Google and Payments May 27, 2011Posted by chetan in : US Wireless Market , add a comment
Had a chance to talk to Bloomberg about today’s Google Wallet announcement. Article below
By Olga Kharif and Amy Thomson - May 26, 2011 2:33 PM PT
A video screen displays a new payment service introduced by Google Inc. at an event in New York on May 26, 2011. Google Wallet will let consumers pay merchants and download coupons with a tap of their mobile phones. Photographer: Guy Calaf/Bloomberg
Google Inc. (GOOG) unveiled two services to let consumers pay merchants and download coupons with a tap of their mobile phones, as the Internet search giant seeks to expand in the growing market for mobile advertising.
Google is partnering with Mastercard Inc. (MA) and Sprint Nextel Corp. (S) to let customers pay and receive coupons on the go using their handsets, the company said today at an event in New York. The system, based on a technology called near field communication, will be available first on the Nexus S handset, which uses Google’s Android software, and later on other phones.
The new services will help Google compete for retail- marketing dollars that now flow to daily deal sites such as Groupon Inc., in-store display advertisers, business directories and newspapers. They will also help the company capture more information about consumers’ shopping behavior off the Internet, building on its knowledge of consumers’ online-buying habits.
“For Google, it is about advertising and enabling commerce,” said Chetan Sharma, an independent wireless analyst in Issaquah, Washington. “Google wants to become the personal concierge for the consumers.” More than 96 percent of Google’s $29.3 billion in sales last year came from search advertising.
Google said it expects to receive revenue from delivering ads and offers to handsets, and won’t make money off of payments. The payment service, called Google Wallet, and the related Google Offers service will be free to consumers.
Google, based in Mountain View, California, fell $1.54 to $518.13 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have lost 13 percent this year. NXP Semiconductor NV (NXPI), the provider of NFC chips for the Nexus S, added $1.33 to $28.55. Mastercard rose $7.62 to $282.10 on the New York Stock Exchange.
Google Wallet will be available in San Francisco and New York this summer. Google Offers, integrated with the Google Wallet and offering coupons and discounts, will be available in the same markets, and also in Portland, Oregon.
“It won’t be a long trial,” Fared Adib, a senior vice president at Sprint, said in an interview. “You trial things when they are nearly done and ready to go out.”
Sprint said most of its phones will have NFC technology eventually. Stephanie Tilenius, a Google executive, said 50 percent of phones sold in the U.S. will have NFC by 2014.
Other Google partners include First Data Corp. and Citigroup Inc. (C)
New York, San Francisco
Google is teaming up with retailers including fast-food chain Subway Restaurants, Macy’s Inc., and American Eagle Outfitters Inc. to let customers pay for products and redeem coupons with their phones. The services will work at retailers with terminals that accept Mastercard PayPass transactions.
Many merchants’ existing cash registers will have to be updated to work with the services. That could mean extra business for payment-systems providers like VeriFone Systems Inc. Douglas Bergeron, Verifone’s chief executive officer, said broad adoption of mobile-wallet services like Google’s could add $100 million to $150 million to his company’s annual revenue.
“We are in the wallets business now,” Bergeron said in an interview.
Users of Google Offers will be able to download coupons by tapping their NFC-equipped phones on display ads, and the service will guide them to the nearest retailer where they can be redeemed.
“The most immediate impact will be felt in retail, but then can spread across every consumer-facing enterprise that accepts on-premise payments — travel, entertainment,” Sharma said.
U.S. mobile-coupon spending may rise to $6.53 billion in 2014 from $370 million in 2010, according to Borrell Associates Inc. The wallet may eventually include users’ drivers’ licenses, concert tickets and hotel room keys, Tilenius said.
The new services also may accelerate consumer adoption of Google’s Android operating system, Sharma said. The software was used in 36 percent of smartphones shipped globally in the first quarter, according to research firm Gartner Inc. That made Android No. 1 ahead of Nokia Oyj’s Symbian and Apple Inc. (AAPL)’s iOS.
