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CTIA Wireless 2008 Roundup April 4, 2008

Posted by chetan in : AORTA, Carriers, Enterprise Mobility, Speaking Engagements, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, International Trade, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 2 comments

CTIA Wireless 2008 Roundup

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

The Sin City hosted CTIA Wireless 2008 earlier this week. On Wednesday morning, just before leaving for the convention center, I caught some portion of Ben Bernanke’s congressional testimony on the US economy woes. Few minutes later, strolling the show floor, talking to various companies, and hearing the keynotes, it seemed like I was on a different planet. Either someone failed to deliver the memo or the wireless industry is resilient enough to weather the turmoil in the financial and housing markets with some ease. The show was bigger with more attendees, the booths were returning to their glamorous heydays of the past, and the general buzz and energy at the show all seem to indicate the industry is going to do just fine and is primed for further growth. The general themes were around open network and access, user experience, and bandwidth.

This note summarizes our impressions from the show.

CTIA Wireless in Pictures

First let’s do the numbers: CTIA released their semi-annual statistics on the US market. In summary: For 2007, $23B in data revenues, 2 trillion in MOU, $139B in total service revenues, 48B txt messages/month. (We released our US Market and Global Market updates last month)

Keynotes: In terms of style, Sir Richard Branson stole the show with his pompous exuberance and pep talk (the talk of imaginary flight to Mars was hilarious; investors in Microgin and Viroo must be upset). For substance, Marco Boerries, President, Yahoo Mobile gave a nice compact overview of Yahoo initiatives and products in the market which are pretty darn good. (Marco wrote an opinion piece for our Mobile Advertising Book – “The future of Advertising is in the Consumers’ Pockets”). Yahoo has sewn together a number of deals worldwide that gives them a potential reach of over 600M users.

Vodafone is one operator which has been quite vocal in stating its positions on future infrastructure roadmap and data opportunities. Arun Sarin is probably the only CEO of major global operator who has publicly stated that Mobile Advertising will constitute a significant portion of their revenues in the coming days (Arun’s point person on the initiative Richard Saggers also wrote an opinion piece for our book “Opportunities for Mobile Advertising.” Let me know if you are interested in reading these two opinion pieces).

Microsoft’s Robbie Bach had the tough task of following the Branson-fest. He announced the arrival of a full-blown browser (finally!) for windows mobile. Also, the new windows mobile device from Sony Ericsson (Xperia) looks pretty darn cool. FCC Chairman Martin announced the rejection of Skype petition on the carterphone principle (to Skype’s dismay, it was not an April fool’s joke). Clearly, the definition of “open” is in the eye of the beholder. It means different things to different people. It has also been clear from the various activities and keynotes that the industry is trying its utmost to remain a “Self-regulated” industry and stay away from the clutches of eager politicians.

Lowell McAdam, CEO of Verizon Wireless conducted a panel with CEOs from Alcatel-Lucent, Ericsson, and Nortel and probed them on the 4G migration path, trends in applications and services, and contrasts in adoption and introduction of new technology in various parts of the world. Final day was marked by what is now becoming a trend - keynotes from politicians. This time around Sen. Edwards and Sen. Thompson graced the podium.

Mobile Advertising: In talking with numerous players in the value chain from small developers to large operators to ad networks to media companies, the impression was that things have matured over the last six months. It was gratifying to hear that some companies are adopting strategies and recommendations we propose in our book. Still, some of the basic problems remain – majority of the inventory remain unsold indicating weak demand, CPM rates are still over-rated though they are starting to come down, and fragmentation continues to remain an issue.

The good news is that the size of the mobile campaign budgets are getting bigger with several seven figure RFPs floating around. While some companies are still trying to throw a lot at the wall in the hope that something sticks, others are maturing as companies and are more focused in their positioning and product roadmaps. Integration of various channels is starting to appear on the horizon and the integration with the publishers is becoming tighter. The issue of measurement and auditing standards remains a big issue and unfortunately not much progress to report. There are carrier initiatives and various industry bodies are taking the challenge to rally the ecosystem, but, frankly, consolidation of such efforts is necessary, we can’t afford yet another layer of fragmentation in an already complex ecosystem.

We were interviewed on Mobile Advertising prior to the show by several publications. Some of the articles were published this week to coincide with CTIA

Wireless Wave (CTIA) – Moving Targets: Mobile marketing reaches consumers on their terms by Lynn Thorne

BrandWeek – Mobile Marketing – Fantasy vs. Reality by Ken Hein

Wall Street Journal – Personalized promotions: Sending the right ads to your phone – Peggy Anne Salz

NFC: There were many more NFC-enabled devices on display this time and vendors were talking and demoing NFC and Biometrics based payment solutions. While there are handsets on the roadmap, this market is still very nascent in North America and Western Europe.

Inspiration: The inspiration for new and creative services still comes (at least for yours truly) from Japan (and Korea). I love spending time in DoCoMo’s booth for it gives a glimpse into what’s to come. No other company better understands the development of devices, services and applications that overlay on lifestyles than DoCoMo (e.g. a wellness handset that is a pedometer, heart rate monitor, body and bad breath monitor and yes, you can make voice calls too). They view wireless air-interfaces as nothing more than enablers to solutions that enhance daily lives. Various device manufacturers also displayed some really cool devices. The quality and diversity of handsets that have been introduced into the global markets over the last four quarters is just astonishing. The cycle of innovation and time-to-market keeps on accelerating.

