The ABCs of SMB Transformation: Apps, Broadband, and the Cloud
- A collaboration between Chetan Sharma Consulting and AT&T
In 2013, the US mobile data revenues will exceed $90 billion accounting for over 165% growth in the last 5 years. This makes US the biggest market for mobile data solutions and services. The smartphone penetration in the US went past 50% by mid-2012. The number of applications available to consumer has quadrupled in just the last two years. While the growth in the smartphone segment has been quite impressive, the tablet adoption rate has been the highest in the consumer electronics history. The advent of mobile broadband, powerful computing devices, reliable cloud services and applications have changed the computing landscape forever.
At the same time, the Consumerization of IT is changing the face of the enterprise architecture as well. This is felt more acutely in the small-and-medium business (SMB) segment. US is also the biggest enterprise market in the world and the SMB segment represents the more agile and technology-savvy of the ecosystem. In fact, we think it is a leading indicator of how technologies are going to be adopted in the enterprise ecosystem, what trends will prove to be disruptive, which vertical segments will embrace efficiency, and most importantly, how should we think about the ever-changing landscape as we look towards rest of the decade.
Small businesses are at the heart of the US economic engine. They represent roughly 45% of the non-farm GDP. Every administration, every president focuses on small business growth and job creation. Given the importance of small businesses to the economy, it is worthwhile to look at how their technology needs are changing. Additionally, it is important to understand how they are adopting technology and the impact it is having on their productivity, competitiveness, and efficiency. The technology adoption is also putting some of the traditional industry segments at risk while creating several new growth areas.
To understand the impact of mobile broadband, devices, and cloud applications, we conducted a survey of eighty SMB companies of different shapes and sizes across the US serving different verticals constituting over ten thousand employees. We also looked at the data from over twelve thousand companies in the SMB segment and over twenty thousand larger enterprises. Additionally, we conducted a series of interviews to better understand the motivations, requirements, and feedback of these companies. These companies have been in business for twenty years on average with over two years of experience with mobile data solutions. By understanding how they use and benefit from mobile data solutions, we can better identify the course of enterprise mobility in the US and around the world.
Some interesting findings:
· Small and medium businesses are leading indicators of technology adoption. As referenced in this paper, SMB smartphone and tablet penetration is more than 90 and 65 percent respectively; whereas national smartphone and tablet penetration is roughly 55 and 22 percent.
· Mobile First to Mobile Only. Last year, we proposed that we will start moving from mobile first to mobile only economy. We said that we are approaching a pivot point wherein the mobile first doctrine is going to move to mobile only. We are starting to see strong evidence of that shift. In our survey, roughly 30% of the SMBs are transitioning from desktops/notebooks to smartphones/tablets. Business software and solutions are being transformed by the use of smartphones and tablets. With this shift, we’ve seen the emergence of a generation of app developers focusing primarily on the mobile app platform.
· Mobile broadband, cloud, and apps are providing real and tangible ROI. The SMBs in the survey saw an average savings of 40 minutes per worker per day, which translates into significant impact on profits over the course of the year.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this paper are our clients.
US Mobile Market Update Q4 2012 and full year 2012 March 13, 2013Posted by chetan in : 3G, 4G, 4th Wave, AORTA, Chetan Sharma Consulting, Intellectual Property, Mobile Cloud Computing, Mobile Commerce, Mobile Future Forward, Patent Strategy, Smart Phones, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment
The US mobile data market grew 3% Q/Q and 15% Y/Y to cross $20B for the first time in Q412. Data is now almost 44% of the US mobile industry service revenues and as we had forecasted a few years back, the cross-over point of 50% might occur later this year. For the year 2012, the market ended up with $79 Billion in data revenues much higher than any other market. The overall mobile services revenue were $182 Billion. For the year 2013, we are expecting $90 Billion in mobile data service revenues for the US market.
For the year, the market added 9 million new connections, a decline of 56% from 2012. The postpaid category suffered a 97% decline despite Verizon and AT&T collectively adding 6.3M postpaid subs. Sprint and T-Mobile collectively lost over 3.3M postpaid subs in 2012.
The last year T-Mobile had Y/Y positive postpaid net-adds growth, George Bush was still the president, Facebook was in diapers, and Pinterest wasn’t even born yet. T-Mobile suffered its tenth straight quarter of postpaid declines. Cumulatively, in the last fifteen quarters, while Verizon and AT&T have added 15M and 8M postpaid subs respectively, Sprint and T-Mobile have lost approximately 4.7M each. Once Nextel is sunsetted for good (it is down to 2.1M subs), we can expect a pick-up of net-postpaid subs at Sprint.
2012 saw a couple of block-buster operator M&As that took many in the industry by surprise. T-Mobile found a soul mate in MetroPCS while Softbank showed up at the altar for Sprint. T-Mobile is adopting the challenger role while Sprint that of a disruptor.
As we mentioned in our previous update, smartphones are now past the 50% mark in the US and continue to sell at a brisk pace accounting for over 90% of the devices sold in Q4 2012. Apple led the smartphone sales amongst the top 4 operators with 51% share for the year. While the US penetration of smartphones is over 50% as we reported last year, the 50% of the sub base is concentrated in only 30% of the households thus leaving plenty of growth left in the marketplace.
In terms of Y/Y growth, Connected Devices segment grew 12%, Wholesale 9%, Prepaid 6%, and Postpaid was flat. The connected devices segment only grew 1% in Q4 2012 Q/Q.
Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.
Race for the 3rd ecosystem
2013 might help define the 3rd ecosystem or at least separate wannabes from the true contenders. While iOS and Android duel out on the top (with iOS ahead in the US market), there is fight for the distant #3. Windows made a grand entry in Q4 but the sales have disappointed. Blackberry is hoping its Q/Z10s will do the trick and help revive its fortune or at least boost the asking price.
