Global Wireless Data Market Update 2007 March 27, 2008
Posted by chetan in : AORTA, Infrastructure, Carriers, Security, Speaking Engagements, M&A, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Networks, ARPU, Japan wireless market, European wireless market, Mobile TV, mobile users, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 7 commentsGlobal Wireless Data Market Update 2007
http://www.chetansharma.com/globalmarketupdate2007.htm
As you read this End of Year (EOY) 2007 Global Wireless Data Market update this week, somewhere in India, a new subscription will catapult India over the US as the number 2 global wireless market. 2007 was a banner year for global wireless data market. The global service revenues for the year touched $700 billion, the data service revenues were more than $120 billion, China signed its 500 millionth subscription, and both India (in feb 08) and the US crossed the 250 million subscription mark. 2007 continued to enhance mobile data’s role in the operator ecosystem with approx 17% of the revenue is coming from data services.
For some leading operators, data is now contributing up to 35% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU. From the true and tested SMS messaging to new services such as Mobile TV, Enterprise apps, and others, different services helped in adding billions to the revenues generated for 2007. Japan and Korea remain the envy of the global markets and the countries to study and learn from w.r.t. new services and applications. The US market has been steadily making strong comeback and for the first time exceeded Japan in service revenue generated from mobile data.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India. This note summarizes the findings from the research.
- The worldwide markets continue to grow at an explosive pace reaching 3.3B subscriptions by Q407 up 20% from 2006 levels. Significant growth is coming from India and China with both countries registering close to 8-9M net adds per month. India recorded 8.8M net adds in Jan 08 while China added 9.4M in Feb 08. Overall, the world market is at almost 50% penetration.
- US surpassed Japan as the most valuable mobile data market in service revenue with US adding $24.5B vs. $23.2B for Japan in 2007 mobile data service revenues. China with $12.5B was ranked number 3. US registered the highest growth amongst the top 3 with over 55% increase from 2006 levels followed by China at 37% and Japan at 18%. These top 3 markets account for over 50% of the global data service revenues.
- NTT DoCoMo continues to dominate the wireless data service revenues rankings with over $12.13B in service data revenues for 2007 however Q/Q growth has dropped to single digits. DoCoMo crossed 80% 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, O2 UK, SK Telecom, Softbank, and China Unicom to round up the top 10 operators by wireless data service revenues. All the top 10 carriers exceeded $3B in data revenues for the year.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping 30%.
- Both India and China added a whopping 85 million new subscriptions (most of them prepaid). This week India edges past US to become the number 2 wireless market (by subscriptions) in the world. In last two years alone it added almost 150 million new subscriptions (in comparison China added 155 million and the US market added 44 million).
- Vodafone Italy reported the highest increase in data ARPU from 4Q06 with 76% growth. Other notable percentage increases in ARPU were from Rogers, AT&T, Verizon Wireless, Sprint, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.70.
- In terms of absolute dollar amount, 3 UK leads the pack with $29 data ARPU (qualifying limit: 4 million subs). By comparison, the rest of the top 4 operators are below $22. In fact, 3 UK reported the highest ARPU recorded for the year at approximately $94 (in Q2). Other operators who reported overall ARPU above $60 were KDDI, NTT DoCoMo, Rogers, and 3 Sweden.
- The biggest jump in data revenues was experienced by Verizon Wireless with over 68% increase from 2006 followed by AT&T with 63% jump and O2 UK making 49% gain.
- In 2007, 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%.
- The top 10 operators increased their revenue by 32% during 2007 (from 2006) to reach almost $62 billion in data service revenues, thus accounting for almost half of the global data service revenues though they account for only 27% of the global subscription base.
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI. Their data coordinates stand at ($21.5, 35%) and ($21, 34%) respectively (please see PowerPoint for reference). Since the takeover from Vodafone, Softbank has been making significant strides in the market by taking the highest share of the net-adds in last 9 months.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 55% (or $4) contribution coming from data services.
- Even though China reported approximately $12.5B in data revenues for 2007 and the percentage contribution is over 23%, data ARPU is around $2.3. For India data ARPU dropped below $1 for all major carriers.