Apple also plans to introduce NFC features in its iPhone and iPad tablet, Richard Doherty, director of consulting firm Envisioneering Group., said in January. Nokia and its software partnerMicrosoft Corp. (MSFT) are working on NFC functionality, too.
In the U.S., Google kick-started adoption of NFC features last fall, with a service called Hotpot in Portland, Oregon. Vendors such as Voodoo Doughnut have put special tags on their doors that can be tapped with an enabled phone to give users access to reviews, menus and directions.
Users of Google Wallet will be able to use any credit card to deposit money onto a digital Google prepaid card contained within their phones. Credit-card networks hope mobile wallets like Google’s will help them boost revenue.
“This is part of a broader strategy that Mastercard has been working on to use mobile phones as a platform to displace cash and checks around the world,” said Chris McWilton, president of U.S. markets for Mastercard. “Mastercard believes an open system, at the end of the day, is the way to make mobile payments ubiquitous around the world.”
In NFC-based mobile payments and marketing services, Google will square off against wireless carriers, other handset makers and financial institutions like Visa Inc. (V) that are promoting their own mobile wallets and discount offers.
New Paper: Mobile Cloud Computing May 25, 2011Posted by chetan in : 4G, AORTA, BRIC, Connected Devices, Enterprise Mobility, European Wireless Market, Infrastructure, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Future Forward, Mobile Search, Mobile Traffic, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
Mobile Cloud Computing
Sponsored by Real Networks
These are exciting times in the wireless industry. The innovation in technology, services, and business models is driving the global industry to new heights. While the global markets were feeling the pain of a brutal recession, the wireless industry for the most part sidestepped the crisis, especially in the North American and Asian markets. Mobile data revenues around the world have been growing at a steady pace. Given the lucrative nature of the market, there are more developers focused on the mobile ecosystem than ever before.
The mobile industry is going through significant transition from being voice-centric to data-centric, from consumers spending 90% of their time talking to being engaged on mobile data services 80% of the time. In Japan, Softbank became the first major operator to have more revenues come from data than voice. Others will follow. In the US, over 35% of the revenues are coming from data services and the data revenues will account for over 50% of the revenues by early 2013.
Mobility is also getting ingrained in the everyday objects, which make up for a fundamental reassessment of how things are done across industries in almost every region of the world. It is not just the phones and the data cards that are being enabled by the broadband connectivity but also the electronic devices such as the tablets, eReaders, automobiles, picture frames, and cameras.
Anything that can be connected will be connected making access omnipresent.
In such a multi-device world, the role of cloud computing becomes central to the content access and sharing. Consumers won’t like to store and upload by device type but would want the same level of functionality available across all their devices necessitating the need for mobile cloud computing. In a mobile environment, one has to contend with the limitations of screen size, the variability of devices, and the network latency. Therefore, the cloud requirements will vary by context.
With the emergence of the smartphones, the mobile operators are being gradually cut out of the value added services space with most of the revenues shifting to rest of the ecosystem. Mobile cloud computing provides an opportunity to leverage their network infrastructure assets and their consumer relationships to open up new revenue streams.
This paper will explore the mobile cloud computing market, its drivers, the opportuniies and the key elements of success in this space. Further, the paper discusses why operators should take a more active role in this space. Mobile cloud computing is here to stay. The winners and losers will be decided based on how players will adapt to empower consumers.US Wireless Market , add a comment
Last year, we put together an exceptional collection of essays on the future of mobile (see the details below). Join our highly acclaimed mailing list that informs and engages about the mobile industry and its future and get the book pdf for free. An offer even Groupon can’t match
You can check out our Mobile Future Forward thought-leadership summit that produced this book here.
