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2012 Mobile Industry Predictions Survey January 3, 2012

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

2012 Mobile Industry Predictions Survey

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

Download PDF

 

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

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

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

Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what’s to come. Executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain and around the world participated to help see what 2012 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution.

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

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

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

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

  4. Russell Buckley, CMO, Eagle Eye

  5. Marianne Marck, VP – Engineering, Starbucks

  6. John Foster, President, ZED USA

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

  8. Dilip Mistry, Senior Director, Microsoft Asia

  9. Phyllis Reuther, Advanced Analytics Lab, Sprint

  10. Gene Keenan, VP of Mobile, Isobar

  11. Elizabeth Day, Director of Finance, Trilogy International

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

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

  14. Michelle Lee, Director, SK Telecom

  15. Hemant Chandak, Sr. Analyst, Cisco Systems

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

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

Thanks and with warm wishes,

Your feedback is always welcome.

Thanks

Chetan Sharma

Now onto the 2012 Mobile Industry Predictions Survey Results.

2012Survey-a

1. What was most newsworthy in Mobile 2011?

 2012Survey1

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

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

 2012Survey2

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

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

 2012Survey3

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

4. What applications will define 4G?

 2012Survey5

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

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

2012Survey5

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

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

 2012Survey6

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

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

 2012Survey7

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

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

 2012Survey8

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

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

 2012Survey9

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

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

 2012Survey10

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

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

 2012Survey11

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

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

 2012Survey12

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

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

 2012Survey13

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

14. Which enterprise segment will mobile impact the most?

 2012Survey14

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

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

 2012Survey15

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

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

 2012Survey16

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

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

 2012Survey17

Tablets dominate. Period.

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

 2012Survey18

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

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

 2012Survey19

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

20. Who was the mobile person of the year?

 2012Survey20

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

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

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Feb 2012. The next Global Wireless Data Market update will be issued in Apr 2012.

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

US Wireless Data Market Update Q3 2011 December 12, 2011

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

 

 

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

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Summary

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

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

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

Smartphones continued to be sold at a brisk pace accounting for 57% of the devices sold in Q3 2011. Operators are averaging 70% of their postpaid sales as smartphones with Android dominating though iPhone leads in mindshare. The featurephone as a device species is on the verge of extinction.

Mobile Ecosystem Complexity

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

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

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

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

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

Mobile is changing the way we spend

It is very clear that mobile will be at the center of the human evolution for years to come. Mobile collapses time and distance and as such impacts every facet of our lives. While we have come to know the mobile phone as a communications device, their role in our daily lives has been expanding. From checking emails, paying for tickets, sending money transfers, taking pictures of your kids, watching soccer World Cup live, checking commodity pricing, to emergency response to mHealth (mobile Health), mobile devices have become an essential tool to help us navigate our day.

Mobile also plays a key role in how we go about the most basic transaction in a given day that keeps the economy humming – spend. We discussed this and more in the paper “How Mobile Will Change The Way We Spend”  that was released last quarter.

What to expect in the coming months?

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

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

Against this backdrop, the analysis of the Q3 2011 US wireless data market is:

Service Revenues

ARPU

Subscribers

Applications and Services

Handsets

Mobile Data Growth

Global Update

Mobile Future Forward

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

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

Mobile Predictions Survey 2012

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

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Feb 2012. The next Global Wireless Data Market update will be issued in Apr 2012.

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

State of the Global Mobile Industry – Half Yearly Assessment 2011 July 7, 2011

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Connected Devices, Devices, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, Mergers and Acquisitions, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Payments, Mobile Search, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Student Paper Contest, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 6 comments

 

 

http://www.chetansharma.com/globalmobileupdate1H2011.htm

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The big picture

The global mobile industry is the most vibrant and fastest growing industry. We expect the total revenue in the industry to touch approximately $1.3 Trillion in 2011 with mobile data representing 24% of the mix. Global Mobile Data revenues are expected to eclipse $300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues will make up the majority of the overall global data revenues at 53%.

We expect the total number of subscriptions to exceed 6 billion by the end of 2011. The first 1 billion took over 20 years and this last one is going to take only 15 months. The primary growth drivers are India and China which are cumulatively adding 75M new subs every quarter. Indian and China are also entangled in the race to the billion. At the end of Q2 2011, China was ahead by 50M but India is adding subscriptions at faster rate and is likely to eclipse China before Q2 2012. By then, both nations are expected to exceed 1 Billion in total subscriptions making up 31% of the global subscriptions.

In Q1 2011, US became the first major market to exceed the 50% mark in smartphone sales. The global figure stands at approximately 26%. Some operators expect 90% of their devices sales to be smartphones by the end of the year. In terms of the actual smartphone penetration, we expect the US market to eclipse the 50% mark in 2012.

China leads in the number of subs but US dominates in both total and data revenue. A number of emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings.

The number of mobile operators with more than $1B in data revenues will increase to 47 in 2011. This number was only at 13 in 2005.

Japan continues to be the leader in mobile data with NTT DoCoMo, KDDI, and Softbank Japan ahead of the pack in terms of mobile data revenue and data as a % of total ARPU. In 2011, it became the first major market to have more than 50% of its mobile revenue from data services. Next, Australia and the US have made good inroads in the last two years. In fact, if we look at the overall data revenue, US is much further ahead than any nation due to the size of the market.

While India has the highest subscriber growth rate in the world right now, the revenue generating opportunity remain down right anemic compared to other major markets with average dropping down to $3.50 in overall ARPU. Even with significant subscriber base, there is going to be a general lack of opportunity in the market for the next couple of years relative to other markets.

Mobile Trends for 2011

1.Total Global Subscriptions to hit 6 Billion

–India and China racing to a billion a piece

2.Total Global Mobile Revenues to hit $1.3 Trillion, almost 2% of Global GDP

–Top 10 operators control 43% of the global mobile revenues

3.Total Global Mobile Data Revenues to eclipse $300 Billion

–Non-messaging data now owns 53% of the global mobile data revenues

4.Mobile Devices are now exceeding traditional computers in unit sales + revenue

–Majority of the device sales in the US are now smartphones. Device Replacement is shrinking

5.Mobile Broadband (4G) is being deployed at a faster rate than previous generations

–Over 1 Billion broadband connections by 2011

6.Global Mobile Apps revenue has shifted to off-deck

–The decline is directly proportional to the increase in smartphone penetration by region

7.All major markets are consolidating with the top 3 players at 85% of the market

–Regulators will have to be more prudent and proactive about managing competitiveness and growth

8.Mobile Data Traffic will be 95% of the global mobile traffic by 2015

–Many countries are facing spectrum exhaust in the next 5 years

9.Connected device segment is growing at the fastest pace

–Operators will have to quickly adapt their strategies to stay relevant in this segment

10.Several multi-billion dollar opportunity segments are emerging

–Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few

11.Mobile Ecosystem has become very dynamic and unpredictable

–Apple, Google, Amazon, and Facebook have become the most important revenue generating mobile platforms

12. There will be more changes in the next 10 years than in the previous 100

– The value chains will keep disrupting every 12-24 months by the new players and business models

13. Intellectual Property has become a key component of long-term product strategy

– Top 20 control 1/3rd of the overall mobile patent pool

Devices

Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to catch-up on the features but can’t do on the margins. OEMs can grow the pie by bringing products at a better price points that helps attract different demographics to the mix. Microsoft can make good inroads into the space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue.

Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product planning and execution has left their market share in disarray. Nokia’s valuation has been cut into half while the newcomer HTC edged past the industry giant in a remarkable story of the year. Nokia’s release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of Nokia Windows Phones. While the market hasn’t shown much appetite for Windows phone thus far, a good family of devices might be able to slow the loss trajectory and position the combined team for the up-for-grabs 3rd spot in the ecosystem. HP’s acquisition of Palm is finally bringing some new products to the market but the lack of an effective ecosystem means lack of traction in 2011. Given that the computing is shifting to mobile devices, we can expect some of the weaker desktop/laptop players will exit the industry.

Tablets are primarily being used in the WiFi mode because the primary use case is indoors and WiFi gives a better (and cheaper) user experience. Once operators start to roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher but will still be dominated by WiFi overall.

The number of connected devices per subscriber and per family will continue to increase over the course of this decade. As the cost structure and margin profile for these devices will be different, we are likely to measure performance of various operators using margin analysis for e.g. while the ARPU for connected devices is 5-10 times lower than the postpaid subscribers, the margins are typically higher due to lower costs of sales, marketing, support, and subsidy. As such the overall impact is dilutive ARPU but higher margins. So, instead of focusing on just the ARPU, the efficiency of operators will be measured in how well they maintain average margin per user (AMPU) and average margin per connection (AMPC).

Managing the data growth

As a result of the data tsunami, there are two types of opportunities that are being created, one that take advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially.

To be able to stay ahead of the demand, significant planning needs to go in to deal with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won’t be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach and thus bringing the hockey stick curves of data cost more in line with the revenues and thus preserving the margins.

The decision making process within the operator organizations will need to be streamlined as well. Operators should also consider creating a senior post which focuses on both the cost side and the solution side so they can devise and institute a sustainable long-term policy and keep the margins healthy.

Competitive landscape

The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average, the top 3 control 93% of the market in an given nation. It doesn’t matter if the market is defined by “controlled regulation” like in China, Korea, and Japan or if it is “open market” driven in markets such as the US, UK, and India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the mobile market.

Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is settling into a “top 3” operator market. India’s brutal price wars are going to trigger the consolidation in the next 12-24 months and will eventually settle into a structure similar to other markets.

The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are 46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some semblance of equilibrium in the market the top operator shouldn’t have more than 50% of the market share and the number three player shouldn’t have less than 20%. This helps create enough balance in the market to derive maximum value for the consumer.

Mobile operators will face some hard choices in developing and protecting the role they want to play in a given region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA margins, investment required over the long-haul, how investors view them, and on the competitive landscape of the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this decade that further define “communications” and “computing” as we know it.

Apps and Services

As expected, mobile commerce and payment discussions are dominating the ecosystem. There is clearly a lot of investment and marketing dollars being spent. However, the traditional payments networks are largely intact. The new opportunities are being built on top of the existing payment platforms with convenience (Square) and offers and advertising (Google Wallet, ISIS, Groupon). Beyond payments, mobile is getting ingrained into every vertical and every facet of our lives – from healthcare to education, from energy to entertainment, from communication to socialization. And we are in the early innings of figuring out the business models, ecosystem leaders, user behavior, regulatory needs, and the overall impact on society.

Ecosystem Dynamics

It is very clear that the ecosystem dynamics can change very quickly, one just can’t take the competitive and friendly forces for granted. In the past, the silos and segments were clearly defined with little overlap. However, over the course of last couple of years, players have been migrating and surfing in segments across the board - from Apple to Visa, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer’s pocketbook. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft’s enterprise business. One product launch, one acquisition, can change the game in an instant.  And this is only the beginning.

Mobile is fundamentally reshaping how we as consumers spend from housing and healthcare to entertainment and travel, from food and drinks to communication and transportation. Mobile not only influences purchase behavior but also post purchase opinions. When the share button is literally a second away, consumers are willingly sharing more information than ever before. Mobile is thus helping close the nirvana gap for brands and advertisers who seek to connect advertising to actual transactions. The long-term battle is however for owning the context of the users. Having the best knowledge about the user to help drive the transaction is the simply the most valuable currency of commerce.

Mobile Future Forward

We will be discussing the global mobile ecosystem – the challenges and the opportunities at our annual mobile thought-leadership summit – Mobile Future Forward - brought to you in partnership with our terrific partners – Qualcomm, Millennial Media, Real Networks, AT&T Interactive, Synchronoss Technologies, OpenMarket, Ericsson, and Openwave. Hope to see you in Seattle on Sept 12th.

Some of the distinguished guests include:

Abhi Ingle, VP – Advanced Mobility, AT&T Wireless; Amit Gupta, SVP and CTO, INQMobile; Bob Gessel, VP/Head of Technology and Network Strategy, Ericsson; Braxton Woodham, Head of Engineering, AVOS; Carlos Domingo, CEO, Telefonica; Charlie Herrin, SVP - Products and Technology, Comcast; Dale Nitschke, former President, Target; Danny Bowman, President - Connected Devices, Sprint Nextel; David Messenger, EVP, Head - Online/Mobile, American Express; Erik Moreno, SVP, Fox; Gibu Thomas, SVP - Online/Mobile, Walmart; Glenn Lurie, President, AT&T Wireless; Hank Skorny, Chief Strategy Officer, Real Networks; Janet Schijns, VP, Verizon Wireless; Jason McKenzie, President, HTC-Americas; Jay Emmet, GM, OpenMarket; Jeremiah Zinn, EVP, MTV; Jerry Batt, CIO, PulteGroup; John SanGiovanni, Cofounder, Zumobi; Ken Denman, CEO, Openwave; Ken Wirth, President, Alcatel Lucent Wireless; Kris Rinne, SVP - Networks, AT&T Wireless; Mark Rolston, Chief Creative Officer, Frog Design; Matt Oommen, President, Reliance Communications; Mikael Back, VP of Products and Portfolio Management, Ericsson; Mike Mulica, President, Synchronoss Technologies; Paul Palmieri, CEO, Millennial Media; Prof. Cliff Nass, Human Computer Interaction, Stanford University; Rob Glaser, Partner, Accel; Sanjiv Ahuja, CEO, LightSquared; Stephen Bye, CTO, Sprint; Steve Mollenkopf, EVP and Group President, Qualcomm; Subba Rao, former CEO, Tata DoCoMo; Suja Chandrasekaran, CIO, Timberland; Will Hsu, Chief Product Officer, AT&T Interactive

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

Your feedback is always welcome.

Thanks and have a great 2H 2011.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2011. The next Global Wireless Market update will be issued in Jan 2012.

