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Future in Review (FiRe) 2009 roundup May 31, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, European Wireless Market, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Over the course of last year, I did 25 different events, all of them focused on mobile. However, there was one event that truly stretched my thinking and worldview and that was the “Future in Review” conference (see last year’s review here) hosted by Mark Anderson, CEO of Strategic News Service (SNS). It exposes one to multidisciplinary subjects from global warming to nuclear weapons, from oceanography to medicine, from mobile to cloud, from economics to space rockets, it’s all here, nicely packed in a 3 day conference.

FiRe 2009 started with a brilliant keynote address from Prof. Veerabhadran Ram Ramanathan, Distinguished Prof of Climate Sciences and Director who is quite possibly the most authoritative person on the subject of climate change. He started his work way back in the 70s, decades before Al Gore made it glamorous. He is the one who has been measuring the impact on our planet one measurement at a time. He took us through the journey of his career culminating with a stark warning and a message of hope.

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Things have deteriorated to such an extent that if we don’t check the downward spiral, many of the significant sources of water such as the Gangotri Glacier in India will disappear in 10-15 years. If you stop and think about it - that’s just stunning and has calamity written all over it. If the source of Ganges disappears, the life that has built around the river for thousands of miles before it goes into the Bay of Bengal will be unsustainable. I grew up in Roorkee, a town on the banks of the Ganges, so the point hit home very strongly. I have been thinking about this issue since the PBS documentary “On Thin Ice” by David Brancaccio and Conrad Anker - one of world’s leading high altitude climbers. 75% of the world’s fresh water is stored in glaciers and at the current pace of destruction, within 15-20 years most will be severely depleted. And there are still people in high places who don’t get it.

It was not all doom and gloom but a ray of hope in his experiments that left us less depressed by the end of the keynote. He is working on a number of experiments to identify and cure the main sources of pollution and carbon in the atmosphere like the Project Surya to reduce air pollution and global warming by cooking with renewable sources. Or the unmanned drones (pictures above) to measure brown cloud particulate composition to get a handle on how pollution travels (did you know that it only takes 2-3 days for pollution in China to come over the US and then another 2-3 days to reach Europe and the cycle continues - pollution is flat and globalized - thinking that it is only a developed world problem or developing world problem is foolish, also foolish is waiting on the other party to move first).

Best wishes to Ram and his team to educate, illuminate, and find solutions to the toxic problem of our times.

131 (with Mark Anderson)

Next day we moved into the full-fledged conference mode with 30 min rapid fire sessions from 8-5. The morning started with Mark talking to Stephen Evans of BBC World Service (he is a great interviewer btw) about how we recover from the current crisis and if technology will lead the rebound? Answer is Yes! and we are already seeing signs of it and others in the industry like Bill Gates and John Chambers have been echoing the same thing as well. Later Mark interviewed Mark Hurd, CEO of HP who had a hard time sitting on his feet so the discussion was done standing up.

070 (Mark and Mark)

He emphasized that the future is in the packaging of software, services, hardware, and network rather than siloed solutions. Haven’t we heard that before. Hurd is a numbers guy and can recite P&L spreadsheet from memory. He suggested that we will see more of the same for the reminder of the year and that the services business is yielding good profits for HP now. There was also quite a bit of discussion on the latest buzz word “Cloud Computing,” what it means and how does everyone profit from it.

Several industry heavyweights like Werner at Amazon, Amitabh at Microsoft, Russ Daniels at HP were at hand to discuss what CC means to them. While there is a lack of industry consensus on the meaning, it more and more looks like the reallocation and redistribution of resources - physical and electronic in a manner that drives efficiency and cost reductions for startups to behemoths. From a consumer point of view, it will always be a blend of solutions that take into account the privacy and security of data. My recent hard drive failures has forced me rethink my backup strategy.

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(My panel on the future of Wireless Broadband - Fred, Chris, David, Hugh, and Rama)

Photo copyright © 2009 by Sandy Huffaker Jr

Later in the day, I had the privilege to host the only mobile session of the conference “The Future of Wireless Broadband” with five amazing panelists, Dr Fred Kitson, Corporate VP, Motorola, Chris Pearson, President, 3G Americas, Dr. Hugh Bradlow, CTO of Telstra, Dr. Rama Shukla, VP, Intel, and David Achim, President, SkyFiber. I have written about the subject in great detail over the last couple of years so it was great to bounce some questions to the best minds in the space. Highlights of the discussion:

There were other host of areas I wanted to get into but you can only do so much in 30 minutes especially if you have great panelists. Wish I could have a day long session :) to discuss the nitty-gritty in much more detail. In any case, great panel and insights. Joe Sterling was at hand as well to do an artist rendition of our panel, art below.