Last quarter, Microsoft and its partners launched a worldwide campaign for a chance to compete. It went from a dominant position to virtually zilch coinciding with the remarkable ascend of iOS and Android. To make any device sell – one needs good and competitive device, distribution channel and marketing muscle, and brand loyalty. I think Windows 8 is genuinely good, is different, and for the first time can stand with its peers (obviously it needs to build a robust apps portfolio and a stronger developer ecosystem).
In the past, while operators, OEMs, and Microsoft announced significant advertising spend, it had almost negligible impact on sales. The actual $ amount spend was tepid, operators didn’t want to be guinea pigs just to prop up a third ecosystem. With Windows 8, things might get better. We can see many more awareness campaigns, more OEMs are launching some quality devices, and operators are warming up to the idea as well. The brand loyalty index for Microsoft Mobile is fairly low and it will take a heavy lift and a few billion dollars of advertising spend to move the needle. The good news is that the devices are shipping at all price points.
Microsoft also made a splash with the first computing device in its history – Surface. Both got a mixed reception from the market. In the US, Nokia is selling 80% of the windows volume making the future of the two companies inextricably tied together. Can the windows ecosystem thrive without Samsung’s support?
Additionally, there has been movement with other OSs like Firefox, Tizen, Jolla, and Ubuntu.
Apple’s dominated 2012 – what’s next?
For 2012, Apple dominated the device sales accounting for 51% of the smartphone sales amongst the top four mobile operators. In Q4, its share rose to 59% of the sales on the back of a successful iPhone 5 launch. AT&T sold a record 8.6M units followed by Verizon’s 6.2M. For the year, AT&T sold a record 21.3M iPhones. So, while globally, Android dominates iOS more than 2:1, the US subsidy model has helped Apple keep its lead from Android. But, will it last? Enough ink has been spilt to answer that question. Undoubtedly, Samsung and others have caught up Apple on device specs and ease of use, even created new categories that Apple didn’t foresee, but, Apple is still the player to beat in 2013. Apple has clearly exposed its Achilles heel – software and services. It will take some heavy lifting to gain back confidence and momentum.
The rise of Samsung and its domination of the Android ecosystem was clearly one of the most captivating stories of 2012. Samsung is making more revenue from Android than rest of the ecosystem put together. Samsung is firing on all cylinders, works better with its distribution partners, and has the bank balance to fight toe-to-toe for its share of the market. It is also in the unique position of having good perch in all the three major screens – mobile, laptops, and TV. But, software and services is also a weak spot for the company. How quickly it beefs up its offerings and how ambitious it is in providing end-to-end solutions will determine its competitiveness in the next 24 months.
Despite setbacks in the IP battles, Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in 2012. However, Apple dominates both the smartphone revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 95% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs.
The Fourth Wave has arrived – the shift towards services
If you attended the AT&T developer summit and Verizon keynote at CES this January, you might have noticed the subtle shift from devices/access to services/solutions. In our paper on the topic “Operator’s Dilemma (and opportunity): The Fourth Wave”, I proposed that we need a new framework to think about the next generation of revenue opportunities. The fourth curve opportunities are massive but require a different skill set and strategic approach than the past three curves. It is being widely adopted in the operator community around the world and some operators have started to break out the 4th wave revenues in their financials. We will have more discussion about how things are shaping on the fourth wave in future research papers.
The Patent Battles
In 2012, Samsung had a strong showing not only in the market place but also in the patents area. It edged past Nokia to become the overall mobile patents leader in the industry. IBM and Microsoft also improved their rankings. Nokia, Ericsson, and Alcatel-Lucent slid in rankings. Motorola dropped out of top 10. Not surprisingly, companies who have been around for a while especially in the infrastructure and the platform space lead the overall mobile patents. Samsung has been fiercely building its patent portfolio in both Europe and the US and the efforts have paid off as it has built a significant portfolio and a formidable lead that is likely to serve it well in the coming years.
A more startling observation is the mobile patent grants as a percentage of the total patent grants in a given year have risen significantly for the US market indicating the importance innovators attach to mobile in their business. In the US, one out of every five patent granted in 2012 was related to mobile. Less than a decade ago, this number was less than 10%. The European market has seen lower growth relative to the US market. Roughly one out of every ten patents granted in Europe are mobile related.
We will have a more detailed analysis of the patent landscape of the mobile industry later this month.
The vanishing Tier-2s
The so called Tier-2s in the US market are practically done. For the year 2012, the top 4 Tier-2 operators suffered a drastic 77% decline in net-adds. Combined they added a measly 366K subscriptions. One of the reasons is that the tier-1s are now squarely focused on the prepaid market as a growth engine. Sprint has had a long history in the segment with brands like Boost and Virgin. T-Mobile’s has retooled itself to go after the prepaid and wholesale opportunities. Additionally, the top 2 have also been launching attractive plans for the prepaid segment. That’s why the top 4 added ten times the prepaid subs compared to the next 4 operators. With Metro gone and Clearwire on the blocks, we expect the Tier-2s to lose their relevancy in the market.
Operator M&A – The Rule of Three Strikes Back
Just when you thought the prospects of any major operator M&A slowed down due to the impending US election, T-Mobile announced its acquisition of Metro PCS giving it more spectrum, access to public markets, a good chunk of subscriber base to become a more competitive number 4. Sprint and Softbank followed the announcement with an absolutely brilliant maneuver. It provides Sprint access to capital, economies of scale, and becomes a much stronger number 3, and a global telecom player with scale and ambition. The T-Mobile-Metro merger has been approved by the FCC and we expect Sprint merger to go through as well.
There have been some interesting twists and turns but as we have stated before, the US market competitive equilibrium will be complete when Sprint and T-Mobile get together at some point down the road. As outlined in our research paper on the subject, market forces find their way to get to 3 dominant operators that compete for attention and revenues, rest becomes noise. While the regulators might scoff at the idea, the inevitable market forces will find their way around.