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

New Research: Competition and the Evolution of Mobile Markets April 28, 2011

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Devices, Enterprise Mobility, European Wireless Market, Gaming, General, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Networks, Patents, Privacy, Smart Phones, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 2 comments

Competition and the Evolution of Mobile Markets

A Study of Competition in Global Mobile Markets

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http://chetansharma.com/mobilecompetition.htm

Over the course of the last decade, mobile communications has become an essential part of the global fabric of evolution. With almost 70% global subscription penetration as of 2010, mobility is being embedded into almost every facet of our lives. Mobility is also spreading across verticals whether it is m-pesa in Kenya or SMS based counterfeit medicine detection in Ghana or paying for your coffee using your NFC enabled mobile phone in a Tokyo café or watching the cricket world cup broadcast while hiking the Yangtze river near Tibet. Consumers expect access to information everywhere they are and the ecosystem is responding with continued innovation, which has become extremely critical in managing the competitiveness of nations.

It is also apparent that some of the innovation and market dynamics has been evidenced by the competitiveness of these markets at different levels – network, devices, and services. While the market entry conditions into the devices and software services markets have gone through significant overhaul this last decade, the competitiveness framework of the mobile networks has been more structured and controlled in many instances.

Given the importance of the mobile network infrastructure to every nation’s competitiveness, security, and productivity, it is useful to understand how the “competitive mobile markets” are formed. In theory, the perfectly competitive markets are in the best interest of the consumers as they provide the best value given the competitive dynamics and the equilibrium provides good checks and balances for the ecosystem.

The global mobile networks have shown a remarkable adherence to the “Rule of Three” which states that in any mature industry, 3 top players dominate the market. Sometimes it has been dictated by the regulators and in other instances by the markets. Some markets like in Europe have settled into a state of equilibrium while other hyper growth markets like India are shuffling to find the right balance.

The elements of globalization are also shaping how mobile network operators grow. The regulators and the political class are increasingly looking at mobile networks as national assets and any foreign ownership generally goes through tremendous scrutiny.

Having worked in major mobile markets around the world, we have been intrigued by the framework  for a competitive market and this is the theme we explore in this working paper. Having the front row seat in an industry that is growing stupendously has given us some unique perspective on the competitive forces at work in the mobile space. We studied the competitive landscape in 40 top mobile markets around the globe.

This paper presents the analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets.

Download Paper (45 pages, 2MB)

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

US Mobile Data Market Update Q4 2010 and 2010 February 28, 2011

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Usability, Networks, Smart Phones, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Data Market Update Q4 2010 and 2010

http://www.chetansharma.com/usmarketupdate2010.htm

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The US wireless data market grew 5% Q/Q and 23% Y/Y to reach $14.8B in mobile data service revenues in Q4 2010. The final tally for the 2010 year was $55B and we expect this to increase by 22% to $67B in 2011.

The US mobile subscriptions officially crossed the 100% penetration mark in Q4 2010.

Of all the segments, the connected device category registered the highest growth at 55% while the postpaid subscriptions grew by only 3% for the calendar year. Connected devices (including tablets, M2M, telematics, eReaders, etc.) now account for 7% of the base.

A significant shift

2010 marked the milestone of the start of a new computing and communications era. For the first time in the US, the smartphones shipments exceeded the traditional computer segments (that consists of desktops, notebooks and netbooks). In 2011, the smartphone segment along with the connected devices (tablets and eReaders) will not only exceed the computer segment in unit shipment but more importantly in the overall revenues as well. Of course, these categories are merging and the lines are blurring but it is good to take stock of the transition which will create new ecosystems and decimate the old ones over the course of this decade.

The evolution of connected devices

The connected devices category is the fastest growing segment of the market and while the ARPUs are low, due to higher margins this segment will prove to be the most profitable in the coming years. By the end of 2011, connected devices will be commanding double digit market share. However, not all sub-segments are going to be successful in the operator channel until multi-device data pricing plans are introduced. Most of the tablets and eReaders can work well with only WiFi most of the times. Monthly data plans make sense for enterprise users but not for consumers who might use these devices occasionally. As such tablets will be more successful in direct and traditional retail channels.

Operators who start to bundle multiple devices by single data plans and data buckets are going to see a better yield in this category (We will be discussing the connected devices universe in our upcoming Mobile Breakfast Series event in April).

Similarly, OEMs who rely on the operators for sell-through of tablets/eReaders will see low volumes vs. players who have more diverse distribution channels (Apple and HP). We do expect multi-device or family data plans to start being introduced in the US market in 2011.

As we had mentioned in our last research note, iPad (and other tablets) are making Netbooks irrelevant. In fact, tablets are starting to eat into the laptop category as well. As expected, the device has been a hit with many enterprises with mobile workers. Many enterprises are giving out iPads to their workforce instead of laptops or Netbooks.

At CES 2011, hundreds of tablets were introduced. While the total number of releases was noteworthy, we expect iPad to dominate the space in 2011 as competitors will find it hard to compete across all dimensions - price, performance, ecosystem, distribution, and brand power.

Mobile Data Consumption

Mobile data consumption continued to grow across all networks increasing 2-5 times on major US networks. Many of the superphones introduced in 2H10 are clocking 1-1.5GB/mo average. The average data consumption in the US at the end of 2010 was 350 MB/mo. Thus, while the data revenues for the year increased 23%, the mobile data traffic grew 132%.

The significant rise in the smartphones sales and usage in the US market (over 50% devices sold in the US in 2010 were smartphones almost twice the global average) means that by the end of 2011, in the US, the smartphones will consume more data than the data cards for the first time. We also expect US to become the number 1 nation in mobile data consumption this year edging out Sweden. A detailed treatment of the subject can be found in our "Managing Growth and Profits in the Yottabyte Era"  paper. Another research update on the topic will be released in 1H11.

The center of gravity has shifted back to the US

As I mentioned in my Time magazine interview earlier this month, there is no question that the center of gravity of the mobile market has shifted back to the US. The Nokia-Microsoft announcement was a wake-up call to many in the industry who were in denial. The innovation is happening all around the world and in many areas other countries are years ahead. The markets are growing faster in India, China, and elsewhere. However, the coordinates of what’s next have clearly changed in the last three years. The software innovation and the next generation network launches in the US are laying the foundation of a solid mobile decade.

US is also the most dominant market in terms of revenue generation for the industry. While the US represents less than 6% of the subscription base, it accounts for over 21% of the data revenues with Verizon Wireless becoming the number one mobile data operator in 2010 edging past the decade long leader NTT DoCoMo. AT&T also went past China Mobile to gain its current number three ranking. By the end of 2013, the US market will account for 25% of the global mobile data services revenues  (We will have a detailed analysis of the global markets in our upcoming research note in march).

Nokia-Microsoft partnership

Nokia’s market problem can be summed up thusly - “While Nokia sold 10 times more devices than Apple in 2010, its market cap is 1/10th that of Apple.” It has been clear for some time that things had to change at Nokia.

Weeks leading up to the Mobile World Congress were rampant with curiosity of who will Nokia marry to continue its next phase of device journey. The multi-billion dollar offering from Microsoft proved too hard to resist for Nokia. This news completely dominated the MWC chatter and the topic comes up invariably in many conversations since then. One has to give points to Nokia for decisiveness and for moving quickly under the pressure.

It is also indisputable that the deal is a significant win for Microsoft who has been looking to come back into the game. However, impact on Nokia remains uncertain. While there were risks with Android, going with Win7 is not an assured path to resurrection either. It all comes down to execution. Can the troops be rallied to produce a slew of competitive devices quickly that consumers and operators will find attractive?