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As I mentioned before, the conference was filled with very interesting discussions like Ambassador Dennis Hays from Thorium Power discussing a world where the capacity of making nuclear weapons can be taken out of the nuclear materials to only focus on nuclear energy for energy purposes. Boy! won’t that change the geo-political dynamics. John Hagel talked about shaping strategy based on this recent HBR paper and his upcoming book on the subject.

Another highlight of the show is to gather the bright CTOs of leading corporations and give them a practical problem to solve like how to provide adequate safe water for future decades. Hosted by David Brin (cohost of TV ArchiTechs series), the panel delved into understanding the problem and delivering a framework for solutions. Not a typical session you see at a conference. Hey CTIA! how about putting together a problem solving panel for your next show?

I also was touched by the screening of the movie “The Cove” - winner of the 2009 Sundance Film Festival Audience Award. More details here. Synopsis:

In the 1960’s, Richard O’Barry was the world’s leading authority on dolphin training, working on the set of the popular television program Flipper. Day in and day out, O’Barry kept the dolphins working and television audiences smiling. But one day, that all came to a tragic end.

The Cove, directed by Louie Psihoyos, tells the amazing true story of how Psihoyos, O’Barry and an elite team of activists, filmmakers and free divers embarked on a covert mission to penetrate a hidden cove in Japan, shining light on a dark and deadly secret. The mysteries they uncovered were only the tip of the iceberg.

Visit the Movie home page

It will change your perspective of how you view dolphins for ever and those trips to seaworld will be ever so more poignant filled with self-introspection. More power to the activists like Richard O’Barry and directors like Louie Psihoyos for opening our eyes and making a remarkable piece despite the challenge.

Another highlight of the conference is the interviews of top technologists and emerging startups by BBC’s Stephen Evans. Each gets a sound byte to wow the world (the session is streamed to 150M people). Highlights - Xerox - how can we solve legal cases with technology? Radar Networks - NOW is the unit of change. Vlingo - Speech is changing. IMANI-Ghana - SMS to prevent drug counterfeits, Cisco - virtual reality, voice, and data are the three different waves of innovation, the opportunity for collaboration is immense, Liberty - 5 yr projection 1Gbps wired, 100Mbps wireless peak throughputs, avg - 200Mbps for wired and 10Mbps for wireless, Microsoft - it will be the Chinese century, companies shouldn’t worry about protecting their marketshare in China but worry about protecting their share from Chinese players overseas, Smaato - Mobile Advertising is going to be the most prevalent business model in mobile, and SIMtone - make terminals dumb again and have the network cloud take care of everything.

The current financial crisis was also discussed at length. Many thought Europe is in denial and lack fundamental understanding of the crisis, that China and US are intertwined more than ever before and will have to work together to lead the world out of the crisis, India is largely untouched and better days are ahead thanks to the recent electoral results.

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(Larry with Kamran, Mark with Elon)

Larry Brilliant suggested that the vaccines are the best investment in human history. Can’t argue with that one. He also suggested that the world should be thankful to Mexico for releasing the data early and often enough for other countries to take precautionary measures (sometimes to the extreme, I might add). They have suffered significantly and have been ridiculed but hopefully they serve as a lesson for the world in future pandemics.

If FiRe represents the best in multidisciplinary thinking, Elon Musk represents the rare breed of multidisciplinary entrepreneurs. The guy can shift from intricacies of electric cars to the design of rocket ships to solar energy with ease.

3556314187_21aa910f15 (with Hugh at Calit2) Copyright© 2009 Calit2

My best session was at Calit2. I think Larry Smarr has the best office with many 10Gbps links and coolest toys to play with, especially the 125Mpixel Hyperwall. It was also nice to interact with Michael Sims, Manager and Planner for the Mars Rover at NASA and his team using the network and the wall. You can see some cool images below. The second set of pictures are an image of human brain where you can pick out the single neurons with ease.

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Also, interacted with the next generation surface and touch technology that uses pressure as an input as well. Below is me doing a destructive face surgery on a poor soul.

