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New Whitepaper: Role of Optical Wireless Broadband in the Evolving Mobile Ecosystem January 27, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Devices, European Wireless Market, Indian Wireless Market, Infrastructure, Location Based Services, M&A, Microsoft Mobile, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments

Role of Optical Wireless Broadband in the Evolving Mobile Ecosystem

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

Sponsored by Skyfiber

These are exciting times in the wireless industry. The innovation in technology, services, and business models is driving the global industry to new heights. While the global markets were feeling the pain of a brutal recession, the wireless industry for the most part sidestepped the crisis, especially the US and Asian markets. In the US, 2009 was a banner year for the mobile data services and applications. Each of the four quarters exceeded $10 billion in mobile data services revenue and the subscription penetration was approximately 93% by the end of the year.

The mobile industry is going through significant transition from being voice-centric to data-centric, from consumers spending 90% of their time talking to 80% of the time spending on mobile data and games. The main drivers of such an evolution are: better devices like the iPhone, Droid, Pre, Bold, etc., higher capacity networks such as WCDMA, HSPA+, and EV-DO Rev A, flat rate data pricing, and a heightened consumer awareness of mobile applications and services. This has boosted both the consumer engagement and the revenues from data services.

However, this increased usage comes at a cost. As users are becoming accustomed to an always-on, always-connected world of mobile, they are consuming tremendous amount of data that is putting significant burden on the networks especially the backhaul. Further, as the need for the bandwidth rises exponentially, we are approaching what FCC’s Chairman Genachowski termed as “a looming spectrum crisis.” In light of such infrastructure challenges, the industry needs to think outside-the-spectrum-box and think long-term else we will be in a perpetual cycle of crises. Traditional transmission technologies like Fiber and Microwave will benefit from complimentary technologies such as Optical Wireless Broadband (OWB), which enhances the operator’s toolbox to build out efficient broadband connectivity.

This paper discusses the mobile data growth, the backhaul demands, and the looming spectrum crisis in more detail. Further, the paper discusses the requirements for backhaul to support next generation traffic and the role of new technologies such as Optical Wireless Broadband to provide backhaul capacity solutions that are both economical as well as future-proof.

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:

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

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

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

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

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

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

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

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

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

10. Laura Marriott, President - 2010 Mobile Almanac

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

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

Despite conventional wisdom, what will not happen in 2010?

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

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

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

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

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

Be well, Do Cool Work, Stay in touch.

Thanks.

With warm wishes,

Chetan Sharma

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

Now onto the 2010 Mobile Industry Predictions Survey Results

The panel comprised of movers and shakers from around the world

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

Sponsored by INQMobile

The last two years in the global mobile market have been truly sensational. Over 1 billion new subscriptions added, over 2 billion new devices sold, and over $300 billion in mobile data revenues. The number of new iconic devices each quarter is on the rise, the consumer engagement is at an all time high and the new startups and entrepreneurs are brimming with ideas and new products. Devices like the iPhone, Storm, Hero, INQ¹, Mytouch, Cliq, Droid, N97 and others have captured the imagination of the media like never before. The smartphones or the integrated devices now account for approximately 9% of the global market. However, what’s often lost in the smartphone euphoria is the remaining 91% of the market and the significant opportunity of data-enabling these customers.

Operators who have focused on data services as their core service have benefited with high data Average Revenue Per User (ARPU). As we quickly transition into the hyper growth phase of mobile data services, players who are designing affordable devices and services with "mobile data" in mind are the ones who will benefit from a higher uptick in adoption and sustainable consumer loyalty. However, as operators have migrated from 2G to 3G, many have missed an opportunity to customize or introduce new services that take advantage of devices being mobile, interactive, and always available.

Traditionally, there has been a big gulf between the functionality of featurephones and the smartphones; however, there is an emerging category of devices that will provide the functionality of a smartphone for the price of a feature phone. Though the average selling price or the ASP of the smartphone has been dropping, the price is still high for a significant majority of the global subscriber base. Consumers who are looking for a sub $50 device still want to the access applications such as Facebook, Twitter, Google search, and make VoIP calls, etc.

In this paper, we will look at the opportunity to attract the 91% of the global user base into the mobile data ecosystem. We will quantify the opportunity, examine what this opportunity means to the mobile value chain specifically to the mobile operators and discuss the success factors to accelerate the migration of non-active data users into the data realm.

Download Paper (660 KB)

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

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

 

 

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

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

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

Ken Denman, CEO, Openwave

Dow Draper, Vice President, Technology Partnerships, Clearwire

Charlie Martin, Wireless CTO, Huawei Technologies

Stacey Higginbotham, Senior Writer, GigaOM (moderator)

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

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

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

The salient points of the 90 minute discussions were:

• The disparity between the available bandwidth and the bandwidth demand is becoming apparent and the industry is scrambling to find solutions to stay ahead of the curve.
• Even at these high usage rates, mobile data is quite profitable for the operators. Vendors typically don’t a full grasp of the carrier economics and end up making some product choices that are not that directly relevant or useful for the carriers.
• Consumers are willing to pay more for better access, higher speeds, and good content and significant opportunities await us in the coming years.
• There is no such thing as “free lunch” and someone has to pay for the bandwidth. Sometimes it feels that the pie is not big enough to feed all the hands that are the in the revenue share pot.
• Spectrum and capacity is king and whoever has a good spectrum tends to benefit competitively.
• Out of necessity, companies come up with innovative solutions e.g. T-Mobile focusing on WiFi in the early days when AT&T didn’t want to touch it and Verizon mocked it. Now WiFi is central to their mobile data strategy.
• Traffic from non-phones will exceed that from the typical feature and smartphones.
• Business and revenue models that will help sustain the industry are going to come from outside the industry.
• With so much at stake, carriers will figure out ways to participate the appstore value chain.
• Browsers have shattered the control of the ecosystem and we are just at the tip of the iceberg.
• We will soon see the return of the tier-ing price plans. QoS will enter the picture soon. Likely to have platinum vs. gold service concept emerge
• Solutions – mobile analytics, video optimization, traffic shaping – it comes down the “art of delivering a packet”
• Apps are not a zero-sum game.
• There will be a metamorphosis of physics and economics of mobile data, new group of players will emerge.
• Carriers have historically not done a good job of picking winning applications but they will figure ways to participate in the new ecosystem.
• Compared to the online Internet market, mobile Internet market is quite nascent and we are expected to see significant opportunities emerge in the next couple of years.
• While iPhone has been a great device, it is the Google applications that make it so popular.
• Presence, social networking, and connectedness will all help in creating a brave new world of mobile data services.
• More Carrier branded solutions to come.
• If carriers are cut of the revenue stream, they might have less incentive to upgrade their networks.
• Technographics, Psychographics, and Demographics data very useful for application developers and we can expect operators to open up consumer information gradually for the ecosystem.
• Some see Android getting more closed with each release, OEMs need to open up the device for app developers to take full advantage of capabilities.
• T-Mobile has been rapidly expanding their 3G footprint with expected coverage increase to 200M by end of the year.
• The levers operators can use to control data usage – pricing, QoS
• FCC’s action is having a positive impact on the industry though we need a lot of work (and a lot of spectrum)

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

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

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

Future in Review (FiRe) 2009 roundup May 31, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, European Wireless Market, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Over the course of last year, I did 25 different events, all of them focused on mobile. However, there was one event that truly stretched my thinking and worldview and that was the “Future in Review” conference (see last year’s review here) hosted by Mark Anderson, CEO of Strategic News Service (SNS). It exposes one to multidisciplinary subjects from global warming to nuclear weapons, from oceanography to medicine, from mobile to cloud, from economics to space rockets, it’s all here, nicely packed in a 3 day conference.

FiRe 2009 started with a brilliant keynote address from Prof. Veerabhadran Ram Ramanathan, Distinguished Prof of Climate Sciences and Director who is quite possibly the most authoritative person on the subject of climate change. He started his work way back in the 70s, decades before Al Gore made it glamorous. He is the one who has been measuring the impact on our planet one measurement at a time. He took us through the journey of his career culminating with a stark warning and a message of hope.

   

Things have deteriorated to such an extent that if we don’t check the downward spiral, many of the significant sources of water such as the Gangotri Glacier in India will disappear in 10-15 years. If you stop and think about it - that’s just stunning and has calamity written all over it. If the source of Ganges disappears, the life that has built around the river for thousands of miles before it goes into the Bay of Bengal will be unsustainable. I grew up in Roorkee, a town on the banks of the Ganges, so the point hit home very strongly. I have been thinking about this issue since the PBS documentary “On Thin Ice” by David Brancaccio and Conrad Anker - one of world’s leading high altitude climbers. 75% of the world’s fresh water is stored in glaciers and at the current pace of destruction, within 15-20 years most will be severely depleted. And there are still people in high places who don’t get it.

It was not all doom and gloom but a ray of hope in his experiments that left us less depressed by the end of the keynote. He is working on a number of experiments to identify and cure the main sources of pollution and carbon in the atmosphere like the Project Surya to reduce air pollution and global warming by cooking with renewable sources. Or the unmanned drones (pictures above) to measure brown cloud particulate composition to get a handle on how pollution travels (did you know that it only takes 2-3 days for pollution in China to come over the US and then another 2-3 days to reach Europe and the cycle continues - pollution is flat and globalized - thinking that it is only a developed world problem or developing world problem is foolish, also foolish is waiting on the other party to move first).

