Always On Real-Time Access

US Wireless Data Market Update: Q4 2009 and 2009 March 2, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Intellectual Property, International Trade, Location Based Services, Messaging, Microsoft Mobile, 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, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Wireless Data Market Update - Q4 2009 and 2009

Download PPT | PDF

http://www.chetansharma.com/usmarketupdate2009.htm

Executive Summary

The US wireless data market grew 5% Q/Q and 24% Y/Y to exceed $11.8B in mobile data service revenues and thus exceeded $10B for each of the four quarters in 2009. For the calendar year 2009, the overall mobile data revenues for the US market grew 29% ending at $44 billion for the year (1% shy of our $44.5 billion estimate). For the calendar year 2010, we expect a 20% increase in mobile data service revenues accounting for over $53 billion in service revenues.

Verizon Wireless edged past China Mobile to become the second biggest mobile data operator by revenues.

The US subscription penetration was approximately 92% at the end of 2009. If we take out the demographics of 5 yrs and younger, the mobile penetration is 99%.

The messaging volume increased 7% from last quarter catapulting US as the number one texting nation by messages/user/month going past the long-time leader Philippines.

For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the full calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.

Apple continued its iTunes juggernaut and if measured by billing relationships (of course not all accounts are mobile) Apple is now the 10th largest mobile operator in the world.

Q4 2009 reported a 5.9% increase in GDP compared to the 3.5% increase in Q3 when the recession technically ended. While the overall economy is sputtering towards growth, wireless industry in the US remains vibrant as is evident by the increase in revenues and net-adds which jumped more than 5 million for the first time in 2 years.

What to expect in the coming months?

Christmas quarter generally yields best results of the year. Though the US mobile industry came out pretty unscathed from the recession, it will benefit from the improving economy. As such we expect the US mobile data service revenues to gain 20% to reach $53 billion in 2010. Mobile data will continue to be the engine of growth for the ecosystem providing at least 33% of the overall service revenues by the end of 2010.

The furious cycle of device releases is accelerating and one wonders if the longevity of each device is starting to shrink as even the hit devices like Droid and Nexus One are not allowed enough room to fully capitalize on their initial momentum. The app economy has been expanding as well. Part strategic, part hysteria, everyone is jumping into the pool to tap into the app river to pull in some revenues or use it more strategically to sell more devices, services, or advertising. (Stay tuned for more research on the subject in the coming days)

Microsoft is attempting a comeback with its 7 series devices though the delay in handset release as well as the lack of backward compatibility gives enough time for competitors to plan their moves. We are glad to see the industry going past the “PC like icons” for mobile phones (something we have advocating for more than 10 years, most recently in our paper “The Untapped Mobile Data Opportunity.” This will enhance user experience and help in extracting true value out of the mobile devices.

From the various announcements this year, we can expect an action packed 2010. However, it will be also an year of shakeouts with several key M&A transactions that will winnow down the competitive landscape in many segments.

Q1 2010 will also be important from the regulatory point of view with the national broadband plan being unveiled later this month. With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. For example, in India, regulators haven’t been able to get their acts together for the past 3-4 years and its citizens continue to suffer from 2G. Similarly, many countries in South America have imposed unnecessary spectrum caps. 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 will be headlining our Mobile Breakfast Series event on March 10th to discuss the Spectrum Crises).

2010 will also be the year of network expansion with HSPA+, WiMAX, and LTE all coming into play in the US. As we had anticipated last year, the mobile data traffic kept on growing disproportional to the revenues. At the end of 2009, the US mobile data traffic was almost 400 petabytes, up 193% from 2008. To truly tackle the problem head-on, industry will need to adopt a multi-pronged strategy to manage their traffic more effectively. We discussed mobile data traffic in much more detail in our popular paper "Managing Growth and Profits in the Yottabyte Era." We will be issuing an update later this quarter so stay tuned.

It is also good to see the mobile industry expanding into vertical segments like Health and Retail. More discussion to come on these topics.

We will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

Against this backdrop, the analysis of the Q4 2009 and 2009 US wireless data market is:

Service Revenues (Slides 8, 17)

The US Wireless data service revenues grew 5% Q/Q to $11.8B in Q409. Compared to Q408, the data service revenues grew 24%.
Verizon and AT&T accounted for 88% of the increase in data revenues in Q4 2009.
The US mobile data service revenues crossed $10B for all the four quarters and stays ahead of Japan and China by a distance.
AT&T experienced the most growth with over 7% increase Q/Q followed by Verizon at 5%.
Verizon’s data revenues exceeded $4B for the second straight quarter and is only inches behind the global leader of over 10 years NTT DoCoMo.
AT&T and Verizon now account for 69% of the market data services revenues and 62% of the subscription base.
The average industry percentage contribution of data to overall ARPU is now 29%. US market is likely to pass the 30% mark in Q1 2010.
Verizon edged past China Mobile to become the second biggest mobile data operator by revenue behind NTT DoCoMo. The top four US carriers are now a permanent fixture in the top 10 global operators by mobile data service revenues occupying #2, #4, #6, and #8 spot respectively. Apart from NTT DoCoMo and China Mobile, Verizon Wireless and AT&T are the only two other operators generating more than $3B in quarterly mobile data service revenues.

ARPU (Slides 9-12)

Overall ARPU decreased by $0.45. Average voice ARPU declined by $0.98 while the average data ARPU grew by $0.53 or 4%.
Verizon led in (blended) data ARPU with $16.24 followed by AT&T and Sprint. In terms of % contribution, all the top three operators exceeded the 30% mark (Verizon became the first operator to do so last quarter). T-Mobile ended the year with 22.2% of its revenue coming from data services.

Subscribers (Slides 13-15)

In Q409, in terms of net-adds, the US market reversed the trend of the last 8 quarters and increased net-adds by 85% Q/Q to add approximately 5.1M new subscriptions.
The messaging volumes in the US market now average almost 592 messages/subscriber/month thus becoming the number one texting nation going past Philippines.
In terms of net-adds, thanks to the boost from the iPhone, AT&T led for the third straight quarter with 2.7M net-adds, edging its friendly rival Verizon which added 2.1M net subscriptions.
T-Mobile and Sprint improved their net-adds from last quarter though it was primarily from the prepaid segment.

Applications and Services

Non-messaging services continue to grab 60-65% of the data revenues for the US carriers.
There are probably 18-20 sub-segments within mobile data services and consolidation looms. While the valuations are still high for rapid consolidation, we think that due to recession pressure, the M&A scene is starting to heat up esp. in mobile advertising with the acquisitions of Admob and Quattro Wireless.
The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.

Handsets

Nokia sold 129M+ units in Q4 2009 including 21M smartphones. Samsung again had a solid quarter with over 69M devices sold maintaining its market share at 21%. LG Electronics at 10%, Sony Ericsson at 4%, and Motorola at 4% rounded up the top 5.
The constant drumbeat of new devices continued with Droid, Nexus One, and the fabled iPad.
The growth in smartphone usage is also putting pressure on the networks which are not able to handle the load during peak times in certain cities thus forcing carriers to look for alternate strategies to satisfy the demand for broadband.

Policy and Regulations

Q4 was also notable for the 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. The US broadband plan is scheduled to be unveiled later this month and can set the tone of innovation and regulation in the coming years.

Open

The appstores battle is intensifying with OEMs and carriers are announcing their plans and some of them are opening their wares to woo the developer community. The number of non-operator appstores jumped 375% in 2009. In the midst of the appstores hoopla, Apple announced the passing of the 3 Billion download mark with increasing number of developers participating the ecosystem.

Data Traffic (Slide 16)

· For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the whole calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.

Misc.

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. 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)
Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.

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 issued in March 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.

New Whitepaper: Mobile VoIP – Approaching the Tipping Point February 17, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, India, Intellectual Property, Japan Wireless Market, M&A, MVNO, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Patent Strategy, Privacy, Smart Phones, Speech Recognition, US Wireless Market, Unified Messaging, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

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

Mobile VoIP - Approaching the Tipping Point

Sponsored by Skype

This paper is a collaboration with Ajit Jaokar (FutureText) in London

Over the course of the last decade, mobile devices have become the most ubiquitous consumer electronic devices ever invented. Even in the poorest of the nations, mobile phones have evolved from being a luxury to an indispensible necessity. The paradigm of communication itself has undergone a significant transformation from just voice to multimode interaction. The trend is also discernable in the revenue numbers from the advanced mobile markets where voice revenue per user have been declining over the course of the last decade while most of the growth is coming from mobile data services. Mobile data services have evolved significantly from simple text messaging to multimode communication involving text, VoIP (voice over IP), video, and other forms of messaging and social networking interactions.

As we head into the next decade, the competitive landscape is going to change from year to year and sometimes even quarter to quarter. For major service providers, competition is no longer just from an operator who provides voice and data services but any company that captures the communication value chain. It is no longer sufficient to rely on voice revenues but providers need to think communications in a much more holistic form. Once the transport layer becomes all-IP in a given network, voice is nothing but another application that will work and interact with other applications in tandem often in real-time. The fear of cannibalization are unwarranted as our research shows that by offering consumers comprehensive services, the lifetime value of customers can be increased, churn can be reduced, and the overall value proposition of the operator increases tremendously.

The forces of technology, business models, consumer expectations, regulatory regimes, competition, and collaboration will help define the communication landscape of the next ten years. This paper will take a look at the evolution of the Internet, mobile broadband, and mobile communication and how consumer behavior and expectations have changed. Next, the emergence and the role of VoIP is discussed in further detail before we delve into the intricacies of communication economics to dispel some myths and layout the framework for how operators should approach the new communications world.

Given the embrace by major tier-one operators, we believe that mobile VoIP is on the verge of becoming an integral part of the communications framework. This acceptance represents a tipping point in the evolution of mobile VoIP. The ecosystem participants who embrace and collaborate to provide a holistic and comprehensive communication solutions stand to benefit the most.

Download Paper (pdf)

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 , 5 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.

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.

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.

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:

Claire Boonstra, Cofounder, Layar- INQMobile 3G Chat device
Michael Libes, CTO, GroundTruth - Open Mobile Book
Henri Moissinac, Head of Mobile, Facebook - Open Mobile Book
Subba Rao, CEO, TataDoCoMo - Open Mobile Book
Saumil Gandhi, Product Manager, Microsoft - Open Mobile Book
Sarah Reedy, Senior Editor, Connected Planet - Open Mobile Book
Mike Vanderwoude, VP & GM, Cincinnati Bell Wireless - 2010 Mobile Almanac
Pinney Colton, VP, GfK - 2010 Mobile Almanac
Tim Chang, Principal, Norwest Ventures - 2010 Mobile Almanac
Laura Marriott, President - 2010 Mobile Almanac
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

What will be the biggest stories of 2010?

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)

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)

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)

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)

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)

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)

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)

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?

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

What will be the impact of Google Phone?

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?

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?

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)

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

What will help mobile cloud computing gain traction in 2010?

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)

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)

Mobile Advertising and Mobile Payments share the top honors

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

LTE might have the momentum but WiMAX has the subscribers

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

No major impact from the operator channel

Which standards will gain traction?

No major impact from the standards

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

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

New Whitepaper: The Untapped Mobile Data Opportunity December 16, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Smart Phones, Speech Recognition, Storage, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

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

The Untapped Mobile Data Opportunity

CTIA Wireless IT & Entertainment Roundup 2009 October 12, 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

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 15^th) 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:

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")
Removing red tape to allow wireless carriers to build their network faster, for example, the work with cell towers
Codify and enforce net-neutrality policies
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 20^th. 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.

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.

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:

John Donovan, CTO of AT&T opined on the growth in data consumption and how the company is tackling the upsurge in usage
Qualcomm released FLO TV service and devices but at $250 and $9/month, it, like Kindle seems to be stuck in the fidelity belly.
A number of local search services/apps are popping up: Geodelic, Aloqa, Decarta, etc. I built my first location app in 1996. 13 years hence, market seems to be coming around to the concept of LBS.
Number of mobile health companies were displaying their wares: Airstrip, Corventis, TotGuard, Sensiotec, and others. Lot of investment will flow into this sector in the coming days.
Companies like Openwave and Bytemobile talked about solutions for mobile data management.
Mobile Retail is picking up with NFC and now Nokia’s initiative of Global Retail Executive Council
More Androids are slated for release in 2010

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

Roundup of the first Mobile Breakfast Series event September 29, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, Carriers, Enterprise Mobility, European Wireless Market, Japan Wireless Market, Location Based Services, M&A, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Users, Privacy, Speech Recognition, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

The views from the venue are stunning both at the crack of dawn and as the sun lit the valley

The first Mobile Breakfast Series Event was held at the beautiful Newcastle Golf Club on Sept 22nd with our elite panelists - Marianne Marck - SVP, BlueNile, Michael Mace, Principal, Rubicon Consulting, Mike Woodward, VP, AT&T, and Jim Hudak, VP & GM, INQMobile. Before I get into what was discussed, would like to thanks the founding sponsors - Openwave, Motricity, and Clearwire who stepped in right away to make the Mobile Breakfast Series possible. Also, Jeff Giard and Brendan Benzing helped shape the event along the way. Finally, thanks to the extended pacific northwest mobile community for such a tremendous response. Hope you guys keep coming back for more.

The diversity and the experience on the panel was apparent. Mike Woodward has a long history with ATT and has been managing the broad device portfolio for the company. Michael Mace with Rubicon worked with Palm and Apple and is a veteran of the mobile industry cycles, Marianne Marck with BlueNile has seen the growth of mobile digital content like few have and brought in the perspective from the developer and content provider point of view. Finally, Jim Hudak has worked in a wide variety of roles and is now with INQMobile which won the best handset award in Barcelona. This gave us a good forum to explore the various aspects of our evolving industry (Moconews coverage here).

The salient points of the 90 minute discussions were:

· The panel thought the big opportunities are in:

o Specialized devices, though there is little VC investment in the area, there is an opportunity to build something unique by verticals or segments

o Network Optimization and Management, given the tremendous growth in mobile data usage, more technologies are needed to effectively manage the growth

o Besides voice and data, location based services represent the biggest opportunity in mobile

o Empower Impulse buys, embed technology to make it simple for users to buy

o Taking advantage of the mobile browser economy. Companies like Skyfire are expanding the capabilities of the browser that enables better application reach and penetration

· ATT has experienced 5000% growth in mobile data usage in the last 12 quarters. And it is good for business but the future growth needs to be more effectively managed.