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Finally, I would be remiss if I didn’t mention the 0-60 mps in 3.9s experience in Tesla Roadster. That car is a rocket.

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Overall it was a great conference. I left more curious about more things. The conference also has an intimate feel to it where you can discuss burning issues with top experts and award winners over coffee, stroll, and meals. Registration for 2010 is open now.

TiECON Conference Roundup

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

 TiEcon 2009 is a conference for entrepreneurs & business start ups

While I have been involved in various TiE events over the years, this was my first TiECOn down in the bay area. Even in this economy, this was a very well attended event with folks coming in from around the globe. The conference was quite diverse as well covering consumer web, internet infrastructure, cleantech, wireless, and software. I was there to moderate a panel on Wireless Monetization.

I was able to attend some really good keynotes, the most notable being Paul Maritz who talked about platforms, Tony Hsieh of Zappos on happiness, and Reid Hoffman, Linkedin. I found Martiz address on platforms and how the successful ones are generally created particularly interesting. He had some inside stories to share about Intel and Microsoft and how “accidental fortitude” seems to be the key of what became the changing platforms for our industry. Planning often doesn’t work that well when create mass-market phenomenon. The next areas of innovation and profits are: microfinance, biotech and information personalization.

What was unique and distinct about this conference was the “level of energy” amongst the entrepreneurs and participants. Despite the funding and economic climate, these guys were rushing to form the new company, start a new chapter, and create something unique in the market place. Some were serial entrepreneurs while others were just getting started.

The central theme of the conference was - if you were going to start a new business, this is the year, now is the time. While it has become a cliche, it is indeed true, best businesses are started in recessions and in the downturn - sometimes out of need other times out of opportunities. Bright brains rally and congregate to shake the cobwebs and look towards a new beginning. The energy was indeed infectious. My own consulting practice started during the last recession and 8 years later we are still around, so i say, all power and glory to the next generation of entrepreneurs who will create new technologies, paradigm shifts, and business models.

50 Startups were awarded the TiE50 awards - http://www.tiecon.org/home/tie

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On to my panel - “Wireless Monetization - The Pot of Gold at the End of the Rainbow.”

My thanks to Arvind Gupta, Asha Vellaikal, and Savinay Berry for being the hosts and putting together the panel. Also, thanks to Ramneek Bhasin and Ujjal Kohli for their assistance.

The panelists were:

Michael Bayle, former Sr. Director, Mobile Monetization, Yahoo

Purnima Kochikar, Director, Nokia

Gary Kovacs, SVP, Sybase

Matt Litz, VP, Glu Mobile, and

Tina Unterlaendar, MD, AKQA

My questions were simply around what makes money, what’s working, and what’s coming? The brilliant panel had terrific insights.

Bottom line:

Overall a great panel and a great conference.

mHealth Summit Roundup May 30, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 4 comments

Earlier this month, I had the good fortune of participating in 3 great events - TiECON, Future in Review, and mHealth. While the 9 straight days on the road were exhausting, I thoroughly enjoyed doing the panels, attending various panels, and meeting several interesting folks in the process. This post is first in the series of Conference roundups.

Last year, I had the good fortune of working with the UN Foundation on a paper “Mobile Services Evolution 2008-2018.” It was presented at the Rockefeller Foundation sponsored Health conference in Bellagio, Italy in July. Since then the two foundations along with many other partners have progressed on creating the mHealth Alliance which was announced in Barcelona earlier this year. Last week, the group convened in San Francisco for its first meeting and I had the privilege to be one of the participants in this initial working group. The goal was to bring together some leading authorities from academic, industry, NGOs, governmental, foundations and others to share and discuss the way forward. Here are some initial thoughts on the summit and the program as a whole.

More interesting things first. I am always more excited about the demos and meeting new companies than listening to prepared material. The areas where mobile makes the biggest impact is in: information dissemination, data gathering and transmit, compliance, monitoring and diagnosis, training and education. While progress in any one of these will be great, progress in various areas will impact different set of demographics and countries. For example, while sophisticated measurement and transmit might become normal course in the developed nations (at the consumer level), due to lack of infrastructure, education, awareness, and compliance are the biggest areas of improvement in the developing world.

Below are the pictures of the various devices for capturing various medical information that can be transmitted over wireless. First one is a point of care immunoassays that a company called Silicon Biodevices has developed which  can quickly detect viruses. These can be eventually be sold in stores for consumers to conduct tests on their own.

