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CTIA Wireless 2012 Recap May 14, 2012

Posted by chetan in : 3G, 4G, AORTA, CTIA, Carriers, European Wireless Market, Infrastructure Providers, Mobile Breakfast Series, Mobile Future Forward, Mobile Operators, Worldwide Wireless Market , add a comment

CTIA Wireless 2012 Recap

http://www.chetansharma.com/ctiawireless2012.htm

CTIA returned to New Orleans after many years and it was great to see the city revitalized and ready to host the wireless show. Overall there were no big announcements, no blockbuster deals, no zingers from speakers that made the headlines. However, it was good to take the pulse of the industry. We met with several prominent industry executives, long-time colleagues, and new entrepreneurs. This note presents the summary of my observations from the show.

Mobile Web and Apps – I had the opportunity to chair the Mobile Web and Apps event and kick off the proceedings with an opening keynote on the State of the Mobile Industry. It was based on our recent global market update that we released last week. In fact, many CEOs and speakers including FCC Chairman Genachowski frequently referenced from the research throughout the show. Wireless Week did a nice cover story based on the talk. There was good discussion and debate about what’s working and what’s not, how developers try to create demand and monetize eyeballs, the issues of security and privacy. Mastercard announced its payment developer APIs program. In fact, the show had the presence of all the major credit card companies. Payments, wallet, and commerce were the big talking point.

Operators vs. OTT – The theme of Mobile World Congress continued at CTIA with the topic dominating in both open forums as well as behind closed doors. While most of the ink has been focused on how OTT players are killing operator revenue streams, there is the untold story of operator collaboration with the OTTs. I wrote a piece on the topic for Synergy magazine “Mobile Operators and OTTs: Building a win-win.” The manner in which operators respond to the OTT opportunity/threat will end up defining their future in the years to come. Some operators like TeliaSonera have reacted by throwing their hands and just charging extra for OTT services while others like Telefonica are launching innovative services. We have looked at this topic in-depth for many years and have some more new research coming out in the next few weeks. Stay tuned.

The challenge for some of the operators is in stark display. While T-Mobile’s Bobsled app garnered (95% users non-TMO customers) 1 million users, Viber announced the 70 million milestone. To be a relevant app, one needs scale. Operators have the advantage of providing better call quality. The call quality on many mobile VoIP services is subpar and enterprise customers (and consumers) will pay a premium for better call quality.

Digital Life and New Revenue Streams – In the US, AT&T dominates the connected devices spaces. Indeed in terms of rolling out new services, it is a step ahead of the competition. AT&T has been showing the Digital Life concepts at Mobile World Congress and at CTIA they announced the trial and actual product availability in 2013. This clearly bodes well for the industry for there are many adjacent industries where operators can play an important role. Other operators should pay close attention. We will be discussing the Connected Devices opportunities in detail at our Atlanta Mobile Breakfast Series Event on June 22nd with AT&T, Synchronoss, and CNN.

Traffic Growth and Signaling storm – As we have mentioned in our various research papers and research updates, mobile traffic is roughly doubling YOY in most major markets including the US. While data traffic hogs the headlines, signaling is becoming a menace to network management esp. Android which tends to be more inefficient in handling network resources. We will have a more in-depth discussion of these topics in our upcoming Yottabyte research paper.

TMO Acquisition – Last year, AT&T’s proposed acquisition of T-Mobile rocked the industry and kept the regulators busy for better part of 2011. While there were no blockbuster announcements, T-Mobile’s acquisition of MetroPCS along with Nokia and RIM’s long-term prospects remained popular water cooler topics.

Nokia’s revival – Nokia has a lot to prove. Its future is riding on the success of the Lumia series of devices in 2012.  Though it hasn’t exactly set things on fire, the sales are actually doing fine. It is amongst the top selling devices at AT&T and is showing stickiness. However, Nokia is getting crushed in other markets, so the net impact on overall cash position can be significant if it is not able to arrest the downfall in the next 3-4 quarters.

Small Cells – A couple of years ago, small cells and HetNets were just talking point. Now, operators are weaving them into their execution plans as they lay out their 4G networks. Given that mobile data growth is going to stay front and center for the foreseeable future, expect to hear about small cells and HetNets for some time to come.

TMO $4B network deal – Generally, the network deals of this size takes many quarters to iron out. T-Mobile moved fairly quickly to iron out its LTE rollout plans and its vendors.  Not surprisingly, the spoils of the deal went to Ericsson and NSN. In light of the collapse of LightSquared, this deal might provide NSN a lifeline to continue operations for a few more years.

Mobile Wallets and Mobile Payments – While 2012 will not be the year of mobile payments; it certainly is the year of mobile wallets launches and lots of them. Every financial institution worthy of its salt has launched a wallet. We are just going through the early turbulence cycle of this new segment. However, the opening up of the payment APIs from the financial industry is leading to some compelling experiences and use cases.

NFC was absent – The talk of NFC as a payment solution was noticeably muted. We have always said that NFC will have more impact from other solutions than payment.

Verizon – LTE – Competing on LTE, the fight to build the fastest and biggest LTE network is on. Verizon has an early formidable lead but in 2013 rivals will start to catch-up.

Messaging innovationAs I mentioned to the NY Times and discussed it in our annual global mobile update, messaging revenue has started to decline in some countries. Some operators in Europe are in a state of panic. Chaos creates new opportunities. While operators have just given up on fighting the OTT war, others are gearing with new apps and services of their own (TU Me from Telefonica, Bobsled from T-Mobile, On from Orange). Several startups are also helping the operators innovate on the messaging front. SMS was invented in the early nineties but operators didn’t really take messaging to the next level for the last two decades. I met with a number of companies which are doing some interesting work on the messaging side – like ZipWhip, Maxx Wireless, OpenMarket, and others. Some of these companies are still in the stealth mode and expect to make some waves in the coming months. We will be taking this topic head-on in our Mobile Breakfast Series in Seattle (w/ AT&T, Groupon) and London (w/ Telefonica, Orange, Horizons Venture, Rebtel)

Sprint Guardian, and other apps – in line with generating more revenue form other apps, Sprint guardian was launched with Safely and the service is seeing pretty good traction in the early days and might be able to increase the lifetime value of the customer. Other US operators have similar services available on their network as well. Operators will have to invest heavily in VAS ecosystem and services to arrest the declining revenue in other segments.

FCC, Spectrum and Regulations – FCC continued to make its case for more spectrum via incentive auction. With a change of guard expected next year, it will be interesting to see how some of these efforts pan out. FCC should create parallel incentive programs like a $1B prize for tangibly solving the spectrum crisis w/o the need of new spectrum.

Absence of large players – The lack of any major announcements was only rivaled by the absence of the former CTIA heavyweights like Samsung, Alcatel-Lucent, Nokia, Motorola, and Microsoft. Others had fairly low-key presence.

Regulations – Regulations lag the technology industry progress and it is getting to the point that they might end up hindering growth esp. related to communication, privacy and monetization of network assets. It is time to consider bringing all communication, and data privacy rules under the same umbrella so both the telecom and Internet players are guided by the same set of principles.

Your feedback is always welcome.

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 May 2012. The next Global Wireless Data Market update will be issued in Nov 2012.

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

2012 Mobile Industry Predictions Survey January 3, 2012

Posted by chetan in : 3G, 4G, AORTA, ARPU, Applications, BRIC, CTIA, Carnival of Mobilists, Carriers, Connected Devices, Disruption, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Payments, Mobile Search, Mobile Traffic, Networks, Patent Strategies, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 12 comments

2012 Mobile Industry Predictions Survey

http://www.chetansharma.com/MobilePredictions2012.htm

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First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2012. My thanks to all who participated in our 2012 Mobile Predictions Annual Survey. It gives our community an insider’s view of trends.

2011 was a terrific year for the mobile industry. With all its ups and down, consumers embraced devices, applications, services, and technology with more gusto than ever before. In the waning hours of 2011, we crossed the 6 billion subscriptions milestone. While the first billion took 19 years, this last billion only took 15 months.

Smartphones are selling like hot cakes. We estimate that by the end of Q4 2011, over 60% of the devices sold in the US were smartphones and over 30% of the global sales were for the evolved brethren of the primordial featurephones. Sparked by insatiable consumer demand for mobile data, LTE and HSPA+ networks are sprouting all over the planet with US leading the charge for broadband deployment.

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=150) from leading mobile companies and startups from across the value chain and around the world participated to help see what 2012 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.

Fifteen names were randomly drawn for the limited edition of the Mobile Future Forward 2011 book. The winners are:

  1. Tor Bjorn Minde, Head of Ericsson Labs, Ericsson

  2. Sunder Somasundaram, Industry Solutions Practice Director, AT&T

  3. C. Enrique Ortiz, Mobile Technologist, About Mobility

  4. Russell Buckley, CMO, Eagle Eye

  5. Marianne Marck, VP – Engineering, Starbucks

  6. John Foster, President, ZED USA

  7. Angel Luis Saez, Sr. Director, Orange Spain

  8. Dilip Mistry, Senior Director, Microsoft Asia

  9. Phyllis Reuther, Advanced Analytics Lab, Sprint

  10. Gene Keenan, VP of Mobile, Isobar

  11. Elizabeth Day, Director of Finance, Trilogy International

  12. Alan Cole, Research Staff Member, IBM T.J. Watson Research Center

  13. X J Wang, VP – GM China, Vesta Corp

  14. Michelle Lee, Director, SK Telecom

  15. Hemant Chandak, Sr. Analyst, Cisco Systems

Thanks again to everyone who contributed. We will be calling on you again next year. It has been a terrific year for us at Chetan Sharma Consulting and we are looking forward to an engaging and productive 2012.

Be well, do good work, and stay in touch.

Thanks and with warm wishes,

Your feedback is always welcome.

Thanks

Chetan Sharma

Now onto the 2012 Mobile Industry Predictions Survey Results.

2012Survey-a

1. What was most newsworthy in Mobile 2011?

 2012Survey1

Android had a spectacular rise in 2011 around the globe. Android OEMs collectively shipped the most number of devices and while margins shrank, they were able to put a united front to iOS. 2011 will always be remembered for the passing away of the industry transformer Steve Jobs. His work directly or indirectly touched billions of souls around the planet, many times over – something rarest of human beings are able to achieve in their life time. Regulatory tussles and significant increase in IP disputes also occupied the headlines. Amazon announced its intention for the mobile space with the launch of Kindle Fire.

2. What will be the biggest mobile stories of 2012?

 2012Survey2

As we look towards 2012, our panel voted for the continued growth of mobile data as the biggest story followed by Amazon’s entry into the mobile space. Some key questions for the year are: Will Microsoft/Nokia devices will make any meaningful progress? Will RIM survive the year? How does Google manage the fragmentation, decline in margins (for the OEMs), and the IP issues? Will any high-profile security and privacy mishaps lead to more regulatory entanglements? Facebook IPO and its mobile ambitions? How do operators manage the data demand? Which M&As will capture industry’s attention? Will Apple continue to dominate on both smartphone and tablet front? What does Apple do with mobile payments? and much more. Clearly, it is going to be a terrific year.

3. Who will be the most open player in the mobile ecosystem in 2012?

 2012Survey3

File this in the “perception is reality” folder. Despite all the criticism, Google has maintained its strong position as the most open player in the mobile industry.

4. What applications will define 4G?

 2012Survey5

Still looking for a killer-4G app? Video, cloud computing, and access will continue to drive 4G demand and growth.

5. What will be the breakthrough category in mobile in 2012?

2012Survey5

For a second year in a row, the panel voted for mobile payments and mobile commerce as the top two category that will find their voice. Mobile advertising has become mainstream so it lost its ranking in the top 3.

6. What will be the most popular consumer mobile applications in 2012?

 2012Survey6

Apps preferences vary by regions depending on a whole range of factors. Messaging and Commerce are the top two categories for the developing world while consumers in the developed nations are likely to gravitate towards commerce and location based services.

7. Which will be the most dominant (unit sales) tablet platform in 2 years?

 2012Survey7

iOS and Android will dominate the tablet landscape for the next 24 months. A late entry by Windows 8 tablets could make a dent but don’t count on it.

8. Who will make the biggest mobile acquisition in 2012?

 2012Survey8

2011 had its fair share of block-buster acquisitions, some successful while others were not. Our panel expects Microsoft and Google to continue making the biggest acquisitions.

9. How will the "Apps vs. Mobile Web" debate shape up in 2012?

 2012Survey9

It seems like the pendulum is swinging towards the mobile web though hybrid solutions are likely to stay with us for a long time.

10. Who will define the mobile payment/commerce space?

 2012Survey10

The financial companies safely locked in the mobile payments space and while the value chain is fairly complicated and definition confusion abounds, the likes of Visa, Operators and Google will continue to drive the payments/commerce space.

11. Which solutions will gain the most traction for managing mobile data broadband consumption?

 2012Survey11

Managing data growth and margins drives all strategies at mobile operators these days which in turns drives the value chain. 4G, tiered pricing, and mobile offload continue to be the top solutions if one has the spectrum that is.

12. Which category will generate the most mobile data revenue in 2012?

 2012Survey12

Messaging, access, apps, and advertising are the four broad categories that drive mobile data revenues around the world. The developing markets rely on messaging while the developed markets are increasingly looking to access as their dominant form of revenue generation.

13. What will help mobile cloud computing gain traction in 2012?

 2012Survey13

Mobile cloud computing will continue to be defined by enterprise, storage, and media needs.

14. Which enterprise segment will mobile impact the most?

 2012Survey14

Best buy is becoming the next Circuit City. Other retailers will follow unless they can successful reinvent themselves. Health is more regulatory driven so the progress will be slow though it is ripe for a complete overhaul and developing nations are moving much faster in this space.

15. What will be the dominant revenue model for apps in 2012?

 2012Survey15

In-app revenue model made good strides in 2011 but the combination of the various available revenue models will be the norm for most application developers.

16. What mode of mobile payments will get traction in North America and Western Europe in 2012?

 2012Survey16

2011 was the year to set the ground work for growth in the mobile payments space. Given the investment and focus, we are likely to see more movement and consumer involvement in 2012 with proximity based solutions and commerce of physical goods on mobile.

17. What will be the most successful non-mobile-phone category in 2012?

 2012Survey17

Tablets dominate. Period.

18. Which of the following are likely to happen in the near future?

 2012Survey18

The is a significant shift in computing taking place right in front of our eyes wherein tablets are replacing laptops and even desktops in the enterprise. European operators have been experiencing tough times while some of the Asian operators are flush with cash, they might make their move in 2012 though regulatory hurdles might prove to be an issue. 33% of the nations will have elections in 2012, maybe which will move mobile voting to the forefront in some nations. Our panel thought there is a better chance of humans discovering water on another planet than rise of another significant mobile OS.

19. Which areas will feel the most impact from Regulators in 2012?

 2012Survey19

Net-neutrality and market competitiveness will keep the regulators busy in 2012.

20. Who was the mobile person of the year?

 2012Survey20

Clearly, Steve Jobs was an easy choice but who will replace him 2012? Jeff Bezos has an early lead followed by Andy Rubin and Mark Zuckerberg. Angry Birds representing the developer community will be in for another terrific year. Other honorable mentions were Tim Cook, Paul Jacobs, Sanjiv Ahuja, Dan Hesse, and Glenn Lurie.

A lot to look forward to in the New Year. My thanks to all who participated and we hope you found it useful as you embark on your journey for a successful 2012.

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 Feb 2012. The next Global Wireless Data Market update will be issued in Apr 2012.

