Global Wireless Data Market Update 2006 April 29, 2007
Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, Gaming, Indian Wireless Market, Intellectual Property, Japan Wireless Market, MVNO, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Networks, Speaking Engagements, Strategy, Wireless Value Chain, Worldwide Wireless Market , 1 comment so farhttp://www.chetansharma.com/worlddatatrends2006.htm
In 2006, mobile data industry grew across every geography. From the true and trusted SMS messaging to new services such as Mobile TV, LBS, and others, different services helped in adding billions to the revenues generated for the year. Japan and Korea remain the envy of the global markets and the countries to study and learn from. The US market has been steadily making strong comeback and is soon going to become the biggest mobile data revenue generating market in the world. Chetan Sharma Consulting conducted its bi-annual study of the global mobile data industry. We took a look at wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and France to high-growth markets such as China, India, Brazil, and Russia. The study also took a detailed look at over 30 prominent operators. This note summarizes the findings from the research.
- 2006 was a great year for mobile data. Revenues from mobile data were up in all major regions and for all major carriers with data contributing double digit percentage to overall revenues in most cases. The overall subscriptions rose to approximately 2.7B and we should be crossing 3B by the end of 2007. The wireless industry is on its way to gain the quickest billion subscribers within the next 3 quarters.
- Japan led the way with almost $20B in annual mobile data revenues. US and China were next with $15.8B and $9.2B respectively.
- NTT DoCoMo became the first carrier to cross the $10B barrier for a given calendar year amassing $10.5B for 2006 in data revenues. The Japanese market was followed by China Mobile at $6.9B, KDDI at $6.6B, Verizon Wireless at $4.5B, and Cingular Wireless at $4.3B. They were followed by Sprint Nextel, SK Telecom, Softbank, O2 UK, and China Unicom to make up the top 10.
- A majority of countries we tracked got double digit growth in mobile data ARPU except for a handful of countries which registered a decline from EOY 2005. Some of the prominent ones being US (33%), Czech (40%), Brazil (32%), Netherlands (31%), UK (20%), and Japan (14%). Japan registered the largest dollar amount increase with $2.08 increase from 2005 levels. US and UK data ARPU levels grew by $1.72.
- In 2006, SMS’s vice like grip on data revenues loosened a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 30-40%.
- The top 10 carriers increased their revenue by 13% during the second half of 2006 to reach an aggregate amount of $46.8B for the year in data revenues.
- In terms of data ARPU, Japan continues to lead the pack with almost 30% of its revenues coming from data services amounting to almost $17 data ARPU. Ireland, Norway, Switzerland, UK and South Korea also registered significant data ARPU. US crossed the ($5, 10%) block, where $5 is the data ARPU and 10% represents the % share of overall ARPU. As of Dec 2006, US stood at ($7, 13%). For detailed US Wireless Market update, please see “US Wireless Data Market Update 2006” (For more details, please refer to the 9-box diagram in the ppt”; for 2005 comparative numbers, please refer to our paper from last year titled “Perspectives: Wireless Data ARPU”)
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI which surged past DoCoMo and remained ahead pretty much for the entire year. Their data coordinates stand at ($17, 31%) and ($17, 30%) respectively. However, it is 3 UK that is inching towards ($20, 30%) mark with $26 in data ARPU contributing over 29% to its overall ARPU. 3 Italy with ($16, 35%) is also amongst the leaders.
- The biggest % contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 50% (or $3) contribution coming from data services.
- Even though China reported approximately $9.2B in data revenues, and the % contribution is over 20%, data ARPU is around $2, confirming what we already know – it’s a volume game. For India data ARPU is just under $1. Approximately same for Brazil and Russia. Actually, in 2006 the overall wireless service revenue for US was two times the overall revenues of the four BRIC (Brazil, Russia, India, and China) countries combined. So, lessons are pretty clear as to which markets to approach for what products and services.