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(Cellphone Microscope)

The second device is a microscope attached to the camera which can take the image of the sample being looked at and transmit via MMS or email, again, very handy for remote diagnosis.

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The third device is a pulsometer which can measure pulse, heart rate, O2/CO2, etc. and then using the netbook can transmit of sync up data to a medical facility.

These tools are not going to be available to consumers in the developing world anytime soon but they can improve care at remote hospitals or point-of-gathering and can allow a visiting physician to quickly detect, monitor, and analyze results w/o the setup of a professional lab.

There were a number of leading technology players represented - Intel, Qualcomm, Cisco, Microsoft, Google, and others who are looking to push their solutions and platforms to take advantage of this emerging opportunity. I think the lowest hanging fruit is services using SMS which is a universal tool for communication. A startup in Ghana is using SMS codes to counter drug counterfeits which can help save 20% of the drug costs for the country.

As I said in my paper, Mobile does two things really well - compress time and distance - and thus connect, enable, and empower participants in the healthcare ecosystem to reduce costs and errors, and increase productivity, access, and efficiency.

There was a lot of conversation about “reuse” of knowledge and tools and inclusion of various players in the ecosystem so that the solutions take off the ground quickly. While there was a lot of optimism to do a lot of good in the world, there was a lingering skepticism of how all the talk translates into actual results. The bureaucracy and infighting is stifling progress and the solutions are not always replicated easily. In the case of mobile, without strong involvement with the countries operators, many of these initiatives won’t go too far or fall short of expectations. It is good that Vodafone is deeply involved in the process and can influence its peers.

There was debate about whether you do the technical work (software) on the ground or build solutions beforehand. As usual, it depends on the circumstances of a particular situation and project. My belief is that each country should have a platform available for launching national health services. Governments should either enable the process by working hand-in-hand or fund and get out of the way of the private industry. Just like roads and electric grids, health platforms should be a matter of national importance and unless there is this realization, the fragmentation of technology will continue.

Another area of improvement is data sharing which various projects seldom do and as such the cycle is reinvented when people could be learning from each other. MHealth Alliance is taking up the challenge to foster the growth and coordinate the ecosystem. I wish them nothing but the best and will try to contribute when and where I can.  Overall, a good start to the process.

Contributing to GigaOM Pro May 28, 2009

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Earlier today GigaOM launched GigaOM Pro - a subscription only research service focused on Green IT, Infrastructure, Mobile, and the Connected Consumer. The effort is led by Michael Wolf, VP, Research, who has done a terrific job in a short amount of time.

I will be contributing with some reports on mobile. The first is on 4G: The State of the Union. We also will be distributing some of our Quarterly Market Updates via GigaOM Pro. These quarterly reports will still be available for free on our website in the Research section.

BusinessWeek: Cheaper iPhone Plans from AT&T? May 18, 2009

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

Talked to Business Week about pricing plans for smartphones, in particular, the iPhone


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TELECOM May 18, 2009, 12:01AM EST

Cheaper iPhone Plans from AT&T?

AT&T may offer lower-cost data plans for iPhones, which would attract new subscribers and force smartphone rivals to cut prices, too

By Olga Kharif

Victor Lin wants an iPhone, but he’s put off by the price. The smartphone costs at least $199 up front, and if he wants unlimited Web and e-mail access in addition to calling, he’ll need to pay an additional $70 a month. “I like the idea of having a full-featured Web browser,” says Lin, a 43-year-old San Francisco software engineer. “However, I think the monthly fee is a little bit too high.”

AT&T (T) may have gotten the message. The exclusive U.S. iPhone service provider is considering cutting the price of its monthly service package or offering a range of lower-priced plans, say people with knowledge of the company’s thinking. One plan that could be introduced as early as late May would include limited data access at a $10 monthly reduction, the people say.

The possible price cut likely reflects the back-and-forth between AT&T and Apple (AAPL) as they work out whether and under what terms AT&T would remain the sole U.S. iPhone carrier. Apple may want flexibility in pricing as a condition, analysts say. “We understand it’s part of the extension [of its contract] that AT&T wants to maintain,” Richard Doherty, director at consultant Envisioneering Group, says of the prospect of lower data-plan prices. As Apple considers whether to widen its circle of U.S. providers, AT&T may have less ability to balk at Apple’s requests. Representatives of Apple and AT&T declined to comment.