Surface, mini, and the tablet market
Apple launched the iPad mini in 2012 for some of the same principles that Microsoft launched Surface. It is better to be cannibalized by self than by the enemy. Microsoft saw the notebook market shrink and needed a product to stem the bleeding while Apple saw Amazon and Google attack the bottom tier with a different model that poses a credible threat. Tablet market is indeed fundamentally altering computing in many ways. The changing landscape of computing also has impact on the ecosystem and the application development environment. Developers flock to platform reach, ease of access to the marketplace, and the basic economics of a viable business model. Windows as a percentage of computing platforms is shrinking drastically which threats not only the platform but also Microsoft’s other software franchises. Surface is classic blocking and tackling to provide a jolt to the shifting ecosystem. Surface RT was an expected disaster but Surface Pro will see takers in the corporate world. With iPad mini, Apple is attempting to lock the mid-top tier of the tablet market and daring its competitors to just play in the bottom tier that leaves no profit on the hardware and revenue stream from services for a very select few.
2012 – US Highlights and Milestones
2012 provided enough drama and suspense for the year, good enough for a hit Spielberg flick. Here were some of the highlights from the US market:
· Samsung went past Nokia to become the world’s biggest OEM by unit volume
· Qualcomm eclipsed Intel in market cap marking another milestone in the progression of the mobile ecosystem.
· Verizon sold 29M smartphones (with half of them being LTE) and AT&T sold 10.2M in Q4 – all US records.
· Shared data plans were introduced by Verizon and AT&T which have been viewed by the consumers favorably.
· The focus of operator metrics is changing from ARPU to ARPA to AMPA.
· After dealing with the AT&T-T-Mobile merger in 2011, the regulators were back to work with the T-Mobile-MetroPCS and Softbank-Sprint mergers.
· Verizon and AT&T Wireless became the top two mobile operators globally by mobile data revenues.
· US market saw its first decline in both messaging revenues and volumes.
· Smartphones penetration eclipsed the 50% mark.
· Over 42M tablets were sold in the US with more than half being iPads. Globally, Apple went past 100M iPads in cumulative sales making it the fastest computing platform.
· mCommerce started to eclipse eCommerce for some companies.
· Amazon made a splash with its Kindle line of tablets, the sales have been steady. Google’s Nexus devices also got good traction.
· The average number of connected devices per household was over five.
What to expect in the coming months?
All this has setup an absolutely fascinating 2013 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. Players who firmly attach themselves to the 4th wave will reap benefits while the ones who miss it will see their fortunes dwindle. We are gearing up for our annual Mobile Brainstorm Summit – Mobile Future Forward on Sept 10th, hope you can join us. Details to come.
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 Q4 2012 and full year 2012 US wireless data market is:
- The US Wireless data service revenues grew 3% Q/Q and 17% Y/Y to over $20B in Q4 2012 becoming the first country to have a $20B quarter. For the year 2013, we are forecasting that mobile data revenues in the US market will reach $90 billion.
- Verizon and AT&T dominated the quarter accounting for 69% of the mobile data services revenue and had 66% of the subscription base.
- Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q4 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q4 2012.
- For the year, Verizon aggregated an astonishing $28.2 Billion haul from mobile data with AT&T close behind at almost $26 Billion. The mobile data business for the US was around $1 Billion a decade ago.
- The Overall ARPU declined by $0.15. Average voice ARPU declined by $0.64 while the average data ARPU grew by $0.48 or 2% Q/Q.
- The average industry percentage contribution of data to overall ARPU is now at the 44% mark in Q4 2012 and is likely to exceed the 50% in 2013. All the top three US operators are over the 45% mark. (For reference, all three major Japanese operators are now over the 60% mark).
- The US operators added 2.3M postpaid subs and approximately 3M total. It was the lowest net-adds Q4 quarter in the US mobile history (barring the early days of tepid growth)
- T-Mobile’s postpaid woes continued for the tenth straight quarter.
- Verizon led the market with 2.2 M net-adds accounting for 73% of the market’s net-adds. It was followed by AT&T at 1.1M, and T-Mobile at 61K. Nextel continues to drag Sprint’s postpaid additions. Sprint is expecting the transition from Nextel to Sprint to be complete in the next few months.
- For the last three years, at AT&T, the connected device growth had exceeded that in the postpaid segment. In Q4 12, postpaid share increased significantly as the connected device growth slowed primarily due to shared data plans and tablet users becoming postpaid users.
Applications and Services
- The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
- The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.
- Q4 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months.
- Smartphones continued to be sold at a brisk pace accounting to almost 84% of the devices sold in Q4 2012.
- iPhone dominated smartphone sales for Q4 as well as the full year of 2012. In Q4, iPhone accounted for 59% of the total smartphone sales at the top four operators. For the year, its tally was over 51%.
- At the end of 2012, Samsung now leads in unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
- While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows phone in Q4 2012 but the sales in the US market were disappointing for just over 1M in unit sales for the full year.
- Apple’s iPhone sales almost doubled in Q4 from Q3 but the company faces significant innovation and perception challenges as it prepares for its product launches in 2013.
- AT&T continues to dominate the connected devices segment with over 47% market share.
- Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 21.6M making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile is also ramping up its LTE deployment. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 50% of its total data traffic is on the LTE network now.
- There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 50% of the iPhones in the US.
Mobile Data Growth
- The smartphone data consumption at some operators is averaging close to 1 GB/mo. Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
- While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.
- Samsung was the leader in the mobile patents granted in 2012 in the US and that propelled the company to the top ranking in overall patents (1996-2013). Samsung was followed by IBM, Sony, Microsoft, RIM, LG, Qualcomm, Ericsson, Panasonic, Alcatel-Lucent, and Nokia for the top 10 companies by mobile patent grants in 2012.