- China Mobile with 369M (as of Dec 07, the numbers increased to 384M by Feb 08) remains the #1 carrier in terms of total number of subscribers followed by Vodafone at 252M and China Unicom with 160M 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. 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 also surpassed Vodafone in market cap which stands at $288B (vs. $164B for Vodafone). 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, GSA reported 293 WCDMA commercial launches worldwide with over 270M 3G users (66% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 75-80% 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 approximately at 25% 3G penetration (Italy being the exception reaching 40%).
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and has been having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas. In India, regulators are considering inviting bids for the 3G spectrum from foreign entities as well.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing 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) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. In terms of 4G, there is a strong momentum behind LTE, UMB in its current incarnation is practically dead, and proponents of WiMAX are pushing the technology as a 4G candidate, though it is starting to lose its time advantage.
- In terms of applications, messaging accounts for 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 captured industry’s imagination. 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.
- 2007 also saw the demise of some high-profile MVNOs like Amp’D. Helio continues to struggle while the newer ones like Sonopia and Blyk are testing the treacherous waters with different business models. Asian market is also opening up for MVNOs.
- Nokia eclipsed 100M/quarter unit sale three times in 2007. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokia’s global market share stood at 40.2%.
- 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.
- 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 launched its ad service as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space. In a matter of weeks, several billion dollar transactions took place highlighting the intensity in preparing for the next battleground. The estimated market for mobile advertising in 2007 was approximately $2.3B with messaging, search, and browsing accounting for over 84% of the revenues.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
US Wireless Market Update - 4Q07 and 2007 March 10, 2008
Posted by chetan in : AORTA, Strategy, Carriers, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 3 commentsUS Wireless Market Update - 4Q07 and 2007
http://www.chetansharma.com/usmarketupdateq407.htm
The US wireless data market grew 55% in 2007 ending the year with $24.5 billion in data services revenues with 4Q yielding $6.9B. 2007 also saw significant industry milestones like: iPhone launch, US crossing 250 million subscriptions, 3G penetration in the US touching 25% subscriber base, consternation around 700 MHz spectrum auction, MediaFLO launch, Android launch, Nokia crossing 40% market share, WiMAX and Femto Cell trials, and much more. US almost equaled Japan in mobile data service revenues for the year (rounding error and currency fluctuation difference). With several significant launches coming up in 2008, US remains one of the most attractive wireless data markets.
- The US Wireless data service revenues grew 7.8% Q/Q to $6.9B in Q407. For the year 2007, the US wireless data service revenues grew to $24.5B, up 55% from 2006.
- Overall ARPU declined by $0.81and reversed the trend of overall ARPU uptick of the last two quarters. Average voice ARPU declined by almost $1.50 while average data ARPU inched up by $0.68 or 7%.
- Sprint lead in data ARPU with $11.50 (or 19.83% of the revenues) closely followed by Verizon at $11.06. Verizon was ahead in terms of data as % ARPU with 21.3% of its ARPU coming from data services. AT&T with $10 (or 19.89%) and T-Mobile with $8.2 (or 16%) rounded up the top 4.
- The strongest growth in 2007 came from Verizon and AT&T, with both of them tied at 64% YOY jump in data revenues. However, Verizon was ahead in dollar terms at $7.4B, accounting for almost 31% of the US industry data services revenue for the year. The top two were followed by T-Mobile at 56% and Sprint with 31% increase YOY.
- The average industry % contribution of data to service revenues jumped to 19.34%.
- In terms of net-adds, thanks to the Dobson acquisition and the iPhone sales, AT&T added 2.7M new subscribers followed by Verizon at 2M. The overall net-adds improved by 6.2M subs taking the total for the year to 20.8M, down slightly from 2006. Despite the 7% slowdown, there is plenty of growth left in the US wireless market.
- In spite of AT&T’s prolific quarter, Verizon ended up with the highest net-adds for the year at 7.7M subs vs. AT&T’s 6.9M.
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the year, Verizon with $7.4B, AT&T with $6.9B, and Sprint with $5.2B in data services revenues stood at #4, 5, and 6 respectively with Verizon closing in on KDDI for the number 3 spot. AT&T became the second US operator after Verizon to be 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 data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- There was tremendous activity in the area of Mobile Advertising. Google is also laying out its tactical and strategic roadmap in hopes to dominate the space and while it succeeded in pushing FCC to change the 700 MHz auction rules, the future of Android alliance remains uncertain. It did however; help open the “open” debate in the industry. Meanwhile, Yahoo is busy creating some compelling applications and is stitching together carrier deals around the world.
