the net-service revenue decline is not a good sign if it is market induced. In Europe, we saw net-revenue declines but the impact of the economic crisis was a big factor in determining the trajectory. After the economy has improved, we have seen the net revenue in effected countries rise again. In the US, the net-revenue decline is more market induced. The calculation of service revenue is a bit more complicated because device revenues are no longer part of the mix and as customers are weaning off the contracts, we have to adjust the service revenue for this accounting change. If we take the accounting distortion into account, service revenue is still in the positive growth territory but in terms of how operators report service revenues, this was the first year the category saw a decline. Regardless of the accounting distortions, there is continuous pressure on the postpaid revenues which is what is impacting the overall numbers.

Given the competitive state of the market, we might see further service revenue declines in 2016. The reversal might come down to consolidation in the industry in 2017 and beyond. The pressure on the revenues has had a positive impact though – operators are running far tighter ships than before. The net income surged in 2016.

The licensed vs. unlicensed: frenemies

Comcast is expected to launch its WiFi first MVNO with Verizon fairly this year. Google Fi hasn’t been a roaring success, perhaps it was never designed to be. Given that WiFi is carrying 75-80% of the traffic, it is easy to make the business case for a national WiFi operator. Companies like Republic Wireless have shown that this can be done. Keeping aside some of the technical challenges with WiFi, there are two major business challenges with the WiFi strategy. First, even with the rise of WiFi usage, the cellular usage hasn’t slowed down. Cellular data usage is still growing 60-70% YoY. As such, consumers will have to rely on cellular when they are out and about which means the economics comes down to the wholesale rate the MVNO has for cellular. The second big problem is the lack of handset choices. For consumers, handset choice is paramount. They want both iOS and Android devices to go with their data plans. WiFi operators generally have limited handsets. Over time this will change but to have a WiFi network of scale, economics, choice, and pricing are critical. By contract, cellular operators will always have a leg-up on the MVNOs unless access regulations are in place which of course are nowhere in sight.

Seeing the success of WiFi, FCC has rightly made more unlicensed spectrum available and it will be interesting to see how the ecosystem around 3.5GHz and other bands develop. This in light of what’s happening in the higher bands of cm and mmwave for 5G deployments. Technologies and business models that take into account benefits and drawbacks of both types of spectrum bands across a different uses cases will win out in the end. Despite advances, WiFi calling still has quality issues so the need for traditional networks is not going away anytime soon.

M&A 2016

As we mentioned last year, the service provider M&A window for 2016 pretty much closed late 2015 given the upcoming auctions and the presidential cycle.  There might still be some cross border opportunities but for any major transactions, it is better to wait it out to have a reasonable chance of success.

IoT Revenue Streams and what it means for the ecosystem

Service provider IoT revenue passed the important $1B mark back in 2013. So far it is tracking the growth of the early days of mobile data. However, they are different curves influenced by different factors. Mobile data was relatively an easier curve to climb as the revenues went up as more data handsets came online. The sales, business case, and ROI was straight forward. IoT is a bit more complicated as it across multiple vertical areas and it is not just about the data network, it is about the complete solution. The sales cycle and execution strategy is different and requires patience and resilience.

AT&T already had an active IoT developer program. Verizon introduced its ThingSpace platform to the developers last year. It is already selling complete IoT solutions in energy, transportation, security, and several other industry segments. As we mentioned before, Verizon is on track to crack the billion-dollar mark in IoT this year. For trivia buffs, Verizon passed the billion-dollar mark in mobile data revenues back in 2004 which at the time made only 5%of the overall wireless revenues for the operator.

We will be doing an in-depth analysis of the IoT Opportunity at our upcoming Mobile Breakfast Series in April and May.

Mobile data growth – Correcting the Cisco Numbers

Mobile data consumption (cellular) continues to grow as devices and networks continue to improve. There are 13 countries now with at least 1GB/mo/sub consumption. US is amongst the top three. At the end of 2015, the average consumption per sub in the US was at 3.9 GB/mo/sub.

Earlier this quarter, Cisco released its annual VNI report that forecasts data consumption and growth around the world. However, they did something very unusual this time, they pulled back their “factual numbers” by 36% for the US market. Based on our research which is corroborated by the data from the sources, Cisco’s numbers are low. Given that a lot of policy papers use these numbers as an input, we thought it will be worthwhile providing the reasonable estimates for data growth in the US market. These estimates match well with the data growth numbers in the Ericsson report.

Our estimates are that the US data consumption last year was close to 10.9 Exabytes. Ericsson reported approximately 10.5 Exabytes. Cisco adjusted its numbers from 9.2 Exabytes to 6 Exabytes.

Android vs. iOS: The fight for profit continues

Amongst the prominent Android OEMs, HTC, Sony, LG, and Lenovo all lost money in their device business in 2015. This again highlights the difficulty in differentiating on an open platform. Some of these players might give up on their handset business in 2016. Apple again dominated with 81% of the profit share, 45% of the revenue share, with only 16% of the unit share. Samsung’s profitability improved a bit but it continues to face challenges both on the top and bottom end of the spectrum.

4th Wave Revenues

5 years ago, we put forth the theory of 4th wave to explain the upcoming changes in the mobile ecosystem. For the most part, the industry changes and tribulations have tracked the 4th wave curves. Last year, voice revenues fell down by 23%, messaging revenues declined by 18%, while data revenues grew by 23%. 4th wave revenues which now dominate the ecosystem now grew by a 60% YoY. We will have more analysis of the state of the 4th wave ecosystem later in the year.

In its Q4 15 earnings call, Verizon laid out its 3-Tier strategy which is similar to the 4th wave digital strategy we have been working on with many operators around the globe since 2011 (see paper and slides for details). Without moving up the stack, eventually, operators will run out of the data steam that is powering their revenues today.

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.

Connected Devices – Resetting the target

The 50B number by 2020 has gotten into the industry lexicon since 2010 when Ericsson first suggested that we are likely to reach this target by the end of the decade. Others picked up the number and either copied it or even went further by suggesting even 75B+ numbers. By the middle of this decade, it looks unlikely, we will hit 50B. Our research shows that we were at approximately 16B last year. It is tall order to make up 34B in 5 years. Given the new evidence and assumptions, Ericsson also revised its estimates down to 28B by 2021 (the 2020 number is just over 25B). 25B+ is still an excellent target and something the industry can be proud of. The 50B number still gets thrown around a lot by vendors and media. We will be better off as an industry if we adjust the forecasts based on ground realities and not unnecessarily hype things.

Apple – what’s next? Mastering the narrative

Apple’s profit in Q4 were the highest recorded in the history of mankind. Let that sink in for a minute. Its $18B in profit on $76B revenue was truly astonishing. Yet, the markets were disappointed. What gives? First, the markets care about growth more than they care about the size of the profits or revenue. If the growth number matches or exceeds the expectations, the stock price responds positively otherwise it moves in the other direction. Second, for the first time since 2003, Apple issued a negative guidance on sales.

The unwritten narrative for Apple’s success has been around the iPhone juggernaut. Now that the high-end market for smartphones is starting to saturate, Apple needs a new narrative that can tie to growth. Apple took a shot at it by releasing some new details around services revenue. In any other company, this would have been received very well. With Apple, expectations of the market are supersized so it is not clear if the pivot towards services will help reshape the basic narrative around Apple’s growth.

Connected Consumer

· On average, each US household spent approximately $3800 on access and devices in 2015.

· Roughly 80% or $3000 of the US household spend went to access of services such as cellular voice, mobile data, cable, landline voice, and broadband internet.

· Roughly 20% or $800 of the US household spend went to devices such as computers, smartphones, feature phones, wearables, tablets, e-readers, connected cars, drones, robots, connected home, and other connected devices.

· 41% of the household access spend went to cellular phones (for voice and data services).

· As a standalone category, mobile data is the biggest category approaching $1000 in yearly household spend.

· In the last 5 years, mobile data spend has risen the most and landline voice has declined the most. Cellular voice spend has also gone down while cable and broadband spend have seen relatively modest uptick.

· In devices, smartphone is by far the biggest spend category. Consumers spend almost 3x on smartphones than they spend on personal computers. Smartphones accounted for more than 50% of the US household connected spend in 2015.

· New categories such as wearables, connected cars, drones/robotics, and connected homes have started to make a tangible impact on consumer spend.

· US consumers spent more on wearables than feature phones in 2015.

· Chetan Sharma Consulting conducted its annual Connected Consumer survey of 1000 US households. The results confirmed the ongoing increase in the number of connected devices/household.

Quad Moves

AT&T is integrating its DirectTV acquisition. Verizon acquired AOL and launched Go90. Similar moves are afoot in Europe and other regions. Regular readers won’t be surprised. Video is a key offering for many service providers and by bundling quad plays, operators can further lower the churn. Content will continue to play a big role in how various offerings get bundled. The traditional cable bundle is being pulled apart in favor of more al carte OTT offerings. Media companies will have to figure out how they play in the new converged world. The ones that have been sitting on the sidelines will have to make some moves in the wireless ecosystem to stay relevant in the long-term.

The Upcoming 5G wars?

5G is gaining steam. All the major players have outline their preliminary plans to do trials on 5G (code word for we don’t want to be perceived as being behind). However, there is some real progress being made in short-range ecosystem of 5G. As I noted, in my MWC note, some of the demos coming out of the labs are exciting. In the US, Verizon’s announcement last year took folks by surprise. By Q1 16, both AT&T and T-Mobile announcement their version of 5G trials. Verizon was out with the first batch of results from its experiments indicating 10Gbps throughput at short-distances. Given the momentum behind cm/mm wave, it is possible that some consensus is built around the spectrum bands by country (and not wait till WRC 19) to get the device ecosystem going.

A lot is still unknown about 5G, specifically, what will be the economics of 5G and the business case for new capex and ROI. We hope to explore this topic in more detail in the coming months.

Our paper on 5G covers the past, present, and future of the network evolution.

What to expect in the coming months?

2015 was a tremendous year for mobile industry thus far as it becomes omnipresence in every industry. We saw some massive moves, astounding acquisitions, and interesting strategic endeavors. The final quarter which is typically the biggest in terms of revenue will lay the foundation for an exciting 2016.

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 2015 and 2015 US wireless market is:

Service Revenues

· The US mobile data services revenues in Q4 2015 increased 3% QoQ and 16% YoY.

· After crossing the $100B in data revenues for two straight years, the US market is set for another excellent mobile data services year though some slowdown has started to occur as predicted by our 4th wave thesis.

· Verizon and AT&T dominated the quarter accounting for 69% of the mobile data services revenue and had 67% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q4 2015. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU fell by 2.2%. 

· Data contribution to the overall revenues is now at 72%.

· After a minor blip of positive growth in postpaid ARPU by T-Mobile and AT&T earlier this year, all operators saw declines in postpaid ARPU in Q4 with Sprint showing the sharpest decline with 18% change YoY.

Subscribers

· The US market increased its net-adds to 6.7M. AT&T, Verizon, and T-Mobile all added approx. 2M or more subs. Sprint also showed positive net-adds though at a fraction of the top 3.

· Verizon again led in postpaid net-adds though a bulk of the net-adds are coming from tablets.

· AT&T has approximately 7M connected cars on their network – probably the highest of any mobile operator in the world.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 80% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

· Verizon reported $200 million revenue from M2M and Telematics. At the current run-rate, this will be a billion dollar business by 2016. The current annualized run rate is $800M.

Connected Devices

· Connected devices (non-phones) accounted for almost 66% of the net-adds in Q4 2015. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 97% of the devices sold in Q4 2015. The feature phone category is practically becoming extinct in the US market.

· The smartphone penetration in the US is now at 83%.

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 84M making it the #2 LTE operator behind China Mobile which has more than three times the LTE subs. Other three operators are also deep into their LTE deployments. Verizon reported that 90% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

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 April 2016.