- The top 5 categories for patents grants in the US for 2012 were Telecommunications, Digital Multiplexing, Digital Processing – Data Transfer, Digital Processing – Financial, and Digital Processing – Databases.
- The top 5 filers of mobile patents in the US were IBM, Microsoft, Samsung, Qualcomm, and Sony. Apple made it to top 10 for the first time on the strength of its patents filed in the computer graphics processing category.
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 May 2013. The next Global Wireless Data Market update will be issued in Apr 2013.
Disclaimer: Some of the companies mentioned in this research note are our clients.
Mobile World Congress 2013 Recap March 6, 2013Posted by chetan in : 4G, AORTA, Chetan Sharma Consulting, European Wireless Market, LTE, Mobile World Congress, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 6 comments
“Welcome to Spain, Thank you for your business,” remarked the immigration officer and thus started my yearly pilgrimage to the grand slam of mobile – The Mobile World Congress 2013. It is truly a global event with participants from virtually all countries looking to do business, learn a thing or two, and ponder over what the year will bring forth. The show moved to a new venue which made the logistics work much better for attendees and exhibitors but the venue lost its charm and character. We used this opportunity to feel the pulse of the industry and understand where things are headed. This note summarizes our observations from the show.
While there was no blockbuster announcements or products that will knock your socks off, several interesting trends emerged that will keep the industry exciting to watch in 2013.
The perennial search for the #3 ecosystem continues: Windows sales have disappointed thus far, Blackberry has launched new devices but hasn’t quite hit the mark. So, while consumers seem perfectly happy with iOS and Android, industry’s desire to have a third robust ecosystem is palpable. The biggest announcement in that regard was from Firefox OS and in a matter of 12 months, it has not only forged a strong alliance with operators, it is actually getting ready to ship phones. It is going to be targeting the low-end of the market which is a smart strategy but a lot depends on the range of price points of the devices and how quickly it can attract the developer ecosystem. Given that Android device price points are hovering around $50 and it is a mature ecosystem with great developer reach and support, it will be challenging to convince consumers to go the Firefox route. However, if the price points are attractive enough, with the distribution power of some key operators, we could see some early traction. Ubuntu, Jolla, and Tizen were also vying for attention.
LTE everywhere: LTE deployment is growing at a very fast pace. The US market is ahead of the curve with almost national footprint from Verizon followed by substantial coverage from the remaining three operators. Elsewhere, operators are gearing for deployment once some of the spectrum issues/auctions are sorted out.
The 4th Wave has arrived: Last year, we put forth a framework for future mobile industry revenues in our 4th wave paper. Since then, the framework has been embraced by many leading operators around the globe. It was good to hear operators talking more about services rather than data plans. Several areas were discussed by the leading tier 1 operators such as health, retail, education, cloud, M2M, automobile, enterprise, security, connected living, home security, commerce, identity and privacy, big data and analytics. Operators who are able to steer their giant organizations to focus on services will be able to survive the commoditization of access. We will have more say on the subject later this year.
Yo OTT, luego existo: which is Spanish for “I OTT, therefore I am” To be a player in the digital world, one has to be an OTT provider for communications and beyond. The interesting dichotomy of the communications OTT business is that very few will survive. The end state of a majority of them (if not all) is either an M&A with a telco or an Internet player or they run out of cash. The new breed of OTTs has forced the lumbering giants to think different about their customers and their markets.
Mobile Broadband, Cloud, and Apps: The troika of broadband network access, the cloud infrastructure and the applications are creating a sea change in the enterprise, especially the SMB segment. It is also changing how developers see the enterprise segment as the opportunity migrates from windows to iOS and Android. We conducted some in-depth research in the space and will have more to share later this year. Our Mobile Breakfast Series later this month will be dealing with the topic of Cloud and SDN in more detail.
Redefining Monopoly: The mobile and internet worlds have collided but the regulatory regimes haven’t changed. European operators seemed to indicate that it is time to reassess what a monopoly really means and the rules should apply to all layers of the ecosystem stack and that means devices and OSs as well.
Device Launches: All major OEMs are following the Apple playbook as far as the device announcements are concerned. To garner media attention, it is best to announce the “hero” devices away from major shows. Just like CES earlier this year, MWC lacked any big device announcements. Nokia announced mid-low tier devices to expand its portfolio that will help it in unit sales. ZTE, Huawei, LG, Asus, NEC, Sony, HTC, HP, Asus, Acer, Lenovo all had new devices to display but media’s eyes are set on Samsung’s Galaxy release later this month.
Local OEMs: Traditional OEMs are facing some healthy competition from new entrants in local markets. Players like Fly and Yotaphone in Russia are giving the veterans a run for their money. By both innovating with new features but also by customizing the devices for the local market (e.g. bigger battery that last 3 days), they are creating their own niche. After gaining good market share in Russia, Fly is expanding into other markets.
Connected Cars: When the biggest operator by revenue announces a deal with the biggest car manufacturer, people take notice. GM and AT&T announced LTE cars by 2015 which will pretty much force the entire auto industry to provide broadband connectivity in a hurry. However, the auto industry has misplaced expectations on apps and any incremental revenue they might be able to harness from them.
Samsung Knox, Blackberry – can you hear me now: Android is probably the most insecure mobile platform out there. Blackberry has long been the gold standard, iOS has improved, Windows has security features built in but security has always been a step-child of Android. Samsung’s Knox announcement elevates Samsung’s role in the mobile enterprise and to some extent takes over some of the development capability of Android that are squarely aimed at Blackberry. The container security feature set with MDM integration is well thought out and opens up the mobile enterprise market for Samsung especially in North America and Western Europe.