· Mobile data is clearly taking off but are there limits to this growth? Will everyone pay $50/month extra? It is probably not for everyone.

· LTE brings down cost of delivering the bits. If EDGE costs $1 to deliver one MB, then HSPA costs 13c and LTE is around 3c. There is significant motivation to move towards LTE.

· While the total number of apps downloaded have exceeded 2B, it is not clear if there are new companies emerging out of the app economy. Developers are still struggling to make ends meet and if we don’t cultivate the ecosystem, very few will be left at the end of the day

· For developers, browser provides the broadest reach but for some apps the richness of the feature/functionality is only available in client apps. Over the long run, browser platform is preferable and is likely to win out.

· Carrier billing is essential for the app economy to survive. Not everyone has iTunes interface for their appstores.

· Femtocells/WiFi play an important role in offloading traffic and providing consumers with better bandwidth and coverage options.

· 75% of ATT’s devices are converged devices. Significant uptick in the last few quarters. Data consumption has been growing as a result. ATT is investing $18B or so in upgrading the network as well.

· Mobile OS becomes less relevant over time.

· Cloud Computing is important for mobile to help with network management, storage, and user experience.

· Microsoft was a freakish event in history, something similar is not going to happen in the mobile space and the fragmentation is not going to go away any time soon.

· Developers like to get access to UI APIs that give them more control over the user experience. Access to location

· Mobile advertising promising but not there yet. Metrics and standards issues need to be worked out.

· TV is a passive experience, Online is less passive, and Mobile is interactive experience. We should be designing apps and services keeping that in mind.

· Handset has become a software business. Companies not having a concrete s/w strategy will be exposed

· We live in interesting times

If you liked the first event, you would love the next one.

The topic is Mobile Broadband and we are getting some of the top notch experts to discuss the very important evolution of the global mobile broadband markets. Date: Dec 4th.

Our good friend Om Malik has kindly consented to moderate the event. Current confirmed panelists are Scott Richardson, former Chief Strategy Officer and now Strategic Advisor at Clearwire and Ken Denman, CEO of Openwave. More panelists to be confirmed in the coming days. Registration is open at http://mobilebreakfastseries.com/

Finally, we would love to hear your feedback. Please help us shape the event and make it your own. How can we make it better? What topics would you like to see discussed? Which speakers would like to hear from? What venues work best for you, etc? Answers will help shape the future events so every bit of feedback is much appreciated. If you could please take a short survey and let us know what you thought of the event as well any guidance on future events, that will be great.

Thanks and see you on Dec 4th.

Global Wireless Data Market Update - 1H 2009 September 21, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 6 comments

Global Wireless Data Market Update - 1H 2009

Download: PPT | PDF

Executive Summary

The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (together) are adding around 20M new subscriptions every month. China crossed the 700M subscriptions mark in July while India’s total went past 450 in Aug. Overall, the global subscriptions penetration is above 64%. During 2009, services revenues further tilted towards data services, increasing 21% from 2008 EOY.

The overall global mobile revenues (including equipment) for the year are expected to stay flat as the impact of recession was felt in many geographies in the first half of 2009. While countries like US, Japan, China, and India showed very little signs of pullback, most of Europe (except France) and the developing world are expected to experience a decline in overall service revenues in 2009. For the first time, mobile data contributes approximately quarter or 25% of the total global service revenues. Additionally, except for India, all major markets have their data contribution percentages above 10%.

For some leading operators, data is now contributing over 40% of the overall revenues. However increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. From the true and tested SMS messaging to the new services such as Mobile Advertising, Social Networking, Commerce, Mobile Wallet, and others, different services helped in adding billions to the revenues generated in 2009. US continues to lead Japan and China in total mobile data revenues by a healthy margin.

NTT DoCoMo continues to dominate the carrier ranking in terms of mobile data service revenues, however, Verizon Wireless which became #2 replacing China Mobile is slowly edging towards the #1 spot and is likely to overtake DoCoMo within the next few quarters.

The velocity with which the smartphones are being introduced into the market, 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.

Though 4G as a standard hasn’t been defined yet, the discussions around LTE (and to some extent WiMAX) grew intense and started climbing the slippery slope of the hype curve. Many prominent operators have come out in support of LTE with Verizon being the most aggressive in launching their next generation network in 2010.

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 acutely felt by the operators. Amongst the operators we studied, only 3, SK Telecom, O2 UK, Telefonica, T-Mobile Germany and Austria, Vodafone Germany and Italy, KTF experienced increase in both the data ARPU and overall ARPU during 1H09 (and some of increase was due to the fluctuation in international currencies).
Looking at the data at a country level, almost all nations noted a decline in overall ARPU and majority in data ARPU. However, almost everywhere data for 1H09 improved over 2H08 indicating that the recession had a worse impact on the wireless sector last year compared to this year and in general the conditions in the telecom microcosm are improving globally.
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/MTN tie-ups are just the start of that process.

Service Revenues

US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $20.6B vs. $16B for Japan in 1H 2009. China with $8.6B was ranked number 3. US registered the highest growth amongst the top 3 with over 39% increase from EOY 2008 levels followed by Japan and China at 5%.
The top 10 nations by service revenues are: US, China, Japan, France, Italy, UK, Germany, India, Spain, and Brazil.
The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Korea, Spain, and Australia.
NTT DoCoMo continues to dominate the wireless data revenues rankings with almost $8B in data services revenue in 1H09. Almost 45% of its overall revenue now comes from data services. DoCoMo also crossed the 50M or 90% 3G mark in June.
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.
The top 10 global operator groups now account for over 63% of the global mobile data revenues.
Each of the top 5 carriers are expected to exceed $10B in yearly mobile data service revenues in 2009
Data revenues for the top 10 operators increased 10% from 2H 2008 and now account for almost 48% of the global mobile data revenues though their subscriber share is around 30%.
The biggest jump in data revenues was experienced by Verizon, AT&T and Softbank. DoCoMo suffered a 2% decline compared to 2H08.
Most of the operators in 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 $8.5B in data revenues for 1H09 and the percentage contribution from data services is around 28%, data ARPU is around $2.7. For India, data ARPU continues to stay around $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 $200B 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.

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 44%. KDDI, 3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, KTF, Telstra, and 3 Sweden exceeded 30% and many others are on the verge of crossing the 30% mark.
3 Australia reported the highest increase in data ARPU from 2008 with 31% growth. 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%. In terms of absolute dollar amount, NTT DoCoMo leads the pack with $25 data ARPU.
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 56% (or $3) contribution coming from the data services. Philippines is also the most active messaging nations where users average a message/hr round the clock though US txters have had the most acceleration in use.

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 been adopted by various vendors and operators worldwide.
The global mobile data traffic is expected to exceed an Exabyte for the first time in 2009. In fact, the data usage is growing so fast that next year, the two territories experiencing the most growth - North America and Western Europe are going to exceed an Exabyte in mobile data traffic.
2010 will also mark the first year when the total number of mobile broadband connections will exceed the total number of fixed broadband connections.

Subscriptions

The global mobile market continues to grow at an explosive pace and is expected to go past 4.5B subscriptions in 2009 and is likely cross the 5B mark in 2010. The global mobile subscriptions now represent over 64% of human population on Earth.
China and India continued their red-hot growth in 1H09. Combined, they added 132M new subscriptions with India easily surpassing China in each of the last 12 months in terms of net-adds.
China crossed the 700M subscription mark in July while India’s total went past 450 in Aug. In total, China is still years ahead. In the meantime, US crossed the 90% subscriptions mark earlier this year.
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 at 264M. Telefonica, América Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.

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.
After falling below the 100M/quarter in Q1, Nokia rebounded to sell 103M units in Q2 09. Samsung also exceeded 50M with a strong second finish at 52M. LG finished a strong third with almost 30M in its bag and Motorola showed signs of strength by selling close to 15M units.
The second quarter was dominated by two blockbuster launches of iPhone 3GS and Palm Pre. While iPhone continued to attract new customers, Pre suffered from a less than adequate launch strategy. By lowering the 3G device price to $99, Apple set the new bar in smartphone pricing leaving the rivals scrambling for response. The release of a slew of Android handsets sets up the stage for fierce competition during the holiday season and into 2010.
China and India represent the biggest opportunities for the Infrastructure providers. China launched 3G across the three operators earlier this year. India is also going through its 3G spectrum policy and is likely to resolve some of the contentious issues shortly. Some of the biggest infrastructure contracts are coming from these two countries as they look to expand coverage into rural areas.
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 next year.

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 Nov 2009. The next Global Wireless Data Market update will be issued in March 2010.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

US Wireless Data Market Update - Q2 2009 August 8, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Usability, Patent Strategies, Patent Strategy, Smart Phones, Speaking Engagements, Strategy, US Wireless Market, Unified Messaging, Usability, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

US Wireless Data Market Update - Q2 2009

Download: PPT | PDF

Executive Summary

The US wireless data market grew 7% Q/Q and 30% Y/Y to exceed $10.6B in mobile data service revenues and thus exceeded $10B for the second straight quarter. As we mentioned in our Q1 2009 research note, given the strong growth in data revenues shown by the top carriers and the increase in service revenues overall, the worst is over for the US mobile industry. In summary, the recession has been all but a tiny blip in its growth trend and the US mobile market has weathered the downward spiral in economy better than its counterparts in other developed nations. Of course, recession doesn’t treat all players equally, so, some have had a negative impact and will need more resources and effective strategies to claw back to the their previous market position.

The US subscription penetration was approximately 90.4% at the end of Q209. The current rate of net-adds (subscription) is approximately 3 every second (compared to a net gain in population of one person every 10 seconds). 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 will stay 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.

As we mentioned in our last two 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 3-4 months along with better than expected Q1-2 2009 earnings from corporations, the mobile industry is back on track. While the structural flaws in various industry segments remain, and the economy is a crisis away from the double dip, the outlook for the remainder of 2009 remains bright and we are expecting the overall data revenues to now increase by 32% compared to 2008 with a record-setting Q4.

US Wireless Industry in Recession - The light at the end of the tunnel is indeed not from the oncoming train

Note: For a detailed discussion of the US wireless industry in recessions, please see 2008 US Wireless Market Update.

Q2 2009 reported a much better 1% decline (compared to 6.4% in Q1). On an yearly basis, 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.

As mentioned in the previous reports, while in the past, the recession hardly impacted the wireless industry, this time around; it is going to be more tied to the recession. In the past couple of months, the consumer sentiment has improved and the Q109 earnings have been better than expected. While there are still many structural flaws in the financial and housing industries and the unemployment is at a 25 year high of 9.4% (though it dropped in July from 9.5% in June), consumers are feeling better about the economy and their own prospects in it.

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 46.6.

Given that consumer sentiment is improving, it is clear that the US mobile data market is all but back from the recession. While some segments within the mobile industry might be suffering, there has been an increase in spending overall.

What to expect in the coming months?

We noted in our Q3 2008 note that we will get a better picture of the impact of the recession on the wireless industry in Q109 as it was the first full quarter after the seasonal holiday quarter. There are two micro trends that are clear. First, as expected, due to the high unemployment, the data card segment took a hit. It is starting to recover in due course as more of the workforce comes back over in the next 18 months.

Also, as expected, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid constituted 82% of the net-adds in Q209 up from 61% in Q109 and 21% in Q208. It is not clear if the good times will bring back the prepaid subscribers to the postpaid realm or like the consumers who are canceling their landline connections and moving to mobile, these customers will get used to savings and the prepaid lifestyle. 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.

The landline replacement by Mobile trend continued now reaching almost 24% by Q209. Messaging continues to grow. The messaging volume was up 15% and messaging revenue was up 11% QoQ. The data access (excluding data card) including flat rate data plan subscriptions have also show significant strength lately. In addition to smartphones, we are also seeing increased mobile data activity amongst feature phone users. 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 US market will exceed 25% penetration of smartphones in Q3 2009.

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.” (I will be giving keynotes on the subject at the Mobile Innovation Week in Sept and at the ISACA meeting in Oct)

The positive factors are helping negate the negative factors and given the strength of 3G and smartphone adoption, the increase in activity on the appstores front, and in general, a better awareness of mobile data services and applications amongst consumers, any decline due to the loss of data card revenue and postpaid transition to prepaid accounts has been taken care off. In particular, Verizon and AT&T have done really well. Smartphones remain a bright spot, which in turn has a direct positive impact on the data revenues. Even with the decline in handset sales, smartphone segment will continue to increase in 2009 accounting for almost 30% of the overall device shipments.

There is also a concerted effort underway to move beyond the traditional subscriptions and expand the mobile universe to wireless-enable other consumer devices (What did your refrigerator say to your microwave while you were gone?).

Coming back to the 2009 forecasts, we are raising our estimates for the mobile data service revenues to $45B for the year. 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 Q209 US wireless data market is:

Service Revenues (Slides 11-12, 17-18)

The US Wireless data service revenues grew 7% Q/Q to $10.6B in Q209. Compared to Q208, the data service revenues grew 30%.
Verizon and AT&T accounted for 90% of the increase in data revenues in Q2 2009.
The US mobile data service revenues crossed $10B for the second straight quarter and stays ahead of Japan and China by a distance.
Verizon and AT&T experienced the most growth with over 8% increase Q/Q followed by T-Mobile at 6%.
Verizon’s data revenues are now almost $4B/quarter only inches behind the global leader of over 10 years NTT DoCoMo.
AT&T and Verizon now account for 69% of the market data services revenues and 61% of the subscriber base. Sprint had the fifth consecutive quarter of data revenue growth.
The average industry percentage contribution of data to overall ARPU is now $27%. US market is likely to touch the 30% mark in 2009.
The top four US carriers are now a permanent fixture in the top 10 global operators by mobile data service revenues occupying #3, #4, #6, and #8 spot respectively. Apart from NTT DoCoMo and China Mobile, Verizon Wireless and AT&T are the only two other operators generating more than $3B in quarterly mobile data service revenues.