We had a special project as part of the Mobile Future Forward Initiative. It related to a limited edition book published by Futuretext exclusively for the event. Some of these summit speakers put their thoughts and ideas on paper that resulted in this book. We are very grateful for the authors (and their respective organizations) who carved out time from their busy schedules to pen some really insightful commentary on how they see the mobile industry evolve both holistically and in the various segments of the ecosystem. While the views are quite diverse and bring together perspectives from different angles, but everyone agrees, 2010-2020 will be one heck of a time period for innovation.
The book had the following pieces:
1. The Next 10 Years - 15 Trends That Matter - Chetan Sharma
2. Sustainability in a Mobile World - Stephen David
3. Managing The Mobile Data Explosion - Wim Sweldens
4. Show Me The Money! - Brian Shepherd
5. Mobility Revolutionizing Every Product, Service, and Process - Russ McGuire
6. How Constant Connection Is Changing Our World - Ken Denman
7. 4G: The Next Big Thing - Mike Sievert
8. The Untapped Potential of Mobile Advertising and Marketing - Takayuki Hoshuyama
9. Mobile Operators are at the Center of Mobile Advertising - Krishna Vedati
10. Mobile Challenges - Three Imperatives in the Changing Game - Russ Shaw
11. Interacting With Everyday Things - Amir Mashkoori
12. In The End, It’ll All Go Through “Browse and Buy” - Anil Malhotra
13. The Future of Mobile: 5 Trends That Matter Most - Jay Emmet
14. India’s Mobile Future Forward - Subba Rao
15. Cellphone As The New Computing Platform - Sailesh Chutani
16. What 5 billion Phones Could Mean for Health Literacy - Jon Stross
17. Privacy: From Compliance To Competitive Advantage - Sarla Sharma
18. Managing Growth and Profits in the Yottabyte Era - Chetan Sharma
US Mobile Data Market Update Q1 2011 May 9, 2011Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Connected Devices, Indian Wireless Market, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Payments, Mobile Search, Mobile TV, Mobile Traffic, Mobile Users, Mobile Wallet, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment
US Mobile Data Market Update Q1 2011
The US wireless data market grew 4% Q/Q and 23% Y/Y to reach $15.4B in mobile data service revenues in Q1 2011 and is on course to increase Y/Y by 22% to $67B in 2011.
Of all the segments, the connected device category registered the highest growth at 9.6% Q/Q while the postpaid subscriptions growth was almost flat for the quarter. Connected devices (including tablets, M2M, telematics, eReaders, etc.) now account for 8% of the subscription base.
For the first time, the smartphone sales crossed the 50% share mark in the US. Also, the US now accounts for approximately one-third of all smartphone sales in the world.
The Big News - AT&T’s proposed acquisition of T-Mobile
The big news during Q1 2011 was of course the blockbuster announcement of the acquisition of T-Mobile USA. We had pondered on the viability of 4 operators in the US market in the past. All the major mobile market eventually settle with three main players controlling the market. So, the news wasn’t a surprise as we had expected something to break loose and conform to the natural market evolution. T-Mobile US has been under tremendous pressure for the last 2 years being unable to expand its postpaid base despite modernizing its network/backhaul and introducing a slew of impressive handsets. It was getting squeezed both from the top (Verizon and AT&T) and from the bottom (MetroPCS, etc.) while duking it out with Sprint in the middle. The decision window was closing as Deutsche Telekom had to decide if it wanted to invest in LTE or not (in the US market). Given that the parent business has been under pressure as well, it decided to take the most attractive available option.
The proposed merger will obviously have an impact on the market structure. The market power will get concentrated in the top 2. The HHI3 Index will go from .22 to .31 but the HHI3 value will be at par with UK, Canada (though the Canadian market is not a good proxy for a competitive market), and some of the other markets. The biggest task for the US regulators will be to analyze the impact on the consumer interest and service pricing on a market-by-market basis.
Putting things into perspective, this move is not unusual for a developed market. On average, the top 3 operators in the developed markets around the world control 94% of the market. The proposed merger roughly resembles the merger that took place in UK last year when T-Mobile and Orange, the number 3 and 4 player (each having approximately 19% of the share) respectively in the market merged to form Everything Everywhere and become the number 1 player in the market with 38% market share.