AT&T and Apple also have added scope for price reductions as iPhone manufacturing costs decline. Apple plans to introduce a new version of iPhone software in June, and it may unveil a new, cheaper device in June or July. New devices may cost as much as one-third less to produce than earlier versions, Doherty says. The cost of touchscreens, the most expensive component, has declined by more than 30% in the past year, estimates Michael Cote, an analyst at consultant Cote Collaborative Wireless Strategy.

Lower-priced data plans would probably lure a lot of fence-sitters, including students and consumers with lower incomes. A reduction could boost AT&T’s iPhone subscriber additions by 20% to 25%, estimates wireless industry consultant Chetan Sharma. A survey late last year by comScore (SCOR) indicated that 43% of iPhone buyers earned more than $100,000 a year. But many of the wealthiest subscribers have already signed up. In the first quarter, AT&T activated 1.6 million iPhones, and 40% of those activations were for users new to AT&T. “[A price reduction] absolutely makes sense,” Sharma says. “AT&T is starting to hit a wall in terms of new subscribers.” In the first quarter of 2009, AT&T’s net subscriber additions were 5.6% lower than in the year-earlier period.

A $99 IPHONE OR A PREPAID IPHONE?

Some analysts have speculated that in addition to cutting the price of service plans, AT&T will also reduce the up-front price of the new iPhone by as much as $100, to $99. Apple is even toying with the idea of coming out with a prepaid iPhone, opening up the device to mainstream consumers, Doherty says.

A cheaper plan, coupled with new and possibly cheaper iPhones, could give AT&T a larger share of the U.S. smartphone market. “They are going to give AT&T the bulk of smartphone users [in the country],” Doherty says. And unless prices drop on other smartphones in AT&T’s stable, those rival handset makers, such as Research In Motion (RIMM), could end up losing market share in AT&T’s stores. The plan could also make it more difficult for the new Palm (PALM) Pre, expected from Sprint Nextel (S) in June, to gain share. “That would definitely push the pricing on high-end smartphones down,” Sharma says.

A new plan could also usher in an era of tiered wireless data plans for consumers from other carriers, too. Already, AT&T offers corporate data plans for BlackBerry devices, among other gadgets; these include the unlimited option, as well as cheaper plans with caps on monthly data usage. Some data plans also allow for so-called tethering, which lets users cut costs by using the phone—instead of a wireless data card—to get wireless broadband access on a computer. But there’s less flexibility for consumers that way; data plans for smartphones typically include unlimited data and go for a flat $30 a month. Many analysts think it may make sense to offer a cheaper limited option for, say, $20 a month.

The rest of the industry will likely mirror AT&T’s moves into tiers of personal wireless data services to stem iPhone-related subscriber defections. “It seems to me if there’s one carrier who is more at risk [of losing subscribers], it’s Sprint,” says Charles Golvin, an analyst at Forrester Research (FORR). “Their marketing has been about their unlimited plan being a better value.” But Verizon Wireless and T-Mobile may need to take a page from AT&T’s playbook as well.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.

More coverage May 13, 2009

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Our Q1 09 report has been picked up by most major news outlets, some more:

Washington Post - US Wireless Data Revenues Hit $10 Billion For the First Time Ever

TMCnet - US Mobile Data Services Revenues Top $10 Billion in Q1

Mediapost - Mobile Marketing Company Velti Acquires Ad Infuse

Telappliant VoIP News - US mobile broadband market grew by 24% in 2008

 

Thanks all

US Wireless Q1 coverage May 12, 2009

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

Coverage of our Q1 2009 US Wireless Data update:

NY Times - US Pulls Ahead in Mobile Data Revenue

BusinessWeek - Wireless Industry: Engaged in Double Counting?

GigaOM - The iPhone Will Not Destroy the Wireless Business

FierceMobileContent - US mobile data revenues cross $10 billion milestone

Mediapost - US Mobile Data Revenue Hits $10 Billion in Q1

TelephonyOnline - Is prepaid growth an illusion?