Femto Cells: A number of players like Airwalk, Airvana, and others are bringing Femto cell solutions to the market and carriers are starting to pull this into their strategy as well and look forward to deployments beyond the trials.

4G: LTE vs. WiMAX (vs. UMB): Since the decision of Vodafone and Verizon to support LTE, UMB has been disappearing from the discussion. The 4G discussion is convulsing around LTE and WiMAX now (though Nortel did indicate its support TD-SCDMA as a 4G candidate). Without a doubt the operator community is rallying behind LTE and there might be an opportunity to finally converge to a single standard (haven’t we seen this movie before) but frankly, the advances in silicon to integrate multiple radios has made the standards debate less relevant. WiMAX has forced acceleration of LTE standardization process but is starting to lose its time (and cost) advantage. All eyes are on Sprint’s XOHM business rollouts in the coming days and months.

Accessories: I have never seen so many accessory and reseller outfits at a CTIA show. Business must be booming.

Best Booth: Thought there were several good layouts, LG and Samsung continue to impress with their creativity and “art of marketing.”

Developer and Publisher woes: Along with John Philips (Astraware) and Peter Baldwin (Cellmania), I helped facilitate a few developer session at the Mobile Jam Session organized by WIP. The issues of distribution, discovery, and monetization remain challenging for the small developers worldwide. Even with million user base, they are finding it difficult to monetize but we did discuss a number of success stories. The core elements of success that emerged from the discussion were: choosing the right market, embedding viral component into everything you throw out there, there is no room for mediocrity, and personalizing and customizing go a long way to get traction. An interesting tidbit: the number of page views for mobile MySpace app is a magnitude higher on off-deck vs. ondeck. Several of the companies are trying mobile advertising with varying degrees of success. After spending 4 hours with the developers, I sat on a carrier panel discussing mobile advertising. The contrast between the two worlds was so apparent. Clearly, more needs to be done to help both sides understand each other a bit better.

Green CTIA: There is a stronger emphasis on recycling and contributing to save the environment. The show itself is a big resource hog, so every bit helps.

Alternate Mobile Devices: The universe of alternate devices is expanding. Companies are buying wholesale data packages from the operators and integrating broadband chipsets into hardware to do digital signage (ICG), M2M (Sensorlogic), PND and much more. The definition of being “mobile” keeps on changing.

On Being “Open”: Obviously, given the recent activity around openness, getting a penny for each time the word was uttered by a speaker would have paid off for a lifetime of CTIA trips. While talk is cheap, demonstrable progress is being made by the likes Yahoo, Apple (btw, 3G iPhone is on its way), and AOL.

Another MVNO experiences turmoil: Movida - a Spanish focused MVNO which has garnered almost 300K subs filed for chapter 11.

Voice is becoming mainstream: With the product launches from Nuance, SpinVox, Vlingo, Jott, Yahoo, and many others, voice based navigation and its tighter integration with data services is becoming mainstream.

Where are the opportunities? Last week, I was moderating a panel with executives from AOL Mobile, T-Mobile, Motricity, and Formotus and the themes that emerged were around platform play, user experience, and productivity. At CTIA, in addition to these areas, there was a lot of discussion around social networking (though the market is being saturated with the MoSo noise). It is also clear that we are moving into the phase of “aggregation of fragmentation” with initiatives from Yahoo, AOL, and Google dominating the landscape.

Home Screen Effect: I have been talking about using the home screen for driving data usage for the last 8 years. I think we will see good innovation this year on that front starting with Yahoo’s One Platform. There are several other initiatives in the works where operators and OEMs will be deploying frameworks and technologies to bring information to a “click-less” idle screen environment.

Overall, no major news but industry stays vibrant, healthy, and exciting.

Your feedback is always welcome.

Chetan Sharma

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

Pacific Northwest Wireless Summit January 15, 2008

Posted by chetan in : AORTA, Strategy, Middleware, Enterprise Mobility, Security, Speaking Engagements, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Location based Services, Indian Wireless market, Mobile Gaming, ARPU, Japan wireless market, European wireless market, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem, Mobile Search, Wireless Value Chain, Privacy , 1 comment so far

Looking forward to meeting new friends and colleagues at the upcoming PNWS conference in beautiful Vancouver, BC this Thursday.There are some really great speakers and panelists. I have the privilege to present, participate, and moderate in two of the panels.

Mobile Marketing and Advertising

I will be sharing some research from our upcoming book on Mobile Advertising and then participate in a panel discussion with Alfredo Tan, Yahoo! Mobile, Matt Snyder, ADO Strategies (formerly with Nokia), and Olivier Vincent, Canpages. The panel is moderated by Michael Bidu of WINBC.

Understand Mobile Asia

I will be moderating this panel consisting of Asokan Thiyagarajan, Motorola, David Dai, CellOn China, and Karl Weaver, Newport Technologies.

If you would like to see any specific questions answered, please let me know. I will do a conference report later this weekend.

Apart from these panels, there are other panels on Mobile Commerce, Mobile Entertainment and Social Networking, Mobile Trends, Insights, Undeserved Vertical Markets, Mobile Enterprise, Disruptive Technologies, Smart DNAs, Wireless Innovation and Accelerated Commercialization, Go-to-market strategy. CEOs and executives from prominent companies in the region are going to be there. There are keynotes throughout the day including Luni from Medio, Fred Ghahramani, AirG, and Sue Abu-Hakima, Amika Mobile.