Best wishes to Ram and his team to educate, illuminate, and find solutions to the toxic problem of our times.

(with Mark Anderson)

Next day we moved into the full-fledged conference mode with 30 min rapid fire sessions from 8-5. The morning started with Mark talking to Stephen Evans of BBC World Service (he is a great interviewer btw) about how we recover from the current crisis and if technology will lead the rebound? Answer is Yes! and we are already seeing signs of it and others in the industry like Bill Gates and John Chambers have been echoing the same thing as well. Later Mark interviewed Mark Hurd, CEO of HP who had a hard time sitting on his feet so the discussion was done standing up.

(Mark and Mark)

He emphasized that the future is in the packaging of software, services, hardware, and network rather than siloed solutions. Haven’t we heard that before. Hurd is a numbers guy and can recite P&L spreadsheet from memory. He suggested that we will see more of the same for the reminder of the year and that the services business is yielding good profits for HP now. There was also quite a bit of discussion on the latest buzz word “Cloud Computing,” what it means and how does everyone profit from it.

Several industry heavyweights like Werner at Amazon, Amitabh at Microsoft, Russ Daniels at HP were at hand to discuss what CC means to them. While there is a lack of industry consensus on the meaning, it more and more looks like the reallocation and redistribution of resources - physical and electronic in a manner that drives efficiency and cost reductions for startups to behemoths. From a consumer point of view, it will always be a blend of solutions that take into account the privacy and security of data. My recent hard drive failures has forced me rethink my backup strategy.

(My panel on the future of Wireless Broadband - Fred, Chris, David, Hugh, and Rama)

Photo copyright © 2009 by Sandy Huffaker Jr

Later in the day, I had the privilege to host the only mobile session of the conference “The Future of Wireless Broadband” with five amazing panelists, Dr Fred Kitson, Corporate VP, Motorola, Chris Pearson, President, 3G Americas, Dr. Hugh Bradlow, CTO of Telstra, Dr. Rama Shukla, VP, Intel, and David Achim, President, SkyFiber. I have written about the subject in great detail over the last couple of years so it was great to bounce some questions to the best minds in the space. Highlights of the discussion:

• Hugh, ever a purist, defined 4G as 100Mbps.
• Not a surprise, but the latest surge of smartphones is causing the networks to panic and follow the upgrade path esp. for HSPA+, LTE, and WiMAX
• Rama said that 4G is more about the business model than about the technology. A business model that enables and opens up the ecosystem at a low price thus fostering innovation and services in an accelerated way
• Hugh added that it is also about the spectrum as what’s available and how it can be utilized for new services, new technologies, and new business models
• Being a provider of the backhaul technology (a choke point in the network evolution), David discussed how the backhaul technology will need to be upgraded at an accelerated pace if we are to deliver 10Mbps+ speeds.
• Fred brought in the perspective from the device and infrastructure provider and they are doing well with both WiMAX and LTE and that newer devices with much enhanced capabilities will drive more demand for bandwidth as well as the need to optimize applications to conserve batteries (which is another areas that needs innovation and breakthrough)
• Chris gave a summary of the LTE efforts of operators around the world with folks like Verizon accelerating their rush to 4G due to end of lifecycle of EV-DO while others like ATT are pursuing a slightly slower approach trying to maximize the output from HSPA+.
• Hugh has been playing with newer set of “alternate devices” like sensor networks, telemetry, projection glasses and so on and so forth and sees their importance in the growing ecosystem.
• Australia is dedicating $43B to broadband expansion to 90% of the consumers in the country. An equivalent US investment will be close to $350B and we are investing $7B (stimulus package). As I have said before, the stimulus package was a huge missed opportunity and the govt. could have done much better.
• The flat rate economy is not sustainable and something has to give in the future
• The availability of broadband impacts consumer behavior and we are likely to see very diverse models and services emerge in the coming days

There were other host of areas I wanted to get into but you can only do so much in 30 minutes especially if you have great panelists. Wish I could have a day long session to discuss the nitty-gritty in much more detail. In any case, great panel and insights. Joe Sterling was at hand as well to do an artist rendition of our panel, art below.

    

As I mentioned before, the conference was filled with very interesting discussions like Ambassador Dennis Hays from Thorium Power discussing a world where the capacity of making nuclear weapons can be taken out of the nuclear materials to only focus on nuclear energy for energy purposes. Boy! won’t that change the geo-political dynamics. John Hagel talked about shaping strategy based on this recent HBR paper and his upcoming book on the subject.

Another highlight of the show is to gather the bright CTOs of leading corporations and give them a practical problem to solve like how to provide adequate safe water for future decades. Hosted by David Brin (cohost of TV ArchiTechs series), the panel delved into understanding the problem and delivering a framework for solutions. Not a typical session you see at a conference. Hey CTIA! how about putting together a problem solving panel for your next show?

I also was touched by the screening of the movie “The Cove” - winner of the 2009 Sundance Film Festival Audience Award. More details here. Synopsis:

In the 1960’s, Richard O’Barry was the world’s leading authority on dolphin training, working on the set of the popular television program Flipper. Day in and day out, O’Barry kept the dolphins working and television audiences smiling. But one day, that all came to a tragic end.

The Cove, directed by Louie Psihoyos, tells the amazing true story of how Psihoyos, O’Barry and an elite team of activists, filmmakers and free divers embarked on a covert mission to penetrate a hidden cove in Japan, shining light on a dark and deadly secret. The mysteries they uncovered were only the tip of the iceberg.

It will change your perspective of how you view dolphins for ever and those trips to seaworld will be ever so more poignant filled with self-introspection. More power to the activists like Richard O’Barry and directors like Louie Psihoyos for opening our eyes and making a remarkable piece despite the challenge.

Another highlight of the conference is the interviews of top technologists and emerging startups by BBC’s Stephen Evans. Each gets a sound byte to wow the world (the session is streamed to 150M people). Highlights - Xerox - how can we solve legal cases with technology? Radar Networks - NOW is the unit of change. Vlingo - Speech is changing. IMANI-Ghana - SMS to prevent drug counterfeits, Cisco - virtual reality, voice, and data are the three different waves of innovation, the opportunity for collaboration is immense, Liberty - 5 yr projection 1Gbps wired, 100Mbps wireless peak throughputs, avg - 200Mbps for wired and 10Mbps for wireless, Microsoft - it will be the Chinese century, companies shouldn’t worry about protecting their marketshare in China but worry about protecting their share from Chinese players overseas, Smaato - Mobile Advertising is going to be the most prevalent business model in mobile, and SIMtone - make terminals dumb again and have the network cloud take care of everything.

The current financial crisis was also discussed at length. Many thought Europe is in denial and lack fundamental understanding of the crisis, that China and US are intertwined more than ever before and will have to work together to lead the world out of the crisis, India is largely untouched and better days are ahead thanks to the recent electoral results.

(Larry with Kamran, Mark with Elon)

Larry Brilliant suggested that the vaccines are the best investment in human history. Can’t argue with that one. He also suggested that the world should be thankful to Mexico for releasing the data early and often enough for other countries to take precautionary measures (sometimes to the extreme, I might add). They have suffered significantly and have been ridiculed but hopefully they serve as a lesson for the world in future pandemics.

If FiRe represents the best in multidisciplinary thinking, Elon Musk represents the rare breed of multidisciplinary entrepreneurs. The guy can shift from intricacies of electric cars to the design of rocket ships to solar energy with ease.

(with Hugh at Calit2) Copyright© 2009 Calit2

My best session was at Calit2. I think Larry Smarr has the best office with many 10Gbps links and coolest toys to play with, especially the 125Mpixel Hyperwall. It was also nice to interact with Michael Sims, Manager and Planner for the Mars Rover at NASA and his team using the network and the wall. You can see some cool images below. The second set of pictures are an image of human brain where you can pick out the single neurons with ease.

       

Also, interacted with the next generation surface and touch technology that uses pressure as an input as well. Below is me doing a destructive face surgery on a poor soul.

Finally, I would be remiss if I didn’t mention the 0-60 mps in 3.9s experience in Tesla Roadster. That car is a rocket.

Overall it was a great conference. I left more curious about more things. The conference also has an intimate feel to it where you can discuss burning issues with top experts and award winners over coffee, stroll, and meals. Registration for 2010 is open now.

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

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

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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:

1. Akio Orii, CFO and VP, Toyota

2. Declan Carew, New Product Strategy Manager, Vodafone

3. Helen Keegan, Consultant, Beep Marketing

4. Rich Begert, CEO, Singlepoint, and

5. Russ McGuire, VP, Sprint Nextel

6. 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.

Global Wireless Data Market Update 2007 March 27, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, European Wireless Market, India, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Partnership, Speaking Engagements, Speech Recognition, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 8 comments

Global Wireless Data Market Update 2007

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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, Am�rica M�vil, 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.