Disclaimer: Some of the companies mentioned in this update are our clients.

Mobile World Congress 2016 Observations February 29, 2016

Posted 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.

VRthe 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.

CES 2016 roundup January 11, 2016

Posted by chetan in : 4th Wave,5G,CES,Chetan Sharma Consulting,Connected Intelligence Era,Internet of Things,IoE,IoT,Mobile 2016,The Golden Age of Mobile,Worldwide Wireless Market , add a comment

CES 2016 roundup

As has been the tradition for the last few years, Cool Toys Association kicked started the year with its annual gadget fest. Ever since the iPhone launch, the industry keeps waiting for a company riding on a unicorn coming from the heavens to surprise us with a technology that we haven’t considered before. However, the romantic notion of someone taking our breath away invariably leaves many disappointed as we get relegated to the incremental improvements of the future. However, CES remains the premier show to lay the foundations of the discussions and debates for the year. Most of the products launched and showcased at the event don’t make it past the show floor but an incredible diversity of devices, applications, services, players, and ideas is on display. Additionally, the deals that are struck away from the limelight makes it one of the most important shows in the tech space.

As usual, I kick-started my CES with the AT&T Dev Summit which provides a good barometer of the initiatives for the year in the operator ecosystem. I also had an opportunity to participate on the WSJ’s panel on innovation to talk about broad industry trends that last beyond 2016. This note provides a summary of our observations from the show.

The Numbers: CTA forecasts the US spending on gadgets to increase 1.6% to $224 Billion in 2016 with smartphones accounting for quarter of that spending. Wearables, drones, robots, and some of the non-traditional devices are starting to appear on the spreadsheet now. As we mentioned in our Connected Consumer Research last year, the spending habits of US consumers are changing. Bulk of spending is still on services like data, internet, and cable with mobile data capturing the most share of the household IT budget.

The march towards Autonomous Intelligence: Each year, we are making incremental progress towards to what seems today a utopian autonomous intelligence state where computers observe anomalies and problems and just fix and address them without human intervention. We have written about this at length in our Connected Intelligence series of papers and will continue to explore the subject in more papers this year. The inevitable emergence of trusted data brokers that help us tie disparate data sources, products, services will be a key development in the coming years.

The current incumbents have a big leg up. In my mind, Google has by far the best machine learning engine. You get a sense of the power of Google’s AI when you travel in remote parts of the world and get a highly accurate representation of human movement – in real-time. It is stunning. Google has better understanding of what’s happening on the ground than any other entity or government in the world.

Facebook has the best repository of emotion movement though the AI engine needs work. Similarly, Amazon knows more about commerce movement than any other player. A number of their products are launched because of this key insight. Apple obviously has good understanding of what their iOS base is doing and while it is smaller than any of the three players mentioned above in their respective areas, in aggregate, it has a potent repository of human behavior and movement. Some mobile operators have technology that can give them insights into some of these trends but their subscriber base is limited and unless they expand beyond their traditional base, they will always be at a disadvantage vis-à-vis the Internet giants.

Intel again gave an excellent keynote of the computing capabilities that are going to enable new interfaces, experiences, devices, and applications. When will computing sense what I am thinking?

Self-driving cars – The biggest headlines at CES this year was for self-driving cars. CES looked like an auto-show. Tesla and Google have forced auto OEMs to dust off their self-driving plans and accelerate their public unveiling because that’s what the cool kids are doing. The notion of self-driving cars has gone from a geek fantasy just a few years ago to the reality on the ground at breathtaking speed. Competition does wonders to the innovation process. The tech to safely deliver a self-driving car is already here. Social-acceptance and regulatory issues will likely to delay the full-blown introduction for sometime.

However, a more interesting development is the marrying of a self-driving fleet with the Uber service model. That’s where a lot of disruption is going to take place. GM’s monstrous $500M investment in Lyft is a defensive bet in that future. Don’t be surprised by some interesting M&A activity in the sector. As, hardware gives way to software domination, new models and players will shift the industry marketecture.

Lot of media companies are busy figuring out how to entertain the consumer with all the new time that will become available in the self-driving cars.

IoT – IoT was a big headline last year, 2016 was just the continuation of what we saw in 2015. Pretty much anything imaginable was connected. Chipset guys are going to stay employed for sometime. The challenge for many new players is still going to be the distribution. Most of the money today is flowing to the system integrators and they can play the role of the segment godfathers of IoT if they play their cards right. Platforms are yet to consolidate around a few accepted technologies and players so we will continue to see the fragmentation and jostling for advantage this year.

Robots – Softbank’s Pepper again stole the show by displaying its humane side. Robots for elderly, kids, and the lonely will become mainstream.

Drones – The drone ecosystem seems to be growing as fast as the self-driving cars (obviously massively different price points). Regulators are more active in understanding what’s going on and how to provide a shape passage to innovation in the space. There are some really interesting use cases both in the consumer and the enterprise space.

Netflix moves – You know what is better than US media domination? Global media domination. Netflix launched its services to pretty much the entire world minus China which remains a closed market for most western services.

3D printing – 3D Printing. Yup, Check!

Connected Home – Connected home has disappointed so far. The pricing is still too high for mainstream adoption and products lack imagination. However, some startups are coming up with both new products that are built from the ground up as well as service models that will get traction. 2016 will continue to be the year of experimentation in the space.

Connected Devices. Unconnected Data – Current set of connected devices are primarily focused on sucking up the data but there hasn’t been much work on connecting the data across devices. If you own an Apple Watch and an iPhone and were having a stroke, Apple watch will duly note that your vitals are deteriorating fast but it will just sit on that data and pray that someone finds you to help out. It has access to a communication tool that could be used to seek immediate help via a call or text but it doesn’t. Data stays unconnected and as such useless in real-life situations. We need more work on the intelligence layer that connects the data and makes it useful. This can be applied to connected devices at home, car, office, city, and pretty much any set of devices and sensors around us.

Smart City – Smart City initiatives are starting to take hold. From governments to industrial players to mobile operator ecosystem, everyone wants a piece of it. Probably, the biggest announcement in the space was from AT&T which is putting together a coalition of the willing to explore the scalable framework for a smart city. Atlanta, Chicago, and Dallas get the first nod. The biggest problem with Smart City is not the tech which is available for most part but the funding and execution. With a majority of the cities in the US in the bankruptcy zone, money is hard to come by. Even if did, cities are notorious for lousy execution and waste of resources. Hopefully, being led by some of the industry players will provide the necessary guidance and new business models to bring many of the big cities into the 21st century. Dubai, Helsinki, Seoul, and Oslo might provide a better inspiration of how to go about making your cities smart. Who wants to live in a dumb city anyway?

Virtual Reality – VR is going mainstream. Will it become the OS for new experiences? By when? What will be the applications and services? Vertical segments? Lot of open questions but we are slowly starting to answer them. Facebook launched its much awaited Oculus, HTC had its Vive and a score of new players emerged on the VR landscape.

IP dilemmas – The federal agents swooped into the CES show floor and took evidence from the booth of Hangzhou First International Trade (maker of the wheeled skateboard) – something that doesn’t happen that often. The pace of introduction of digital products is accelerating at such a pace that it is extremely difficult to protect your IP specially for smaller innovative players. The copycat ecosystem comes so fast that before you know it, you are history. IP tussles used to be the domain of the industry giants but smaller innovators are now getting impacted. The sheer volume of products that use your IP will overwhelm you. But, CES gives a good window into the haves and the have-nots. The federal agencies have their work cut for now.

Samsung – Samsung has studied the history of the mobile industry well. That’s why it is nervous. The fact that they are struggling to maintain their top spot is not surprising, it was expected. in fact, the entire trajectory was very easy to predict. What’s astonishing is that, even after being at the center of the digital explosion with hands into virtually every segment, it hasn’t been able to launch an integrated product strategy. It should have been a leader in IoT but is not. It should have used TV as the home hub to connect everything digital in the house but it hasn’t. it should have led the industry in standards and best practices but it seems confused of its role in the larger ecosystem. In the meantime, Google, Apple, and others are doing circles around them. With a new management team in place, a renewed focus on software, will 2016 be different?

Security & Privacy – Almost every major discussion thread had an underlying question around security and privacy and what can and is being done about it.

Auction – FCC is pretty jazzed about the upcoming spectrum auction. It will be fascinating indeed.

The foldable screen – we have waited for a computing screen that can fold like a newspaper for over 15 years. I first wrote about it in my Wireless Internet book in 2000. We might be still a few years away from full commercialization. Sometimes, these things just take time. A flexible screen could lead to breaking of the rectangular screen mold that is starting to get boring. Full marks to LG for bringing the screen to the market.

Vaporware – There was plenty of hand waving. Some managed to fool the press into feeding into the frenzy like Faraday Future (apparent competitor to Tesla), Ehang flying cars.

Uber in Vegas – Every year, CES attendees to the torture of the Vegas taxis and the highly inefficient system of transportation. For the first time, Uber and Lyft were in action and it definitely help at times. The taxi cabal hates the entry of the new brethren in the market but will learn to live with it.

Next stop, DLD Munich.

Have a great 2016.

Best wishes

Mobile Predictions 2016 January 3, 2016

Posted by chetan in : US Wireless Market , add a comment

Mobile Predictions 2016

http://www.chetansharma.com/MobilePredictions2016.htm

2016 mobile industry_predictions_survey_chetan_sharma_consulting from Chetan Sharma

 

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A very happy, healthy, and prosperous 2016 to you and your family. Hope you had a good holiday and area ready to take on the new year with vigor and purpose. My thanks to all who participated in our 9thannual Mobile Predictions Survey. It is a unique polling of the insiders to get a glimpse into what the ecosystem is thinking about the future.

As I have mentioned before, we are entering the Connected Intelligence Era and the mobile industry is growing beyond its traditional borders to transform every vertical industry and by extension – the global GDP. Proof is in the numbers. 7 Zettabytes of digital information created. 1.3 billion smartphones sold. 31 Exabytes of mobile data traffic (which btw will grow 15x+ in the next 5 years). 72 million wearables sold. 16 billion connected devices. Almost half trillion dollars in data revenues. Quarter billion dollars in OTT revenues. At least 62 companies generating a billion or more from 4th wave. At least 8 companies generating a billion or more from IoT.

The improving economy empowered consumers to spend more. Europe is starting to come out of the 2008 recession. Asia is on fire. Any slow-down in China has been picked up by startups in India who are transforming the commerce landscape. Even remote islands like Tonga are LTE-enabled and citizens everywhere have access to high-speed broadband networks. Affordability remains a key issue to address to bring in the next billions into the fold.

IoT emerged as a big category last year and we are just starting. While the potential is unlimited, industry needs to come together on a number of issues around fragmentation, security, policy, and privacy. The fact that we are selling more non-phone devices than phone devices on cellular networks in the US should be a hint of things to come. 2015 saw a wave of consolidation and we will continue to see stronger player get more aggressive this year across domains which is very exciting. We passed the mid-point of this decade and most certainly, the next five years are going to be full of action, surprises, and transformation. Stay with us and we will keep you posted.

We do our annual survey to engage our knowledgeable community on trends and events to keep an eye on. The composite view gives a glimpse into the future scenarios. Executives, developers, and insiders from leading mobile companies and startups from across the value chain and from the around the globe participated to educate us on what to expect of 2016. The survey draws upon the unique collective wisdom of the folks who are making it happen. Thanks for being part of the annual ritual.

25 names were randomly drawn for the limited edition of the Mobile Future Forward 2015 book and they have been notified. Congrats.

Welcome 2016!

Kind regards,

Chetan

What was most newsworthy in Mobile 2015?

