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US Wireless Market Update Q2 2011 August 18, 2011

Posted by chetan in : 3G, 4G, AORTA, Applications, Connected Devices, Enterprise Mobility, IP, IP Strategy, Intellectual Property, Mergers and Acquisitions, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Future Forward, Mobile Payments, Patent Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , trackback

 

 

http://www.chetansharma.com/usmarketupdateq22011.htm

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US Mobile Data Market Update Q1 2011

Summary

If Confucius was alive, he would have said, “We live in interesting times.” 2011 is proving to be the blockbuster deal year. After Microsoft/Nokia, AT&T/T-Mobile, Microsoft/Skype, Google made the $4*π billion play for Motorola and raised the stakes in the mobile ecosystem warfare. The ecosystem has entered into a phase that Sun Tzu and Chanakya would have loved to operate in.

In other news, the US wireless data market grew 5% Q/Q and 22% Y/Y to reach $16.2B in mobile data service revenues in Q2 2011 and is on course to increase Y/Y by 22% to $67B in 2011.

US unseated Philippines as the king of TXT messaging with almost 664 messages/sub/month. Philippines is seeing a sharp decline in per user messaging thanks to Facebook and app messaging.

Apple overtook Nokia as the dominant smartphone OEM though Samsung is right behind and is likely to overtake Apple later this year. However, Apple will continue to dominate profit share for the foreseeable future.

Smartphones continued to be sold at a brisk pace accounting for 55% of the devices sold in Q2 2011. Operators are averaging 70% of their postpaid sales as smartphones with Android dominating though iPhone leads in mindshare. The featurephone as a device species is on the verge of extinction. By Christmas, 90% of the US postpaid device sales could be smartphones.

Platform Moves

I am a Platform, therefore I am. Everything and everyone wants to be a platform that developers can build upon. The big 4 – Apple, Google, Facebook, and Amazon are having good success with frequent upgrades and rollouts. Consumers gravitate towards ecOSystems and the richness of the product offerings not specific OSes. OS is just a means to an end. However, the more developers you get excited about the platform, the more the ecosystem thrives and it becomes a virtuous circle. Companies left without the dancing partners need to ensure that they are not the one left standing when the music stops.

While a lot of attention has been focused on Apple and Google skirmishes, Amazon has been quietly tinkering with some interesting products – advertising enabled Kindle, the upcoming tablets and handsets, Android based appstores, mobile payments, distribution giant, cloud, and so on and so forth. Facebook with its nearly 800M friends can unleash several “billion dollar” features that can shake up different mobile microcosms.

In the meantime, Microsoft is trying to find a way to get back into the mobile market. Microsoft’s Xbox franchise gives it something unique and compelling. Their success might depend on how well they are able to integrate and tell a compelling story to the consumers. The upcoming Christmas quarter will be a critical test. RIM and HP don’t have much of an ecosystem to matter in the larger scheme of things. They can be successful in their own ways but attaining a leadership position remains significantly challenging.

AT&T/T-Mobile merger

AT&T’s proposed merger of T-Mobile continued to keep the regulators busy for the quarter. Earlier this year, 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 analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets. Our research shows that an effective equilibrium point for the top three market share in a given country to be around 46%:29%:18% respectively. We expect that once all is said and done, we will end up in the vicinity of this equation.

Patent Warfare

On the eve of Android launch, I mentioned to one of the journalist to watch for some IP fireworks in about 3 years. For those of us who have been deeply involved in the mobile IP space, the IP events of 2011 have been largely predictable though the valuations have gone through the roof.

Over the last 15 years, I have seen patents and IP in the mobile space from all angles from authoring patents to testifying in ITC cases and pretty much everything in between. In the last six months, patents have become an essential tool for competitive strategy in the mobile device space. See our analysis on the major players with the number of granted patents in Europe and US (slide 13).

To paraphrase the oracle of Omaha, “Only when the litigation tide comes in do you discover who’s been swimming without protection.”

Mobile is changing the way we spend

It is very clear that mobile will be at the center of human evolution for years to come. Mobile collapses time and distance and as such impacts every facet of our lives. While we have come to know the mobile phone as a communications device, their role in our daily lives has been expanding. From checking emails, paying for tickets, sending money transfers, taking pictures of your kids, watching soccer World Cup live, checking commodity pricing, to emergency response to mHealth (mobile Health), mobile devices have become an essential tool to help us navigate our day.

Mobile also plays a key role in how we go about the most basic transaction in a given day that keeps the economy humming – spend. We discussed this and more in the paper “How Mobile Will Change The Way We Spend”  that was released earlier this month.

What to expect in the coming months?

All this has setup an absolutely fascinating rest of the year in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. We are likely to see a few more blockbuster marriage proposals before the year is out.

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 Q2 2011 US wireless data market is:

Service Revenues

ARPU

Subscribers

Applications and Services

Handsets

Mobile Data Growth

Global Update

Mobile Future Forward

We will be discussing the global mobile ecosystem – the challenges and the opportunities at our annual mobile thought-leadership summit – Mobile Future Forward - brought to you in partnership with our terrific partners – Qualcomm, Millennial Media, Real Networks, AT&T Interactive, Synchronoss Technologies, OpenMarket, Ericsson, and Openwave. Hope to see you in Seattle on Sept 12th.

Some of the distinguished guests include:

Abhi Ingle, VP, AT&T; Biju Nair, Chief Strategy Officer, Synchronoss Technologies; Bob Borchers, Partner, Opus Capital; Bobby Morrison, President – PNW, Verizon Wireless; Braxton Woodham, Head of Product Development, AVOS; Danny Bowman, President, Sprint; David Messenger, EVP, Head of Online/Mobile, American Express; Gibu Thomas, SVP – Mobile Walmart; Erik Moremo, SVP, FOX; Glenn Lurie, President, Emerging Devices, Resale & Partnerships, AT&T Mobility; Hank Skorny, CSO, Real Networks; Jana Messerschmidt, Sr. Director, Twitter; Jay Emmet, GM, OpenMarket; Jason MacKenzie, President, Global Sales and Marketing, HTC; Jerry Batt, CIO, PulteGroup; Ken Denman, CEO, Openwave; Ken Wirth, President, Alcatel-Lucent Wireless; Kris Rinne, SVP - Networks/Architecture, AT&T; Mark Rolston, Chief Creative Officer, Frog Design; Manoj Leelanivas, EVP & GM, Juniper Networks; Michael Wolf, VP, GigaOM; Mikael Back, VP – Products, Ericsson; Naoki Aoyagi, CEO, GREE USA; Paul Palmieri, CEO, Millennial Media; Rob Glaser, Partner, Accel; Sanjiv Ahuja, CEO, LightSquared; Stephen Bye, CTO, Sprint; Steve Mollenkopf, EVP/Group President, Qualcomm; Suja Chandrasekaran, CIO, Timberland; Will Hsu, CPO, AT&T Interactive.

More information at http://www.mobilefutureforward.com

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Nov 2011. The next Global Wireless Data Market update will be issued in Apr 2012.

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

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