- In terms of overall ARPU, it has been a mixed picture compared to 2005. Of the 40 countries we looked at, it was an even split, with half of the countries registering increase in overall ARPU while the other half were at the same level or experienced decline in ARPU. US, China, and India all registered declines while Japan, Russia, Italy, UK, and Canada had an uptick in their ARPU numbers.
- All the carriers in the top 10 wireless carriers by wireless data revenues list exceeded $1B in data revenues for the second six months of 2006 and $2B for the year.
- Western Europe officially crossed the 100% wireless subscriber penetration mark (primarily due to multiple SIMs and double reporting) with several nations reporting up to 140% subscriber penetration. US crossed the 75% penetration mark.
- China crossed the 400M subscriber market in 2006 and is on its way to cross the 500M mark this year. However, its growth rate was overtaken by India which is experiencing tremendous growth. Its net-adds approached 7M subs/month compared to 6M/month for China (though in March 07, monthly net-adds dipped below 4M probably due to the pressure from the government to prove the reported numbers). India crossed Japan and Russia to stand number 3 behind China and US and is going to get past US in terms of total number of subscribers by 2008.
- As expected, China Mobile is way ahead of the second ranked Vodafone w.r.t total number of subscribers. China Unicom, América Móvil, Telefonica, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next six largest telecom groups in the world. In terms of individual carriers, Cingular and Verizon now occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for some years to come. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- Japan became the first nation to have more than 50% of its subscribers using 3G. DoCoMo and KDDI have 60% of their subscriber base using 3G devices. Korea is close second approaching 50% 3G penetration. 3G is starting to pick-up steam in both western Europe and North America per our discussion in the cover story article “3G: Hitting the Mass Market” published in Wireless World Magazine. US and Western Europe crossed the 10% mark for 3G penetration (Italy stayed ahead with over 25% of its subscriber using 3G phones). The difference between 2G/2.5G/2.7G and 3G is palpable, for example, for DoCoMo the difference FOMA (3G) and mova (2G) was approaching 200%.
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and is having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets.
- In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industry’s imagination. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- China Mobile overtook Vodafone as the most valued telecom operator in the world which in turn was surpassed by AT&T though China Mobile is likely to get its title back within a few quarters.
Your comments are always welcome.
Chetan Sharma
Mobile Advertising Book: Interviews April 28, 2007
Posted by chetan in : Mobile Advertising, Mobile Applications, Mobile Ecosystem, Worldwide Wireless Market , add a commentHave been busy talking to experts in the field. Last week was Microsoft, Qualcomm, and some VCs who have invested in the space and are evaluating companies actively. Next week it is Ogilvy, Enpocket, and AdInfuse. It is great to validate some of our themes and observations as well as learn new things and perspectives.
WCG 2007 in Seattle April 26, 2007
Posted by chetan in : US Wireless Market , 1 comment so farThe Olympics of video games is coming to Seattle this year. Yesterday, my good friend Ike Lee hosted the reception for the organizing committee of World Cyber Games 2007 at his palatial mansion. Ike is the honorary chair for the event.
Korea, Germany, and US are top teams and the world of video games will have its eyes focused on Seattle come Oct. Stay tuned.
http://www.worldcybergames.com/6th/main.asp
Mobile Advertising Book: First chapter done April 24, 2007
Posted by chetan in : 3G, AORTA, ARPU, European Wireless Market, Indian Wireless Market, Intellectual Property, Japan Wireless Market, Mobile Advertising, Mobile Applications, Mobile Content, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 2 commentsPhew! Things are getting into motion. Wrapped up my first chapter that deals with the overview of the wireless data industry worldwide, looking at stats and trends, and specific regional issues and trends. The DRAFT TOC is
Global Wireless Markets Overview
- Macro Trends
- Massive growth
- Move from voice to data
- Pressure on voice ARPU
- Data as a major revenue source
- Europe
- North America
- Korea and Japan
- China and India
- Rest of the World
- Devices – Life’s new remote control
- What to expect in the next few years
Would love to hear what you would like to see in this chapter, any suggestions or thoughts are much appreciated. Have also lined up some really great interviews over the course of next few months starting this week. Have dug deep into Mobile TV advertising models and the trends out of Japan and Korea. Will be reporting bits and pieces as time goes along.