Spectrum and Regulations: While spectrum was a universal issue with the operators, more is better, European operators were particularly vocal about the state of the regulatory affairs on the continent. Regulators, they complained, are killing the industry by cutting of revenue opportunities, are fostering too much competition, too much taxation, and too involved in the operations of the operators. This is leading to declining revenues and turmoil at the operators. There might be some unintended consequences of weakening operators and regulators will have to grapple with some interesting questions that a free market economy will pose in the coming days.
TU Go – Take your phone number everywhere: In our opinion, Telefonica has done the best job of dealing with the digital world in putting forth an org structure that can crank out applications and services at Internet speed. TU Go is a new service (launched in UK) that allows users to take their phone number to any supported device and use it for calling and texting – number in the cloud at its best.
NFC is dead, Long Live NFC: Vodafone CEO’s frank admission that he doesn’t expect to make much money from NFC gave the audience a bit of a pause. Several NFC initiatives have floundered without clear goals or vision. Instead of working together, the industry has remained fragmented and thus the lack of scale has hampered progress. For too long, the industry has focused on payments but the opportunity lies in the engagement with the customer. For better or for worse, the financial industry has sequestered its commission for the foreseeable future. We saw some clever NFC implementations to drive consumer engagement and commerce in retail environments, primarily in Europe.
Consolidation looms: The question that is on everyone’s mind but was hardly discussed at the show was the coming onslaught of consolidation at virtually all layers of the ecosystem.
Developing Markets: Connecting the next billion was a recurring theme. The smartphone penetration in the developing world is in the single digits. More than that, introducing consumers to a computing platform for the first time is an exciting opportunity. Creating services that are tailored to the local environment remains an opportunity that can have a profound impact on society. Our own work with the UN/ITU has shown the transformative role of mobile in almost every walk of life. The device unit growth is coming from the developing markets and as they get connected, the world becomes flatter, and the competitive dynamics in a globalizing world will create for some interesting policy and political battles.
M2M and Internet of Things: As we wrote in our book “Wireless Data Services” back in 2004, the connectivity is becoming pervasive. The module costs are coming down fast and the desire to measure and track every number that is important in our lives is creating a massive opportunity. However, privacy, battery life, environment, security remain key issues that need to be tackled.
Identity as a business opportunity: In a digital world where access to information and resources depend on verification of your identity, the guards and keepers of the identity information have a big role to play. As such, “identity” management is emerging as an opportunity that can be monetized. In the online world, Facebook has become the dominant way to integrate apps and services. In the mobile world, operators can play a significant role in authentication and verification. Will the two worlds collide? Fasten your seat belts.
The Post PC world: As an experiment, for the MWC trip, I carried just the Nexus 7 tablet and an iPhone. I felt liberated. In the past, for day trips, I have relied just on iPad/iPhone for taking care of my computing needs. For this trip, I wanted something that I can carry in jacket pocket. Nexus was good enough for taking simple notes, email, browser and even some phone calls. I could easily switch back-and-forth between the tablet and the phone, and the combined battery life lasted the whole day.
· Google’s absence from the show puzzled many
· The enthusiasm for RCS/Joyn seems to have subsided as reality sets in
· Nokia is broadening the reach of its HERE platform to other operating systems
· AT&T/Ericsson showed WebRTC demo
· Facebook announced messaging partnerships with operators in developing countries
· Small cells remained a hot topic though seen more of a compliment for the macro network
· Signaling traffic continues to grow at a faster pace than the data traffic as more LTE devices come on the network
· Qualcomm launched RF360 solution to deal with frequency band fragmentation which is serious problem for LTE roaming
· Yotaphone with its dual screen (front and back) and NEC Medias with its stacked up screens had something fresh to offer in the devices space when 99% of the devices look the same
· Virtualization is the new black in mobile networks
Best booth: Ericsson’s networked world theme was well thought-out and provided a unique exploratory view of the opportunities and technology evolution. A close second – Connected City.
Best party: There won’t be an MWC without the bevy of parties every night. Qualcomm again stole the show with the jam-packed confluence of the mobile elite.
2013 Mobile Industry Predictions Survey January 2, 2013Posted by chetan in : Chetan Sharma Consulting, Connected Devices, European Wireless Market, IP Strategy, Mobile Commerce, Mobile Ecosystem, Mobile Predictions, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2013. My thanks to all who participated in our 2013 Mobile Predictions Annual Survey. It gives our community an insider’s view of the trends and predictions for the New Year.
2012 was a terrific year for the mobile industry. Mobile data continued to drive most of the mobile growth around the world. Mobile also started impacting every major vertical industry around the globe. In fact, mobile has become so ingrained in the fabric of business productivity and social interaction that it is not longer the new growth engine, it has become the engine.
The competitive dynamics stayed quite vibrant in 2012. We saw epic battles in the markets as well as in the courts. 2012 also saw the PC value chain struggling for relevance while the smartphones and tablets unit sales captured all the attention and headlines.
As we peer into 2013, we will see the total number of cellular subscriptions eclipsing humans on the planet. The connected device made steady progress. Anything that should be connected is being connected - creating a web of new opportunities and challenges.
LTE has become the fastest deployed cellular technology in the approximately 35 year history of the industry. Broadband combined with connected devices and applications are changing the way we live, we interact with others, do business, and consume information.
The European economic crisis impacted many players especially the large telcos, making the transition to digital ever more urgent. As voice and messaging revenue curves decline and access revenue approaches its high mark in the next few years, investment in the fourth curve becomes critical for all players.
Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what’s to come. Executives, developers, and insiders (n=200) from leading mobile companies and startups from across the value chain and from around the world participated to help see what 2013 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution. The survey provides a view of how they see the upcoming year for mobile.