ARPU (Slides 13-15)

Overall ARPU decreased by $0.23 thus reversing the trend of the last three quarters. Average voice ARPU declined 13-15by $0.45 while average data ARPU grew by $0.68 or 5% and easily negated the drop in voice ARPU.
Sprint led in data ARPU with $15.5 followed by Verizon at $14.96. In terms of % contribution, Verizon led with 29.28% followed by AT&T at 28.74%.

Subscribers (Slides 16-17)

In Q209, the US market added approximately 2.8 M new subscriptions down 6% from Q109.
The number of data subscribers has been on the rise with Verizon leading the way. At the end of Q209, 65% of US subscribers were using some form of data services.
The messaging volumes in the US market now average almost 540 messages/subscriber/month or at the frequency of almost at a message/hour/sub thus reaching close to the messaging leader Philippines.
In terms of net-adds, thanks to the boost from the iPhone, ATT led in Q209 with 1.4M net-adds, edging its friendly rival Verizon which added 1.1M net subscriptions. T-Mobile net-adds reduced to 325K while Sprint lost 214K.
The 3G penetration in the US stays at a healthy 40%+ in Q209. Verizon led the pack while T-Mobile is slowly expanding its 3G coverage. The growth in 3G and smartphones is helping offset some of the downward pressure on the data revenues and overall ARPU. (I will be moderating a panel “Ultraband: A Fast Platform For Innovation” at GigaOM’s Mobilize in Sept. We will discuss the future of broadband and its implications)

Applications and Services

Non-messaging services continue to grab 50-65% of the data revenues for the US carriers.
The flat-rate pricing movement that was started by Willcom in Japan which moved to Europe became more prevalent in the US market with industry wide flat-rate pricing plans that included data. All the major carriers seem to be offering flat-fee access plans for most of the new smartphones being introduced in the market. Approximately 18% of the consumers have flat-rate data plans.
There are probably 18-20 sub-segments within mobile data services and consolidation looms. While the valuations are still high for rapid consolidation, we think that due to recession pressure, the M&A scene is starting to heat up.
The usage and data consumption trends are enabling carriers to accelerate their 4G plans and develop long-term business and technical strategies (We will be discussing the state of the industry and what lies ahead at the inaugural “Mobile Breakfast Series” on Sept 22nd in the panel discussion “State of the Union: Where do we go from here”)
The appstores battle is intensifying with OEMs and carriers are announcing their plans and some of them are opening their wares to woo the developer community. In the midst of the appstores hoopla, Apple announced the passing of the 1.5 Billion download mark with increasing number of developers participating the ecosystem. The new functionality being released with 3.0 is taking the battle up a notch. The clear-cut business model of 30/70+ split is attractive to the long-tail of developers. While there is no dearth of applications, findability remains a challenge. Also, appstores are changing the monetization strategies for content and application developers and the industry is trying to figure out what “Open” means in the long-term. (Will be discussing this and more at CTIA in Oct)
The App vs. Mobile Web discussion reached a surprisingly new crescendo. The evolution is pretty clear - for the applications that don’t require significant UI resources, it will be better to develop in for the browser, for intensive games, the native platform will be ahead of the browser advances. The location API access on the iPhone browser is breakthrough to have developers start thinking about the webapps. But, what does it do to the revenue model? (I will be moderating two panels on the subject in Nov at the Open Mobile Summit)

Handsets

After falling below the 100M/quarter level in Q1, Nokia rebounded to sell 103M units in Q2 09. Samsung also exceed 50M with a strong second finish at 52M. LG finished a strong third with almost 30M in its bag and Motorola showed signs of strength by selling close to 15M units.
The second quarter was dominated by two blockbuster launches of iPhone 3GS and Palm Pre. While iPhone continued to attract new customers, Pre suffered from a less than stellar launch strategy. By lowering the 3G device price to $99, Apple set the new bar in smartphone pricing leaving the rivals scrambling for response. T-Mobile launched another Android device last month.
The growth in smartphone usage is also putting pressure on the networks which are not able to handle the load during peak times in certain cities thus forcing carriers to look for alternate strategies to satisfy the demand for broadband - usage billing, UMA, Femtocells, Hotspot buys, WiMAX, LTE, and others.
Rest of 2009 is eagerly awaiting the release of Palm Pre, several Android handsets from HTC, Samsung, Motorola, and others, Windows devices along with follow on of Danger devices, new model(s) of iPhone, and other touch screen devices.

Misc.

Not surprisingly, Venture capital market experienced a continued decline in thefirst half of 2009, with companies announcing $1.2B in financings vs. $1.6B for 2H08 and $2.1B for 1H08. (Source: Rutberg)
In a sign of convergence battles to come, T-Mobile’s @Home and various Femto cell initiatives are taking hold. Cable operators are also aggressively seeking triple-play by providing the wireless component of the service.
China crossed the 700M subscription mark last month. In terms of net-adds, India has outpaced China for every single month of the last one year. The Indian market added almost 140M vs. 100M in China during the last four quarters. (more discussion on the international market in our global market update next month)

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 Oct 2009. The next Global Wireless Data Market update will be issued in Sept 2009.

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.

New WhitePaper: Managing Growth and Profits in the Yottabyte Era July 14, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Mergers and Acquisitions, Mobile Advertising, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Smart Phones, Speaking Engagements, Strategy, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

Managing Growth and Profits in the Yottabyte Era

Executive Summary

In Q1 2009, the US market exceeded $10B in quarterly mobile data service revenues for the first time. The subscription penetration in the US is well past 90% and the mobile data usage is on the rise. While the rate of new subscriptions has slowed, the pace of innovation is going very strong. It is quite apparent that the mobile industry is going through a significant transition from voice to data, from making calls to getting lost in applications and from voice communications to multimedia communications. Helped by the ever expanding wireless broadband networks, and release of hit devices every quarter, and consumer’s insatiable appetite for information and content has brought us to the surge of a data tsunami that will shake the industry to its core.

As everything moves to digital, information repositories across the web are almost doubling every day moving rapidly to the yottabyte (YB) era. The information and the desire and the capability to consume oodles of data is increasing exponentially. As a result the traffic – both Wireline and wireless is also increasing at a predictably fast rate.

In 2009, the global yearly mobile data traffic will reach a new milestone – 1 Exabyte(EB) or 1 Million Terabytes (TB).By 2016-17, the global yearly mobile data traffic is likely to exceed 1 Zettabyte (ZB) or 1000 Exabytes. By 2014, in the US alone, the total yearly mobile data traffic is likely to exceed 40 EB. How do you go about managing such growth in a profitable manner when the cost of supporting such traffic will increase exponentially despite the move to 4G? Will the move to LTE offer some respite?

This paper discusses the analysis done by Chetan Sharma Consulting on the growth of mobile data traffic in the US market and how the ecosystem can apply some strategies to manage growth and profits. We built detailed models to estimate the rise of mobile data network traffic and discuss some solutions to handle such growth in this paper.

Download Paper

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 paper are our clients.

TiECON Conference Roundup May 31, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

While I have been involved in various TiE events over the years, this was my first TiECOn down in the bay area. Even in this economy, this was a very well attended event with folks coming in from around the globe. The conference was quite diverse as well covering consumer web, internet infrastructure, cleantech, wireless, and software. I was there to moderate a panel on Wireless Monetization.

I was able to attend some really good keynotes, the most notable being Paul Maritz who talked about platforms, Tony Hsieh of Zappos on happiness, and Reid Hoffman, Linkedin. I found Martiz address on platforms and how the successful ones are generally created particularly interesting. He had some inside stories to share about Intel and Microsoft and how “accidental fortitude” seems to be the key of what became the changing platforms for our industry. Planning often doesn’t work that well when create mass-market phenomenon. The next areas of innovation and profits are: microfinance, biotech and information personalization.

What was unique and distinct about this conference was the “level of energy” amongst the entrepreneurs and participants. Despite the funding and economic climate, these guys were rushing to form the new company, start a new chapter, and create something unique in the market place. Some were serial entrepreneurs while others were just getting started.

The central theme of the conference was - if you were going to start a new business, this is the year, now is the time. While it has become a cliche, it is indeed true, best businesses are started in recessions and in the downturn - sometimes out of need other times out of opportunities. Bright brains rally and congregate to shake the cobwebs and look towards a new beginning. The energy was indeed infectious. My own consulting practice started during the last recession and 8 years later we are still around, so i say, all power and glory to the next generation of entrepreneurs who will create new technologies, paradigm shifts, and business models.

50 Startups were awarded the TiE50 awards - http://www.tiecon.org/home/tie

058

On to my panel - “Wireless Monetization - The Pot of Gold at the End of the Rainbow.”

My thanks to Arvind Gupta, Asha Vellaikal, and Savinay Berry for being the hosts and putting together the panel. Also, thanks to Ramneek Bhasin and Ujjal Kohli for their assistance.

The panelists were:

Michael Bayle, former Sr. Director, Mobile Monetization, Yahoo

Purnima Kochikar, Director, Nokia

Gary Kovacs, SVP, Sybase

Matt Litz, VP, Glu Mobile, and

Tina Unterlaendar, MD, AKQA

My questions were simply around what makes money, what’s working, and what’s coming? The brilliant panel had terrific insights.

Bottom line:

Appstores are a way to experiment with pricing, gives users more control
Different appstores might require different strategy for promotion, pricing needs to remain consistent across appstores, rev-shares with operators need to remain consistent
Mobile Advertising is in its infancy, budgets mostly in experimental campaigns but the potential remains huge. The biggest problem is reach and fragmentation
In the flat world, one must think of how the solutions will be adopted around the world not just in the developed nations
India and China are the volumes business, get used to it
Consumers are always looking for free so there is continuous price pressure, one has to consider alternate pricing or monetization strategies
Companies like mig33 have been successful in alternate modes of monetization, advertising is a smaller piece of the puzzle
Days of using mobile to purchase physical goods is coming
Mobile Payments using NFC is still a far cry for the US market

Overall a great panel and a great conference.

US Wireless Data Market Update - Q1 2009 May 11, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Speaking Engagements, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

US Wireless Data Market Update - Q1 2009

Download PPT (2.8MB)

Download PDF (1.8MB)

http://www.chetansharma.com/usmarketupdateq109.htm

Executive Summary

The US wireless data market grew 5% Q/Q and 32% from Q108 to reach $10B in mobile data service revenues. It marked the first time the US market has crossed the $10B milestone. Given the strong growth in data revenues shown by the top carriers and the increase in service revenues overall, it appears that at least for the time being that the worst is over for the mobile industry. In summary, the recession has been all but a tiny blip (from the service revenue perspective) in its growth trend and the US mobile market has weathered the downward spiral in economy better than its counterparts in other developing nations.

The US subscription penetration went passed 90%. 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 will stay strong in 2009 given the activity around 3G/4G deployments and trials. As expected, the data card subscriptions were hit the hardest and there was an increase of prepaid subscribers which dropped the overall revenues for some of the carriers.

As we mentioned in our last research note 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 couple of months along with better than expected Q1 2009 earnings from corporations, the mobile industry seems to be back on track. While the structural flaws in various industry segments remain, and the economy is a crisis away from the double dip, the outlook for the remainder of 2009 remains bright and we are expecting the overall data revenues to now increase by 24% compared to 2008.

US Wireless Industry in Recession - The light at the end of the tunnel might not be of the oncoming train

Note: For a detailed discussion of the US wireless industry in recessions, please see 2008 US Wireless Market Update.

The % GDP change dropped from 4.8% in 2007 to 2.3% in 2008. Q4 2008 reported a drop by 6.2% QoQ in one of the sharpest declines in the last quarter century. Q1 2009 reported a 6.1% decline. On an yearly basis, 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.

As mentioned in the previous report, while in the past, the recession hardly impacted the wireless industry, this time around; it is going to be more tied to the recession. In the past couple of months, the consumer sentiment has improved and the Q109 earnings have been better than expected. While there are still many structural flaws in the financial and housing industries and the unemployment is at a 25 year high of 8.9%, consumers are feeling better about the economy and their own prospects in it. Most companies are being optimistic but cautious.

Given that consumer sentiment is improving, it appears that US mobile data market is all but back from the recession. While some segments within the mobile industry might be suffering, there has been an increase in spending overall.

What to expect in the coming months?

We noted in our Q3 2008 note that we will get a better picture of the impact of the recession on the wireless industry in Q109 as it was the first full quarter after the seasonal holiday quarter. There are two micro trends that are clear. First, as expected, due to the high unemployment, the data card segment took a hit. It will recover in due course as more of the workforce comes back over in the next 18 months.

Also, as expected, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid constituted 61% of the net-adds in Q109 up from 57% in Q408 and 25% in Q108. It is not clear if the good times will bring back the prepaid subscribers to the postpaid realm or like the consumers who are canceling their landline connections and moving to mobile, these customers will get used to savings and the prepaid lifestyle.

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 someplace else (or maybe they can hire Oprah to send a tweet to her followers to upgrade to Postpaid. It will crash the system but increase the ARPU).

Rising unemployment continues to accelerate another trend - landline replacement by Mobile which reached almost 22% by Q109 (of course this benefits the mobile industry). This trend is irreversible and requires fresh thinking.

Messaging continues to grow. The messaging volume jumped 27% and messaging revenue was up 7% QoQ. The data access (excluding data card) including flat rate data plan subscriptions have also show significant strength lately. In addition to smartphones, we are also seeing increased mobile data activity amongst feature phone users.

We are likely to see continued price and margin pressure on subscription plans and as a result, voice ARPU will continue its downward trend and data ARPU will become a more prominent factor of the ARPU mix by the end of 2009 reaching over 30% of the service revenues.

This will lead to new business and pricing models for e.g. some will find the low flat rate pricing untenable in the long-run without a fundamental rethink of the network and business architecture.