- Venture money continued to flow into the mobile sector with over $4.9B investment in 2007 (Source: Rutberg). Location Services, Mobile Personalization, Mobile Video, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- iPhone helped AT&T find its voice. Since the introduction of iPhone in June 07, AT&T has reversed the multi-quarter trend of narrowing total subscriber difference with Verizon. Aided by the Dobson acquisition, the difference between the two companies stood at 4.4M subscribers in favor of AT&T (vs. 1.5M in Q107). iPhone also accounted for (higher) disproportionate mobile web usage exciting the ecosystem and media alike.
- Nokia eclipsed 100M unit sale in Q407 for the third straight quarter. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokia’s global market share stood at 40.2%. Quite impressive.
- 3G penetration in the US touched 25% in 2007, with Verizon leading the pack with over 53% 3G subscriber penetration. AT&T reported that 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- There was tremendous discussion around “openness.” Bowing to the industry pressure, FCC’s 700 MHz spectrum auction included clauses for opening up the network by the winner. Sprint made progress with its upcoming launch of XOHM. Verizon launched its Open initiative. Google’s Android was announced in Q407. Though devices are slated to hit the market in 08, its overall impact remains uncertain.
Global update
- China and India added approximately 86M subscribers in 2007 dwarfing growth in other regions by a distance (China marginally edged out India to retain the top honors). Similar growth trends will continue into 2008. In fact, India will overtake US as the number two wireless market in the world (by total subscriptions) during the week of March 24th 2008.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $12B in data services revenue in 2007. 35% of its revenue now comes from data services. DoCoMo will also cross 80% in 3G penetration this month. China Unicom edged past SK Telecom to occupy the number 9 spot.
- 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 coming out later this month.
Your feedback is always welcome.
Chetan Sharma
Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market December 8, 2007
Posted by chetan in : AORTA, Carriers, Speaking Engagements, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G , 15 commentsStanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market
Stanford University hosted a program focused on the Indian Wireless Market – Why Mobile?, Why India?, Why Now? Under the tutelage of Prof. Tom Kosnik of Stanford, Graduate Student Mohit Gundecha and BDA worked on a study looking at the Mobile Value Added Services (MVAS) market in India and presented their research at the event along with the release of their in-depth report on the subject. Prof. Kosnik started the evening by giving a presentation on his Global Leaders Entrepreneurs and Altruists Network (GLEAN) initiative. This was followed by a keynote from Jeffrey Belk, SVP Strategy and Market Development, Qualcomm (sponsor for the event) providing an overview of mobile growth in emerging and developing markets. The evening ended with a panel discussion on the opportunities and challenges of the MVAS space. This note summarizes the discussion from the event and our random musings on the market.
The panelists for the discussion were:
(above L to R)
Eric Allen, VP, FunMobility (Moderator)
Ashok Narsimhan, Chairman and CEO, July Systems,
Ojas Rege, VP, Global Mobile Products, Yahoo!,
Vin Dham, Executive Managing Director, NEA-IndoUS Ventures,
myself, and
Niren Shah, Managing Director, Norwest Venture Partners,
It was an honor to be part of this discussion.
First, let’s do the numbers. As we have reported in our previous research notes, India’s growth has been going through the roof. We are likely to end up with over 80M net-add (subscriptions) for the year taking the overall tally to 232M. In the last 5 months, India has added more subs than China. By early April, Indian Market will cross US as the number 2 wireless market in the world. China remains untouchable with over 500M subs. Indian Government is targeting 500M subs by 2010. So, what does this all mean?
Couple of points on the numbers – Just like in other prepaid markets especially Europe, there is a lot of double counting of subs. Many of the unused SIMs are still being counted so the number of “actual” subscribers is less than the numbers that are generally discussed for the market. Secondly, the new subs that are being added are primarily voice subs and hence ARPU (esp. data ARPU is steadily going down for the market. Overall ARPU is approximately $8-9 with 8-9% from data services (where P2P SMS still dominates). Despite low ARPUs, operator margins remain good. The overall MVAS market is close to $1B. The revenue splits are approx 60% for the operators, 20% for the aggregator and rest for the developer and content owner.