AT&T posts mobile data gains
Posted by chetan in : US Wireless Market , add a comment
Top 100 Most Powerful Brands April 23, 2007
Posted by chetan in : US Wireless Market , add a commentGoogle tops the list of the top 100 most powerful brands in the world with brand value of $66.4B ahead of GE and Microsoft. 11 wireless companies (where substantial part of their business is wireless) are in the mix - China Mobile at number 5 tops the list along with Nokia, Vodafone, DoCoMo, Verizon, Samsung, Motorola, Orange, Cingular (AT&T Wireless), Siemens, and T-Mobile.
Proud to say 9% of the top 100 brands are our clients.
Supercalifragilisticexpialidocious
Posted by chetan in : US Wireless Market , add a commentHow fast can you punch this on your mobile device. Can you do it in 15 second? No, you are getting old, aren’t you?
13 year old Morgan Pozgar won the LG national texting championship for $25K.
Now, how about the contest of finding content on the device?
Carnival over at Mobile Opportunity
Posted by chetan in : US Wireless Market , add a commentMichael Mace hosts this week’s carnival. As usual, great set of posts. Be sure to check them out. Thanks Michael
Fierce 15 winners
Posted by chetan in : US Wireless Market , 1 comment so farSome are obvious, others are not ..
Mobile Advertising Panel Roundup April 19, 2007
Posted by chetan in : AORTA, ARPU, CTIA, Carriers, Indian Wireless Market, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Mobile TV, Mobile Usability, Smart Phones, Speaking Engagements, Speech Recognition, Strategy, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , 8 commentsYesterday, I had the distinct honor to present and moderate a PAN-IIT event on “Mobile Advertising - Technical Challenges and Business Opportunities” at Google’s Kirkland offices.
I will get into the panel discussion in a minute. First, would like to join everyone in paying our sincerest condolences and prayers to the families of Prof. G.V.Loganathan and rest of the folks who were lost in the tragic Virginia-Tech incident. Prof. Loganathan was a fellow IIT alum and colleague and friend of many in the community.
Mobile Advertising Panel Discussion
Our illustrious panel included:
- Brendan Benzing - VP, Products and Marketing, Infospace
- Jai Jaisimha - VP, Engineering, Medio Systems
- Kosar Jaff - Engineering Manager, Google
- Victor Melfi - EVP and CSO, VoiceBox Technologies
(Bios here)
Decades of experience in Mobile, Internet, and Advertising.
I started the discussion by giving a broad overview of the mobile advertising industry and some of the things that we should be thinking about. In random order, they are:
Mobile Advertising means different things to different people: Depending on a company’s focus, mobile advertising means different things to different companies. There are over a dozen different channels or strategies at our disposal in this framework, for instance -
- ¨Messaging – SMS/MMS
- ¨WAP/XHTML – on-deck/off-deck
- ¨Search – Mobile, Media, Local
- ¨Video – Unicast, Multicast
- ¨Audio – Streaming, Podcast
- ¨Downloadables – Games, Applications (BREW/JAVA) – Interstitials/In-app
- ¨Community
- ¨Directory Assistance/ Call Inst.
- ¨Code based – Barcode, QRcode, Images
- ¨ActiveScreen
- ¨Bluetooth, NFC, WiFi, others
No one provider offers capabilities across a majority of them, you could argue that there is no need but from an advertiser’s perspective, the situation demands aggregation and simplicity.
Forecasts: I put up a graphic that included the US mobile advertising forecasts from several leading analysts and asked the audience to guess the timeframe for the same. The original figure is below -
(Source: eMarketer, 2001)
This is a reminder that a) it is hard to forecast when you are starting from zero and b) we should learn our lessons from history. 2006/7 forecasts stand at
(Source: eMarketer, 2006)
(Data Source: Informa, 2006)
(Data Source: ABI Research, 2007)
It is not a question of whether these forecasts will prove to be accurate in 4-5 years time, but what will it take to make these forecasts real. Can we learn from the last time around and apply the lessons to this cycle?