Coming back to the 2009 forecasts, we are raising our estimates for the mobile data service revenues to $42B for the year. 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 Q109 US wireless data market is:

Service Revenues (Slides 11, 18)

The US Wireless data service revenues grew 5% Q/Q to $10B in Q109. Compared to Q108, the data service revenues grew 32%.
It marked the first time the US mobile data service revenues crossed $10B. It is also the first time any country has reported a $10B quarter (for mobile data services).
Thanks to the Alltel acquisition, Verizon’s data revenues grew the most - 18% QoQ and 46% YoY. AT&T experienced a 39% lift while T-Mobile reported a 24% increase in YoY data revenue growth.
Last quarter AT&T surpassed Verizon in data revenues for the first time since 2005 and in Q109 Verizon duly took many of titles back from AT&T becoming the number 1 carrier in almost all the categories.
AT&T and Verizon now account for 68% of the market data services revenues. Sprint had a fourth consecutive quarter of data revenue growth.
The average industry percentage contribution of data to overall ARPU is now $26%. US market is likely to exceed the 30% mark in 2009.
The top four US carriers are now a permanent fixture in the top 10 global operators by mobile data service revenues occupying #3, #4, #6, and #8 spot respectively. Apart from NTT DoCoMo and China Mobile, Verizon Wireless and AT&T are the only two other operators generating more than $3B in quarterly mobile data service revenues.

ARPU (Slides 12-15)

Overall ARPU decreased by $0.91. Average voice ARPU declined by $1.17 while average data ARPU grew by $0.26 or 2% and couldn’t negate the drop in voice ARPU.
Sprint led in data ARPU with $15 followed by Verizon at $14.16. In terms of % contribution, Verizon led with 27.91% followed by AT&T at 27.2%.

Subscribers (Slides 16-17)

In Q109, the US market added almost 3M new subscriptions down 33% from Q108.
The number of data subscribers has been on the rise with Verizon leading the way. At the end of Q109, 62% of US subscribers were using some form of data services.
The messaging volumes in the US market now average 485 messages/subscriber/month or at the frequency of a message/sub every 1.5 hours. The leading messaging nation is Philippines where consumers routinely send a message/hr on average.
In terms of net-adds, Verizon led in Q109 with 1.3M net-adds, edging its friendly rival AT&T which added 1.2M net subscriptions. Sprint losses reduced to 180K subscribers.
With its Alltel acquisition, Verizon became the number one carrier in the US easily overtaking AT&T. It now has 86.6M subs and secured the bragging rights to being the biggest operator in the Americas.
The 3G penetration in the US went past 40% in Q109. Verizon led the pack while T-Mobile is slowly expanding its 3G coverage. The growth in 3G and smartphones is helping offset some of the downward pressure on the data revenues and overall ARPU.

Applications and Services

Non-messaging services continue to grab 50-60% of the data revenues for the US carriers. For the first time the non-messaging share exceeded 60%.
The flat-rate pricing movement that was started by Willcom in Japan which moved to Europe became more prevalent in the US market with industry wide flat-rate pricing plans that included data. All the major carriers seem to be offering flat-fee access plans for most of the new smartphones being introduced in the market. Approximately 17% of the consumers have flat-rate data plans. We will see a further acceleration of this trend aided by the recession.
There are probably 18-20 sub-segments within mobile data services and consolidation looms. While the valuations are still high for rapid consolidation, we think that due to recession pressure, the M&A scene is starting to heat up.
The usage and data consumption trends are enabling carriers to accelerate their 4G plans and develop long-term business and technical strategies (I will be moderating a panel on “The future of Broadband” at the “Future in Review (FiRE)” conference on May 20th in San Diego where some of the best minds on broadband will be debating the evolution of our industry)
The appstores battle is intensifying with OEMs and carriers are announcing their plans and some of them are opening their wares to woo the developer community. In the midst of the appstores hoopla, Apple announced the passing of the 1 Billion download mark with increasing number of developers participating the ecosystem. The new functionality being released with 3.0 is going to take the battle up a notch. The clear-cut business model of 30/70+ split is attractive to the long-tail of developers. While there is no dearth of applications, findability remains a challenge. Also, appstores are changing the monetization strategies for content and application developers (I will be moderating the panel “Wireless Monetization” at TiECON on May 16th in Santa Clara)
Slowly but surely, mobility is becoming pervasive across industry verticals. Mobile Health looks very promising and the impact could be global. (I will be participating in a conference on mHealth being held in San Francisco on May 22nd by UN Foundation, Vodafone Foundation, UCSF Global Health Services, Berkley Engineering, Cisco, and NetHope)

Handsets

After selling over 100M units for seven straight quarters, Nokia slipped to 93M handsets in Q109, still more than the next three players combined but an 18% drop from Q408 nevertheless. Samsung and LG have been really gaining on their rivals in the past year and are now at #2 and #3 respectively. Motorola and Sony Ericsson with 6% share each round up the top five.
While Apple has been stealing all the press, RIM upped the ante by claiming leadership in the smartphone wars by outselling Apple in the first quarter of the year.
The growth in smartphone usage is also putting pressure on the networks which are not able to handle the load during peak times in certain cities thus forcing carriers to look for alternate strategies to satisfy the demand for broadband - metered billing, UMA, Femtocells, Hotspot buys, WiMAX, LTE, and others.
Rest of 2009 is eagerly awaiting the release of Palm Pre, several Android handsets from HTC, Samsung, Motorola, and others, Windows devices along with follow on of Danger devices, new model(s) of iPhone, and other touch screen devices.

Misc.

Not surprisingly, Venture money in the mobile sector experienced a rapid decline. Compared to Q108, venture financing declined by 58%. (Source: Rutberg)
In a sign of convergence battles to come, T-Mobile’s @Home and various Femto cell initiatives are taking hold. Cable operators are also aggressively seeking triple-play by providing the wireless component of the service.

We will be keeping a close eye on the trends in the wireless data sector in our blog, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2009. The next Global Wireless Data Market update will be issued in Sept 2009.

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.

Mobile Industry Predictions 2009 January 1, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, Gaming, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Privacy, Speaking Engagements, Strategy, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

Mobile Industry Predictions 2009

2009 Mobile Industry Predictions Survey

View SlideShare presentation or Upload your own. (tags: google microsoft)

http://www.chetansharma.com/MobilePredictions2009.htm

Download PPT (2.1M)

Download PDF (2.9M)

First things first. From all of us at Chetan Sharma Consulting, wish you and yours a very happy and prosperous 2009.

Before we get into what’s to come, let’s do a quick wrap-up of the year that was.

While 2007 was remembered as “the year of the iPhone,” in 2008, though iPhone and Appstore again dominated the headlines as “Touch” became the new black, iPhone shared the spotlight with Android and the resurgent RIM. The deafening roar of “Openness” that started to bubble up during Q407 permeated the ecosystem in 2008. Responding to the iPhone, OEMs raced to introduce Touch phones - Instinct, Armani, Storm, N2, Glimmer, Vu, G1, Diamond, Dare, N97, 5800, and others.

Apple reached its 10M goal a full quarter early and Gphone’s 1M number was impressive. The Clearwire deal was consummated though it meanders through the clouds of uncertainty. Blyk continued to defy expectations. We made significant headway in energizing the mobile advertising sub segment but the tough problems of privacy, education, control, fragmentation, and user experience remain. LBS picked up steam and mobility started to get into the alternate consumer device universe which with the help of Amazon kindle and PNDs have started a new chain of AORTA devices.

In terms of actual numbers, the mobile industry exceeded 1 Trillion USD in revenues for the first time with services revenue making up 80% of the mix and 20% being contributed by infrastructure, handsets, and misc. Several operators are now exceeding $2B/quarter in data revenues.

Several subscription milestones throughout the year: 50% penetration, almost 4B worldwide, 600M China, 300M India. India and China both added more than 100M subs in 2008. As expected, 3G crossed the inflection point in the western markets (30%+ penetration) while in Korea and Japan, it was getting hard to find people without 3G (85%+ penetration). Mobile web penetration is above 25% and is becoming quite significant.

Thanks to the iPhone, we seem to have settled on sub-$200 smartphones with race to $150 and $100 on the cards. Flat-rate data subscriptions went above 10% in the western markets. Over 20% of the global service revenues are not dependent on data while non-SMS revenues surged past 40%. With the advent of Femto and UMA, we might see a new front in the battle for the digital home, esp. as bundling and quad-play offers become common place and convergence starts to take different shapes, forms, and business models. Carriers are starting to worry about mobile data usage and looking for alternate strategies and business models. Chinese OEMs started to become more dominant and started to win some major accounts. Don’t be surprised by a major acquisition by them in 09.

Among other events of significance: Mobile TV continued to suffer from highpricendititis, Helio shut down, China and India delayed 3G, WM got updated as MS got behind, Yahoo cemented some impressive operator deals as GYM got more active in mobile, Microsoft entangled Yahoo in a mating dance, Mobile Open got into the industry physce, 700 MHz auction drama ensued, Beijing Olympics rocked, SMS handed the presidency to Obama, Whitespaces and FCC tangled, LTE dominated, UMB died, Admob exponentiated, M&A slowed, IP scuffles continued, over 1.2B new devices shipped, Nokia sold more than 100M devices in each quarter, Samsung surged, Motorola pondered, AT&T iJoyed, Vodafone said Namaste India, US edged past Japan in mobile data revenues, DoCoMo continued to dominate the mobile data revenues rankings, India edged past US in total mobile subscribers, Mobile Facebook spread, Twitter tweeped, Symbian went open source, Sequoia panicked, INQ launched, Economy tanked, WalMart started selling iPhone, Palm got a lifeline, Change was in the air.

We covered these is much detail in our regular industry research notes, books, whitepapers, blog posts, speeches, panels, and more. Look forward to continuing the conversation this year.

2009 will also 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 industry movers and shakers participate. Executives and insiders (n=200) from leading mobile companies across the value chain and around the world opined to help us see what 2009 might bring.

Six names were randomly drawn for one of our three books released in 2008 (Mobile Advertising, Enterprise Mobility and Wireless Broadband)

The winners are:

Akio Orii, CFO and VP, Toyota
Declan Carew, New Product Strategy Manager, Vodafone
Helen Keegan, Consultant, Beep Marketing
Rich Begert, CEO, Singlepoint, and
Russ McGuire, VP, Sprint Nextel
Jonathan Ebinger, General Partner, Blue Run Ventures

Congrats and Thank You.

Now onto the survey results. The makeup of the respondents below:

Will we see a pull-back in mobile data spending globally/in the US?

The wireless data industry has been somewhat unharmed so far (though OEMs and Infrastructure providers are bearing the brunt of the economic storm). Flat rate pricing, smartphones, 3G networks, better UX are all helping in the continued surge of mobile data consumption and hence revenues. Most expect that though we might see some scaling back in mobile data spending, overall, the growth will continue. The global markets will be slightly better off than the US.

Will Android handset sales exceed iPhone’s in 2009?

The overwhelming majority thought that iPhone will continue to dominate Android in 2009 though 2010 could be a different story. Android has had a good start and if the number of handsets keep on increasing with more carriers carrying it in more countries, Android might not exceed but can come awfully close.

Mirror, Mirror on the wall, who will be the most open of them all?

“OPEN” was the biggest buzzword of 2008 though it means different things to different people. Almost everyone thinks, Google is likely to set the agenda on “open” for others to follow.

Will Apple launch new iPhone models in 2009?

The answer is yes but will they be just minor upgrades or shake-the-market new models. With Android, Nokia, and RIM breathing down its neck, Apple will need more than just upgrades to maintain the limelight.

Will Mobile Advertising see a rise in ad-spend in 2009?

There might be some slow down but mobile advertising ad-spend will keep on increasing. Targeting capability is increasing and CPMs are coming down making for a more efficient mobile channel for advertising. In our own work, we have seen brands fall into two camps: one who are scaling down on inefficient channels like print and radio and moving money into digital including mobile and the others who don’t have quite the appetite for mobile and want to keep investing in channels that they are most familiar with.

Will India and China launch nationwide 3G in 2009?

After many years of delay, the two powerhouses set to launch 3G in 2009. China with TD-SCDMA/WCDMA and India with WCDMA are set to doll out some of the largest contracts seen in the industry.

Will Mobile Payments get any traction in North America and Western Europe?

The plans for mobile payments launch will get pulled back a bit due to the economic crisis. Limited rollouts and trials to continue. Some progress will be made in international mobile remittances.

Will Microsoft launch its own mobile phone?

Will they, Won’t they? How can they not? The probability increased from last year for an Mphone coming to a store near you. But, with the boeingification of Microsoft, it is hard to get any decisions to the market quickly.

Will Clearwire meet the 1.3 million subscriber target in 2009?

The economic climate might force slow-down of expansion and thus the optimistic subscriber forecasts could be impacted.

Will Mobile Open Source mitigate fragmentation?

Not a clear cut answer. Depends on how other versions of Android phones do in the market and if the application development remains a challenge across the Android and Symbian family of devices.

Will cable companies make a major play in wireless in 2009?

Quad-Play is the name of the game. Cable companies have invested half-heartedly thus far. 2009 might be the year they move in aggressively.

Will Microsoft buy RIM?

RIM has become too big and powerful to be consumed by Microsoft easily but desperate times call for desperate measures.

Will Obama’s administration have a major impact on network neutrality and open networks debate?

Not a priority for now. No high expectations, just regular bureaucratic grind.

Will carriers start launching Apple/Android style appstores?

Opinions remain divided. I think most are tempted to build but will outsource the development.

Will Microsoft make windows mobile free to OEMs?

Android (and to some extent Symbian) has pushed Microsoft in a corner. Will it preempt the demise of its pricing strategy? Reduction in price might be the safest bet at this time.

Will the smartphone penetration hit the inflection point in the western markets?

We are getting to that inflection point. 2009 seems to be the year with major implications for the ecosystem.

Will UMA/Femtocells cement their place in the mobile ecosystem?

As 3G networks get burdened by data usage, carriers will look to making UMA and Femtocells as a critical piece of their network strategy

Will consumer privacy and data security rise to be one of the important issues of 2009?

Privacy? What Privacy? Another celebrity mishap might pull this issue to the front burner.

Despite conventional wisdom, what will not happen in 2009?

There were many. Sampling - Microsoft will not buy Yahoo. US Cellular will not be sold. Global economy will not recover in 2009. LTE won’t be commercially deployed. India and China will struggle to get substantial progress with 3G. Motorola will not breakup. Nortel will not disappear. 2009 won’t be the year of mobile advertising.

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, 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, OpenSocial, GF/FB Connect, Comes with Music, Mobile Widgets, Mobile 3.0, LTE, MIDs, Off-portal, Embedded Mobile, M2M, and others.

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 2009 and seeing many of you along the way.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

Request for Participation: 2009 Mobile Industry Predictions December 9, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, Indian Wireless Market, International Trade, Japan Wireless Market, Location Based Services, Wireless Value Chain, Worldwide Wireless Market , add a comment

Greetings.