Mobile Advertising Market in India – Having looked at the mobile advertising space in depth for our upcoming book, we found the Indian market one of the most active esp. in coming up with interesting business models both operator driven as well as new startups. One of the first in-application mobile advertising services was launched by Reliance, they have several other interesting programs in place that cater to the advertising industry. One of the mobile advertising campaigns that we discuss in the book generated over 21M impressions and won the Cannes award. Companies like mGinger have come up with simple pyramid viral scheme to use SMS mobile advertising. As Admob numbers indicate, the number of impressions are second only to the US market despite low penetration. Finally, operators in India are quite innovate when it comes to integrating the back-end for triple and quad-play unlike their western counterparts who have primarily focused on bill-integration vs. service and application integration.
So, who is actually making money? Clearly the most amount of money is in the infrastructure-related items. Infrastructure is something that is absolutely needed to expand and though the margins shrink quite a bit, it is somewhat made up in volumes. Unless you have unique Intellectual Property that creates barriers to entry, software and/or content companies haven’t had much luck (similar to the trends in China) as the local competition is stiff. Overseas companies who jump in without understanding the market lured by the growing numbers are destined to be surprised.
Cricket, Bollywood, and Education remain the top categories for MVAS apps. Panelists were bullish on new MVAS applications and services around UGC, LBS, high-end segmentation, and enterprise applications. Everyone agreed that the next couple of years are primarily for educating the market and subscription acquisition and it will take another 2-3 years for the MVAS to mature and take off. Unless you are in for the long haul, tread carefully. This market is not for the faint-hearted. IP issues can pose significant risks and challenges.
Jeff thought 3G rather than WiMAX will drive growth in the Indian Market, while Vin suggest Fixed WiMAX is going to be significant. I think the primary use of WiMAX will be to provide Internet connectivity to desktops and laptops and for backhaul of backend systems.
We kind of joked that Indian market might become the second largest market for iPhones within a few months given the pace of unlocked phone shipment to the region.
A question was asked how is working with operators in India different, if at all? Apart from a larger value chain share, things are quite similar. Indian operators do exhibit the desire to move fast and they can take an app to the market quite rapidly where some of their western brethren can keep trialing forever.
You can access the released report here.
You can watch the video from the panel discussion here (Part I, Part II, you can access other videos from the evening on the same page).
Prof. Kosnik and Mohit are launching a new program called “Mobile Momentum” to create an ongoing dialog between Silicon Valley companies and the vibrant mobile industry in Asia. I have signed on as the founding member of the advisory board and look forward to working with entrepreneurs and companies on both sides of the pacific to share thoughts, research, and best practices.
If you would like to receive my slides from the event, please let me know.
2008 promises to be even more exciting than 07. Happy Holidays.
Your feedback is always welcome.
Chetan Sharma
US Wireless Data Market Update - 4Q06 and 2006 March 4, 2007
Posted by chetan in : AORTA, Carriers, Middleware, Speaking Engagements, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, MVNO, Indian Wireless market, India, BRIC, WiMax, ARPU, Japan wireless market, Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Wireless Value Chain, 4G, CTIA , 1 comment so farUS Wireless Data Market Update - 2006
US Wireless Data Market update – 4Q06 and 2006
- US wireless data market continued its rapid growth in 2006. Wireless data service revenues jumped almost 84% to approximately $15.8B (from $8.6B in 2005). The service data revenues are likely to top $27B in 2007.
- The average data ARPU climbed 50% while the average voice ARPU declined 7% since EOY 2005. Overall ARPU declined 1% from 2005 levels.
- The strongest growth was experienced by Verizon which more than doubled its data revenues, up 101%, followed by Sprint up 69%, T-Mobile up 66% and AT&T (old Cingular) was up 62%. Except for Sprint, rest of the top 4 maintained a double digit growth rate Q-over-Q for the entire year (Sprint’s growth rate was marginally down to single digits in Q2 and Q3 but made up for the loss with a 19% increase in Q4).
- The top three carriers again garnered over $1B/quarter in data revenues for the second straight quarter, with Verizon coming out on top with $1.4B followed by AT&T at $1.3B.
- The US market added approximately 23M new subscribers or 1.92M subs/month. This puts the market at approx. 78% penetration. We will start to see the decline in market growth from here on.
