Always On Real-Time Access

Mobile Future Forward: Connected Living and Lessons from Emerging Markets July 30, 2014

Posted by chetan in : Connected Devices, Emerging Markets, Mobile Future Forward, Wireless Value Chain, Worldwide Wireless Market , add a comment

In one of my interview with Time magazine last year, I alluded to the “Connected Intelligence Era” that is slowly but surely touching the various technology microcosms. It is transforming how we live and expect technology to behave. Glenn Lurie at AT&T has been investing in “Connected Living” products and services for well over 5 years in areas such as home security, health, and connected cars. Similarly, Tom Nagel is leading Comcast’s strategic initiatives to drive value from a connected home. Chris Putnam at Synchronoss has been working with service providers to help make some of these visions possible. We will explore the multi-trillion dollar “Connected Living” market with some of the leading global experts in the space.

Not too long ago, emerging markets used to follow the developed markets in technology adoption. While some of it is still true, many emerging markets are adapting and leapfrogging at a fast pace. Companies operating in India and China are often coming up with innovative solutions for the constrained environment and the lessons can be applied anywhere. We are fortunate to have two industry leaders who are leading the way. Mathew Oommen is a long time industry veteran who is doing some terrific technology work at Reliance. Similarly, Andreas Gal is leading Mozilla in mobile in LatAm and Asia.

Opportunities in Connected Living

· Glenn Lurie, President, AT&T

· Tom Nagel, SVP, Comcast Cable

· Chris Putnam, SVP, Synchronoss

Lessons from the Emerging Markets

· Mathew Oommen, President, Reliance

· Andreas Gal, CTO, Mozilla

We at Chetan Sharma Consulting are deeply involved in these changes and use our global mobile executive brainstorm forum to kick-off another year of ideas, networking, and industry collaboration. Our work on the 4^th wave has shaped strategies of players around the world and we continue to strive to bring you the best of “global mobile thinking” at Mobile Future Forward.

When: Sept 24^th in Seattle.

Registration

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

Some of the confirmed industry leaders are:

· Dan Hesse, CEO, Sprint

· Bill Ruh, VP, GE

· Tim Campos, CIO, Facebook

· Erik Moreno, SVP, Fox Networks

· Glenn Lurie, President, AT&T

· Steve Mills, CIO, Motorola Mobility

· Hank Skorny, VP/GM, Intel

· Dr. John Saw, CNO, Sprint

· JD Howard, VP/GM, Lenovo

· Dave Webb, CIO, Equifax

· Dr. Hassan Ahmed, CEO, Affirmed Networks

· Mark Fernandez, Managing Partner, Sierra Ventures

· Ujjal Kohli, Founder, Rhythm NewMedia

· Vik Kathuria, Global Chief Media Officer, Razorfish

· Erin Kienast, SVP, Starcom Worldwide

· Josh Will, Senior Category Manager, Best Buy

· Steve Elfman, President, Sprint

· Jason Hoffman, VP, Ericsson

· Matt Grob, EVP/CTO, Qualcomm

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

· David Richter, VP, Uber

· Paul Brody, VP & Mobile Practice Leader, IBM

· Tom Nagel, SVP, Comcast Cable

· Mathew Oommen, President, Reliance

· Andreas Gal, CTO, Mozilla

· Chris Putnam, SVP, Synchronoss

.. 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.

Thanks

Mobile Future Forward: Enterprise Mobility: IBM July 24, 2014

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

Last week Apple and IBM announced their historic Enterprise Mobility deal. Microsoft in a series of memos and presentations this month declared that it is essentially betting the company on redefining productivity. In one of the hottest mobile segments – IoT – Enterprises are the ones who are driving the most revenue and tangible value. Enterprise mobility is getting redefined in so many respects – from the use of sensors to drive tactical decisions, from securing a global and mobile workforce, from creating collaborative moments of productivity, from putting true “analysis” and “data” at the fingertips of managers and field engineers, that it will see a complete transformation of what the world thinks of enterprise mobility. We saw some of these trends coming in our work with AT&T last year.

The Apple/IBM deal can have a significant impact on how enterprises use devices and think of applications. We are fortunate to have Paul Brody, VP and Mobile Practice Leader at IBM, one of the leaders who was behind this deal from day 1, to talk about how enterprises worldwide are thinking about mobility, workflows, operations, ROI, and business models. Paul has a deep global understanding of the enterprise challenges and has the experience of coming up with solutions. He joins a stellar cast of leaders to discuss the present and the future of enterprise mobility.

Rethinking Enterprise Mobility

· Tim Campos, CIO, Facebook

· Steve Mills, CIO, Motorola Mobility

· Dave Webb, CIO, Equifax

· Paul Brody, VP/Mobile Practice Leader, IBM

· Mark Fernandez, Managing Partner, Sierra Ventures (moderator)

When: Sept 24^th in Seattle.

Registration (Summer Saver Expires 7/25 – Friday)

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

Some of the confirmed industry leaders are:

· Dan Hesse, CEO, Sprint

· Bill Ruh, VP, GE

· Tim Campos, CIO, Facebook

· Erik Moreno, SVP, Fox Networks

· Glenn Lurie, President, AT&T

· Steve Mills, CIO, Motorola Mobility

· Hank Skorny, VP/GM, Intel

· Dr. John Saw, CNO, Sprint

· JD Howard, VP/GM, Lenovo

· Dave Webb, CIO, Equifax

· Dr. Hassan Ahmed, CEO, Affirmed Networks

· Mark Fernandez, Managing Partner, Sierra Ventures

· Ujjal Kohli, Founder, Rhythm NewMedia

· Vik Kathuria, Global Chief Media Officer, Razorfish

· Erin Kienast, SVP, Starcom Worldwide

· Josh Will, Senior Category Manager, Best Buy

· Steve Elfman, President, Sprint

· Jason Hoffman, VP, Ericsson

· Matt Grob, EVP/CTO, Qualcomm

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

· David Richter, VP, Uber

· Paul Brody, VP & Mobile Practice Leader, IBM

.. 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.

Thanks

Mobile Breakfast Series–IoT–London July 3, 2014

Posted by chetan in : 4th Wave, Chetan Sharma Consulting, Internet of Things, IoT, Mobile Breakfast Series, Mobile Ecosystem, Mobile Future Forward, Smart Cities, Wireless Value Chain, Worldwide Wireless Market , add a comment

We hosted our Europe Mobile Breakfast Series in London last month in partnership with Telefonica and they have been gracious host for the series. The topic of discussion was “Internet of Things: Exploring the next big thing in mobile.” Regular readers will notice that it is the same topic we covered in our Seattle breakfast event in March. IoT is gaining lot of share of the news cycle and investments from big companies like GE and Caterpillar to startups like Fitbit and Smart Things. Many traditional computing and communications players like Telefonica, AT&T, Intel, Qualcomm, Microsoft, Google and others are also plunging full-steam ahead into the segment.

I have written about the notion of the coming “Golden Age of Mobile” and IoT, IMHO fits right into that growth strategy. In previous notes, I suggested that:

It is very clear to us that we are entering the ‘Connected Intelligence’ era. These two operative words are going to define the next phase of human evolution and are going to dramatically change every industry vertical from the ground up.

We are starting to see the signs in all directions. We had assembled a great panel to delve into some of the early opportunities, solutions to problems, and the traction areas. Executives from BMW, Intel, Telefonica, and Worldsensing were at hand to share their opinions and experiences in the space.

Dominik Fromm is responsible for expanding BMW Group’s Mobility Services in the United Kingdom under the BMW, MINI and BMW i brands. Strategy, Mobility and Financial Services have been his professional focus in recent years. The current work builds on this wealth of experience, gained whilst working in the United Kingdom and in BMW’s global headquarters in Munich.

Raine Bergstrom is a vice president in the Software and Services Group at Intel Corporation and general manager of API Services. He takes the lead on market and product definition, as well as the execution of API management. He also defines the IoT Services Platform strategy, helping deliver a true end-to-end IoT solution for some of Intel’s largest customers.

Carlos de otto Morera is an economist educated in the United Kingdom. He has now 15 years of international experience including entrepreneurial experience in mobile, hardware and Internet startups. Created the largest online music platform in Spain from 2008 till 2012. Deeply passionate about his job designing and manufacturing connected products. Currently running Thinking Things, connected Hardware initiative from Telefónica.

Mischa Dohler is Chair Professor in Wireless Communications at King’s College London, UK. He is Distinguished Lecturer of IEEE ComSoc, Senior Member of the IEEE, and Editor-in-Chief of ETT. He frequently features as keynote speaker and had press coverage by BBC and Wall Street Journal. He is a tech company investor and also entrepreneur, being the cofounder, former CTO and now with the Board of Directors of Worldsensing.

So, as you can see, we had quite an eclectic group of individuals with diverse backgrounds and perspectives.

To recap, as we stand today, here are some of the forecasts:

In 2011, Ericsson forecasted 50 Billion Connected Devices by 2020

In 2012, Cisco agreed with the forecast and said they too expect the same number of connected devices and in 2013 came out with a paper talking about a $14.4 Trillion economy powered by IoE

In 2013, GE came out with their research and paper on the Industrial Internet powered by sensors and calculated that we could see $10-15 trillion dollar impact on the GDP in the next 20 years.

The salient points of the discussions were:

IoT has been around for a long time, it just existed in different form factors and was called something different. for e.g. Telemetry has been used for many decades in the transportation and utility space. IoT started with some of the first DARPA projects and then moved into the academia, however commercial interest into the space started around 5 years ago and we are seeing the confluence of many trends in the current incarnation of IoT.
Sensors and IoT could fundamentally change how people live, how cities are organized, how people commute, and how we as consumers interact with objects, things, and people around us.
Dominik had interesting perspectives around what type of an auto company might BMW become in the future and they are experimenting with different business models and technologies to see how best to serve the customer and adjust to changing dynamics. BMW becoming an MVNO and offer an Uber like service for BMW customers in an autonomous fashion is within the realm of possibilities.
Carlos talked about the need for modular design and talked about how Thinking Things is solving that problem for various enterprise customers. He gave examples of medical analysis companies, logistics, and transportation and by using componentized sensors, they have been able to operationalize into their work flow and reduce costs.
The medical analysis company carries a large number of fridges from one lab to another (around the continent). It is very important for them to ensure the quality of samples contained. Thanks to sensors they can track temperature around the clock of all fridges and samples around Europe.
Similarly a logistics companies needed help with tracking expensive items being deliver around the world. Sometimes these items, especially expensive ones get stolen. Sensors can be inside these packages and inform whenever these packages have been open, so central systems are aware in real time of any wrong doing.
There was a consensus that the money in IoT is right now in the enterprise where companies are willing to pay top dollars to reduce costs and gather better insights into their supply chain, partners, and customers. Consumer IoT is largely limited to wellness devices which have limited appeal and home security services which are still a bit expensive for mass consumption. However, this is likely to change as there is more streamlining, commoditization, and interest from the developer community.
Mischa talked about some of the work his company Worldsensing is doing in the smart cities space with parking, car counting, journey estimation, and in general getting a better grip of the city.
There was a consensus that the eventual value is going to be in the “data” and not really in the hardware or the basic services both of which will be gradually commoditized. Data will enable companies to figure out better ways to monetize as well as kick off new services.
A new opportunity for data brokers is on the horizon where data is treated like currency in transactions and the marketplace could enable many participants to bring their value-add to the table.
Raine talked about the concept of data segmentation e.g. red data, proprietary data not for sharing; yellow data – you pay for use, and green data that is available for everyone to use. This is what might drive some of the data brokerage economy.
Intel has bet heavily on IoT to the point that it gets its own line item on the financials. The company reported that its 2013 revenue from IoT was $1.8 billion with an operating income of $550 million.
IoT data could allow companies to completely change their business model for e.g. GE now rents its engines vs. selling them and makes more money doing that.
There was some debate about the role of the operator in the IoT value chain beyond connectivity and whether they can manage to move beyond their traditional core business or not. Initiatives like Thinking Things at Telefonica or Digital services at AT&T are indicative of a strong interest from the operators to move beyond connectivity. It is still early in the game.
With IoT there is a discussion around the fragmentation with no set of common standards that can help bind various IoT hardware components together. AllJoyn is there. Android is taking a shot at it and numerous proposals in the burner but it will take some work to harmonize the standards that makes the IoT platform attractive to the developers without whom the IoT traction will suffer.
APIs are one way to bring things together on a platform and that’s Intel’s approach to provide value and attract developers.
Regulatory support is critical for the segment as it starts touching various vertical industries like automotive, retail, energy, etc. and also in the context of personal data. Europe is obviously much more stricter on the consumer privacy issues than rest of the world and it seems the regulators are trying to get ahead of the problem by at least starting to talk about them.
IoT can also help auto manufacturers in managing liability which is a big cost center for OEMs in addition to providing more relevant and real-time data useful for car bookings and navigation.
GE is a great microcosm of IoT as they are across almost all verticals and are using data capabilities to build service solutions for different industries.
How should startups think about IoT? well, for one, don’t get too excited about the technology was the informed opinion of the panel. Rather, focus on the business problem and really understand how this helps the specific buyer who is writing the checks.