Microsoft understands developers better than most and the two companies can bring in tremendous scale and complementary toolsets to attack the market. Nokia has significant talent and it’s a proud company but jumping into the shark-infested cold waters miles away from the shore will require all the stamina, good weather, and skill it can muster to make landfall before thanksgiving.

MeeGo is likely to go back into Intel’s camp and might look interesting to the likes of LG, Samsung and even Motorola though creating a new ecosystem is a tall order. Never a dull moment in the industry, is there?

Impact of iPhone on AT&T

It finally happened. The Verizon iPhone has kept the media busy for the last 3.5 years. It was quite an anticlimactic moment when the device finally came to the 2nd operator in the US. It was inevitable that one of the longest exclusive relationship in the wireless world will come to an end. The  iPhone singlehandedly turned around AT&T relative to Verizon in the net-adds race. For 10 quarters leading up to Q2 2007, AT&T was adding less net-adds compared to Verizon, in fact the cumulative net-add loss was 3.7 million subs on an average of 374,000 subs per quarter. As soon as the iPhone was launched in Q2 2007, AT&T started adding more net-adds compared to Verizon with the 14 quarter cumulative net-add difference close to 6 million subs on an average of 426,000 subs per quarter.

What to expect in the coming months?

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

Android and iOS are completely dominating the developer and ecosystem mindshare and the race to become a viable 3rd option is on. Operators would love to see another competitive force emerge in the market.

All this has setup an absolutely fascinating 2011 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the  industry is going to evolve in the next decade in our Sept 15th mobile thought leadership summit – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. More details to come.

US is also leading the way in smartphone sales. In Q4 2010, 48% of the devices sold in the US were smartphones compared to 25% globally. The fast pace of device introduction has catapulted the agile players like Samsung and HTC to the forefront while others like LG and Sony Ericsson have lost ground. By singularly focusing on Android, Motorola did quite well in 2010 but 2011 is going to be challenging.

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

While 2010 started quite active on the regulatory front as the national broadband plan was unveiled in March little substantive progress has been made w.r.t. the spectrum, net-neutrality, and other broadband related issues. The matter has swiftly moved to courts where it will take months before anything useful comes out.

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

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

Against this backdrop, the analysis of the Q4 2010 and 2010 US wireless data market is:

Service Revenues

ARPU

Subscribers

Applications and Services

Handsets

Data Traffic

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in May 2011. The next Global Wireless Data Market update will be issued in Mar 2011.

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

2011 Mobile Predictions Survey Results January 3, 2011

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

2011 Mobile Predictions Survey

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

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

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

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

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

1. Jared Cornfeld, Industry analyst, FCC

2. Abhi Rele, Marketing, Microsoft

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

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

5. Peter Jarich, Service Director, Current Analysis

6. Darren Austin, Director of Mobile, Expedia

7. Craig Fisher, Software Client Leader, IBM

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

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

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

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

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

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

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

Be well, Do Cool Work, Stay in touch.

Thanks. With warm wishes,

Your feedback is always welcome.

Thanks.

Chetan Sharma

Now onto the 2011 Mobile Industry Predictions Survey Results

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

ps2011_1

ps2011_2

What will be the biggest stories of 2011?

ps2011_3

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

When will Verizon iPhone launch?

ps2011_4

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

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

ps2011_5

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

Will Android tablet sales exceed iOS tablet sales in 2011?

ps2011_6

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

Who will make the biggest mobile acquisition in 2011?

ps2011_7

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

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

ps2011_8

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

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

ps2011_9

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

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

ps2011_10

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

Who will be the mobile come back story of 2011?

ps2011_11

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

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

ps2011_12

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

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

ps2011_13

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

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

ps2011_14

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

Which category will generate the most data revenues in 2011?

ps2011_15

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

What will help mobile cloud computing gain traction in 2011?

ps2011_16

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

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

ps2011_17

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

What will be the breakthrough category in mobile in 2011?

ps2011_18

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

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

ps2011_19

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

Which enterprise segment will mobile impact the most?

ps2011_20

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

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

ps2011_21

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

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

ps2011_22

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

Who was the mobile person of the year?

ps2011_23

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

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

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Mar 2011. The next Global Wireless Data Market update will be issued in Mar 2011.

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

US Mobile Data Market Update Q3 2010 November 7, 2010

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

US Mobile Data Market Update Q3 2010

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

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Executive Summary

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

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

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

The role of connected devices

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

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

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

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

Mobile Data Consumption

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

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

What to expect in the coming months?

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

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

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

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

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

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

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

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

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

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

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

Against this backdrop, the analysis of the Q3 2010 US wireless data market is:

Service Revenues (Slides 7, 17)

ARPU (Slides 8-11)

Subscribers (Slides 12-15)

Applications and Services

Handsets

Data Traffic (Slide 16)

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

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Mar 2011. The next Global Wireless Data Market update will be issued in Dec 2010. Be sure to participate in our annual mobile industry predictions survey coming out in Dec 2010.

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

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

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

CTIA Enterprise and Applications 2010 Wrap-up

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

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

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

The Mobile Ecosystem

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

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

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

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

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

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

Mobile Enterprise - The unglamorous cousin of the consumer segment

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

LTE

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

Mobile Devices: Competitive landscape

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

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

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

Connected Devices

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

Mobile Apps vs. Web

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

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

Some of the other news worthy items were:

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Nov 2010. The next Global Wireless Data Market update will be issued in Oct 2010.

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

Mobile Future Forward 2010 Summit Summary September 20, 2010

Posted by chetan in : 3G, 4G, AORTA, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Mobile Advertising, Mobile Applications, Mobile Ecosystem, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Wallet, Networks, Partnership, Patents, Privacy, Smart Phones, Speaking Engagements, Student Paper Contest, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

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Summit Summary

In proud partnership with

Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, Openmarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce

MFF_Summary_s

Download as pdf

Earlier this month, Chetan Sharma Consulting hosted its first mobile thought leadership executive summit – Mobile Future Forward. The sold-out event attracted leaders from the global mobile industry across the ecosystem to discuss and debate the future of mobile. This note summarizes the various discussions from the summit.

Some of the key themes discussed by the speakers and panelists were:

1. The Mobile Ecosystem is becoming more complex and competitive by the day

2. Broadband is exploding around the globe, Nation’s competitiveness and prosperity is being defined by the quality and depth of Broadband

3. Mobile Device is becoming central to our existence

4. Understand the user, generational usage patterns, geographical differences and customs

5. Communication modes are evolving and morphing rapidly

6. Emerging Devices are taking the lion of share of growth in some western markets

7. Given the devices and networks, content, media, services are moving to the cloud

8. New experiences are being introduced that will impact monetization and interaction with computing and technology

9. World is becoming flatter by the day

10. Mobile as a platform is booming and several industry verticals are exploding

11. Context and Analytics are key currency for tomorrow

12. There is significant reallocation of revenues underway

13. The fight for developer mind share is getting intense

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As technologists, we get too enamored with the technical details and specs but what’s most important is how can technologies be applied to make lives of every day consumers better. If a new solution or a service only benefits or thrills a few, it is destined to miss the mass market. No one understands the mass market better than Procter & Gamble, and no company in the world touches more consumers with more products than Procter & Gamble (with over 40-50 billion items per year). Technology plays a central role in how P&G thinks about engaging consumers. Last year, I had the privilege of spending some time with Steve David, our first keynote speaker. His understanding of the interplay between technology and consumer interaction and behavior is very deep and his enthusiasm for using technology to change the world infectious. Steve spent over 30 years at P&G , the final assignment as P&G’s CIO responsible for their Internet Strategy.