CTIA Wireless IT and Entertainment 2007 Roundup October 28, 2007

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Infrastructure, Intellectual Property, 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 Usability, Partnership, Privacy, Smart Phones, Strategy, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

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

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

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

Keynotes - The central theme that tied the three keynotes was �Be Open, Do Good Work, and Rest will take care of itself.� The keynotes from Steve Ballmer, Microsoft, Dustin Moskovitz, Facebook, and Atish Gude, Sprint Nextel emphasized the need to have an �open platform� for innovation, applications, and services. Haven�t we been down this lane before?

Steve started by taking a page out of our (upcoming) book, literally (page 243 to be exact) and describing a vision where mobile device becomes the remote control of your life for both workstyle and lifestyle. Too often we focus on separating out personal vs. professional but our lives are so intertwined that one minute you are setting up a doctor�s appointment and the next minute closing a sale. Companies that focus on managing the experience start to finish (waking to sleeping) independent of everything else will be the ones that dominate these turf wars. Microsoft�s big announcement was the release of device management server that includes mobile devices in addition to the desktop world (but it is limited to windows mobile devices only, Open?). Microsoft has been making impressive strides in occupying its place in the mobile ecosystem. Though windows mobile and battery life don�t go together, the fact that they are deployed with 160 operators in 55 countries, shipping 20M devices/year places them at a significant advantage in the coming days.

Facebook�s Moskovitz made the plea for openness of networks, devices, and applications to enable the social networking phenomenon on mobile. The fact that Microsoft and Facebook were doing the keynotes on the eve of strategic investment wasn�t a coincidence. Dustin brought out the elderly statesman Mike Lazaridis to announce the facebook app for Blackberry smartphones. The interesting thing was how the app was introduced - Facebook chose RIM and RIM chose T-Mobile for this app. Device manufacturers are surely getting bolder. Facebook extended its platform to mobile. Getting social networking apps on mobile is a no-brainer. In fact, the coming enhancements with Presence, IMS, Broadband, Profiling, Location, can make mobile social network a society of its own.

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

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

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

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

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

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

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

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

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

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

iPhone continues to dominate the talk - iPhone continues to set the tone of discussion in the industry. Since July, there has hardly been a mobile conference worth its salt that hasn�t had a session on �impact of iPhone.� There hasn�t been a mobile device like this one and it shows. Attendees proudly fiddled with their iPhones in public and were eager to discuss their experience and forecasts.

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

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

Misc

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

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

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

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

Carnival of the Mobilists #68 April 9, 2007

Posted by chetan in : 4G, AORTA, CTIA, Carriers, Devices, European Wireless Market, Infrastructure, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Usability, Mobile Users, Privacy, Smart Phones, Strategy, Wireless Value Chain, Worldwide Wireless Market , 14 comments

In 1991, Mark Weiser, in his seminal article, �The Computer for the 21^st Century,� described ubiquitous computing as a �world in which humans and computers were seamlessly united�. The article opened with �The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it�. IBM evangelized the concept as pervasive computing in the nineties. Later in 1997, Mark Anderson, one of the best forecasters in our business, coined the term AORTA or �Always On-Real Time Access� to announce the age of �always on, always connected to any information at anytime, anywhere�. Then, in 2003, my good friend Dr. Yasuhisa Nakamura at NTT DoCoMo wrote in the Introduction of our book about broadband connectivity that will become an �air-like� infrastructure, omnipresent, without us (devices) being conscious of it. That�s the essence of this blog, discussing the ideas put forth by Mark Weiser and subsequent visionaries - tracking the AORTA evolution.

Welcome.

I am glad you could join us for the 68^th edition of the Carnival of the Mobilists � a weekly showcase of best writing by Mobilists from around the world on topics that are near and dear to us. I am delighted to present you with the best posts from last week that will help carry the discussion of AORTA forward.

Ajit Jaokar of OpenGardens fame muses - why carriers are not proactive about increasing touch points with the customers?. Indeed, carriers could do a much better job by the communicating with their customers via what else � the device. Shouldn�t mobile advertising start at home?

Raddedas at TechType takes the South Korean mobile players like Samsung and LG to task for not opening up their platforms to external developers. Welcome to the Carnival and thanks for your post.

Ed at The Pisstakers writes about formatting website with graphics to fit cell phones.

James Pearce at Tripleodeon opines about �The Mobile Web is Generation Y�s�.

David Beers at Software Everywhere in his post �Is the network the (mobile) computer?� talks about designing applications and services with user experience in mind.

Barbara Ballard at Little Springs Design writes about Smart Phone Evolution. Also, if you want to dig deeper into mobile user experience, be sure to check out her recently released book on �Designing the Mobile User Experience� by John Wiley.

Shawn at Shackdiesel takes FCC to task for banning the user cell phone on flights. There is no technical evidence that there is any interference with avionics equipment, but the myth persists.

Tomas Zeman writes for Wirenode mobile blog about the need for feedback from mobile users.

My favorite post of the week comes from Andreas Constantinou who does an analysis of the slow demise of browser companies like Openwave who helped pioneer the space but failed to keep up with the times.

Apple and EMI�s journey into the bold new DRM-free world is captured well by Rudy De Waele in his post �DRM Free at Last�. EMI�s Nicoli had hinted of this in his keynote in Orlando.

CTIA saw the arrival of Zenzui and Deepfish, both from Microsoft. Carlo Longino at MobHappy ponders - �Mobile UI Trends: Is More Better?�

Some of us are still recovering from CTIA. In case you missed it, Greg Clayman of Twofones provides an excellent summary of CTIA with commentary on Mobile TV, Advertising, Search, Standards and much more. My CTIA roundup is here. Review of the best party by Shawn Conahan is here.

Views and Reviews

Ricky Cadden at SymbianGuru provides an update on N95.

Dennis at Wapreview, our host for #67 reviews AOL�s mobile portal

Zach Epstein reviews GSync by Psiloc.

Justin Oberman at Mopocket points to an interesting application for house hunting folks out there � Housefront SMS

Farooq Anjum at Anjum�s web provides an introduction to BREW.

Next Carnival is at Mobile Marketing & Spam hosted by Troy Norcross. Be sure to check it out. Until next time, Sayonara!

US Wireless Data Market: 3Q06 update November 13, 2006

Posted by chetan in : 3G, AORTA, ARPU, Carriers, Devices, Infrastructure, Japan Wireless Market, M&A, MVNO, Mergers and Acquisitions, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Networks, Partnership, Smart Phones, Strategy, US Wireless Market, Worldwide Wireless Market , 2 comments

PPT Download (849 KB)

• US wireless data market continues to grow rapidly. As expected, for the first time, the top three US carriers (Verizon, Cingular, and Sprint Nextel) crossed $1B/quarter in data revenues. US is the only country with 3 carriers in the �$1B/quarter� data revenues group (7 carriers are in this group, only NTT DoCoMo is in the exclusive �over $2B/quarter� club). This takes the overall US wireless data service revenue tally to over $10.5B for the year (compared to $8.6B for entire 2005) and is expected to cross $15B in 2006.
• Verizon continues to dominate and has shown better performance than its rivals. It became the number one carrier in terms of service revenues and data revenues, and is heading steadfastly to claim the coveted �carrier with most subs� title by second half of 2007. Its data revenues for the year were approx. $3.1B followed by Cingular at $2.9B, Sprint Nextel at $2.8B, and T-Mobile US at $1.2B.
• Sprint retains its leadership position of highest wireless data ARPU in terms of absolute dollar amount at $7.75 but Verizon continues to lead in terms of % data ARPU at over 14%. Average data ARPU for the industry is now $6.8 or 13%.
• Overall ARPU (voice + data) increased slightly for the second straight quarter to $53.09 bucking the general trend of slow ARPU decline. Both Verizon and Cingular reported slight increase in voice ARPU. Average Overall ARPU was $53.09. Sprint led with $61 followed by T-Mobile at $51, Verizon at $50, and Cingular with $49.8.
• US 3G subscriber base continues to grow - primarily due to Verizon and Sprint Nextel�s aggressive push. With Cingular and T-Mobile joining the fray, the 3G growth is expected to accelerate with 2007 being the inflection year.

• In terms of EV-DO vs. WCDMA, EV-DO is quite ahead in both coverage and handset diversity. As of Sept 2006, there were 15 3G handsets available in the market (representing approximately 20% of the available handsets from big four), 14 EV-DO (10 from Verizon, 4 from Sprint Nextel) vs. 1 UMTS/HSDPA handset from Cingular.