30 names were randomly drawn for the limited edition of the Mobile Future Forward 2012 book. The winners are:
- Ryan Carney, UX, Gfk
- Wes Biggs, CTO, Adfonic
- Volker Hirsch, Head of BD, RIM
- Bobby Morrison, President, Verizon Wireless
- Chris Walls, Strategy, Huawei
- Von Cameron, EVP, Smith Micro
- Sami Makelainen, Manager, Telstra
- Martin Fichter, VP, HTC
- Jeff Hasen, CMO, Hipcricket
- Paul Brody, VP, IBM
- Michael Mullany, CEO, Sencha
- Mick Welch, Manager, Nokia
- Jana Messerschmidt, VP, Twitter
- Akio Orii, SVP, Toyota
- Gina Bovara, Software Services, Intel
- Mark Brill, Lead Partner, Brand Emotivity
- Stuart Saunders, CEO, Mobile Defense
- Tony Greco, Director, ZTE
- Venu Vasudevan, Sr. Director, Motorola
- Elliott Hamilton, Sr. Director, TeleCommunication Systems
- Biljana Jovicic, VAS, Digitel
- Robin Jewsbury, Cofounder, Promoht
- Julie Dey, VP, Rootmetrics
- Pat Nunally, VP, Upaid
- Paul Upham, Director, Welldoc
- Sagar Tamang, Director, Nielsen
- Andrew Meadors, Engineer, Cisco
- Nikao Yang, SVP, Adcolony
- Pelle Larsen, Director, SingTel
- Kelly Amsbry, Sr. Planner, Microsoft
- Elisabeth Rainge, Head – Strategy, NSN
Thanks again to everyone who contributed. We will be calling on you again next year.
Be well, do good work, stay in touch, and stay away from Triskaidekaphobiacs.
Thanks and with warm wishes,
What was most newsworthy in Mobile 2012?
2012 was a spectacular year for smartphones. Smartphones in most western nations are now over 80% of the devices sold every quarter. China will soon become the biggest market by unit volume and the rest of the world is catching up fast as we see sub-$50 Android devices flood the market. Apple vs. Samsung has become akin to Lakers vs. Celtics of the eighties or the India vs. Pakistan rivalry in cricket. The passion and intense competition between the two super powers was clearly the headline of the year. That pushed the Android vs. iOS tussles as the subheading for 2012. As we enter into 2013, the legacy computing aka PC players will need to reinvent themselves or expect substantial decline in their fortunes.
The role of mobile data in industry’s growth has been cemented by the insatiable appetite for higher speeds, more apps, and social interaction and is expected to continue at a feverish pace as LTE roles out around the world and the developing world catches up. We are likely to see the Apple and Google rivalry intensify. One is a master of hardware and the other of software. Both have their Achilles heel and much is at stake in the coming year. Many expect Microsoft’s Windows to make progress to lay claim to become a viable 3rd ecosystem. 2013 will try to answer that question.
Who will be the most open player in the mobile ecosystem in 2013?
Who are the top 4 important players in the mobile ecosystem?
Many in the industry talk about Apple, Google, Facebook, and Amazon as the most important platform players in the business today. However, when it comes to mobile, in addition to the defacto top-two, our survey picks Samsung as number three by a good margin. Samsung has become a strong player in the digital ecosystem that commands attention and respect. The top 10-15 global operators play a strong role in the mobile ecosystem and collectively edged out Amazon and others for the number four spot. Facebook and Microsoft while strong in the desktop world have a lot to prove to be considered a top tier player in mobile.
What will be the breakthrough categories in mobile in 2013?
Our industry seems fascinated with the potential of mobile payments and voted it to be the top mobile applications and services category for 2013. Given the importance of Cloud in all apps/services, it is no surprise that it is part of the top 2. Mobile Commerce, Big data, and connected devices rounded up the top 5.
What will be the most popular consumer mobile applications in 2013?
There are regional variations when it comes to the popularity and revenue potential of mobile applications. Messaging, mobile commerce, and social dominate the developing world while location based services replaces messaging in the developed world as the key mobile application. Mobile health and gaming made a strong show in both regions.
Which will be the most dominant tablet platform in 2 years?
So far, iOS has dominated the tablet landscape. With iPad, Apple has effectively carved out the mid-high tier of the tablet space. Android players are losing or barely making any revenue from this device category. Windows tablets are priced so high that it is trying to compete with laptops rather than the tablets. Our panel expects Android to catch-up in unit sales and iOS to dominate the revenues by good margins. Windows is likely to stay a marginal player.
Who will make the biggest mobile acquisition in 2013?
Microsoft and Google both have big cash balanced to make some sizable acquisitions in 2013. Microsoft lacks traction and attention and will try to make a move but which player can give them an edge? Apple also needs to beef up its software operations significantly but doesn’t have the history of big acquisitions. Operators are also looking to become OTT players themselves and might make moves to shore up their strategic interests. Many participants think that Nokia and RIM have seen their final year as an independent entity.
How will the "Apps vs. Mobile Web" debate shape up in 2013?
In 2012, many expected the resurgence of “mobile web” but it hasn’t panned out that way. Google has doubled up on apps, Facebook realized HTML5 isn’t going to cut it, and the expectations pendulum swung back to the apps and might stay there for 2013.
Who will dominate the mobile payment/commerce space?
Three years ago, mobile payments/commerce seemed to be the “blue ocean” opportunity but financial guys have firmly protected their turf, at least for now. Hopes were high for operator led initiatives but the enthusiasm has tapered off. Startups like Square are doing more to disrupt the payments space than some of the established players. The only exception is PayPal, which has so far been able to create good distance with the competitors. Microsoft has surprisingly been absent in a critical space.
Which solutions will gain the most traction for managing mobile data broadband consumption?
4G, mobile offload, and tiered pricing have been most effective in managing the costs of mobile data consumption though spectrum has garnered more of the noise share.
Which category will generate the most mobile data revenue in 2013?
Access dominates the developed world while messaging has the lion share in the developing world. We will see access becoming the dominant category in the emerging markets fairly soon.
Which European operator is likely to emerge stronger from the current economic climate?