Steve laid out the case for Advocacy being the new measure of marketing. It has a lasting impact on the brand, the sales, and the relationship with the consumer. Companies who have a better understanding of the customer via sophisticated analytics and can quickly take the solutions and products that consumer want and need gain long-term competitive advantage. Insights from the market must be processed in real-time that can empower decision making at every level of the company. And mobile is central to this strategic shift. Mobile is being used to attack the counterfeit problem worldwide, in formulating personal recommendations as trust in brands erodes, in collecting analytics, and engaging interactions with products and services using NFC, etc. Steve ended with the old Chinese proverb, “When the wind changes direction, there are those who build walls and there are others who build wind mills.” What are you going to build?

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Fred Devereux, President, AT&T West in his address on “The Next Big Thing” honed in on the emerging connected devices ecosystem and how AT&T is retooling itself to take advantage of the boom. The AT&T Emerging Devices organization is setup to behave and operate like a startup with hundreds of devices being approved in a short amount of time. The new generation of connected devices range from eReaders, PNDs, Telematics, Cameras, Camcorders, Picture Frames, Tablets, Tracking Devices, Gaming Devices, and Smart Meters. While the ARPU of these connection is low, the margins are high due to negligible overhead in operations, sales, and marketing. The importance of this category is evident from the research data we reported in our last quarterly report which indicated that there are more connected devices being added than postpaid net-adds and operators are starting to list them as separate line items in their financial statements. Fred also discussed AT&T’s plans to deploy LTE in 2011-.

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Dr. Genevieve Bell, Fellow at Intel is one of the most fascinating anthropologists out there with an acute sense of technology evolution and how humans react and adapt to changes around them and how technology needs to adapt to humans and their needs in different habitats. She had some interesting stats from her research e.g. the household sizes vary significantly by countries – India has only 5% of the households as single-person households while France and Germany have over one third households as single-person. Boomers will represent more than half of the population of China, Japan, and EU by 2012. These demographic shifts have significant impact on how technology is used and how media is consumed. The keynote was filled with priceless anecdotes and research items that informed and gave the technologists something to think about and that the technologists are not the proxy for rest of the population. Her book “Telling Techno-Cultural Tales” is being published by MIT Press and is coming out next year. So, be on the lookout for that.

Mobile Advertising is in the news lately in the US. About 11 years ago, a young man named Takayuki Hoshuyama was making waves in the mobile advertising space. In 1999, he helped found D2Communications - a successful joint venture between the largest advertising firm in Japan - Dentsu and the largest and one of the most innovative operator on the planet - NTT DoCoMo. He was one of the original members of the Mobile Advertising Team for the i-mode service 11 years ago. In June, he was appointed CEO of D2C. Hoshuyama-san talked about the future of mobile advertising. Japanese mobile ad market is over $1B (though it represents only 1.7% of the overall ad spent) and with the advent of 4G/LTE the opportunities are enormous. Display outscores Search by 3:1 in ad revenues. Mobile is some embedded in Japanese culture that it is just assumed just like my good friend and coauthor Dr. Yasuhisa Nakamura, then CTO of NTT DoCoMo wrote back in 2002 in our book “the wireless infrastructure will become indistinguishable from air i.e. omnipresent”

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Hoshuyama-san also talked about the evolving role of the operators in the ecosystem with some of them focused on becoming the cloud service providers and broadcasters.

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After the keynotes, we shifted to panel discussions. The first one dealt with the disruptive forces in the ecosystem with Mike Sievert, Chief Commercial Officer, Clearwire, Lixin Cheng, CEO, ZTE USA, and Subba Rao, CEO, Tata DoCoMo – three leaders who are disrupting the status quo. All three agreed that the openness of Android will make it the most dominant OS in the coming years. Lixin talked about how the infrastructure business is becoming a software business with SDR design of technology standards and evolution. He also suggested that we as an ecosystem need to simplify the business models and the consumer purchasing process of bandwidth and connectivity before the connected device revolution takes significant hold. India is the fastest growing market but the ARPU levels are 1/10th of what they are in the US. Given that the market just spent over $100B on the 3G auction, the investment recovery model is unclear and the market is ripe for a big shakeout. Telenor, having lost over half a billion dollars is desperate to get out of the market. The pains of globalization are showing up in other regions as well. Mike mentioned the high average data consumption at Clearwire (currently at 7 GB/mo) – clearly a precursor of what’s to come (our research shows the national average was 230 MB/mo as of Q2 2010). In terms of new technology areas, the panel was interested in products that help with spectrum efficiency, reducing the cost structure, and in improving the battery performance.

As part of the Mobile Future Forward Initiative, we had also worked on two other projects:

· The Mobile Future Forward Book that consisted of thought provoking essays on the future of mobile from the speakers of the summit and

· The global student paper contest that invited the papers form university students from the around the world

It required enormous collaboration with the folks around the globe in a very short amount of time. We are very proud of the outcome.

Mobile Future Forward Book

The second project related to a limited edition book by Chetan Sharma Consulting (published by Futuretext) exclusively for the event. Some of these summit speakers put their insights and ideas on paper that resulted in this book. We are very grateful to the authors (and their respective organizations) who carved out time from their busy schedules to pen some really insightful commentary on how they see the mobile industry evolve both holistically and in the various segments of the ecosystem. While the views are quite diverse and bring together perspectives from different angles, everyone agrees, 2010-2020 will be one heck of a time period for innovation.

 

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The book has the following pieces:

1. The Next 10 Years - 15 Trends That Matter - Chetan Sharma

2. Sustainability in a Mobile World - Stephen David

3. Managing The Mobile Data Explosion - Wim Sweldens

4. Show Me The Money! - Brian Shepherd

5. Mobility Revolutionizing Every Product, Service, and Process - Russ McGuire

6. How Constant Connection Is Changing Our World - Ken Denman

7. 4G: The Next Big Thing - Mike Sievert

8. The Untapped Potential of Mobile Advertising and Marketing - Takayuki Hoshuyama

9. Mobile Operators are at the Center of Mobile Advertising - Krishna Vedati

10. Mobile Challenges - Three Imperatives in the Changing Game - Russ Shaw

11. Interacting With Everyday Things - Amir Mashkoori

12. In The End, It’ll All Go Through “Browse and Buy” - Anil Malhotra

13. The Future of Mobile: 5 Trends That Matter Most - Jay Emmet

14. India’s Mobile Future Forward - Subba Rao

15. Cellphone As The New Computing Platform - Sailesh Chutani

16. What 5 billion Phones Could Mean for Health Literacy - Jon Stross

17. Privacy: From Compliance To Competitive Advantage - Sarla Sharma

18. Managing Growth and Profits in the Yottabyte Era - Chetan Sharma

We will be giving out some copies of the book during our Annual Predictions Survey in Dec, so be on the lookout for that participation request.