2015 was a year of change in the mobile industry. The rise of Uber and its ilk are transforming traditional decades old industries in front of our eyes. T-Mobile’s impact on the mobile industry was felt far and wide and these two ended up being our top two stories of the year. Closely followed the continued rise of connected devices, IoT, and the mobile revenues around the globe. The emergence of Chinese players on the global platform is shifting things around. Apple’s tussle with Samsung subsided in the back pages of 2015.

What will be the biggest mobile stories of 2016?

2015 saw the launch of Google-Fi, 2016 might see the expansion of the concept by other players. Connected devices of all shapes and sizes will continue to transform the ecosystem and consumer mindset. We might see new experiences in VR and flexible displays introduced this year. Spectrum auctions and regulatory tussles will be a key story in 2016. Apple car rumors will continue. Mobile commerce growth in India was a big story in 2015 and will continue to only become more dominant this year.

Who are the top 4 important players in the mobile ecosystem?

Apple and Google continue to be the top 2 most important players in the mobile ecosystem. The biggest shift was that Facebook replaced Samsung at number 3 and Operators consolidated their position at number 4. There are 5-10 global operators who are influential in the direction of the industry. Will Samsung make a comeback in 2016 under the new leadership remains to be seen and will be the story to watch this year. While Microsoft ranked low, 2015 saw a shift from its failed strategy something we have advocated for many years. Can it recapture the love of the developers? It will be key to its future role in the ecosystem.

What will be the breakthrough categories in mobile in 2016?

For the second year in a row, Mobile Payments was voted as the key category for 2016 followed by Big data and analytics, Enterprise IoT, Connected Devices, and Mobile Security.

What will be the most popular consumer mobile applications in 2016?

Mobile applications are transforming many industries and 2016 will only accelerate this trend. Amongst the most popular app categories: Mobile Health and Wellness, Location Based Services, Mobile Payments and Commerce, Messaging which could emerge as the next major mobile OS this year, social and IoT.

Who will dominate the mobile payment/commerce space?

The introduction of Apple Pay last year shifted the long held view that Financial guys will dominate the space. However, the enthusiasm seems have subsided and the Visa and Mastercards of the world are back in the driver seat. Apple will continue to play an industry defining role. Operators have largely been marginalized mostly due to self-inflicted strategy blunders. Google could have played a more significant role but is operating on the edges. Amazon and Facebook can be disruptors in the space but so far haven’t shown must gusto to shape the industry.

Who will make the biggest mobile acquisition in 2016?

Google continues to be the player that startups and investors hope will help make their payday. Significant service provider M&As are also on the cards as they were in 2015. Facebook is perhaps the gustiest acquirer. Microsoft looking to stay relevant in the ecosystem is likely to be bolder and more strategic in its acquisitions in 2016.

Who is doing the most interesting work in the IoT space?

We are in the early phases of the connected intelligence era and startups seem to be doing the most interesting work in creating new solutions, hardware, and services. However, the big boys are investing heavily as well. Google, AT&T, GE, and Intel all are putting in a lot of resources and for some of them, IoT is already a multi-billion-dollar business. We expect several acquisitions in the space throughout the year.

What protocol will dominate IoT communications?

There is a race to dominate the IoT communications protocol layer. The emergence of Sigfox and Lora is similar to the introduction of WiMax which failed but played the role of rallying the GSM players to work on LTE. Similarly, NB-LTE has been rushed and positioned to address the IoT opportunity. In the absence of any widely adopted protocol, WiFi continues to dominate the remainder of the IoT industry and is likely to play a very important role in the coming years.

Which solutions will gain the most traction for managing mobile data broadband consumption?

WiFi continues to play a very important role in handling mobile data demand. 70-80% of the consumption these days in most developed markets is taking place over WiFi (and hence fixed broadband). This hasn’t dampened the demand for cellular data though and it continues to increase albeit at a lower rate. Alternate business models like sponsored data and 5G have started to enter the conversation and we expect more discussion on the subject this year.

Which category will generate the most mobile data revenue in 2016?

The revenue trends are following the expected trajectory. Mature mobile markets have revenues divided between apps, access, OTT, and advertising. In the emerging markets, messaging (including SMS) still plays an important role though access is starting to generate some serious revenues for almost all mobile operators around the globe.

Which region will end up leading the world in 5G by 2020?

4G has been dominated by North American operators. There is a real race underway to take the honors for 5G. The collective wisdom right now is that Korea will end up kick-starting the 5G deployments though Verizon the US has stated its intention to be the leader. Europe and China also have several initiatives to make their mark in the race to 5G.

When will mobile commerce be greater than ecommerce?

We are at the tipping point in North America and Europe with Asia close behind.

The company bringing the most successful mobile gadget of the year – 2015 and 2016?

Since the introduction of the iPhone in 2007, Apple continues to dominate the race. Though 6s didn’t have as great of a reception as 6, it was enough for Apple to once again take the honors for the year. It is expected that while others will make some minor gains, Apple is again going to dominate in 2016.

Mobile company of the year – 2015 and 2016?

Besides Apple, Uber and Facebook really excited the industry – Uber with its breathtaking valuation curve and Facebook with its impressive revenue curves. T-Mobile with its many un-carrier moves shaped the US market decisively and unseated Sprint at #3 for the first time. The big two also had to respond to the pricing changes that TMO introduced. Operators beyond the US borders were also impacted as the tier-2 operators tried to copy TMO moves in their respective markets. AT&T with its heavy investments in the connected intelligence space is likely to make news in 2016. Google will continue to be an important player. The new corporate structure might help the company to be more aggressive. Amazon continues to be a juggernaut in the mobile commerce space – bigger than anyone else and with its complete hold over the consumer psyche, it will make further gains in the space.

Automation and Digitization of industries will lead to?

This is still an early area of discussion. We are still trying to understand how societies will be shaped by automation. Will past provide any guidance or are we unchartered territory. Arguments can be made on both sides. We continue to study the data points to inform our view on the subject. Opinions haven’t changed much since last year though there is a slight uptick in the number of people expecting automation to impact them negatively.

Which of the following are likely to happen in 2016?

Apple didn’t reach the trillion-dollar market cap but remains on course though 2016 could be a challenging year for the company. Wall Street has lofty expectations from the company that continues to defy expectations with its monstrous revenue and profits each quarter. It is a company unlike any other on the planet and remains a subject of intense curiosity amongst industry participants. Last year, the survey predicted Amazon opening a retail store which the company readily obliged. Data-only smartphone plans will start to become common. Some benevolent acquirer will end Yahoo’s misery run. Sprint and T-Mobile will continue to be the subject of M&A speculation. 5G marketing drama will intensify. Microsoft might make a comeback in devices. 2016 will keep us on our toes with its many unexpected turns and tribulations.

What category will be impacted the most by mobile in the next 5 years?

IoT, Home Automation, Health and Wellness, and Autonomous Cars are the most exciting categories for the year.

Which segments are likely to get disintermediated the most by algorithms in the next 5 years?

Algorithms can disintermediate a lot of industry job segments. At the highest risk are advertising agencies, transportation, real estate agents, retail, and car drivers. Fascinating trends to follow.

Who was and will be the mobile person of the year?

In the past executives from device companies have dominated the top honors. However, the mobile person of the year for 2015 was John Legere (first time someone at the mobile operator took the honor). With his colorful persona, he has reshaped the industry in many ways. Tim at Apple, Mark at Facebook, Sundar at Google, and Jeff at Amazon rounded out the top 5. The stars for 2016 are predicted to be Sundar Pichai, Tim Cook, Jeff Bezos, Mark Zuckerberg, Satya Nadella, and Jack Ma. Honorable mentions went to Lei Jun, Travis Kalanick, Masayoshi Son, Ralph de la Vega, Glenn Lurie, Marcelo Claure, Tom Wheeler, Steve Mollenkopf, Jony Ive, Nikesh Arora, Brian Krzanich, and many others.

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 Feb 2016.

Disclaimer: Some of the companies mentioned in this update are our clients.

Request for input – Mobile Predictions 2016 Survey December 8, 2015

Posted by chetan in : US Wireless Market , add a comment

Greetings,

Trust that the end of a fabulous mobile year is treating you well. Wish you and yours a very happy holiday season and best wishes for a terrific 2016.

As is the tradition, we are doing our 9th Annual Mobile Predictions Survey for 2016. I would like to request your input in the process. We rely on our community and colleagues to help us understand the trends for the upcoming year.

The survey is available at https://www.surveymonkey.com/r/MOBILEFUTURE

The questions are:

1. What was most newsworthy in Mobile 2015?

2. What will be the biggest mobile stories of 2016?

3. Who are the top 4 important players in the mobile ecosystem?

4. What will be the breakthrough categories in mobile in 2016?

5. What will be the most popular consumer mobile applications in 2016?

6. Who will dominate the mobile payment/commerce space?

7. Who will make the biggest mobile acquisition in 2016?

8. Who is doing the most interesting work in the IoT space?

9. What protocol will dominate IoT communications?

10. Which solutions will gain the most traction for managing mobile data broadband consumption?

11. Which category will generate the most mobile data revenue in 2016?

12. Which region will end up leading the world in 5G by 2020?

13. When will mobile commerce be greater than ecommerce?

14. The company bringing the most successful mobile gadget of the year – 2015 and 2016?

15. Mobile company of the year – 2015 and 2016?

16. Automation and Digitization of industries will lead to?

17. Which of the following are likely to happen in 2016?

18. What category will be impacted the most by mobile in the next 5 years?

19. Which segments are likely to get disintermediated the most by algorithms in the next 5 years?

20. Who was and will be the mobile person of the year?

As an incentive, we will be giving away 10 copies of our exclusive edition Mobile Future Forward 2015 book (Connected Intelligence Era: Golden Age of Mobile) that is a collection of essays and interviews from some of the most influential mobile executives on the future of mobile.

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Deadline: Dec 29th. Results will be released in early January.

Thanks and see you in 2016.

Kind regards,

Chetan Sharma

Mobile Future Forward | Standard Saver expires Friday | Registration closes next week September 18, 2015

Posted by chetan in : US Wireless Market , add a comment

Greetings,

In 2013, Time Magazine said that Mobile Future Forward is one of the best and most important conferences on mobile. Folks in our community know why.

We are putting the final touches to preparations for our Mobile Future Forward Summit coming up in a few days. There are some outstanding leaders, inventors, legends, professors, investors, startups, visionaries, and doers from around the globe in the mix and we are preparing for an outstanding day of brainstorm that will have implications on your assumptions, product plans, and strategic direction of your vision. The IP quotient of MFF speakers is the highest of any such gathering in the world.

We will be presenting a lot of data to back up our assumptions about various views of the emerging landscape, there will be discussion around IoT, 5G, architectures, applications, vertical industries such as retail, commerce, health, transportation, travel, insurance, media, advertising, and others. We have a brilliant panel on how to transform data into revenues. Will dig deeper in cyber security, VR, payments, spectrum demand, and much more. We will focus on what a connected enterprise means? What are the expectations of a connected consumer? What are the new business models? And most importantly, the new revenue flows – where is the “real” money in the value chain?

One of our guests last year put it succinctly:

The caliber of participants is extraordinary. Mobile Future Forward is a data driven event, the team has put together so much hard to find factual data that is unrivaled anywhere in the industry in terms of building the foundation of facts for analysis. I normally don’t learn new things at events but at Mobile Future Forward, I did. – North American Leader – IoT and Mobile, IBM

We expect to sell out so please grab your seats today. Standard Saver expires this Friday (9/18) and registration closes next week.

Summit Partners: Our heartfelt thanks to our terrific summit partners who made it all possible: Ericsson, Neustar, Oracle Communications, Overture Networks, and Tata Communications.

The Mobile Future Forward team, our esteemed partners, our fantastic speakers and our engaged community are really looking forward to Sept 29th.