• US added over 16M net subscribers from Jan-Sept 2006. This translates into 1.7M subs/month which is slightly lower than the 2005 average of over 2M/month. Given the fact that we have crossed 75% penetration, the declining rate is indicative of approaching saturation in the market.
• The top 4 US carrier account for 81% of the subscribers, 86% of the service revenues, and approximately 95% of the wireless data revenues.
• US Off-net revenues for the year are likely to exceed $750M.
• Data ARPU of CDMA/EV-DO carriers was 20% higher than GSM/WCDMA carriers.
• Several high-profile MVNOs were launched over the course last year and the overall results have been disappointing primarily due to poor execution, instant crowding effect, and competition from big 4. Mobile ESPN was first to bow out last quarter.
• US wireless carriers are steadily climbing in their wireless data performance as compared to their peers worldwide. Verizon, Cingular, and Sprint maintained their ranking # 4, 5, and 7 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for the first nine months of 2006.
• T-Mobile US outperformed its parent TMO Germany for the first time by generating $434M in data revenues (compared to $425M by TMO Germany).
• In terms of total wireless data revenue for the first nine months of 2006, the #1 carrier worldwide is NTT DoCoMo which has maintained its position for a number of years. It has generated over $7.8B in wireless data revenues during the first nine months and will eclipse $10B mark for 2006.
• In terms of wireless investments, over $5.1B was invested in wireless related companies/startups from Jan-Sept 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.
• Worldwide Handset market share Q306: Nokia and Motorola dominated with 35.4% and 21.5% market share respectively. Samsung with 12.3% stands third. Source: Credit Suisse.
• Sprint’s cozing up with the cable guys has 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.

Sell Phones: What will make Mobile Advertising tick? October 19, 2006

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Devices, European Wireless Market, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, MVNO, Mergers and Acquisitions, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Mobile TV, Mobile Usability, Mobile Wallet, Partnership, Privacy, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Usability, Wireless Value Chain, Worldwide Wireless Market , 2 comments

The full version of the paper is available now -

http://www.chetansharma.com/sellphones.htm�(pdf download)

�

Introduction

Mobile Marketing and Advertising is the new �it� in the industry. All the three recent industry shows (MES, MECCA, and CTIA)[1] in LA last month were buzzing with the potential of mobile advertising. For carriers, who until now had not paid attention to this evolving sub-segment, have started to organize internally to be the clearinghouse and magnet for agencies and advertisers. The advertising agencies and big brands have started to throw MDF[2] dollars at experimenting with this new medium called mobile. Analysts have started predicting billion dollar markets by 2010[3]. The ecosystem has also started shifting and new alliances are being probed and tested for positioning. Is mobile marketing going to be another over-hyped industry segment or will it actually help generate revenue, drive exits for VC investments, enhance content value-proposition, and most importantly, deliver value to the consumers? This article discusses the elements that are critical for the long-term viability of the mobile advertising and marketing industry.

How big is the market?

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To get a grip on the potential market in the US or Western Europe, we take a look at Japan[4] as the harbinger of what�s to come in this space. According to Dentsu, mobile advertising revenues for 2006 will be approximately $373M or close to $3.8 per subscriber (for the year). By 2009, this number is likely to scale to over $6/sub/year[5] (Figure 1). According to InfoPlant, almost 60% of the Japanese consumers use mobile coupons and discounts more than once a month[6]. The US market is just starting to get organized and move from SMS marketing to mobile/local search marketing, interstitials, in-content ads, banner ads, etc. In 2006, US will do less than $1/sub (for the year) in mobile advertising revenues, bulk of which will be SMS marketing. Europe is also slowly waking up to the possibilities around mobile ads and has been experimenting with some clever business models such as Operator �3� subsidizing usage and phones in lieu of advertising on the phone. These models are also being offered in the microenvironments of downloadables, subscriptions, video streams, etc.

Figure 1. Mobile Advertising Revenue Growth in Japan[7]

It is apparent that due to the availability of context, immediacy, and personalization, mobile has significant advantages over the other channels as an advertising medium.

The potential is clearly there but how long will it take to reach a critical mass? How many years before the industry cracks $1B? $10B? For reference, it took 2, 4, and 5 years for Broadcast, Internet, and Cable advertising respectively, to cross the $1B revenue mark; 5 years for Internet and Broadcast advertising to cross the $5B mark. None of them crossed $10B mark in their first 10 years of existence[8] (Figure 2). Will mobile be any different? Instead of being a blip in the advertising revenue stream, when will the mobile segment start rivaling revenues generated from advertising on Internet, Radio, Newspaper, and TV? Can it? If yes, what does it take to get there? What technical, business, and legal issues need to be addressed before agencies have dedicated staff to tackle mobile advertising and real dollars instead of MDFs as part of the budgeting exercise? Finally, who will be the dominant players controlling the ecosystem five years from now?

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Figure 2. Annual Ad revenue growth in broadcast, cable, internet in the first 11 years[9]

Technology Requirements

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First, let�s discuss the technology piece. As we have seen in Japan and Korea, higher processing power handsets and 3G pipes play a significant role in the adoption of rich advertising content. If an ad is non-intrusive, delivers value, and is relevant to the consumer; there will be a higher propensity of adoption vs. when after 45 seconds of �connecting to server� screen, an ad rears its ugly head to slam in the face of an already frustrated consumer. In the US, 3G is being adopted fairly aggressively and when Cingular picks up pace with its WCDMA/HSDPA deployment, growth is going to accelerate into 2007. By 2008, 3G penetration will reach over 25%[10]. Adoption of Smartphones is also increasing (Figure 3). With Motorola�s Q and RIM�s Pearl, price point is getting near mass-market consumption levels. By next year, we will start seeing $100 smartphones. In the US, 25% of the converged devices sold during the first half of 2006 were 3G devices. This is up from just 3% in 2005. User interfaces are also getting better. UIOne, MYDAS, Flash, Screen 3, 1mm, and other proprietary solutions are extending the possibilities. In terms of options, there are different channels available � SMS, MMS, Search, Browser, Games, Video/TV, etc. each with its pros and cons and maturity level in the market (Figure 4 and 5).

Figure 3. Expected lifecycle of various key technologies in the US[11]

Figure 4. Mobile advertising channels[12]

Most of the effective mobile advertising and marketing will be search driven � whether it is based on declared intent from the user or passive impressions based on user�s context, history, and preferences. Google is an example of the former while Amazon is a brilliant case study of the latter. Local search and advertisements will be a significant part of the equation. As Mark Anderson, CEO of Strategic News Service[13] recently quipped in his recent column �Searching for Transactions�, �Search isn�t about advertising, it�s about shopping, which is why the advertisers have to be there�. It is truer in the mobile environment. Astute advertisers realize the proximity and intimacy of the medium and already conjuring up clever ways to engage the consumer. Service providers with good �mobile� search engine technology will be at competitive advantage as they build a strategic framework to address the bigger opportunity.

Figure 5. Consumption of various services in key western nations[14]

For mobile advertising to be successful, one needs �reach�, �purity�, and �analytics� (Figure 6). Reach is how many �real� customers do you have? Purity is the �quality� of information on the customers. Name and address just don�t cut it. Analytics is matching users interests � implicit and explicit, context, preferences, network and handset conditions to ads and promotions in real-time. Not just bucketing a user in a group and giving them a number but understanding the user in every way possible and customizing every single interaction, every single push, every single imprint, and every single promotion to the finest degree possible.

So, who has the reach? Clearly, carriers with millions of billing relationships currently have the tightest relationship with the end-customer in this ecosystem and has the most relevant transactions to build a good customer profile fingerprint[15]. On the other end are the Internet brands like Yahoo, Google, and MSN with over half a billion unique visitors each. Other important players include giants like Amazon, EBay, Myspace, Youtube, Skype, AOL, and Paypal.

Figure 6. Mobile Advertising and Marketing Framework

The internet brands have good reach but limited purity. Purity is about good profile data. The customer profile information that Internet players have assimilated doesn�t really always translate well into a view of a customer�s interests and preferences. They can and will build a direct relationship with consumer but it will take time and has to overcome some technical and business hurdles.

Finally, one needs the analytical framework. The goal of the framework is to capture the behavior and interests of the user while they are browsing, shopping, interacting with a variety of applications and content, and even simply calling 1-800-Flowers. This knowledge mixed with the explicit profile helps enable build characteristics and traits of users on a mass scale. Once the segmentation and understanding of the user is fine-tuned, the gathered knowledge can be continuously applied to enhance the user experience while they are interacting with their mobile phone by targeted promotions and offers sent to the user, and mobile advertising can be enabled such that it adds value to the user experience.

In terms of platforms, there has been a lot of activity on building backends, but little progress on the front-end where it matters the most. What is absolutely needed is an easily accessible control framework for �permission advertising/marketing� so that the user can selectively or globally switch-on or off the types of ads/promotions they would like to entertain and when. We need a SIP/Presence like capability that works across all apps and services and is as universally accessible through open APIs. Mobile advertising is not just all visual either. It can interact with the customer while they are on hold or support free 411 or premium services or can be integrated with podcasts, essentially finding clever ways to provide ad/promotion content in exchange for something that provides value to the end-user. The context engine combines various inputs and uses location and other contextual information to package information before it is pulled or pushed to the consumer. This is true for all the application areas such as portals, storefronts, local search, mobile search, off-net access, and other applications.

The value chain

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As the convergence continues, the mobile ecosystem keeps shifting. Currently, the mobile advertising chain consists of the following main segments (Figure 7):

Campaign Sponsors American Express, P&G, GE, Toyota, etc.

(Advertisers)

Marketing Agencies Ogilvy, Universal, Carat, Mindshare, etc.

Enablers ThirdScreenMedia, Admob, MobiTV, Enpocket, Rhythm NewMedia, Medio, ActionEngine, Screen Tonic, Google, Yahoo, Tellme, MSN, Infospace, etc.