Student Paper Contest

Despite, the summer recess, we received an a very positive response from students around the globe. The top six entries went through rigorous scrutiny of our judges:

1. Pankaj Kedia, Head of Mobile Ecosystems, Intel

2. Subba Rao, CEO, Tata DoCoMo

3. Len Barlik, VP, Sprint Nextel

4. Jeff Giard, Director, Clearwire

5. Paul Palmieri, CEO, Millennial Media

6. Matt Oommen, CTO, Sprint Nextel

7. Paul Struthers, Head of Regional Marketing, Amdocs

The top two students were Lun Huang and Smruthi Pariccha and they were invited to join us for the event and receive their prizes.

The final ranking was as follows:

1. UWB Based on Multi-Band MC-CDMA and Magnetic Near-FieldLun Huang, Electrical and Computer Engineering, Illinois Institute of Technology, US

2. Ubiquitous Peer Proximity Awareness in Mobile EnvironmentsSmruti Parichha, Dept of Computer Science and Engineering, University of California, Riverside, US

As a mobile strategist, I get to see some of the cool technologies before they hit the market. For the demo this year, we selected Microvision’s cool projection technology where you can interact with the projected screen in thin air by waving hands. Yes, you got it. You had to be there to see it. It was shown for the first time to the general public and we are thankful to Selvan Vishwanathan and Andrew Rosen, the two engineers (and their colleagues) behind this exciting emerging technology that will expand the horizons of mobile interactivity and media engagement.

The afternoon sessions started delving into specific topics and details that were touched upon at the high level during the morning sessions. Each of the panels had an absolutely stellar cast who are deeply engaged in defining the mobile ecosystem right now.

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Network and Mobile Data Evolution 2010-2015

Wim Sweldens, President - Wireless Division, Alcatel-Lucent,

Neville Ray, Chief Network Officer, T-Mobile,

Bob Azzi, Senior Vice President, Sprint,

Matt Bross, CTO and Vice Chairman, Huawei

Sean Cai, Vice President - Advanced Wireless Technology, ZTE,

Ken Denman, CEO, Openwave (moderator)

There is a big debate about network evolution - how fast does LTE need to come to the market? Will LTE be enough to help with the data tsunami. The consensus was a resounding No but LTE brings in some key capabilities like an all-IP network that enables new capabilities for multimedia applications and services, lowers the per bit cost, and reduces latency for superior user experience. Of course, the RAN is only part of the story, the backhaul needs to get upgraded as well to handle the load. The panel also emphasized simplicity in services without making things burdensome for the consumer with new technology. The other area of concern is of course the spectrum. Will there be ever enough spectrum? The issue is more acute for some operators. Finally, the focus need not to be on the bandwidth or the latency, from a user’s point of view, it is always about the services and things they can do with more bandwidth and lower latency.

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Future of Content, Engagement, and Monetization

Louis Gump, Vice President - Mobile, CNN,

Omar Javaid, Vice President, Converged Media, Motorola (moderator),

Paul Palmieri, CEO, Millennial Media,

Rob Glaser, Chairman, Real Networks and Partner, Accel

Superphones and smartphones have changed the landscape for content, engagement and monetization. Superphones are most open and it is reflected in the results, more engagement and higher app usage. Apple/Android have also put US back in the leadership role when it comes to devices. CNN has seen high degree of non duplicated reach and reach is king when it comes to mobile advertising. The ad platforms are going into the next stage of evolution with more multimedia, better monetization opportunities, and higher value for the consumer. For content providers, ads can’t be the only strategy to generate revenue, subscriptions and/or micro transactions need to be part of the equation as well.

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The Balance of Privacy and Monetization from Consumer Data

Krishna Vedati, Senior Vice President, AT&T Interactive,

Chris Murphy, Head of Digital Strategy, adidas

Dr. Nitin Shah, CEO, Feeva,

John Giere, Senior Vice President, Openwave,

Jeremy Lockhorn, Vice President - Emerging Media, Razorfish (moderator)

It is a complex issue and our insightful panel talked through the intricacies and the balance of monetizing using consumer data while meeting user’s expectations on privacy. One has to give something of value to the consumer before they trade up. Advertisers like adidas want to move from 1-2-many to 1-2-1 relationship with the consumer that increases the volume and quality of the transactions. The valuable variables to track are location, propensity to buy, past actions, traffic inputs, etc. Discovery and recommendations also become important part of the whole process. Of course, regulators are eager to jump in as well. It will be one of the key issues defining the industry landscape over the next 5 years.

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mHealth - The Impact on Society and Global Health

Dr. Sailesh Chutani, CEO, Mobisante (moderator)

Jon Stross, General Manager and VP, Babycenter.com

Tim Wood, Director, Grameen Foundation

Greg Brandenberg, CEO, Columbia Basin Health Association

Dr. Suzanne Clough, Chief Medical Officer, Welldoc

mHealth is one of those areas which has been talked about for a long time and where mobile is starting to have a truly disruptive run at the industry. While the regulations and the dinosaur health care industry have been slow to adapt, there are a number of innovative companies like Welldoc, Babycenter.com, Mobisante, and others who are forcing rethink and change in the status quo. Greg’s CBHA is forced to think differently and has looked to technology to solve their challenges. Serving in the rural areas of WA state, his team has been testing out new solutions such as cell phone based ultrasound system from Mobisante that is 1/10th the cost of what GE sells for. It is much more portable and flexible and works well with the field work force. Tim’s Grameen Foundation is similarly leading the charge in nations like Ghana where mobile has been used to solve real-life health issues. Jon’s Babycenter has been expanding in other regions and increasing revenues at the same time. However, the test results and trials can still take inordinate amount of time (it was 3 years for one of the trials). The opportunity is immense but regulators, healthcare industry, pharma giants, and the rest are starting to come to grips with the role that mobile can play in transforming lives and P&Ls.

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Mobile Cloud Computing - At the Tipping Point?

Hank Skorny, Senior Vice President - Media Cloud Computing, Real Networks

Brian Shepherd, President - Mobile Services and Marketing, Amdocs

Marianne Marck, Senior Vice President, BlueNile

Mike Wolf, Vice President - Research, GigaOM (moderator)

Erez Yarkoni, Chief Information Officer, T-Mobile

Cloud is changing IT and cloud is going to change mobile media. It helps take out some of the complexities of media consumption, management, and sharing for the consumers and provides a lower cost structures for the media companies. There are opportunities for operators to provide cloud based services at many levels - storage, media, billing, bandwidth, profile, analytics, network intelligence and so on and so forth. Some are easier to implement while others requires more investment and change in DNA. From a developer’s perspective, cloud based services will be ideal to increase reach but we are not there yet as the capabilities of the browser are not comparable to the native environment on platforms like iOS and Android. Better user experience is essential and developers won’t compromise.