We hope you will join us in what is shaping up to be an exceptional gathering of the mobile minds.

Thanks and best wishes.

Chetan Sharma

NEW BOOK: Connected Intelligence – Reimagine Everything

Posted by chetan in : US Wireless Market , add a comment

 

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We are pleased to announce that our Mobile Future Forward Book for 2015 will be published and become available exclusively to Mobile Future Forward participants on Sept 29th. As is the tradition, the book has some brilliant essays from our speakers – the thought leaders and mobile industry senior executives, on trends, opportunities, innovations, and user experiences. More importantly, these thought-pieces highlight how some of the leading companies are gearing themselves to execute in the Connected Intelligence Era. The book provides a perfect platform for our day long brainstorm about what the next 5 years in mobile will look like. We have extraordinary speakers and am really looking forward to the discussions throughout the day.

The essays are:

1. The History and the Future of Connected Intelligence – Chetan Sharma, CEO, Chetan Sharma Consulting

2. The New Strategic Competitive Advantage: Connected Intelligence – Doug Suriano, SVP and GM, Oracle Communications

3. Staying Ahead of the Wave – Glenn Lurie, President and CEO, AT&T Mobility

4. 5G Era: When Networks Transform Everything – Hossein Moiin, CTO and EVP, Nokia Networks

5. 5G: The Past, Present, and Future of Mobile Industry Evolution – Chetan Sharma, CEO, Chetan Sharma Consulting

6. Connecting with the Connected Consumer – Raja Rajamannar, CMO, Mastercard

7. Securing the Future of Connected Cars  – Sarla Sharma, COO, Chetan Sharma Consulting

8. The Cell Phone Redefined – Martin Cooper, Chairman, Dyna LLC

9. Interoperability – The Essential Step to Realizing the IoT Vision  – Hank Skorny, SVP – IoT, Neustar

10. Mobile Patents Landscape: An In-depth Quantitative Analysis – Chetan Sharma, CEO, Chetan Sharma Consulting

11. The Future of Money – Vijay Shekhar Sharma, CEO and Founder, Paytm

The goal of the Mobile Future Forward Summit is to explore the future of the mobile industry, to create new connections, to openly discuss and debate new ideas. By bringing together a really diverse group of individual leaders – both speakers and audience, we are able to create an environment for constructive dialogue that will hopefully help in formulating your own strategies and product plans.

Thanks to all the authors and their respective organizations for making this year’s book possible.

Chetan Sharma

The History and the Future of Connected Intelligence September 2, 2015

Posted by chetan in : 4th Wave,Chetan Sharma Consulting,Connected Devices,Connected Intelligence Era,Internet of Things,IoE,IoT,Mobile Future,Mobile Future Forward , add a comment

The History and the Future of Connected Intelligence

A Mobile Future Forward Research Paper

http://www.chetansharma.com/historyofconnectedintelligence.htm

Last year we introduced the concept of “Connected Intelligence” and how it is going to shape the next era of computing, communications, and technology. While to some this might seem as something new, folks who have been tinkering on the edges know that this evolution has taken place over more than 200 years. The concept of connectivity and intelligence have been around for decades. Early form of communication between two end points has existed since early 1800s. In fact, intelligence organizations in military and espionage have been using the basic techniques for the last two centuries. Even the industrial folks recognized the need for end-point sensors to communicate data of “things” that are outside the constant purview of humans.

The oil and gas industry has been using basic telemetry for almost half a century. The history of connected intelligence is very long. The present day evolution is the culmination of the several trends of the last two centuries. From the early days of telemetry to significant developments in machine to machine to connecting objects to the internet via Internet of Things have played a critical role in this journey. Along the same lines, the telegraphy, the phone, and the cellular industry have over the same time period changed how bits are transferred from point A to point B. To appreciate where we are going, we need to marvel at the historical achievements of the pioneers of past. In this paper, we will take a look at how the notion of connected intelligence has evolved over the last two centuries and where do we go from here.

Download

Your feedback is always welcome.

Chetan Sharma

We will be taking a deep dive into the Connected Intelligence Ecosystem and Opportunities in our upcoming summit Mobile Future Forward on Sept 29th.

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 Nov 2015.

Mobile Future Forward: Reimagine Everything August 28, 2015

Posted by chetan in : US Wireless Market , add a comment

Mobile Future Forward means business. We got so many deals done that it is a no brainer to attend again this year – CEO and founder, Mobile Startup

Mobile Future Forward connects a lot of high-level people with very progressive thinking and it is at the cutting edge of how technology is absorbed – MD, Leading Private Equity Firm

Mobile Future Forward is the most intellectual conference – CEO and founder, Connected Watch Company

Dear Friends,

Here is a pop quiz to end the week.

When was the first instance of what is today known as IoT recorded?

a) 1991

b) 1980

c) 1812

d) 1836

e) 1901

f) 1930

g) 1958

Each year represents a milestone in the history of Connected Intelligence. The advent of telegraph, radar, telephone, wireless paved the way for 200 years of innovation evolution. Inventors such as Schilling, Gauss, Weber, Morse, Bell, Bose, Marconi, Ericsson, Galvin, Cooper (as you know Marty is joining us at MFF this year), and scores of other extraordinary individuals saw what others couldn’t and changed the trajectory of human civilization. However, the first instance of connected things took place before any of these remarkable individuals came to the scene.

The correct answer is 1812.

If you picked the right answer, you just won an automatic entry into the CI Historian Hall of Fame.

The first use of data transmission was recorded by P.L. Shilling who reported that the Russians telemetered the successful firing of remotely activated mines to stem the French invaders during the war of 1812. After that the notion of connected devices was used quite extensively in wars, weather reports, space exploration, transportation, medicine, entertainment, and the like. The taxonomy changed as different breakthroughs were incorporated into connected devices. From Telemetering, we went to Telemetry to M2M to now IoT. This has set us up nicely for a an explosive “Connected Intelligence” age to reimagine everything, each minute task, every revenue flow, every industry. We will explore “The History and the Future of Connected Intelligence” in the Mobile Future Forward 2015 paper that comes out next week.

In the meantime, we are busy preparing for the summit in four weeks and we have some brilliant minds that will test your thinking and grow your appetite for more.

Registration (First Come, First Served)

Additionally, here are some of the highlights of what we will be discussing during our annual brainstorm:

Connected Intelligence and the evolution of media consumption

Media remains a core part of our society. The entertainment, education, sports, drama, movies, and news events keep us captivated but how does the media creation, delivery, and engagement evolve with the new set of tools.

· Robert Gelick, SVP and GM – Digital, CBSInteractive

· Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs

Disruption is my middle name

Every company present at Mobile Future Forward is disrupting the markets in their own ways, some more fundamentally than others, some more dramatically than others. We will look at the disruption of traditional industries and creation of new ones.

· Sunil Daluvoy, Head of Business Development, Uber Everything

· Dr. João Barros, Founder & CEO, Veniam

· Ralph Derrickson, President and CEO, Carena

5G and the Future of the Network

The 5G discussion is gaining significant momentum at all levels. We will have folks who understand the technology, the standards, and the economics better than most.

· Hossein Moiin, EVP and CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Mark McDiarmid, VP, Radio Network Engineering, T-Mobile

· Bob Azzi, Executive Managing Partner, Argylegriffin

Leading the Connected Intelligence Era

At AT&T, Glenn Lurie saw the emergence of the 4th wave before many of his peers (some still don’t see it). Under his stewardship, AT&T has become a trusted partner and leader in many of the emerging areas such as connected car, enterprise services, IoT, digital home, etc. We will explore the opportunities, the learnings and what does it take to prepare a big company for the Connected Intelligence Era.

Connected CIOs

CIOs play a critical role in keeping their company ahead of the curve in terms of tools and technology. We will have CIOs from different industries address the challenges and the solutions needed to prepare the enterprise for the connected age.

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Julie Woods-Moss, CEO, Tata Communications NextGen Business

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Mark Fernandes, Managing Director, Sierra Ventures

Incredible India

India’s tech sector is on fire. It is the fastest growing economy with many terrific unicorns driving excitement and real revenue. We will have the top two companies who will educate us on what’s working in mcommerce in India and why.

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Vijay Shekhar Sharma, Founder and CEO, Paytm

Convergence of industries, platforms, and opportunities

The IT and Telecom industries have collided and no one understands this better than Oracle as they work with all of the top 100 IT and Telecom clients around the globe. Hear from the executive who runs the global communications business on what’s changing in the enterprise and the wireless world and why.

· Doug Suriano, SVP and GM, Oracle Communications

Funding the next unicorn in the Connected Intelligence Era

It requires a different kind of mindset to invest in the next unicorn that can reshape an industry or the ecosystem. Meet the VCs who have a keen eye on finding such companies

· Tim Chang, Managing Partner, Mayfield

· Lo Toney, Partner – Catalyst Fund, Comcast Ventures

· Bubba Murarka, Partner, DFJ

· Colin Greenspon, Managing Director, Mithril

We will have discussion around Man and Machine, Industrial IoT, Building blocks of Connected Intelligence, New Platforms and Tools, Security, Robotics, Vertical Industries, and a ton more. We will have startups that will blow your mind, projects from the giants that will surprise you, and technology break-throughs that will inspire you.

What will be the $ flows, where are the early opportunities and successes, what are the use cases? We will tackle them all at Mobile Future Forward on Sept 29th. We welcome you to join us in the discussions and contribute to the collective knowledge of our industry. Give us your one day, and we will give you the next 5 years in mobile.

A number of key industry partnerships and relationships are formed at Mobile Future Forward. Make sure you are not left behind.

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson, Neustar, Oracle Communications, and Tata Communications.

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Chairman, Tillman Global Holdings

· Hossein Moiin, CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Josh Will, SVP – Mobile, Best Buy

· Tim Chang, Managing Partner, Mayfield

· Prof. Shyam Gollakota, University of Washington

· Mark Fernandes, Managing Director, Sierra Ventures

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Doug Suriano, SVP and GM, Oracle Communications

· Vishal Gupta, Chief Products and IoT Officer, Silent Circle

· Marty Cooper, Chairman, Dyna

· Vijay Shekhar Sharma, Founder and CEO, Paytm

· Julie Woods-Moss, CMO, CEO – Nextgen Business, Tata Communications

· Andrew Hopkins, Managing Director – IoT, Accenture

· Lo Toney, Partner – Catalyst Fund, Comcast Ventures

· Robert Gelick, SVP and GM – Digital, CBSInteractive

· Bob Azzi, Executive Managing Partner, Argylegriffin

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Sunil Daluvoy, Head of Business Development, Uber Everything

· Dr. João Barros, Founder & CEO, Veniam

· Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs

· Mark McDiarmid, VP, Radio Network Engineering, T-Mobile

· Bubba Murarka, Partner, DFJ

· Colin Greenspon, Managing Director, Mithril

· Kelly Fitzsimmons, CEO and Founder, Harqen

· Sam Shawki, CEO and Founder, MagicCube

· Ralph Derrickson, President and CEO, Carena

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Thanks.

Chetan Sharma

Mobile Future Forward: Uber, CBS, NBC, Veniam join the program August 14, 2015

Posted by chetan in : 4th Wave,Chetan Sharma Consulting,Connected Intelligence Era,Mobile Future Forward , add a comment

Mobile Future Forward means business. We got so many deals done that it is a no brainer to attend again this year – CEO and founder, Mobile Startup

Mobile Future Forward connects a lot of high-level people with very progressive thinking and it is at the cutting edge of how technology is absorbed – MD, Leading Private Equity Firm

Mobile Future Forward is the most intellectual conference – CEO and founder, Connected Watch Company

Dear Friends,

One of the trends I have talked about is the impact of connected intelligence ecosystem on other industries. As we mentioned in our research earlier this year, US became the first country in 2014 when the 4th wave revenues eclipsed the access revenues. The universe on top of the IP layer is expanding faster than ever. We will go deeper into this facet of global growth using specific industry examples. Transportation is one of the categories that has captured the imagination of the ecosystem worldwide. Uber has become synonymous with disruption. The promise of connected cars, autonomous vehicles, and the media consumption when we will have all this time is not science fiction anymore but a tantalizing reality of the near future.