2009 is upon us. We are doing our annual Mobile Industry Predictions survey (20 questions) to gather insights from the collective brain trust – our readers, friends and colleagues around the globe. I am hoping you will help us out by giving us your thoughts and insights. You can answer any or all questions. All answers are kept confidential. Last year’s survey results here.

If you leave your email address, we will enter you in the drawing for winning a signed copy of one of our three books released in 2008.

- Mobile Advertising by Chetan Sharma, Joe Herzog, and Victor Melfi, John Wiley & Sons

- Wireless Broadband by Vern Fotheringham and Chetan Sharma, IEEE Press and John Wiley & Sons

- Enterprise Mobility: Applications, Technologies, and Strategies, IOS Press

We will share the results during the first week of 2009.

Please click here to start responding. If the link doesn’t work for you, please let us know.

Survey ends Dec 28^th.

The questions are:

1. Will we see a pull-back in mobile data spending globally?

2. Will we see a pull-back in mobile data spending in the US?

3. Will Android handset sales exceed iPhone’s in 2009?

4. Mirror, Mirror on the wall, who will be the most open of them all?

5. Will Apple launch new iPhone models in 2009?

6. Will Mobile Advertising see a rise in ad-spend in 2009?

7. Will India and China launch nationwide 3G in 2009?

8. Will Mobile Payments get any traction in North America and Western Europe?

9. Will Microsoft launch its own mobile phone?

10. Will Clearwire meet the 1.3 million subscriber target in 2009?

11. Will Mobile Open Source mitigate fragmentation?

12. Will cable companies make a major play in wireless in 2009?

13. Will Microsoft buy RIM?

14. Will Obama’s administration have a major impact on network neutrality and open networks debate?

15. Will carriers start launching Apple/Android style appstores?

16. Will Microsoft make windows mobile free to OEMs?

17. Will the smartphone penetration hit the inflection point in the western markets?

18. Will UMA/Femtocells cement their place in the mobile ecosystem?

19. Will consumer privacy and data security rise to be one of the important issues of 2009?

20. Despite conventional wisdom, what will not happen in 2009?

Please feel free to pass this on to anyone who might be interested or has something to say.

Thanks and Have a safe and wonderful holiday.

For a prosperous and strong 2009.

Kind regards,

Chetan Sharma

Recap of "Tomorrow’s Wireless Future" November 20, 2008

Posted by chetan in : 3G, 4G, AORTA, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, International Trade, Japan Wireless Market, Location Based Services, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Smart Phones, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

Tomorrow’s Wireless Future

One of the reasons I love what I do is that I get a chance to work with really smart people around the world on some cutting-edge projects. Additionally, I get the opportunity to interview some of the brightest minds in the industry. This year has been particularly rewarding. I probably did close to 25 events which were a mix of keynote addresses, panel moderation, panel participation, university lectures, and other speeches. Add in the 20+ client project visits and it all translates into more than a trip every other week to the SeaTac airport. My suitcase has been permanently positioned at the doorstep in my house.

Earlier this week, I had the distinct honor of moderating a panel of some of the most eminent senior wireless research scientists and CEOs of wireless companies from Finland where we explored the future of the wireless landscape from user interface to reduction in carbon footprint to privacy and security issues and much more.

Also, had the privilege to do a Q&A session with Dr. Craig Barrett, Chairman of Intel Corporation after his keynote address. This note summarizes the topics discussed during the “Tomorrow’s Wireless World” event.

Many people might not be aware but the City of Oulu in the central part of Finland is a leading epicenter of wireless activities with many major industry players setting up shops for doing R&D work. In fact, it is quite likely that one of the companies out of Oulu has had an impact in some way on the mobile phone you have in your pocket (and we are not including Nokia).

The topic of our panel was “Your Wireless Future” – a broad topic that is always difficult to cover in 60 minutes or less. My illustrious panel included (from R to L):

· Prof. Juha Röning, Head of the Dept. Electrical and Information Engineering, Oulu University. A leading edge research center, many companies in Oulu have been spun out of this department

· Markus Asplund, VP, Sesca Technologies. A major services firm in the mobile industry

· Ari Pouttu, Director of Center of Wireless Communications, University of Oulu. A leading research center in doing work in access technologies.

· David Chartier, CEO, Codenomicon. A major player in the network security space. Their tools are used for hardening their products by companies such as Cisco, Apple, IBM, Nokia, and others.

· Craig O’Connell, Sr. Manager, Elektrobit. Working with pretty much all OEMs around the world

· Dr. Jussi Paakkari, VP, R&D ICT, VTT. Doing some cutting edge research in the area of network protocols, security, access, machine vision systems, and much more

· Purnima Kochikar, Director, Software and Services. Nokia. Well, you know Nokia

I started by asking the panelists about what in their view have been some of the defining trends over the last 12 months. Summary of answers – iPhone; android; move towards full mobile browser; browser will reduce fragmentation and more innovation will happen on this front; with the rise of smartphones, security and privacy have become an issue,

Some other salient points (read issues and opportunities) from the discussion:

· It is forecasted (by WWWRF) that in another 10 years, we will have 1000 radios per every subscriber. That would translate into few trillion nodes around us. The level of complexity and carbon footprint will be enormous. One has to figure out a way to address both.

· City of Oulu has first of a kind experiment with NFC where the technology has been embedded in day-to-day life from home, school, train station, restaurant, probably every object in the city. Pretty interesting experiment that will lead to interesting use cases and technology implementations.

· There are so many protocols being integrated into the device that hackers are targeting not only the data but the protocol weaknesses to gain access. IT finally starting to address smartphone issue in their networks.

· The role of Cognitive radio and SDRs will gain prominence as more access technologies get introduced.

· In a ubiquitous environment with finite spectrum, “sensing” technologies will have a great role in optimization. Sense and do the best for the consumer, the device, and the network. Hyper connectivity will become the norm.

· In addition to touch, gesture and face recognition will add to a better multimodal experience.

· Mobile payments is coming and going to make a big impact. We have to of course sort out the business models.

· 3Cs of mobile – convergence, context, and community (Nokia’s Mantra).

· The very business of R&D has changed significantly with corporations choosing to outsource R&D and the cycle of concept to market launch has shrunk from 6 years or more to 12-18 months.

· More innovation will come from integration of existing technologies rather than some big breakthrough.

· Demand for bandwidth will keep growing.

· Significant opportunities in medicine, enterprise, and other industry verticals.

· In developing countries, while consumers are willing to pay for expensive devices, they don’t have any appetite for expensive service plans.

Some discussion points from Craig’s speech and our Q&A session:

· World will go to free MIPS and free baud (computing and communications). What happens then?

· Moore’s law is good for another 15 years based on 5 generation of future chipsets that they have in the labs. And it will probably keep going after that.

· Awareness of context really important.

· Many types of devices will proliferate including MIDs, education devices, some designed specifically for special purpose (medical monitors) and geographies (emerging markets).

· Global challenges are education, health, computing, and communication.

· In the developed world, wireless technology can help reduce the cost which is increasing at the rate of $200B/year and in the developing world, technology can help provide access to health care.

· Convenience and access trumps security concerns.

· Areas of opportunities – Telemedicine, education, economic development, governance, energy and environment.

· This is Craig’s 11^th recession. Principle to tackle has been the same every time. You cannot save your way out of recession. You can only innovate out of a recession. Intel R&D budgets will remain the same.

· Innovation is key to surviving and competing in the global economy, now more so than ever.

· The fact that so much can be done in these tiny piece of electronics is just amazing and the drive to do better and more using technology keeps him going, keeps him inspired.

Craig is passionate about education and innovation and he serves on more global committees than he would care to admit. His work outside of Intel has been equally impactful.

It should be noted that the Matti Pennanen, Mayor of Oulu who also graced the event with his presence is a technologist at heart and understands the role of innovation in the growth and strengthening of their economy. How many tech-savvy Mayors do we have in other countries? I thought so. I have noticed similar trends in Korea, Ireland, and Israel. They all have something in common – great early education system and maniacal focus on innovation and desire to succeed. It was great chatting with Mayor Matti about technology trends and opportunities. In this global economy, politicians better become tech-savvy really fast or they won’t be serving their constituents well. Cities, states, and countries need to start thinking like startups and compete for every dollar.

My thanks to my friends Victor Vurpillat and Brenda Fox at Global Connexus and Pauliina Pikkujämsä at Oulu Innovation for inviting me to participate in the discussion.

Image Courtesy: Global Connexus

Wireless Broadband Book - More Details October 7, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Search, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

The Wireless Broadband Book is launching next week on 17th Oct. It will be in Wiley stores in a week and then early Nov, available at retailers around the world including amazon.com.

If you are interested, the best discount is available at Wiley.com. We are making it available to all our readers and colleagues. The code is WBR98 and it get you the book 20% cheaper (Amazon is 9% right now).

We also launched the book web site - WirelessBroadbandBook.com. It has lot of details about the book including:

Introduction

The telecommunications industry has evolved to a point in time when the wireless elements of the global network have eclipsed the legacy wired networks in terms of reach and adoption by the world’s population. There is now a growing tension between the original vision of the cellular network as simply a mobile extension of the traditional wired telephone network that is operated as a closed system under the unilateral control of the service provider and its role as a leading access platform for the global Internet. The powerfully established business and regulatory model of the legacy telephone network operators is now bumping up against the dramatic expansion of the global Internet into a broadband data system that can provide alternatives for virtually every legacy communications service. A historic conflict is evolving over how these two mammoth environments will converge and overlap. Will the well-established institutions that hold sway over the legacy telecommunications networks and service providers capture control of the Internet by leveraging their existing gatekeeper position for access and termination? Alternatively, will these well-established habits of operation yield to creative new forces and competitors who will grow and thrive by implementing new business models that make obsolete the business practices of the incumbents? This conflict is well under way, and its outcome will have tremendous influence on the future of the global economy, the evolution of human rights and freedom, and the daily lives of virtually all the world’s citizens.

The core theme of this book is an examination of contesting factors that have influenced and will continue to influence the deployment and adoption of the broadband Internet Protocol (IP) wireless infrastructure, its devices and its services, which will mark the next major steps in the evolution of wireless worldwide. The implementation of the ubiquitous wireless broadband Internet will reach into every corner of global society. Every segment of the wireless industry will ultimately have to view and plan for its future prospects from the perspective of how it will fit within the emerging IP ecosystem growing out of this major change of state for the entire telecommunications industry. We will consider the impact of new entrants and operators, versus new innovators and the current market leaders in each sector of the industry. We will also examine how the future technology road maps of the 3GPP (Third Generation Partnership Project) and WiMAX (Worldwide Interoperability for Microwave Access) standards promoters will conflict, compete, and ultimately converge. Our efforts will also seek to penetrate the noise and hype, both positive and negative, that presently cloud the perceptions of both industry insiders and the larger publics who will be impacted by this insidious and inevitable broadband evolution.

New broadband wireless deployments will find market share both among and beyond the current base of 3 billion subscribers, most of whom are on secondgeneration (2G) versions of the global system for mobile communications (GSM) systems. The installed base of GSM infrastructure is presently undergoing a slower than anticipated, but inevitable transition to third-generation (3G) platforms. This step along the trajectory to true broadband IP–centric fourth generation (4G) networks can be viewed as the transition from the narrowband 2G environment to the wideband 3G era, which will evolve into the true broadband future matching the vision of the 3GPP technology Long Term Evolution (LTE) for GSM systems, and the emergent Mobile WiMAX standards based on OFDMA (orthogonal frequency division multiple access) technology. The emergence of OFDMA as the technology of choice for the next-generation mobile platforms is a by-product of the dramatic increases in microprocessor power over the past decade that finally enabled OFDMA technology to become practical for application in wireless platforms. These systems will come into existence under the sponsorship of existing cellular operators, and through major telecommunications and computing industry organizations that have to date been essentially left out of direct participation in the wireless industry. Included among these new contributors to the wireless broadband future are the cable television operators, Internet portal and search companies, computer and digital appliance manufacturers, software concerns, and content developers.

Much of the momentum driving mobile wireless broadband services is being created by the widespread adoption of wired broadband Internet services by a large portion of the population. The experience and convenience of broadband access have extended from their original presence in the workplace into approximately 60%of all U.S. households, primarily though digital subscriber line (DSL) and cable modem services.* We are now at the tilting point when it is both practical and logical to seek access to our broadband services and applications wherever we may be, regardless of whether we are at the office, at home, traveling to a remote destination, or mobile betwixt and between these locations. We will address the nature of network and service convergence and the interrelationships that exist between and among each of the broadband network service domains, including all types of wired and wireless networks.

There is a pending collision between the traditional telecommunications industry closed system approach to the market and the open platform environment of the Internet. As broadband wireless service delivery networks proliferate, the migration to expanded openness will accelerate. The traditional ‘‘walled garden’’ environments of the legacy wireless service providers are already breaking down, with pledges to remove existing carrier-defined constraints that only allow network access to user devices obtained from the underlying carrier coming from both Verizon and Mobile WiMAX proponents. How these deeply established traditions of the telecommunications industry are relaxed and eliminated in whole or in part and at what pace over time will mark the next era of the wireless industry.

Numerous contributing factors will impact the pace of the ubiquitous availability of wireless broadband services. These include: (1) the need to resolve a wide range of regulatory constraints and protectionist policies on literally a global basis; (2) the existence of enabling technology development for pending broadband wireless expansion in an increasingly complex intellectual property environment that requires equipment manufacturers to be sensitive to potential business risks, which are very difficult to quantify in advance of drawn-out contentious legal processes; (3) the need for substantial increases in the amount of radio spectrum allocated to existing and new service providers with sufficient contiguous bandwidth to support truly broadband services; and (4) the need for non-discriminatory standardization of networks and user equipment across commercial and political boundaries, which will likely take many years to resolve.

We will attempt to handicap the field contending to be the future winners and losers among the numerous competing factions participating in the broadband convergence movement. Included among the participants for next-generation network services leadership are the reconsolidated and expanded (wireless, Internet, video and long-distance-enabled) legacy telephone companies, called the incumbent local exchange carriers (ILECs), non-ILEC cellular network operators (Cellcos), the multisystem operators (MSOs) in the cable industry, wireless internet service providers (WISPs) led by the new Mobile WiMAX system operators, the direct broadcast satellite (DBS) service providers, and the competitive local exchange carriers (CLEC).