Japanese Mobile Advertising market: Clearly, Japan has had more experience with Mobile Advertising than rest of the markets. In 2006, the average revenue/user/year stood at around $4. For US, this figure was less than $1.
Mobile Advertising value chains: As I mentioned above, mobile advertising means different things to different people and hence there are different value chains in place though they are merging rapidly.
Measurement: It is critical for the success of the industry to have measurement tools in place. I discussed Ogilvy’s Lenova campaign that generated 188% lift in brand awareness and 156% lift in product recall.
Mobile Advertising Framework: Finally, I presented my view of the technical advertising framework that is needed to make the experience work for the user
Panel Discussion
We had a packed house and a very engaged audience. We had influential engineers, VCs, biz dev, mobile enthusiasts in the mix. I asked the panelists to summarize their view of the Mobile Advertising space and what they saw as some of the challenges going in. (paraphrasing of their comments is mine)
Everyone was bullish on the segment, however they cautioned that it will take time, as the “reach” is not there yet. Jai mentioned the oft-quoted 15% penetration for browsing in the US as a limitation of “reach”. Kosar discussed Google’s initiatives in Japan where they are doing a lot of testing to hone in on the “user experience”. Victor talked about the challenges of “user interface” and that voice represents a good solution to cut through the archaic menu hierarchy to find things. He is not worried about the supply and demand but the brokerage in the middle. Brendan talked about the “ecosystem friction” wherein we have too many players for advertisers to deal with and an aggregated or simplified view is needed for the advertisers to jump in with both feet. Coming from the broadcast and Internet marketing background at TW/AOL, Brendan thought measurement authority like Nielsen is a must.
Kosar described the concept of “signals” that Google uses to discern “intent” and how mobile presents a great experimentation field to test some search techniques and algorithms that can also be applied to online search at a later date. The reason being low threshold for wrong results on mobile.
On the question of targeting, Brendan and Jai mentioned the use of demographic data available from the carrier to make search results (and advertising) better. Kosar said that Google’s focus is on tailoring experiences for device capabilities and cannot always rely on user preferences on mobile devices since they are not always available. They want to make sure an ad shows up where user expects it to show up. Google is concerned for both the user and the advertiser. Victor used to the run probably the biggest direct marketing research org in the world at Reader’s Digest and he thought that the targeting is actually much easier in mobile due “declared intent”.
There was some discussion on the meaning of mobile advertising and how promotions and marketing are part of the same mix. Jai said that recommendation is another form of advertising which appears non-intrusive and is actually useful for the consumers. Amazon gets a good chunk of their revenues from recommendation clicks. I myself find them quite useful and end up buying dozens of books this way every year.
Victor thought that the ”promotions” piece (tied to local search) is actually going to be a much more lucrative business than the banner ads or even media search related advertising.
Kosar reiterated Google’s philosophy - “focus on the best products and experiences, and monetization opportunities will emerge naturally both for users and advertisers”.
There was active participation from the audience as well.
Katie Thompson from Trilogy (a prominent VC firm in PNW) wondered about the ad saturation levels we might be reaching and how do we address that and if agencies are worried about that aspect.
Mohan Venkataramana, President of IITPNW chapter and a veteran in the industry saw history repeating itself w.r.t. advertisements and evolution of the mobile industry.
There was general agreement that industry needs to focus on user’s needs rather than CPC and CPMs at this stage in the game. And that user privacy issues should stay at the forefront.
Another one lamented that first the carriers need to fix the voice quality, reduce data rate plans, and make things usable before consumers are going to tolerate ads.
Someone narrowed things down to two key aspects a) location and b) relevant targeting.
There were questions about the Japanese market and if it is different from the US and if that’s the reason advertising will take longer in the US. A lot of people misunderstand the Japanese (and Korean) market. I was advisor to the senior management team of NTT DoCoMo when they were active in the US and we used to laugh about the misconceptions and the myths that perpetuated in the US market. We dealt with this issue in quite a bit of detail in our previous book (co-authored with Dr. Nakamura, SVP, DoCoMo).