Overall, it was a great discussion on the practical aspects of IoT and the audience was great in keeping us honest. I always enjoy interacting with the London mobile crowd and this time was no different. My thanks to the attendees, the partners, the speakers, and to Telefonica for making this event possible.

Given the importance of the topic, we will be dealing with it again at our annual summit Mobile Future Forward on Sept 24th in Seattle and will have more speakers talking about their perspectives and experiences on IoT including GE.

Mobile Breakfast Series - Q&A with Prof. Mischa Dohler, cofounder Worldsensing June 12, 2014

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

We are really looking forward to seeing many of you next Tuesday. Here is the final installment of the Q&A series with our speakers. Prof. Dohler has been looking at the IoT space for a long time as a researcher, entrepreneur, and an academic.

We caught up with Prof. Dohler to get a preview of our upcoming Mobile Breakfast Series event in London on June 17^th.

You have looked at the IoT opportunity both as an academic as well as an entrepreneur. What’s your sense of the opportunity? Are we beyond IoT being a theoretical exercise?

IoT was a dream 25 years ago with the first DARPA projects; it started to migrate from an interesting academic exercise to industrial innovation via standards work/etc. about 15 years ago; and has become commercial reality some 5 years ago. The potential market is enormous, the problem is that the market has not fully developed yet. This will require time and money. IoT is thus an enormous opportunity today, yes!

You have done quite a bit of work in the Smart Cities space? How does the implementation impact the common man? How should governments think about funding such initiatives? Does it offer any significant competitive advantage to the city?

The problems of Smart Cities today had been summarized in a recent blog of mine under https://connect.innovateuk.org/web/design-sig/article-view/-/blogs/designing-smart-cities-in-2013.

It boils down to "smart" (ie IoT, Big Data, etc.) not properly synch’ing with "city" (i.e. infrastructure providers, etc). Despite the enormous potential of bringing smartness into cities, very little is visible today. The problem with the uptake is that the market is not developed yet, which means that innovative companies have to survive long sales cycles, etc., etc. Difficult times, still!

If you look 5-10 years out, what are some of the exciting developments in R&D that we will start seeing in real-life?

The most exciting thing for me would be if wireless finally really became invisible - and I hope by 2020 we won’t have to stress out which technology we use to connect our IoT devices. Another exciting area is the combination with robotics since the IoT would allow us to collect data; Big Data process it; and robotics act on it - and thereby close the data cycle.

The IoT space is quite fragmented right now. Will that hinder progress? Where will the value lie in the value-chain?

The value currently is in the verticals, and with some specific industries, such as health, transport, construction, and oil/gas. Once these verticals have expanded, the horizontals will start to become important because one can leverage the true Big Data value by cross correlating data sets which each individual vertical cannot do.

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: June 17^th. Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration

Internet of Things: Exploring the next big thing in mobile

Prof. Mischa Dohler, King’s College, London and Cofounder, Worldsensing

Dominik Fromm, GM – Mobility Services, BMW

Carlos de otto Morera, CEO, Thinking Things, Telefonica

Raine Bergstrom, VP and GM, Intel

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Look forward to seeing you next week.

Mobile Breakfast Series: IoT Q&A with Telefonica June 9, 2014

Posted by chetan in : Internet of Things, IoE, IoT, Mobile Breakfast Series, Worldwide Wireless Market , add a comment

We are delighted to have Carlos de otto Morera, CEO of Thinking Things at Telefonica join the panel next week. Carlos is an economist educated in the United Kingdom. He has 15 years of international experience including entrepreneurial experience in mobile, hardware and Internet startups. He created the largest online music platform in Spain from 2008 till 2012. He is deeply passionate about his job designing and manufacturing connected products. Carlos is joined by execs from BMW, Intel, and Worldsensing and we will be exploring the opportunities in the “Internet of Things” world.

We caught up with Carlos to get a preview of our upcoming Mobile Breakfast Series event in London on June 17^th.

Why did you and Telefónica start Thinking Things? Is it about simplification or are there more benefits to the modular approach?

Telefónica R&D created the Physical Internet Lab to design specific solutions using connected hardware. After a few projects for different customers, the Lab realized that we were always tackling the same problems: sensoring or measuring, communications and intelligence (SW) for many different types of problems. Thinking Things was created so all those cases could be solved through a seamless solution that allows you to measure, collect and act on the information. It has been designed in a way that allows anyone unfamiliar with hardware to create specific solutions to specific problems thanks to connected hardware. This modular approach allows one to create objects with different functionalities by simply buying new modules with different sensors on top of the basic modules.

What are couple of examples of how it is being used today?

Thinking Things is being used currently by one of the largest Medical Analysis companies in Europe. This company carries a large number of fridges from one lab to another (around the continent). It is very important for them to ensure the quality of samples contained. Thanks to Thinking Things they can track temperature around the clock of all fridges and samples around Europe.

We are working together with large logistics companies to help them track expensive items being deliver around the world. Sometimes these items, especially expensive ones get stolen. Thinking Things can be inside these packages and inform whenever these packages have been open, so central systems are aware in real time of any wrong doing.

How can developers be involved in using the Thinking Things toolkit?

Thinking Things has been designed for all those app and web developers and digital product designers that need and want to build new connected products and services. We provide them with an easy to use, plug and play solution where, by buying our connected hardware are able to build such products and services. Thinking Things comes with battery, different types of sensors and a connections device together with cloud services so by just using our API, you can build any software specific solutions on top.

Our back-end software allows you to access your data, as well as allows you to create rules and ways to interact with the devices.

What are you doing on the software-side of things and with data?

Thinking Things is a hardware project within Telefónica. But it’s a connected product so we developed our own front-end and back-end software platform to satisfy the needs of Thinking Things users and developers. On the front-end side of things, we provide users with all necessary functionality so you can use Thinking Things right away. In any case we are aware of the fact that developers want to build their specific solutions therefore we provide an open API so they can freely create on top of the framework.

Data as of today will be used by owners of end products and their end customers for whatever purpose those products are created. We foresee though that considering that a large variety of products can be built, data generated may be of interest to third parties allowing both Telefónica and developers to exploit it commercially.

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: June 17^th. Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration

Internet of Things: Exploring the next big thing in mobile

Prof. Mischa Dohler, King’s College, London and Cofounder, Worldsensing

Dominik Fromm, GM – Mobility Services, BMW

Carlos de otto Morera, CEO, Thinking Things, Telefonica

Raine Bergstrom, VP and GM, Intel

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Look forward to seeing you next week.

US Mobile Market Update – Q1 2014 June 2, 2014

Posted by chetan in : 4G, 4th Wave, AORTA, ARPU, Chetan Sharma Consulting, Mobile Future Forward, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update – Q1 2014

Summary

The US mobile data service revenues grew 4% Q/Q and 23% Y/Y to $25.9B in Q1 2014. In 2014, we expect US to become the first country to cross the $100B mark in mobile data services revenue. We have also started to see digital services appear in the revenue maps as more companies rely on mobile to generate their revenues.

With the acquisition of Leap, AT&T has virtually tied Verizon for market share at 34%.

T-Mobile continued to impress with 66% share of the net-adds. Even Verizon felt the heat in Q1 resulting in a subpar performance. Smartphone penetration increased to 68% and roughly 93% of the devices sold now are smartphones.

M&A Season

FCC must have cancelled all summer vacations for its staff as it is going to have a busy summer. As expected, Comcast made a bid for Time Warner and AT&T for DirectTV. Encouraged by the M&A season, Softbank is going to make a run for T-Mobile and pop the question to the FCC – so what do you think?

This in addition to the net-neutrality religious wars that have been triggered.

So, how will this all end-up?

It’s complicated.

The basic problem is that the communications and computing worlds have collided and nobody told the politicians. One can’t develop a policy framework in vacuum. It has to synchronize with the real world and with the facts on the ground. In my travels around the globe, I find that some of the most underdeveloped countries have better policy framework than some of the developed nations. Obviously, they don’t have the legacy to work with but they are more progressive in terms of national competitiveness and creation of jobs as the central underpinning of their framework.

As we noted in our 2011 research paper, “Competition and the Evolution of the mobile markets,” the mobile markets gravitate towards three player composition. Over time, every market approaches this equilibrium. We looked at the world’s top 36 markets and the average HHI (Herfindahl-Hirschman Index) for these markets is 0.344. If we just look at the developed markets, the HHI is 0.327. The US market HHI stands at a relatively lower number of 0.25 which is right at the cusp of what DOJ calls heavily concentrated and moderately concentrated markets. In fact, 30 of the 36 markets are over this line and that includes pretty much every developed market except UK.

If and when Softbank proposes the T-Mobile merger, the HHI will increase to 0.28 and will clearly cross the DOJ marker of heavily concentrated markets. For contrast, the cable industry is at 0.13 HHI. Clearly, just looking at HHI is inadequate and misleading as we showed in our paper back in 2011.

In heavy Capex industries, it is natural to have consolidation. It allows more efficient deployment of the capital or else everyone gets bloodied in the turf war as is evident in Indian mobile market which is on the verge of a major restructure.

In the last 20 years, the share of top 3 operators has grown from roughly 40% to 80%. The number of mobile subscriptions have grown 14x during the same time period.

So, will there be further consolidation in the mobile industry? Short answer is – Yes. The only thing up for debate is whether it happens in this administration or the next. As we said in the last note, T-Mobile has complicated things by being successful in the short-term. A third player with 30% market share will of course be better but T-Mobile has been able to change the market by being the fourth at 14%.

FCC’s dilemma is that it can’t evaluate these proposed mergers in isolation and Congress hasn’t done a good job of clearly defining FCC’s authority.

It is going to be an interesting summer for sure.

What’s next for Microsoft?

With a new CEO at the helm, Microsoft made some key (albeit late) changes to its strategy: Office for non-windows devices, zero-rating the OS licensing fees, doubling down on the enterprise class Surface. In light of the plummeting PC sales, Microsoft is trying to figure out its place in the post-PC world. Surface 3 is good device but there are also significant hurdles. Having failed to stem the tide of iPad and Android tablets, Microsoft seems to be focusing on the high-end by trying to change the discussion around the wisdom of carrying multiple devices.

One of the basic problem that the current strategy faces is that of articulating a valid value proposition. On the pricing axis, it doesn’t make a dent. MacBook Air is still the best notebook around and iPad is still the best tablet and you can get both of them for $1500 while a comparable Surface configuration will set you back $1200-1300, a drop of less than 20%. The reason Kindle and other sub $200 tablets got some traction was that the price difference was 60%. It forced Apple to reconsider and launch the mini to secure the mid-tier.

However, it is smart of Microsoft to fight the battle on the top end in the enterprise where their biggest strength lies rather than in the low-mid tier consumer segment which is nothing but a bloodbath for new OEMs.

The mobile ecosystem will clearly benefit from a stronger Microsoft but it has to address some key strategic questions for its partners and customers. It has started to shed some legacy constraints, is getting some product thinking behind its strategy, and is becoming more open which is a good start.

About that Google Car

The autonomous car that Google showcased earlier this week is probably the most interesting technology development in the last couple of years (in addition to whatever Elon Musk does). Given that going from point A and point B is so central to our civilization, a rethink of how it should be done is going to have profound effect on not only the existing value chains and industries but more fundamentally, how humans organize themselves as social beings. There are a number of exciting and terrifying (for some) questions in front of us – how quickly will autonomous cars become the norm in major markets – 5 years? 15 years? What does this do to the driver segment? Auto sales? Cost of transportation? Design and investment of infrastructure? Privacy and security of data? Mobile network infrastructure to support a radical societal architecture? Will tech companies become car OEMs? Should they? How quickly will the regulators catch-up? Months? Years? Decades?

I do think Google car is a perfect embodiment of the connected intelligence era and this is going to have such profound implications that we haven’t yet built a model to grasp its impact (more to come on this topic).

What to expect in the coming months?

2014 has had an excellent start and rest of the year is looking great with a slew of announcements and activities planned for the rest of the year. We have already seen some massive moves, astounding acquisitions, and interesting strategic moves.

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 Q1 2014 US wireless data market is:

Service Revenues

The US mobile data service revenues grew 4% Q/Q and 23% Y/Y to $25.9B in Q1 2014. For the year 2014, we expect US to become the first country to generate $100B from mobile data services.
Verizon and AT&T dominated the quarter accounting for 68% 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 2014. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile operators.
Revenue from new subs has declined to roughly 2%.

ARPU

The Overall ARPU declined by $0.51. Average voice ARPU declined by $1.27 while the average data ARPU grew by $0.76 or 3% Q/Q.
As noted in the last update, the average industry percentage contribution of data to overall ARPU is now over 50%. US became the 7^th nation to achieve this feat. Japan at 70% leads the industry.