Our direct experience over the past 20 years of the evolutionary march of progress towards a wireless broadband future has revealed many of the obstacles and obstructions that have emerged either as defensive acts of commission by established operators, or acts of omission on behalf of regulators and vendors, which have resulted in a seemingly never-ending series of chicken-or-egg phenomena. Inefficiencies impacting progress abound, including how wireless spectrum is allocated and licensed, how capital formation is organized and aligned with new network requirements, and how the numerous ‘‘standard’’ obstacles that mark the implementation of wireless infrastructure are overcome, such as site acquisition in a crowded market, local zoning obstacles including NIMBY (not in my back yard) issues, and the growing challenge of provisioning broadband backhaul and interconnection for cell sites with vastly increased capacity requirements compared with legacy voice cellular systems.

We are attempting to cover a very wide swath of the issues facing decision makers within the impacted sectors of the economy, with the intention of broadening their awareness of emerging competitive factors and potential opportunities that will decide their future success or failure. In addition, we hope to add worthy contributions to the policy making process to add additional insight and information to the impacted publics on every side of these often polarized issues.

We all share responsibility for the future we create as members of our respective professions and societies as well as members of the global community of nations. Our world is shrinking rapidly, and few technologies are contributing to this evolution of global interaction and interdependency as completely and cogently as broadband communications in all of its multivariate forms.

Chapter 1

Foreword by Mark Anderson, Founder and CEO of Strategic News Service, one of the biggest proponents of Wireless Broadband and the one coined the term AORTA from which this blog gets its name.

Testimonials

and much more.

We look forward to your feedback and carrying the conversation forward.

Thanks for your continued support.

Global Wireless Data Market Update - 1H 2008 September 28, 2008

Posted by chetan in : 3G, 4G, AORTA, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Gaming, IP Strategy, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Smart Phones, Speaking Engagements, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

Global Wireless Data Market 1h 2008 Update Sept 2008 Chetan Sharma Consulting

View SlideShare presentation or Upload your own.

Download PPT (1.9M)

Download PDF (3.2M)

http://www.chetansharma.com/globalmarketupdate1H08.htm

Global Wireless Markets continued to grow rapidly especially in India and China where the carriers are adding over 9M new subscriptions every month. India crossed the 300M subscription mark in Aug while China whizzed past 600M in September. Overall, the global subscriptions penetration edged past 50%. During the 1H 2008, revenues further tilted towards data services. The overall global mobile revenues (including equipment) for the year are likely to reach the 1 Trillion dollar landmark later this year (enough to bailout an economy or two), with approximately $800 billion attributed to service revenues. Data revenues now account for almost 20% of the global service revenues.

For some leading operators, data is now contributing close to 40% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. From the true and tested SMS messaging to the new services such as Mobile Advertising, Social Networking, Commerce, Mobile Wallet, and others, different services helped in adding billions to the revenues generated for 1H 2008. Japan remains the envy of the global markets and the nation to study and learn from w.r.t. new services and applications. The US market expanded its lead over Japan in mobile data service revenues for the year and is unlikely to cede ground in the months to come.

Buoyed by the global launch of iPhone, Apple is likely to eclipse the 10M goal in Q308. Its App-Store launch along with Android’s imminent arrival dominated the news. Other manufacturers also introduced challengers to iPhone, most notably, Instinct by Samsung on the Sprint network which has also been quite successful in getting users to engage in data services.

WiMAX vs. LTE debate took over the EV-DO vs. WCDMA chatter and while majority of the industry is consolidating around LTE; open-platform advocates are watching the arrival of WiMAX in the US with great interest. Google, Sprint, Motorola, TWC, Comcast and others put new life into the experiment called Clearwire.

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

The global mobile markets continue to grow at an explosive pace reaching 3.6B subscriptions by 1H08 up 9% from EOY 2007 levels and will likely cross the 4B mark by the end of 2008. Significant growth is coming from India and China with both countries registering on an average 9M net adds per month. India and China combined to add approximately 107M new subscriptions during the first six months of 2008. Overall, the world market is now over the 50% penetration mark.
US edged past Japan again as the most valuable mobile data market in service revenue with US adding $15.7B vs. $13.6B for Japan in 1H08 mobile data service revenues. China with $7.8B was ranked number 3. US registered the highest growth amongst the top 3 with over 18% increase from EOY 2007 levels followed by China at 9% and Japan at 7%. These top 3 markets account for just under 50% of the mobile global data service revenues.
NTT DoCoMo continues to dominate the wireless data service revenue rankings with over $6.8B in service data revenues for 1H08; however, Q/Q growth is declining. DoCoMo crossed 84% in 3G penetration and is expected to touch 90% by end of the year.
DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, China Unicom, Softbank, O2 UK, and T-Mobile USA to round up the top 10 operators by wireless data service revenues. It marks the first time, T-Mobile USA enters the top 10 list as it went past SK Telecom. All the top 10 carriers exceeded $1.5B in data revenues for the first half of 2008.
For the last couple of years, NTT DoCoMo has been the only carrier exceeding $10B in yearly mobile data revenues. In 2008, it is likely to be joined by China Mobile, KDDI, Verizon Wireless, and ATT in the exclusive 10B club.
Data revenues for the top 10 operators increased 10.3% from EOY 2007 and now account for almost 50% of the global mobile data revenues though their subscriber share is around 30%.
Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and Softbank are approaching 40%. 3 UK, O2 UK, Singtel, and 3 Sweden exceeded 30%.
In March, India edged past the US to become the number two wireless market (by subscriptions) in the world. In last two years alone it has added almost 175M new subscriptions (in comparison China added 169M and the US market added 39M).
ATT reported the highest increase in data ARPU from 2Q07 with 32% growth. Other notable percentage increases in ARPU were from KDDI, DoCoMo, Softbank Japan, 3 Australia, Vodafone Italy, Rogers, Verizon Wireless, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.65.
In terms of absolute dollar amount, NTT DoCoMo and 3 UK lead the pack with $22 data ARPU. Operators who reported overall ARPU above $60 were 3 UK, Singtel, Rogers, and 3 Sweden.
The biggest jump in data revenues was experienced by the US carriers, the top 3 being ATT, Verizon Wireless, and T-Mobile USA respectively. SK Telecom, Sprint and O2 UK experienced declines. (For a complete US Market Update, please see our Q208 research note).
In 1H 2008, SMS’s vice like grip on data revenues continued 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 regained its position vis-à-vis KDDI w.r.t. mobile data revenues. Their data coordinates stand at ($22, 39.5%) and ($20.3, 37%) respectively (please see slide 10 for reference).
Most of the operators in developed nations are contemplating future strategies to boost data revenues such that decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPUs. Comparing the ARPU for last 2 years, amongst the top operators, only Singtel, Rogers, T-Mobile UK, O2 Germany, O2 UK, Verizon Wireless and ATT experienced increase in both overall and data ARPU.
NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets and exploring new technologies and social experiments ahead of almost anybody else in the market. We looked at the data revenue growth at NTT DoCoMo since the introduction of i-Mode almost 10 years ago (see slide on page 17). During the last 9 years, overall ARPU has declined 33% though data ARPU increased over 1800% and now accounts for almost 40% of DoCoMo’s service revenues. The voice ARPU has declined almost 60%. 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 and technologies in these markets to get a sense of what’s coming.
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 66% (or $3) contribution coming from the data services. Philippines is also one of the most active messaging nations where users average a message/hr round the clock.
Even though China reported approximately $7.8B in data revenues for 1H08 and the percentage contribution is over 27%, data ARPU is around $2.3. For India, data ARPU continues to stay below $1 for all major carriers with Reliance experiencing a 50c data ARPU during Q208.
China Mobile with 428M (as of Aug 08) remains the #1 carrier in terms of total number of subscrptions followed by Vodafone at 269M and China Unicom with 171M subscriptions. Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5 (Verizon will overtake ATT after its Alltel acquisition goes through later this year). The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for many years to come.
China Mobile remains the most valuable telecom operator with over $200B in market cap. It is followed by Vodafone at around $125B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
As far as 3G is concerned, there were over 350M 3G users (69% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 80%+ penetration. 3G has picked-up steam in both western Europe and North America per our forecast in the 2005 cover story article “3G: Hitting the Mass Market” published in the Wireless World Magazine. Western Europe and US are at approx. 30% 3G penetration (Italy being the exception exceeding 40%).
China and India represent the biggest opportunities for the Infrastructure providers. China postponed its 3G decision again and couldn’t launch a network for the otherwise wildly successful 2008 Olympics. India is also going through its 3G spectrum policy and is likely to resolve some of the contentious issues shortly. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas.
Carriers with nationwide 3G networks and good distribution of handsets are seeing strong uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) is also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. For 4G, there is a strong momentum behind LTE, proponents of WiMAX are pushing the technology as a 4G candidate, and though it is starting to lose its time advantage, all eyes are on the imminent Clearwire launch.
In terms of applications, messaging accounts for the lion-share of data 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 also captured industry’s imagination. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than the other hot category - 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.
1H 2008 saw the demise of the last standing next-generation MVNO in the US market - Helio, which got sold to Virgin Mobile at bargain basement prices. In Europe, Blyk continues to make good progress with its unique mobile advertising-based model. Asian market is also opening up for MVNOs.
Nokia eclipsed 100M/quarter unit sale in both the quarters thus far. It has sold over 237M handsets in 2008, more than the next three handset manufacturers combined. Nokia’s global market share edged past 41%. Samsung at 15%, Motorola with 9.5%, LG with 9.3% and Sony Ericsson with 8% rounded out the top five. For the year, the industry looks to again eclipse the 1 billion handset mark for 2008.
While the talk of “Open Access” and “Open Platform” consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizon’s “Open Network” initiative elevated the consternation in the ecosystem. Apple launched its 3G iPhone while Android’s first device is slated to see the light of day next month courtesy of T-Mobile USA.
Apple launched its App-Store with iPhone 3G which has been quite successful though there is significant clutter to muddle through. The company is likely to announce soon that it eclipsed its 10M goal in Q308, a full quarter earlier than the stated target. These days, any new device that gets launched in the market is looked through the prism of iPhone.
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 (see slide 8). For a more detailed analysis, check out our research paper sponsored by The United Nations Foundation on “Mobile Services Evolution: 2008-2018.” It was presented at The Rockefeller Foundation Healthcare summit in Bellagio, Italy in July 08. (Note: The dichotomy between developed and developing nations is a very simplified concept that has been around for about 50 years. It is clear that a transformation in the distribution of wealth worldwide will change the picture in the next 10 years. Countries that are considered developing in today’s definition will become economic superpowers in 10 years and more dominant than some of the developed nations, even if they have not caught up then with some in terms of GDP per capita. However, for purely the purposes of comparison and illustration, we are using the existing definitions to discuss the shift in the mobile ecosystem).
Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia and Google are getting active in the space as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space and while it slowed down during 2008, it is likely to pick-up again in 2009 as consolidation looms.
Wireless Broadband continues to be a significant growth driver for the industry. We partnered with our good friend Vern Fotheringham - a true industry entrepreneur and who has been behind many of the industry firsts, to write an exhaustive treatment of the subject in our upcoming book - Wireless Broadband: Conflict and Convergence being jointly published by IEEE Press and John Wiley (see below). Details forthcoming.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

CTIA Wireless IT and Entertainment 2008 Roundup September 12, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Usability, Privacy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

CTIA Wireless IT and Entertainment 2008 Roundup

http://www.chetansharma.com/ctiawirelessit2008.htm

CTIA in pictures

San Francisco hosted the CTIA Wireless IT and Entertainment 2008 show earlier this week. In addition, there were some pre-show events like Billboard’s Mobile Entertainment Live and Mobile Web Strategies. This note summarizes our impressions from the week.

First, Let’s do the numbers CTIA released its mid-year survey results. Bob Roche and John-Paul Edgette at CTIA do a great service to the industry by compiling 6-month of useful data and making it available at each CTIA. In Summary - 262.7M subs, $14.78B in data revenues accounting for 20.3% service revenues, 75B TXT messages/month. We released our US Mobile Data Update for Q208 last month, Global Update coming later this month.

Overall Impression – This year’s show was one of the dullest in recent memory, devoid of any buzz, energy, or announcements. Maybe it was due to the 50,000 other events happening the same week (many in San Francisco). Or maybe, Bernanke’s congressional testimony is playing out in the wireless industry. Or maybe it is just conference-fatigue.

My week started early as I had the honor of giving a keynote address to a group of influential executives at major international operators and agencies worldwide at a well-organized private event. The topic was “US Mobile Advertising: Today and Tomorrow.” We delved into what’s working and what’s not and what will it take to get the industry to the next level, which players are likely to succeed and why?

Next day, I split my time between Mobile Entertainment Live organized by BillBoard and Mobile Web Strategies chaired by our friend Ajit Jaokar. While most of it was rehash of previous events, presentation by Jouko Ahvenainen of Xtract was probably the standout for me where he talked in detail about the importance of “analytics” and “intelligence” in advertising and social media. One of the interesting announcements/discussion was from Nokia regarding “Comes w/ Music” to be launched in UK next month - music subscription is bundled with the device as long as the device is from Nokia. Reliance Entertainment also announced its aggressive push into the US market.

Trip down the memory lane US Wireless Industry is celebrating 25 years of existence. Steve Largent invited Craig McCaw and John Stanton to reminiscence about the good old days - $4000 phones, hundreds of dollars of monthly bills, no roaming, 30 min talk time, obligatory 100 lbs bricksters. Craig emphasized on innovation while Stanton accurately put his finger on the big picture – US operators aren’t thinking like global companies or the media companies and can’t succeed in the new economy over the long haul. Spot On, John.