European operators have been battered by struggling economy and regulatory changes. Many are rethinking their strategy, shedding off assets, and just trying to keep their head above water. The leaner operations and refocused strategic direction might help them recover better when the economy improves. While our global panel picked Vodafone to have the strongest recovery, our European panel picked Telefonica to emerge stronger.
When will mobile commerce be greater than ecommerce?
A majority of the panel thinks that mobile commerce will eclipse ecommerce in revenues generated by 2015 in North America and Asia and by 2020 for the rest of the world. There are already strong signs that commerce is shifting from online to mobile.
The company bringing the most successful mobile gadget of the year - 2012 and 2013?
Apple continues to produce the most desirable devices. iPhone and iPad dwarf everything else and easily was the company with the most successful gadget in 2012. However, the panel expects Samsung to best its rival in 2013. Google and Amazon might mount a credible challenge but their chances of producing something truly dominating remain low.
Which platform has a credible shot at becoming a viable and durable 3rd ecosystem in mobile?
Windows 8 phones finally launched in 2012. The design is solid, the OEM support is growing, the number of apps are rising and while it is still a long ways to becoming a credible 3rd ecosystem, it has the best shot at becoming one. The only rival seems the HTML5-based OS initiatives. The application developer community actually voted for HTML5 over Windows as the 3rd ecosystem that has some chance of competing with iOS and Android which completely dominate in revenues and unit sales respectively.
Mobile company of the year - 2012 and 2013?
Samsung eclipsed Nokia and Apple to become the most dominating device player in unit volume in almost all major markets. The speed with which it is churning out devices has pretty much crushed the rest of the Android ecosystem and is going head-to-head with Apple. For this performance, the panel voted Samsung to be the mobile company of the year for both 2012 and 2013 with Apple and Google close behind.
Which of the following are likely to happen in 2013?
The rumor chamber is ablaze with the possibilities of Apple TV, smartphones from Amazon and Microsoft, and data-only plans to make their appearance in 2013. Square and Twitter could be the hot acquisitions of the year though Twitter is likely to chose IPO glory. Will Samsung fork Android? Will Sprint and T-Mobile merge? Will European operators get acquired? These are some of the questions that are likely to keep the media on their toes this year.
Which operator is best positioned for the digital world?
As we outlined in our research paper “Operator’s Dilemma: The Fourth Wave,” the business of being a mobile operator is at a critical juncture and operators are investing heavily into creating the digital business. AT&T, Verizon, NTT DoCoMo, Softbank, and Telefonica are already generating billions of dollars from these initiatives and lead the operator contingent in the digital world.
Who was and will be the mobile person of the year?
In the past, Steve Jobs was consistently the person of the year in mobile. In 2012, Tim Cook effectively managed to produce record profits for the investors and navigated Apple to keep its “most valuable enterprise” title intact for the year. Apple is still the company on top of the hill. JK Shin of Samsung was voted number two for 2012. For 2013, the landscape changed. Our panel overwhelmingly voted Jeff Bezos to impress us the most in 2013. Amazon has done a good job disrupting the device model and with its strong commerce expertise, it is looking to take on both Google and Apple at the same time. Andy Rubin of Google with the 1 billion Android units milestone coming up this year will be a good contender for the title as well.
There were several other leaders who impressed in 2012 e.g. Paul Jacobs (eclipsing Intel in market cap), Jack Dorsey (disrupting the mobile payments market with Square), Masayoshi Son (for Sprint acquisition and global ambitions), Dan Hesse (for navigating Sprint through rough waters), Glenn Lurie and Matthew Key (for leading the digital transformation of the two giants – AT&T and Telefonica respectively), Rhen Zhengfei (for making Huawei into a dominating infrastructure provider), Lowell McAdam (for making Verizon the number 1 mobile data operator in the world) and Ralph de la Vega (for making AT&T the number 2 ahead of NTT DoCoMo).
All in all, a great collection of thoughts and comments. Thanks again to everyone who participated. Have a great 2013.
Mobile Breakfast Series Recap – Mobile 2013 December 13, 2012Posted by chetan in : Chetan Sharma Consulting, Mobile 2013, Mobile Breakfast Series, Mobile Predictions , add a comment
The Mobile Breakfast Series Event returned back to its home ground in Seattle after a detour to Atlanta and London earlier this year. As is the tradition, we go into the pontification mode for the last event and assemble experts to help us gauge what’s going to be exciting in the coming year, the shakeups that are coming and what should we keep an eye on.
The panelists were:
Zaw Thet, Advisor, Signia Venture Partners
Zaw is a veteran entrepreneur who has been at the forefront of search, social networking, mobile, and adtech since the age of 19. Most recently Zaw was the founder and CEO of 4INFO, one of the largest mobile advertising platforms in the world. Business Week recognized him as one the “Mobile Barons” helping to shape the mobile ad industry since 2004.
Omar Javaid, Managing Director, BBO Global
Omar is the managing director of BBO Global, a boutique advisory and early stage venture firm in the wireless and media space. Prior to BBO, Omar Javaid is Vice President, Product Management of Emerging Technologies Group at Motorola Mobility, a Google company. He was part of the executive team that lead the successful turn-around of Motorola, culminating in the $12.5B acquisition by Google. In this role, he was responsible for next generation smart phone and convergence products Motorola Mobility.
Tracy Isacke, Director of Investments and Business Development, Telefonica Digital
Tracy started her career at Xerox, rising to be the first female member of the UK Board, leading a team of over 450 people. Tracy joined Telefónica in 2006 as the head of the Enterprise Sales Team for O2 UK, then she led on Telefónica’s $207m acquisition of Jajah, the Valley-based VOIP/IP Telephony company. Tracy is currently spearheading the growth of Telefónica Digital as Director of Investments and Business Development, focusing primarily on Silicon Valley, Israel and Europe, with a growing team of half a dozen employees, based in Mountain View, Madrid, London and Tel Aviv.