Caroline Lewko of WIP and WINBC fame also be moderating a couple of sessions.

There will be discussion about 2010 Olympics as well.

All in all a very packed day from 8am to 9pm and then a mixer that will probably go till midnight.

Hope to see some of you there.

US Wireless Data Market Update - Q3 2007 November 18, 2007

Posted by chetan in : AORTA, Strategy, Carriers, Middleware, Enterprise Mobility, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, ARPU, Japan wireless market, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 2 comments

US Wireless Data Market Update - Q3 2007

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http://www.chetansharma.com/usmarketupdateq307.htm

US wireless data market continued its growth reaching $6.4B in service revenues for the third quarter. With the holiday quarter to go, the aggregate data revenues for the year are already past the 2006 data revenue mark. Whether it was the first full quarter of iPhone sales, or the debate on the upcoming 700MHz spectrum auction, or the rumors swirling around the gPhone, or the continued M&A activity - the US wireless data market remained vibrant in Q3.  Given that majority of the data revenues now comes from non-messaging applications and services and the subscriber penetration for such services is just getting into the inflection zone, US remains one of the most attractive wireless data markets.

Global update (more details in our worldwide wireless data market update coming out in Q108)

Your feedback is always welcome.

Chetan Sharma

CTIA Wireless IT and Entertainment 2007 Roundup October 28, 2007

Posted by chetan in : AORTA, Infrastructure, Strategy, Carriers, Middleware, Enterprise Mobility, Security, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, MVNO, BRIC, WiMax, Mobile Gaming, ARPU, Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G, Privacy, CTIA , 4 comments

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http://www.chetansharma.com/ctiaoct07.htm

The early morning full moon over the San Francisco bay was much more inspiring than any gizmos or gimmicks at the annual CTIA Wireless IT and Entertainment show. Maybe it is the conference fatigue setting in but the scaled back event failed to gather steam and one had to rely on alternate sources to get a sense of where things are headed in the next 6-12 months. This note summarizes the observations and commentary from the show.

First let’s do the numbers. CTIA released its mid-year data survey for the year. In summary, as of June 2007 - 243M subs, $67.9B in revenues (first 6 months), $10.5B in data revenues for the year accounting for 15.5% of the total service revenue, MOU exceeded 1 Trillion minutes, 1B TXT messages daily. These numbers were in line with the numbers we reported back in Aug.

Keynotes - The central theme that tied the three keynotes was “Be Open, Do Good Work, and Rest will take care of itself.” The keynotes from Steve Ballmer, Microsoft, Dustin Moskovitz, Facebook, and Atish Gude, Sprint Nextel emphasized the need to have an “open platform” for innovation, applications, and services. Haven’t we been down this lane before?

Steve started by taking a page out of our (upcoming) book, literally (page 243 to be exact) and describing a vision where mobile device becomes the remote control of your life for both workstyle and lifestyle. Too often we focus on separating out personal vs. professional but our lives are so intertwined that one minute you are setting up a doctor’s appointment and the next minute closing a sale. Companies that focus on managing the experience start to finish (waking to sleeping) independent of everything else will be the ones that dominate these turf wars. Microsoft’s big announcement was the release of device management server that includes mobile devices in addition to the desktop world (but it is limited to windows mobile devices only, Open?). Microsoft has been making impressive strides in occupying its place in the mobile ecosystem. Though windows mobile and battery life don’t go together, the fact that they are deployed with 160 operators in 55 countries, shipping 20M devices/year places them at a significant advantage in the coming days.

Facebook’s Moskovitz made the plea for openness of networks, devices, and applications to enable the social networking phenomenon on mobile. The fact that Microsoft and Facebook were doing the keynotes on the eve of strategic investment wasn’t a coincidence. Dustin brought out the elderly statesman Mike Lazaridis to announce the facebook app for Blackberry smartphones. The interesting thing was how the app was introduced - Facebook chose RIM and RIM chose T-Mobile for this app. Device manufacturers are surely getting bolder. Facebook extended its platform to mobile. Getting social networking apps on mobile is a no-brainer. In fact, the coming enhancements with Presence, IMS, Broadband, Profiling, Location, can make mobile social network a society of its own.

I thought the most forceful case for “openness” was delivered by Atish Gude, SVP of the XOHM (WiMAX) initiative at Sprint Nextel. In fact, it was exactly along the lines of our recommendations for the operators in our book. Atish talked about openness across network, devices, content, and applications to deliver a great “customer experience.” Operators focus on delivering the intelligent network by focusing on QoS, Network elements like Presence and Location, Security, and Consistency of throughput and performance and leave the innovation in applications and services on the ecosystem who know how best to exploit the medium. His definition of “device” expanded beyond the mobile phone into consumer electronics and appliances which is a smart way of looking at things. However, vision is one thing and execution is another. Will Sprint be able to deliver on this vision in a timely fashion amidst quarterly Wall Street pressure is going to define the industry more than any of the hoopla of 700MHz.

Enterprise MIA - One of the personalities was clearly missing from the show. Yes, there was an enterprise pavilion but nothing new and different surfaced. Microsoft’s late foray into the device management space was the only worthwhile news that emerged.