We could have gone on for the rest of the night but had to wrap things up. Mobile Advertising is a broad topic and it is hard to cover all aspects of it in 90 minutes, but touched on quite a number of items and honed in on a couple.
Thanks to our hosts Google for space and food, the panelists for an illuminating evening and spirited discussion, and the participants for making it a lively exchange.
Industrial Espionage Tool April 18, 2007
Posted by chetan in : US Wireless Market , add a commentCorporate data slips out via Google Calendar. Privacy! What Privacy? 
Qualcomm buys assets from WiMAX company April 17, 2007
Posted by chetan in : US Wireless Market , add a commentEric Schmidt on Mobile
Posted by chetan in : Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search , add a commentAt Web2.0 expo,
Battelle: What do you see as the web’s biggest growth areas?
Schmidt: “Mobile, mobile, mobile — it’s probably the most wide open space out there right now. Also, local. Most search companies don’t take advantage of the local data inherent in the web.”
Mobile Advertising Panel
Posted by chetan in : Mobile Advertising, Mobile Ecosystem, Mobile Search, Mobile TV, Mobile Usability, US Wireless Market , 1 comment so farI am prepping for the mobile advertising panel tomorrow that involves
Brendan Benzing - Infospace
Jai Jaisimha - Medio Systems
Kosar Jaff - Google, and
Victor Melfi - VoiceBox
I am looking forward to it. If you would like to ask any specific question(s) (or broad for that matter), please let me know. I will do a summary of things discussed later this week.
This week’s carnival at Mobile Marketing & Spam April 16, 2007
Posted by chetan in : US Wireless Market , add a commentTroy at MMS provides a good summary of great posts from around the world.
Google/Doubleclick - Sour Grapes? April 15, 2007
Posted by chetan in : Mobile Advertising, Mobile Applications, Mobile Content , add a commentMicrosoft said yesterday that Google’s proposed purchase of Internet advertising company DoubleClick raises antitrust and privacy concerns that deserve careful review by authorities. Executives at the software giant said they talked over the weekend with AT&T, AOL and Yahoo about similar concerns.
It is surprising that Microsoft let Google have Doubleclick. It is hard discern the strategy behind this move.
Google grabs Doubleclick for $3.1B April 13, 2007
Posted by chetan in : US Wireless Market , add a commentMicrosoft, your turn.
Vodafone in talks to offer advertising on mobiles
Posted by chetan in : European Wireless Market, Mobile Advertising, Worldwide Wireless Market , add a commentFinancial Times is reporting that Vodafone is planning to offer companies the chance to direct pan-European advertising campaigns at its mobile customers by the end of the year.
The world’s largest mobile group by revenue said yesterday that it was in talks with a soft drinks company and a carmaker that could result in pan-European campaigns by the end of 2007 or early 2008
Mobile Advertising - A contrarian view
Posted by chetan in : Mobile Advertising , 6 commentsEnders Analysis noted in their research today:
· Mobile advertising has recently been talked up by both mobile operators and media companies, with some analysts estimating that it could be worth more than $11 billion by 2011, or over one third of the current internet advertising market
· The reality, however, is that the current market is very small (c.€100 million globally), with even this supported heavily by experimental campaigns, and it cannot grow significantly without mobile browsing increasing dramatically, whereas adoption is currently stable or even shrinking in some markets
· The economics of advertising generally depend on a mass market of consumers spending hours a day viewing or listening to a medium, not occasional usage by a hard-core group of techies, and unless the mobile internet can be brought to the masses mobile advertising will remain very niche
Speaking at Zino Society Events
Posted by chetan in : US Wireless Market , add a comment
ZINO Society is focused on connecting entrepreneurs with accredited investors, cultivating camaraderie in the world of wine and business, and facilitating insider wine trips, tours and special event opportunities.
May 16th - I will be speaking on “Trends, Opportunities, and Challenges in Wireless”
Oct 2nd - I will be giving a class on “Intellectual Property” to a group of entrepreneurs.