- For the FY2006, Verizon’s data revenues were at $4.4B, AT&T at $4.25B, Sprint Nextel at $4B and TMO US finished the year at $1.6B.
- Verizon continued to dominate the 2006 ARPU sweepstakes with approximately 16% of its revenue coming from data services followed by Sprint and AT&T at 14.6%, and TMO US close behind at 13%. The average data ARPU is no at 14.5%. Sprint maintained its leadership in terms of raw data ARPU at $8.75. In fact, its CDMA data ARPU topped $12.
- Verizon gained the most number of customers in 2006 with 7.7M net adds followed by AT&T at 6.9M and TMO at 3.3M. Sprint at 1.6M, and Alltel with 1.56M rounded up the top 5.
- US 3G subscriber base continues to grow – primarily due to strong showing by Verizon and Sprint Nextel’s aggressive push. AT&T also covered significant ground while TMO is expected to join the fray by EOY 2007. As discussed in our 2005 paper, 2007 is priming to be the inflection year for 3G in US (and Europe). At the end of 2006, 3G penetration stood at approximately 10%.
- US Off-net revenues for the year exceeded $750M.
- In 2006, Data ARPU of CDMA/EV-DO carriers was 21% higher than GSM/WCDMA carriers.
- Several high-profile MVNOs were launched over the course of last year and the overall results haven’t been favorable primarily due to poor execution, instant crowding effect, and competition from big 4. Mobile ESPN was first to bow out. Helio and Amp’D have boasted $100 ARPU and 100K subscriber base but the burn rate and Cost of Customer Acquisition remains quite high.
- US wireless carriers maintained their strong showing vis-à-vis their peers worldwide. Verizon, Cingular, and Sprint maintained their ranking # 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for 2006. US is the only country with 3 operators who generated $4B or more in data revenues in 2006 and are going over $1B/quarter now.
- For the second straight quarter- TMO US outperformed its parent TMO Germany
- Though mobile enterprise data growth doesn’t make headlines, there has been steady growth in deployments and revenues generated for carriers and product vendors. Verizon alone reported over 33% of its data revenues or $462M from the enterprise users in 4Q06.
- In terms of wireless investments, over $6.4B was invested in wireless related companies/startups in 2006. Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas. M&A activity also picked up quite significantly.
- For the year 2006, mobile shipments eclipsed 1B mark for the first time with Nokia leading the way at over 347M in phone sales.
- Smartphone penetration increased into double digits and is slowly approaching the inflection point.
- 2006 started the realignment for “quad-play” and “quintuple play” positioning in the market. Clearly, bundling enhances life value of the customer and lowers churn but do you do it through partnership or investment is the question on the table.
Global update (more details in our worldwide data market update coming out soon)
- The worldwide markets ended with approximately 2.6B connections and are going to top 3B by end of 2007. Significant growth is coming from India and China with India registering an astounding 7M net adds every month now. China is close behind at 6M/month. Overall, the world market is slowly approaching 50% penetration (should reach the target in first half of 2008) with approx. 41% penetration at the end of 2006.
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NTT DoCoMo became the first carrier to cross $10B/yr in data revenues in a given calendar year. It was followed by China Mobile at $8.6B.
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Worldwide Handset market share 2006: Nokia maintained its number one position with 36% market share. Motorola increased its market share by 4 percentage points to 23%, Samsung dropped a point to 11%. Sony Ericsson edged past LG with 9% while LG dropped to 6%. Nokia shipped over 100M handsets in 4Q06 (a first by any OEM). Nokia’s ASP dropped by $2 from EOY 2005 while Motorola’s dropped by a whopping $27 putting the company in struggle mode. Sony Ericsson bucked the trend and increased its ASP by $17 showing a strong comeback.
- 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 topping 30%.
- China Mobile became the world’s most valued operator surpassing Vodafone.
2007 – Early signs
- iPhone: What’s in your pocket? – The launch of iPhone after years of rumors captured the imagination and headlines of the industry. The bar has been raised.
- Mobile Advertising – Tremendous activity (trials and press releases) in this area though there is confusion in the industry w.r.t the definition and the standardization process.
- LBS, GPS, and Navigation – It is becoming mainstream. What! We will have to pay for it?
- Enterprise Applications – Mobile Enterprise sector is quietly making strides with mobile becoming an integral part of corporate IT strategy though several challenges remain.