LBS - The LBS industry proudly presented its posterchilds TeleAtlas, Navteq, TeleNav, and others. Their imposing presence on the show floor and in some of the sessions was palpable. I have been working in or following this space since 1995 and it finally feels that there is going to be some activity in this space after years of posturing, delays, and hype. However, the true value of “location” can’t be unlocked unless it truly becomes “open” for the application and service developers. The delivery of coordinates for every request is not cheap so some form of business model or technical break through is needed to make the use pervasive. Some of the newer players displaying their wares were Telmap, locr, and earthcomber.

Mobile Advertising - It is great to see the progress over the last 12 months. The distribution, inventory, and ad networks are all improving and size of the campaigns are starting to reach six figures on average. Some of the working demos I saw were really compelling and some unique solutions are going to be introduced in the market in the next six months. Though the space is still nascent, some trends have started to emerge - companies who are focused on solving the problem end-to-end from strategy to execution to understanding the results are separating themselves from the plethora of technology providers in the space. There is tremendous amount of work that needs to be done in the metrics and auditing space in addition to the integration of silos.

WiMAX picks up steam On the heels of WiMAX being declared as part of the IMT-2000 family, WiMAX is slated to gather momentum though a lot still depends on carriers like Sprint to deploy nationwide networks and device manufacturers like Nokia, Motorola, and Samsung to bring cheap devices to the market. Nevertheless, Cisco’s acquisition of Navini, Beceem’s deal with NEC and others are signs of positive movement in this sector.

Mobile Video a dying market? Already? Only a couple of CTIAs ago, Mobile video took the event by storm only to find defending itself as a viable business in a short span of time. The video quality has improved significantly but the business models have not.

Entering the US market - US remains one of the most attractive market for mobile data but very few overseas firm succeed. One of the big European brands “Zed” is making an aggressive and impressive push into the US market and is expecting up to 30% (or $150M) of its revenues coming from the US market in the next 12 months. They have developed a good platform for interactive games that tie the experience across mobile and online really well. EA and the likes should take notice.

Open - not in my backyard The keynotes were in sharp contrast with some of the carrier panels. One of them seemed to be the replay of a session I attended in 2001 or was it 1997. Eerie.

Presence, IMS - The discussion around presence and IMS is intensifying. Demos are getting better and the coordination between carriers to standardize and interoperate is improving but we still have a long way to go.

Coolest gadget - NeuroSky filled the void of a gadget less show by showcasing its mind-over-matter technology. Using brainwaves which are detected by a sensor attached to your head, it allows the user to move, push, and float objects by just concentrating on them. Remember The Matrix. Now, if you throw in Philip’s amBX and Microvision’s PicoP, your cell phone becomes this gaming platform that takes the die-hards to the transcendental state of nirvana.

iPhone continues to dominate the talk - iPhone continues to set the tone of discussion in the industry. Since July, there has hardly been a mobile conference worth its salt that hasn’t had a session on “impact of iPhone.” There hasn’t been a mobile device like this one and it shows. Attendees proudly fiddled with their iPhones in public and were eager to discuss their experience and forecasts.

US vs. Europe - There was quite a bit of us vs. them discussion. CTIA’s Wireless Wave magazine started the discussion by its cover story article “The Continental Divide” (for which we were interviewed). It was soon covered by the likes of WSJ (Walt Mossberg - Free My Phone), GigaOM (How far behind is the US vs. Europe?), Steve Largent (Largent to Mossberg .. Wish you were here in San Francisco), and others. As I say in the article - the picture is more complicated .. and one needs to take a holistic view. This topic is crying for a detailed study.

MCommerce - Behind closed doors there is a lot of discussion on MCommerce and how to enable phone to become the wallet of choice (this will be music to the ears to my colleagues in Japan and Korea). Some new and interesting models are starting to appear. One is from Mobilians, a company that has had good success in South Korea and is now setting its sight on the US market. Their focus is to use the phone to enable payment of online and offline goods. In Korea, Mobilians is registering 7M transactions/ month and over $1B in goods sold/year with up to $250 items (which appear on the carrier bill). This is a totally untapped space for the carrier and is a threat to the credit card companies especially for the low cost items where the 2%+20-25c fee drives up the effective rate for the merchant. A tier-1 carrier is also looking to firm up its mCommerce strategy in the next few weeks. It should be noted that some of the smaller regional carriers who survive due to laser focus customer service are testing and rolling out innovative solutions ahead of their bigger peers. For e.g. CellularSouth launched picture application (with Ontela) and after their successful trials with NFC based payments is looking into launching WirelessWallet. Similarly, some others are in the process of getting some LBS, Mobile Search, and Mobile Advertising solutions in the next quarter or so.

Misc

· AOL Mobile re-launched its mobile suite of products. It has a good suite of assets and the company is starting to integrate and enhance the user experience.

· More M&A activities are expected in the mobile advertising space in the next 6-12 months as startups use every advantage to maximize the returns before the big boys catch-up.

· There was hardly any mention of the gPhone or the zPhone.

· Verizon and Sprint are boosting the holiday season lineups to counter the onslaught of iPhone with similar looking phones.

· Becker - a 60 year old company which launched the first ever car radio showed off its “Traffic Assist” unit which had a good user interface and free real-time traffic info for life.

· M2M players such as Telit and Numerex showed their solutions in the machine-to-machine communications space.

· Talkster talked about its free global calls in exchange of listening to ads.

Your feedback is always welcome.