US Wireless Data Market Update - Q1 2009 May 11, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Speaking Engagements, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

US Wireless Data Market Update - Q1 2009

Download PPT (2.8MB)

Download PDF (1.8MB)

http://www.chetansharma.com/usmarketupdateq109.htm

Executive Summary

The US wireless data market grew 5% Q/Q and 32% from Q108 to reach $10B in mobile data service revenues. It marked the first time the US market has crossed the $10B milestone. Given the strong growth in data revenues shown by the top carriers and the increase in service revenues overall, it appears that at least for the time being that the worst is over for the mobile industry. In summary, the recession has been all but a tiny blip (from the service revenue perspective) in its growth trend and the US mobile market has weathered the downward spiral in economy better than its counterparts in other developing nations.

The US subscription penetration went passed 90%. While the flailing economy hit certain segments of the wireless ecosystem hard esp. the infrastructure and handset segments, consumers haven’t really pulled back on the mobile data overall spending. Additionally, the CAPEX spending will stay strong in 2009 given the activity around 3G/4G deployments and trials. As expected, the data card subscriptions were hit the hardest and there was an increase of prepaid subscribers which dropped the overall revenues for some of the carriers.

As we mentioned in our last research note that this time around, the fate of the US mobile industry is more closely tied to the overall economy compared to the previous recessions. As the consumer sentiment improved over the last couple of months along with better than expected Q1 2009 earnings from corporations, the mobile industry seems to be back on track. While the structural flaws in various industry segments remain, and the economy is a crisis away from the double dip, the outlook for the remainder of 2009 remains bright and we are expecting the overall data revenues to now increase by 24% compared to 2008.

US Wireless Industry in Recession - The light at the end of the tunnel might not be of the oncoming train

Note: For a detailed discussion of the US wireless industry in recessions, please see 2008 US Wireless Market Update.

The % GDP change dropped from 4.8% in 2007 to 2.3% in 2008. Q4 2008 reported a drop by 6.2% QoQ in one of the sharpest declines in the last quarter century. Q1 2009 reported a 6.1% decline. On an yearly basis, the GDP is expected to change by 3.2% for 2009 and the service revenues are expected to  account for 1.13% of the US economy by year-end.

As mentioned in the previous report, while in the past, the recession hardly impacted the wireless industry, this time around; it is going to be more tied to the recession. In the past couple of months, the consumer sentiment has improved and the Q109 earnings have been better than expected. While there are still many structural flaws in the financial and housing industries and the unemployment is at a 25 year high of 8.9%, consumers are feeling better about the economy and their own prospects in it. Most companies are being optimistic but cautious.

So, what does this mean? Well, the markets can still be volatile, but overall the market seems to be feeling better about the economy than it was in February. The Conference Board Consumer Confidence Index experienced a significant jump to 39 (relative scale of 100) from being at an all-time low of 25 in February.

Given that consumer sentiment is improving, it appears that US mobile data market is all but back from the recession. While some segments within the mobile industry might be suffering, there has been an increase in spending overall.

What to expect in the coming months?

We noted in our Q3 2008 note that we will get a better picture of the impact of the recession on the wireless industry in Q109 as it was the first full quarter after the seasonal holiday quarter. There are two micro trends that are clear. First, as expected, due to the high unemployment, the data card segment took a hit. It will recover in due course as more of the workforce comes back over in the next 18 months.

Also, as expected, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid constituted 61% of the net-adds in Q109 up from 57% in Q408 and 25% in Q108. It is not clear if the good times will bring back the prepaid subscribers to the postpaid realm or like the consumers who are canceling their landline connections and moving to mobile, these customers will get used to savings and the prepaid lifestyle.

It is quite likely that 50-60% of such consumers don’t go back to postpaid thus permanently lowering the ARPU base for such customers and carriers who have experienced more postpaid to prepaid shift will have to make up for the lost revenues someplace else (or maybe they can hire Oprah to send a tweet to her followers to upgrade to Postpaid. It will crash the system but increase the ARPU).

Rising unemployment continues to accelerate another trend - landline replacement by Mobile which reached almost 22% by Q109 (of course this benefits the mobile industry). This trend is irreversible and requires fresh thinking.

Messaging continues to grow. The messaging volume jumped 27% and messaging revenue was up 7% QoQ. The data access (excluding data card) including flat rate data plan subscriptions have also show significant strength lately. In addition to smartphones, we are also seeing increased mobile data activity amongst feature phone users.