The Media landscape is changing right before our eyes. Consumption is up, distribution is changing, consumer expectations have diversified. Billions of dollars are at stake.

We have some exceptional speakers to help us think through the changes that are upon us:

Robert Gelick, SVP and GM of Digital Platforms at CBS Interactive is tasked with building CBS Interactive Entertainment experiences across multiple platforms.

Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs is looking at advanced technologies that will shape our media experiences.

Sunil Daluvoy, Head of Business Development for Uber Everything is a Google veteran who has worked on new products such as Google Fiber, Wallet, and Adsense.

Dr. João Barros, Founder & CEO, Veniam is a professor in Portugal and a global entrepreneur who is building the networking fabric for the Internet of Moving Things. Extremely fascinating results. This company is going places.

Registration (4th Wave Saver expires next week)

Additionally, here are some of the highlights of what we will be discussing during our annual brainstorm:

5G and the Future of the Network

The 5G discussion is gaining significant momentum at all levels. We will have folks who understand the technology, the standards, and the economics better than most.

· Hossein Moiin, EVP and CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Bob Azzi, Executive Managing Partner, Argylegriffin

Leading the Connected Intelligence Era

At AT&T, Glenn Lurie saw the emergence of the 4th wave before many of his peers (some still don’t see it). Under his stewardship, AT&T has become a trusted partner and leader in many of the emerging areas such as connected car, enterprise services, IoT, digital home, etc. We will explore the opportunities, the learnings and what does it take to prepare a big company for the Connected Intelligence Era.

Connected CIOs

CIOs play a critical role in keeping their company ahead of the curve in terms of tools and technology. We will have CIOs from different industries address the challenges and the solutions needed to prepare the enterprise for the connected age.

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Erez Yarkoni, CIO and EVP, Telstra

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Mark Fernandes, Managing Director, Sierra Ventures

Incredible India

India’s tech sector is on fire. It is the fastest growing economy with many terrific unicorns driving excitement and real revenue. We will have the top two companies who will educate us on what’s working in mcommerce in India and why.

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Vijay Shekhar Sharma, Founder and CEO, Paytm

Convergence of industries, platforms, and opportunities

The IT and Telecom industries have collided and no one understands this better than Oracle as they work with all of the top 100 IT and Telecom clients around the globe. Hear from the executive who runs the global communications business on what’s changing in the enterprise and the wireless world and why.

· Doug Suriano, SVP and GM, Oracle Communications

We will have discussion around Man and Machine, Industrial IoT, Building blocks of Connected Intelligence, New Platforms and Tools, Security, Robotics, Vertical Industries, and a ton more. We will have startups that will blow your mind, projects from the giants that will surprise you, and technology break-throughs that will inspire you.

What will be the $ flows, where are the early opportunities and successes, what are the use cases? We will tackle them all at Mobile Future Forward on Sept 29th. We welcome you to join us in the discussions and contribute to the collective knowledge of our industry. Give us your one day, and we will give you the next 5 years in mobile.

A number of key industry partnerships and relationships are formed at Mobile Future Forward. Make sure you are not left behind.

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson, Neustar, Oracle Communications, and Tata Communications.

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Chairman, Tillman Global Holdings

· Hossein Moiin, CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Josh Will, SVP – Mobile, Best Buy

· Tim Chang, Managing Partner, Mayfield

· Prof. Shyam Gollakota, University of Washington

· Mark Fernandes, Managing Director, Sierra Ventures

· Erez Yarkoni, CIO and EVP, Telstra

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Doug Suriano, SVP and GM, Oracle Communications

· Vishal Gupta, Chief Products and IoT Officer, Silent Circle

· Marty Cooper, Chairman, Dyna

· Vijay Shekhar Sharma, Founder and CEO, Paytm

· Julie Woods-Moss, CMO, CEO – Nextgen Business, Tata Communications

· Andrew Hopkins, Managing Director – IoT, Accenture

· Lo Toney, Partner – Catalyst Fund, Comcast Ventures

· Robert Gelick, SVP and GM – Digital, CBSInteractive

· Bob Azzi, Executive Managing Partner, Argylegriffin

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Sunil Daluvoy, Head of Business Development, Uber Everything

· Dr. João Barros, Founder & CEO, Veniam

· Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Thanks.

Chetan Sharma

US Mobile Market Update – Q2 2015 August 12, 2015

Posted by chetan in : 4G,4th Wave,5G,AORTA,Connected Intelligence Era,Emerging Markets,Fourth Wave,The Golden Age of Mobile , add a comment

US Mobile Market Update – Q2 2015

http://www.chetansharma.com/usmarketupdateq22015.htm

Summary

The US mobile data market grew by 3% QoQ and 14% YoY. The overall services revenue declined again by 1%. The device revenue increased by 21% which helped the overall revenue to grow by 3%.

The biggest news of the quarter was as we had suggested last year – T-Mobile finally going past Sprint to become #3 for the first time. TMO continues to add the bulk of postpaid phone subs and it helped the company reverse the declining postpaid ARPU trend that had been so prevalent for the last three years. AT&T’s postpaid ARPU also stabilized

All four operators delivered historic low churn rates and are running much tighter operations. Net income improved 11% YoY.

After seeing steep declines in 2014, the mobile data pricing has started to inch up in 1H 2015. The emphasis of unlimited is paving way for shared data plans and the data buckets per account keep on inching up. In fact, many low-to-mid tiers have seen a price increase. Some of the upper enterprise tiers have seen the prices double. This bodes well for the margins and revenue in 2H 2015.

Smartphone penetration increased to 78% and roughly 95% of the devices sold now are smartphones. The smartphone penetration amongst postpaid users is now 84%.

The iPhone again dominated with 75% of the smartphone profits. While the Android profits improved 41% QoQ, the smartphone business remains a challenge for a number of Android OEMs.

As we have suggested for the last couple of years, Microsoft finally got rid of Nokia and is focusing its energy on software and services.

4th wave services continue to grow at a very past face around the globe. IoT as a category is also making steady progress with a number of players reporting multi-million dollar revenue quarters most notably Intel with over a billion dollars in revenue in the first six months. Fitbit reported $736M in 1H with a whopping 49% margin.

T-Mobile Ascension to #3 – a historical perspective

One year ago, we suggested that T-Mobile is likely to become the #3 operator in early 2015. Given the current trends, the T-Mobile’s ascension to the #3 spot was rather anticlimactic.

In the service provider land, switching rank based on organic growth is rare. Most of the times, the rank switches because of M&A. This has been true for most part for US mobile operators over the last 30+ years. The top two positions in the last 20 years have been held by AT&T and Verizon who have taken turns to hold the #1 spot. The #3 and #4 rankings haven’t changed since 2004. In fact, when Sprint acquired Nextel, T-Mobile had less than half the customers of Sprint Nextel. However, aided by the Metro PCS acquisition, while Sprint added only 13M subs in 11 years, T-Mobile added more than 3x – 37M. Nextel proved to be a really bad operator acquisition – the company is still reeling from that decision.

At the time of the Nextel acquisition, T-Mobile’s share of the market was roughly 10%. By the end of 2015, T-Mobile’s share will increase to almost 17%. During the same 10 year period, Sprint’s share has declined from 23% to 16%. Verizon and AT&T controlled 51% of the market in 2005. Now that share stands at 68%. Rest of the market has virtually dissipated in light of the fierce competition.

US mobile operator consolidation – what’s next?

Like any other market and like what you would expect in a maturing industry, the US mobile operator segment has consolidated in predictable ways. 20 years ago, AT&T fresh from its McCaw Cellular acquisition led the market with 3.95M subs at 14.5% share. Today, it still leads the market with 124M subs at 34% share. In the last 20 years, the market has whittled down to four national players. As we discussed back in our 2011 paper, in every market, the competitive and regulatory forces narrows down the field to 3 players. The top 3 players controlled 40% of the market in 1995. With T-Mobile ascending to #3, by the end of 2015, the top 3 will have almost 90% of the market. This is no different than other major mobile markets. Barring India (which will follow this trend soon as well), each market either by design or by market forces has consolidated to three major players.

The US regulators have resisted the trend and it has worked out better for the consumers as competition has led to better deals and non-stop new offers. However, as we suggested in our paper, market forces are often more powerful than the regulatory ideology. In the last two years, since the Softbank acquisition, T-Mobile’s marketcap has doubled while Sprint’s has been cut down into half. T-Mobile is only slighty ahead in the subscriber count but in terms of marketcap, it is 2.5x more valuable than Sprint. Instead of being the hunted, it has become the hunter. On the other hand, without a substantial infusion of external investment, it will be a challenging few quarters for Sprint.

Given that there are only a few legit big suitors left for T-Mobile or Sprint, the market is waiting for a major acquisition to happen in the next 12-18 months.

US Service Revenues: Turnaround?

In 2014, data pricing came down by 77% to historic lows. However, in the first half of 2015, price/GB hasn’t really come down any further than the lowest levels seen in 2014. In fact, some categories even saw a jump as some of the promotions went away. It is also notable that both T-Mobile and Sprint are de-emphasizing (though the plans are still available) unlimited data plans and instead they are promoting their shared bucket data plans. This is good for profitability.

Though Sprint saw its position slip, the churn number looked much better than past quarters. AT&T and Verizon have managed their respective companies to historic low churn numbers. T-Mobile has literally cut down its churn rate by 50% over the last three years.

The fierce competition has put pressure on the service revenues which declined (YoY) for the first time in the history of the industry in Q1 2015 by 2%. In Q2 2015, the service revenues still declined by 1% but there are some early signs of stabilization.

T-Mobile’s postpaid ARPU which has been in decline for three years increased QoQ (YoY it still declined). For AT&T, the postpaid ARPU stayed flat. For Verizon and Sprint, the postpaid ARPU declined but by less amount than it did in Q1.

The industry also delivered better EBITDA and Net Income numbers which shows the operators are running a tighter operation compared to last year.

One data point doesn’t make a trend and we need to study the numbers of the next two quarters, if the industry has stemmed the decline or it was just a blip.

Microsoft’s turbulent history with mobile

In 2001, of all the major computing brands, Microsoft probably had the clearest view of the things to come in mobile. It was working with several leading players in Japan where imode was taking the country (and the world) by storm. It did make incremental progress with Windows CE but never really embraced mobile as a strategic pillar of growth until Satya became the CEO. However, his first task was to undo the mistakes of the previous administration and he had no choice but to untangle Microsoft from the Nokia deal. It has just taken this amount of time to write-off one of the biggest corporate mistakes in the industry.

As we have been saying for the last couple of years, Microsoft should abandon the strategy to fight Apple on Apple’s turf and instead focus on services and the cloud where it has historically been more agile. However, ceding the platform has its repercussions and it is not clear how far the current strategy will take the company. Microsoft is focusing early on IoT so as to not miss the next big wave but it seems like the strategic architecture to attack the market remains old school.

Nokia – final nail in the coffin and quickest destruction of a loved consumer brand

Nokia’s decision to pursue Windows OS will go down in the industry history as the biggest blunder of all times. By putting all eggs in one broken immature basket, Nokia’s fate was sealed from day one. Barring any strategic brilliant maneuvers from Microsoft, the seeds of demise of a fabled brand were sown, the writing was on the wall. The company’s board had made poor decision to let things go out of control. In its heydays, Nokia’s marketcap was almost $250 billion – many times that of Apple. With the launch of the history-shattering device in 2007, Apple laid the foundations of irrational behavior amongst its competitors. Nokia’s board did an extremely poor job of navigating the company out of turbulent waters. There was no strategy, no plan, just a misguided Hail Mary pass. More than the burning platform, the decision to switch to windows set forth in motion an inextricable trajectory into an inferno. Will the phoenix rise from the ashes in 2016 remains to be seen.