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

US Wireless Data Market Update Q3 2011 December 12, 2011

Posted by chetan in : 3G, 4G, AORTA, Applications, CTIA, Carnival of Mobilists, Carriers, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Mobile Breakfast Series, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Payments, Mobile Search, Mobile Traffic, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 5 comments

 

 

http://www.chetansharma.com/usmobileupdateQ32011.htm

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Summary

The US mobile market continued its blistering pace of growth and ecosystem restructuring. While China and India lay claim to the fastest growing markets on the planet, the many of the meaningful and impactful trends are originating out of the US market with software at the epicenter of creation, growth, change, evolution, and destruction.

The US wireless data market grew 5% Q/Q and 21% Y/Y to reach $17B in mobile data service revenues in Q3 2011 and is on course to increase Y/Y by 22% to $67B in 2011.

As predicted, Samsung overtook Apple as the leading smartphone OEM. However, Apple will continue to dominate profit share for the foreseeable future.

Smartphones continued to be sold at a brisk pace accounting for 57% of the devices sold in Q3 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.

Mobile Ecosystem Complexity

As expected, Amazon entered the mobile tablet space with a killer value proposition - $200 for a tablet, something the market sorely needed. While other OEMs tried to compete with Apple on performance (and have been retreating from the market one by one), Amazon is entering the battle on its own turf – a hardware platform built on Android with a slew of services to underwrite the device discount. Incumbent OEMs just can’t compete with that strategy without a complete rethink of their product strategy. What happens when Amazon’s strategy migrates to handsets? While Kindle Fire is not a serious threat to Apple iPad, and the current version has a lot of deficiencies, Amazon has carved out a nice market for itself that will continue to grow in the coming days. In some sense, with its tight integration of commerce, cloud, and advertising, it has out-maneuvered even Google.

Amazon’s impact will be felt by many others in 2012 as its strategy becomes more apparent. Retailers will be facing the brunt of the wave that Amazon represents i.e. etailers supplanting physical retailers. Don’t be surprised if Amazon purses Apple like stores to showcase its merchandize and puts a dagger at the heart of retail.

Google has done a masterful job of shepherding Android through the turbulent platform waters and make it the dominant mobile platform in terms of shipments.

Microsoft and Nokia finally introduced the Windows devices and it has at least given them a fighting chance in 2012, though a far more competitive offering would be needed to make any significant market share or revenue share inroads. Microsoft’s Xbox/Kinect integration remains its best card for 2012.

In a severe case of corporate schizophrenia, HP first launched webOS devices, then backed away, then thought of re-launching only to give it away to open source. Similarly, RIM faces critical test in 2012 and all its hopes are pinned on the new OS that is expected to come to the market sometime next year.

Mobile is changing the way we spend

It is very clear that mobile will be at the center of the 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 last quarter.

What to expect in the coming months?

All this has setup an absolutely fascinating 2012 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems.

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 Q3 2011 US wireless data market is:

Service Revenues

ARPU

Subscribers

Applications and Services

Handsets

Mobile Data Growth

Global Update

Mobile Future Forward

Our annual mobile thought-leadership summit - Mobile Future Forward was a grand success. Our thanks to all those who attended as well as to the speakers, sponsors, and well-wishers for making it happen. Planning for 2012 summit are underway and we will keep you posted as plans develop.

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

Mobile Predictions Survey 2012

As is the tradition, we are running our annual Mobile Predictions Survey for 2012. Will appreciate your input in understanding the trends and news stories that will make 2012 another big year in mobile. Winners of the survey get our fabulous limited edition Mobile Future Forward 2011 book that contains 19 essays from the global leaders in the mobile industry. (Mobile Predictions Survey Results for 2011 here)

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 Feb 2012. 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.

New Paper - How Mobile Will Change The Way We Spend – A Mobile Future Forward Paper August 5, 2011

Posted by chetan in : 3G, 4G, AORTA, CTIA, Connected Devices, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Future Forward, Mobile Payments, Mobile Search, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

How Mobile Will Change The Way We Spend

A Mobile Future Forward Paper

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The Mobile Future Forward 2011 Book will contain 18 essays from thought-leaders around the globe and is going to be distributed exclusively to the Mobile Future Forward attendees on Sept 12th. The book is published by FutureText, UK.

The essays from the Mobile Future Forward speakers and industry luminaries are:

1. How Mobile Will Change The Way We Spend – Chetan Sharma, President, Chetan Sharma Consulting

2. The Mobile Cloud Connected Enterprise – Abhi Ingle, VP, Advanced Mobility Solutions, AT&T

3. Mobile and Health Possibilities – Subba Rao, CEO, Razi Health

4. Buying a Mobile Device in 2014 – Frank Meehan, CEO, INQMobile

5. Surviving and Thriving in the Age of Mobile Internet – An MNO Game Plan – Manoj Leelanivas, SVP and GM, Juniper Networks

6. Mobile Future Forward Interview with Steve Elfman – President, Sprint Nextel

7. Is Mobile Local Advertising Finally Poised to Take Off? – William Hsu, SVP and CPO, AT&T Interactive

8. Implications of a Connected Society – Danny Bowman, President, Sprint Nextel

9. Big Data and Mobile – Braxton Woodham, Head of Engineering, AVOS

10. Broadband for All – Sanjiv Ahuja, CEO, LightSquared

11. Wireless Competition and Innovation – Stephen Bye, CTO, Sprint Nextel

12. The Future of the Personal Information Economy: Enabling Success Across the Mobile Ecosystem – Ken Denman, CEO, Openwave

13. T-Commerce – Carving Out and Extending E-Commerce – Ramneek Bhasin, SVP and GM, TheFind

14. The Case for Building a Mobile Broadcast Content Delivery Network – The Critical Piece to Fulfilling Mobile Data Demands of the Future – Erik Moreno, SVP, FOX Network

15. Connected Devices – Redefining the Channel – Biju Nair, Chief Strategy Officer, Synchronoss Technologies

16. How Mobile Can Turn Retailers Into Media Companies – Dale Nitschke, CEO, Ovative Group

17. The Future of (Mobile) Communications – Carlos Domingo, CEO, Telefonica R&D

18. Competition and the Evolution of Mobile Markets – Chetan Sharma, President, Chetan Sharma Consulting

Download (http://www.mobilefutureforward.com and click on the White paper image)

 

Executive Summary

In his 1943 paper titled “A Theory of Human Motivation”, the famed philosopher Abraham Maslow theorized his observations of human needs and curiosities. His pyramid came to depict the human hierarchy of needs. If we map the physiological, safety, love, esteem, and self-actualization needs onto how much we spend as a community, it correlates rather well. As you would expect, human spending behavior is tightly tied to the basic needs. The amount of money we spend on these basic needs might vary by demographics or region but in aggregate, we tend to spend the most for the things that are the bottom of the pyramid – shelter, food, and water.

Over time, entrepreneurs have used technology to drive fundamental changes in consumer behavior for e.g. Microsoft with personal computers, Google with search, Apple with devices, Facebook with social connections. Of course, the web of interconnection, the various vertical industries that map against the human needs is very complex and as new technology cycles come into play, inventors get busy with enhancing performance sometimes by manifold to keep up with the insatiable demand and appetite to do more.

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. As we alluded to earlier, it is not just the traditional phones that have cellular connection these days; we are slowly but surely moving into an era where a majority of electronic devices from small tags to giant billboards will have a communication channel that both machines and humans can interact with.

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.

In this paper, we will take a look at how the connected universe of devices and sensors are going to impact the way we spend and how all this creates new opportunities to meet the basic human needs.

Your feedback is always welcome.

Thanks

Chetan

2011 Mobile Predictions Survey Results January 3, 2011

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Traffic, Networks, Patent Strategy, Patents, Privacy, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

2011 Mobile Predictions Survey

http://www.chetansharma.com/MobilePredictions2011.htm

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First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy,

healthy, and prosperous 2011. Thanks to all who participated in our 2011 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.

We put some of the questions to our colleagues and industry leaders in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=225) from leading mobile companies across the value chain and around the world opined to help us see what 2011 might bring.

Ten names were randomly drawn the limited edition Mobile Future Forward book. The winners are:

1. Jared Cornfeld, Industry analyst, FCC

2. Abhi Rele, Marketing, Microsoft

3. Christopher Billich ,Head of Mobile Advertising, Deutsche Telekom AG

4. Gary Cohen, VP/GM North America, Flirtomatic

5. Peter Jarich, Service Director, Current Analysis

6. Darren Austin, Director of Mobile, Expedia

7. Craig Fisher, Software Client Leader, IBM

8. Steve Wood, CEO, Perlego Systems, Inc.

9. Elliott Hamilton, Sr. Director of Strategic Planning, TeleCommunication Systems

10. Vishal Gupta, Vice President North America, Qualcomm Inc

Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly

living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific

year for us here at Chetan Sharma Consulting and we are looking forward to 2011 and seeing many of

you along the way. We hope you enjoyed gaining from the collective wisdom.

Be well, Do Cool Work, Stay in touch.

Thanks. With warm wishes,

Your feedback is always welcome.

Thanks.

Chetan Sharma

Now onto the 2011 Mobile Industry Predictions Survey Results

The panel comprised of movers and shakers of the mobile industry from around the world.

ps2011_1

ps2011_2

What will be the biggest stories of 2011?

ps2011_3

In last year’s survey, Google/Android narrowly missed out to be the biggest story of the year but this year, the verdict was clear that Google will continue to dominate the headlines with Android devices and new updates and apps. Given that we are in the midst of 4G deployments and ITU’s flipflop on the definition, we could be in for an interesting year.

When will Verizon iPhone launch?

ps2011_4

Inordinate amount of ink has been spilt over Verizon’s iPhone speculation. However, given the chatter, our panel voted for a Q1 launch.

Who will be the most open player in the mobile ecosystem in 2011?

ps2011_5

In all our surveys Google has consistently cemented its perception of being the most open in the ecosystem.

Will Android tablet sales exceed iOS tablet sales in 2011?

ps2011_6

Last year, Android OS edged past iOS, however, given the lead iOS has had in tablets, it might be hard to overcome the number of shipments in 2011.

Who will make the biggest mobile acquisition in 2011?

ps2011_7

Got Cash? Big players are likely to go shopping but who will score the blockbuster deal of the year. Google and Microsoft will duke it out with Google taking the spoils.

How will the "Apps vs. Mobile Web" debate shape up in 2011?

ps2011_8

Apps vs Mobile Web has been as hotly debated in the industry as the CDMA vs. GSM battles of the past. Our panel thought Apps will continue to grow though mobile web starts to show its muscle.

By how much will the mobile advertising ad-spend increase in 2011?

ps2011_9

Our panel was more bullish on mobile advertising than last year with a good 50% of respondents aiming for 200% growth and higher.

Which market will be the biggest infrastructure in 2011 for sales opportunities?

ps2011_10

India and China are laying out 3G and North America is expanding on 4G. Infrastructure contracts abound.

Who will be the mobile come back story of 2011?

ps2011_11

Many long-time players are under the gun this year. Will Windows 7 help Microsoft or will Meego make Nokia competitive. Story will unfold this year.

Who will end up having the strongest position in the mobile payment/commerce space?

ps2011_12

While Japan/Korea markets have developed mature mobile payments solutions, the battle royale of mobile payments in North America will play out between the financial guys and Operators with Internet players making a strong run at it as well. 2011 might help decide the long-term winners in the space. Our panel thinks, the likes of Mastercard and Visa will edge out others in the tussle.

Which areas will feel the most impact from Regulators in 2011?

ps2011_13

Regulators can have a huge impact on the course of the industry and nation’s competitiveness. With the laws all but laid out, the real rulings might come from the courts.

Which solutions will gain the most traction for managing mobile data broadband consumption?

ps2011_14

2010 saw the emergence of tiered data pricing in North America and operators all over the world are bracing for a long-term challenge of managing mobile data growth. We have written extensively on this subject in our Yottabyte series. Our panel voted for Tiered pricing and 4G as the top two solutions.

Which category will generate the most data revenues in 2011?

ps2011_15

Global markets are quite different and while data service revenues have been growing in all regions, our panel breaks down by categories in terms of expected contribution from various segments.

What will help mobile cloud computing gain traction in 2011?

ps2011_16

Mobile Cloud Computing is expected to take several strides in 2011 with Media and Enterprise demand at the forefront.

What will be the most successful non-mobile phone category in 2011?

ps2011_17

As we have highlighted in our previous research, Connected devices have shown tremendous growth in 2010. Tablet seems to be clear category winner.

What will be the breakthrough category in mobile in 2011?

ps2011_18

Mobile payments and commerce are starting to take off and are expected to show the most growth in 2011.

By the end of 2011, how will we end up defining 4G?

ps2011_19

ITU’s flipflop means, anything above HSPA+ will be deemed a 4G technology.

Which enterprise segment will mobile impact the most?

ps2011_20

Mobile as a platform is booming with Retail finally getting into the swing of things and will show the most activity in 2011.

What will be the dominant revenue model for apps in 2011?

ps2011_21

While paid apps dominated the revenue stream in the early days, advertising and in-app payments are taking off on iOS and Android. Developers will play with a combination of models depending on what works on a given platform.

What mode of mobile payments will get traction in NA and WE in 2011?

ps2011_22

Operators experimented with mobile payments over the last few years, now is the time to put the solutions to the test.

Who was the mobile person of the year?

ps2011_23

Who can compete with King Jobs. Launching iconic devices year after another, Steve Jobs has set the direction of the industry since 2007 and was a clear favorite for the mobile person of the year. The tremendous success of the apps personified by blockbuster hit of "Angry Birds" took away the second spot with Andy Rubin’s Android effort won him the third spot.

Well, there you have it. The top trends and stories we will be talking about in 2011. Thanks again for all who participated and we hope that you found this useful as you embark on your journey for the year.

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 Mar 2011. The next Global Wireless Data Market update will be issued in Mar 2011.

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

US Mobile Data Market Update Q3 2010 November 7, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Devices, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Intellectual Property, Location Based Services, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Event, Mobile Future, Mobile Future Forward, Mobile TV, Mobile Traffic, Smart Phones, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Data Market Update Q3 2010

http://www.chetansharma.com/usmarketupdateq32010.htm

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Executive Summary

The US wireless data market grew 7% Q/Q and 25% Y/Y to exceed $14B in mobile data service revenues in Q3 2010 - on track to meet (and most likely exceed) our initial estimate of $54B for the year.

Sprint had a second straight positive net-add quarter. T-Mobile also reversed its losses and had a net-positive quarter though postpaid additions were down for both the carriers. 2011 is shaping up to be an interesting year with some big M&As on the cards. The launch of 4G networks provides an opportunity to realign the industry.

The US subscription penetration crossed 96% at the end of Q3 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 101%. While the traditional net-adds have been slowing, the “connected device” segment is picking up so much that AT&T, T-Mobile, and Sprint added more connected devices than postpaid subs in Q3 2010. Given the slow postpaid growth, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.

The role of connected devices

In the connected device category, tablets led almost singlehandedly by the iPad is taking away the lion share of the revenues. The whole category is catching up speed in the US with 12% growth Q/Q much higher than in the postpaid segment which has trickled down to 1% Q/Q growth by Q3 2010.

We expect that in less than 5 years, the connected devices category will generate more revenue for the operators than the entire prepaid segment in the US. While today, connected devices represent only 3% of the quarterly data revenues, this segment didn’t really exist a few months ago and will keep on gaining strength every year for the foreseeable future.