Todd Achilles, VP, Mobility, Hewlett-Packard Company
Todd Achilles is Vice President, Mobility for HP’s Printing and Personal Systems business unit, where he leads strategy and execution for delivering a connected experience to HP customers. Todd has spent his career in product, marketing, sales and engineering roles within telecommunications sector, including leadership positions with HTC and T-Mobile USA.
What is in store for Mobile 2013?
2012 has been an incredible year for mobile. We crossed several key industry milestones – 6.5B subscriptions, 1B subscriptions in China, 1B broadband subscriptions, 500M android activations, Apple’s monstrous march towards $1T market cap. We also saw Amazon’s aggressive moves in the mobile space, Facebook eclipsing 1B active users, and Nokia/Microsoft/RIM trying to stem the tide. Some big M&A maneuvers throughout the year. All this is setting up a very exciting Mobile 2013. There was a lot to discuss – from the tussles of Apple and Android to opportunities in commerce and big data, from Microsoft’s comeback to challenges in managing the network growth and consumer expectations. We assembled a stellar panel of mobile veterans to help us brainstorm what the big trends, big movers and shakers, and the big opportunities of 2013.
Below is the summary of the discussion:
- Events that captured our imagination in 2012:
- Omar – Google-Motorola, growth in smartphones around the globe
- Zaw – The rise of mobile gaming and the move towards mobile first
- Todd – FCC and the slew of actions they took to frame the wireless industry in the US market
- Tracy – London Olympics, which was truly a “mobile” event helping citizens of the world “connect”
- Depends on which business are you in – HP/Microsoft see it is a PC+ world with multiple screens interacting with the consumer, Apple sees it is a clear delineation.
- However, the data-centric devices like tablets are starting to challenge the notion of computing.
- Also, Smart TVs might start to make an entry that help with inter-device communication and expand developers view of the world
- Clearly an iOS and Andorid world. Microsoft will grind it out and become relevant but it is a tough slog ahead. No mention of RIM or any other platform player
- Panel cautioned developers to over-rely on Twitter, Facebook and other platforms as a foundation of their business. If they like the business, they will just build that into the platform as a feature. VCs are becoming wary of such startups.
- Siri and voice will be much tightly integrated into the OS in 2013. As speech recognition gets better, consumers get more comfortable, we are getting closer to the “star trek” world
- Augmented reality could have a big year as consumers become more familiar and comfortable with AR apps.
- Telefonica’s work with Mozilla on a web-based OS is going well and offers an alternative to the walled-garden approach of the appstores. It will first start in Latin America and might see deployment in the western markets later in the year.
- Telefonica is one of the most advanced operators when it comes to attacking the opportunities in digital. It is the most formal with the formation of Telefonica Digital. It has embraced the OTT world with a launch of new initiatives across various verticals – communication, advertising, health, retail, security, cloud, etc. Tracy operator based OTT services can become the core of enterprise and consumer services
- OTT players will continue to eat away at the operator voice and messaging revenues. Operators didn’t innovate on these services for over 20 years and we are seeing the impact of that.
- There are also significant opportunities in M2M
- Cross-operator services for further monetization
- The day of data only subscriptions is not far away
- More embedded data pricing w/ devices like notebooks
- Android is enabling new hardware segments
- Hardware is hard, supply-chain to build and deliver billions of device is harder and it is going to get tougher in 2013
- It will be hard for OEMs to be in the hardware game w/o any services with a possible exception of Samsung which is making its way into the services space
- Amazon will be the one to watch in 2013 as it works to introduce tablets and a possible Smartphone
- Google glasses is quite interesting and can open up new possibilities for developers and consumers
- Intel got surpassed by Qualcomm due to a number of missteps and the street is valuing the future growth of QCOM higher than INTC and it will be difficult for INTC to catch-up
- MediaTek is becoming a strong player
- Lytro like imaging innovation in smartphones
- Mobile commerce is growing by leaps and bounds as evident by thanksgiving numbers. Mobile and social commerce will continue to make waves in 2013
- Apps model has become an alternate to the web and while not efficient it does provide a distribution vehicle to the developers
- App interop will be a big thing in 2013
- Advertising works better on apps than mobile web
- Wallet wars to continue into 2013
- T-Mobile’s non-subsidy approach might not work out too well as other operators will pound on the opportunity to peel away more subs from TMO. Telefonica Spain tried it along with some other operators around the globe and the experiment didn’t go too well
- Big data and analytics will continue to drive all sorts of new services – health to gaming. Panel cautioned startups relying on Amazon for cloud services to have appropriate backups, some startups have lost all their data due to errors and have had no recourse
- Big opps in cloud and big data in the enterprise segment, these services will get bundled in with devices and data plans
- OTTs are unlikely to wade into the Telco space, too capital intensive and regulatory lens is a negative
- Interesting to see what Softbank does with Sprint. He changed the market in Japan and has the capacity to disrupt the US market
- Latin America is full of opportunities for 2013
- IP battles to continue but most will get settled
- 2013 will be another great year for mobile. Stay tuned and get ready for the ride
It was a lively discussion and I could have easily gone on for another 2-3 hours. Our audience is always top-notch and is highly educated about the nuances of the industry as was evident from the questions. 2012 was the year when Mobile Breakfast Series spread its wings and went to Atlanta and London. We had a great time putting together each of the events in 2012 and we have many more planned for 2013, so stay tuned.
Our annual thought-leadership summit – Mobile Future Forward returns in Sept 2013. More details to come.
From all of us at Chetan Sharma Consulting, we wish you and yours a great holiday season and a terrific 2013.
Finally, as we do it every year, we launched our Annual Mobile Predictions Survey for 2013. There will be prizes for the 25 lucky winners. Be sure to share your thoughts. The survey ends Dec 28th. We will release the results in January.
have a good time.