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Evolution of Communication and Social Interaction

Mario Queiroz, Vice President - Product Management, Google

David Weiden, General Partner, Khosla Ventures

Robin Schofeld, Principal, Booz&Co (moderator)

Erick Tseng, Head of Mobile, Facebook

Pankaj Kedia, Head of Mobile Ecosystems, Intel

The panel delved into how the communication ecosystems might evolve. While there is discussion about open and closed (too much at times), it is about executing on a strategy that touches the most number of consumers. The closed gardens of Apple is quite dominating and so is the evolving Android ecosystem which is relatively open. At the end of the day, developers are looking to make a buck with the least amount of resources and reach the most of amount of users. Cloud based communications services are about to change the landscape in a big way. Google and Facebook both have had good successes and both suggested that we are just getting started and more innovation is going to come in the form of personalization and social interaction. Operators while ceding some of the communication territory can still have a viable broadband business. As far as social on mobile is concerned, we are still in the early days with lots of opportunities to enhance and engage.

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Internet of Things - Emerging Ecosystems

Amir Mashkoori, CEO, Kovio

Danny Bowman, President - Integrated Solutions Group, Sprint

Mark Selby, Vice President - Industry Collaboration, Nokia

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Abhi Ingle, Vice President - Industry & Mobility Application Solutions, AT&T

Peter Koo, Vice President, Ericsson

The fact that there are more mobile phones than toothbrush brings home the point of the pervasiveness of mobile around the globe. The panel gave several examples of how “connectedness” is spreading across other electronic devices as well e.g. in Netherlands, 30K home care workers are equipped with NFC enabled devices which help interact with the patients (opens the door as well) without the need for paperwork, the records, helps with navigation. Overall result - happier workers, higher efficiency, and reduced carbon emission. The mobility for “connected devices” will try to leverage all RF radios as needed - 3G, 4G, Bluetooth, WiFi, Zigby, etc. Digital signage is emerging as a new area for consumer interaction and information. Some of the industries are on the verge of significant change - e.g. insurance where car insurance rates are given based on driving habits learned via telemetry vs. the old actuary table based rating systems. NFC is also enabling a lot of commerce opportunities by bringing the online world together with the physical world. However, as the ecosystem evolves, we need to also worry about QoS, security, and reliability concerns that various vertical industries have. Of course, the net-neutrality debate impacts the evolution. There are several scenarios where prioritization of data traffic is essential in emergency situations (ambulance transmission, fire fighting, etc.).

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At the Intersection of Gaming, Social, and Commerce

Tim Chang, Partner, NVP (moderator)

Prashant Fuloria, Director - Facebook Credits, Facebook

David Marcus, CEO, Zong

Andrew Lacy, Senior Vice President, Disney Games

Alex Tokman, CEO, Microvision

Micro transactions is the new currency that scales up to billions of dollars in gaming and social networking. Free drives interest and the core 2-5% drive the revenues. If you ask for payment up front, virality component fizzles and the longevity declines. iTunes has been the gold standard for payments, carrier billing is starting to shape up and it will benefit the developers. HTML5+ in theory makes sense and is nice enhancement but the app experience is compelling for users. Discovery continues to be the sore spot and the burning opportunity. Whichever platform and mode of operation helps developers make more money, that’s where the momentum will shift. Today it is the iPhone but rival models are starting to pop up.

Our heartfelt thanks to everyone who helped in making Mobile Future Forward successful especially the sponsors (Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, OpenMarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce), participants, the moderators, and the speakers. Thanks to Caroline Lewko and David Smith for taking good notes. Planning for Mobile Future Forward 2011 is underway. Until then, best wishes and good luck in your pursuits, and we hope to see you next year. Thank You.

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US Mobile Data Market Update Q2 2010 August 10, 2010

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

US Mobile Data Market Update Q2 2010

http://chetansharma.com/usmarketupdateq22010.htm

Download PPT (1 MB)

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Executive Summary

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

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

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

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

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

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

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

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

All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the  industry is going to evolve in the next decade in our Sept 8th event – Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. Hope you can join the discussion.

What to expect in the coming months?

31% of the US subscription base is now smartphones.

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

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

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

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

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

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

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

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

Against this backdrop, the analysis of the Q2 2010 US wireless data market is:

Service Revenues (Slides 7, 16)

ARPU (Slides 8-11)

Subscribers (Slides 12-14)

Applications and Services

Handsets

Data Traffic (Slide 15)

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

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

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

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

Opportunities in Mobile

Mike Sievert, CCO, Clearwire

Dr. Genevieve Bell, Fellow, Intel

Shi Lirong, President, ZTE

Subba Rao, CEO, Tata DoCoMo

Evolution of Communication/ Engagement

Christopher Dean, Chief Strategy Officer, Skype

Erick Tseng, Head of Mobile, Facebook

Mario Queiroz, VP, Google

David Weiden, General Partner, Khosla Ventures

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

Your feedback is always welcome.

Thanks.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Nov 2010. The next Global Wireless Data Market update will be issued in Sept 2010.

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

Announcing Mobile Future Forward Executive Summit June 14, 2010

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

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

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

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

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

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Glenn Lurie, President, AT&T

Subba Rao, CEO, TataDoCoMo,

Mike Sievert, Chief Commercial Officer, Clearwire

Louis Gump, VP Mobile, CNN,

Paul Palmieri, Founder and CEO, Millennial Media

Dr. Sailesh Chutani, CEO, Mobisante

Abhi Ingle, VP, AT&T Wireless

Ken Denman, CEO, Openwave

Amir Mashkoori, CEO, Kovio

Stephen David, Former CIO, Proctor & Gamble

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

Hank Skorny, SVP, Real Networks

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

Dr. Suzanne Sysko, Chief Medical Officer, WellDoc

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

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

Christopher Dean, Chief Strategy Officer, Skype

Russ McGuire, VP, Sprint Nextel

Jack Kennedy, EVP, News Corp

David Weiden, General Partner, Khosla Ventures

Anand Chandrasekhar, SVP and GM, Intel

Chamath Palihapitiya, VP Growth/Mobile, Facebook

Rob Glaser, Chairman, Real Networks

Wim Sweldens, President – Wireless Division, Alcatel Lucent

Takayuki Hoshuyama, CEO, D2 Communications

Neville Ray, SVP, T-Mobile

Bob Azzi, SVP—Networks, Sprint Nextel

Mario Queiroz, VP—Android, Google

Matt Bross, Global CTO, Huawei

We will be covering the following topics in detail:

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

Mobile Future Forward Paper

I hope to see you there.

Chetan Sharma

Chief Curator

Mobile Future Forward

New Research Paper: Managing Growth and Profits in the Yottabyte Era 2nd Edition June 2, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, Carnival of Mobilists, Carriers, Devices, European Wireless Market, Federal, Indian Wireless Market, Japan Wireless Market, Location Based Services, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Patent Strategies, Smart Phones, Speaking Engagements, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

 

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Managing Growth and Profits in the Yottabyte Era

The year 2010 will be remembered for many milestones. One of them clearly will be the significant migration from voice to data services and revenues. In Q1 2010, the number three operator in Japan - Softbank Mobile reported 55% of its service revenues coming from data thus becoming the first major operator to have more revenues from data services than from voice. Over the course of the rest of the year, other operators like NTT DoCoMo will take this data leap as well.