The verdict on Apple Watch

Quarterly sales of 2.5M units with almost a billion dollars on debut would have been hailed by the press and critics alike. But given that it was Apple’s name behind the watch, expectations were lofty and it led many to prejudge the platform and its future. People often forget what the first version of iPhone or even iPad felt like. While there are a number of issues with the Apple watch, it is just too soon to have a final say on the platform. While the potential marketsize is every wrist on the planet, the overall size just by definition will be smaller than the smartphone base. As developers learn to understand how to use the dual screens of watch and phone, as they master the different language of vibrations, taps, heartbeats, and notifications, as they connect the signals of health to the dots of care, we will see if the platform can deliver on its promise.

Android vs. iOS: The fight for profit continues

HTC’s losses from Android operation were really bad. LG barely eked out a profit from its quarter. Apple accounted for 75% of the industry profits in Q2 2015 down from Q1 but up 13% YoY. Samsung better than last quarter but is nowhere near the peak it hit two years ago. Overall, the revenue for the Android ecosystem declined 5% QoQ while the profits increased 41%.

4th Wave/IoT Revenues

Qualcomm reported $1B in IoT revenues (chips used in city infrastructure projects, home appliances, cars, and wearables) in 2014. Intel is on track to exceed $2B in IoT revenue this year. Fitbit is likely to eclipse $1.5B in revenue with an astonishing 48-50% margin. AT&T’s IoT business is over a billion dollars. Verizon’s annual run rate is over $650M now. Google is approaching half a billion in IoT revenues. There are numerous other players who are doing sizable IoT revenues. We haven’t even gotten to the Industrial part yet where the savings and earnings are into billions (we will cover them in a future paper).

In other 4th wave segments, the number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 76% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 88% in mobile (of the total advertising revenue) up from 60% in 2013.

Alphabetizing Corporations

In the late breaking news, Google restructured the businesses under Alphabet. I have been thinking about this from the 4th wave point of view. Various business are quasi-conglomerates of many multi-million and even multi-billion dollar businesses. In fact, we wrote about it in May – Unicorns at incumbents. Mobile operators should think their various businesses as building blocks that can be under a holding company. For example, at some point access can be a separate company just focused on operating the pipes while the content company is focused on creating the best content for various distribution channels. Connected car is easily a separate business, so is Industrial IoT which can be further broken by verticals etc. This might give a better yield and return to the shareholder rather than holding them under the core entity.

Connected Consumer

· On average, each US household will spend approximately $3800 on access and devices in 2015.

· Roughly 80% or $3000 of the US household spend will go to access of services such as cellular voice, mobile data, cable, landline voice, and broadband internet.

· Roughly 20% or $800 of the US household spend will go to devices such as computers, smartphones, feature phones, wearables, tablets, e-readers, connected cars, drones, robots, connected home, and other connected devices.

· 41% of the household access spend will go to cellular phones (for voice and data services).

· As a standalone category, mobile data is the biggest category approaching $1000 in yearly household spend.

· In the last 5 years, mobile data spend has risen the most and landline voice has declined the most. Cellular voice spend has also gone down while cable and broadband spend have seen relatively modest uptick.

· In devices, smartphones is by far the biggest spend category. Consumers spend almost 3x on smartphones than they spend on personal computers. Smartphones will account for more than 50% of the US household connected spend in 2015.

· New categories such as wearables, connected cars, drones/robotics, and connected homes have started to make a tangible impact on consumer spend.

· US consumers will spend more on wearables than feature phones in 2015.

· Chetan Sharma Consulting conducted its annual Connected Consumer survey of 1000 US households. The results confirmed the ongoing increase in the number of connected devices/household.

· The number of connected devices per US household is now 5.3 with over 37% of the households in the 4-8 range.

· Almost 6% of the households have 15 or more connected devices.

· More details are available at: http://chetansharma.com/connectedconsumer15.htm

Quad Moves

AT&T closed its DirectTV acquisition. Verizon acquired AOL. Similar moves are afoot in Europe and other regions. Regular readers won’t be surprised. Video is a key offering for many service providers and by bundling quad plays, operators can further lower the churn. Content will continue to play a big role in how various offerings get bundled. The traditional cable bundle is being pulled apart in favor of more al carte OTT offerings. Media companies will have to figure out how they play in the new converged world. The ones that have been sitting on the sidelines will have to make some moves in the wireless ecosystem to stay relevant in the long-term.

The Upcoming 5G wars?

I started my career when 1G was all the rage. My first 4G project was back in 2002. By some measures, we are already behind on the 5G discussions. In general, it takes 7-10 years before the standards are finalized and then the network technology lasts for approximately 20 years before a market moves onto the next generation of technology. US led in the growth of 1G (AMPS, TACS) followed by Europe on 2G (GSM, CDMA). Japan took the leadership role with 3G (WCDMA, EVDO) and US wrestled it back on 4G (LTE). Japan and EU are determined to lead on 5G and have been making very public statements and R&D investments about their ambitions on 5G. Japan of course has a very clear goal of having 5G by Tokyo Olympics in 2020. Am sure some operator(s) somewhere will jump the gun and start calling LTE-A+ as 5G around 2017-18 or sooner. You can expect a lot of activities both in public and private on 5G as companies and governments try to figure out a way to claim the 5G leadership mantle.

Our paper on 5G covers the past, present, and future of the network evolution.

What to expect in the coming months?

1H 2015 was a tremendous year for the mobile as it becomes omnipresence in every industry. We saw some massive moves, astounding acquisitions, and interesting strategic endeavors. 2H promises to be an exciting for the industry as well.

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 2015 US wireless market is:

Service Revenues

· The US mobile data services revenues in Q2 2015 increased 3% QoQ and 16% YoY.

· After crossing the $100B in data revenues last year, the US market is set for explosive growth and is likely to cross $130B in data revenues in 2015.

· Verizon and AT&T dominated the quarter accounting for 70% of the mobile data services revenue and had 67% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q2 2015. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU fell by 1%.

· Data contribution to the overall revenues is now at 65%.

· The postpaid ARPU increased for T-Mobile for the first time in 3 years. AT&T’s stemmed the decline of the last two quarters while others continued to see the pressure on postpaid ARPU.

Subscribers

· The US market increased its net-adds to 5.8M. AT&T and T-Mobile led with 2M+ net-adds.

· Verizon led in postpaid net-adds though a bulk of the net-adds are coming from tablets.

· AT&T added 1M cars to its tally to reach 4.5M in connected cars on their network – probably the highest of any mobile operator in the world.

Shared Data Plans

· Shared data plans launched by Verizon and AT&T have been quite successful. The attachment rates have increased tremendously over the course of last two years with more consumers opting for cellular tablets and connected devices. 77% of postpaid accounts at AT&T are now on shared plans.

· Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive on premise Wi-Fi solutions.

· The number of accounts on 15 GB or more have quadrupled over the last year for AT&T.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 76% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 88% in mobile (of the total advertising revenue) up from 60% in 2013. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

· Verizon reported $165 million revenue from M2M and Telematics. At the current run-rate, this will be a billion dollar business by 2016. The current annualized run rate is $650M.

· AT&T reported 1M net-adds on the connected car platform.

Connected Devices

· Connected devices (non-phones) accounted for almost 62% of the net-adds in Q2 2015. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· For AT&T, Connected cars started to form a significant base of the connected devices segment with 47% of the new connections coming from cars.

Handsets

· Smartphones continued to be sold at a brisk pace accounting almost 95% of the devices sold in Q2 2015. The feature phone category is practically becoming extinct in the US market.

· The smartphone penetration in the US is now at 78%.

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 76M making it the #2 LTE operator behind China Mobile which has more than twice LTE subs. Other three operators are also deep into their LTE deployments. Verizon reported that 87% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

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 Nov 2015.

Disclaimer: Some of the companies mentioned in this update are our clients.

We will be discussing a number of critical industry themes and future impacting topics at our annual summit Mobile Future Forward with some incredible thought-leaders from around the globe. Speakers, Sponsors, and the executives at Mobile Future Forward invite you to participate in the discussion on Sept 29th in Seattle. Join Glenn Lurie, President & CEO, AT&T Mobility, Dr. Eric Topol, Chief Academic Officer, Scripps Health, Rima Qureshi, Chief Strategy Officer, Ericsson, Hank Skorny, SVP – IoT, Neustar, Raja Rajamannar, CMO, Mastercard, Sanjiv Ahuja, Chairman, Tillman Global Holdings,Hossein Moiin, EVP and CTO, Nokia Networks, Craig Moffett, Partner, MoffettNathanson, Josh Will, SVP – Mobile, Best Buy, Tim Chang, Managing Partner, Mayfield, Prof. Shyam Gollakota, University of Washington, Mark Fernandes, Managing Director, Sierra Ventures, Erez Yarkoni, CIO and EVP, Telstra,Mark Showers, CIO and EVP, Reinsurance Group of America, Doug Suriano, SVP and GM, Oracle Communications, Vishal Gupta, Chief Products and IoT Officer, Silent Circle, Marty Cooper, Chairman, Dyna, Vijay Shekhar, Founder and CEO, Paytm, Julie Woods-Moss, CMO, CEO – Nextgen Business, Tata Communications, Andrew Hopkins, Managing Director – IoT, Accenture, Lo Toney, Partner – Catalyst Fund, Comcast Ventures, Robert Gelick, SVP and GM – Digital, CBSInteractive, Sujeet Chand, CTO and SVP, Rockwell Automation, Bob Azzi, Executive Managing Partner, Argylegriffin, Anand Chandrasekaran, Chief Product Officer, Snapdeal, Dr. Tony Yen, MD, CMIO, EvergreenHealth, and many more

Download

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 Aug 2015.

Connected Consumer 2015 August 5, 2015

Posted by chetan in : 4th Wave,Connected Devices,Connected Intelligence Era , add a comment

Global

· With each passing day, more consumers are connected and are using more connected devices. The connected intelligence era is starting to take shape.

· It is not just a western market phenomenon, the connected age is reaching the far corners of the planet.

· The total number of connected devices will reach 16 billion by the end of 2015.

· The biggest category of the devices will still be feature phones followed by smartphones and personal computers.

· By 2020, Industrial and Smartphones will become the top two connected devices categories.

US

· There are two broad connected categories of consumer spend: Access and Devices.

· On average, each US household will spend approximately $3800 on access and devices in 2015.

· Roughly 80% or $3000 of the US household spend will go to access of services such as cellular voice, mobile data, cable, landline voice, and broadband internet.

· Roughly 20% or $800 of the US household spend will go to devices such as computers, smartphones, feature phones, wearables, tablets, e-readers, connected cars, drones, robots, connected home, and other connected devices.

· 41% of the household access spend will go to cellular phones (for voice and data services).

· As a standalone category, mobile data is the biggest category approaching $1000 in yearly household spend.

· In the last 5 years, mobile data spend has risen the most and landline voice has declined the most. Cellular voice spend has also gone down while cable and broadband spend have seen relatively modest uptick.

· In devices, smartphones is by far the biggest spend category. Consumers spend almost 3x on smartphones than they spend on personal computers. Smartphones will account for more than 50% of the US household connected spend in 2015.

· New categories such as wearables, connected cars, drones/robotics, and connected homes have started to make a tangible impact on consumer spend.

· For the first time, US consumers will spend more on wearables than feature phones in 2015.

· Chetan Sharma Consulting conducted its annual Connected Consumer survey of 1000 US households.