Subscribers

In terms of total subscribers, thanks to the Leap acquisition, AT&T is virtually tied with Verizon at 34% share in terms of market share. Verizon hasn’t ceded the top spot since its acquisition of Alltel in 2008/9.
The US operators added 3.5M new customers. In a first, T-Mobile added twice the amount of new customers compared to the rest of the top 3 combined.
T-Mobile’s postpaid continued to see the positive growth for the fourth straight quarter. Verizon was impacted significantly with the smallest postpaid net-add quarter in two years. Sprint continued its losses in the postpaid segment. While T-Mobile is on its way to recover from the postpaid losses of the last few years, Sprint’s tally of postpaid losses over the last 5 years stands at 7.4M.
AT&T continued to lead the connected device segment with 48% market share.

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. 50% of postpaid accounts at Verizon are now on shared plans. At AT&T, tablets are performing 2-3 times better than smartphones in postpaid net-adds.
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.
45% of AT&T’s postpaid accounts are on 10GB+ plans.

4^th Wave Progress

The number of players making $100M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 59% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 80% in mobile (of the total advertising revenue) up from 60% in 2013. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4^th Wave: Evolution of the Next Trillion Dollars”)
In 2014, we are also seeing continued investments from the operators especially AT&T, Verizon, and Sprint in non-traditional segments like home security, healthcare, insurance, automotive, enterprise mobility, advertising, and security, and others. Collectively, this is already a multi-billion dollar business in the US.
The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

Connected Devices

· Connected devices (non-phones) accounted for almost 50% of the net-adds in Q1 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.

· Tablets form 63% of the connected devices sold.

· YOY, the connected devices segment grew 23%.

We hosted our IoT Americas session last quarter with Verizon, Ericsson, Samsung, and adidas and are planning our IoT Europe panel with Telefonica, BMW, Intel, and Worldsensing in London on June 17^th.

Handsets

· Smartphones continued to be sold at a brisk pace accounting almost 93% of the devices sold in Q1 2014. Within the next two years, the feature phone category will practically be extinct in the US market.

· The smartphone penetration in the US is now 68%.

· Android had its best showing in the US market with 54% share of the quarter. Q2 is expected to strong as well.

· While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows phone last year but sales have been poor. While Microsoft has made steady progress in other regions, in the US, it’s not gaining any traction and its share remains at a measly 3%. (Read our paper to get more insights into why Windows hasn’t been able to make a dent so far).

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 48M making it the leading LTE operator in the world. Other three operators are also deep into their LTE deployments. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 73% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

· Mobile operators also announced their VoLTE launches.

· Verizon and AT&T sell more iPhones than Android while the reverse is true for T-Mobile (by a big margin) and Sprint. There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 36% of the iPhones in the US.

Mobile Patents/IP

· 24% of the patents granted by the USPTO were mobile related. Samsung, IBM, Microsoft, Sony, and Ericsson make the top 5 patent players in mobile. We will have more details in our coming paper on Mobile Patents Landscape next month.

· US companies comprise of 50% of the top 50 list followed by Japan, China, and South Korea.

· Samsung was again the leader in mobile patents granted in 2013 in the US and worldwide. Samsung was followed by IBM, Qualcomm, RIM, LG, Sony, Microsoft, Ericsson, Google, and AT&T for the top 10 companies by mobile patent grants in 2013.

· Google made an entry into the top 10 overall mobile patents list for the first time. AT&T did the same for the mobile patents granted in 2013.

· US Mobile Operators dominate the top 10 operator rankings: Patent top 10 Rankings: AT&T, NTT DoCoMo, Sprint, Verizon, Telecom Italia, Swisscom, T-Mobile, Orange, SK Telecom, and TeliaSonera.

· Mobile Infrastructure Patent top 10 Rankings: Samsung, Ericsson, Alcatel-Lucent, Qualcomm, LG, Intel, Siemens, Fujitsu, NEC, and Panasonic.

· Mobile OEM Patent top 10 Rankings: Samsung, Microsoft, Sony, Nokia, Google, LG, RIM, Siemens, Fujitsu, and Panasonic.

· The top 5 categories for patents grants in the US for 2013 were Telecommunications, Digital Multiplexing, Digital Processing – Data Transfer, Digital Processing – Financial, and Computer Graphics.

· The top 10 filers of mobile patents in the US were IBM, Samsung, Microsoft, Sony, Qualcomm, Nokia, Ericsson, Google, LG, Intel and Apple. It was the first time that Samsung, Microsoft, Google and Apple showed up in the top 10 patent filers list together.

· Facebook’s mobile patent filings increased by 177% YoY.

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 2014. The next Global Wireless Data Market update will be issued in July 2014.

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

We will be discussing many of the ecosystem and technology issues, opportunities and challenges for the coming years in our annual mobile executive summit Mobile Future Forward on Sept 24^th in Seattle. Some of the confirmed speakers are Dan Hesse, CEO, Sprint; Tim Campos, CIO, Facebook; Ben Fried, CIO, Google; JD Howard, GM and VP, Lenovo; Erik Moreno, SVP, Fox Networks; Glenn Lurie, President, AT&T; Steve Mills, CIO, Motorola Mobility; Mark Fernandez, Partner, Sierra Ventures; Dave Webb, CIO, Equifax; John Saw, CNO, Sprint; Hank Skorny, VP/GM, Intel; Hassan Ahmed, CEO, Affirmed, and many more to come. We hope to see you there for the brainstorm.

Mobile Breakfast Series: IoT Q&A with Intel May 28, 2014

Posted by chetan in : Intel, Intellectual Property, Internet of Things, IoE, IoT, Mobile Breakfast Series , add a comment

We are delighted to have Raine Bergstrom, VP and GM at Intel participate on our panel. We caught up with to get a preview of our upcoming Mobile Breakfast Series event in London on June 17th in partnership with Telefonica.

Raine is joined by execs from BMW, Telefonica and Worldsensing and we are exploring the opportunities in the “Internet of Things” world.

1. There is a lot of investment buzz around the IoT. M2M and similar concepts have been around a long time. What’s your sense of why there is interest and activity?

While the core use cases and actual implementations have been around for years in what could be defined as “IoT”, we have seen the maturing of several core paradigms across hardware, software and services. This maturation enables enterprises to accelerate the scale, security, and ability to take to market new IoT business models and not just one-off solutions.

2. Intel is considered a major player in the IoT segment both from the chipset point of view as well as the services. How does Intel see the IoT opportunities?

For Intel, IoT’s synergy of software and hardware is perfectly aligned with our hardware and software portfolios. End-to-end solutions need devices to collect data, but also require software and services, particularly API management and big data, to realize the value of that data. Intel is uniquely situated to provide a silicon to cloud solution that IoT customers can depend on.

3. What specific segments or verticals are seeing more traction than others? Why?

IoT has the potential to modernize rapidly in Smart Cities, Fleet, Manufacturing, Automotive, and the Public Sector. These are all early leaders due to the heavy logistics and wide variety of legacy devices in play today. The more interesting question is what happens in Phase 2 of IoT using the IoT data that is collected and monetized.

4. As you look at the IoT opportunity down the road, say 5 years out, where will be the most value reside in the stack?

There will be two value segments, the IoT platform that is scalable across segments and the vertical solutions for each industry. API management will be central to any platform that allows the aggregation of APIs and the services they create. The Vertical solutions will require deep segment knowledge, but still leverage a platform. Launching products today is not just a matter of designing for current partners and customers. It’s about designing API programs that aim to target entire industries.

Raine Bergstrom is a vice president in the Software and Services Group at Intel Corporation and general manager of API Services. He takes the lead on market and product definition, as well as the execution of API management. He also defines the IoT Services Platform strategy, helping deliver a true end-to-end IoT solution for some of Intel’s largest customers.

Prior to Intel, Raine was an executive and founder of several successful startups, and led software groups for Microsoft, AOL/Time Warner and Adobe. He holds multiple patents in mobile messaging and formerly served as a director of the Cellular Telecommunications and Internet Association (CTIA).

Mobile Breakfast Series–London–June 17th May 14, 2014

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

I am excited to add Professor Mischa Dohler of King’s College in London to the program. Prof. Dohler is a distinguished researcher and an entrepreneur and is focused on IoT, Smart Cities, and 5G. His work has been referenced by PM Cameron at CeBIT

The topic of discussion will be “Internet of Things: Exploring the next big thing in mobile.” Internet of Things (IoT) has been hailed as the next big thing in the mobile industry. As connections from objects and things interconnect with existing and new end points, the networked effect can provide tremendous opportunities, reshape existing processes, user experiences, and expectations. But, really, how real is IoT? and what will it take to reach the billions of dollars promised? Will it fundamentally alter how we do things? We are starting to see signs of tremendous progress. GE is investing $4B+ into its version of IoT – the industrial Internet and it is making the difference in operations and machine learning. Connected consumer gadgets are enabling us to lead healthier lives, work more efficiently, and manage our time more effectively.

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration (limited seats) Early Bird expires next week

We have an exciting panel planned with some leading experts on the subject:

Prof. Mischa Dohler, King’s College, London and Cofounder, Worldsensing

Dominik Fromm, GM – Mobility Services, BMW

Francisco Jariego, Director – Industrial IoT, Telefonica

Raine Bergstrom, GM – IoT, Intel

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Dominik Fromm is responsible for expanding BMW Group’s Mobility Services in the United Kingdom under the BMW, MINI and BMW i brands. Francisco is responsible for the Industrial IoT projects including Smart Cities for Telefonica. Raine is a mobile industry veteran and is driving Intel’s investment in IoT and related services.

Look forward to seeing you in June.

Mobile Breakfast Series: London: June 17th: Internet of Things April 20, 2014

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

I am excited to announce our 2^nd London Mobile Breakfast Series event in partnership with Telefonica on June 17^th. The topic of discussion will be “Internet of Things: Exploring the next big thing in mobile.” Internet of Things (IoT) has been hailed as the next big thing in the mobile industry. As connections from objects and things interconnect with existing and new end points, the networked effect can provide tremendous opportunities, reshape existing processes, user experiences, and expectations. But, really, how real is IoT? and what will it take to reach the billions of dollars promised? Will it fundamentally alter how we do things? We are starting to see signs of tremendous progress. GE is investing $4B+ into its version of IoT – the industrial Internet and it is making the difference in operations and machine learning. Connected consumer gadgets are enabling us to lead healthier lives, work more efficiently, and manage our time more effectively.

We have an exciting panel planned with some leading experts on the subject:

Dominik Fromm, GM – Mobility Services, BMW

Francisco Jariego, Director – Industrial IoT, Telefonica

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

.. more speakers to be announced

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration (limited seats)

Look forward to seeing you in June.

Kind regards,

Chetan Sharma

Mobile Patents Landscape–An In-Depth Quantitative Analysis

Posted by chetan in : 4th Wave, Mobile Patents, Patent Strategies, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Mobile Patents Landscape - 3rd Edition - 2014

http://www.chetansharma.com/MobilePatentsLandscape_2014.htm

Download

Subscribe to the best research in mobile

Highlights

· The study looked at over 7 million patents granted in the US and Europe. The analysis focused on the patents granted to 65 technology companies in the mobile space.

· The gap between the number of mobile patents granted in the US vs. Europe widened again. US now accounts for roughly 76% of the mobile patents granted in the two jurisdictions.

· US companies comprise of 50% of the top 50 list followed by Japan, China, and South Korea.

· By the end of 2013, approximately 25% of all granted patents in the US were mobile related. In 2001, the percentage was 5%. In Europe, roughly 10% of the patents granted were mobile related.

· Google made an entry into the top 10 overall mobile patents list for the first time. AT&T did the same for the mobile patents granted in 2013.

· Despite dwindling market fortunes, RIM continues a healthy patents grant rate and appears in several top 10 categories.

· US Mobile Operators dominate the top 10 operator rankings: Patent top 10 Rankings: AT&T, NTT DoCoMo, Sprint, Verizon, Telecom Italia, Swisscom, T-Mobile, Orange, SK Telecom, and TeliaSonera.

· Mobile Infrastructure Patent top 10 Rankings: Samsung, Ericsson, Alcatel-Lucent, Qualcomm, LG, Intel, Siemens, Fujitsu, NEC, and Panasonic.

· Mobile OEM Patent top 10 Rankings: Samsung, Microsoft, Sony, Nokia, Google, LG, RIM, Siemens, Fujitsu, and Panasonic.

· The top

· Facebook’s mobile patent filings increased by 177% YoY.

· Due to the ongoing work in the LTE/LTE-A space, the Multiplex Communications category saw the highest jump in patent filings in 2013.

Introduction

The value of Intellectual Property (IP) have been debated since the days of Aristotle in the fourth century B.C. In 1624, The Statute of Monopolies passed as the first statutory expression of English patent law. Patent systems evolved from there and helped lay the foundations of the patent system that we are familiar with today. In any given industry, IP forms the core basis of technology, the competition evolves and its protection becomes paramount to not only its inventors but also to the geographical boundaries of operations.

In a knowledge economy, the very competitiveness and durability of the nation’s economy depends on how well the framework of IP and patents works in the country and the steps it takes to avoid theft and misuse of the laws while enforcing the rules and regulations on the books. IP has been an integral part of the economic engine of the western world for many decades if not centuries. Over the past two decades, nations and corporations have competed on the creation, funding, execution, and protection of the new ideas.