Chetan Sharma

Global Wireless Data Market Update - 1H 2007 September 12, 2007

Posted by chetan in : AORTA, Strategy, Carriers, Enterprise Mobility, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Location based Services, MVNO, Indian Wireless market, BRIC, ARPU, Japan wireless market, Messaging, European wireless market, Mobile TV, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 1 comment so far

Global Wireless Data Market Update - 1H 2007

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http://www.chetansharma.com/globalmarketupdate1H07.htm

As you read this first half (1H) 2007 Global Wireless Data Market update this week, somewhere in China, the 500 millionth subscription is being signed up for services. In India, the 200 millionth subscription mark was crossed in the last two weeks. In the US, the 250 millionth subscription will be reached by end of the year. In total, these three top mobile markets account for 32% of the total number of global subscriptions.

2007 continued to enhance mobile data’s role in the operator ecosystem. From the true and tested SMS messaging to new services such as Mobile TV, Enterprise apps, and others, different services helped in adding billions to the revenues generated for the first half of 2007. Japan and Korea remain the envy of the global markets and the countries to study and learn from. The US market has been steadily making strong comeback and equaled Japan in terms of most service revenue generated from mobile data.

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 high-growth markets such as China, India, Brazil, and Russia. This note summarizes the findings from the research.

Your feedback is always welcome.

Chetan Sharma

CTIA Wireless 2007 Roundup April 2, 2007

Posted by chetan in : AORTA, Carriers, Enterprise Mobility, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, International Trade, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wireless Value Chain, 4G, CTIA , 5 comments

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http://www.chetansharma.com/ctia0307roundup.htm

Orlando was the venue for CTIA Wireless 2007. Pre-show events include Mobile Entertainment Live (Billboard), day long seminars on Mobile Advertising and Emerging Technology. The main themes from the show were Mobile Advertising, NFC and Mobile Payments, Mobile TV, and WiMAX. This note summarizes the observations, interviews of executives, pre-show briefings, and commentary from the above shows.

First let’s do the numbers  Just before CTIA, M:Metrics released some numbers from their most recent survey. At the end of 2006, amongst the western nations, US had approximately 11% 3G penetration with Italy leading the way with 27%. Photo messaging is picking up reaching 15-30% penetration in most markets. CTIA also released their survey numbers. 233M subs, 76% penetration, and $8.7 billion for the latter six months of 2006, up 82% from $4.8 billion in the latter half of 2005. You probably already knew most of the above after reading our research note here. Instat reported that for the first time the handset replacement market was greater than the new purchase market. Replacement market is expected to take 80% share by 2011.

Keynotes  Attendees come to keynotes to be inspired, to get a sense of the direction of our industry. Unfortunately, some use the opportunity as a sales platform and rehash of press releases. What a waste of time and the platform. What an insult to the audience. I thought the best keynote came from EMI CEO Eric Nicoli, who first eloquently laid out the potential of the industry and then brought us back to reality by outlining the hurdles that we need to overcome to realize the potential. At the most basic level, it is all about simplicity, valuable functionality, and the right pricing. However, the highlight of the show was being in the same room (along with a few hundred others) with two former heads of state – Presidents Bush and Clinton.

Mobile Advertising  As expected, the hottest theme out of this CTIA was Mobile Advertising. The pre-event seminar on the subject was packed with discussions and viewpoints from all parts of the value chain. The involvement of agencies was refreshing. They can help guide the industry by articulating the needs of the brands and agencies in an overall advertising framework, develop standards, and not develop point solutions that won’t scale beyond MDF campaigns. But they are keenly aware of mobile and reported positive results from their tests for some big brands. David Rittenhouse from Ogilvy noted that Lenova experienced 188% lift (n=1495) in awareness from a mobile ad campaign. Third Screen reported up to 7.5% click rates on its network. Still missing were Internet players like Google and Yahoo. Vendor driven standardization processes are not very productive and take too long to become meaningful. Since, mobile advertising is the most buzzable topic in the industry right now; companies are adjusting their positioning to become mobile advertising players (akin to becoming Web 2.0 compliant). There was some debate whether off-deck impression is worth more than an on-deck impression. CPMs are a bit out of whack and will need to drop and stabilize. Premium CPMs range from $27-35 going as high as $60. User profile is of course the holy grail of mobile advertising. Visa demonstrated that mobile advertisements isn’t really limited to messaging, keyword auction, and banner ads, but also includes promotions that drop in your applications based on your transaction history. Can carriers stop them from running this downloadable app on the device? They are running some trials to find that out. Code/Image-based advertising is also picking up – Qcode, NFC, barcodes, pictures, etc as input to trigger content/ad delivery is making its way to the US.

Amongst the various enablers (that I was able to talk to and look at), The Hyperfactory has the most comprehensive view of the space and it shows in their campaigns. Not only cross carriers and cross handsets, but also cross modality and cross countries. Mobile Advertising needs to seamlessly fit in the overall digital strategy of a brand or else there will be too much friction. GSM association has taken some lead in helping define standards in this space. MMA is also updating its best practice guide though it needs to do more to expand its vision. Companies that made their presence felt were Third Screen Media, Ad Infuse, Millennial Media, Yahoo, Smaato, Mindmatics, Bango, Medio, JumpTap, Blyk, Admob, iLoopMobile, GreyStripe, Enpocket, and Rhythm.

Not to be outdone, Alcatel-Lucent and Motorola were also showing some future mobile advertising concepts that allow for cross medium advertising. For e.g. purchasing or activating advertising subsidized content on one device (like mobile) and viewing on another (like IPTV) and the experience is subsidized and interstitialized with advertisements.