Content Provider CNN, Disney, Yahoo, YouTube, ESPN, Mixxer, Intercasting, etc.

Aggregators mBlox, Infospace, WSC, etc.

Carriers Sprint Nextel, NTT DoCoMo, Vodafone, Telefonica, Verizon, Cingular, Virgin, amp�D, Clearwire, etc.

Consumers You and Me

For each of the participants, there are some inherent benefits, specifically,

For the carrier, it is an excellent way to build loyalty and �stickiness�. It is also a way to take the saturated levels of data users to another level by subsidizing premium content and even transport costs by advertising thus lowering the barrier-to-usage. However, the carriers need to balance the influx of users and data traffic with the potential for additional revenues. Spectrum is still limited and it needs to be used wisely in any strategic scenario.

For the user, relevant (opt-in) and targeted advertising and promotions deliver value. In all recent surveys, the number of users willing to pay for the Mobile TV service is a very small fraction of the number of users who want to use the service. With advertising, they can afford more and start enjoying the full capabilities of their handsets.

Figure 7. The emerging mobile advertising value chain[16]

From an advertiser�s point of view, mobile provides unparalleled reach and a reliable and fairly accurate measurement tool. The ad/promotion system should have the capability to create promotions at national and local level (city, zip code, location) and everything in between. The system needs to support extensive querying and segmentation capability to design sophisticated campaigns for e.g.

� Give me users who are most likely to purchase a new ringtone from Usher.

� Give me users who are Pop aficionados, have coke as their favorite cola, wear Nike shoes, single, living in large metro areas on the east coast, income level above $120K, have ARM11 or higher devices, and have responded to at least 50% of ads in the past 2 months.

For evaluating the mobile medium, advertisers are using the same criterion as they have used for other channels, namely:

Reach � how big is the audience esp., unique and regular visitors?

Purity � how good is the user profile information?

Frequency � how often is the audience exposed to advertisements?

Performance � what�s the quantitative measurement criterion to determine effectiveness of the campaigns?

Advertising inventory � what�s the availability of ad slots on premium properties?

Advertising units � what�s the size and shape of advertising content?

Tools � what kind of tools are available to run the lifecycle of a campaign? How does mobile advertising fit into the larger advertising budgets and planning?

For content providers, both big and small, it offers an ability to go direct in addition to working with carriers on revenue-sharing arrangements. If a content-providers has traction and user profile data for a few million loyal subscribers, advertisers would love to talk to you. But, as we discussed earlier, it comes down to reach and purity of the subscriber base.

Risks

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While the potential is immense, there are also significant risks and potential challenges that need to be tackled before the industry evolves into a vibrant advertising medium. The prominent amongst them are privacy and data security. Once you start mining user data, significant profile information can be developed. Then how that information is used and by whom becomes an issue, and a significant legal minefield. In addition, if the industry doesn�t want regulators to get involved, the security policies and procedures need to be in place to protect the data from theft or misuse. Next, the advertising ecosystem needs to be fostered so that everyone in the value chain benefits relative to their contribution.

Some people have compared the advertising ecosystem to lions (advertisers) and antelopes (consumers), where you need enough antelopes to attract the lions but not enough lions that you scare away the antelopes[17]. As Omar indicates in his article, advertising needs to align the interests of different players in the value chain to keep plenty of antelopes around the watering hole. As we have seen time and time again, if the ecosystem is healthy, segment thrives otherwise it is relegated to slow growth or the interest dissipates altogether. There needs to be a good balance of power between advertisers, content providers, carriers, and consumers.

Value-chain dynamics

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It is clear that mobile advertising and marketing has big potential if certain technical and business requirements are met and industry strives to take into account the user considerations that matter the most. But, which players will dominate and control the ecosystem. Without a doubt, carriers have the purest profile information available, but can they execute their strategies? Well, they have approximately 3-4 year window. Once 3G and Smartphone penetration curves collide and pass 20-30%, if the carriers haven�t built a good mousetrap (value proposition) by then, all bets are off. Different dominant players will start to emerge, as it will get easier for Internet and traditional brands to build direct relationships with a good proportion of the subscriber base. It is also possible that in some geographies carriers and brands will work closely to establish a tight service offering and equitable revenue split. Role of savvy brands like P&G who are generally ahead of the curve on most technology trends is going to be important. Brands and service providers who are able to integrate user experience across channels will benefit the most (Microsoft will be a strong player in cross-channel advertising). There is real value in understanding user behavior on the Internet and mobile and cross-leverage in a) building a solid profile fingerprint and b) using it to push content.

Then, there is the whole world of off-net advertising and marketing. Carriers are increasingly playing a lesser role in that segment. But the market is very fragmented amongst hundreds of content providers and mini-aggregators. They only have a piece of the (reach and purity) puzzle and hence the analytics they apply will be limited in scope. Could they collaborate to work to leverage each-others strength? Certainly. Can the user profile information be available as a web service (with user�s permission of course)? Sure. Can carriers start to offer that to trusted providers in exchange for revenue-share? Possibly. There is clearly enough room for experimentation in both technology and business models arena of this nascent industry segment. Finally, ads and promotions should be �super-distribution-friendly� (across carriers and devices) meaning — treat ads and promotions like content that can be passed around �easily.�

Conclusion

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It is quite clear from the industry trends that mobile industry (especially in the US) is moving from an emerging state to a more interactive and immersive application and services environment. By 2011, advertising industry will be close to $600B. Can mobile start to increase its revenue share from its current levels of less than 0.2% to 2-5% by then? Since this medium can provide context, immediacy, and personalization, the answer is yes. However, there are technical, business, and legal hurdles to be crossed before the industry becomes a thriving institution.

Until then, stay tuned to our commentary on the shifts and turns in the ecosystem.

Acknowledgements

My thanks to Sunil Jain, Victor Melfi, Amar Patel, Anne Baker, Sarla Sharma, Shawn Conahan, and Subhadeep Chatterjee for their valuable assistance with the article.

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[1] Coverage of fall shows (2006) is available at http://www.chetansharma.com/ctia0906roundup.htm .

[2] Market Development Funds (MDF) are typically allocated for new media activities.

[3] In a recent report, Informa estimated that the mobile advertising market is going to be worth $871m this year, and will jump to $11.35bn in 2011.

[4] Japan is the second largest advertising market in the world behind US. Japan is also the first country to exceed 50% 3G penetration earlier this year.

[5] Source: Dentsu, Chetan Sharma Consulting

[6] Source: http://www.wirelesswatch.jp//modules.php?name=News&file=article&sid=2021

[7] Source: Dentsu, Chetan Sharma Consulting

[8] Year 1: 1995 for Internet, 1980 for Cable, and 1945 for Broadcast TV (Source: IAB).

[9] Source: IAB Internet Advertising Revenue Report, 2005 Full Year Results, PriceWaterhouseCoopers

[10] For a more exhaustive discussion on 3G, please see http://www.chetansharma.com/cover%20story_3G.pdf

[11] Source: Chetan Sharma Consulting

[12] Source: Chetan Sharma Consulting, Q206

[13] http://www.tapsns.com

[14] Data Source: M:Metrics, Aug 2006

[15] While carriers have the most pertinent data on the users, it resides in disparate locations and very few have realized the long-term value of such an exercise.

[16] Source: Chetan Sharma Consulting

[17] �Lions and Antelopes in the Advertising Ecosystem�, Omar Tawakol, Revenue Science

Mobile Ads September 21, 2006

Posted by chetan in : CTIA, General, Infrastructure, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Entertainment , add a comment

There has been a significant debate over mobile ads. Mobile Advertising was the highlight of the three shows in LA. GigaOM discusses this in further detail with a good roundup of companies. Small to large companies are looking at this new medium. While there are a lot of things that can go wrong, if done right, it will be welcomed by consumers. I guess next question to ask is

“What will make mobile ads work?”

I will be dealing with these issues in my future white paper. If you have thoughts or would like to contribute, please let me know.

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

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

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

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

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

Enterprise focus, Finally!. I have been involved in the mobile enterprise space since 1999 and have been coming to the CTIA for a number of years. The fall show is supposedly about dual personalities of Entertainment and Enterprise. For the first time it felt that the Enterprise side was given its due respect and was on an equal footing to its sibling personality - the glamorous, the attention-seeking �Entertainment�. CTIA started the conference with an Enterprise panel discussion (of course after the surprise Governator keynote). Though the discussion was too high-level to provide any key insights, CIOs confirmed what is well known now that the spending on wireless-data related projects is going up significantly. A surprise revelation was that China�s growth in enterprise solution is among the highest in the world. It is all about productivity and ROI. Companies are also looking to outsource their IT operations related to wireless devices. Handset guys are coming out with Enterprise targeted devices though we are still in the very early stage development of the cycle. Throwing an email client on the device doesn�t make it an enterprise device. Email client is a given in all new handsets now. When will we start seeing embedded enterprise apps? Mobile web services clients and frameworks?