The positive factors are helping negate the negative factors and given the strength of 3G and smartphone adoption, the increase in activity on the appstores front, and in general, a better awareness of mobile data services and applications amongst consumers, any decline due to the loss of data card revenue and postpaid transition to prepaid accounts has been taken care off. In particular, Verizon and AT&T have done really well. Smartphones remain a bright spot, which in turn has a direct positive impact on the data revenues. Even with the decline in handset sales, smartphone segment will continue to increase in 2009 accounting for almost 30% of the overall device shipments.

We are likely to see continued price and margin pressure on subscription plans and as a result, voice ARPU will continue its downward trend and data ARPU will become a more prominent factor of the ARPU mix by the end of 2009 reaching over 30% of the service revenues.

This will lead to new business and pricing models for e.g. some will find the low flat rate pricing untenable in the long-run without a fundamental rethink of the network and business architecture.

Coming back to the 2009 forecasts, we are raising our estimates for the mobile data service revenues to $42B for the year. 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 Q109 US wireless data market is:

Service Revenues (Slides 11, 18)

ARPU (Slides 12-15)

Subscribers (Slides 16-17)

Applications and Services

Handsets

Misc.

We will be keeping a close eye on the trends in the wireless data sector in our blog, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2009. The next Global Wireless Data Market update will be issued in Sept 2009.

Your feedback is always welcome.

Should you have any questions about navigating or understanding the economic and competitive icebergs, please feel free to drop us a line.

Thanks.

Chetan Sharma

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

Carnival #172 May 3, 2009

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

over @ Mobilestance. Check it out for last week’s best posts.

Events this month - TiECON, FiRE, and MHealth May 1, 2009

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Three exciting events to participate in this month - TiECON, FiRE, and mHealth

First up is TiECON 15-16th May. I will be moderating a panel on “Wireless Monetization - The Pot of Gold at the End of the Rainbow”

Saturday, May 16, 2009
11: 45 AM - 02:30 PM

Historically there has been a lot of buzz around mobile advertising, commerce and payments. This session will address the topic - Where do things stand today and what is the promise for the future? Currently, there are four ways applications can be monetized: subscription (or one-time download), advertising (in-application and banner), virtual goods (primarily for games), and rev-share (mostly for apps native to carriers). There have been differential rates of growth and adoption in different countries. Why is that? The panel will be challenged to address the issues around how does the pervavsiveness of applications, content and services, and, the emergence of mobile application stores impact each of these areas, and, what are the opportunities and pitfalls for entrepreneurs going forward.

Key Takeaways:
The attendee/entrepreneur can expect to listen to not only an analysis of what monetization scheme works, but also why it works. Further, the discussion will focus on what monetization schemes work for what type of applications in what kind of platforms.

This panel will aim to synthesize the conversations in the previous panels and dive into where the rubber meets the road for making money.


TiE Host(s):
Savinay Berry, Granite Ventures
Arvind Gupta, Former Yahoo & Oracle
Asha Vellaikal, Orange Labs


Moderator(s):
Chetan Sharma, Chetan Sharma Consulting


Panelist(s):
Michael Bayle, Yahoo!
Purnima Kochikar, Nokia
Gary Kovacs, Sybase
Matt Liszt, Glu Mobile

Then hop over to San Diego for “Future in Review” hosted by Mark Anderson of the SNS fame. I will be moderating a panel on “The Future of Wireless Broadband.” on 20th

1:00p - 1:30p
“The Future of Wireless Broadband”: A panel with Hugh Bradlow, CTO, Telstra; Scott Richardson, Chief Strategy Officer of Clearwire; Fred Kitson, Vice President, Motorola; and Chris Pearson, President, 3G Americas; hosted by Chetan Sharma, President, Chetan Sharma Consulting

Then finally on May 22nd, I will be attending the mHealth invite-only conference in San Francisco. My thanks to UN Foundation and Vodafone Foundation for inviting me to the event.

Will of course have coverage of these events as we get into them. So, Stay Tuned.

Google’s operating system could help usher in an era of ultra-cheap laptops

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

Had a chance to talk to MIT Technology Review regarding the emerging market of netbooks and the role of wireless in the ecosystem. Article below.

A New Breed of Netbook?

Google’s operating system could help usher in an era of ultra-cheap laptops.