My first job was with a company that wrote the billing software for McCaw Communications in the early nineties (at that time, I was writing code for fraud prevention using RF fingerprinting for GTE, Ameritech, Bell Atlantic, Nynex, Airtouch, and the likes .. those were the days)

Open is in the Air With each CTIA over the last 18 months, carriers’ embrace of “Openness” is getting tighter and more nuanced. It is amazing how competitive threat can help disrupt the status-quo. While the keynote session sounded very scripted, each of the 3 CEOs from T-Mobile (Dotson), Sprint Nextel (Hesse), and Verizon (Lowell) are putting in place their “Open” Strategy (the current no. 1 operator was MIA). T-Mobile is launching an Apple-like App-Store next week with 50-50% rev-share which goes up to 30-70% in favor of the app developer but advertising is allowed (unlike iPhone Appstore). Streaming is also not allowed. Tricia at Moconews has more details. The balance between open network, customer care cost, and application performance can be a tricky one and everyone is tiptoeing the boiling waters carefully.

My favorite quips:

Hesse – “We have opened the network, Knock yourself out”

Lowell – “Our definition of open is irrelevant, it is what the customer wants”

Dotson – “Walled garden is a thing of the past”

It should be noted that two of the biggest success stories in the industry - iPhone and Blackberry are closed systems. Everything boils down to user-experience and value. We shouldn’t lose sight of that in the Open debate.

Yahoo’s oneConnect Marco Boerries, EVP, Yahoo! (read the piece he wrote for our Mobile Advertising book here) gave a keynote second CTIA running. These guys aren’t distracted by the Microsoft acquisition drama and remain the bright spot in an otherwise flailing organization. Over the past few months, they keep on refining their distribution and monetization strategy but they do need to attract droves of developers to make the initiative successful. Marco announced the launch of “Blueprint” – a framework for building mobile Internet apps and services. The trick is of course to attract developers. AOL is also pursuing a similar strategy.

Mobile Advertising There was a lot of discussion around mobile advertising each day with some new players emerging. Companies like Hipcricket (and many many others) are making real progress but I get a sense of “being stuck” from some of the players. Maybe, it is a function of the economy, or perhaps – fragmentation, lack of education, metrics, is keeping the industry from opening up.

CTIA released a whitepaper on 2D bar code scanning. Good to see some progress but the big question is – who takes the initiative to spend marketing dollars to educate the consumers and to make 2D bar codes pervasive in the US.

Carriers are getting more active in pursuing their mobile advertising strategies but I still see some fundamental missteps. Keep an eye on some of the work we will release later in the year to help guide the discussion, hopefully, in the right direction.

Mobile Social Networking Lot of discussion around mobile social networking (infact too much at times, even the mobile email player Visto considers itself a social networking company now), mobile only social networking, monetization challenges and opportunities. Most of the players are just aggressively focused on building an audience as quickly as possible. The monetization strategies include advertising, value added services, app store. Verizon and ATT announced their social networking strategies (built on the back of Intercasting’s platform) which essentially focus on social networking aggregation. This keeps them pretty safe and relevant. Current monetization model is that of subscription and maybe advertising down the road. For mobile only players the models varies from advertising heavy (Mocospace) to VAS heavy (mig33).

M2M The percentage of M2M companies in the mix increased compared to last time. For the first time I saw, carrier booths in M2M pavilion which was quite interesting. They clearly see this is a growing segment.

Smartphone Mania Devices like iPhone and Instinct are accounting for a disproportionately high share of the mobile download business now. And if data services is the only growth engine, why worry about launching sub-ARM9 devices, the economics is pointing towards cheaper smartphones on a fast network, it doesn’t make sense to port to 50 other devices when 80% of the revenue will come from a small subset of the devices.

For those of you attended the show, hopefully, it warmed you up for a really great mobile event being organized by GigaOM – Mobilize. Some terrific set of speakers and panels. I will be moderating two excellent panels (details below).

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

New Book: Enterprise Mobility: Applications, Technologies and Strategies August 24, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Networks, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

Enterprise Mobility: Applications, Technologies and Strategies

IOS Press

Chapter Contribution

“Enterprise mobile product strategy using scenario planning”

SAMIMUNEER (SAP) and CHETANSHARMA

Download Chapter (154 KB)

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

Each year, we work on strategies and product plans for our clients around the world that end up touching millions of consumers worldwide and do behind-the-scenes research, due-diligence, and analysis work on several critical deals and transactions that move our industry forward. But, rarely do we talk or write about them, due to obvious reasons.

However, last year, I got an opportunity to briefly write about some of the strategy work. On the request of Dr. Basole at Georgia Tech, my colleague Sami Muneer (Sr. Director, Enabling Solutions at SAP – responsible for all things mobile) and I drew from some of the long-term strategy and product planning work we had done for SAP to put together a paper on “Enterprise mobile product strategy using scenario planning.” SAP is the leading global enterprise player and their view of the world is both comprehensive and long-term. It was a privilege to work with their global team on the project.

Our paper is being published as a chapter in the just released book “Enterprise Mobility: Applications, Technologies and Strategies” (IOS Press, Amsterdam. 272 pages, Editor R. Basole, 2008) as part of The Tennenbaum Institute Series on Enterprise Systems. The chapter is also being published in the special issue of peer-reviewed International Knowledge Systems Management (IKSM) journal published by Georgia Tech.

The book is a collection of 13 chapters from academics and practitioners in enterprise mobility. I often use scenario planning techniques when doing long-term strategic assessment and forecasting. In this chapter, we hope to provide a framework for scenario planning in mobile that can go across verticals, applications, and services.

You can download the chapter here.

IKSM is making available all the chapters online (for free) if you register for a free one year subscription.

For those interested in reading the paper copy can order the book here.

Book Introduction

As the number of enterprises using mobile ICT increases, it becomes imperative to have a more complete understanding of what value and impact enterprise mobility has, what drives and enables it, and in what ways it can and will transform the nature and practices of work, organizational cultures, business processes, supply chains, enterprises, and potentially entire markets. Enterprise mobility is therefore a topic of great interest to both scholars and practitioners. Enterprise Mobility: Researching a new paradigm aims to contribute to and extend both our theoretical and practical understanding of enterprise mobility by exploring the necessary strategic, technological, and economic considerations, adoption and implementation motivators and inhibitors, usage contexts, social implications, human-centered design issues, support requirements, and transformative impacts. The main objective is to discuss applications, technologies, strategies, theories, frameworks, contexts, case studies, and analyses that provide insights into the growing reality of enterprise mobility for scholars and practicing managers. This volume contains thirteen articles from leading scholars and practitioners and includes an examination of the changing nature of work, work practices, and the work environment; a discussion of critical enablers of enterprise mobility; authors exploring strategic considerations; and insightful case studies of enterprise mobility across multiple domains. Together, the articles explore enterprise mobility across the entire continuum.

Enterprise mobile product strategy using scenario planning

Author(s): Sami Muneer and Chetan Sharma

The Mobile industry is changing at a rapid pace and so is the behavior of enterprise workforce which uses mobile technologies. When planning for a long-term product roadmap, one has to consider a myriad of evolution trends and forecasts to determine the probable list of product functionality and their introduction timing in the lifecycle of the product. One has to look at the technology trends by market, the competitive landscape, and the mobile worker adoption trends. However, one can only come up with a prioritized list of capabilities by taking into context the company’s own core competencies, skill sets, and overall mission. This paper looks at how mobile product companies can use scenario-planning methodology to formulate their product strategy and roadmap.

The listing of the chapters is as follows:

Enterprise mobility: Researching a new paradigm
The convergence of wireless, mobility, and the Internet and its relevance to enterprises
Business mobility: A changing ecosystem
A socio-technical perspective of mobile work
Designing productive spaces for mobile workers: Role insights from network analysis
Telecommuting and corporate culture: Implications for the mobile enterprise
User requirements of mobile technology: A summary of research results
Mobile interaction design: Integrating individual and organizational perspectives
A comparative anatomy of mobile enterprise applications: Towards a framework of software reuse
Protecting data on mobile devices: A taxonomy of security threats to mobile computing and review of applicable defenses
Enterprise mobility and support outsourcing: A research model and initial findings
Enterprise mobile product strategy using scenario planning
The strategic value of enterprise mobility: Case study insights
Exploring enterprise mobility: Lessons from the field

Your feedback is always welcome.

Thanks.

Chetan Sharma

US Wireless Data Market Update - Q2 2008 August 10, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Usability, Smart Phones, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 4 comments

US Wireless Market Q2 2008 Update Aug 2008 Chetan Sharma Consulting

View SlideShare presentation (tags: us wireless market arpu)

Download PDF (2.5 MB)

Download PPT (1.5 MB)

http://www.chetansharma.com/usmarketupdateq208.htm

The US wireless data market grew 40% in Q208 compared to Q207 to reach $8.2B in data revenues. The total for 2008 stands at $15.7B for the first six months, 38% higher than the total for the same time period in 2007. The news of Alltel acquisition, iPhone 3G, and the flat rate pricing wars dominated the news. Though the infatuation for iPhone was a few degrees lower, Apple managed to keep the device front and center of the news cycles. US again exceeded Japan in mobile data service revenues for the quarter and the market is on track to reach $34B in data revenues for 2008.

The US Wireless data service revenues grew 8.6% Q/Q to $8.2B in Q208. Compared to Q107, the data service revenues grew 40%.
Overall ARPU increased by $0.46. Average voice ARPU declined by $0.05 while average data ARPU grew by $0.50 or 5%.
Verizon lead in data ARPU with $12.58 (or 24.41% of the revenues) closely followed by Sprint at $12 (or 21.4354%), AT&T at $11.59 (or 22.91%) and T-Mobile at $8.60 (or 17%).
The strongest growth in Q208 came from Verizon with 13% increase in data revenues from Q108. Verizon generated an industry record $2.6B in data revenues closely followed by AT&T at $2.5B. Both AT&T and Verizon are on target to exceed $10B in data revenues for the year for the first time by any operator worldwide besides NTT DoCoMo (the two US carriers are already close to 50% of the target). AT&T and Verizon now account for 62% of the market data services revenues. Sprint reversed its decline in data revenues during last quarter to increase its data revenues by 3% in Q208. T-Mobile registered a 5% uptick.
The average industry % contribution of data to service revenues exceeded 21% and now stands at 21.41%. A year ago, the % contribution stood at approximately 17%.
The number of data subscribers has been on the rise with Verizon leading the way. At the end of Q208, Verizon had that 49.6M (or 72%) data subscribers. Verizon, AT&T and T-Mobile subscribers joined to send over 169 Billion text messages in Q208 translating into almost a message every 2 hours or so. This compared to users in Philippines where average routinely surpasses a message every hour.
In terms of net-adds, Verizon continued to lead with 1.5M net-adds again edging AT&T by 200K subscribers for the quarter.
For the first time, T-Mobile USA entered the top 10 rankings of global mobile operators by data revenues replacing SK Telecom which suffered decline for the second straight quarter. In fact, SKT got pushed to the 12th spot by Orange France. The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the quarter, Verizon, AT&T, and Sprint Nextel stood at #4, 5, and 6 respectively with Verizon and AT&T closing in on China Mobile (2nd) and KDDI (3rd). AT&T and Verizon are in the select group of five global operators who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI).
Non-messaging continues to grab 50-60% of the data revenues for the US carriers.
The flat-rate pricing movement that was started by Willcom in Japan which moved to Europe started to enter the US market with industry wide flat-rate pricing plans that included data. Sprint has been the most aggressive with its “Simply Everything” plans that include data services. 30% of its $100 plan is assigned to data revenues (for accounting purposes).
Q208 saw the blockbuster acquisition of Alltel by Verizon which is likely to close by end of the year. The $28B acquisition will catapult Verizon ahead of AT&T in total number of subscribers by a big margin (10M or so) and make it a leader in almost all major categories.
There continues to be tremendous activity in the area of Mobile Advertising. AdInfuse, Admob, Amobee, Millennial Media, Nokia, Rhythm New Media, Yahoo, and others ran compelling campaigns. There was also meaningful activity on the carrier front with industry wide initiatives.

Venture money experienced a decline into the mobile sector. During the first half of the year, private wireless companies announced $1.8B in 173 financings, compared to $2.7B in 209 financings for the same time period last year. (Source: Rutberg)
Nokia eclipsed 100M unit sale in Q208 for the fifth straight quarter. It sold over 122M handsets in Q208 (out of the total 297M), almost as many as the next four combined. Nokia’s global market share edged past 41%. Samsung at 15%, Motorola with 9.5%, LG with 9.3% and Sony Ericsson with 8% rounded out the top five. For the year, the industry looks to again eclipse the 1 billion handset mark for 2008
3G penetration in the US went past 30% in Q208, with Verizon leading the pack with over 60% 3G subscriber penetration compared to 25% 3G subscriber penetration at AT&T. T-Mobile is slowly expanding its 3G coverage. 3G subs have over $23 in data ARPU. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
Apple announced a 3G iPhone in June and launched an aggressive expansion plan to reach 70+ countries. The broadband and appstore capabilities are quite attractive to consumers and it shows. VPN and direct access to Exchange will get many more users into the mix and IT folks less apprehensive. The clearcut business model of 30/70 split is also attractive. Apple is likely to announce in Sept (may wait for its quarterly results in Oct) that it has reached the 10M goal for iPhone.
Feeling the threat from Apple and Google, Nokia bought the remaining portion of Symbian and announced the plan to open-source the OS, making things interesting in the wireless ecosystem. It puts Microsoft on the defensive and will be forced to reduce its licensing fee per device closer to zero. While Apple basked in the glow of iPhone 2.0, Google spent time swatting rumors of Android delay. Giving the changing dynamics in the industry, Google might be forced to play its gPhone hand earlier than it had anticipated.
After raising $14.5B from friends and family, Clearwire’s net-adds dropped in Q208. It needs to get its content and handset strategy in place in short-order.
In a sign of convergence battles to come, T-Mobile’s @Home and Sprint’s Femto cell initiatives started to take hold. Cable operators are also aggressively seeking triple-play by providing the wireless component of the service.

Global update

China and India added approximately 52M subscriptions combined in Q208 with China marginally edging out India. For the year, both countries have added almost identical number of subscriptions (53M). By comparison, US added 7.5M for the same time period.
NTT DoCoMo continues to dominate the wireless data revenues rankings with almost $3.4B in data services revenue in Q208. Almost 40% of its revenue now comes from data services. DoCoMo also crossed 84% in 3G penetration in Q208 and is expected to cross 90% by early 2009.
Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are consistently topping 30%.