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

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

4G. While, we are just starting with 3G (except Japan and Korea), seven of the wireless industry�s leading carriers have joined forces to �develop a common vision� for the future of mobile networks technology. Members of the Next Generation Mobile Networks initiative include China Mobile, KPN, NTT DoCoMo Inc., Orange, Sprint Nextel Corp., T-Mobile and Vodafone. The group said it has created a set of requirements �for a future wide area mobile broadband network designed to offer enhanced customer benefits by delivering competitive broadband performance alongside high levels of interoperability.� In plainer terms, the NGMN appears to be devising a roadmap for interoperable 4G networks. You can sense the arm-wrestling to come. 4G could end up having some serious IPR issues if all major patent-holders don�t participate. The 3GPP licensing regime has been a failure, industry needs to be proactive, dedicate resources to the problem and get is solved to the extent it can.

Telematics. The number of firms talking about telematics or navigation on the phone or devices for your car increased quite a bit. Navteq, TeleAtlas, TeleNav, Inrix, Pharos, Kore, Teydo, and many others displayed their wares. On the consumer side, navigation is getting embedded into Local search apps which are enhancing the user experience quite a bit. FindIt and Google Maps are two examples. There were enterprise focused solutions from Tierravision, LiveCargo and @Road.

WiMax. Spent sometime with Lars Johnsson, VP at Beceem Communications talking about the prospect of WiMax worldwide. Clearly, Intel and Clearwire�s announcement has reenergized the industry and taken some uncertainty out. Lars is extremely knowledgeable person on everything WiMax. He co-founded Flarion which got sold to Qualcomm last year. It looks like the benefits of 802.16e will render 802.16d useless in short order. �e� provides better link capacity, Forward Error Correction, power efficiencies, and optimization. The cost of building a WiMax modem is lower than the WCDMA counterpart. A number of cable and wireline players are looking for triple-play offerings. Beceem has strong partnerships with OEMs worldwide and is actively involved in several trials in Korea, Taiwan, Japan, India, and US. The biggest challenges are around interoperability (as always) and quick resolution of IPR issues. From an application perspectives, gaming companies are the ones watching it closely. Also, automobile media player vendors are interested in using WiMax for Broadcast video. Tropos believes that Mesh technology will continue to have relevance in a WiMax-enabled world as the practical ranges of base stations won�t exceed 5-10miles.

M&A. Some major M&A news at the show� Real acquiring WiderThan for $365M, Lucent acquiring Mobilitec for undisclosed amount, and FOX acquiring 51% stake in Jamba for $188M. This follows Sybase�s acquisition of Mobile365 last week for $400M. There are several factors at play. Clearly, some segments of the industry that have matured are facing price pressure and hence consolidation. Media companies are also realizing the potential and don�t want to miss out or get behind the curve so acquiring companies that have traction, not necessarily the best technology. Some of the valuations just don�t make sense but I guess some over-exuberance is to be expected at this time.

Handset launches. You might have missed the announcement; there was no Steve Jobs, no iPhone release. Pearl was probably the highlight of the show though plans had been leaked in the media sometime back. RIM has Razresque aspirations from the device. The big three didn�t have anything interesting. Nokia launched E62 (thankfully, taking a cue from Motorola, they are getting rid of their number scheme), however it is missing 3G and WiFi support of its European cousin E61. Kyocera had some interesting devices as discussed above. Sprint launched two EV-DO Rev A data cards from Pantech and Sierra Wireless. Cingular announced a $150 HTC Smartphone. Linux handsets are also on the rise. Obigo/Teleca had some nice tools/products for mobile Linux � Browser, IM, Media and Email client. The user experience was quite nice.

Mobile TV/video. At the last two shows, Mobile video and Mobile TV were all the rage. The solutions seem to have matured though uncertainty of its success remains (primarily around time-horizon to success). There are too many providers in the space offering solutions from individual codecs to end-to-end solutions, do-it-yourself toolkits (Nexage) to user-generated video solutions (ComVu, Juicecaster � ComVu�s one click mobile broadcast capability was pretty good) to niche demographics (Viva Vision is getting good traction in the Latino market). Various pieces of the mobile video puzzle have been commoditized, now, it is all about packaging. There were a number of Mediaflo handsets on display as well. The quality of Broadcast is really good. I saw some Broadcast TV services in Seoul earlier this year and the user experience is pretty good. My partner watched the entire South Korea soccer world cup game on his mobile device as he wasn�t near a TV. Once the market gets seeded with enough phones and service pricing settles to mass-market scale, we can expect good adoption rate for such services. Imagination Technologies out of UK showed some innovative SoC (System on Chip) solutions targeting Mobile Broadcast video. Some new names in the space are QuickPlay, Picsel (nice user experience), and Convisual. Expect some consolidation in this space over the next 12 months.

The ecosystem friction. The mobile data ecosystem tension is bubbling up. Carriers want control (some more than others) so that they can manage user experience and minimize customer support calls. Content companies want to bypass the carrier and go direct to the consumer. This was also evident in the Walt Mossberg�s grilling of the carriers as well as other conversations with participants in the value chain. Things are improving but not at the pace everyone would like it to be. Clearly, ecosystem only proliferates if it is allowed to make money. If certain sections of the chain get strangled, holes start to develop which pollutes the system.

User experience. Didn�t see much progress on the UX front. Saw a cool implementation from FAST for Optus in Australia where they used search technology to populate the Active Screen with user preferred content. Optus has been using this offering to entice users to 3G as it is not available on lower bandwidth network and is apparently having good success. Add context and some multimedia and it becomes very very compelling. It is one area that hasn�t been exploited that much yet. In the US Cingular�s MediaNet implementation uses the same concept but is more browser-based. In different sessions, carriers agonized over limited shelf space and mountain of content. That�s why man invented �mobile search�. The concept of �deck� is very limiting. Content needs to get exposed via search whether it is post-query or pre-populated dashboard based on context and preference.

Test equipment � Whether it is entertainment or enterprise, very little attention is given to testing and monitoring data applications and services. Keynote launched a really useful product offering (Mobile Device Perspective) that enables developers to test their app from distance on a live network and live devices and control it through manual steps or automation. Currently, such testing is done by flying a team of testers, test, and optimize. This offering can reduce the cost of such operations. I took a look at their R&D and test setup and found it quite compelling. TestQuest also showed a product along the same lines though it is more of a platform play than a service offering.

MVNOs. There is a realization that MVNO business is hard. The unrealistic expectations for customer growth are being recalibrated. It is still a viable business model but one has to give time and execute like a carrier. Virgin Mobile noted that it requires at least 2M subs before a nationwide MVNO (in the US) will cross the line from red to black.

IMS. Talked to Lucent and NMS about their pre-IMS solutions. NMS was displaying a technology around P2P mobile video sharing while talking (though the tasks happened in time-slice mode). Lucent had a solution �extensions� which converged PBX and Mobility. An example would be you dial a 4 digit extension on your mobile phone that connects you to the other party as if you dialed it from your desktop phone. BUT, networks aren�t there yet and devices will arrive a bit later. In the interim, companies are looking to stimulate the simulated IMS experience.

Funding news. Several funding news from the show, the one that caught my eye was $10m for Bubble Motion in VoiceSMS (funded by Sequoia Capital). It should be noted that there is prior art in this space and the likelihood that the company is infringing on somebody�s patents are high.

Coolest gadget. MyVu�s media viewer

Coolest booth. Infospace�s Tony Hawk show was probably the most exciting thing happening on the show floor. Watching the masters go swing-swong had the crowd go wild with ooohs and aaahs.

Misc. News.

• Melodeo won a major podcasting deal with Cingular.
• Medio Systems announced the big Verizon deal (mobile search including use of voice as input).
• Hookmobile � Got a preview of the services coming out next week on all four operators. It is around Mobile Trading Community and using content to digitize trading cards, create some exclusivity and hence some viral effect. In future users can create their own trading cards for their social network. Carrier keeps 35% of the subscription fee. Hookmobile gets 27% and rest goes to the content guys. This could be good for the MMS infrastructure that is collecting dust right now. And yes, you guessed it right; there is an Ad model as well.
• New York City is going to use IPWireless technology to build a $500 million network for police, firefighters and other public-safety agencies
• Users of EV-DO data cards were much happy customers than free Wi-Fi users. Though things were better, under load, the free network comes to its knees fairly quickly.
• SpinVox had a simple but useful offering � converting voicemails to text messages. Use case � you are in a meeting, somebody leaves a voice message, can�t go out to listen, peek under the desk to see (the SMS) if it is important.
• SNAPin�s solution is designed to address Carrier�s customer calls. It wouldn�t be a stretch if carrier starts selling �the deck� to other companies especially in the airlines, insurance, and credit-card industry. You dial the number; phone captures it, goes into the system and brings you the answers to the questions you might be most interested in (in a data format).

Your comments are always welcome.

Mobile Search News August 16, 2006

Posted by Chetan in : AORTA, General, Infrastructure, Mobile Applications, Mobile Search, Mobile Usability, US Wireless Market, Usability , add a comment

Some activity in the Mobile Search space

Branded vs. White label mobile search solutions. Carriers are struggling to define their long-term strategy in the space. Do they bring it in-house, go white-label, or just hand over the real-estate to the likes of Google. It is an interesting dilemma for them as they clearly see the opportunities but are also scared to execute on it.