Note: As some of you know, we have been involved in helping players in the value chain with mobile advertising strategy for the past two years. Well, we are now writing the book on it, literally! This book on Mobile Advertising is a collaboration with two brilliant co-authors and is going to be published by a major publisher. It will explore the key elements that will make mobile advertising tick. If you know of interesting case studies or people we should talk to, please do let us know. Check out our two part series on the subject published in Wireless World Magazine. Track the progress and become part of the conversation and the book at http://www.chetansharma.com/blog/category/mobile-advertising

Mobile TV  With Mediaflo’s launch, the discussion in the US has changed from unicast/multicast to broadcast. With Cingular and Verizon adopting Mediaflo, it is hard to see DVB-H’s future in the US. Spent some time with Dr. Kamil Grajski, Chairman of the FLO forum. FLO’s advantage comes from better channel switching time and slightly better spectrum efficiency. The goal is to pursue individual partnerships by geography that fuses spectrum, technology, and content. KDDI partnership is such an example. The quality is very impressive and the user experience raises the bar. With the introduction of clipcasting that enables some personalized content filtering on the device (e.g. Entire NASDAQ quotes are streamed but only your portfolio is displayed), broadcast can extract more value from the spectrum. Though Mediaflo has an edge, the future beyond the US shores is tough. Majority of Europe is going to go to DVB-H and similar standards. But, the potential customers are not only cellular operators but also include cable and satellite operators. Companies looking for Triple and Quad play strategies will have to come up with their mobile Broadcast strategy in the next couple of years. While Mobile TV has been in the headlines for some time, the penetration in the US remains quite low – around 2% and represents less than $350M revenue in 2006 (European trends are similar). For the opportunity to scale, pricing and business models will need to be adjusted to market realities. Mobile TV has been around in Japan and Korea for a longer duration and has reached critical mass penetration. Unicast becomes expensive if the usage gets into double digits because pricing pressure doesn’t allow for monetizing by the MB. Broadcast becomes the natural solution but it is limited by spectrum, less interactivity, and lack of handsets in the short-term. Clearly, hybrid models will continue to exist for the foreseeable future. For broadcast, it is about the spectrum first and the technology second.

Near Field Communication (NFC)  VISA has been running NFC trials around the country for some time with VISA credit cards (30K) and POS terminals (50K). The goal is to do NFC on the phone. VISA also released numbers from their NA survey (n=800) – 57% interested, 64% of Gen X/Y will consider switching carriers and credit card for mobile payment capability, by 5:1, consumers prefer to have charges on their credit card bill rather than their phone bill. The first generation of NFC phones is hitting the US market later this year. Kyocera demonstrated buying from a vending machine, downloading content, and doing internet transactions using an NFC-enabled prototype handset. It also had a biometric fingerprint sensor. Korea and Japanese market have been using phone as a wallet for some time (e.g. DoCoMo’s FeliCa) and it will be great to see such enhancements in Europe and North America. There is a demand for such solutions, Visa is providing leadership, and hopefully, the ecosystem will step up. Last year, in US, $7.2Trillion dollars worth of consumer financial transactions took place. Taking a small cut of this pie will be a big deal. Enabler to watch – Ecrio.

Biometrics  NTT DoCoMo introduced handset with biometric capability in 2003, we expect to see it introduced in the US in first half of 2008. AuthenTec has been dominating the market for both PC/laptops and mobile phones. Japan has reached about 10% penetration for biometric sensors in mobile devices. ROW is just getting started. HTC is introducing some devices (for the US market) with biometric sensors later this year.

Mobile Search  Google and Yahoo announced their next release of mobile/local search. Google’s attempts at mobile search reminds me of Microsoft’s early attempts to build an OS for mobile phones. I thought AskMeNow’s semantic search was pretty good though they are still working on indexing which can take a long time due to understanding content. With the recent purchases of BeVocal and TellMe, voice is getting its due attention. V-enable showed their local 411 app and Nuance talked about voice-enabled music search. Voice has become an integral part of any mobile search (and ad) strategy.

Interesting handsets  While the industry is waiting for the June launch of iPhone, several new concepts and phones emerged at the show. Hopefully, NA operators got inspired from the handsets available in Asia and will bring some of that experience here. Samsung launched its dual-faced Ultra. While, it is a first for the industry, the user experience left lot to be desired, the Sharp touch UI is confusing. DoCoMo had the best selection on display. Flipstart is launching a $2000 mobile device (UMPC form factor), which has full PC running on it. It does have some clever user experience enhancements that make the usability acceptable but I am not sure if the price point will hold in the market where you can find an equally powerful laptop for half the price.

User Interface  Apple’s iPhone has raised the bar on device user experience. Zenzui announced their UX technology (based on Microsoft IP) that takes us away from the boring menu-based navigation schemes. Punchcut showed what’s possible utilizing the idle screen. Flipstart had some clever UX enhancements that I hope can get integrated into other forms of computing. Biometric sensors also surprisingly prove to be a good navigation element, better than 5 key dial and even iPOD dial.

Simplicity  EMI’s Nicoli had emphasized on simplicity of applications and services. AT&T’s COO Randall Stephenson echoed similar sentiments. It is a no-brainer, right? So, why do we make things inherently complex and hard-to-use? Hasn’t Apple taught us enough? Ontela’s mobile imaging platform is following on Apple’s footsteps. The technology allows you to take the picture and store it on any other device or destination within 30-60 seconds. No user intervention. It just works.  