However, if we look at the history of competitiveness in the US mobile market, the market and revenue concentration will be at its highest in the history of the US wireless industry. Such a move is likely to have an impact on the ecosystem depending on the regulatory policies.
Last month, we published a first of its kind in-depth study on competition in mobile markets -“Competition and the Evolution of Mobile Markets - A Study of Competition in Global Mobile Markets”. The paper presents the analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets.
Transparency as a competitive advantage
An unfortunate side effect of an industry moving too fast is that regulations are often behind the curve (we discuss the role of regulators in our Competition paper mentioned above). Q2 will see a lot of heated debates around privacy and competition. Current regulatory framework in the US seems ineffective to meet the demands of the digital age. The indecision and a weak regulatory framework can be harmful to the ecosystem. While the industry has done a poor job of explaining targeting and relevancy and the associated consumer benefits, by over reacting, regulators can mess up the potential for better services. It is not the mechanics they need to regulate but the “transparency” of services and policies in plain English. Regulating transparency seems to be a more effective way. The ecosystem players will do better if they use transparency not as a threat but as a competitive advantage.
The new troika - AAG
A couple of years back, I gave a talk about the changing mobile ecosystem and what it means to compete in an environment where the ecosystem stacks get reshuffled every few months. I wrote about that in an essay that was published in the Mobile Future Forward book last year. While innovation is coming from all angles - fast and furious - the troika of Apple, Amazon, and Google is leading the way right now. Their interests are clashing in multiple dimensions - device, user data, cloud, advertising, local, commerce, books, etc. In a fast changing environment, either you define the market or be defined by it. The journey from being an arch-rival to a frenemy (and vice-versa) can be a short one.
A significant shift
As we mentioned in our last research note, 2010 marked the milestone of the start of a new computing and communications era. For the first time in the US, the smartphones shipments exceeded the traditional computer segments (that consists of desktops, notebooks and netbooks). Smartphones and the connected devices now account for 51% of the computing devices revenue in the US (devices include desktops, notebooks, netbooks, tablets, eReaders, and conventional feature and smartphones)
The growth in of connected devices
The connected devices category is the fastest growing segment of the market and while the ARPUs are low, due to the higher margins this segment will prove to be the most profitable in the coming years. By the end of 2011, connected devices will be commanding double digit market share. However, not all sub-segments are going to be successful in the operator channel until multi-device data pricing plans are introduced.
Apple’s iPad has been, as expected, a runaway success. Several other tablets launched in 2011 but none has come close to being a credible challenge. OEMs will do well to segment the market and price accordingly rather than follow Apple in performance and pricing. Market is fairly young and there is tremendous room for growth. Another trend that is obvious is the development of an alternate ecosystem. 85% of the tablets use primarily use WiFi for connectivity meaning that OEMs need more diverse distribution channels. Operators who start to bundle multiple devices by single data plans and data buckets are going to see a better yield in this category.
We do expect multi-device or family data plans to start being introduced in the US market in 2011. Also, the $200-250 Android tablets will start to emerge during the second half of the year to broaden the choices for the consumers.
Turmoil in the OEM land
Another headline grabbing event in Q1 2011 was that of Microsoft’s partnership with Nokia. Nokia’s lack of a credible response to Apple and Android has left the company scrambling for survival. Nokia still dominates the unit sales but the domination of Apple and the Android OEMs has taken away significant profits and ecosystem mindshare. Industry is awaiting the first release of the Windows phone from Nokia which will have a lot riding on it. If the release of iPhone 5 coincides with this release, the Christmas selling season will be interesting.
The OEMs that have impressed the most are HTC and Samsung. The collapsed release cycles and the fierce pace of introduction of new devices have caught many of the traditional players unprepared. These things have a tendency of going in cycles so we expect the pendulum to swing again in the next 12-24 months.