Moconews reports the tussle going on at Vodafone - Vodafone looking for fast exit from Google mobile search partnership

As I have discussed before, various modalities come into play for providing input to the search engine. Google makes the move with the purchase of Neven Vision. With Image strategy behind, next acquisition might revolve around voice search or some forays into LBS.

Mobile Phone Sales 1H06 August 15, 2006

Posted by Chetan in : 3G, ARPU, Infrastructure, US Wireless Market , add a comment

 

According to new research from The NPD Group, mobile phone sales to consumers in the U.S. reached 67 million units in the first half of 2006. This number represents a slight decrease (less than 2 percent) compared to sales during the second half of 2005. NPD estimates total first half 2006 consumer sales of nearly $4.4 billion, after rebate and promotions. There was no word on what share of the market included 3G wireless broadband-capable phones.

“The U.S. handset market remained strong during the first half of this year,” said Neil Strother, research director for mobile devices at The NPD Group in a prepared statement. “There was a small, seasonal drop during the first half of this year, compared to the second half of last year. But this is to be expected, since holiday purchasing accounts for higher mobile phones sales during the latter part of every year.”

According to NPD’s Mobile Phone Track, Motorola continued its leadership in the U.S. market during the first quarter, boosting its share sequentially from 29 percent to 32 percent as it continued to ride the success of its popular RAZR models. Nokia and LG followed with 16 percent with Samsung at 15 percent.

Following is the breakdown of top 10 manufacturers’ first half of 2006 market shares:

 Motorola 32% 

 Nokia     16%

 LG         16%

 Samsung 15%

 Sony Ericsson 4%

 Kyocera 4%

 Sanyo  2%

 UTStarcom  2%

 RIM  <1%

 Palm <1%

During the first half, Motorola continued to dominate the GSM (global system for mobile communication) space with a 42 percent share of the market, followed by Nokia with 23 percent and Samsung with 13 percent. During the time period, LG was the leader in CDMA handsets with a 36 percent market share, Samsung reached 18 percent and Motorola at 14 percent.

Sales of music-enabled devices have doubled significantly since last year, from five percent during the second quarter of 2005 to more than 10 percent during the second quarter of 2006. The percentage of mobile phones sold with Bluetooth capability has also increased significantly in the last year, from nine percent during Q2 2005 to 22 percent this past quarter.

http://www.broadband-today.com/article/CA6362643.h…

Sprint picks WiMax August 8, 2006

Posted by Chetan in : 3G, AORTA, Carriers, Infrastructure, US Wireless Market, WiMax , 1 comment so far

In what would be an important moment in WiMax’s lifecycle, Sprint is likely to choose WiMax according to WSJ. Sprint Nextel Corp. is expected to announce as early as today it is choosing a nascent technology known as WiMax to build a new wireless Internet network in the coming years, people familiar with the matter say. The move would mark a significant win for backers of the new technology, such as Intel Corp. and Motorola Inc., while it would be a setback for wireless pioneer Qualcomm Inc, which is behind a rival technology.

Enterprise Mobility Cover Story June 12, 2006

Posted by Chetan in : 3G, 4G, AORTA, Carriers, Enterprise Mobility, Infrastructure, Middleware, Strategy, Uncategorized, Usability , add a comment

Our cover story on Enterprise Mobility in Wireless World Magazine June 2006

http://www.chetansharma.com/JUNE_cover%story.pdf

India Challenges China as Fastest Growing Mobile Phone Market May 8, 2006

Posted by Chetan in : 3G, AORTA, Carriers, Indian Wireless Market, Infrastructure, International Trade , add a comment

India Challenges China as Fastest Growing Mobile Phone Market 

 

 Adding five million subscribers per month, India will become
the world’s second largest mobile phone market by 2008

May 8, 2006 – St. Louis, Missouri – The pace of India’s mobile phone market growth is accelerating and the country is on track to surpass Russia and the U.S. in total subscribers. That is one of the conclusions of the updated 86-page report, India’s Wireless Market: Model for the Next Phase of Global Wireless Expansion, released today by Datacomm Research Company.

“The number of mobile phone subscribers added each month in India has more than tripled over the past year,” said Chetan Sharma, President of Chetan Sharma Consulting and the report’s author. “India passed Japan in total subscribers last month.  Within the next few weeks, India will break through the 100 million subscriber barrier,” he added.

The updated version of India’s Wireless Market: Model for the Next Phase of Global Wireless Expansion provides a comprehensive, accurate, up-to-date, and actionable report on India’s wireless market. The study is based on in-depth interviews with executives at operators, application developers, manufacturers, and other players. The report describes India’s market, value chain, competition, and regulation and identifies the best and worst money-making opportunities.

Additional conclusions found in the updated version of India’s Wireless Market: Model for the Next Phase of Global Wireless Expansion:

1.       India’s wireless boom is largely the result of government decisions favoring competition.  Both developing and developed countries can learn from India’s regulatory, network infrastructure, handset, and value-added service innovations.

2.       India will spend several $billion on wireless infrastructure to accomodate subscriber growth, improve rural coverage, and add advanced services. Significant opportunities exist for leveragin the 450 and 800 MHz bands.

3.       India’s consumers require low-cost handsets.  Handsets are now available for as little as $40.  However, many Indian consumers will spend a little more for enhancements such as the ability to download and play music and games.

4.       Thanks to low per-minute charges (under $0.03), most Indian consumers pay less than US$10 per month for voice service.  Wireless data yields higher margins for operators, providing incentives for affordable text, music and video services. 

Full Press release here

Microsoft’s massive media spend next year May 5, 2006

Posted by Chetan in : AORTA, Infrastructure, Mobile Advertising, Mobile Entertainment, Partnership , add a comment

Microsoft's over $2B spend next year will start to have implications to the mobile world in 2008. Seattle Times has good coverage http://seattletimes.nwsource.com/html/businesstechnology/2002973119_microsoft05.html

CTIA and Mobile Entertainment Summit Roundup April 10, 2006

Posted by Chetan in : 3G, 4G, AORTA, Carriers, Devices, Enterprise Mobility, Federal, General, Infrastructure, International Trade, Location Based Services, M&A, Mergers and Acquisitions, Middleware, Mobile Advertising, Mobile Content, Mobile Entertainment, Mobile Wallet, Partnership, Speaking Engagements, Strategy, US Wireless Market, Usability , add a comment

My week started with a presentation on “US Wireless Market: Trends, Technologies, and Opportunities” to the CTIA-bound Japanese delegation that included very knowledgeable executives from NTT DoCoMo, KDDI, Kyocera, Mitsubishi, Base, MCPC, Vodafone, and Willcom. During networking, had some interesting conversations with our Japanese friends regarding content business, UMA, WiMax, 4G, and new business models.

Spent next three days attending Mobile Entertainment Summit (April 4th; Chetan Sharma Consulting was research partner for the event) and CTIA (April 5-7th), talking to companies, looking at demos, visiting with colleagues and friends, and just absorbing the atmosphere and distilling things down to “what does this mean?” Below is the summary of key observations, thoughts, and digressions.

General atmosphere – As expected, the show grew bigger in terms of attendees (over 40K) and exhibitors marked by return of double story booths, glitz, and million dollar marketing budgets. Samsung and LG clearly were dueling it out for the most recognized brand out there trying to out-do each other in invoking a subliminal conversation with the customers. There was tremendous excitement at the opportunities, fear of missing it out, and yearning for figuring things out to ride the wave.

Booth of the show award is a tie between LG and Motorola with Samsung close behind. Honorable mentions: Philips, Lucent, and Siemens.

Typically, the main CTIA show focuses a lot on infrastructure, middleware, network, and handsets. This time, it was also about applications. There are readjustments going on in the value chain and with the looming consolidation wave, the rubric cubes will be rearranged in several sub segments. Wireless email had already starting shifting that way even though we are below 10% penetration.

Convergence was a big theme of the show. Consulting firms Deloitte and PwC released their reports on the subject and every major infrastructure player was talking about the impact of Fixed-Mobile Convergence (FMC). Convergence across PSTN, Cellular, WiFi, Bluetooth, Cordless Telephony Profile (CTP), Unlicensed Mobile Access (UMA), Session Initiation Protocol (SIP), IP Multimedia Subsystem (IMS), and Digital Living Network Alliance (DLNA) were all discussed in some detail. From a consumer point of view, it comes down to how fast the network is upgraded to provide the functionality and the number of devices in the market to take advantage of the feature-set at reasonable prices. Until then, it is just talk.

Positioning – Several companies are coming around to what DoCoMo taught us about i-mode. It was all about – improving the life experiences of customers. Nokia’s tag line changed from “voice goes mobile” to “life goes mobile” and “work goes mobile”. MTV expresses itself as a “content experience” company. Microsoft is all about “Discover, Innovate, Deliver” while Motorola wants to produce “must do” experiences.