In terms of financials, the addition of connected devices units and revenues to the mix masks the tremendous growth in smartphone related data revenues. For example, T-Mobile lost 360K postpaid subs but added 300K connected devices for a net loss of 60K subscriptions. Because of lower ARPU, Connected devices have a dilutive impact on the revenues and ARPU so the overall ARPU for postpaid segment for T-Mobile was $52 instead of $55.

iPad literally created a new category and rest of the industry is scrambling to respond. Some just want to follow Apple’s trail to cash in while others don’t want to competing head-to-head with Apple so they are launching smaller sized units. There will be others who will launch devices at every inch increments just to see what sticks. However you might slice and dice the market, the segment is here to stay and as we had mentioned before, Netbooks will take a hit as the category was the creature of a falling economy and with a viable alternate, the need for Netbooks diminishes.

Mobile Data Consumption

Data traffic continued to increase across all networks. There are some superphones that are routinely average more than 1 GB/mo, superphones as a category is averaging 700-800 MB/mo. By the end of 2010, we expect the average US consumption to be approximately 325 MB/mo up 112% from 2009. This puts US right behind Sweden in the top two by per capita mobile data consumption. While the US lags Japan and Korea in 3G penetration by a distance, due to higher penetration of smartphones and datacards, the consumption is much higher than its Asian counterparts. Given that it is also becoming the largest deployment base for HSPA+ and LTE, most of the cutting edge research in areas of data management and experimentation with policy, regulations, strategy, and business models is taking place in the networks of the US operators and keenly watched by players across the global ecosystem.

As we had forecasted, the tiered pricing structure for mobile broadband expanded further with Verizon and T-Mobile following AT&T in deploying policy management strategies for controlling data margins. We will see the pricing evolve over the next 2-4 quarters as the US mobile ecosystem adjusts to the new realities and strategies for mobile data consumption.

What to expect in the coming months?

Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.

Microsoft launched its much anticipated Windows Phone 7 in a bid to recapture the mind- and unit-share. By taking a different UI route, it actually has a shot to be a viable third option to iPhone and Android and pushing RIM from the top 3.

All this has setup an absolutely fascinating 2011 in the communication/computing industry. Convergence is everywhere and is leading to 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 15th event – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. More details to come. We will also be discussing the trends and opportunities in our Dec Mobile Breakfast Series event.

US is also leading the way in smartphone sales. In Q3 2010, 47% of the devices sold in the US were smartphones compared to 24% globally. The fast pace of device introduction has catapulted the agile players like Samsung and HTC to the forefront while others like LG and Sony Ericsson have lost ground. By focusing singularly on Android and by broadening the device portfolio, Motorola has written a great comeback script.

The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market literally every week. Players are having to re-evaluate their businesses and long-term strategies. There are several players whose future is at stake (to put it mildly). The competition has grown fierce and companies are finding it hard to take ideas from R&D to products in market in a short amount of time.

While 2010 started quite active on the regulatory front as the national broadband plan was unveiled in March little substantive progress has been made w.r.t. the spectrum, net-neutrality, and other broadband related issues.

To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come.

ITU christened LTE-A and Wireless MAN-Advanced as the “official” 4G technologies but the marketing departments cared less.  (We will be releasing the next edition of our “State of the “Mobile” Broadband Nation” in the coming months.

As we had mentioned last year, the mobile data traffic kept on growing disproportional to the revenues. A series of solutions have come into the market from players big and small. We released the second edition of our in-depth research paper on data growth - "Managing Growth and Profits in the Yottabyte Era"  earlier this year.

Finally, operators are starting to diversify more aggressively than in the past. AT&T’s mobile enterprise business is a leading indicator of this trend. Their focus by verticals has yielded new revenue streams and positioning them to become a one-stop shop for devices, access, and services in the enterprise market.

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 Q3 2010 US wireless data market is:

Service Revenues (Slides 7, 17)

ARPU (Slides 8-11)

Subscribers (Slides 12-15)

Applications and Services

Handsets

Data Traffic (Slide 16)

· As we noted in our previous updates, the data traffic is now significantly more than the voice traffic. By end of 2010, we expect the average US consumer was consuming approximately 325 MB/mo up 112% in 12 months. The good news is that there are several solutions available and are being invented that will help manage the data growth starting with the tiered pricing plans.

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 Mar 2011. The next Global Wireless Data Market update will be issued in Dec 2010. Be sure to participate in our annual mobile industry predictions survey coming out in Dec 2010.

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

CTIA Enterprise and Applications 2010 Wrap-up October 11, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Future Forward, Privacy, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

CTIA Enterprise and Applications 2010 Wrap-up

http://www.chetansharma.com/ctiaenterprise2010.htm

Déjà vu - the experience of thinking that the current CTIA had occurred before.

This note summarizes the observations and opinions from the event, discussions, and briefings from the CTIA event that just concluded in San Francisco.

The Mobile Ecosystem

For me, the proceedings started with my talk “Mobile Apps: The Big Picture.” I generally start my talks these days by explaining the complexity of the mobile ecosystem. The traditional value-chains are morphing (and some cases being decimated) and the new ones are getting coalesced very fast. It is hard to summarize without going into the intricacies and the dynamic nature of the game. (I will be expanding on this theme again during my talk at University of Oxford this friday)

It is like a long marathon composed of 100m sprints where new players can enter and leave midstream. Players can merge en route to gain strength and speed or blow up before reaching the next 100m. The friends in this segment of the race might turn into competitors in the next segment. To throw a wrinkle into the mix, regulators or any one player can change the rules of the game such that 100m can become 50m or 200m and the players have to adapt and respond accordingly.

The race is in the open so the weather elements can impact but doesn’t stop the race. In such a brutally competitive environment, only the players who are super-agile or super-innovative or both have enough juice left to compete effectively in the next leg of the marathon. The successful ones are those where the C-suite and the troops are watching the KPIs of each step at the granular level so they have real-time intelligence of taking the next stride.

It requires the perfect blend of Usain Bolt and Samuel Wanjiru to compete in the “new” mobile landscape.

For example, Samsung, HTC, and Motorola (recently) have adapted remarkably well to this fast-paced marathon but their friendly rival LG has suffered and will need some time to regroup and be a force again. Microsoft faltered and didn’t adapt while new entrants like Apple and Google set the terms of the race. Watch out for what Facebook does in the space. Given their scale, their user understanding, and their product portfolio, if they execute certain elements of their strategy right, Facebook can be front runner in this ecosystem.

Some of the operators who have traditionally felt safe on their home turf are getting challenged. They are reinvigorating the industry segments they could have dominated before though it is probably too late in some areas.

Mobile Enterprise - The unglamorous cousin of the consumer segment

Enterprise is hot again. AT&T and Sprint have become very focused on becoming the “total solution providers” vs. just providing data subscriptions and devices. A&T is making a big push for the enterprise market and showcased several of its wins in the healthcare, education, retail, shipping, and other verticals. As I have talked about before, (mobile platform will) let a thousand industries bloom! Cloud computing is another area where we are going to see some interesting developments over the course of next 6 months (I will be moderating a panel on Mobile Cloud Computing at the upcoming Open Mobile Summit in Nov)

LTE

At CTIA, Verizon formally announced their LTE plans with almost 40 markets. It has moved aggressively in the last 24 months to get the network and slew of devices ready. Verizon’s marketing machine will let loose come Christmas and CES. AT&T also announced its “LTE ready” devices.

Mobile Devices: Competitive landscape

iPhone is likely to be launched on a second US carrier in Jan and is going to offer first true iPhone vs. Android test. In the meantime, a stable of Windows Phone 7 launched today after the announcement 8 months back in Barcelona. I do like a fresh approach to UI design akin to flipboardification of the apps icon-based layout (which is so desktopish). Things started to move in this direction with Motorola Blur last year and INQ a bit earlier.

The question is not if Microsoft has done a good job with WP7. It has. The question is - how soon does Microsoft come with its second round of handsets and software upgrades? And how soon will it be able to sign up additional OEMs. Remember, a few extra hops doesn’t guarantee unfair competitive advantage for the next 100m. Microsoft is starting from 0 and will have to execute on all fronts to be considered a serious contender come 2011 Christmas season. Finally, there is always room for another player, another platform. These things go in cycles. The trick is to capitalize on your opportunity and not be the one left standing when the music stops.

Coming back to my talk, I do think that an analytics driven UI is where we will end up on the smartphone UI and the whole debate around “mobile web vs apps” will be rendered moot to some extent. I expect Apple will come out with its iteration of the next generation UI soon.

Connected Devices

Mobile as a platform is maturing and we can see this in the growth in connected devices and vertically focused solutions - healthcare, energy, education, etc. The fact that the connected devices have become the next battle ground was clear from the fact that Ford had a major presence at the show. Their telematics strategy is very well executed. In our own work in the space, there is some cool stuff that is going to get rolled out in the next 24 months. Secondly, Samsung was displaying its tablet as if it was the only device it built. Apple has created a new category and others are lining up to cash in.

Mobile Apps vs. Web

The noise around “mobile apps vs. web” is reaching a fervent pitch. It is rather a silly debate. Developer care about reach, revenue potential, and the cost of the reach. Users care about the best user experience and cheapest access. Ecosystems are built around these two simple notions. Recent data from Comscore revealed something interesting. Looking at the smartphone data between apps and browser, while overall, the apps usage was higher compared to that of the browser, browser was considered a better way to navigate in various categories like news, search, and social networking by a good margin. However, games which happens to be generating the lion share of the apps revenue will continue to be a native play for some time to come because developers don’t want to compromise and the browsers are not there yet.

Over all, great to catch-up with friends and colleagues. CTIA, thanks for the networking party. 2011 looks pretty darn interesting already (we will be discussing the trends and opportunities in 2011 in our upcoming Mobile Breakfast Series event on Dec 8th)

Some of the other news worthy items were:

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 2010. The next Global Wireless Data Market update will be issued in Oct 2010.

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

US Mobile Data Market Update Q2 2010 August 10, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile Wallet, Music Player, Networks, Speaking Engagements, Speech Recognition, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

US Mobile Data Market Update Q2 2010

http://chetansharma.com/usmarketupdateq22010.htm

Download PPT (1 MB)

Download PDF (2.5 MB)

Executive Summary

The US wireless data market grew 6% Q/Q and 22% Y/Y to exceed $13.2B in mobile data service revenues in Q2 2010 - on track so far to meet our initial estimate of $54B for the year.

Having narrowly edged NTT DoCoMo last quarter for the first time, Verizon Wireless maintained its number one ranking for the 1H 2010 in terms of the operator with the most mobile data revenues (though the difference was thinner than the amoeba membrane).  The total wireless connections for Verizon were almost 100M with 92.1M being the traditional subscriber base. Rest of the 3 top US operators also maintained leading positions amongst the top 10 global mobile data operators.

Sprint had the first positive netadd quarter in 3 years and has been slowly and steadily turning the ship around. T-Mobile did better on the postpaid netadds but overall additions declined again. The larger question for the market is if 4 large players can stay competitive. Generally, the answer is no. But these are different times and there are a number of permutations and combinations that are possible.

The US subscription penetration crossed 95% at the end of Q2 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 100%. While the traditional net-adds have been slowing, the “connected device” segment is picking up so much that both AT&T and Verizon added more connected devices than postpaid subs in Q2 2010. Given the slow postpaid growth, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.

Data traffic continued to increase across all networks. By 1H 2010, the average US consumer was consuming approximately 230 MB/mo up 50% in 6 months. US has become ground zero for mobile broadband consumption and data traffic management evolution. While it lags Japan and Korea in 3G penetration by a distance, due to higher penetration of smartphones and datacards, the consumption is much higher than its Asian counterparts. Given that it is also becoming the largest deployment base for HSPA+ and LTE, most of the cutting edge research in areas of data management and experimentation with policy, regulations, strategy, and business models is taking place in the networks of the US operators and keenly watched by players across the global ecosystem.

As we had forecasted, the tiered pricing structure for mobile broadband touched the US shores with AT&T becoming the first major operator to change its pricing plan based on consumer consumption. We will see the pricing evolve over the next 2-4 quarters as the US mobile ecosystem adjusts to the new realities and strategies for mobile data consumption.

In the connected device category, iPad like its flashy cousin dominated the headlines, the sales numbers, and the industry profits. The device sent every slate maker back to the drawing board, many projects were cancelled and strategies are still being formulated to capture a new burgeoning space and Apple again has a massive lead of mindshare and pocketbook.

Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.

All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to 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 8th event – 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 the discussion.

What to expect in the coming months?

31% of the US subscription base is now smartphones.

The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market literally every week. Players are having to re-evaluate their businesses and long-term strategies. Several new impressive devices got introduced during the course of 1H of 2010 including the iPad and EVO.

There are several players whose future is at stake (to put it mildly). The competition has grown fierce and companies are finding it hard to take ideas from R&D to products in market in a short amount of time.

Microsoft announced its comeback with the W7 commercial launch imminent. The change in UI was refreshing and the expectations are quite high. W7 v2 is likely around the corner to update on the flaws of v1. HP acquired Palm in an attempt to become relevant again in the mobile device space. It has been an action packed 1H 2010 and we can expect more of the same for the remainder of the year.

2010 has also been active on the regulatory front as the national broadband plan was unveiled in March and the subsequent debate over the course of nations broadband future kept the spectrum, net-neutrality, and exclusivity issues at the forefront.

To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (We will be going in-depth into this subject at our Sept event with some very senior and experienced executives)

2010 is also the year of network rollouts. T-Mobile has been rolling out HSPA+ at an impressive rate, Clearwire announced its intention to move to LTE, Verizon is betting big on LTE and looking for competitive marketing advantage over the course of the next 12 months. AT&T has been adding backhaul, upgrading to HSPA+ and planning for LTE all at once. Even the smaller carriers like MetroPCS are looking for competitive advantage with quicker LTE launch and beat others by carrying the first LTE smartphone. (We will be releasing the next edition of our “State of the “Mobile” Broadband Nation” paper later this year)

As we had mentioned last year, the mobile data traffic kept on growing disproportional to the revenues. A series of solutions have come into the market from players big and small. We released the second edition of our in-depth research paper on data growth - "Managing Growth and Profits in the Yottabyte Era"  last quarter.

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 2010 US wireless data market is:

Service Revenues (Slides 7, 16)

ARPU (Slides 8-11)

Subscribers (Slides 12-14)

Applications and Services

Handsets

Data Traffic (Slide 15)

· As we noted in our last update, the data traffic is now significantly more than the voice traffic. By 1H 2010, the average US consumer was consuming approximately 230 MB/mo up 50% in 6 months. The good news is that there are several solutions available and are being invented that will help manage the data growth starting with the tiered pricing plans.

To discuss all these trends and more, we are putting together a unique Mobile Future Forward Executive Summit and are fortunate to have the company of some of the sharpest minds in the industry, folks who both have the vision to shape the evolution and the authority to invest billions of dollars this decade to make things happen. Hope to see you in Seattle on Sept 8th.