GYM is in the house  It was the first CTIA with Google and Yahoo having their own booths, announcing their arrival. Their presence was telling of the battles to come. Microsoft has been coming to the show for some time but primarily to show their devices and talk about enterprise (email) applications.

LBS and Telematics There were a number of firms talking about telematics or navigation on the phone or devices for your car. Navteq, TeleAtlas, TeleNav, Inrix, Pharos, Kore, deCarta, and many others displayed their wares. On the consumer side, navigation is getting embedded into Local search apps which are enhancing the user experience quite a bit. FindIt and Google Maps are two examples. TCS is working on a framework for LBS based mobile advertising that allows carriers and users to control location availability to applications, something I wrote about back in 2001. Sprint has raised the bar by opening the APIs for developers and loosening the pricing friction. GSM operators are awaiting the arrival of OMA compliant phones. European carriers are targeting Christmas 2007 to launch several OMA SUPL devices while US will see such devices from Cingular next year. The best navigation was from Churchill Navigation which gives you a bird’s eye view in a fun-interactive experience.

WiMax. Sprint showed some potential launch devices for their WiMax service. Initially, the focus is limited to data cards and UMPCs. There will be restrictions on data usage and the move to handset form factor devices is uncertain. Samsung showed video conferencing at 12fps and VoIP on WiMax devices (PDA form factor). Since Intel put a boat load of money into Clearwire and Sprint’s endorsement, WiMax industry has been surging ahead but long-term viability is still not certain, how fast will device pricing drop?                

China  While China can’t make up its mind on TD-SCDMA, Chinese manufacturers are increasingly competing with the big boys, the handset rollouts and infrastructure wins are a testament to that. They should just let go of their obsession with TD-SCDMA, there are plenty of opportunities for their manufacturers. Canada, Finland, Taiwan, Sweden, Spain, Ireland, Korea, and UK also had Intl pavilions.

The ecosystem friction  The mobile data ecosystem tension is bubbling up. It was highlighted in the first session of the conference – Jim Ryan (Cingular) vs. Larry Shapiro (Disney) well moderated by Tom Wheeler (past CTIA President). Carriers want control (some more than others) so that they can manage user experience and minimize customer support calls. Content companies want to bypass the carrier and go direct to the consumer. Things are improving but not at the pace everyone would like it to be. This debate is not going away. Perhaps, CTIA can demonstrate some leadership in kicking-off some content interoperability (and treat ad as content) initiatives.

Test equipment  Whether it is entertainment or enterprise, very little attention is given to testing and monitoring data applications and services. Keynote launched its on-demand platform for testing and monitoring for developers who for $500/day can test on live devices anywhere in the world. This service can significantly lower down the cost of procuring handsets and doing testing.

Coolest booth  In my travels around the world, in every major city, you can’t escape the massive ads from Samsung and LG. CTIA is no different. The plastered ads all over and the booth from these two Korean companies were clearly the pick of the show with LG edging out its arch-rival by creating a gigantic music player.

Misc. News.

Your comments are always welcome.

Chetan Sharma

Wireless Data ARPU January 3, 2007

Posted by chetan in : Strategy, Carriers, Enterprise Mobility, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, Indian Wireless market, BRIC, ARPU, Japan wireless market, Messaging, European wireless market, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Mobile Search, Wireless Value Chain, 4G , 1 comment so far

Wireless World magazine published couple of my articles in their Jan-Feb 2007 issue. The first one deals with Wireless Data ARPU on a global basis. You might have read this during our release of ”Worldwide Wireless Data Trends: Mid Year Update 2006″

IBM and Telenor invent PASTA September 22, 2006

Posted by chetan in : , AORTA, Strategy, Carriers, Middleware, Enterprise Mobility, Partnership , add a comment

It is great to see some progress in this space. I have been talking about such a system for some time.

IBM and Telenor have developed new mobile communications technology for global business users that will allow mobile devices and networks to automatically learn about their users’ whereabouts and preferences as they commute, work and travel.

Code-named PASTA for “Presence Advanced Services for Telco Applications” and developed by the two companies as part of a joint research initiative, the technology provides infrastructure for deploying next-generation mobile presence services. “Presence” technology – used in applications such as instant messaging – makes it possible to locate and identify a computing or communications device wherever it might be, as soon as the user connects to the network. Privacy issues are addressed by allowing users to control when they are available.

“The PASTA infrastructure has the ability to “learn” about users’ preferences. As the network becomes “smart” about its users’ preferences, we believe we can reduce outgoing network load by up to 70 percent,” said Vova Soroka, IBM’s lead researcher on the project. “That is a huge benefit to a network operator, but PASTA can also be used to create new end-user applications – to enable new services in medicine, tourism, financial services, logistics and home care industries among others. Any business with a large mobile workforce will find potential uses.”

I am sure it won’t be perfect but definitely a step in the right direction.

CTIA, MES, MECCA Fall 2006 Roundup September 18, 2006

Posted by chetan in : AORTA, Infrastructure, Carriers, Middleware, Enterprise Mobility, Security, Federal, General, M&A, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Mobile Gaming, Gaming, Networks, ARPU, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Speech Recognition, Mobile Search, Wireless Value Chain, 4G, Patents, CTIA , 2 comments

Los Angeles was the venue for the annual CTIA Wireless IT and Entertainment 2006. Pre-show events included Mobile Entertainment Summit (Chetan Sharma Consulting was a research partner) and MECCA. This note summarizes the observations and commentary from the above shows.