Mobile TV is another area that is priming up for some consolidation as various components are commoditized (esp. for Unicast). It is not that, we are done with the innovation in this segment, in fact, we are only getting started, however, the drive will come from how the video content is packaged with other pieces of content and applications and made more interactive with humans and machines. The number of companies in the space almost doubled since last show (Ortiva, VectorMax, Snell & Wilcox, NMS, Nexage, Vimio). Everyone agrees that MobiTV has a huge advantage. It is a good case study of “first mover advantage”. It will be interesting to see if they can build on their success and compete effectively against broadcast solutions. Broadcast is the future of MobileTV. Mediaflo rocks. Key questions are: can the carriers get the business model right at launch that promotes usage and will the political and regulatory climate foster Mediaflo growth in light of DVB-H (Modeo in US) and DMB. Japan, Korea, and US are fertile ground for this battle. Qualcomm is working on Mediaflo as well as DVB-H chipsets. Slingbox was also showing their place-shift mobile video solution. It will be interesting to see how carriers block-and-tackle this one.

AORTA and 3G revisited – Since the article “3G – Hitting the Mass Market”, the tipping point assessment has been validated by several other analysts. In US and Europe, 3G deployments will start hitting critical mass in the first half of 2007 and we are getting closer to the vision of Always-On Real-Time Access (AORTA).

Mobile Search – During last couple of CTIA shows, mobile search has been an upcoming thing. During the last six months, 3 of the top 5 carriers have launched mobile search solutions with some incredible returns and actual impact on the bottom-line. Some branded solutions have also been launched and various business models are being tested. One can feel the tension between carrier-branded search and solutions from the likes of Google, and Yahoo. Who can build a better mouse-trap? Will carriers cede control and help non-carrier solutions with carrier-resident data? Feature-set is straightforward. Question is what customer data can one use to enhance the user-experience. If carriers are smart about it, they will work with white-label vendors such as Infospace (also Medio, Jumptap, etc.) to develop some really neat analytics that feeds back into user experience. Voice search solutions are also becoming more prominent. In the last 6 months, Voicebox, Voicesignal, Promptu, and V-enable have announced voice search solutions.

User Interface is getting better – Players in the value chain are paying more and more attention to the user-experience. As predicted, MVNOs are having an impact on how device manufacturers and carriers think about customization. Amp’D, ESPN, Disney, and Helio all have custom clients. Rather than relegating the user experience on device browser and archaic transcoding solutions, these MVNOs want to provide a controlled and immersive user experience. With 2^nd tier device guys eager to do what-ever-it-takes to make the user experience attractive, mainstream device manufacturers and carriers will need to get their acts together in a hurry. Verizon’s announcement (about using Flash) is recognition of this trend. Also, there were some apps with really cool UIs from startups such as DSI.

Community and User-generated content – There was tremendous activity in the mobile community and user-generated content space, from blogs and SMS to video and music content around community networks. Indeed, it is all about communities and user-generated content plays an incredibly important role in it. Though we have seen significant amount of growth in ringtones, graphics market, this will explode when UGC (including music, video) is put into the mix. This has been validated by multiple data points, the newest one being from 3 in Europe through seemetv service. How quickly will carriers embrace this so that the poor schmuck with 10 goofy videos with no technical capability gets to put their content for sharing, for barter, or for sale. Companies such as Intercasting, Juicewireless, AirG, SMS.ac, Bango, Blogstar, Helio (Myspace) are coming at the opportunity from different angles.

MVNO launches Since last CTIA, ESPN Mobile and Amp’D have launched. This CTIA marked the launch of Disney Mobile and the concept resonated with most attendees esp. folks who have kids. They also got their handset strategy right by pricing it for mass consumption. Service will become available in June. Helio is supposed to launch around the same time. In the meantime, Vegas started taking bets on which MVNO will be the first to fold. As I have discussed in prior articles, MVNOs have clearly raised the bar on user experience and will continue to push the envelope. The willingness of Asian manufacturers to customize at a frantically rapid pace is going to put pressure on the big boys and is already having an impact on their strategy and roadmaps.

Enterprise – Though there were a couple of Enterprise pavilions, the substance was pretty light. Revenue potential of enterprise solutions is equally big if not bigger than the consumer segment, yet it fails to get attention beyond mobile email which itself is becoming a commodity play. It should be noted that there were a couple of vendors that are trying out new approaches to the consumer email such as using MMS for email (Memova).

Mobile Diagnostics and Performance measurement – With the advent of 3G and numerous data apps, the impact on network storage and performance is enormous but is often not talked about. The amount of bytes generated in 3G networks is many times more than 2G and 2.5G networks. As such, the networks need to be planned and monitored appropriately. Testing and simulation of applications, services, and handsets also become more important. Companies such as Vallent, EMC, Keynote, Schema, and Argogroup are looking at the problem from different angles.

4G – Though no body in the industry agrees what it is, some semblance of “Beyond 3G” solutions started showing up at the show from IMT-Advanced solutions from DoCoMo (1Gbps) to WiMax pavilion. Samsung had the WiBro gear at the show – handsets and infrastructure – very cool to see things end-to-end. WiBro trials are ongoing in Korea and we are likely to learn a lot from the results that will help decision makers in the WiMax segment. However, we are still a long ways away (2008) before we see any meaningful mass market penetration for mobile WiMax (There are a number of trials going on around the world from DoCoMo, Willcom, Softbank, KDDI, Sprint, SKT, and KT). It should be noted that US spectrum auction is slated to start June 29^th, 2006. It will be interesting to see who ends up with what esp. Clearwire and if any of the non-traditional players such as Google, Disney, DirecTV, and Microsoft make a run for it.

Near Field Communications (NFC) – DoCoMo has had success with FeliCa (Sony’s technology) launch in Japan. Things are increasingly looking bright for NFC-based solutions (mobile wallet, venue check-in, authentication, etc). Mastercard is running some trials on East coast. Cingular has been running some trials in Atlanta area using Nokia phones with Philips NFC technology. In addition to contactless payment capability, NFC-equipped phone can also read data from compatible tags, opening new content discovery avenues. The biggest challenge is of course getting the required infrastructure in place and endorsement or participation by at least one or two major retailers such as Starbucks or McDonalds. Many companies from Philips to smaller players such as MobilyT had neat NFC prototypes. Paypal also launched its mobile payment solution. Many companies are looking to bypass carrier billing so they have more control – it will be an interesting battle to watch.

M2M – With most major western markets reaching saturation, focus has been shifting to M2M applications and device-to-device networking. In addition to the big players such as Siemens, Motorola, and Phillips, newer players such as Esmertec were discussing the potential and applications.

Chinese presence – In the CTIA roundup one year back, I noted “Chinese are coming”. If there was any doubt, it was pretty clear from this show that Chinese wireless players are going to be significant force to reckon with. They are already making an impact in markets outside China, such as in India, Eastern Europe, and Latin America. Booths and showcases from ZTE, UTStarcom, and Huawei rivaled their western counterparts. Noticeably, several software and SI Indian firms also had presence at the show.

Handset business will continue to be brutal. Samsung, LG, Motorola, and Nokia all had a good line up of new handsets. Chinese manufacturers such as Techfaith wireless and Amoi also had some sleek handsets on display (Amoi even had knock-offs of Razr and iPod phone)

Mobile Advertising – Not much substantive progress since last time, except for more talk, and more companies popping up. The concepts and business models are starting to get more serious discussions from carriers, content providers, aggregators, and advertisers. Some interesting ad performance tools are also coming up (Integrated Media Measurement Inc.). It comes down to who has the relationship with the customer, what’s the depth of consumer profile information, and the trust-level established with the customers. ActionEngine’s MSNBC launch, new startups Rhythm NewMedia and VibesMedia, and Free DA (supported by Ads) were among the highlights in this area.

Location Based Services – I remember working on LBS solutions back in 97-98 timeframe and the technology was going to change the world (in the US). Largely due to FCC’s inability to enforce its own rulings, we didn’t see much progress for a number of years. Though Nextel has been providing LBS in the enterprise sector, it was only recently with Sprint opening up its APIs for selected developers that we are seeing some LBS based apps for the consumer sector e.g. FindIt. Disney Mobile is also making location a key feature of its offering for kid-tracker types of apps.

Microsoft dominance starts – It has taken a number of years, but shift is noticeable now. With smart phones penetration increasing, Microsoft is starting to dominate the high-end market. A good percentage of new smart phones are running MS software though Linux is also making some inroads in this market (DoCoMo, China). If the battery power issues can be resolved and the OS moves into the sub-$200 market, it will accelerate MS’s dominance of handsets. There was also talk about Opensource OS for mobile devices.

Open gardens – Pretty soon, being “open” will be considered a competitive advantage. At the two extremes are T-Mobile International (which gave up and opened up its greenhouse to the likes of Google) and Verizon (which might be one of the last ones to open up its nursery). Then we have carriers such as Cingular who are slowly but surely opening up access and getting closer to the i-mode model (e.g. recent Myspace announcement)

Misc. – Impatica was showing their solution of running PowerPoint from blackberry. Pretty slick and easy. Another interesting app I learned about was that of using SIM as a token generator for authentication. This can be really handy for corporate security.

Later this week, I am leaving for Korea to meet with some really smart guys in the wireless industry and experience the wireless broadband capital of the world first hand.

Your comments are always welcome.

Copyright, 2006 Chetan Sharma Consulting. All Rights Reserved

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