- Emerging Markets – Growth is in emerging markets but who gets to make money?
- Content Interoperability – Access to content across devices and networks is a challenge.
- Convergence – Mobile is converging with Net, Net is converging with cable, wireless phone is converging with desktop phone, voice is converging with data, CBS is converging with YouTube, Skype is converging with Qwest, … you get the picture.
- Others to watch – NFC, WiMAX, FemtoCells, Mobile IM, 4G, Mediaflo.
Your comments are always welcome.
Chetan Sharma
India net-adds cross 6M mark October 12, 2006
Posted by chetan in : Indian Wireless market, India, BRIC, ARPU , 1 comment so farIndia might have overtaken China in net adds this month (still need to verify the numbers from China for Sept). During September 2006, 6.07 million wireless subscribers were added while wireline subscribers declined by 0.12 million at the end of September 2006 resulting in net increase of 5.95 million subscribers as compared to almost similar net additions of 5.94 million during August 2006.
The total subscriber base stands at approx 130M subs, meaning India has already added over 56M subs this year and is likely to double the number from its 2005 levels.
Worldwide Wireless Data Trends - Mid Year Update 2006 August 31, 2006
Posted by chetan in : AORTA, Carriers, Enterprise Mobility, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, International Trade, MVNO, Indian Wireless market, India, BRIC, WiMax, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem, Microsoft Mobile, Mobile Search , 1 comment so farDownload white paper - Worldwide Wireless Data Trends (doc, 320 kb)
This research note summarizes the wireless data trends in over 40 countries and the analysis of over 30 prominent operators.
- Wireless industry crossed several milestones this past 6 months - 2 billion GSM subscribers and is on its way to the quickest billion subscribers within the next 2 years. 100M 3G subscribers with 66% coming from WCDMA (40% of these from Japan) and rest from EV-DO.
- Japan led the way with approximately $10B in wireless data service revenues for the first half of 2006. US and China followed with approximately $7B and $5.5B respectively.
- The #1 carrier worldwide in terms of total wireless data revenues for the first six months of 2006 is NTT DoCoMo with over $5.1B in data revenues. It was followed by China Mobile ($3.9B), KDDI ($3.3B), Verizon Wireless ($1.9B), and Cingular Wireless ($1.9B). Sprint Nextel, O2 UK, Vodafone Japan, SK Telecom, and China Unicom filled the rest of the top 10 slots respectively.
- China crossed the 400M subscriber mark and is on its way to cross the half billion subscriber mark in 2007. As first discussed in our “India’s Wireless Market” report, India is rivaling China’s monthly net adds of 5M/month and crossed the 100M subscriber mark making it the fourth largest subscriber base after China, US, and Russia. India will cross Russia later this year and the US by 2008 to become the second largest wireless market.
- Western Europe officially crossed the 100% wireless subscriber penetration mark (due to multiple SIMs) with several nations reporting up to 115-120% subscriber penetration. In spite of crossing 70% penetration mark, US wireless market shows no sign of slowing down and is strongly progressing towards another record year with over 25M net adds in 2006.
- In terms of total subscribers, China Mobile with 274M subscribers is way ahead of the second ranked Vodafone, which has 187M subscribers. China Unicom, América Móvil, Telefonica, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next six largest telecom groups in the world. In terms of individual carriers, Cingular and Verizon now occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for some years to come. 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.
- Japan became the first nation to have more than 50% of its subscribers using 3G. Korea is close second. 3G is starting to pick-up steam in both western Europe and North America as discussed in our cover story article “3G: Hitting the Mass Market” published in Moconews.net and Wireless World Magazine. Since then, we have presented our research at IEEE, CINA, EMC, Carriers in US; in Japan, Korea, and Russia; and later this year in India.
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and is having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Ericsson just scored a $1B contract with Bharti. BSNL’s tender is worth 2-3 times more.