· The number of connected devices per US household is now 5.3 with over 37% of the households in the 4-8 range.

· Almost 6% of the households have 15 or more connected devices.

· In terms of geography, US Northeast households had the highest number of devices per households.

· In terms of urban density, urban, rural, and suburban neighborhoods exhibited similar propensity to acquire connected devices.

· In terms of household income, households with annual income of $150K or more had almost 10 connected devices. Next income bracket was $75-100K with 6.6 connected devices.

· US operators have been seeing a bulk of their net-adds come from connected devices (for more details, please refer US Wireless Market Updates).

· In the most recent quarter (Q2 2015), 62% of the net-adds were from non-phone devices such as tablets, cars, and m2m (more details to come in our Q2 2015 US Wireless Market Update next week).

We will be taking a deep dive into the Connected Intelligence Ecosystem and Opportunities in our upcoming summit Mobile Future Forward on Sept 29th.

Download

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 Aug 2015.

Mobile Future Forward Update July 20, 2015

Posted by chetan in : 4th Wave,Connected Intelligence Era,European Wireless Market,Internet of Things,IoE,IoT,Mobile Future Forward,Wireless Value Chain,Worldwide Wireless Market , add a comment

Dear friends,

Over the past couple of years, I have talked a lot about the “Connected Intelligence” Era which is a superset of the Industrial Internet and IoT. We already have plenty of data points to indicate the rise of the next technology era enabled by sensors and software. While consumer gizmos get the headlines, the real money is in the enterprise segment though in some verticals, the two start to merge e.g. health, retail, energy, etc. To give you a sense of the disparity in terms of dollars, consider the following:

This year the US wearables segment will do over $4B in sales. A leading industrial giant founded more than 90 years ago is looking to capture 2-4x revenue of the entire wearables industry in one year with the help of IoT as it empowers them to create new service and revenue models.

Leading facilities management companies are looking to automate the entire building management process and reduce the maintenance costs by over 50% in a matter of months. The “industrial” side of IoT is likely to capture 90% of the new multi-trillion-dollar revenue that will be injected into the global economy. Obviously, benefits will flow into the consumer economy as well.

The Connected Intelligence stack is very complicated right now but that’s true with any new technology wave. 10-20 years ago, most markets had dozens of mobile operators. Today they are generally limited to 3-4. We will see the layers collapse and new players emerge.

“The caliber of participants is extraordinary. Mobile Future Forward is a data driven event, the team has put together so much hard to find factual data that is unrivaled anywhere in the industry in terms of building the foundation of facts for analysis. I normally don’t learn new things at events but at Mobile Future Forward, I did.” – North American Leader – IoT and Mobile, IBM

At Mobile Future Forward, we will explore where is the money in IoT, discuss several use cases that are being implemented around the world, the required building blocks, the areas of collaboration and competition, and how our community can help the industry reach its full potential quicker. Mobile Future Forward is a summit that makes you think. We will have folks from startups who challenge our thinking and industrial giants who are moving at a fast pace to deliver outcomes.

We welcome you to join us in the discussions and contribute to the collective knowledge of our industry. Give us your one day, and we will give you the next 5 years in mobile.

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson, Neustar, Oracle Communications, and Tata Communications.

Registration (Summer Saver expires next week)

Some of the confirmed leaders are:

•  Glenn Lurie, President & CEO, AT&T Mobility

•  Dr. Eric Topol, Chief Academic Officer, Scripps Health

•  Faisal Masud, Chief Digital Officer, Staples

•  Rima Qureshi, Chief Strategy Officer, Ericsson

•  Hank Skorny, SVP – IoT, Neustar

•  Raja Rajamannar, CMO, Mastercard

•  Sanjiv Ahuja, Former CEO, Orange

•  Hossein Moiin, CTO, Nokia Networks

•  Craig Moffett, Partner, MoffettNathanson

•  Josh Will, SVP – Mobile, Best Buy

•  Tim Chang, Managing Partner, Mayfield

•  Prof. Shyam Gollakota, University of Washington

•  Mark Fernandes, Managing Director, Sierra Ventures

•  Erez Yarkoni, CIO and EVP, Telstra

•  Mark Showers, CIO and EVP, Reinsurance Group of America

•  Doug Suriano, SVP and GM, Oracle Communications

•  Vishal Gupta, CTO – IoT, Silent Circle

•  Marty Cooper, Chairman, Dyna

•  Vijay Shekhar, Founder and CEO, Paytm

•   Julie Woods-Moss, CMO, CEO – Nextgen Business, Tata Communications

•   Andrew Hopkins, Managing Director – IoT, Accenture

•   Lo Toney, Partner – Catalyst Fund, Comcast Ventures

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Thanks.

Chetan Sharma

CEO, Chetan Sharma Consulting

http://www.chetansharma.com

New Paper: Empowering the Digital Telco Transformation with Convergent Charging and Policy June 23, 2015

Posted by chetan in : 4G,4th Wave,Connected Devices,Connected Intelligence Era,Convergent Charging,Mobile Cloud Computing,Oracle,Policy,The Golden Age of Mobile,Worldwide Wireless Market , add a comment

Empowering the Digital Telco Transformation with Convergent Charging and Policy

http://www.chetansharma.com/convergentcharging.htm

Commissioned by  Oracle Communications

convergentcharging_s

Download paper

Introduction

In 2014, the mobile industry passed an amazing milestone – the number of mobile subscriptions (SIM cards) surpassed the human population. While these connected devices represent a smaller subset of the global consumer base, mobile has had a significant positive impact on literally every aspect of our lives, the supply-chain of trillion-dollar industries and national GDPs. At the heart of this transformation is the digitization of information, processes and democratization of opportunity. The three dynamic forces of network evolution, smartphones and applications brought the fundamental change in the industry. Faster networks meant quick access to content and applications. Smaller yet powerful computers in smartphones translated into billions are coming into the digital fold. The new applications and services have empowered consumers to discover ways to enrich their lives and entrepreneurs to reimagine the world.

The changes have also meant that the traditional ways of doing business and thinking about revenue streams is largely over in most parts of the world. Many mobile operators who dominated the industry for the first 30 years recognize this and are transitioning to become a digital telco, but a vast majority are caught in the cycle of inaction.

For mobile operators to stay relevant and participate in the digital economy, they have to drastically change their processes and how they manage their services, launch new products, enable the ecosystem and think about digital services. At the heart of this transformation is the ability to launch and nurture new services whether it is one of their own or that from the larger ecosystem. The flexibility needed to launch at the speed of thought is essential to competing in the digital world.

Additionally, as the network becomes complex with millions of network nodes and billions of end points, we need a good framework for policy management to help manage the flow of data and thus manage the network.

Changing market dynamics due to economy and competition is also forcing service providers to consider a multi-play strategy, which helps protect the subscriber base whilst increasing revenue. As various services are integrated across different access means, one still has to maintain a single view of the customer to both lower the operational cost as well as better understand consumer’s interests and preferences. Without a tight integration on the back-end, this won’t be possible.

Finally, the communications and the IT industries are merging. Digital is changing the expectations of both the consumers as well as the enterprises. The digital economy is providing an opportunity to service providers to transform the business processes and become a digital platform where new applications and services can blossom. The massive growth in connected devices and applications means we need a more robust framework for policy and charging. One of the core strengths that service providers have is their billing relationship with the customer. The architecture required to support evolving use cases needs a rethink.

In this paper, we will explore the emerging trends that necessitate the urgency for a more agile infrastructure. We will discuss how new revenue opportunities in communication, commerce, health and retail need a more robust framework to manage growth and keep service providers relevant in the value chain.

Download paper

Your feedback is always welcome.

Chetan Sharma

Mobile Breakfast Series–5G–July 16th June 5, 2015

Posted by chetan in : US Wireless Market , add a comment

Dear friends,

Hope you are enjoying the advent of summer.

For our next mobile breakfast series event, we will tackle one of the hottest topic in the industry – 5G.

LTE is here and now. What’s next?  The networking wizards of the industry will put their heads together to help define 5G. What features are essential? How will our understanding of the data consumption on the 4G networks help define 5G? How should we tackle video and signaling? How do we tackle IoT? What applications will motivate 5G? What does the timeline look like for 5G? Will 5G enable new business models? How are we going to have a sustainable spectrum strategy? Will 5G empower operators to justify the investments? This panel will take a look at the fundamental elements of 5G that will be a key layer for the Connected Intelligence Era.

Our guest speakers are:

Dr. Ron Marquardt, VP – Technology Innovation & Architecture, Sprint

Mark McDiarmid, VP – Radio Network Engineering, T-Mobile

Two of the best network engineers anywhere so am really glad to have them. 5G will impact everyone and every industry. Get an early glimpse into what’s coming.

Background Reading

Registration is open now

Portion of the proceeds will be donated to the Nepal Earthquake Relief Efforts.

Thanks and see you in July.

Regards,

Chetan

Ps. Don’t forget to save your seat for the fall Mobile Future Forward Summit. Early bird expires next week.

Mobile Future Forward 2015 Update June 4, 2015

Posted by chetan in : US Wireless Market , add a comment

Greetings,

Trust your summer is going well. The connected intelligence ecosystem continues to expand with each passing day. From startups like Prosyst, Axeda, 2lemetry getting acquired to mobile operators and chip manufacturers building billion dollar IoT businesses to Google proposing Brillo and Weave, there is tremendous activity all around. On the consumer front, wearable revenue is expected to cross $5B for the first time. In the industrial sector, investments and cost-savings are even bigger.

Partners and speakers at Mobile Future Forward are key companies and executives who are shaping the connected intelligence journey. We are delighted to add more speakers to the roster (see below). At the summit, each topic gets a thorough deep-dive to explore the intricacies of opportunities and challenges. Participants leave with a clearer picture of where the technology world is headed and more importantly what should they do about it, who to partner with, and what to ignore as noise.

At Mobile Future Forward (now in its 6th year), we delve into the nuances of innovation that trigger seismic activity which shapes the future generation of experiences, applications and services. This unique executive summit is a true meeting of the great minds who go beyond the headlines and hype to examine the growth trajectory of the future. It is a daylong data-driven brainstorm designed to make you think. The experts and visionaries from around the globe will gather in Seattle on Sept 29th to explore the world of possibilities, envision the opportunities, and inspire the entrepreneurship spirit within us to achieve more, faster.

We welcome you to join us in the discussions and contribute to the collective knowledge of our industry.

Registration is open now (Early bird expires next week)

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson and Neustar.

Mobile Future Forward is causing everyone to think about what’s the next big thing. – CEO, Global Mobile Operator

Mobile Future Forward is the most intellectual conference  – CEO and founder, Connected Watch Company

The caliber of participants is extraordinary. Mobile Future Forward is a data driven event, the team has put together so much hard to find factual data that is unrivaled anywhere in the industry in terms of building the foundation of facts for analysis. I normally don’t learn new things at events but at Mobile Future Forward, I did. – North American Leader – IoT and Mobile, IBM

Some of the confirmed industry leaders are:

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Faisal Masud, Chief Digital Officer, Staples

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Former CEO, Orange

· Hossein Moiin, CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Prof. Shyam Gollakota, University of Washington

· Tim Chang, Managing Partner, Mayfield

· Josh Will, SVP – Mobile, Best Buy

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Chetan Sharma

CEO, Chetan Sharma Consulting

http://www.chetansharma.com

US Mobile Market Update – Q1 2015 May 18, 2015

Posted by chetan in : 4G,4th Wave,5G,AORTA,ARPU,Chetan Sharma Consulting,Connected Devices,Connected Intelligence Era,IoE,IoT,LTE,Mobile 2015,Mobile Future Forward,Tablets,The Golden Age of Mobile,US Wireless Market,Wearables,Wireless Value Chain,Worldwide Wireless Market , add a comment

US Mobile Market Update – Q1 2015

http://www.chetansharma.com/usmarketupdateq12015.htm

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Summary

The US mobile data services revenue grew 4% Q/Q and 15% Y/Y. The overall services revenue declined 1%. The device revenue for the operators grew by 41% allowed the overall service revenues to grow 5% Y/Y.