First let’s do the numbers. Just before CTIA, M:Metrics released some numbers from their most recent survey. Amongst the western nations, US has just over 5% 3G penetration with UK leading the way at 11.4%. Spain and France are at 8.9% and 7.9% respectively. In the US, Verizon is ahead with over 17% 3G subscriber penetration followed by Sprint at 6%. CTIA also released their survey numbers. 12.5 billion messages in the month of June 2006, up 71% from 7.3 billion messages in June 2005. There was 70% growth in service data revenues. You probably already knew most of the above after reading our research notes here and here, weeks and months ahead of the mainstream media.

MES and MECCA. The central theme from both the shows was community and advertising. The buzz shifted from “Mobile Search”, “Mobile TV”, and “IMS” during the last couple of shows to “Mobile Advertising”. The prospective lifecycle of product development goes like this – build community (whether it is around user generated content, games, artists, bands or other) and monetize the community by advertising. The permutation and combination of the business models are: free application and/or free content, subscription, earn credits for watching ads, more credits for feedback/surveys, etc. Companies who are able to build a large mobile community (at least 5-10M active users) and gather some specific demographic data become hot property of the moment. It is important to note that the mindset for an exit strategy for companies in the social media and user generated content space has changed a bit. Instead of getting acquired by software or computing companies like Google and Yahoo (yes, yes, they are media companies as well) to traditional Media companies like FOX and HBO. This was quite apparent in a number of discussions I had with the executives from new media content companies.

Enterprise focus, Finally!. I have been involved in the mobile enterprise space since 1999 and have been coming to the CTIA for a number of years. The fall show is supposedly about dual personalities of Entertainment and Enterprise. For the first time it felt that the Enterprise side was given its due respect and was on an equal footing to its sibling personality - the glamorous, the attention-seeking “Entertainment”. CTIA started the conference with an Enterprise panel discussion (of course after the surprise Governator keynote). Though the discussion was too high-level to provide any key insights, CIOs confirmed what is well known now that the spending on wireless-data related projects is going up significantly. A surprise revelation was that China’s growth in enterprise solution is among the highest in the world. It is all about productivity and ROI. Companies are also looking to outsource their IT operations related to wireless devices. Handset guys are coming out with Enterprise targeted devices though we are still in the very early stage development of the cycle. Throwing an email client on the device doesn’t make it an enterprise device. Email client is a given in all new handsets now. When will we start seeing embedded enterprise apps? Mobile web services clients and frameworks?

It’s an Ad, Ad, Ad, Ad world. Mobile advertising is clearly the buzz of the moment. Everyone wants to build an ad-supported model and also build their own ad network. Currently, most of the talk is around simple rotation of ads or tying ads to the category the user is interacting with. Not much attention on demographics, profiles, or context. That’s where the “big” impact and value will come into play. Currently, carriers sit on goldmine of user data that is begging to be leveraged for enhancing user experience. Unexpectedly, they sit on a big opportunity that will start to change the advertising industry over the course of the next 5 years. To see where things are going, we just need to look at trends in Japan and Korea. It was interesting that in almost all of the mobile advertising discussions, nobody talked about the elephant that was not in the room - Google, trendsetter in monetizing content. Also, missing were the agencies and their perspective. I have looked at this space quite a bit over the last two years and while agencies are excited about the prospect, they are not ready to jump yet. It will be quite entertaining to watch the new-generation media companies compete/collaborate with the carriers. For the next 3 years or so, carriers will still have an upper hand and if they execute it right, could dominate the space for a long time to come. People also talked about different types of ads – IVR, Voice, Interstitials, banner, in-game, before-and-after, etc. Of course, click-to-call or click-to-action are going to be an especially important ingredient of this game. Sprint Nextel and Enpocket announced their mobile advertising program. Amp’D also announced mobile advertising plans with Rhythm New Media. Bango launched its Ad initiative as well. Virgin mobile’s Ad program “Earn Airtime in Your Spare Time” is innovative. They are truly in tune with their subscribers.

FMC. Kyocera had some trial handsets that supported WiFi/VoWiFi. One could theoretically make VoIP calls and download content over WiFi but will carriers allow it and how long will they resist. Non-traditional carriers like the MVNOs and the cable operators are very interested in exploring bundling offers. Sprint also announced EV-DO Rev A data cards that provide data rates up to 400-600kpbs. Cingular announced that they will have a majority of the top 100 markets deployed with UMTS/HSDPA by year-end. However, the choice of handsets is still missing and as such adoption for Cingular is behind schedule.

4G. While, we are just starting with 3G (except Japan and Korea), seven of the wireless industry’s leading carriers have joined forces to “develop a common vision” for the future of mobile networks technology. Members of the Next Generation Mobile Networks initiative include China Mobile, KPN, NTT DoCoMo Inc., Orange, Sprint Nextel Corp., T-Mobile and Vodafone. The group said it has created a set of requirements “for a future wide area mobile broadband network designed to offer enhanced customer benefits by delivering competitive broadband performance alongside high levels of interoperability.” In plainer terms, the NGMN appears to be devising a roadmap for interoperable 4G networks. You can sense the arm-wrestling to come. 4G could end up having some serious IPR issues if all major patent-holders don’t participate. The 3GPP licensing regime has been a failure, industry needs to be proac