Mobile’s role in transforming industries and countries is being appreciated in every corner of the planet – whether it’s streets of Thimpu or high rises of Hong Kong, whether it is the hustle-bustle of Cupertino or a relaxed afternoon in Paris, mobile forms the connective tissue of the global society. As mobile devices have moved from being a luxury good to becoming an everyday necessity, innovation in various segments of the industry has accelerated the reach and impact of mobile technology worldwide. Mobile is also levelling the playing field, increasing the opportunities for entrepreneurs far and wide. A dreamer in Nairobi has as good a shot at success as anyone else in the west.

All the innovation and economic activity has also increased the patent activity around the world. While US, Europe, and Japan remain the overall leaders in patents both in quantity and quality; China’s is at the top in terms of growth rate. In 2013, China’s patent applications grew 15.6% compared to the US at 10.8%. Amongst the top 5 filers in 2013, ZTE and Huawei are from China.

According to the US Patent Office (USPTO), in 2013, the number of patents granted grew over 62% by the end of 2012 for the same time period. 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 449% increase while the European market saw a 105% increase in mobile related patent grants.

Another interesting fact is that in 2013, roughly quarter of all patents granted in the US were mobile related. This grew from around 2% in 1991 and 5% in 2001. In Europe, roughly 10% of the patents granted are now related to mobile.

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 third in the series that does an in-depth quantitative analysis of the mobile patents landscape.

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 May 2014. The next Global Wireless Data Market update will be issued in May 2014.

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

Mobile Breakfast Series: Internet of Things March 23, 2014

Posted by chetan in : Internet of Things, IoE, IoT, Mobile Breakfast Series, Mobile Future Forward, US Wireless Market, Worldwide Wireless Market , 1 comment so far

Internet of Things: Exploring the next big thing in mobile

We hosted our first Mobile Breakfast Series of the year at Columbia Tower Club last week and the topic was Internet of Things (IoT). IoT is the hottest thing in the mobile industry right now with investment pouring in from all sides. Our expert panel took a deeper look into the opportunities, the hype, and the challenges in the evolving mobile segment. Mobile Breakfast Series works to bring you the current thoughts, expert brains, and probing questions about the main issues of the day.

Internet of Things (IoT) has been hailed as the next big thing in the mobile industry. As connections from objects and things interconnect with existing and new end points, the networked effect can provide tremendous opportunities; reshape existing processes, user experiences, and expectations. But, really, how real is IoT and what will it take to reach the billions of dollars promised. Will it fundamentally alter how we do things? We are starting to see signs of tremendous progress. GE is investing $4B+ into its version of IoT – the industrial Internet and it is making the difference in operations and machine learning. Connected consumers’ gadgets are enabling us to lead healthier lives, work more efficiently, and manage our time more effectively.

We had a superstar panel discussing the IoT evolution from different angles.

Bobby Morrison, President, Verizon PNW has his ears to the ground as he works with his customers big and small on using mobile to solve real-world problem that improves productivity and financial performance. Verizon is one the top digital operators in the world who understands the implications of the 4^th wave and is investing appropriately.

Tim Moss, SVP, Ericsson was one the key guys behind the analysis that led to the 50 Billion connected devices paper in 2011. He has 20+ years of experience in the industry and worked across many verticals so has a real deep understanding how mobile can be incorporated in various industries.

Chris Murphy, Director, Brand Communications and Digital Marketing, adidas US is close to the consumers as to what matters most. Companies like adidas don’t introduce technology in their products for the sake of technology. Each mistake can be costly if it is not well thought out. It doesn’t mean that are constantly tinkering at the edges. His team has been introducing new concepts and new ways to engage the consumer throughout their

Shankar Chandran, VP, Samsung Catalyst Fund is part of the new investment group at Samsung in Silicon Valley who is looking to invest in cutting edge startups and technologies in both hardware and software that can give Samsung and its ecosystem an edge. His areas of interest are IoT, cloud, security, mHealth, and next-generation user interfaces. Samsung is one of the top 3 important players in the mobile and technology ecosystem.

From wearables to automobiles to industrial automation, the use cases are endless and we are just trying to make sense of what such a connected world will mean to productivity, human behavior, safety, privacy, and the society at large.

As we stand today, here are some of the forecasts:

In 2011, Ericsson forecasted 50 Billion Connected Devices by 2020

In 2012, Cisco agreed with the forecast and said they too expect the same number of connected devices and in 2013 came out with a paper talking about a $14.4 Trillion economy powered by IoE

In 2013, GE came out with their research and paper on the Industrial Internet powered by sensors and calculated that we could see $10-15 trillion dollar impact on the GDP in the next 20 years.

So, these are massive numbers. It does feel like we are entering a new phase of technology growth due to connected sensors, what I call the “Golden Age of Mobile” and I was seen that in my work in both developing and developed nations that the use cases are everywhere. In many instances, developing countries are not waiting but leapfrogging some of the developed nations. So, very exciting times ahead.

The salient point of discussions were:

Verizon had 1.3TB of traffic during the super bowl. That was easily matched by Seattle Victory parade couple days later. #goHawks
Verizon has worked with some venues to help fans find parking quickly through mobile. The less time they spend on parking, the more they spend in the stadium and average spend goes up
The current crop of wearables is pretty “meh,” we need a lot more accuracy, better design and aesthetics, and algorithms that help make sense of the data in practical terms. Just knowing the heart rate might not help if doesn’t come with a personal digital assistant that helps you manage high heart rate or abnormal conditions? Connecting the dots through algorithms is the key for broader adoption.
Connected Home – there is debate about how this evolves. Do we need a central hub to control various entities in the house like what AT&T Digital Life is all about or we will just integrate best of the breed solutions like Nest in the house. How do they talk to each other or will consumers be forced to manage different devices using different interfaces and apps? Will there be algorithms that unify this complexity in easy to use single interfaces? Who owns the control points? Who owns the data? Who controls the security? Many questions. No clear answers today but they all point to opportunities for the ecosystem. Algorithms can help tie data coming from security camera, thermostat and water heater together to provide a better view to the consumer on actionable information in the case of exceptions.
Retail – Retailers are starting to use as a way to understand their customers better and engage with them inside and outside the stores
Industrial Automation – every airplane flight generates Petabytes of data but we don’t have the capability to truly analyze all of it at the speed we need to. Wind turbines collect data every 40ms. This points to a growing problem of managing data and picking the needles in massive haystacks.
Connected Cars: 60M cars sold last year, 14M were connected. Next year, we will probably have 50% connected so we are getting to a point where pretty much every car coming out of the plant will be connected.
Microsoft should be focusing more on IoT. It lost out on the smartphone wave but shouldn’t miss the IoT wave or it will be really out of the game.
Battery life is pretty poor on today’s devices. Without significant improvement there is no mass-market.
The privacy/security angle on the data of IoT is one of the critical issues that might derail or slow IoT. Either due to regulations or some major incidents, we might see a big shift in perception of privacy of IoT data or how security is managed at various levels of the IoT stack.
Mobile security is a Lego-block building problem. One has to secure every layer of the stack to be able to provide comprehensive security and it is challenging when there are multitude of players involved.
Samsung’s focus is on two key areas: core sensor technologies to help improve the performance and algorithms that helps make sense of the data so if you have something cutting-edge, you can get an audience with them.
One of the biggest things that is holding back IoT is the fragmentation and lack of standards that appeal to folks outside the mobile industry. While there have been efforts from the likes of Qualcomm and Google to harmonize things, IoT is still quite fragmented and is likely to remain so for sometime. There was a call for action for key leaders in the industry to come to the table to help create standards quickly.
Verizon has been talking about some of its solutions in health and public safety via its “powerful answers” campaign.
Ericsson has been investing heavily into software as they transition to become a digital player assisting the operators and others. The importance is highlighted by the fact that Ericsson now invests 50% of its R&D budget on software.
Verizon has seen 200-300% growth in the space every year in the last few years and it is likely to continue. Investment profile stays aggressive.
adidas helps not only its target demographics of high-school kids but also professional athletes with connected apparel and analysis of data to help prepare better athletes and agile sports teams. In 2012, they ran an experiment with the two soccer teams in Philadelphia where both sides wore connected things and people in the stands could look at the player heart rates and their speeds etc. From the consumer point of view, the focus is always on adding value to the product and a service to the consumer.
Mobile operators like Verizon and AT&T are focused on services that go beyond connectivity to move up the stack and offer more complete solutions (as outlined in our 4th wave paper series).

I really enjoyed the discussion and we covered quite a bit of ground. As usual, the audience were well informed and did their homework.

Given the importance of the topic, we are expanding our Mobile Breakfast Series on IoT and going back to London this summer and in partnership with Telefonica hosting a session on IoT on June 17th. Hope our friends and colleagues in western Europe can join us.

We will also more details on our annual summit Mobile Future Forward in September. Stay tuned for more details.

Thanks and see you around.

2014 Mobile World Congress Observations March 3, 2014

Posted by chetan in : 4th Wave, Applications, Big Data, Hetnets, Internet of Things, IoE, IoT, LTE Broadcast, Mobile World Congress, NFV, SDN, Smart Cities, Smart Phones, US Wireless Market, Wearables, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 3 comments

2014 Mobile World Congress Observations

Last week all mobile roads led to Barcelona for the annual industry get-together. Many of the discussions at MWC were through the lens of previous week’s blockbuster deal of Facebook/Whatsapp. The deal touches upon many of the technology and business trends up-and-down the mobile stack.

According to industry sources, the first 3GSM had a grand total of 72 attendees cobbled together by self-interest and coaxing. Fast-forward to 2014, and the show has become the most dominant show on the planet, reporting over 80K attendees from around the globe. Perhaps, it is an indication of the improving economy and the fact that we are firmly on the 4^th wave impacting every industry vertical.

This note presents the summary of the observations and discussions from the show.

The deal everyone was talking about

The news that everyone was talking about and dissecting was the one that Facebook struck with Whatsapp in a blockbuster announcement few days ago. For folks who were looking primarily from the financial metrics couldn’t come to grips with the magnitude of the deal. However, as I mentioned on CNBC, the deal has to be understood from the point of view of strategic moat for Facebook. Additionally, when the street measures the company by the number of active users, at $130/user, the deal was a bargain. Having said that, there is whack-a-mole element to this strategy. It takes enormous courage to strike such a deal but if you look it from a strategic point of view, Facebook could have easily spent $25B to secure their future in the short-term. The cost of not acting is much higher.

Connecting the unconnected

Connecting the unconnected was by far the biggest theme of the show. From Mark Zuckerberg’s keynote to the launch of $25 devices from Mozilla, there was concerted discussion around how to increase the 3.5B consumers to 5-6B. The business models were hotly debated both in public and private meetings. How does this get funded? Clearly, cheaper devices, lower infrastructure costs, lower application delivery models are key, but how do you onboard these users is one the biggest challenges of the next 5 years.

SDN/NFV

The emergence of the 4^th wave and the competitive dynamics in the markets has put tremendous pressure on the operating margins of the operators. In order to compete and make the organization more nimble and future-ready, one has to tackle the problem on multiple front – reduce the number of resources required to accomplish the tasks, get rid of the network architecture that is limiting and controlled by proprietary interfaces and vendors, drastically reduce the cost of operations, and enable the API layers for quick service creation and deployment. As a result of this pressure and desire to change, SDN and NFV took more prominence this year compared to the past and operators are urgently moving to cloud-based infrastructure. AT&T’s CTO John Donovan emphasized the need to work with startups and more nimble/innovative players than the incumbents to reduce cost and introduce new services quickly (this paper on the subject is worth the read).

5G – 5GPPP and NGMN

While 4G has been the fastest network technology in the history and we are seeing deployments around the world, industry has officially set its sight on defining 5G. A couple of prominent efforts were announced at MWC – 5GPPP led by the Europeans and NGMN – an operator led initiative. A couple of things will have to be worked out as industry bodies look to define 5G and its use cases. While there is politics and jostling to get an advantage, someone will have to harmonize the definitions and requirements. And more importantly, the discussions of 5G should involve the leading OTT players given that 5G will be applications-led network technology.

Ecosystem value shifts

There are significant value shifts that are taking place in the ecosystem. The value is shifting to the upper layers of the stack. This is what is defining the current turbulence, which is exciting to many and depressing for some. Regulators are caught in the middle unable to understand the OTT landscape and design policies that work for the overall growth of the industry that drive the investments, innovation, and GDP growth. We are likely to see the overall pie grow but the tremendous value creation and destruction within the confines of this growth.

Wearables

MWC picked up where CES left off in wearables. There were many more players who launched watches with different flavors and price point. Industry is also getting conscious of the design elements is what is going to drive the industry. On a larger scale, the industry is waiting for Apple to release its version of wearables and watches, create awareness, and hope that the rising tide lifts all. Huawei, Motorola, Sony, and others announced watches to the market in 2014 without any information on pricing or availability dates. As we mentioned in our CES summary, the wearables market is likely to split into the commoditized layer and the fashion segment.