We are forecasting that the mobile data service revenues will increase by 22% to $132 Billion in 2015. Verizon will become the first operator to generate more than $50B from data services in 2015.

After acquiring lusacell and Nextel Mexico AT&T became the biggest North American operator with over 136 million subs.

The average mobile data consumption (cellular) is approximately 2.5GB/mo. In the US, it took roughly 20 years to reach the 1GB/user/mo mark. However, the second GB mark has been reached in less than 4 quarters. An entire year’s worth of mobile data traffic in 2007 is now reached in less than 75 hours.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in 2014, the data pricing has plummeted by 77%. In Q1 2015, the data pricing stayed pretty steady.

The intense competition amongst the operators meant a 6% rise in OPEX QoQ and a 12% decline in CAPEX YoY. The income declined 4% while EBITDA grew modestly at 2%.

Smartphone penetration increased to 76% and roughly 95% of the devices sold now are smartphones.

4th wave services continue to grow at a very past face around the globe. At least 37 companies generated a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

The difference between Sprint and T-Mobile number of subs is just 300K subs now – the narrowest it has ever been. Like we suggested mid-last year, T-Mobile is likely to become the number three operator. This is more or less just a symbolic event with the transfer of bragging rights. Overall, churn was low for all operators in Q1 2015.

T-Mobile accounted for over 40% of the overall net-adds for the year with AT&T and Sprint coming in second at 26%. Verizon slipped to a distant fourth with only 8%.

Operator’s non-phone net-adds were 4 times that of the phone net-adds, highest it has ever been in the history of the industry.

M2M+Connected car is a billion dollar revenue stream for AT&T. M2M+Telematics will become a billion dollar stream for Verizon by 2016.

In our 4th wave series of papers, we had postulated for years that the 4th wave revenues will become bigger than any of the previous curves. This finally happened in 2014 in the US market with the revenues from the 4th wave applications and services built on top of the IP access layer surpassed both voice and data revenues.

Apple Watch – New Interaction Models

Apple is never the first one to introduce a new consumer gadget but it is generally the first to make it work for the market so allies and enemies are all eager for Apple to come in and create awareness. For me, the exciting part wasn’t the watch itself though it clearly the best smartwatch available in the market but the new interaction models it introduced. The reincarnation of Morse code in the language of vibrations and heartbeats. The splitting of screen on two different computers on the body is quite fascinating and has design implications for the developers. It will take time for us (as consumers and developers) to understand and absorb the advantages of such a model. The transmission of signals from the body is enormously powerful in creating the preventive care culture around the globe. The story on wearables is just starting out.

Q1 2015 – 4th wave in action

For a casual observer of the industry, Verizon’s acquisition might have come as a surprise but for the students of the 4th wave, it was normal course of action.  In my talks, I often say that for service providers to compete with the OTTs, they have to become OTTs themselves. One could argue if AOL was the right company for this strategy but large operators are opening up their checkbooks to do cross-domain acquisitions. AOL brings a new billion dollar revenue stream however it doesn’t solve the basic fragmentation problem that operators have. They can’t effectively compete with Google and/or Facebook without covering the entire market. Without domination (in market share) or collaboration, the opportunity will remain small and might even vanish in due time.

As we mentioned earlier this year, globally, 37 companies generated (not valuation) a billion dollar or more in revenue from 4th wave services in 2014 – a 311% jump from 2012.

Unicorns at incumbents

Tech press and the startup world is infatuated with unicorns. The billion dollar is a magical marker that inspires the ecosystem to be in the elite club but what about when a new unicorn stream is created at an incumbent? It rarely makes waves. At a 100+ year old incumbent, even less so. AT&T has been lighting up connected cars faster than any other mobile operator in the world right now. While 3.5M connected cars might not instill excitement, one must consider the replacement cycles of automobiles which is several times that of a smartphone.

Our estimates suggest that the connected car segment will become a billion dollar business for AT&T by 2016. The M2M+Connected Car revenue stream is already a billion dollar business for AT&T. Verizon is also slowly getting there. Their M2M+Telematics revenue stream should reach an annualized revenue stream of over a billion dollars by 2016. Some operators in Europe are also making inroads into the new connected devices revenue streams. Similarly, the likes of Microsoft and Google have created new billion dollar revenue streams in mobile. As a separate entity, these will be decacorns but don’t get appreciated when residing with the parent company.

Google Fi – Google Fiber for Wireless

When Google-Fi was announced, there was plenty of media frenzy around Google going after the operators. Folks who wrote such articles don’t understand the business of either Google or the operators. Google is a brilliant strategist which does some projects to push its strategy in the ecosystem. The goal is generally not a new revenue stream but twisting the value-chain enough to serve its purpose long-term.

However, there are couple of direct and subtle signals that Google did send to the markets. First, there are some technical tricks that Google was able to pull off to make WiFi/Cellular handoffs to work. Second, and perhaps more important is that the control point moved from the network to the device which at scale can be the biggest disruption the mobile industry has ever seen. It is not easy to pull off given the interdependency of OEMs to the operators. But sometime in the future, it is not hard to envision that for every session, the device (and associated cloud infrastructure) initiates the auction amongst the available networks and picks one based on performance, pricing, revenue share, and other parameters. That day is not here yet but service providers should start planning for this scenario.

WiFi-first network has good potential and we will see many of them pop up around the globe but getting scale is the biggest question mark in such endeavors (beyond some technical issues of seamless interop).

One should also remember that while WiFi usage in the US is 3x that of cellular usage, the use of WiFi hasn’t really slowed down the cellular data growth one bit. They both are growing at approximately 100% Y/Y.

Post-PC – Apple has no peer

There are has been a lot of debate around the PC and Post-PC worlds. Apple has benefited from the transition to the Post-PC universe like no other company. Its Post-PC revenue in Q1 was four times the Post-PC revenue of Google, Microsoft, Facebook, and Amazon combined. Largely due to the iPhone, Apple has been able to carve out a dominant space on the current wave of computing.

Service provider M&A

When Comcast initially announced the merger with Time Warner, it looked like a slam dunk but it was swiftly rebuffed by the regulators. This sets up an interesting 18 months for the US market. Unless there is a change in power (democrats to republicans), the big mergers in the same domain are off the table. So, how do existing behemoths grow? They start to look overseas (e.g. AT&T acquiring Mexican operators), look sideways (e.g. AT&T acquiring DirectTV) or look upwards (e.g. Verizon acquiring AOL). There are still a number of questions posed to the likes Comcast, Time Warner, Dish, T-Mobile and Sprint. Will this finally force Comcast to be a more active mobile player by acquiring one of the two smaller operators? Will the regulators allow such a move? Is Sprint back in the equation? How anxious is Deutsche Telecom to offload its US assets? How will Dish use its spectrum assets? We might see all these questions answered in the next 18 months or not.

Net-Neutrality and Zero-Rating Debates

In the tech world few things ignite the discussion with religious fervor as the net-neutrality debates. From Washington DC to New Delhi, from Brussels to Santiago, net-neutrality and zero-rating have inflamed passions. Most of the times those fighting on either sides have no clue about the issues at hand and what are they fighting for. Ask a protester on the street about the intricacies of net-neutrality and you will get blank looks or confused answers. Both issues boil down to “transparency” and “control” – who gets to decide what and what are they going to disclose. The answer to many of these debates is fairly simple – ensure there is enough competition and put the (granular) “control” and the “responsibility” in the hands of the customer for e.g. they should decide which apps should make it into the “Zero Rating” club for them. The problem goes away at least in principle.

The Upcoming 5G wars?

I started my career when 1G was all the rage. My first 4G project was back in 2002. By some measures, we are already behind on the 5G discussions. In general, it takes 7-10 years before the standards are finalized and then the network technology lasts for approximately 20 years before a market moves onto the next generation of technology. US led in the growth of 1G (AMPS, TACS) followed by Europe on 2G (GSM, CDMA). Japan took the leadership role with 3G (WCDMA, EVDO) and US wrestled it back on 4G (LTE). Japan and EU are determined to lead on 5G and have been making very public statements and R&D investments about their ambitions on 5G. Japan of course has a very clear goal of having 5G by Tokyo Olympics in 2020. Am sure some operator(s) somewhere will jump the gun and start calling LTE-A+ as 5G around 2017-18 or sooner. You can expect a lot of activities both in public and private on 5G as companies and governments try to figure out a way to claim the 5G leadership mantle.

We have summarized our thoughts on 5G in this paper – 5G: The past, present, and future of the mobile industry evolution. I have been giving a number of talks on 5G in North America and Europe and many of these will be made public in due course.

What to expect in the coming months?

2014 was a tremendous year for the mobile as it becomes omnipresence in every industry. We saw some massive moves, astounding acquisitions, and interesting strategic endeavors. 2015 promises to be an exciting year for the industry as well.

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.

The next 10 years will generate almost 1000 Trillion dollars in global GDP, which is 60% more than the last 10 years. What will be significant is how the “Connected Intelligence” built using networks, sensors, and software is going to transform every industry, every nation. We will covering the future of the mobile industry in-depth at our Mobile Future Forward summit this fall on Sept 29th.

Against this backdrop, the analysis of the Q1 2015 US wireless data market is:

Service Revenues

· The US mobile data services revenues in Q1 2015 increased 3% and reached $30B.

· After crossing the $100B in data revenues last year, the US market is set for explosive growth and is likely to cross $130B in data revenues in 2015.

· Verizon and AT&T dominated the quarter accounting for 70% of the mobile data services revenue and had 68% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q1 2015. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU fell by 2.71%. 

· Data contribution to the overall revenues is now at 62%.

· The postpaid ARPU continues to decline for all operators with all but Verizon suffering double digit YoY losses.

Subscribers

· The US market had 4.6M net-adds. Probably for the first time, Verizon finished last in terms of net-adds for the quarter. T-Mobile led with 1.8M net-adds mostly postpaid.

· T-Mobile added almost as many postpaid subs as rest of the three operators combined.

· Connected devices (excluding tablets) had the best net-add performance followed by tablets.

· T-Mobile led in the phone category while remaining three operators added more than 1M non-phone customers.

Shared Data Plans

· Shared data plans launched by Verizon and AT&T have been quite successful. The attachment rates have increased tremendously over the course of 2013-14 with more consumers opting for cellular tablets and connected devices. 70% of postpaid accounts at AT&T are now on shared plans.

· Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive on premise Wi-Fi solutions.

· 50% of AT&T’s postpaid accounts are on 10GB+ plans.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 70% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 89% in mobile (of the total advertising revenue) up from 60% in 2013. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

· Verizon reported $150 million revenue from M2M and Telematics. At the current run-rate, this will be a billion dollar business by 2016.

· AT&T reported 684K net-adds on the connected car platform. We estimate that connected car will become a billion dollar revenue stream for AT&T in 2015. Connected cars accounted for 62% of the connected devices for AT&T.

Connected Devices

· Connected devices (non-phones) accounted for almost 52% of the net-adds in Q4 2014. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· For AT&T, Connected cars started to form a significant base of the connected devices segment with 68% of the new connections in the segment coming from cars.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 95% of the devices sold in Q1 2015. The feature phone category is practically becoming extinct in the US market.

· The smartphone penetration in the US is now at 76%.

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 71M making it the #2 LTE operator behind China Mobile which has more than twice LTE subs. Other three operators are also deep into their LTE deployments. Verizon reported that 86% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

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 Aug 2015.

Disclaimer: Some of the companies mentioned in this paper are our clients.