More details in our worldwide wireless data market update in our Global Wireless Data Market Update Sept 2008.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

Interview with Ravi Venkatesan - Chairman, Microsoft India August 5, 2008

Posted by chetan in : BRIC, Enterprise Mobility, Indian Wireless Market, Mergers and Acquisitions, Microsoft Mobile, Smart Phones, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

Innovating from, for and with India is our mantra.

PiTech is the premier technology magazine for the Indian Institute of Technology (IIT) alums and community. I had the opportunity to interview Ravi Venkatesan - Chairman, Microsoft India for the July 2008 issue of PiTech that celebrates 50 years of IIT Bombay. Below is the interview in its entirety.

You can read the entire issue here.

Ravi Venkatesan, Chairman, Microsoft Corporation India Pvt. Ltd.

Ravi Venkatesan, Chairman, Microsoft India is responsible for Microsoft�s marketing, operational and business development efforts in the country. In partnership with the leaders of Microsoft�s other business units, Venkatesan provides a single point of leadership for the company, playing an integral role in defining Microsoft�s relationship with policy makers, customers and business partners across Microsoft�s six distinct business units in India namely: Microsoft Corporation India (Pvt) Ltd, the Marketing Subsidiary, Microsoft India Development Center, Microsoft Global Technical Support Centre, Microsoft Global Development Center India, Microsoft Global Services India and Microsoft Research India.

Prior to joining Microsoft, Venkatesan worked for over seventeen years with Cummins Inc, a US-based designer, manufacturer and distributor of engines and related technologies. He served in various leadership capacities at Cummins including Chairman of Cummins India Limited and Managing Director of Tata Cummins Limited, a joint venture between Cummins Inc. and Tata Motors. His biggest contribution at Cummins was leading the transformation of Cummins in India into the leading provider of power solutions and the largest manufacturer of automotive engines in the country.

Venkatesan has a BS in Mechanical Engineering from the Indian Institute of Technology, Bombay (1985), an MS in Industrial Engineering from Purdue University (1986) and a MBA from Harvard University (1992) where he was a Baker Scholar. Ravi was awarded Purdue University’s Outstanding Industrial Engineer award for the year 2000 and the Distinguished Alumnus award by the Indian Institute of Technology in 2003.

Venkatesan is a member of the Executive Council of NASSCOM, the Confederation of Indian Industry (CII), a Director on the Board of Thermax Ltd and a member of the Advisory Council of the Indian Institute of Technology, Bombay and IIIT-Bangalore. He has contributed frequently to the Harvard Business Review and some of his articles include, “Strategic Sourcing - to Make or Not to Make” and “The Strategy that Wouldn’t Travel.”

His interests include reading, travel, classical music and philanthropy.

~ ~ ~

What are some of the problems that our industry hasn�t solved? What�s holding us back?

At first, in many ways India is the centre of the IT world today and the credit only goes to the huge amount of talent that we have. However, for all the expertise that we have in IT, there is a huge underserved market in India.

The IT uptake in the domestic market has been limited. With all the challenges that lie ahead of us as a nation, are it access to education, or market access for small business or even transparency and accountability in governance, technology has the potential to solve these but we have never really applied ourselves to it. We have largely focused our energies on the global market.

The fact remains, for India to continue the economic growth it has seen in the last three years, it is imperative for us to work towards addressing these issues.

What are the key ingredients of a strategy to outsmart competition?

The only way to stay ahead in the game is to focus on the customer. You have to hear and concentrate on the spoken and unspoken needs of consumer. Take for instance the success Apple has enjoyed with iPod. It�s not a technological innovation but a brilliant execution of an innate need of a customer, connecting the device and the online music service, which had never been clearly articulated. Much like the Walkman a few decades ago. Or X Box live. We realized people were not looking to just enjoy the game in their living rooms but also wanted to play with the best of the best, whoever they may be and anywhere they may be. And in addressing that need, we were able to close the gap on Sony.

How can technology companies better understand the needs of customers?

If we can balance the obsession with our products with an obsession for our customers and really listen to them, and listen to them not only before the sale but even post the sale, it will make all the difference.

Simplistic as it may sound, it all boils down to be less internally focused and ensure our people are walking in the shoes of our customers.

How do you see PC computing evolving over the next 5-10 years?

If you look at the emerging new world of work and lifestyle, an always connected environment where users want to access data from wherever and at any time, one can safely talk about the emergence of non PC devices as the center piece of the digital era.

Likewise as technology is increasingly deployed for the next five billion and we think about enabling people in various scenarios, one will have to innovate to enable access for them. That will lead to evolution in the modality of interaction.

For instance, we will need to address issues of language and literacy, which means changes in text user interfaces, vision and speech recognition. Essentially, the devices will be more intelligent. Not only will they recognize our voice, but they’ll recognize our intent, take intelligent actions and follow commands. This means display technology will also have to evolve quite dramatically Concepts like surface computing, automotive computing and mobile computing will really become a big-big phenomenon.

Another interesting dimension will be the integration of TV software & PC software for connected-home consumer experiences across devices. IPTV will become pervasive with the integration of end-to-end multimedia and video solutions.

Needless to say, all of this will be accompanied by a fundamental re-architecting of the microprocessor. As per Moore�s law, multi-core computers will play a vital role in ushering in supercomputing.

What are some of the key �big-picture� initiatives at Microsoft?

As we all know, there are Two India�s. One is the global corporate India which is every bit as sophisticated as any other company globally. As productive, efficient and technology savvy as anyone else. And we see ourselves as partners to them and in their growth.

Then there is the other India, to be precise 2/3^rd of it which is at the risk of being left behind. Ironically at one level technology can be the divider. But it is also pretty much the most significant bridge to ensure an inclusive socio economic growth for the underserved India.

Over the last couple of years the focus has intensified in three areas and is aligned with the overall national agenda:

At first Investment in human capital both by way of education and skills has been and will continue to be a key focus area. IT is key, both as a subject of study and as the key facilitator in providing affordable access to education and skills.

Secondly, as we work towards addressing the unique scenarios of our country, it is obvious we and the entire ecosystem will need to innovate. We have to create a relevant enabling environment and that requires innovation at all levels.

Last but not the least it is important to sustain the current growth of the Indian economy and create appropriate jobs and opportunities for the growing young population of our country. Again IT plays a dual role of both as a facilitator and a key provider.

And in this commitment to realize the �Unlimited Potential�, we run several initiatives in the country such as:

Project Shiksha for accelerating IT literacy and enhancing the classroom environment among government schools across the country. We have already covered over 1,10,000 school teachers and impacted the lives of over 4 million students.

Project Bhasha for promoting local language computing wherein we have tried to break down one of the barriers by providing local language interface packs for Microsoft products in 14 Indian languages.

Project Jyoti which provides lifelong learning for adults in rural communities especially women through Community Technology Learning Centers. Run in partnership with NGOs we have already impacted the lives of several women who in many instances have now become bread earners for their families or simply gained social esteem and confidence and are leading examples for women�s empowerment in their communities.

Project Vikas to enhance the global competitiveness of the SMEs by IT enablement. Run in partnership with the national manufacturing council it entails a five year action plan to help the Indian SMEs address their �soft� challenges of market access, knowledge networks and enablement of supply chain linkages in the cluster ecosystem. We have successfully seen the first phase of deployment in three sectors: Tripur (textiles), Pune (auto components) and Ahmedabad (pharmaceuticals)

In addition to all the innovative work we do at our own business units, we also work with the Indian SI, ISV and developer community to build a robust software product ecosystem in India. We are engaged with them to support them on quality, technology roadmap, business skills and mentoring, venture capital funding and provide all the end to end tools to become commercially successful. It is towards our quest of �Made in India� software.

But at all times we are aware of the need to deliver affordable PC solutions and that is central to our India mission of building a digitally inclusive society. So over and above the special licensing for the government and academic community, we have in place a �Good-Better-Best� segment approach. Essentially, different SKUs with different levels of functionality and therefore differentiated prices. Good example is Windows Vista Starter Edition, specially designed to spur PC usage in India it is the lowest cost Microsoft offering available today.

Or innovative models of delivery, such as the �pay-as-you-go� business model enabled by our flex go technology. It uses the familiarity and flexibility of prepaid mobile phones and applies it to personal computer, bringing down the entry barrier of costs for PC ownership.

Like I have said before, Innovation is key. Innovation in product, business models, solutions and services.

What technology (ies) is Microsoft building specifically for India?

India is the only subsidiary outside of the US where Microsoft has an end-to-end presence of its entire product lifecycle right from research to product development to support. The large talent pool is naturally empathetic to the needs and problems of our fellow citizens. Therefore we can explore various technology, tools, solutions and services which are relevant not just to India but all emerging markets. As a result we are �Inspired by India� we therefore we �Innovate for India�.

Take the example of Microsoft Research India. It is one of the premier industrial research labs globally and as of March 2007, MSR India had already published more than 60 papers in leading international journals and conferences. While it focuses in areas including Cryptography, Security, Digital Geographics, Mobility and Multilingual Systems, it is the work they do for Emerging Markets is very heart warming.

Take MultiPoint - a simple yet powerful technology which will enable multiple children to share a single PC using multiple mice. For the purposes of primary education, it can multiply the benefit of a single computer by three, four, five, or more.

Equally inspiring is Digital StudyHall (DSH), an independent research project primarily supported by Microsoft Research, which aims to overcome both the problems of staff shortage and availability of standardized study material among underserved communities.

Simply put, it records and distributes DVDs of subject classes led by India�s best grassroots teachers. Underserved areas can access the DSH database via DVDs, while areas that are more developed will be able to access the content via the Internet.

Some other areas it is working on and very relevant to scenarios like India is Text Free User Interface to overcome the language barrier or the Split Screen UIs to multiply benefits for small businesses.

The Microsoft development centre which does end to end product development for Microsoft globally and contributes significantly to all our products, is also incubating technologies which will make computing more, far more intuitive and integrated with entertainment and therefore more compelling and more affordable.

How does India help Microsoft in the Asian markets, Global markets?

India is amongst the fastest growing markets for Microsoft both from a talent perspective and from a market perspective and it�s no surprise that we are contributing significantly to the revenues and product innovation at Microsoft corp. Our contributions are immense.

Microsoft Research, with over 50 people, is one of the premier industrial research labs globally and as of March 2007, MSR India had already published more than 60 papers in leading international journals and conferences. It focuses in six areas including Cryptography, Security, and Algorithms; Digital Geographics; Mobility Networks, and Systems, Multilingual Systems, rigorous software engineering and emerging markets and is committed to advancing the state of the art computer science research in India. It partners with a number of educational and research institutions in India and abroad to push forward the boundaries of scientific research.

The Microsoft India Development Center (MSIDC) at Hyderabad is fully integrated with the key product families of Microsoft and is the second largest MS software development center outside Redmond. It has more than 1300 employees working on over 50 products and technologies for the global Microsoft portfolio.

Team here have end-to-end responsibility on projects and cover all aspects of software development - Development, Testing and Program Management. Teams work collaboratively with Redmond on future releases of products and are constantly innovating to enhance the user experience. MSIDC is a leader in creating intellectual property from India and has filed for over 130 patents in the last two years.

The Global technical support centre, Microsoft IT and the Global consulting and services centre are also based out of India and are supporting global customers for Microsoft and contributing significantly to Microsoft revenues.

Innovating from, for and with India is our mantra.

older posts »

US Wireless Data Market Update: Q4 2009 and 2009 March 2, 2010

New Whitepaper: Mobile VoIP – Approaching the Tipping Point February 17, 2010

2010 Mobile Industry Predictions Survey January 3, 2010

New Whitepaper: The Untapped Mobile Data Opportunity December 16, 2009

CTIA Wireless IT & Entertainment Roundup 2009 October 12, 2009

Roundup of the first Mobile Breakfast Series event September 29, 2009

Global Wireless Data Market Update - 1H 2009 September 21, 2009

US Wireless Data Market Update - Q2 2009 August 8, 2009

New WhitePaper: Managing Growth and Profits in the Yottabyte Era July 14, 2009

TiECON Conference Roundup May 31, 2009

US Wireless Data Market Update - Q1 2009 May 11, 2009

Mobile Industry Predictions 2009 January 1, 2009

Request for Participation: 2009 Mobile Industry Predictions December 9, 2008

Recap of "Tomorrow’s Wireless Future" November 20, 2008

Wireless Broadband Book - More Details October 7, 2008

Global Wireless Data Market Update - 1H 2008 September 28, 2008

CTIA Wireless IT and Entertainment 2008 Roundup September 12, 2008

New Book: Enterprise Mobility: Applications, Technologies and Strategies August 24, 2008

US Wireless Data Market Update - Q2 2008 August 10, 2008

Interview with Ravi Venkatesan - Chairman, Microsoft India August 5, 2008

Recent Posts

Categories

Archive

Feeds

Always On Real-Time Access

US Wireless Data Market Update: Q4 2009 and 2009 March 2, 2010

New Whitepaper: Mobile VoIP – Approaching the Tipping Point February 17, 2010

2010 Mobile Industry Predictions Survey January 3, 2010

New Whitepaper: The Untapped Mobile Data Opportunity December 16, 2009

CTIA Wireless IT & Entertainment Roundup 2009 October 12, 2009

Roundup of the first Mobile Breakfast Series event September 29, 2009

Global Wireless Data Market Update - 1H 2009 September 21, 2009

US Wireless Data Market Update - Q2 2009 August 8, 2009

New WhitePaper: Managing Growth and Profits in the Yottabyte Era July 14, 2009

TiECON Conference Roundup May 31, 2009

US Wireless Data Market Update - Q1 2009 May 11, 2009

Mobile Industry Predictions 2009 January 1, 2009

Request for Participation: 2009 Mobile Industry Predictions December 9, 2008

Recap of "Tomorrow’s Wireless Future" November 20, 2008

Wireless Broadband Book - More Details October 7, 2008

Global Wireless Data Market Update - 1H 2008 September 28, 2008

CTIA Wireless IT and Entertainment 2008 Roundup September 12, 2008

New Book: Enterprise Mobility: Applications, Technologies and Strategies August 24, 2008

US Wireless Data Market Update - Q2 2008 August 10, 2008

Interview with Ravi Venkatesan - Chairman, Microsoft India August 5, 2008

Recent Posts

Categories

Archive

Blogroll

Feeds