Galaxy S5

MWC was light on any major device launches except for S5 from Samsung who announced the device in a low-key press conference. There were some other interesting concepts introduced like Yotaphone with an e-ink interface on the back and the privacy-infused-Blackphone. The display is one area, which could bring in new form-factors and use cases as industry gets saturated with existing designs.

IoT

IoT is going through its hype cycle right now. IoE takes the notion even to a next level. Everyone wants to make things connected but how will this all pan out, what are “real” use cases? Who bears the cost of the additional BOM? What form of connectivity is required? How do you unify the underlying platform so IoT is exposed as an opportunity to the developers? There are still more questions than there are answers. The most ambitious practical initiative is from GE, which is looking ways to improve its operations using sensors in a significant way. Intel, Cisco, AT&T, Telefonica, Ericsson, Google, Facebook, and many others are all contributing to defining what this connected world will look like in a few years.

I moderated a couple of panels on the role of network APIs in the IoT world. There was significant interest in the developer community on how to tap into this emerging opportunity.

The connected universe will generate opportunities for many players especially the chip manufacturers. Qualcomm has had a dominant role in the chipset space for sometime and continues to operate from its high perch but market is seeing credible solutions and traction from Mediatek who is attacking the market at the bottom end and Intel, which is taking a more performance-centric strategy.

We will be conducting two in-depth sessions on IoT in the coming months. IoT Americas in Seattle (March 18^th) with AT&T, Samsung, and adidas and IoT Europe in London (June 17^th) with Telefonica and Intel.

Smart Cities

There was a lot of talk about Smart Cities and by extension Smart Nations. However, we haven’t settled on a set of operating models to fund such initiatives. Smaller nations have a better chance to execute on the vision. Countries that have the political breed, regulators, and the industry in sync will see quicker progress than the ones mired by constant election cycles and lackadaisical regulatory regimes. Japan, Korea, Australia, Israel, Spain are a the forefront of what a “Smart City” means and more importantly how will these initiatives will get funded.

Connected Cars

This year connected cars feel more real with imminent launches and data become a key selling point for the OEMs. The primary use cases are safety, diagnostics, and navigation. Next come entertainment and the larger developer ecosystem. Business models vacillate between the kindle model (of embedded connectivity) to shared data plans (attach your cars to the data plan you already have). We are likely to see much activity, deals, and progress in 2014 as the likes of Ford and GM have become regular fixtures at MWC.

Carrier-Aggregation and Hetnets

Carrier aggregation (CA) and Wi-Fi-cellular integration is not new. Vendors and operators have been talking about it for sometime. Most of the LTE operators are in the process of implementing CA to boost the bandwidth and gain more efficiency out of their spectrum assets. Integration with Wi-Fi also gives a boost though there are some enhancements needed to fully utilize Wi-Fi. KT perhaps had the most impressive demo with 3 CA demonstrating speeds of 400-600 Mbps. In a country where 100 Mbps is commonplace, it is no surprise that Korea is pushing the boundaries with LTE.

Network investments - $1.7 Trillion in the next five years

All the progress that has been on the mobile economy has been on the back of trillions of dollars of investment over the last couple of decades. With declining margins, how long do operators continue to invest and at what pace? What’s the margin profile they are willing to live with? What’s the role of government in building out the infrastructure when high-speed mobile networks are concerned? Japan, Korea, Israel have all based their competitiveness on connected broadband world. Can others follow? The impact of Whatsapp launching voice services and Netflix/Comcast deal were hotly debated in the hallways. It is one thing to put out national broadband plans and it is entirely another reality to have an execution path to deliver on the plan. The broadband investment has much far reaching implications than most people and governments realize.

Move towards data-only plans

As we have chronicled in our 4^th wave series papers, the past revenue curves of voice and SMS though still generating significant revenues are on their way out. We will be transitioning slowly but surely to the “data-only” world where consumers pay for data packages and voice and SMS are just IP apps on the network being offered by the operator or other 3^rd parties.

LTE broadcast

While the industry still has the Mediaflo hangover, LTE broadcast seems to be gaining more traction as more operators are committing to trials and experimentation. The business model (for generating new revenue) still stays elusive.

OTT regulations

The cacophony of OTT regulations is increasing. Faced with OTT impact on their core business, operators are asking regulators to take a broader look at how communications is regulated. Most of the regulators seem incapable or unwilling. There is an urgent need to overhaul the policy framework worldwide and more harmonization is needed so that the developers are not constantly looking at a moving target. However, it feels like the current tools are inadequate to keep with the times. Nations who get what it means to be “digitized” are investing and positioning their respective countries for greater competitive position for the next decade while others will be forced to fight the cycles of unemployment, sluggish growth, and widespread apathy.

Big data – data is the resource that feeds the economic engine and industry growth

Not surprisingly, there was a lot of talk about using data to fuel new industries and business models. While we are having pertinent debates about security and privacy, the opportunity to use data for greater efficiency and new revenue streams is no more academic. Companies who have gone through the investment of collecting and streamlining the data sources from not only their internal operations but also partners and the developer ecosystem are going to reap better rewards in the long-term. All this is to have an unfair competitive advantage in the “battle of context” which is going to get played out for the second half of this decade. However, big data is also raising big questions about security and privacy.

Security and Privacy

The requirement for tighter end-to-end security and regulators involvement in managing privacy is becoming very important especially in Europe. Given the pervasiveness of Android, it remains the favorite target of the hackers and the frequency of attacks has seen an enormous increase over the last 12 months. The Snowden effect is having tangible impact on US businesses in Europe and elsewhere and given that mobile is platform of choice, many governments are trying to figure out how to regulate security and privacy.

Nokia’s love affair with Android

The fact that Nokia announced more Android devices than those on the Windows OS pretty much sums up the conundrum Microsoft is in today. Nokia’s recognition that Android is a ticket to recognition proved that its Windows-only strategy had been flawed all along. Had it chosen a dual Android/Windows strategy at the outset, Nokia’s history could have been different and the company might have not seen such destruction in value. In any case, the Android device roadmap was prepared primarily to seal the Microsoft deal so we don’t expect any major Android handsets on Microsoft’s roadmap.

Best Booth – Ericsson

Best Party – Siris Capital

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 2014. The next Global Wireless Data Market update will be issued in April 2014.

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

2014 CES Observations January 12, 2014

Posted by chetan in : 4th Wave, Chetan Sharma Consulting, Connected Devices, US Wireless Market, Wearables, Wireless Value Chain, Worldwide Wireless Market , 4 comments

2014 CES Observations

International CES is not an event where game-changers are launched but it is a celebration of technology and gadgets. It is a good place to understand what is on its way to hope (many if not most of the products never make it to the market), hype (“innovation” was the most used word for defining pretty much anything, second year in a row), and commoditization (how many body tracker does the world need?). It is a place for like-minded people to congregate and pontificate, to do deals, to validate their roadmaps, spy on competitors, meet new partners and suppliers, and just get warmed-up for the year ahead. CES is a good place to get a sense of where the investments might flow this year.

Here is the summary of our observations from 2014 CES:

The big numbers – CEA expects the overall consumer electronics market to grow 2-3% in 2014 to $208 billion. The new growth areas are connected devices, tablets, wellness devices, connected auto, 3D printers, etc. Smart watch sales are expected to double in revenues in 2014. The wearables are expected to grow 25%. At CES, clearly, the connected universe was in full display in all its current glory. It was a mix of some new ideas, incremental improvements from last year, and innovators from all walks of life getting into the value chain.

Wearables – It was no surprise that wearables were one of the highlights of the show. The good news is that the barrier to entry is fairly low. The bad news is that the barrier to entry is fairly low. The space is going to get commoditized very quickly and it is likely going to get stratified into two major buckets – really cheap $10-20 wearables (if one can have < $50 smartphone, there is no real reason for a common wearable to be > $100 given that the components are fairly standard and algorithms are well understood. The other bucket will be high-end fashion driven wearables. Companies that can afford to get some classy designers involved and get good retail distribution are going to cater to the “jewelry” conscious market. The big winners are obviously the component folks who don’t really care who wins as long as there are many players in the pond. Wearables might congregate around natural islands of geography, distribution, and ecosystems. Intel’s keynote was focused almost entirely on wearables.

Connected Auto – There were announcements in the connected auto space. This year things matured a bit with more investments flowing in. AT&T and Google announced their respective platforms for connected auto. While there are significant opportunities in the space, it is still quite fragmented and as such less appeal for the wider developer population.

Robotics – While we are still ways away from the household robotic butler, tiny robots are becoming very sophisticated. Robotics has been around for ages but the connected environment gives them their soul. Toys, games, entertainment, emergency verticals, etc. are natural categories. Unlike the wearables segment, robotics is less commoditized but has lesser overall mass appeal.

Sponsored data – Maybe sponsored data rubs some folks the wrong way but alternate data monetization models are needed in the market. AT&T announced their sponsored data platform. There are already numerous examples of sponsored data all around us across the world. In fact, in some regions, sponsored data will become a key ingredient of the overall mobile data strategy. There are several other alternate sponsored data models that will benefit users and markets should be encouraged to explore them. If it is indeed a bad idea, the market will take care of itself.

US mobile industry – While I work around the globe and there are some fascinating markets with new developments, US is by far the most interesting mobile market right now. Not only does it have the most innovation going on, the competitive dynamics make it a great study for the students of the industry. T-Mobile, having decided on the value strategy is disrupting the market dramatically from the pricing structure point of view. Just like Free in France changed the market within 12 months, T-Mobile is doing the same in the US. They pre-announced their Q4 numbers at CES and they are stunning. 1.6M net-adds, 900K postpaid adds. For the year, they added 4.4M subs. To understand how dramatic of a reversal this is one has to only look at 2012 numbers – 2M postpaid losses compared to 2M postpaid gains in 2013. US industry has never seen such reversal in a short amount of time. Fasten your seat belts, 2014 is going to be a fascinating ride.

Healthcare connected devices – This super category of the wearables is something that is actually quite interesting and can be quite lucrative if you get it right. Sensors that can alert of impending heart attack or food poisoning or help manage diabetes and cancer by understanding the markets inside the body are revolutionary. If we get the price points to manageable levels, the impact on global health is going to be astounding and unprecedented. Of course, regulations and a moribund industry stands in the way.

Curved TV – The 3D TVs were a big flop. Consumers really didn’t warm up to the idea. The curved TV introduced by Samsung won lot of accolades and it was indeed a good experience if you find the right spot to view the screen in front of you. The 4Ks were out in full force as well with Vizio even touting one for under $1K. it is another matter that the UHD content doesn’t really exist in any meaningful way to while there was buzz, there might be little biz on the cards in the short term.

3D Printing – We all appreciate the potential for 3D printing - it is enormous. However, the impact could surprise us. With printers coming down in price to below $500, it is becoming more affordable and could really unleash the creativity of individuals of all shapes and sizes.

Smart Home – There is lot of activity and some real dollars flowing into the segment. AT&T has had some good success with their Digital Life rollout and it is generating new ARPU and increasing LTV of the customers. Additionally, startups are coming out with specific improvements around security, energy, entertainment, appliances, communication, and other related areas.

Disconnect between data and security – There is so much data emanating out of the wearables and the personal IoT devices that NSA or the hackers don’t really have to worry about the lack of data. Given the massive breach at Target, it is time for regulators to step in and work with the industry to formulate some basic guidelines on data protection. It should be unacceptable that these incidents are increasing in audacity and frequency.

Virtual Reality – Oculus VR was one the biggest hits at CES. The marriage of gaming and VR is a natural one and whoever tried the space-age headset at CES seemed immersed into an experience previously unexplored.

Best Booth – Samsung again took the honors

Best Booth Engagement – GoPro has some loyal fans

Your feedback is always welcome.

Chetan Sharma

Mobile Predictions 2014 January 2, 2014

Posted by chetan in : 4G, 4th Wave, ARPU, Bhutan, Chetan Sharma Consulting, Fourth Wave, Indian Wireless Market, Mobile 2014, Mobile Predictions, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

Mobile Predictions 2014

http://www.chetansharma.com/MobilePredictions2014.htm

Download

First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2014. My thanks to all who participated in our 2014 Mobile Predictions Annual Survey. It gives our community an insider’s view of the trends and predictions for the New Year.

2013 was a terrific year for the mobile industry. Mobile data continued to drive most of the mobile growth around the world. Whether it was LTE-minted markets like the US or the emerging economies like Indonesia, whether it was giants like China or the upcomers like Vietnam, mobile data growth was central to the economic activity in the ecosystem. Mobile is also transforming every major vertical industry around the globe. 2013 proved that connectivity has become the core of our fabric and we are entering the “connected intelligence era” that will enable the Golden Age of Mobile.

The competitive dynamics stayed quite vibrant in 2013. We saw epic battles in the field as well as in the courts. Many players struggled for relevance while some fresh blood was infused with startups around the world.