Abhi Ingle, VP, AT&T; Amir Mashkoori, CEO, Kovio; Anand Chandrasekhar, SVP & GM, Intel; Bob Azzi, SVP - Network, Sprint Nextel; Christopher Dean, Chief Strategy Officer, Skype; Danny Bowman, President, Sprint Nextel; David Weiden, General Partner, Khosla Ventures; Dr. Boris Nikolic, Sr. Program Officer, Global Health & Discovery, Bill & Melinda Gates Foundation; Dr. Genevieve Bell, Intel Fellow & Director, User Experience, Intel; Dr. Greg Brandenberg, CEO, Columbia Basin Health Association; Dr. Sailesh Chutani, CEO, Mobisante; Dr. Suzanne Clough, Chief Medical Officer, WellDoc; Erick Tseng, Head of Mobile, Facebook; Glenn Lurie, President, AT&T; Hank Skorny, SVP, Media Mobile Cloud Computing, Real Networks; Jack Kennedy, EVP, News Corp; Joe Sims, Lead Partner - Digital Convergence , Booz & Company; Jon Stross, VP & GM - Babycenter, Johnson & Johnson; Ken Denman, CEO, Openwave; Krishna Vedati, SVP & GM - Mobile, AT&T Interactive; Lirong Shi, President, ZTE; Louis Gump, VP Mobile, CNN; Mario Queiroz, VP - Product Management - Android, Google; Mark Selby, VP, Nokia; Matt Bross, CTO and Vice Chairman, Huawei; Michael Sievert, Chief Commercial Officer, Clearwire; Neville Ray, Chief Network Officer, T-Mobile ; Omar Javaid, CEO, BBDO; Paul Palmieri, Founder and CEO, Millennial Media; Rob Glaser, Chairman, Real Networks and Partner, Accel; Sean Cai, VP - Advanced Technology, ZTE; Stephen David, Former CIO, Proctor & Gamble; Subba Rao, CEO, TataDoCoMo; Takayuki Hoshuyama, CEO D2 Communications; Tim Chang, Partner, NVP;Tony Lewis, VP, Verizon; Wim Sweldens, President, Alcatel-Lucent

Each panel discussion will involve luminaries/experts on specific topics, for e.g.

Opportunities in Mobile

Mike Sievert, CCO, Clearwire

Dr. Genevieve Bell, Fellow, Intel

Shi Lirong, President, ZTE

Subba Rao, CEO, Tata DoCoMo

Evolution of Communication/ Engagement

Christopher Dean, Chief Strategy Officer, Skype

Erick Tseng, Head of Mobile, Facebook

Mario Queiroz, VP, Google

David Weiden, General Partner, Khosla Ventures

The size of the panel will be small and the time duration long so we can delve deep into the issues and questions. For more panel, speaker, sponsor, and program details, please visithttp://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 2010. The next Global Wireless Data Market update will be issued in Sept 2010.

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

Mobile Industry 1H 2010 Assessment July 8, 2010

Posted by chetan in : 3G, 4G, AORTA, BRIC, CTIA, Carnival of Mobilists, Carriers, Enterprise Mobility, European Wireless Market, Gaming, Indian Wireless Market, Japan Wireless Market, M&A, MVNO, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Partnership, Smart Phones, Speaking Engagements, Strategy, US Wireless Market, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

Mobile Industry 1H 2010 Assessment

http://chetansharma.com/1H10mobileassessment.htm

As the mobile world approaches the 5 billion subscription landmark, it is time to do a half yearly assessment of 2010. We will have our official Q2 2010 analysis for the US market in Aug and the global analysis for 1H 2010 in Sept after all the numbers are in. In the meantime, it might be worthwhile to take a stock of the first 6 months, the ensuing trends and what they mean for the long-term.

Mobile Ecosystem has become much more complex

In case you didn’t notice, the competitive landscape has changed significantly over the last 6-12 months. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft’s enterprise business, Kodak is competing with Yahoo, so on and so forth. One product launch, one acquisition, can change the game in an instant.  And this is only the beginning.

Network evolution: more capacity, more bandwidth, tremendous usage

We have covered this topic in detail in our paper - Managing growth and profits in the Yottabyte era. As we had predicted, the tiering of pricing plan has started in the US which is actually a good thing. It will force some discipline and technology innovation to solve the longer-term problem of network congestion. While AT&T got things in motion, market forces will take care of the right pricing and GB levels in the coming months. Data consumption on TeliaSonera and Clearwire’s network is a good indicator of what’s to come with 3-4x the usage compared to its counterparts.

New sources of revenue: mobile advertising, commerce, and more

Regular readers know that we have been bullish on the mobile advertising space for a long time. Over the last 6 months or so, some of the pieces are coming together though significant amount of work remains. Sergio Zyman, former CMO of Coca Cola once said “There is only one rule: advertising must sell.” And nothing will sell better than mobile. Period. While North America and Western Europe have been slow to wake up to the mobile commerce opportunities, in Japan, it is already a multi-billion dollar industry. Several trials are underway that are going to help open up the western market in the next 12 months for significant opportunities. In fact, the pie for the mobile services will keep on growing bigger but so will the number of players who want a piece of it. This will set up an interesting tug-of-war for the next couple of years

It’s the iPhone, dude!

Just when the competitors think they are all caught up with Apple,  Steve Jobs and co. releases a new product that raises the bar further. Google, Samsung, HTC, LG, Motorola have done well in emulating Apple while Microsoft and Nokia have fallen behind. The embarrassing launch and demise of KIN is a example of how confused things are for some of the players. While both Microsoft and Nokia are capable for mounting good comebacks, it will take more than an org change and a sprinkle of holy water. Android will easily outsell iPhone just by the law of arithmetic but Apple’s secret weapon is iTunes. With over 150M billing relationships, it has fostered a great apps ecosystem that others will find hard to replicate entirely. While some point to Apple’s tiny marketshare, wall street looks at the fat margins - rewarding Apple by making it the most valuable technology company surpassing Microsoft in a major tech tremor. Google has run the mobile chess game with great acumen so far. Despite the Nexus experiment, the explosion of the superphone category has gone according to the plan. Overall, most of the western operators are selling smartphones at 50%+ levels each quarter.

Always On Real-Time Access

The always-connected vision of the late Mark Weiser is finally approaching some realization. Mobile is so perfectly suited for cloud computing. The younger generation is growing with the expectation that they can get access to any content from any device anywhere. The constraints and friction that doesn’t allow them to do that is just not acceptable. As such, the mobile industry is scrambling to provide tools and technologies that help the digerati access content at will. All this has to be designed and developed against the current network, content, and device constraints and evolution paths. Whether it is access to music or movies for a 15 year old or availability of the entire corporate knowledgebase, information will need to be available at a touch of a button. Companies big and small are investing in the infrastructure and software tools to make this happen. We are likely to see some interesting launches in the next 12 months.

Battle for the analytical mind - data, context and intelligence drives everything

Many people don’t realize that the battle for the consumer of 2015-2020 has already begun. The company that has the best understanding about the most consumers will have a pole position in the mobile ecosystem. Players like Google, Apple, Amazon, Mastercard, Microsoft, Facebook, Twitter, China Mobile, Disney, AT&T, Vodafone, Motorola, and others are amassing a lot of information on individuals. Besides Google and Apple, Facebook has quietly become one of the most important players in the mobile ecosystem with its phenomenal reach across many countries, tremendous stickiness of the app, and innovative onboarding process of the carriers. Of course, data is a double edged sword - it can provide enormous benefits to consumers in terms of intelligence, experience, and engagement and can also prove to be problematic when privacy and data breaches happen. In fact, that will be one of the tightest ropes many including the regulators will have to walk this decade - figuring out what they call in Swedish - logam - the right balance.

Apps vs. the Web

Recently, the ecosystem has been more enamored with the apps vs. the web debate than the early departure of Brazil and Argentina from the world cup. It is rather a silly debate. As we mentioned in our apps economy paper, both worlds will coexist for a long time. What matters for the developers is the “reach” of a certain platform or technology and the “cost” and “potential” of that reach. For the user, the only thing that matters is what’s available on “their” device. Obviously, the capabilities of the mobile browser will grow over time and it will make more sense to build certain category of applications for the web vs. on the native platforms but developers live and die in the present.

Internet of Things

Nokia took the leadership stance of announcing that all of their smartphones by the next year will have NFC. You can expect pretty much all major OEMs following the same trend which means that hundreds of millions of devices will be equipped with a chipset that will enable new experiences, applications and services. Though we still need to do a lot of work to complete the end-to-end ecosystem, we are getting close. Further, all major carriers have created separate units to address the M2M and emerging devices opportunity. iPad showed what’s possible - it fundamentally created a new leisure computing category. Also, iPad (and similar form factor devices) will find good usage in the enterprise as well. Pretty soon, it will be hard to imagine a computing device without the communication capability. Operators will have to release pricing plans to accommodate such an evolution.

Nurturing ecosystems - fight for the developer mindshare

It is good to be a developer in 2010. The success of many players goes through developersville. The love fest won’t last forever though, it will depend on how vibrant the various ecosystems become and how profitable individual developer shops are over the course of time. One thing Microsoft did very well with the windows empire was to create a web of partners and developers who were incented to use the tools and develop for the platform. In a more fragmented world of mobile, things are a bit complicated. Developers don’t have time or the energy to go after the newest, shiniest toy, what matters in the end is the “cost” to develop, “reach/distribution” of the platform, and “potential” of the reach. Players who don’t consciously make an effort to make developers thrive in their ecosystem will see their developer efforts collapse like house of cards. While the media attention is squarely on iOS and Android, we are not heading down the duopoly path as the dynamics of the mobile ecosystem are significantly different from that of the PC. RIM, Nokia, Samsung and others will do well, the fight is over the relative rankings in the pecking order.

Shifts in the revenue sand dunes

By the end of 2010, the global ondeck revenues will be overtaken by the offdeck revenues. As the smartphone penetration grows, it is less likely that the user will purchase VAS from the operator. While the carrier gets a healthy access revenue of $15-40 or more/month, the VAS business is shrinking for many. Some operators are trying to extract some value but are likely to follow T-Mobile’s path and give up on the smartphone appstore eventually. On the featurephones and probably low-tier smartphones, operator do have a role to play but perhaps some of it can be outsourced to other appstore providers so that they can focus on higher-margin services. We are going to see a readjusting of the appstores again in the next 12-24 months with the weaker ones whittling away from the landscape.

New experiences - display, interaction and commerce

The man-machine interaction took a significant leap with the introduction of the iPhone. Now the touch-interface is embedded in our evolutionary genes. There is significant work going into accomplishing more with less friction with the help of new interfaces and experiences that can like trying out a new outfit in front of a mirror - at home or in the store and with a flick of finger - choose the color, purchase it, and get it shipped. The amount of time it takes to “accomplish any given task” is going to reduce dramatically. With the help of contextual sensors, extreme personalization, and brainiac software, we will take automation to a new level. This will lead to new experiences that will enable more commerce, social interaction and participation, and general awareness and intelligence about every day things. Examples like Kinect, Augmented Reality, Projection displays are just the start of the decade when the display and interaction paradigms will be fundamentally redefined.

Reallocation of revenues - winners and losers are decided in reallocation

If we take a look at the spending habits of the US consumers on “access and communication services” which includes the spending on Telephone, Cable, Internet, and Cell phones, the total “access” spending over the course of last decade has been consistently around 4% of the total personal income per capita. However, the share of each of the services has been changing steadily. Telephone used to have 65% share of the spending but is going to be below 30% by end of 2010. Others have been climbing at the expense of telephone revenues, especially the cellphones which since 2007 command the highest share. So, the overall spending has stayed constant while there has been significant reallocation of spending. Similarly, within cell phone services, data has gone from being less than 1% of the overall revenues to over 35% in 2010 and is going to be more than 50% of the overall revenue mix by early 2013. Mobile operators will need to figure out how to manage these reallocation undercurrents and maintain the overall life time value of the customer. It will come from re-architecting of the business and technology practices as well through the introduction of new services.

Mobile takes off in Verticals

Mobile has become a full-fledged computing platform and other industries are taking notice. There is significant work going on in the mHealth, mRetail, mCommerce, mEducation, mEnergy, and others to keep things busy for the next few years. There are some really innovative startups focused on making use of the computing power that the device affords and turn them into full-fledged medical instruments. Add the communication bit and you can see the revolution happening in front of your eyes. The impact on saving lives and quality of health care will be tremendous - worldwide. The regulators and the legacy players will need to keep up. As we mentioned before, the NFC wave is coming and if all goes well, it will change the retail experience. Stay tuned.

(Mobile) World is flat

There is a significant readjusting of players going on right now with some of the Asian players flexing their muscles for dominant share of the market. Competition is driving more M&A, the gravity of the mobile data world is slowly shifting from Japan and Korea to the US with Verizon overtaking the long time leader NTT DoCoMo in terms of quarterly mobile data revenues. India’s Bharti became the number 5 operator after completing the acquisition of Zain. On the device front, Samsung and LG have been ferocious in their pursuit of marketshare and have been rewarded well by their performance esp. in the North American market. HTC has undergone metamorphosis and has become a serious competitor. Many non-traditional brands like Dell, Garmin, HP, Cisco are also flexing their muscles in the space that has become the computing battleground. On the infrastructure front, ZTE and Huawei are going to make life difficult for some of the players. We can expect the big “M&As” to continue as the industry consolidates around the top 3 players in different markets and sectors. The local skirmishes will spill into the global arena. North American operators have been curiously silent on the global front. Being the most lucrative mobile market probably has something to do with it  but we can expect some of the bigger players to go shopping in the coming days.

Regulatory Excursions

The much-awaited national broadband plan was finally unveiled earlier this year. The current FCC has done a good job of engaging the industry and informing the citizens, better than its predecessors. It is also taking a deeper interest in setting up guidelines for the industry. The Comcast ruling was a setback but FCC is moving ahead with its plans. It will be interesting to see the execution details and how things pan out over the course of this decade. Similarly, regulatory agencies in other nations are acutely aware of the role broadband plays in nations economy and competitiveness and what they need to do keep their country on track. The mad scramble for more spectrum is underway. FTC is also keeping a close eye on the mobile industry for privacy related violations. If someone has any doubts of how much regulators are likely to get involved in this matter should read through the settlement between the FTC and Twitter.

Scenario Analysis - more changes in the next 10 years than in the previous 100

Despite all the commotion, the excitement, and the turbulence in the ecosystem, the trajectory of the winners and losers is not set. Like the Chaos theory, a lot depends on how the dynamic elements of the mobile universe effect and react to changes.  Players will do well to have strategies in place per scenario so they can adapt quickly and keep the mother ship in the right direction. We can expect more changes in the next 10 years than in the previous 100. The triggers for various scenarios will vary - regulatory, competitive, technology, business model, consumer adoption, economic - each of these can have an impact on how a trend becomes the fact of life.

To discuss all these trends and more, we are putting together a unique Mobile Future Forward Executive Summit and are fortunate to have the company of some of the sharpest minds in the industry, folks who both have the vision to shape the evolution and the authority to invest billions of dollars this decade to make things happen. Hope to see you in Seattle on Sept 8th.

First 25 readers to use the discount code FUTBOL get $200 off the regular price.