- In terms of data ARPU, Japan continues to lead the pack with 28% of its revenues coming from data services amounting to almost $17 data ARPU. Ireland, Norway, Switzerland, UK and South Korea also registered significant data ARPU. US crossed the ($5, 10%) block, where $5 is the data ARPU and 10% represents the % share of overall ARPU. As of June 2006, US stood at ($6.3, 12%). For detailed US Wireless Market update, please see “US Wireless Data Market - Mid Year Update 2006” ( For more details, please refer to the 9-box diagram in the ppt or the 2006 paper – “Worldwide Wireless Data Trends”; for 2005 comparative numbers, please refer to our paper from last year titled “Perspectives: Wireless Data ARPU”)
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI which surged past DoCoMo for two straight quarters. Their data coordinates respectively stand at ($17.3, 28.9%) and ($16.5, 28%). However, it is 3 UK that is inching towards ($20, 30%) mark with $19.3 data ARPU contributing over 25% to its overall ARPU. 3 Italy with ($15.6, 34%) is also amongst the leaders.
- The biggest % contribution by data ARPU has been consistently registered (since mid 2002) by the two Philippines carriers – Smart Communications and Globe Telecom with almost 50% (or $3) contribution coming from data services.
- Even though China reported approximately $5.5B in data revenues, and the % contribution is over 20%, data ARPU is around $2, confirming what we already know – it’s a volume game. For India data ARPU is just over $1.2. Approximately same for Brazil and Russia. Actually, in 2005 the overall wireless service revenues in US were two times the overall revenues of the four BRIC (Brazil, Russia, India, and China) countries combined. So, lessons are pretty clear as to which markets to approach for what products and services.
- We will have to look at the EOY 2006 numbers but there are some indications of cooling down of data ARPU growth in mature markets of Japan, Korea, and UK. So, while % contribution will increase due to declining voice revenues, data ARPU will not make up for the loss. Most of the mature markets face the same dilemma. In fact, comparing EOY 2005 to 2004 numbers, only a handful nations registered positive increase in overall ARPU with Canada ($3), Korea ($3), Mexico ($1), Taiwan ($1), Brazil ($1), and Chile ($1) showing an increase. For majority of the other nations, the ARPU declined, for example by $2 for US, Thailand, India, Australia, and Argentina. Nigeria recorded a massive $23 decline.
- All the carriers in the top 10 wireless carriers by wireless data revenues list exceeded $1B in data revenues for the first six months of 2006. China Mobile and China Unicom benefited from their huge subscriber base of 274M and 135M respectively while DoCoMo and KDDI did well because they are generating over $17 (or 28%) in wireless data ARPU.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing up tick 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) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets.
- In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industry’s imagination. 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.
- In Japan and Korea, consumer messaging revenue only accounts for 30% of the data revenues, rest is from multimedia applications, browser traffic, and other infotainment applications. It is almost the reverse in Europe with 70-80% (on average) of the data revenue is coming from messaging. There are some exceptions like Vodafone Spain, Telefonica Moviles Espana, and Eurotel, who have over 40% of their data revenues coming from non-messaging applications. For North America, the data revenue from non-messaging applications (excluding transport) is around 20%.
- China Mobile is challenging Vodafone’s supremacy as most valued telecom operator. For a brief period in August, it was valued higher than Vodafone and is likely to overtake the crown as China continues to add significant number of subscribers while Vodafone struggles.
- WiMax is gaining some traction both in the developed and developing world. However, the case for mobile WiMax is still quite questionable. By the time the embedded devices come to fruition, 3G devices will be quite pervasive and the WiMax services will not be able to compete on price alone. And, a sub $30 WiMax handset for the developing world is nothing short of a pipe dream at this point. WiMax for backhaul makes sense, and some niche scenarios for fixed wireless services will also be successful, but clearly, we will not be witnessing replacement of cellular anytime soon. Free Wi-Fi movement scored more deployments around the world though the business model to support them long-term stays unproven.
Your comments are always welcome.
See you at CTIA.
India - Driving the Next Phase of Global (Wireless) Expansion July 24, 2006
Posted by Chetan in : AORTA, Strategy, Carriers, Enterprise Mobility, 3G, Devices, Mobile Content, Mobile Entertainment, International Trade, Indian Wireless market, India, WiMax, Mobile Gaming, Networks, ARPU , add a commentthe article is online now http://www.chetansharma.com/India_July06.pdf
India crosses 100M subscriber mark June 9, 2006
Posted by Chetan in : Uncategorized, India , add a commentFirst reported in our report last month, India wireless industry crosses 100M subscriber mark and gunning for the Russian market figures now.