As we peer into 2014, we will see the total number of cellular subscriptions eclipsing humans on the planet for the first time. As the number of connected devices continue their march towards a multi-billion unit market, expectations of what’s possible are changing. Without a doubt, 2014 will be better than 2013 as new technologies, players, and business models shape the ever changing mobile landscape.

Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what’s to come. Executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain and from around the world participated to help see what 2014 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution around the world. The survey provides a view of how they collectively see the upcoming year for mobile.

1. What was most newsworthy in Mobile 2013?

Smartphones and tablets established themselves as the most dominating computing platforms. If there was any doubts that the post-PC world is here, they were over as smartphones in most western countries are now over 90% of the devices sold every quarter. Once Nokia announced its shift to Windows, Microsoft’s acquisition was only a matter of time and with the acquisition (and a new CEO), Microsoft looks to a new beginning in 2014. Apple and Samsung continued to duel it out in the courts and the markets. The security breaches and the privacy revelations were a big deal in 2014. Facebook got its mobile mojo and many other consumer brands start to perform well on the mobile 4^th wave.

2. What will be the biggest mobile stories of 2014?

Mobile continues to transform industries and nations. The continued growth of mobile data around the globe was voted the top story third year in a row closely followed by the expectations of new experiences that go beyond the smartphones. The connected devices segment will keep wanting for more and the big M&As are not going anywhere. Given that cross-domain acquisitions have become the norm, expect some blockbuster deals in 2014. Privacy has also surged in priority for folks in the industry.

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

In mobile, Google, Apple, Samsung and the mobile Operators continued to be the most influential players in the ecosystem. Amazon, Qualcomm, Facebook, Microsoft, and Ericsson also hold significant sway as to which direction we will go in the New Year. The top 10 operators play a major role in terms of technology and business models evolution in the marketplace.

4. What will be the breakthrough categories in mobile in 2014?

It was no surprise that connected devices and wearable computing was voted as the breakthrough categories for 2014. We are in the early stages of understanding what’s possible and the entrepreneurs buoyed by the new business models are pushing the boundaries. Some of the early models lack the smarts but we will learn a lot this year about the new business models and technology boundaries to push with sensor-enabled societies.

5. What will be the most popular consumer mobile applications in 2014?

There is still quite a bit of disparity as to which apps dominate in the developed world vs. the emerging countries. The differences are due to the varying smartphone penetration, cost of data, regional requirements and interests. However, the gaps are closing every year.

6. Which will be the most dominant tablet platform in 2 years?

The industry expects iOS to continue to dominate the revenue pie and Android the unit share. While Windows made a bold entry with Surface, the lack of coherent strategy and execution has left the platform way behind in numbers and while we might see some incremental performance, iOS and Android will continue to dominate the tablet landscape for the next couple of years.

7. Who will make the biggest mobile acquisition in 2014?

Softbank made the biggest blockbuster deal in mobile last year with a $22B acquisition of Sprint/Clearwire. It is likely that Softbank will make a bid for T-Mobile in a deal of similar size in early 2014 and again lead the industry in M&As. A number of operators are also eyeing operators in Europe and so we might be in for a surprise. In a non-operator merger, our panel correctly predicted Microsoft to make the biggest acquisition (Nokia). This year, they pick Google ahead of Microsoft.

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

Due to fragmentation, no challenger has emerged who can put up a fight against the might of the financial companies like Visa and Mastercard. As such, the industry expects them to stay in the driver’s seat for some time.

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

LTE has been the fastest cellular technology being deployed in the history of the industry. 4G continues to be the focus for the operators with other solutions chipping in to help manage the insatiable appetite of consumers for more data. There are hopes that some alternate business models to fund mobile data broadband will emerge in 2014.

10. Which category will generate the most mobile data revenue in 2014?

Access has become the most dominant category for generating mobile data revenues worldwide. There are some regional differences for e.g. in North America, messaging’s contribution is tiny while in Asia and Africa, it is a dominant category. OTT services are also starting to make a dent in the overall revenue mix.

11. Which European operator is likely to emerge stronger from the weak economic climate?

Vodafone sold of its previous Verizon possession. Will it help in making the company stronger? Our panel thinks so. Deutsche Telekom and Telefonica make up the top three.

12. When will mobile commerce be greater than ecommerce?

As the holiday commerce data showed, mobile was already 50% of the digital traffic in 2013. The panel expects that within 2-3 years, each region is likely to see the tipping point.

13. The company bringing the most successful mobile gadget of the year - 2013 and 2014?

Apple continues to set the pace of the industry, however, Samsung has gone toe-to-toe with its rival and won many battles. Samsung understood the potential of bigger screens better than most and capitalized on it with blockbuster sales around the globe. If you go to Asia, you will see ease with which consumers interact with larger screen devices. Now, this phenomenon is taking over the western markets as well. As is always the case, folks expect Apple to surprise us with iPhone 6. There are expectations that Google (Motorola) and Amazon might spring in a surprise or two.

14. Which platform has a credible shot at becoming a viable and durable 3rd ecosystem in mobile?

In 2013, Windows established itself as the only viable third mobile ecosystem. The gap is likely to increase in 2014 though HTML5 and forked Android based OS might pose a challenge.

15. Mobile company of the year - 2013 and 2014?

Samsung’s performance in 2013 was outstanding. With a massive global footprint, its ambition knew no bounds. It performed exceptionally well generating multi-billion quarters and just dominating the Android landscape. In 2012, Samsung displaced the 14 year reigning champion Nokia from the top spot. In 2013, the company solidified its position and was voted the Mobile Company of the year. However, in 2014, the panel expects Apple and Google to duke it out for the top spot.

16. Which of the following are likely to happen in 2014?

Amazon smartphone is like water on Mars. It is much talked about but hasn’t been spotted yet. Will 2014 be any different? For the first time, expectations improved to 50%+. Microsoft might launch Surface smartphone instead of pushing Windows smartphones. 40% of the panel thought that Softbank will acquire T-Mobile and it will go through. Will Samsung fork Android? The question has been of much speculation in 2013 and will continue to see interest in the New Year as well.

17. Which operator is best positioned for the digital world?

As we outlined in our 4^th wave series of papers, mobile operators are at a critical juncture of their evolution. The ones that embrace the digital world will live to see another decade of growth and prosperity while others will perish or be relegated to lesser roles. As we have worked with leading operators around the globe on this transition, I have become more convinced that the digital transformation will redefine the segment. AT&T, Verizon, Softbank, DoCoMo, Telefonica continue to lead. There are many sceptics as well. 2014 will be a year of change and progress.

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

As I have said before, we are entering the golden age of mobile and every vertical, every industry is going to be transformed by mobile. Which categories are ripe for disruption? Our panel voted for health and monitoring, home automation, wellness/fitness, entertainment, and auto as the top categories. We already saw great progress in 2013 and will see many more companies enter these spaces in 2014. Exciting times ahead.

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

The inefficiencies of a middlemen can be overcome by algorithms. The concept is not new but society expects more each year to narrow the gap between the thought and task execution. Advertising agencies, retail, real estate, transportation, and education seem to be on top of everyone’s mind as the areas that need some algorithmic infusion.

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

Samsung’s JK Shin was number two behind Tim Cook in last year’s vote. His ascendency to the number one spot for 2013 reflects the success Samsung has had this last year. He was closely followed by Masayoshi Son whose global ambitions put the mobile world on notice in 2013 and John Legere who brought back T-Mobile as a strong contender in the US market. Last year, the expectations were high for Jeff Bezos and they are high again for 2014. Will it be drones or space exploration or just a simple much awaited smartphone? There is a lot to look forward to in the New Year. There were several other leaders who are working on transforming the mobile industry like Sundar Pichai, Jack Dorsey, Tim Cook, Jony Ive, Mark Zuckerberg, Dick Costolo, Neelie Kroes, Lowell McAdam, Ralph de la Vega, Hans Vestberg, John Chambers, Dan Hesse, Tom Wheeler, Matthew Key, Glenn Lurie, Brian Krzanich, and many more.

Thanks again to everyone who contributed. Warm wishes for a terrific 2014.

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 2014. The next Global Wireless Data Market update will be issued in February 2014.

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

Interview with OMD December 31, 2013

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

Did an interview last week with Mark Walsh of Mediapost:

Chetan Sharma is founder and president of Chetan Sharma Consulting, which provides strategic advisory services for the mobile industry and publishes various research reports. His clients include companies such as Disney, Toyota, Comcast, China Mobile, Sony and Qualcomm.

Prior to starting his own practice, Sharma was director of emerging solutions at Luminant Worldwide, acquired in a reverse merger by Align Solutions Corp. in 1999. Given his close eye on the mobile market, Online Media Daily caught up with Sharma to get his take on the past year — as well as what to expect in 2014.

OMD: Among the major mobile developments this year, what was most surprising and why?
CS: The most unexpected development of the year was the way T-Mobile came back fighting for its share of the market. Through a series of pricing and marketing innovations, they put the big guys on the defensive. In the past, T-Mobile maneuvers barely changed the market. But being in the position of the underdog with nothing to lose, T-Mobile’s new plans are attractive to price-conscious consumers.

The changes are having an impact beyond the borders with T-Mobile’s international data-roaming plans. In a matter of a couple of quarters, T-Mobile went from laggard — not having added any postpaid subs in three years — to a leader.

OMD: What would you consider, alternately, the biggest mobile product launch in 2013 and the biggest flop?
CS: The typical device launches from Apple and Samsung were the biggest, and for obvious reasons. They’re not only building great products, but also have the best distribution channels and the marketing budgets to support it. In the case of Apple, the brand loyalty factor keeps them at the top, while Samsung uses its marketing muscle to stay at the No. 1 position in terms of units sold. iOS7 was a huge success as well, given that over 70% of the devices upgraded in a very short amount of time.

The biggest flop has to be the BlackBerry devices. A lot of hope was pinned on them for the revival of the historic brand. While the devices were pretty good, and the OS had some nifty features, it was just too late for the company. Consumers had moved on a long time back. People are just not interested in buying BlackBerry, the partners aren’t interested in selling them, and the misguided strategies over the years led to the company’s downfall.

OMD: Speaking of Apple, it recently announced a long-anticipated deal with China Mobile, the world’s largest carrier. How much of a difference will this make for Apple in competing against cheaper Android devices in China.

CS: Given that China Mobile has the subscription base of 750 million-plus, it will definitely give a good boost to Apple in 2014. However, China is also a price-sensitive market. While consumers like to “own” stellar brands, paying $700-plus for devices is not within reach for the majority of the subs. However, even a small percentage of 750 million is a big number, so overall, Apple will do well. China Mobile-Apple might come up with some creative financing as well to make devices more affordable for the masses. In the low-to-mid tier, Android will continue to dominate.

OMD: Messaging services like Snapchat, WeChat, Line, and WhatsApp have exploded this year. How do you see that space playing out in 2014?

CS: IP messaging is a critical component of keeping the consumers interested in your services and building brand loyalty. That’s why both Facebook and Twitter have also jumped strongly into this space. While many pure-play IP messaging companies were built on “grow first, find revenue later” model, in 2014, they might have to bring home the bacon or else they’ll be under pressure to sell or wind down or change strategies. Whatsapp is the clear leader of the pack. It has impressed with its meteoric rise in 2013. With little resources, they have accomplished quite a bit and have had a revenue model from the start.

OMD: Mobile payments is still a fragmented landscape. Do you think any particular players or technologies will emerge as a clear leader next year?

CS: Mobile payments is likely to stay a fragmented space. Since so much is at stake, the big guns will continue to carve out their place in the ecosystem. The most interesting players in the space are PayPal, Amazon and Square, and it will be interesting to see if they help streamline the space a bit by cajoling and consolidation.

OMD: Every year you survey your readers about their mobile predictions for the coming year. Do you have any bold prediction yourself for 2014?

CS: I am not a fan of “the year of” proclamations. Each year, we make significant progress in our understanding of what technology can do to enhance human experience. In my work in emerging countries like Bhutan and Vietnam, I already see a significant uptick in using mobile to transform societies in the most fundamental ways.
In Western markets like the U.S. and U.K., we’re continuously tinkering with the hardware and software to make the tasks more automated. The company that’s really pushing the boundaries is Google. They’re not afraid of going in multiple directions and leapfrogging current thinking. Their work on Google Glass is forcing everyone to rethink what’s possible with computing, as well as the kind of societies we would want to live in.
Another company that’s likely to make a splash in the new year is Amazon. They have such a good grip on the commerce behavior of consumers that they can change the industry trajectory through some product and pricing innovations. Of course, Apple and Samsung will continue to compete fiercely.

I have talked about the emergence of the fourth wave of mobile, which is all about digital services and revenues. Facebook, Twitter, Uber, Rovio, Pandora, and Square are all riding this wave, along with the traditional players. In 2014, the number of players making more than $1 billion in digital revenues will more than double, and they’ll come from different industries.