Abhi Ingle, VP, AT&T; Amir Mashkoori, CEO, Kovio; Anand Chandrasekhar, SVP & GM, Intel; Bob Azzi, SVP - Network, Sprint Nextel; Chamath Palihapitiya, VP - Growth, Mobile, Intl, Facebook; Christopher Dean, Chief Strategy Officer, Skype; Danny Bowman,President, Sprint Nextel; David Weiden, General Partner, Khosla Ventures; Dr. Boris Nikolic, Sr. Program Officer, Global Health & Discovery, Bill & Melinda Gates Foundation; Dr. Genevieve Bell, Intel Fellow & Director, User Experience, Intel; Dr. Greg Brandenberg,CEO, Columbia Basin Health Association; Dr. Sailesh Chutani, CEO, Mobisante; Dr. Suzanne Clough, Chief Medical Officer, WellDoc; Glenn Lurie, President, AT&T; Hank Skorny, SVP, Media Mobile Cloud Computing, Real Networks; Jack Kennedy, EVP, News Corp; Joe Sims, Lead Partner - Digital Convergence , Booz & Company; Jon Stross, VP & GM - Babycenter, Johnson & Johnson; Ken Denman, CEO, Openwave; Krishna Vedati, SVP & GM - Mobile, AT&T Interactive; Lirong Shi, President, ZTE; Louis Gump, VP Mobile, CNN; Mario Queiroz, VP - Product Management - Android, Google; Mark Selby, VP, Nokia; Matt Bross,CTO and Vice Chairman, Huawei; Michael Sievert, Chief Commercial Officer, Clearwire;Neville Ray, Chief Network Officer, T-Mobile ; Omar Javaid, CEO, BBDO; Paul Palmieri, Founder and CEO, Millennial Media; Rob Glaser, Chairman, Real Networks and Partner, Accel;Sean Cai, VP - Advanced Technology, ZTE; Stephen David, Former CIO, Proctor & Gamble;Subba Rao, CEO, TataDoCoMo; Takayuki Hoshuyama, CEO D2 Communications; Tony Lewis, VP, Verizon; Wim Sweldens, President, Alcatel-Lucent

Each panel discussion will involve luminaries/experts on specific topics, for e.g.

M2M/Internet of Things

Danny Bowman, President, Sprint

Amir Mashkoori, CEO, Kovio

Tony Lewis, VP, Verizon Wireless

Mark Selby, VP, Nokia

Evolution of Communication/ Engagement

Christopher Dean, Chief Strategy Officer, Skype

Chamath Palihapitiya, VP - Mobile, Facebook

Mario Queiroz, VP - Android, Google

David Weiden, General Partner, Khosla Ventures

The size of the panel will be small and the time duration long so we can delve deep into the issues and questions. For more details, please visit http://www.mobilefutureforward.com

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

Announcing Mobile Future Forward Executive Summit June 14, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Speaking Engagements, Speech Recognition, Strategy, US Wireless Market, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

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You have seen some hints of the project that we have been working on for sometime. We are proud to announce “Mobile Future Forward” Executive summit to be held in Seattle on Sept 8th, 2010.

Registration is Open Now. Early Bird expires June 30th 2010.

MFF is a gathering of some of the most brilliant minds in the mobile industry. The goal is to look at how mobile is likely to evolve over the course of this decade. We couldn’t have done this without the tremendous support of our excellent sponsors who are paving the way in their respective segments.

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The speaker list includes the who’s who of the mobile industry:

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Glenn Lurie, President, AT&T

Subba Rao, CEO, TataDoCoMo,

Mike Sievert, Chief Commercial Officer, Clearwire

Louis Gump, VP Mobile, CNN,

Paul Palmieri, Founder and CEO, Millennial Media

Dr. Sailesh Chutani, CEO, Mobisante

Abhi Ingle, VP, AT&T Wireless

Ken Denman, CEO, Openwave

Amir Mashkoori, CEO, Kovio

Stephen David, Former CIO, Proctor & Gamble

Dr. Genevieve Bell, Intel Fellow, User Experience, Intel

Hank Skorny, SVP, Real Networks

Jon Stross, VP & GM - Babycenter, Johnson & Johnson

Dr. Suzanne Sysko, Chief Medical Officer, WellDoc

Dr. Boris Nikolic, Sr. Program Officer, Bill & Melinda Gates Foundation

Krishna Vedati, SVP & GM - Mobile, AT&T Interactive

Christopher Dean, Chief Strategy Officer, Skype

Russ McGuire, VP, Sprint Nextel

Jack Kennedy, EVP, News Corp

David Weiden, General Partner, Khosla Ventures

Anand Chandrasekhar, SVP and GM, Intel

Chamath Palihapitiya, VP Growth/Mobile, Facebook

Rob Glaser, Chairman, Real Networks

Wim Sweldens, President – Wireless Division, Alcatel Lucent

Takayuki Hoshuyama, CEO, D2 Communications

Neville Ray, SVP, T-Mobile

Bob Azzi, SVP—Networks, Sprint Nextel

Mario Queiroz, VP—Android, Google

Matt Bross, Global CTO, Huawei

We will be covering the following topics in detail:

You can read more about what you can expect at the executive summit in the following whitepaper.

Mobile Future Forward Paper

I hope to see you there.

Chetan Sharma

Chief Curator

Mobile Future Forward

US Wireless Data Market Update – Q1 2010 May 16, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Wallet, Networks, Partnership, Patent Strategies, Patents, Privacy, Speaking Engagements, US Wireless Market, Unified Messaging, WiMax, Wireless Value Chain, Worldwide Wireless Market , 5 comments

US Wireless Data Market Update – Q1 2010

http://www.chetansharma.com/usmarketupdateq12010.htm

Executive Summary

The US wireless data market grew 5% Q/Q and 22% Y/Y to exceed $12.5B in mobile data service revenues in Q1 2010 - on track so far to our initial estimate of $54B for the year.

In a significant milestone that went largely unnoticed, Verizon Wireless edged past NTT DoCoMo - the decade old leader in mobile data revenues to become the biggest mobile data operator by data revenues. Helped by its 93M subscriber base and high ARPU, the Verizon juggernaut is steamrolling. Rest of the 3 top US operators also occupy leading positions amongst the top 10 global mobile data operators.

The US subscription penetration was approximately 94% at the end of Q1 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 100%. While the traditional net-adds have been slowing, the “connected device” segment is picking up so much so that both AT&T and Verizon added more connected devices than postpaid subs in Q1 2010. Given the slow postpaid growth in, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.

Data traffic continued to increase across all networks. US has become ground zero for mobile broadband consumption and data traffic management evolution. While it lags Japan and Korea in 3G penetration by a distance, due to higher penetration of smartphones and datacards, the consumption is much higher than its Asian counterparts. Given that it is also becoming the largest deployment base for HSPA+, LTE and WiMAX, most of the cutting edge research in terms of data management and experimentation with policy, regulations, strategy, and business models is taking place in the networks of the US operators and keenly watched by players across the global ecosystem.

We are starting to see the inevitable changes in broadband pricing starting with T-Mobile and MetroPCS. Over the course of this year, we are likely to see newer pricing models that tie usage to pricing and add multiple devices to a single data bucket.

The fabled iPad landed in the market and it is a winner. Apple’s latest gizmo has created a new user experience category of casual and couch computing that will foster growth in the connected device space. Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.

Privacy brouhaha has been brewing for some time and the polity class is getting interested in stepping in. If people are really serious about tackling privacy, OEMs and carriers should build a physical/soft privacy button on the device with 3-5 levels (just like for the ringer volume) that allows users to open/close privacy across all applications and services with the touch of a button. All apps and services should adhere to the principle via APIs. The other mistake companies make about privacy is by treating everyone the same. Privacy is about the perception of control and transparency. If it is given back to the consumer, they are likely to engage more and have a more positive impact on revenue streams that are likely to flow.

In an another global milestone, Softbank became the first major operator to have more service revenues from data services than voice services. In Q1 2010, 55% of its service revenues were attributed to data services. (While Smart and Globe have been reporting 50%+ revenues from data services for a long time, the total revenues are not at scale with the leading global operators. Incidentally, for the first time in many years, the data revenue % slipped below 50% for the both operators in Q1). Based on current projections, US is likely to cross the 50% data revenue threshold in late 2012 or early 2013. NTT DoCoMo is next in line to cross the 50% mark this year.

All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to 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 8th event – Mobile Future Forward which is bringing leading industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. Hope you can join the discussion.

What to expect in the coming months?

The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market. Players are having to re-evaluate their businesses and long-term strategies. Several new impressive handsets got introduced during the course of 1H of 2010. iPad finally launched and even the next generation iPhone walked into a bar.

Microsoft announced its comeback with the W7 launch though the time it is taking to launch is making partners nervous. The change in UI was refreshing though the inability for the OEMs to differentiate is not winning friends. HP acquired Palm in attempt to become relevant again in the mobile device space. Some other players missed out in buying an attractive IP portfolio. It has been an action packed 2010 thus far and we can expect more of the same for the remainder of the year.

2010 has also been active on the regulatory front as the national broadband plan was unveiled in March (our thoughts on the plan). The Comcast ruling delivered a blow to the FCC and any directives or policies will hardly have any impact on the ecosystem in the short-term.

With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. Many countries in South America have imposed unnecessary spectrum caps. Others are behind in sorting out their spectrum allocations. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.

To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (Former FCC Chairman, Kevin Martin headlined our Mobile Breakfast Series event in March and discussed the Spectrum Crises. Our June 10th event is bringing CEOs of some of the most innovative mobile startups to discuss the ecosystem)

2010 is also the year of network rollouts. T-Mobile has been rolling out HSPA+ at an impressive rate, Clearwire has been expanding the network so fast that it has become the biggest construction company in the US, Verizon is betting big on LTE and AT&T has been adding backhaul, upgrading to HSPA+ and planning for LTE all at once. Even the smaller carriers like MetroPCS are looking for competitive advantage with quicker LTE launch and beat others by carrying the first LTE smartphone. (We will be releasing the next edition of our “State of the “Mobile” Broadband Nation” paper later this year)

As we had mentioned last year, the mobile data traffic kept on growing disproportional to the revenues. A series of solutions have come into the market from players big and small. We will be releasing the second edition of our in-depth research paper on data growth - "Managing Growth and Profits in the Yottabyte Era" later this month.

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 2010 US wireless data market is:

Service Revenues (Slides 7, 16)

ARPU (Slides 8-11)

Subscribers (Slides 12-14)

Applications and Services

Handsets

Open

Data Traffic (Slide 15)

· As we noted in our last update, the data traffic is now significantly more than the voice traffic. The good news is that there are several solutions that available and are being invented that will help manage the data growth. The question is how fast will the operators deploy some of these solutions.

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 2010. The next Global Wireless Data Market update will be issued in Sept 2010.

Your feedback is always welcome.

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

Thanks.

Chetan Sharma

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

Global Mobile Data Market Update 2009 March 31, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

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Executive Summary

The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (combined) are adding almost 30M new subscriptions every month. Amongst the two, India is outpacing China 2:1. China touched 750M subscriptions while India crossed 525M by the end of 2009. With 4.6B subscriptions, the global subscriptions penetration was above 68%.

The global mobile data revenues reached $220B and mobile data now contributes 26% of the overall global mobile service revenues.

As expected, the overall global mobile revenues stayed pretty flat for the year at around $1.1 trillion as many regions were hit by the recession and the competition pushed the ARPU lower for many operators. While the countries like US, Japan, China, and India showed very little signs of pullback, most of Europe and the developing world experienced a decline in overall service revenues in 2009. All the major markets have their data contribution percentages above 10% now.

For some of the leading operators, data is now contributing almost 50% of the overall revenues. However, the increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. NTT DoCoMo continues to dominate the carrier ranking in terms of the mobile data service revenues, Verizon Wireless which became #2 replacing China Mobile and is slowly edging towards the #1 spot and is likely to overtake DoCoMo within the next few quarters.

Though 4G as a standard hasn’t been defined yet, the discussions around LTE and WiMAX deployments grew intense. Telia Sonera became the first operator to commercially launch LTE. At CTIA, Sprint/HTC became the first players to launch a WiMAX smartphone and MetroPCS/Samsung took the honors for the LTE smartphone.

2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic. In the US, the yearly mobile data traffic exceeded the voice traffic for the first time.

We are also entering the phase of global mega-mergers in telecom. Bharti Airtel of India just acquired Kuwait-based Zain Group to become the 5th largest telecom group in the world (at the end of 2009, it was #9). There are now 14 telecom groups with 100M or more subscriptions. While China Mobile’s ARPU is 1/5th of its western counterparts, it operates its business at higher margin, around 51%. There are a number of global players mainly in Europe and Asia who have mastered the art of running lean operations and if they have good bank balance they are going to go shopping in the days ahead.

From the revenue perspective, the $50 billion revenue club is more exclusive with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.

As we sit at the cusp of the iPad era, there is a bigger transformation taking place and that is of the connected consumer electronic devices (CEDs). Few years from now, most popular CEDs will have connectivity. We are also approaching the start of phase where pricing of access will start to morph - we will see the introduction of family data plans (something we have been advocating for some time), ability to connect multiple devices to the same GB plan, more granular use plans (per session/day/week/mo/yr etc, roll-over GBs anyone?). As the number of connected devices/consumer increases, we will start worrying about Average Margin Per User (AMPU) or Average Margin Per Connection (AMPC) because ARPU won’t quite capture the dynamics of the industry.

Exciting times indeed.

Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.

This note summarizes the findings from the research with added insights from our work in various global markets.

Impact of Global Recession

  • Telecom in general fared better than other industries. In some regions, it hardly caused a tremor. However, in most nations, the impact was felt by the operators. Amongst the 40 major operators we studied, SK Telecom, 3 Australia, KTF, T-Mobile Netherlands, Rogers, Softbank Japan, Singtel, Vodafone Italy, T-Mobile Germany, 3 Sweden, Telstra, China Unicom, and Vodafone Germany experienced increase in both the data ARPU and the overall ARPU during 2009. Some of increase was due to the fluctuation in international currencies e.g. Korea.

  • Looking at the data at a country level, most nations noted a decline in overall ARPU. Only Venezuela, Pakistan, Argentina, Bangladesh, Australia, and Poland showed positive increase in ARPU since 2008.

  • Rule of Three is kicking in most markets with smaller players having to consider the M&A option to remain viable. T-Mobile/Orange, Bharti/Zain tie-ups are just the start of that process. We are likely to see many international mergers in 2010 and beyond as power in the mobile ecosystem self-adjusts.

  • 5 new players joined the 100M subscriptions club. The new members are: Bharti Airtel (India), MTN Group (South Africa), Orascom (Egypt), Etisalat (UAE), and MTS (Russia). The top 9 telecom groups in the world are: China Mobile, Vodafone, Telefonica, America Movil, Telenor, T-Mobile, China Unicom, TeliaSonera, and Orange.

Service Revenues

  • US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $44.56B vs. $32.5B for Japan in 2009. China with $20.3B was ranked number 3. US registered the highest growth amongst the top 3 with over 40% increase from EOY 2008 levels followed by Japan and China.
  • The top 10 nations by service revenues are: US, China, Japan, France, Italy, UK, Germany, Brazil, Spain, and India.
  • The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Australia, Spain, and Korea.
  • NTT DoCoMo continues to dominate the wireless data revenues rankings with over $16B in data services revenue in 2009. Almost 46% of its overall revenue now comes from data services. DoCoMo also crossed the 95% 3G mark.
  • NTT DoCoMo was followed by Verizon Wireless, China Mobile, AT&T, KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to round up the top 10 operators by wireless data service revenues.
  • Each of the top 5 carriers exceeded $10B in yearly mobile data service revenues in 2009
  • Data revenues for the top 10 operators now account for almost 43% of the global mobile data revenues.
  • The biggest jump in data revenues was experienced by Verizon, Softbank, and AT&T. DoCoMo saw an 11% increase for the year.
  • Most of the operators in the developed nations are contemplating future strategies to boost data revenues such that the decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPU.
  • China reported approximately $20.3B in data revenues for 2009 and the percentage contribution from data services is around 32%, data ARPU is around $3.2. For India, data ARPU continues to stay below $0.50 as most of the new adds are voice only subscribers and there is continued price pressure in the market.
  • China Mobile remains the most valuable telecom operator with over $195B in market cap. It is followed by Vodafone at around $122B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans.
  • In 2009, SMS’s vice like grip on data revenues continues to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
  • NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets. They are exploring new technologies and social experiments ahead of almost anybody else in the market. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends, technologies, and ecosystem dynamics in these markets to get a sense of what’s coming.