By Kate Greene

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Armed with Android: A Chinese company plans to sell inexpensive netbooks that run Google’s open-source operating system, Android. Credit: Skytone

Just a few years ago, many pundits expected consumers to shun netbooks. With less power than traditional laptops, a tiny screen and keyboard, and more bulk than a mobile phone, they appeared, at first, to be solving a problem that no one had. But thanks to good design, decent battery life, and, above all, a cheap price, the netbook took off. A few years on, many people have come to rely on one as a more-mobile, secondary laptop.

But the netbook could be about to splinter. Skytone, a Chinese manufacturer, has started showing off the first netbook to run Android, an operating system developed by Google that currently runs on just a single device, the G1mobile phone. Using Android makes sense for Skytone because its netbook is minimal (even by netbook standards): it supports 128 megabits of RAM and only up to 4 gigabytes of storage on a flash-based, solid-state disk. And importantly, its central processing unit is an ARM11 chip–the same model found inside the iPhone.

Dubbed the Alpha 680, the netbook has more in common with a phone than with a normal laptop, says Phil Solis, an analyst with ABI Research. In addition to the processor and operating system, it’s expected to retail for about $250–less than some high-end smart phones. This bare-bones device may point toward a trend, Solis says, with more netbooks relying on cell-phone chips–known for power efficiency–and on cell-phone operating systems.

“You can’t run Windows on ARM,” says Solis, “but all mobile operating systems are made to work on ARM. That opens it up to Windows CE, Symbian, and Android. Those are made to work in tighter constraints.”

Currently, many netbooks use Intel’s Atom processor, which is built using the x86 architecture found in most of the company’s desktop, laptop, and server chips. Most netbooks get about an hour of power per battery cell. On an ARM-based notebook, Solis says, it could be possible to get eight hours from a three-cell battery.

Of course, while long battery life is appealing, there is a definite trade-off. “If you’re looking for a powerful speedy laptop, then these netbooks aren’t for you,” Solis says. “But if you’re looking for something that can last you all day without recharging, and that’s at an even lower cost than most netbooks, then these might work.”

Android is being tweaked to take advantage of streamlined netbooks by manufacturers interested in using an open-source operating system that has the heft of Google behind it.

It’s unclear, however, how much influence Google will have on Android’s evolution. The company declined an interview for this story, responding with a statement: “Android is a free, open source mobile platform. This means that anyone can take the Android platform and add code or download it to create a mobile device without restrictions. The Android smartphone platform was designed from the beginning to scale downward to feature phones and upward to [mobile Internet devices] and netbook-style devices.”

But if the Alpha 680 is any indication, it might not be so easy to make Android work smoothly on a netbook. Solis says that early demonstrations suggest that the operating system needs work in order to run properly on the Skytone device. “Android isn’t ready,” he says. “They need to do work to make it run well on a netbook.”

The main problem revolves around the user interface. “Making the UI work well is exceptionally hard,” says Mark Murphy, an Android developer and contributor to the Android Guys blog. It’s a matter of making sure that the hardware and software communicate effectively with each other, and it’s a different case for each device. One issue is ensuring that the interface and applications adjust appropriately to the larger screen size of a netbook. Also, Murphy says, Android is designed for touch screens, directional pads and trackballs as pointing devices.

While a majority of mobile-device manufacturers are publicly supporting Android, it’s not as clear which major laptop companies might choose ARM and Android over Intel’s Atom and Windows. Still, as rumors of other Android devices start to emerge, there will be more pressure for the operating system to perform, for both developers and consumers. It’s important that there’s some consistency in the way that Android is implemented, says Chetan Sharma, an analyst who runs his own firm in Issaquah, WA. Otherwise, he says, developers will need to pick and choose a particular version of Android to work with instead of being able to contribute across the board. For their part, consumers expect reliable, easy-to-use software, Sharma adds.

“A moment of truth is coming for Android,” says Sharma. “If all of the applications are developed seamlessly, then that means that fragmentation issues that have plagued the mobile industry are on the path to being resolved.” Still, he cautions, device manufactures will need to tweak Android for their own products, which “might create different flavors of Android.”

But whether Android will be ready or not, cheaper netbooks are on their way, predicts Kevin Burden, another analyst at ABI Research. Consumers “want these things to be $150. They want to let their kids bang away on them, and when they break, they’ll just throw it away and buy another one,” he says.

Moreover, low-end netbooks could find their way into emerging markets such as China and India, says Solis. “It opens up to people who can afford a $200 netbook, but not one that’s $500.”

Copyright Technology Review 2009.