2013 – The year in mobile December 23, 2013

Posted by chetan in : 4G, 4th Wave, Applications, Chetan Sharma Consulting, Connected Devices, Devices, Disruption, Enterprise Mobility, European Wireless Market, Fourth Wave, IP Strategy, Intellectual Property, Mergers and Acquisitions, Mobile 2013, Mobile Applications, Mobile Future Forward, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 41 comments

Mobile Predictions 2014 Survey: We launched our annual mobile predictions survey for 2014 last week. For all of you have already contributed – many thanks! Rest – will appreciate you filling out the short survey and helping us in analyzing 2014. We even have prizes J. We will have the full analysis from the survey during first week of January.

2013 – The year in mobile

Just like there is no “year of electric cars” or “year of razor blades” or “year of the Greek yogurt,” there is no “year of mobile” or “year of this or that.” However, as we have seen over the 30+ years of mobile evolution, the next year is better than the previous one and so on and so forth. So, 2013 ends in the long tradition and continuum of human endeavor to make significant progress in multiple mobile dimensions and make an impact on individuals and societies alike. 2013 proved that connectivity has become the core of our fabric and we are entering the “connected intelligence era” that will enable the Golden Age of Mobile.

In no particular order, here were some highlights of mobile 2013:

Number of mobile subscriptions ~ humans: the total number of mobile subscriptions got tantalizing close to the number of humans on the planet. Next year, we will go past the milestone but it shows the pervasiveness and strength of the mobile technology that it has become the basic part of our Maslow’s hierarchy.

More data please: As smartphones approach the 2B mark, the data appetite of consumers showed no signs of abating. In Sweden, the mobile broadband subs are consuming over 7GB/mo. In the US, some Android devices are consuming over 4 GB/mo on average. Operators will need to continue to refine their pricing and margin models as the demand for more spectrum will continue.

The dominance of Samsung and Apple: The tussles in the device segment has all the intrigue and juxtaposition of a Shakespearean drama and the ups and downs of a Pavarotti’s masterpiece. Through sheer muscle tenacity and the execution speed of Usain Bolt, Samsung was able to firmly dominate 2013 despite Apple’s grip on the high-end smartphone market. These two account for almost 50% of the smartphone shipments and almost all of the profits in the space. Apple continued to set the tone for the market with the launches of new iPhones and iPads. Though iOS trails Android in raw deployment, it trounces it in consumer usage. It is also remarkable how quickly consumers upgrade to the latest iOS in stark contrast with the Android fragmentation. Apple finally got access to the big Chinese market.

The disappearance of the legacy device brands: Nokia, Motorola, and RIM were dominant players a few years ago but Apple ensured the smartphone script is rewritten. They all made serious strategic errors one after another and while Nokia and Motorola have found new families to host their aspirations, their story should be a reminder of the turbulent cycles of the device business and that the complacency virus spares no one. The rise of the local OEMs should keep everyone on their toes in 2014.

Android juggernaut: In 2013, Android continued to create distance with Apple in terms of downloads, easily going past the mind boggling 1 billion milestone. Android has changed the industry for the better. While there is trouble in the house, Android will continue to play a major role in the device and app ecosystem in 2014.

The growth of OTT Services: As we discussed in our 4^th wave paper earlier this year, OTT Services will be the biggest growth segment for the next decade. In 2013, the segment grew 50% ahead of any other telecom segment. Young IP messaging stalwarts fundamentally altered the messaging landscape with Whatsapp performing exceptionally. SMS usage and revenue numbers were impacted worldwide.

The digital revenue streams are very distributed with diverse players such as Facebook, Twitter, Starbucks, Expedia, Uber, Pandora, Amazon, AT&T, Telefonica, Verizon, DoCoMo, Netflix, China Mobile, Rovio, Square, Softbank, Ebay, Hertz, Apple, Google, and Microsoft. In our work with players around the world this year, it is clear that there is significant energy and application in mining the opportunities on the 4^th wave. With nascent efforts in Bhutan, Vietnam, Malaysia to moonshots in the US and Europe, mobile is rewriting the rules in virtually every industry. Fasten your seat belts for another fast paced year in 2014.

Post-PC beat PC+: Apple expertly wrote the post-PC narrative and while the PC+ crowd has a legit argument, perception is often reality and there in no doubt that from here on out, the industry will be talking about the post-PC world in one voice. Even Microsoft will grudgingly admit to the transition and likely shift its strategy accordingly. As we wrote long time ago, Tablets have fundamentally altered the computing paradigm. In our SMB research released earlier this year, it was clear that smartphones and tablets are the tools of choice for the enterprise and that is not only altering the device business but also the software landscape. Mobile broadband, the cloud, and the applications are altering the enterprises – big and small. Microsoft should take solace from a tough year of progress. Blackberry is practically done and Microsoft has established itself as the distant but a viable third mobile ecosystem. Had it not been for a series of strategic mistakes, Microsoft might have made better inroads in 2013.

LTE launches: LTE is the fastest growing generation of cellular technology in the history. With over 250 networks launched, the desire to launch IP networks quickly is on top of the agenda. US leads with all major operators having substantial LTE deployments but other nations are fast catching up. While there has been quite a bit of focus on LTE, WiFi has been emerging as the white knight and its importance only grew in 2013 with 60-70% of the mobile data traffic being carried by WiFi networks in most of the countries. It might lead to some interesting business models in the coming years. 5G entered the industry lexicon.

M&As: It is natural for fast growing and competitive industries to consolidate. 2013 wasn’t any different. There were some blockbuster and expected M&As: Microsoft acquired Nokia, Softbank surprised with Sprint/Clearwire acquisition, Verizon finally got hold of its destiny from Vodafone. As we have eluded to several times in our past research notes, we expect the global M&A to continue with several block buster deals slated for 2014. Stay tuned.

Patent wars: In maturing markets, patent wars are the unfortunate part of the ongoing battle for dominance. Mobile saw its share of patent wars. With roughly quarter of the USPTO grants becoming mobile related, it shouldn’t come as a surprise though.

Regulatory tussles: Regulators are generally always behind in understanding a fast growing industry. It was clear in 2013, that the convergence of the computing and communications world has left the regulatory world woefully short of expertise and imagination. Governments around the world will do better by hiring folks from the industry to get a grip of the fast-paced every-changing dynamics of the mobile world as the very competitiveness of a nation depends on it. From spectrum to privacy, from competition to commerce, regulators need to get up to speed on unexpected trajectories of the new world.

Security and Privacy: From Snowden revelations to industrial espionage, from credit card data loss to enterprise security, the security and privacy of mobile data, applications, networks, and devices became front and center of the security and privacy debate.

Operator disruption plays: In the telecom space, the #4 player generally doesn’t have a big impact on the overall mechanics of the industry. However, when it has nothing to lose, it can provide a potent dose of disruption to the market. Free in France and T-Mobile in the US were examples of that this year. In France, by offering cheap mobile data services at low margins, the newcomer altered the economics of the segment tumbling the incumbent revenues by 10%. In the US, through a series of financial and marketing maneuvers, T-Mobile was able to alter its net-add trajectory and had meaningful sub gains for the first time in three years. Also, for the first time, T-Mobile forced the top three to react to its moves and not the other way around. It also inspired other smaller players in other countries to rethink their strategies.

Connected devices: The promise of M2M and connected devices has been there for some time. Internet of Things has morphed into the gimmicky Internet of Everything. While the hockey stick curve hasn’t arrived yet, there was plenty to celebrate with the introductions of Google Glasses, wearables, smart watches, connected autos, glamorous thermostats, winking light bulbs, home security and energy management solutions and much more. GE is spending billions for its “industrial Internet” initiative. A nice platform has been set for continued feverish growth and product introductions in 2014.

Mobile’s impact on commerce: Mobile is changing every industry but its impact on commerce is particularly notable. In the 2013 holiday season (according to IBM), mobile made 17% of the online sales increasing over 55% from 2012. Tablet users spent $126/order.

Meteoric rise of mobile apps: In 2010, we evaluated the impact mobile apps will have on the industry. Much of the growth has been expected, however the players who lead in revenue and downloads have fluctuated across the various platforms. In 2013, Google started to match Apple in downloads though Apple easily wins in the revenues category and thus still remains more attractive to the developers though the gap is closing.

There was much more – Twitter IPO, Surface, Moto X, spectrum scandals, Facebook’s love for mobile, Google mobile advertising dominance, the rise of the Chinese OEMs, decline of HTC, and several other events captivated our attention.

I am positive that 2014 is going to be another terrific year for mobile. The progress and surprises will come from all quarters. New players will emerge, new business models will take hold, and we will make significant progress. I am also sure that you all will do your part in shaping the mobile cosmos.

Would love to hear from you. How was your 2013? And what are you looking to do in 2014 that will change the mobile world? Please be sure to fill out our annual predictions survey for 2014.

With best wishes for an outstanding 2014.

Yours truly

Chetan Sharma

Request for Input–Mobile Predictions Survey 2014 December 16, 2013

Posted by chetan in : US Wireless Market , 1 comment so far

Dear friends,

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 2014.

As is the tradition, we are doing our 7^th Annual Mobile Predictions Survey for 2014. 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. (Previous surveys – 2008-13 - http://chetansharma.com/research.htm)

The questions are:

1. What was most newsworthy in Mobile 2013?

2. What will be the biggest mobile stories of 2014?

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

4. What will be the breakthrough categories in mobile in 2014?

5. What will be the most popular consumer mobile applications in 2014?

6. Which will be the most dominant tablet platform in 2 years?

7. Who will make the biggest mobile acquisition in 2014?

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

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

10. Which category will generate the most mobile data revenue in 2014?

11. Which European operator is likely to emerge stronger from the weak economic climate?

12. When will mobile commerce be greater than ecommerce?

13. The company bringing the most successful mobile gadget of the year - 2013 and 2014?

14. Which platform has a credible shot at becoming a viable and durable 3rd ecosystem in mobile?

15. Mobile company of the year - 2013 and 2014?

16. Which of the following are likely to happen in 2014?

17. Which operator is best positioned for the digital world?

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?

The survey is available at https://www.surveymonkey.com/s/N6WPLZQ

As an incentive, we will be giving away 10 copies of our exclusive edition Mobile Future Forward 2013 book (Mobile 4^th wave: Mining the trillion dollar opportunity) that is a collection of essays and interviews from some of the most influential mobile executives on the future of mobile.

Deadline: Dec 30^th. Results will be released in early January.

Thanks and see you in 2014.

Chetan

New Paper: Mobile Apps Privacy Framework For Consumer Transparency and Control November 19, 2013

Posted by chetan in : 4th Wave, AORTA, Privacy, Security, US Wireless Market, Usability, Wireless Value Chain, Worldwide Wireless Market , add a comment

Mobile Apps Privacy Framework For Consumer Transparency and Control

A Mobile Future Forward Research Paper

The paper was originally published in the Mobile Future Forward 2013 Book - Mobile 4th Wave: Mining The Trillion Dollar Opportunity

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

Download PDF (1 MB)

Introduction

Mobile technology is an integral part of our daily life. Mobile devices help consumers in many ways. They help us connect with loved ones, provide directions, catch-up with news, send emails, text friends and family, monitor our heart rate, stream movies, interact on social media sites, and complete transactions in a matter of seconds. Most of the times, applications and services require end-user related data to understand the context and provide appropriate content. It is well understood that data is critical in providing a great user-experience. However, consumers don’t have a clear understanding of how their personal data is being collected, stored, and used.

The collection of consumers’ personal information is not new. The difference now is that there are tools available that help connect various dots to generate the precise information about the user and build a detailed user profile without consumer knowing about it. Because of the location based technologies and various apps on your phone, companies now have a log of all of your day activities. Over time, the data collected can generate significant details about your habits, likes and dislikes, and pretty much build your identity without you ever knowing about it.

There have been many concerns raised by consumers about privacy of their data collected through mobile devices. For example, a nationwide survey indicated that 57% of all the apps users have either uninstalled an app over concerns about having to share their personal information, or declined to install an app in the first place for similar reasons. A mobile app developer had to settle with the FTC because they were collecting kid’s information without their parent’s consent. Delta airlines had to settle with California State when they were cited for mobile apps privacy violation in a lawsuit. A popular social networking application Path was fined $800K by the FTC for improperly sending consumer’s contact information to their cloud. FTC has repeatedly warned leading mobile app developers and platform providers to be more transparent about consumer data and privacy and even issued a recommendation report in 2013.

Data that provides context to the application developer is definitely needed to provide a robust user experience. Google Maps won’t operate well without location information, Whatsapp will not work well without the address book, Facebook requires the interaction history to provide a better newsfeed, Amazon looks at past transactions to recommend new ones, and so on and so forth. However, there is a lack of a simple and consistent way to convey the intent and the value of the data being collected, stored, and used by various application providers.

These concerns clearly indicate that in order to build consumer trust, we must provide control to consumers over their personal information and be extremely transparent about what, when, and where companies are collecting personal information. There must be a balance. While protecting consumer privacy, there shouldn’t be a negative impact on innovation.

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 2014. The next Global Wireless Data Market update will be issued in February 2014.