· From the revenue perspective, the $50 billion revenue club has limited membership with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.

ARPU

  • Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like DoCoMo, and Softbank are over 46%. KDDI, 3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, Telstra, and 3 Sweden exceeded 35% and many others are on the verge of crossing the 30% mark.
  • NTT DoCoMo reported the highest data ARPU for the year while Rogers took away the honors for the highest overall ARPU. Other notable percentage increases in ARPU were from 3 Italy, SK Telecom, KTF, T-Mobile Germany, 3 Sweden, and T-Mobile Austria. The Japanese operators saw a decline in ARPU by 3%.
  • The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 53% (or $2) contribution coming from the data services.
  • Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.

Mobile Data Traffic

  • We have been calling attention to the tremendous increase in mobile data traffic for some time. The discussion has hit mainstream and many operators are scrambling to nail-down their short-term and long-term strategies to manage the data traffic growth in their networks. See our paper on the subject "Managing growth and profits in the Yottabyte era." The recommendations discussed in the paper are slowly being adopted by various vendors and operators worldwide.
  • The global mobile data traffic exceeded an Exabyte for the first time in 2009. In fact, the data usage is growing so fast that this year, the two territories experiencing the most growth - North America and Western Europe are both going to exceed an Exabyte in mobile data traffic.
  • 2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic.
  • For many of the superphone heavy operators, devices like iPhone and Android account for more than 50% of their total data traffic.
  • 2010 will mark the first year when the total number of mobile broadband connections will exceed the total number of fixed broadband connections.

For more mobile data traffic analysis, please stay tuned for the second edition of our Yottabyte research

Subscriptions

  • India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times  the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Combined, one year of growth in these two market is equivalent to the size of the third largest market - the US, to date. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
  • Thanks to the explosive growth in the emerging markets, the global mobile market went past 4.6B in 2009 and is likely to cross the 5B mark in 2010. The global mobile subscriptions now represent over 68% of human population on planet earth.
  • China crossed the 700M subscription mark in July while India’s total went past 500 in Nov. In the meantime, US crossed the 90% subscriptions mark in 2009.
  • In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018.
  • The top 10 nations by subscriptions are: China, India, US, Russia, Brazil, Indonesia, Japan, Germany, Pakistan and Italy.
  • China Mobile became the first operator (and likely to be the only one for a very long time) to cross the 500M mark. It remains the #1 carrier in terms of the total number of subscriptions followed by Vodafone. Telefonica, América Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.

Mobile Apps

· The total number of app downloads in 2009 reached 7 billion resulting in approximately $4.1B in revenues 12% of which was from mobile advertising.

· The number of non-carrier appstores jumped to 38 from 8 in the previous year.

· While Asia had the highest percentage of the download share, North America had the highest share of the apps revenue accounting for over 50% of the total revenue.

· The paid ASP in 2009 was approximately $1.9 and the advertising revenue generated from the free applications was approximately $0.09/user/app/year

For a more detailed analysis of the mobile apps market, please see our paper “Sizing the Global Mobile Apps Market”

Others

  • Messaging still accounts for the lion-share of data service revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have gradually chipped away the share from messaging. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
  • Nokia dominated the year as usual but the revenue share is shrinking and so is the lucrative smartphone share. Apple, RIM, and Google are relentlessly attacking the top tier while Samsung, LG, and others giving a tough fight for the bottom tier. We see a new middle tier emerging that has the form factor of a featurephone and functionality of a smartphone. The smartphone category is getting further split into regular qwerty smartphones like Blackberry and the touch and full browser based superphones like the iPhone and Droid.
  • The year was dominated by several blockbuster device launches like the iPhone 3GS.
  • Next few years will be big for infrastructure providers as many countries both developed and developing get into upgrading their infrastructure.
  • Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
  • In the US, the increase in messaging volume catapulted US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
  • Deployment of 3.5G technologies is in full swing. However, it is the discussion of 4G that is occupying the headlines, even though 4G hasn’t been fully defined yet and the current candidates for 4G are nowhere near the performance goals of 4G (150Mbps/50+Mbps). Many larger operators have laid out their plans for deploying LTE starting this year.
  • We are also seeing regulators playing an active role in making the markets competitive and attractive in the long-term.

· The velocity with which the smartphones are being introduced into the market esp. the western markets, one wonders if in five years, we will be using the moniker to describe devices and if the "dumbness" in the device market will be practically eliminated. Led by Apple’s Appstore success, significant investments are pouring into the appstore world. In parallel, the debate over apps vs. mobile web is intensifying. The implications of the transition will be significant on the ecosystem on many levels.

2010 will be a critical year on many fronts. As usual, 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 2010. The next Global Wireless Data Market update will be released in Sept 2010.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

CTIA Roundup 2010 March 26, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, MVNO, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Traffic, Mobile Usability, Patent Strategy, Patents, Smart Phones, Speaking Engagements, Strategy, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

wordlectia3

CTIA hosted its annual networking party in Vegas. I can appreciate what Bill Murray must have felt like in ground hog day for sometimes I can’t tell which year we are in at CTIA.  Of course, things are moving forward with all the advances and services but the messaging and value props reappear from the dead. In any case, it is always good to reconnect with colleagues and wander around on the show floor to get the pulse of the industry. The highlight of the show was the release of the HTC Evo 4G device by Sprint to mark the entry of the first WiMax smartphone. Not to be outdone, Samsung announced SCH-r900 (who comes up with these names) - the first LTE handset to be launched later this year on the Metro PCS network. Like at the Mobile World Congress, it was clear that industry is courting the “developers”  though few have figured out how to help them with a healthy revenue stream. There was a lot of discussion on 4G, Mobile Advertising, Mobile Web vs. Apps, Femtocells, Smart Driving Solutions (it had its own pavilion), HSPA+, A/V Reality, Spectrum, Congestion management, National Broadband Plan, Taxi lines, and more. This note summarizes the observations and opinions from the event, discussions, and briefings.

My trip started early as I was moderating a panel on Mobile Advertising at the packed Mobile Web and Apps World forum. I am finding that the pre-shows generally have better attendance than sessions during the show. MTV’s Joe Lalley mentioned that the number of RFPs that require mobile advertising as a component have grown 3-4 times in the last 6-12 months. One of the areas that has been lagging is the “industry consensus on metrics” as without consistent numbers across all ad networks and service providers, many in the advertising industry will stay on the fence or will work with only select players in the ecosystem. Gary Schwartz, who is on IAB’s Mobile Marketing Committee updated on the collaboration done between IAB and MMA and we should be seeing some of the work soon. To some extent the story of mobile advertising is playing out exactly as we had imagined in our Mobile Advertising book and once many of the pieces are in place, the use of mobile in advertising will become so pervasive that we will wonder what took so long. And as I mentioned before, Apple could help redefine mobile advertising.

It is good that CTIA is thinking of some diversity when designing their keynotes. Iñaki Urdangarín, René Obersmann, Padmasree Warrior, Michelle Caruso-Cabrera, James Cameron, and Biz Stone were a welcome change not that there is anything wrong with other speakers. It is better to look at the industry from multiple angles. However, the lack of developers on the stage was acutely felt. The consistent message across all keynotes was: tremendous growth ahead and we are barely scratching the surface. That was hardly in doubt, the question is who benefits from it and who goes home.

T-Mobile announced the launch of its HSPA+ upgrade along with many smartphones to launched soon. Per Cole Brodman, CTO, T-Mobile US, this makes T-Mobile the US operator with the fastest network (did you know T-Mobile has more cellsites than Verizon?). With WiMAX and LTE smartphones coming in the next few months, we can expect a good tussle for mindshare. However, as the FCC quoted in its National Broadband Plan from our paper  “State of The (Mobile) Broadband Union” - there is a difference in advertised vs. actual speeds especially on smartphones. We will be doing some more research on the topic later this year.

The highlight of the show was Sprint’s release of the “mother of all smartphones” (from the spec point of view)- the HTC EVO 4G. Consider this: 1GHz processor, 8/1.3MP camera, 720p HDvideo, HDMI out, Hotspot capability (upto 8 devices), 3-6 Mbps (wimax)/.6-1.4 Mbps(evdo), 1GB ROM, 4.3” capacitive display, etc. Full specs here. Of course, the pricing and street performance will determine its success but clearly a milestone for the industry. The device came to the market earlier than most expected and will let the competitive fervor to go up a notch.

A couple of days later, Samsung announced its SCH-r900 (who comes up with these names) - the first LTE handset to be launched later this year on the Metro PCS network. Had it been on Verizon or AT&T, it would have gotten more attention. In any case, Metro PCS is trying to cement its place for the bragging rights. We can expect a number of new LTE smartphones coming into the market early next year. Voice and actual performance are still an open question.

Congestion management remains a big issue for the industry. I was glad to hear that the industry is coming around to the realization that “a holistic approach” is required to solving the problem, something we first outlined in our widely referenced paper “Managing Growth and Profitability in the Yottabyte Era.” Ralph de la Vega, speaking in his capacity as the Chairman of the CTIA and executive at AT&T embraced the principles of a sustainable model - complementary technologies, application efficiencies, network efficiencies, and available spectrum. We should add pricing efficiencies into the mix as well. Chetan Sharma Consulting will be releasing an update to the Yottabyte paper in the next couple of months, so stay tuned.

There was clearly a lot of focus on developers and attempts at giving them more voice and attention. As I alluded to in my talk on the appstore ecosystem at last CTIA, the various appstores need to focus on how to make their ecosystems more vibrant and profitable for the developers, else, we will start seeing them drop like dead flies in the not so distant future. A week prior to the CTIA, we released our research on the appstore economy which was well received. While a number of developers had booths at CTIA, there was no useful traffic. Better forums were organized WIP Connector and OMS.

With the imminent arrival of iPad next week, there was plenty of discussion and display of eReaders/tablets and how it might drive another category. While we won’t see the iPhonesque like sales numbers, it is clearly an exciting introduction to couch computing. I will have more to say on the subject once I get my hands on the device next month. It is also quite apparent that the category of extending the display beyond the device is going to take shape this decade. The interactions and content doesn’t need to be in the confines of the small display. 3D video also surfaced as something many players are working on.

Video was touted as the killer app for 4G though I wondered who will be the hunter and the hunted. I remember the same argument for 3G and mobile video went from the darling of the show to a pariah that no one wanted to touch in a matter of two years. Is video over cellular really the best use of resources? Am sure, the debate will continue for the foreseeable future.

Activity in the mHealth segment is picking up. It was mentioned several times in the various keynotes as well as the number of startups tackling the capture and processing of medical data is increasing. One of them was Mobisante which presented on a VC panel I moderated. They are building a low-cost ultrasound imaging device that uses smartphones.

Some of the other news worthy items were:

We will be discussing many of the future topics in much more detail at our upcoming conference “Mobile Future Forward.” More details to come.

Thanks

Chetan Sharma

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

New Research: Sizing up the Global Mobile Apps Market March 17, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, European Wireless Market, Gaming, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Usability, Partnership, Smart Phones, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 6 comments

Sizing up the Global Mobile Apps Market

mobileapps_s

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

Industry Study Commissioned by Getjar

Executive Summary

Mobile applications (apps) have been around since the late nineties and the apps stores have been available for a quite some time as well. Operators have been offering content and applications on their appstores for most of the last decade. But it wasn’t until the launch of Apple Appstore that the appsworld started to blossom in earnest. First, it fundamentally changed the revenue model in favor of the developers which has become the current defacto standard (70/30) in the mobile apps business. Second, it brought more developers into the ecosystem as it fostered the notion of focusing on just 1-2 platforms rather than the entire device ecosystem to be relevant. Third, the time-to-market equation changed for developers so that they can get the application from conception to market in a fraction of a time of what was possible in the past. Finally, the importance of a seamless end-to-end user experience to increase usage and monetization became a core principle in the mobile apps space.

While Apple has played a significant role in reenergizing the mobile apps space by bringing more consumers and developers into the ecosystem, there is significant activity outside the iPhone or smartphones space that is often not discussed. The purpose of this research study is to take a holistic look at the mobile apps space across all platforms and on a global basis to get a sense of the size of the mobile apps market and the direction it is headed.

The overall mobile apps downloads are expected to increase from over 7 billion in 2009 to almost 50 billion by 2012 growing at the rate of 92% CAGR. The revenue from mobile apps which includes both paid downloads and revenue from advertising and virtual goods is expected to increase from $4.1 billion in 2009 to $17.5 billion by 2012 at the rate of 62% CAGR. Though ondeck (operator managed) mobile apps sales exceeded those from offdeck in 2009, by 2012, offdeck is expected to hold the lion share of the mobile apps revenue.

The dynamics of the app market are quite different in emerging nations where to effectively monetize the significant app momentum (app downloads/active user and growth rates in some of these countries exceed those from the western markets, irrespective of the device type), creative strategies are needed to attract new consumers and different business models will be required to make the regional ecosystems viable.

Overall, by enhancing discovery, improving user experience, dropping price barriers, and increasing developer revenue share, the apps ecosystem can continue to prosper. The paper presents the results of the study in more detail as well discusses the future of mobile apps and how the app economy is likely to evolve.

Download full paper

My thanks to Getjar for supporting the research.

Thanks

Chetan Sharma

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

Mobile Breakfast Series Event Roundup March 12, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Carriers, European Wireless Market, International Trade, Japan Wireless Market, Location Based Services, MVNO, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Traffic, Music Player, Privacy, Smart Phones, Speaking Engagements, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

Wednesday Morning we hosted the third edition (sold out) of the Mobile Breakfast Series and were grateful for the time and insights from two outstanding speakers. Thanks to our sponsors for the support: Motricity, Openwave, WDSGlobal, and Clearwire

First up was Kevin Martin, former FCC Chairman and current co-chair of the communications practice and partner at the leading law firm of Patton Boggs in Washington DC.

Second speaker was Rob Glaser, Chairman and Founder, Real Networks. This was his first public appearance since he stepped down as CEO of Real Networks.

Kevin talked about the National Broadband Plan that is going to be released this coming tuesday and Rob opined on the opportunities in mobile. I had the good fortune of asking and moderating the Q&A after the initial presentation.

Summary of his comments:

Rob’s talk (embedded below) was about the opportunities created by the introduction of smartphone/superphones over the next 34 years.

Opportunities are:

and of course challenges are:

In summary,

After the intense 30 minute talk that the sold out crowd tried to absorb as much as possible, I asked him what Real would do if he were starting today. And there was a similar question from Andy Kleitsch from Billing Revolution about advise to startups. Here is some of what he had to say (courtesy: Techflash)

On the question of vertical vs. horizontal integration (question from Tricia Duryee of Moconews), he had this to say (courtsey: Techflash)

His presentation below:

We also announced the June 10th event that will all about Mobile Startups. Registration is open. It should be a great discussion with startup CEOs.

Also, announced the Sept 8th event which is of the long-form (day long) – Mobile Future Forward. Great speakers and useful discussion. Stay tuned for more details. We are working feverishly on the details.

Many thanks to our generous sponsors who believe in the vision behind the MFF event – Real Networks and Millennial Media. Your support is much appreciated.

MFF-1

Finally, a personal thanks to all those of you who helped out. You know who you are. We are a pretty lean operation and need assistance from our friends to make every event successful and useful to the mobile community.

Overall, we had as much fun hosting the event as we had in preparing for it. Please let us know your feedback.