US, the nation with the most mobile data service revenues went past $14 Billion in quarterly mobile data revenues and is expected to go past the $50 Billion mark for the year in 2010. The subscription penetration in the US is well over 94% and the mobile data usage is on the rise.

While the rate of new subscription addition has slowed down, the pace of innovation is going very strong. Just like Japan, other major economies will slowly transition from a voice-centric universe to the one where voice is just another application on the all-IP network. Operators will make significant transition from voice to data, from making calls to getting lost in applications and from voice communications to multimedia communications. Helped by the ever expanding wireless broadband networks, and release of hit devices every week, and the consumer’s insatiable appetite for information and content has brought us to the surge of a data tsunami that will shake the industry to its core.

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

In 2009, the global yearly mobile data traffic reached a new milestone – 1 Exabyte (EB) or 1 Million Terabytes (TB). In the US, the data traffic is growing so fast that we are likely to exceed the 1 EB barrier in 2010. By 2016-17, the global yearly mobile data traffic is likely to exceed 1 Zettabyte (ZB) or 1000 Exabytes. How does the industry go about managing such growth in a profitable manner when the cost of supporting such traffic will increase exponentially? Will the move to LTE offer some respite?

This paper is the second edition of the “Managing Profits and Growth in the Yottabyte Era” research paper. It discusses the research and analysis done by Chetan Sharma Consulting on the growth of mobile data traffic in over 45 countries (with a detailed look at the US market) and how the ecosystem can apply some strategies to manage growth and profits.

We have built detailed models to estimate the rise of mobile data network traffic and to understand as to how the margin per bit can be maintained. Over the course of the last year, we have worked with several global players in the ecosystem to deploy effective strategies and solutions. This paper also draws from this experience on the ground.

Download Paper

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

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

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

US Wireless Data Market Update – Q1 2010

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

Executive Summary

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

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

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

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

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

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

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

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

All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the industry is going to evolve in the next decade in our Sept 8th event – Mobile Future Forward which is bringing leading industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. Hope you can join the discussion.

What to expect in the coming months?

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

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

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

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

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

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

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

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

Against this backdrop, the analysis of the Q1 2010 US wireless data market is:

Service Revenues (Slides 7, 16)

ARPU (Slides 8-11)

Subscribers (Slides 12-14)

Applications and Services

Handsets

Open

Data Traffic (Slide 15)

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

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Aug 2010. The next Global Wireless Data Market update will be issued in Sept 2010.

Your feedback is always welcome.

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

Thanks.

Chetan Sharma

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

Global Mobile Data Market Update 2009 March 31, 2010

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

Download PPT (2.6 MB)

Download PDF (3.6 MB)

Executive Summary

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

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

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

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

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

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

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

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

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

Exciting times indeed.

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

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

Impact of Global Recession

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

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

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

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

Service Revenues

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

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

ARPU

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

Mobile Data Traffic

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

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

Subscriptions

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

Mobile Apps

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

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

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

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

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

Others

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

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

2010 will be a critical year on many fronts. As usual, we will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in May 2010. The next Global Wireless Data Market update will be released in Sept 2010.

Your feedback is always welcome.

Thanks.

Chetan Sharma

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

CTIA Roundup 2010 March 26, 2010

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

wordlectia3

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

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

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

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

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

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

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

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

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

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

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

Some of the other news worthy items were:

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

Thanks

Chetan Sharma

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

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

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, European Wireless Market, Gaming, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Usability, Partnership, Smart Phones, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 7 comments

Sizing up the Global Mobile Apps Market

mobileapps_s

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

Industry Study Commissioned by Getjar

Executive Summary

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

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

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

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

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

Download full paper

My thanks to Getjar for supporting the research.

Thanks

Chetan Sharma

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

Mobile Breakfast Series Event Roundup March 12, 2010

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

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

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

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

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

Summary of his comments:

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

Opportunities are:

and of course challenges are:

In summary,

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

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

His presentation below:

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

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

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

MFF-1

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

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

Some pictures from the event:

304 307 316 324

328 332

334 336 344 343 341 338

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

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

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

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

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

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

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

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

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

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

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

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

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Intellectual Property, International Trade, Location Based Services, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

US Wireless Data Market Update - Q4 2009 and 2009

Download PPT | PDF

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

Executive Summary

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

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

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

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

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

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

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

What to expect in the coming months?

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

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

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

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

Q1 2010 will also be important from the regulatory point of view with the national broadband plan being unveiled later this month. With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. For example, in India, regulators haven’t been able to get their acts together for the past 3-4 years and its citizens continue to suffer from 2G. Similarly, many countries in South America have imposed unnecessary spectrum caps. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.

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

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

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

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

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

Service Revenues (Slides 8, 17)

ARPU (Slides 9-12)

Subscribers (Slides 13-15)

Applications and Services

Handsets

Policy and Regulations

Open

Data Traffic (Slide 16)

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

Misc.

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in May 2010. The next Global Wireless Data Market update will be issued in March 2010.

Your feedback is always welcome.

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

Thanks.

Chetan Sharma

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

New Whitepaper: 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 , 4 comments

Role of Optical Wireless Broadband in the Evolving Mobile Ecosystem

clip_image002

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 , 6 comments

2010 Mobile Industry Predictions Survey

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

Mobile Predictions Survey (pdf)

Mobile Predictions Survey (ppt)

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

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

The Last Decade: 2000-2009

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

decadeglobal

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

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

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

decadeoem

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

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

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

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

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

decadeus

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

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

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

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

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

2000-2009

2010-2019

Operator of the Decade

NTT DoCoMo

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

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

OEM of the Decade

Nokia

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

RIM, Apple, Nokia, Samsung

Smartphone OEM of the Decade

Apple

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

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

Infrastructure Provider of the Decade

Ericsson

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

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

Nation that led in mobile data

Japan

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

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

Device of the decade

iPhone followed by Razr

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

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

The year 2009

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  10. Laura Marriott, President - 2010 Mobile Almanac

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

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

Despite conventional wisdom, what will not happen in 2010?

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

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

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

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

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

Be well, Do Cool Work, Stay in touch.

Thanks.

With warm wishes,

Chetan Sharma

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

Now onto the 2010 Mobile Industry Predictions Survey Results

The panel comprised of movers and shakers from around the world

survey2_10 survey1_10

What will be the biggest stories of 2010?

survey3_10

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

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

survey4_10

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

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

survey5_10

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

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

survey6_10

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

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

survey7_10

There are indications that this might happen sooner rather than later

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

survey8_10

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

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

survey9_10

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

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

survey10_10

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

Who will be the mobile comeback story of 2010?

survey12_10

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

What will be the impact of Google Phone?

survey13_10

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

Which areas will feel the most impact from FCC?

 survey11_10

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

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

survey14_10

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

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

survey15_10

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

What will help mobile cloud computing gain traction in 2010?

survey16_10

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

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

survey17_10

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

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

survey18_10

Mobile Advertising and Mobile Payments share the top honors

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

survey19_10

LTE might have the momentum but WiMAX has the subscribers

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

survey20_10

No major impact from the operator channel

Which standards will gain traction?

survey21_10

No major impact from the standards

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

survey22_10

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