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

US Mobile Market Update Q3 2013 November 14, 2013

Posted by chetan in : 4G, 4th Wave, Big Data, European Wireless Market, Fourth Wave, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Ecosystem, Mobile Future Forward, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update Q3 2013

http://www.chetansharma.com/usmarketupdateq32013.htm

Download PDF (2MB)

Summary

The US mobile data market grew 5% Q/Q and 15% Y/Y to reach $22.8 billion in mobile data revenues. Data is now 48% of the US mobile industry service revenues and as we had forecasted a few years back, the cross-over point of 50% might occur next quarter. For the year 2013, we are expecting $90 Billion in mobile data service revenues for the US market making it the number one market in mobile data revenues ahead of Japan and China. Q4 2013 is looking to be another record breaking holiday quarter for the industry at many levels, which is setting up 2014 quite nicely.

For the quarter, the market added 2.2M new connections, a strong reversal from the paltry 139K last quarter. T-Mobile continued to impress after its strong reversal in industry metrics last quarter on the back of a series of marketing and pricing initiatives that seem to be gaining traction and having an impact on its image and fortune.

Given that Apple didn’t launch the device until Sept and then had severe supply-chain constraints, Android had its best quarter against iOS with 54% share in the US market. However, iOS is likely to catch-up in Q4.

Smartphones are now past the 64% mark in the US and continue to sell at a brisk pace accounting for almost 90% of the devices sold in Q3 2013. Apple led the smartphone sales amongst the top 4 operators with 42% share for the quarter. While the US penetration of smartphones is 64%, the 64% of the sub base is concentrated in only 40% of the households thus leaving plenty of growth in the marketplace. Overall, connected devices remains the highest growth segment with 6% Q/Q growth.

Smartphone and Connected Device Growth

Though China has overtaken (primarily because of the sheer size of its population) US in terms of the overall smartphone penetration, US remains the market where OEMs have to be really successful in order to be consider a serious player on the larger canvas. Though the likes of Xiaomi and the Micromax have had good success in their local markets (and still have a great amount of growth left), the prized market to make a sizable dent in their overall revenue and margins is the US market. This is primarily due to handset subsidy that allows consumers to easily own premium brands at bargain-basement prices in addition to the higher disposable incomes. This has helped the ASPs to go up in this market unlike some of the other markets where they have been going down.

US also boasts four leading-edge LTE networks that allows the ecosystem to innovate at the edge, literally. Having access to fast mobile broadband impacts human behavior, application and service development and everything in between. As such, US has become the laboratory for many experiments that benefit the larger ecosystem. This absolutely doesn’t mean that innovative things are not happening in other parts of the world. Far from it. But the “enabling layer” of networks, devices, and platforms is in its most advanced stage in the US. This layer allows folks to build applications and services that will power the global economy.

So, in order to be considered credible in the smartphone space, one must have a decent scorecard in the US today. The pendulum could of course swing and China could take the lead. In fact, US and China are the G2 nations of the mobile world.

While there have been murmurs in the market about smartphone saturation, the upgrade cycles will keep up the demand for more devices in 2014.

Like any ecosystem or a market, there are winners and there are companies who couldn’t perform to their potential. Enough ink has been spilt on Blackberry to reiterate what was quite predictable. The only interesting tidbit that emerged was that as we expected, Lenovo made a serious run for it and the Canadian government stopped it. It is ok for Canadians to use Lenovo laptops but not the smartphones? Of course, the reasons were complicated and different from what have been generally reported. Can Blackberry make a comeback under a savvy CEO? If they continue with the same OS, it is hard to see how?

Apple for the first time launched two models – 5s and a slightly lower priced 5c. It seems like the strategy might have been two fold a) get the supply-chain ready for more than one new model at a time and b) given an additional option to the consumers (in the US) who used to go for a level down version. Since the supply chain was under pressure, it is hard to get a clear picture of what might be happening but the iPhone 5s/c launch allowed Apple to raise the percentage of new devices sold. In fact, based on the weekly sales data from ITG Research, they might have managed to flip the ratio. For e.g. in Sep and Oct 2012, the old models sold 3:1. During Sept-Oct 2013, the new models outsold the old models by 1.7:1. 5s outsold 5c 1.6:1.

The big block-buster deal of Q3 was Microsoft’s acquisition of Nokia. It was clearly one of the outcomes Nokia was on the path of the day it chose Windows Phone OS. Microsoft got an effective OEM distribution and design system for really cheap but how long will it take to turn things around? Its mobile fate might largely depend on who the new CEO is.

Tablets are making a tremendous impact in the post-pc era. In the US market, we are already approaching 100M unit sales/year run rate. While Android tablets have taken market share from iPad, Apple remains the undisputed king of the category primarily because of superior hardware and a more robust ecosystem. Android tablets can be cheap but also unreliable, the life expectancy of such tablets can be 50% or so compared to the iPad. The usage is even less. Microsoft launched a credible challenger in Surface but there have been so many missteps that it is not (yet) in the picture of the post-pc transition.

There has also been quite a bit of excitement about smart watches, smart glasses, smart cars, smart homes, and on and on. However, we must remember that just because device is growing in the era of the smartphones, it doesn’t makes them smart. In fact, most of these devices are where smartphones were in the late nineties – basic, functional, and full of possibilities. The evolution, however, will be much quicker. Google is one company that is pushing the boundaries of across multiple dimensions. Regulators and policy makers better come up to speed on the emerging landscape quickly.

A good test of a platform’s importance is to find out what happens if the platform shuts down for 5 minutes – how much panic and revenue drop does that create in various parts of the world? Another measure of the platform is the value it creates by launching new companies and ideas. For mobile, the answer is fairly obvious.

The Fourth Wave and the shift towards services

It is evident that there is a subtle shift from devices/access to services/solutions. In our paper on the topic “Operator’s Dilemma (and opportunity): The Fourth Wave”, I proposed that we need a new framework to think about the next generation of revenue opportunities. The fourth curve opportunities are massive but require a different skill set and strategic approach than the past three curves. As predicted, we are starting to see the impact of the 4^th wave on a global scale and some operators have started to break out the 4^th wave revenues in their financials. Operators with better balance sheets will also look for global expansion especially in Europe where economic impact on the telecom operators has been severe, however the M&A efforts will be complicated by respective governments desire to keep control of the national infrastructure provider.

We had a very successful Mobile Future Forward Summit last quarter. It was dedicated to exploring the 4^th wave in more detail across multiple dimensions and verticals. The dialogue was incredible and validates the march towards the 4^th wave that is redefining industries across the spectrum including the wireless industry itself, at its core. Some of these tectonic shifts aren’t very apparent and visible but as I have spent time working with some of the leaders in New York, Silicon Valley, London, Abu Dhabi, Barcelona, Hanoi, Singapore, Dallas, New Delhi, and Seattle this year, it has become abundantly that mobile industry is at a key inflexion point that is changing industries and the power structures, creating new opportunities and new revenue streams. In my interview at Mobile Future Forward, Ralph de la Vega, CEO of AT&T Mobility indicated that the ARPU from Digital Life customers is higher and the churn is lower. So, the fourth wave services have a direct impact on existing revenue streams as well. Conversely, absence of such services doesn’t yield a pretty picture.

FCC chairman and regulations

Amidst all the cacophony of device launches, acquisitions, and investments, FCC finally got its new chairman. Tom Wheeler is one of the savviest operative in the space with better grasp of the ecosystem, policy, law, and politics than most of his predecessors, so it will be interesting to see what the next FCC era brings over the next 3 years. Clearly, Incentive Auctions will be one of the most critical items on the agenda but some other issues like the potential T-Mobile acquisition and net-neutrality issues are likely to become important as well. Regardless, we are in for an interesting ride.

What to expect in the coming months?

2013 has been quite a year for the mobile industry and as we head into the holiday season, it’s a consumer’s market with plenty of choice and competition.

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 Q3 2013 US wireless data market is:

Service Revenues

The US mobile data service revenues grew 5% Q/Q and 15% Y/Y to $22.8B in Q3 2013.For the year 2013, US mobile data market is on track to reach our original forecast of $90 billion in 2013.
Verizon and AT&T dominated the quarter accounting for 71% of the mobile data services revenue and had 68% of the subscription base.
As expected, China Mobile went passed both Verizon and AT&T to claim the #1 operator in mobile data service revenues. Verizon and AT&T slipped to #2 & #3 mobile data revenue ranking respectively in Q3 2013. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile operators.

ARPU

The Overall ARPU increased by $0.82. Average voice ARPU declined by $0.38 while the average data ARPU grew by $1.19 or 5% Q/Q.
The average industry percentage contribution of data to overall ARPU is now at the 48% mark in Q3 2013 and is likely to exceed the 50% next quarter. The top three operators are hovering over the 50% mark and T-Mobile is slowly catching up.

Subscribers

The US operators added 2.4M net-adds a sharp reversal from the lowest net-add in history last quarter. Verizon and T-Mobile led with over 1M subs, closely followed by AT&T while Sprint slowly emerges from the Nextel shutdown.
T-Mobile’s postpaid continued to see the positive growth for the second straight quarter, though Verizon was a clear leader of the quarter with 927K net-adds.
Sprint continued its losses in the postpaid segment. In the last couple of quarters, T-Mobile has started to break-away from Sprint in cumulative postpaid net-adds with positive growth.
AT&T continued to lead the connected device segment with 48% market share.

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 with more consumers opting for cellular tablets and connected devices. In fact, at AT&T, tablets are performing 2-3 times better than smartphones in postpaid net-adds.
Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive premise WiFi solutions.

4^th Wave Progress

The number of players making $100M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. Facebook is now doing 50% and touching a billion dollars in quarterly revenue from mobile. Latest addition to the club is Twitter which is now doing $117M/quarter or 60% in mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4^th Wave: Evolution of the Next Trillion Dollars”)
We are also seeing continued investments from the operators especially AT&T and Verizon in non-traditional segments like home security, healthcare, insurance, automotive, enterprise mobility and security, and others. Collectively, this is already a multi-billion dollar business in the US.
The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

Handsets

Smartphones continued to be sold at a brisk pace accounting almost 90% of the devices sold in Q3 2013.
The smartphone penetration in the US is now 64%.
Android easily went past iOS in smartphone sales in Q3 13 by a 54% - 42% margin. However, iOS is expected to bounce back in Q4 after the release of new devices in late Q3.
At the end of Q3 2013, Samsung continued its lead in unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows phone last year but sales have been poor. Q3 was better than Q2 but insignificant in the larger scheme of things. So, while the sales surged over 400% from Q3 2012, the market share barely budged at 3%. (Read our paper to get more insights into why Windows hasn’t been able to make a dent so far).
Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 38M making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile is also ramping up its LTE deployment. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 64% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.
There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 42% of the iPhones in the US.
In terms of Q/Q growth, Connected Devices segment grew 6%, Wholesale -1%, Postpaid 1%, and Prepaid 2%.

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 2014. The next Global Wireless Data Market update will be issued in February 2014.

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

4th Wave Consumer Study October 27, 2013

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

Regular readers know that I have been talking about the 4th wave for sometime. In the last couple of years, I have worked with players across the ecosystem, around the world on formulating strategies to take advantage of the 4th wave. Recently, we collaborated with a colleague – David Sprosty of Best Buy fame. His team ran some consumer surveys that illustrated the consumer demand for services like home automation, home security and surveillance, wellness, mHealth, auto diagnostics, usage based insurance, and others. Results clearly show significant interest in various services. It is also interesting to see which channels consumers prefer.

There are some other interesting data points as well. Results can be downloaded here.

As you know, we run a survey of mobile executives at the end of the year to look at what’s on people’s mind. David ran a survey asking the same questions to the early tech adopters to see the differences. Some interesting findings.

older posts »

Always On Real-Time Access

Mobile Future Forward: Connected Living and Lessons from Emerging Markets July 30, 2014

Mobile Future Forward: Enterprise Mobility: IBM July 24, 2014

Mobile Breakfast Series–IoT–London July 3, 2014

Mobile Breakfast Series - Q&A with Prof. Mischa Dohler, cofounder Worldsensing June 12, 2014

Mobile Breakfast Series: IoT Q&A with Telefonica June 9, 2014

US Mobile Market Update – Q1 2014 June 2, 2014

Mobile Breakfast Series: IoT Q&A with Intel May 28, 2014

Mobile Breakfast Series–London–June 17th May 14, 2014

Mobile Breakfast Series: London: June 17th: Internet of Things April 20, 2014

Mobile Patents Landscape–An In-Depth Quantitative Analysis

Highlights

Introduction

Mobile Breakfast Series: Internet of Things March 23, 2014

2014 Mobile World Congress Observations March 3, 2014

2014 CES Observations January 12, 2014

Mobile Predictions 2014 January 2, 2014

Interview with OMD December 31, 2013

2013 – The year in mobile December 23, 2013

Request for Input–Mobile Predictions Survey 2014 December 16, 2013

New Paper: Mobile Apps Privacy Framework For Consumer Transparency and Control November 19, 2013

US Mobile Market Update Q3 2013 November 14, 2013

4th Wave Consumer Study October 27, 2013

Recent Posts

Categories

Archive

Feeds