Some pictures from the event:

304 307 316 324

328 332

334 336 344 343 341 338

Some additional coverage of the event by some of the most outstanding reporters in the industry - Seattle Times, Techflash, Moconews, GigaOM, and PC World. Thanks.

http://seattletimes.nwsource.com/html/technologybrierdudleysblog/2011306485_rob_glaser_surfaces_outlines_m.html

http://seattletimes.nwsource.com/html/technologybrierdudleysblog/2011306195_former_fcc_boss_on_fedsfree_wi.html

http://techflash.com/seattle/2010/03/rob_glaser_on_apple_android_and_the_future_of_mobile.html

http://techflash.com/seattle/2010/03/rob_glasers_advice_to_startups.html

http://moconews.net/article/419-former-realnetworks-ceo-rob-glaser-says-for-now-apple-has-won/

http://moconews.net/article/419-fcc-former-chairman-says-concerns-for-open-access-persist/

http://gigaom.com/2010/03/10/rob-glaser-defines-the-superphone-and-predicts-the-mobile-future/

http://gigaom.com/2010/03/10/former-fcc-chair-lays-out-the-limits-on-the-agencys-authority/

http://www.pcworld.com/businesscenter/article/191195/former_fcc_chair_says_more_fiber_will_help_wireless_crunch.html

http://www.pcworld.com/article/191200/rob_glaser_thinks_mobile_is_the_next

2010 Mobile Industry Predictions Survey January 3, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Uncategorized, Unified Messaging, Usability, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 6 comments

2010 Mobile Industry Predictions Survey

http://www.chetansharma.com/MobilePredictions2010.htm

Mobile Predictions Survey (pdf)

Mobile Predictions Survey (ppt)

First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2010. Thanks to all who participated in our 2010 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.

Before we dive into the survey results, let’s do a quick wrap-up of the year that was. Well, since we  just completed one heck of a mobile decade, let’s do a quick jog down the memory lane.

The Last Decade: 2000-2009

Each new decade brings its own consumer and technology trends. During the 2000s mobile cemented its place in the global society fabric, the use of mobility became addictive and pervasive, to be without mobile seemed a curse and innovation blossomed and took user expectations to new heights.

decadeglobal

From a pure statistical point of view, the global mobile subscription penetration grew from 12% in 2000 to approximately 68% in 2009 - phenomenal by any measure. The overall revenues grew over 400%, the data revenue grew 32,600% and the total subscriptions grew 563%. NTT DoCoMo paved the way with the i-mode launch in 1999 and they were the operator to emulate throughout the last decade, leading every single year in data revenues, in new application and service revenue sources, and in innovation and risk taking. They tried to export the success to other regions with little reward but DoCoMo clearly led the industry in taking mobile devices where they have never gone before.

China and India were late to the party but during the second half of the decade caught up with the western world and eventually surpassed all nations becoming number one and two nations by subscriptions respectively. In 2006, China Mobile became the most valuable operator passing Vodafone.

Mobile devices went significant transformation as well. From the early Bluetooth, camera, and music phones to the iPhones, the Storms, and the Androids, the industry was transformed by the introduction of Apple’s iPhone in 2007. While Bluetooth, sleek designs, camera phone defined the first half of the decade, the second half was all about the applications and the mobile web. While Nokia dominated the entire decade in terms of the sales and profits, having missed the touch revolution, it leaves the decade a bit battered and a bit behind playing catch-up to the newcomers who profoundly disturbed the status quo.

decadeoem

Razr carried Motorola through 2006 when its global share peaked but was left to reinvent itself during the second half. It seems to have redeemed itself with the successful launch of Droid and upcoming Android devices. While many in the industry predicted RIM’s demise, the company has only gotten stronger and is looking good for the 2010s. The emergence of Samsung and LG as strong players in the mobile ecosystem was also a big story of the decade with Samsung increasing its share by 380% and LG by 575% becoming the number 2 and 3 players respectively.

While Microsoft’s Windows Mobile had an early start and the enterprise market share, it lost its way through several missteps and is on dialysis as we enter the new decade. One shouldn’t count WM out though but there is a lot of work to be done before it can capture the imagination of the ecosystem which has been sequestered away by iPhone and Android.

While many new application areas were introduced during 2000s, none was able to displace SMS as the leading app category by usage and revenues. However, it’s relative share has started to come down especially in North America and Western Europe.

As data usage grew, so did the data traffic bringing many data networks to their knees. We expect the data traffic consumption to only accelerate. Many people are underestimating the growth rates (as they did previously) and the strain the increase in consumption will put on the unprepared networks. Projector phones will take media  consumption to a new level. Data management is going to be big business in the 2010s.

Overall, the mobile industry became a trillion dollar industry in 2008 and the data revenues are increasing in almost all regions. Voice is being commoditized at fast pace and that has put the traditional economics and ecosystem wealth distribution in topsy-turvy.

decadeus

The US market also experienced tremendous growth with mobile data service revenues climbing 21,327% and becoming a mainstay in the mobile economy. In 2008 it crossed Japan as the most valuable mobile data market. US was late in adopting SMS but caught fire once American Idol started using it and even played a good role in the 2008 Presidential election in showcasing the power of mobile. Verizon started the decade being the number one operator and after trading places with Cingular and ATT grabbed the title back in 2009 (after the Alltel acquisition) to become the most dominant carrier in North America. Many smaller players competed by being innovative with Cincinnati Bell launching the fist UMA device, Sprint the first mobile eReader, and TMO launched the hotspot business which has now become an essential component of an operator strategy going forward.

Mobile is also replacing landline at a much faster pace than expected and within the first half of the new decade, we will have majority of the users using mobile vs. landline. Just like the last decade, this one starts with a new standard deployment of LTE that will keep operators and vendors busy throughout the decade. However, a lot of the developing markets will still be deploying 3G during the first half of the decade.

Infrastructure providers suffered the most in the decade bookended by the two recessions. Consolidation of giants (Alcatel Lucent, Nokia Siemens), bankruptcies of the famous (Nortel), and uprising of the upstarts (Huawei) pretty much defined the decade for the segment. Ericsson and Huawei enter the new decade from a strong position and looking to dominate the global markets.

The last decade was also marked by some prominent IP battles such as RIM vs. NTP, Qualcomm vs. Broadcom, Sony Ericsson vs. Samsung, Upaid vs. Satyam etc. (disclaimer: we worked on some of these cases and testified as an expert)

Here is our “subjective” list of movers and shakers of the last decade

2000-2009

2010-2019

Operator of the Decade

NTT DoCoMo

DCM led the way in almost all new category of apps and services. Its data service revenue was highest in each of the last 10 years

DCM will continue to lead along with KDDI and SKT. However, it might be the carriers with tremendous scale who will have the calling cards in the new decade. Watch for China Mobile, Vodafone/Verizon, Telefonica, Orange, Bharti, Unicom, Singtel

OEM of the Decade

Nokia

Nokia dominated in sales and revenues in each of the 10 years and while the last couple of years took some shine off its glorious past, the company nevertheless came out ahead

RIM, Apple, Nokia, Samsung

Smartphone OEM of the Decade

Apple

Smartphones as we know them were introduced by RIM but Apple defined the category and the subsequent ecosystem

This space will be very competitive with Apple still the gold standard to beat

Infrastructure Provider of the Decade

Ericsson

Its prime rivals struggled to stay afloat while Ericsson grabbed most of the revenues from infrastructure contracts and is very well positioned for the next decade

Ericsson is joined by Huawei as the two top infrastructure provider with Huawei giving tough competition for LTE contracts. ZTE and other Chinese infrastructure providers will also replace some of the incumbents

Nation that led in mobile data

Japan

This is a no brainer. Japan led with Korea a close second. Finland, UK also impressed

US, China, and India are well positioned to make an impression but most likely during the second half. Japan will still be a major player

Device of the decade

iPhone followed by Razr

iPhone impressed with form and function while Razr with its global sales making it a top selling device of all times

The field might get more crowded as all OEMs focusing on the smartphone category. However, OEMs who also focus on the 90% of the market w/o smartphones might win the top prize

The year 2009

Apple continued to dominate the headlines for the third straight year - whether it was the launch of 3GS or the upcoming introduction of the fabled tablet. Google too kept the ecosystem active. It has executed on its mobile strategy with brilliant acumen though causing significant consternation amongst its partners who it needs to be successful. It has been often misunderstood by competitors, regulators, and partners. Often, they have focused on Google’s tactics vs. its strategy. Look for these two players to be very aggressive as they try to fight for the mantle and the mindshare.

While Nokia leads the OEM space by a good distance, its momentum in the smartphone space left a lot of question marks. Motorola made a credible comeback with Cliq and Droid. Samsung and LG continued to innovate and expanded on their share of shipments and revenues.

India outpaced China in net-adds and crossed 500M though it is still quite behind China’s 750M. The M&A and the consolidation process became active in Asia with several of the big regional operators looking to flex muscles in the international markets. After several delays, China started deploying 3G while India again fumbled and postponed its 3G auction.

US mobile data market continued its pace in 2009 with each of the four quarters exceeding $10B in data service revenues. The gap between the top two operators and the rest grew to be the biggest in the decade and the industry weathered the recession with ease. There was a clear shift towards prepaid especially for Sprint, T-Mobile, and the tier 2/3 operators.

2009 was also defined by significant activity on the application front. With Facebook eclipsing 100M subscribers and Appstore exceeding 2.5B downloads, sky is the limit.

The year also saw an unprecedented growth in mobile data consumption. As we had predicted, for some of the networks, the growth proved to be a double-edged sword. Many in the industry are banking on LTE to help relieve the pain but will be surprised that depending solely on the upgrade strategy will not be enough. Declaring spectrum as a looming crisis, FCC also started tinkering with the mobile industry and the broadband plan.

Japan exceeded 90% in 3G penetration while US subscriptions ventured into the 90% territory. Most of western Europe is way past 130%.

All in all, a terrific year considering that we went through one of the worst recessions in a generation. As we bid goodbye to the last decade, Nexus One and iTablet only serve to whet our appetite of what’s to come.

On a personal note, we started our consulting practice this last decade as we were coming out of the bubble recession and have been fortunate to work with some of the brightest brains and companies in the global ecosystem. We also had a chance to work on some key initiatives that impacted the ecosystem in profound ways. Many thanks to our clients, colleagues, friends, and readers. We will be involved with many new initiatives over the next decade and are looking forward to the conversations through the research notes, books, speeches, panels, whitepapers, blog posts, facebook and twitter feeds, and more.

Thanks and Happy New Year. May the upcoming decade leave you happier, healthier, and more successful than the previous one.

As we eluded to earlier, 2010 will be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments?

We put some of the questions to our colleagues in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=150) from leading mobile companies across the value chain and around the world opined to help us see what 2010 might bring.

11 names were randomly drawn for 3 special prizes. The winners are:

  1. Claire Boonstra, Cofounder, Layar- INQMobile 3G Chat device

  2. Michael Libes, CTO, GroundTruth - Open Mobile Book

  3. Henri Moissinac, Head of Mobile, Facebook - Open Mobile Book

  4. Subba Rao, CEO, TataDoCoMo - Open Mobile Book

  5. Saumil Gandhi, Product Manager, Microsoft - Open Mobile Book

  6. Sarah Reedy, Senior Editor, Connected Planet - Open Mobile Book

  7. Mike Vanderwoude, VP & GM, Cincinnati Bell Wireless - 2010 Mobile Almanac

  8. Pinney Colton, VP, GfK - 2010 Mobile Almanac

  9. Tim Chang, Principal, Norwest Ventures - 2010 Mobile Almanac

  10. Laura Marriott, President - 2010 Mobile Almanac

  11. Asha Vellaikal, Director, Orange - 2010 Mobile Almanac

Thanks to INQMobile and my friend Ajit Jaokar for contributing the prize gifts.

Despite conventional wisdom, what will not happen in 2010?

There were many. Sampling - Verizon iPhone, Microsoft Phone, Sprint will not be bought, Femtocells won’t gain traction, RCS will not happen, Google will not enter handset market directly, iPhone won’t lose steam, Android won’t bring coherence, NFC won’t take off, WiMAX won’t disappear, Nokia won’t bounce back, Palm won’t die, “Year of Mobile” noise won’t subside, carriers won’t be delegated as dumb-pipes.

It is hard to cover the mobile industry in 20 questions. As pointed out by our panelists, there are a number of other issues and opportunities that will help shape our ecosystem - monetization of social networks, augmented reality, the fight for mobile advertising dollars, continued impact of globalization, security and privacy, NFC, IMS, VoIP, enterprise apps beyond email, battery improvements, new interaction modalities, health risks of RF radiation, Mobile 3.0, LTE, single purpose devices, 3G in India, Bada, app vs web, developer turmoil, featurephones, smart grids, M2M, Chrome, etc.

However, be rest assured, we will be tracking these and much more throughout the year and sharing them through various channels.

Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific year for us here at Chetan Sharma Consulting and we are looking forward to the next decade and seeing many of you along the way.

We hope you enjoyed gaining from the collective wisdom. Your feedback is always welcome.

Be well, Do Cool Work, Stay in touch.

Thanks.

With warm wishes,

Chetan Sharma

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

Now onto the 2010 Mobile Industry Predictions Survey Results

The panel comprised of movers and shakers from around the world

survey2_10 survey1_10

What will be the biggest stories of 2010?

survey3_10

Jan seems to be the Google Phone vs. Apple Tablet matchup. Our panel though voted for the continued growth in mobile data as the top story.

Have we recovered from the recession? (Please select one)

survey4_10

Majority thought we are out of it though some might still feel the pinch

Who will be the most open player in the mobile ecosystem in 2010? (Please select one)

survey5_10

Google has done a great job at maintaining its image as THE open leader

Will Android handset sales exceed iPhone’s in 2010? (Please select one)

survey6_10

Despite Androids coming in droves, iPhone will still be the king of the hill

When will we see tiered pricing plans for smartphones in the US from tier 1 operators? (Please select one)

survey7_10

There are indications that this might happen sooner rather than later

What will happen to the mobile prepaid subscriber base in the US? (Please select one)

survey8_10

Prepaid made a strong comeback in 2009 and a good majority thought that the trend is likely to continue

By how much will the mobile advertising ad-spend increase in 2010? (Please select one)

survey9_10

Mobile Advertising was the only advertising segment with positive growth last year so it is no surprise that folks expect it to more than double this year

What will be the impact of the FCC’s national broadband plan on the mobile industry in 2010? (Please select one)

survey10_10

Not much is expected from the various rulings that might come this year with most expecting the courts to have the final word.

Who will be the mobile comeback story of 2010?

survey12_10

Having bet its future on Android, Motorola was voted as the comeback kid of 2010

What will be the impact of Google Phone?

survey13_10

It’s pretty clear, Google and Apple are duking it out for the developer mindshare. Google wins in either case.