There is a fight for the #3 spot and it is likely that Windows will fill that void. However, for developers, iOS and Android are the only platforms they need to worry about right now.
Verizon finally got its iPhone and as expected it didn’t make a big dent into the AT&T’s financials.
Platforms - Horizontal vs. Vertical
Over the past few quarters, we have seen a fascinating battle brew between the horizontal (Android and Windows) and the vertical (Apple, RIM, Nokia) device platforms. In the US, in the smartphone category, the horizontal platforms (primarily Android) has been gaining significant share since Q1 2010 and now have over 65% share of the new devices sold while the vertical platforms’ share has declined to 35%. However, the revenues and profits are still dominated by the vertical platforms.
What to expect in the coming months?
All this has setup an absolutely fascinating 2011 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the industry is going to evolve in the next decade in our Sept 12th mobile thought leadership summit – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. Hope you can join us.
As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.
Against this backdrop, the analysis of the Q1 2011 US wireless data market is:
· Sprint is on good comeback adding over million customers. Sprint extended its streak of positive net-adds to four quarters by adding over a million subs for the second straight time since Q1 2006.
· T-Mobile however continues to be sandwiched between the top three and the next three and is having a hard time adding postpaid subscribers.
Applications and Services
Your feedback is always welcome.
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2011. The next Global Wireless Data Market update will be issued in Jun 2011.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Announcing Mobile Future Forward 2011 May 4, 2011Posted by chetan in : Mobile Ecosystem, Mobile Future, Mobile Future Forward, Student Paper Contest, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment
I am really excited to announce or 2011 Mobile Future Forward. We have been working on it for a while and thanks to our wonderful partners and speakers, the program is starting to take shape. As usual, we are deeply focused on the understanding the underlying currents of the mobile ecosystem and how behavior, technologies, and business models will be morphed over time.
First of all, a big thanks to our current partners in this endeavor
We are also grateful to our fantastic thought-leaders who are eager to share and discuss the future of mobile. Current list of outstanding speakers includes:
- Abhi Ingle, VP, AT&T Wireless
- Amit Gupta, SVP and CTO, INQMobile
- Charlie Herrin, SVP - Technology, Comcast
- Danny Bowman, President, Sprint
- David Messenger, EVP, Head - Online/Mobile, American Express
- Erick Tseng, Head - Mobile, Facebook
- Erik Moreno, SVP, Fox
- Gibu Thomas, SVP - Mobile, Walmart
- Glenn Lurie, President, AT&T Wireless
- Hank Skorny, Chief Strategy Officer, Real Networks
- Jason McKenzie, President, HTC-Americas
- Jerry Batt, CIO, PulteGroup
- Ken Denman, CEO, Openwave
- Kris Rinne, SVP - Networks, AT&T Wireless
- Mike Mulica, President, Synchronoss Technologies
- Paul Palmieri, CEO, Millennial Media
- Prof. Cliff Nass, Human Computer Interaction, Stanford University
- Rob Glaser, Partner, Accel
- Sanjiv Ahuja, CEO, LightSquared
- Stephen Bye, CTO/VP - Technology & Strategy, Sprint
- Steve Elfman, President, Sprint
- Steve Mollenkopf, Group President, Qualcomm
- Suja Chandrasekaran, CIO, Timberland
- Will Hsu, Chief Product Officer, AT&T Interactive
We will keep you posted as we have more updates and news.
Mobile Future Forward Early bird registration is open now.
We are also launching our Global Student Paper Contest. If you are a student or you know of one in college, this is a great way to meet the movers and shakers of the industry. Last year’s contest was a runaway success and we are working hard to make this year’s memorable as well.
Thanks and hope to see you at the summit.US Wireless Market , add a comment
Our media partners at paidContent are putting together a pretty good mobile event on May 18th in NYC with speakers from Fox, MLB, Rovio, Time, and others. Friends of Chetan Sharma Consulting can avail a 15% discount by using the code MFPC15.