Which areas will feel the most impact from FCC?

 survey11_10

Net neutrality is the area where they will have the most impact

Which solutions will gain the most traction for managing mobile data broadband consumption?

survey14_10

While only a holistic approach can provide complete relief, tiered mobile data pricing might have the most impact

When will the carrier-branded appstores lose steam? (Please select one)

survey15_10

Most expect carrier-branded appstores to be a thing of the past in 2010

What will help mobile cloud computing gain traction in 2010?

survey16_10

Mobile cloud computing is gaining steam and the reason is storage and media

What will be the most successful non-mobile-phone category in 2010? (Please select one)

survey17_10

Netbooks seem to be the strongest category followed by eReaders, Tablet, and M2M

What will be the breakthrough category in mobile in 2010? (Please select one)

survey18_10

Mobile Advertising and Mobile Payments share the top honors

By the end of 2010, which will have more subscribers? (Please select one)

survey19_10

LTE might have the momentum but WiMAX has the subscribers

How will Netbooks do through the operator channel? (Please select one)

survey20_10

No major impact from the operator channel

Which standards will gain traction?

survey21_10

No major impact from the standards

What mode of mobile payments will get any traction in North America and Western Europe in 2010?

survey22_10

The category will expand in different ways with more items being charged on the operator bill

Roundup of second Mobile Breakfast Series event – Mobile Broadband December 6, 2009

Posted by chetan in : 3G, AORTA, ARPU, CTIA, Carriers, Indian Wireless Market, Infrastructure, Location Based Services, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Mobile TV, Mobile Users, Mobile Wallet, Networks, Speaking Engagements, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

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The second Mobile Breakfast Series Event was held at the picturesque Harbor Club in downtown Seattle on Dec 4th. The topic was “The Impact and Evolution of Mobile Broadband.” The lineup of speakers was awesome with who’s who of the mobile broadband world opining about the state of the industry, the opportunities, and challenges posed by the growth in mobile broadband:

Neville Ray, Senior Vice President of Engineering, T-Mobile USA

Hank Skorny, Senior Vice President, Media Cloud Computing and Services, Real Networks

Ken Denman, CEO, Openwave

Dow Draper, Vice President, Technology Partnerships, Clearwire

Charlie Martin, Wireless CTO, Huawei Technologies

Stacey Higginbotham, Senior Writer, GigaOM (moderator)

First of all, a big thanks to our generous sponsors: Motricity, Openwave, and Clearwire of supporting the event series. I am happy to report that Motricity has signed up to be the sponsor for the entire 2010 season. So, thanks Jennifer Moranz and Brendan Benzing. Thanks also to Ken Denman and Lupe Downing at Openwave, and Jeff Giard and Scott Richardson at Clearwire for their support. Thanks also to our esteemed panelists who have taken the time out of their busy schedules to be here with us this morning, esp. Ken, Charlie, and Stacey who had to hop on a plane to be at the event. Also, thanks to GigaOM and Moconews for being such terrific media sponsors.

As our operators continue to enhance the infrastructure both in the US as well as abroad, it is creating new opportunities and challenges for the industry. As you know, our friends at the FCC are also very consumed by the task of creating a National Broadband Policy and mobile is a key component of that proposal.

It was one of the best discussions on mobile broadband I have heard all year long. Panelists were really frank and insightful.

The salient points of the 90 minute discussions were:

Also, Tricia Duryee does a good summary of the discussion at Moconews

Our next event is looking to be another sellout affair with tech titan Rob Glaser, Founder, Chairman, and CEO of Real Networks headlining the event. Be sure to register early to avoid any sellout blues. Date: March 10, 2010.

Until then, a very happy new year to you and yours and have a terrific holiday season that helps you prepare for a successful 2010.

US Mobile Data Market Update Q3 2009 November 9, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, European Wireless Market, IP Strategy, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Networks, Partnership, Speaking Engagements, US Wireless Market, Unified Messaging, Usability, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 5 comments

 

Download PPT | PDF

Executive Summary

The US wireless data market grew 5% Q/Q and 27% Y/Y to exceed $11.3B in mobile data service revenues and thus exceeded $10B for the third straight quarter. As we mentioned in our Q1 2009 research note, given the strong growth in data revenues and overall service revenues, the worst is over for the US mobile industry. The US market touched 25% penetration of smartphones in Q3 2009, a new milestone.

While the flailing economy hit certain segments of the wireless ecosystem hard esp. the infrastructure and handset segments, consumers haven’t really pulled back on the mobile data overall spending. Additionally, the CAPEX spending has stayed strong in 2009 given the activity around 3G/4G deployments and trials. As expected, there was an increase of prepaid subscribers which dropped the overall revenues for some of the carriers. The US subscription penetration was approximately 91.3% at the end of Q3 2009.

As we mentioned in our last three research notes that this time around, the fate of the US mobile industry is more closely tied to the overall economy compared to the previous recessions. As the consumer sentiment improved over the last two quarters along with better than expected Q1-3 2009 earnings from corporations, the mobile industry is back on track. While the structural flaws in various industry segments remain, the outlook for the Q4 2009 and 2010 remains bright and we are expecting the overall data revenues to now increase by over 30% compared to 2008 with a record-setting Q4.

Q3 2009 reported a 3.5% increase in GDP compared to the 1% decline in Q2 and 6.4% decline in Q1, thus marking the official (technical) end of the recession. The GDP is expected to change by 3.2% for 2009 and the service revenues are expected to  account for 1.13% of the US economy by year-end. Note: For a detailed discussion of the US wireless industry in recessions, please see 2008 US Wireless Market Update.

So, what does this mean? Well, the markets can still be volatile, but overall the market seems to be feeling better about the economy than it was in February. The Conference Board Consumer Confidence Index though retreated from June is at a healthy 47.7.

What to expect in the coming months?

The high unemployment has slowed the growth in the data card segment but the smartphone consumers have more than picked up the slack. Also, as expected, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid accounts for almost 20% of their customer base compared to 17% from an year ago. The fight for the low-end customer is also having an impact on the traditional prepaid players and the price pressure is reducing their margins. It is quite likely that 50-60% of such consumers don’t go back to postpaid thus permanently lowering the ARPU base for such customers and carriers who have experienced more postpaid to prepaid shift will have to make up for the lost revenues elsewhere.

In fact, the churning in the last few quarters has distanced the top two (AT&T and Verizon) and the next two (Sprint and T-Mobile) by the biggest gap in the history of the industry. By the end of 2009, this gap will rise to 36% compared to 28% at the end of 2008 and 21% in 2002.The "Rest" category has essentially diminished from the market dropping from a dominant 43% market share in 2002 to 12% in 2009.

The trend of the landline replacement by Mobile continued in Q3 2009, now reaching almost 25%. In the third quarter, messaging growth slowed down. The messaging volume was up only 4% and messaging revenues were up 3% QoQ. With its expanding 3G network, T-Mobile like its peers has started to benefit from smartphone penetration reaching to 6% of its subscriber base. Overall, The increased use of smartphones and datacards is putting a pressure on carrier networks and accelerating their strategies to deploy LTE/WiMAX. We estimate that by end of 2009, the US mobile data traffic is likely to exceed 400 petabytes, up 193% from 2008. To truly tackle the problem head-on, operators will need to adopt a multi-pronged strategy to manage their traffic more effectively. We discuss mobile data traffic in much more detail in our paper "Managing Growth and Profits in the Yottabyte Era." We will have more on this subject in the coming days (You can also read our RCR Wireless columns on the subject - Defining Mobile Broadband and Solutions for the Broadband World).

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 Q3 2009 US wireless data market is:

Service Revenues (Slides 11-12, 17, 19)

ARPU (Slides 13-15)

Subscribers (Slides 16-18)

Applications and Services

Handsets

Policy and Regulations

· Q3 also marked the start of an intense FCC scrutiny of the wireless industry. In outlining the four key principles of a) looming crisis of spectrum shortage b) removal of red tape c) enforce net-neutrality and d) open Internet, things have already started to change in the US Wireless Industry. Google has played the game of Armadaian tactics with Kasparovian acumen. The impact of the codified principles (and the subsequent court battles) can have a significant impact on not only the US wireless industry but the global ecosystem as well.

Open

· While there has been much consternation around the word "Open," one is hard pressed to find a consistent definition what it might actually mean. One could provide access to one API and declare themselves an open heretic while others could end up opening up their business more than needed and yet be accused of being closed. Clearly, the degree to openness is in the eye of the recipient. There is no black and white, just shades of grey and that’s where the battles will be won and lost. In the end, it is all about "access" to the market and the "freedom" to earn profits. Rest is noise.

· It is worth debating as to what can be mandated to be open, do the rules apply just to the operators and OEMs, or we should extend the courtesy to software platforms, search indices, aggregated user profiles, billing engines, etc.

· It is also becoming obvious that we need to redefine the device categories. Featurephones are no longer dumb terminals, many empower the users with smartphone functionality. Devices like iPhone, Droid, Pre no longer fit the smartphone stereotype, they need a separate category for themselves - appphones, ddhmvcs (data devices that happen to make voice calls), platformdevices, mobilecomputers, geniusdevices, agilechips, astuteconceirge, you get the point.

Misc.

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 Feb 2009. The next Global Wireless Data Market update will be issued in Mar 2010.

Watch out for our end of the year survey and commentary on global wireless markets and trends for 2010.

Your feedback is always welcome.

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

Thanks.

Chetan Sharma

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

Carnival of the Mobilists #195 October 12, 2009

Posted by chetan in : CTIA, Carnival of Mobilists , 7 comments

Welcome to the 195th edition of Carnival of the Mobilists. It has been quite a start to the final quarter of the year. With CTIA just wrapping up last week, there was plenty of action. Folks are still recovering from the travel so posts have been light but an eclectic mix of viewpoints makes up this week’s carnival.

Andrew Grill of London Calling delves into the world of mobile and social networking. There is significant traffic due to social networking. Who monetizes the best is the question.

Enrique has a compelling presentations on the concepts and technologies behind real-time demand data, a topic near and dear to me. Thanks for sharing.

Dennis Bournique of WAP Review does a review of the Bolt Browser.

Jose from Mobile Strategy writes about mobile application development.

There has been a lot of discussion about mobile advertising. An industry veteran, Mark Jaffe opines in his series - Ten Reasons Why Mobile Advertising Has Not Reached Its Potential.

Belen Barros of iQblog has a post on Mobile reverse innovation inviting you to expand your thinking beyond the western markets.

Mobile VoIP made a lot of news last week. Tsahi Levent-Levi of VoIP Survivor and a frequent contributor writes 5 reasons why mobile VoIP =#FAIL

My own contribution to the carnival is in the form of our CTIA Wireless IT and Entertainment 2009 Roundup

Q4 is shaping up to be a great quarter for developments that will impact the mobile industry. Be sure to read the Carnival each week as the mobilists track the progress. Next week, the carnival moves to A Consuming Experience.

Thanks and happy surfing.

CTIA Wireless IT & Entertainment Roundup 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, MVNO, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Smart Phones, Speaking Engagements, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , 3 comments

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CTIA San Diego Roundup

San Diego is a casual town so this year’s CTIA fit nicely with an equally casual show, that felt more like a networking party sprinkled with some striking keynotes and engaging sessions. However, the biggest tremors were felt a day before the event started with Verizon getting in bed with Google and AT&T embracing VoIP with open arms. FCC’s curiosity into the wireless world has yielded more action in 3 months than many years combined before. I was drawn more to the policy debate and the implications to the wireless industry in the US and to the rest of the world. There was intense discussion on appstores and their place in the future, mobile advertising and its maturity, enhancing retail experience, accelerated growth in mobile health in recent times, and of course the tremendous growth in the US wireless data market but if you already knew that. This note summarizes the observations and opinions from the event, discussions, and briefings.

A friend of mine at the FCC invited me to the FCC Broadband Field Hearing occurring simultaneously with the CTIA at the University of San Diego. I am glad I went. The first panel was on the App Ecosystem with a diverse panel of industry verticals – rural, public safety, health care, environment, air quality, health care complimented by the discussion of the iPhone and its impact on the mobile industry. Chairman Julius Genachowski is to iPhone what President Obama was to Blackberry. He described his love for the apps with tender affection.

I am finding that the whole process of broadband planning to be quite interesting. The proceedings have been open and participatory, interest and feedback has been intense, and the principles have been clearly stated. This helped with a broader question that my CTO team for the FiREGlobal panel (to be held on Oct 15th) is addressing. We are tasked with a unique challenge of coming up with technology solutions for better civic discourse and our team consists of experts in the public and private enterprise to give a set of recommendations. We are currently under intense discussions and will unveil our suggestions on thursday. Stay Tuned.

Coming back to the FCC talk, Julius described four key principles:

  1. Most importantly he described the spectrum shortage as a looming crisis and that additional spectrum capacity is needed to handle the demand of data traffic from data cards and smartphones (something we have illustrated in detail in our paper - "Managing growth and profits in the Yottabyte era")
  2. Removing red tape to allow wireless carriers to build their network faster, for example, the work with cell towers
  3. Codify and enforce net-neutrality policies
  4. Operate more openly

While 1) and 2) have been discussed in the industry for some time, it is the mention of 3) and 4) that has changed industry in more ways than one. AT&T’s Ralph de la Vega took the stage after the Chairman and gave a spirited defense of the industry that requires no regulation. Frankly, the mere mention of the word "open" has had quite an impact on the industry in last 3 months. (I will be moderating two panels at the upcoming Open Mobile Summit on "What open means to apps providers" and "Apps in the cloud" in Nov, 2009)

Of course, as always, it is from the details that the devil flexes it muscles. How FCC will end up defining "open," "net neutrality," "network management" and other key items will determine the course of the industry. I wrote a piece that appeared in RCR Wireless “Defining Mobile Broadband” that outlined some of the same principles but from an operator strategy point of view suggested a much broader strategic imperative of building intelligent platform to survive long-term. The recommendations we made in our Yottabyte paper are being adopted and discussed much more openly since it was released in July. Due to significant interest, we will some follow-up research on the topic in the coming days, so stay tuned. I will be giving a ISACA luncheon keynote on the topic on Oct 20th. Of course, our Mobile Breakfast Series panel on mobile broadband will delve into the details of the broadband ecosystem on Dec 4th. Be sure to register.

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Each year our small community in Issaquah, WA celebrates a festival “Salmon Days.” As I was strolling around the hatchery, it helped me prepare for my talk on the Appstore ecosystem. The fish traveling upstream has several parallels to the developers trying to make in the 80,000 db appond. So, I focused my talk on how the ecosystem needs to come together urgently to build the fish ladder to give more developers a chance to make it to the next level to create a vibrant and sustainable ecosystem. While Microsoft’s mobile strategy is disarray right now, they are one of the few companies who understand the caring and feeding of the developer ecosystem (another one is Ebay). If the ecosystem focuses primarily on their profits and margins, the rich ecosystem might be at a risk of collapsing.

I discussed several factors that can help foster a healthier ecosystem starting with fish ladder. If you are interested in the presentation, please drop me a line. There was pretty good discussion from some experienced and successful developers. The emergence of appstore mania has been a double-edged sword. Developers are back in demand but their attention is finite and they are forced to allocate resources accordingly. I was also surprised to find out about the level of piracy and counterfeit goods in the appstore and how little is being done to protect legitimate developers. Some of the ladder factors I discussed were: greater revenue share, connection with investors, iTunes and carrier billing, location and presence, user profile and context, reports and analytics, $0 signup and certification, better search and discovery, social interaction and virality, flexible payment and billing models, better networks and devices, reduced fragmentation, more open APIs and marketing dollars. If you are interested, drop me a line and I will send you the ppt.

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I also had a chance to moderate a panel on Mobile Advertising and the current state of affairs. While mobile advertising is the only advertising sector that has shown growth this year, it is not breaking out to stand on its own. Large media companies are primarily looking mobile as a complimentary channel though they are clearly enamored by its potential. Lack of clear, uniform, auditable metrics is another issue though various industry bodies have been working together and some guidelines are expected to be released next quarter.

Overall, the show felt like a sponsored networking party with hardly any new announcements, the show floor was easier on the feet, the attendance was down again. However, the hallway conversations and running into friends and colleagues from the distant past is always priceless. The only newsworthy highlight for me was the emergence of mobile healthcare and mobile retail as separate categories at CTIA. There is clearly much potential and interest in these areas. We will have more on these topics in the coming months.

Some of the news worth items were:

It was great catching-up with friends and colleagues. Looking forward to the next one.