Inside the USPTO: A Guide to the Patenting Process April 30, 2008
Posted by chetan in : AORTA, M&A, Mobile Content, Mergers and Acquisitions, International Trade, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem, Wireless Value Chain, 4G, Patents, Intellectual Property, IP, Patent Strategy, IP Strategy , add a commentInside the USPTO: A Guide to the Patenting Process
by Carlos Villamar and Chetan Sharma
http://www.chetansharma.com/insidetheuspto.htm
Note: We have an integrated approach to strategy as we strongly believe that taking market research, business, technology, and intellectual property inputs into strategic initiatives is essential in obtaining a long-term sustainable competitive advantage in the industry. To further the dialogue on the subject, we will be publishing several articles, white papers, books, and blog posts over the course of next few months. This white paper is to help entrepreneurs and inventors understand the patenting process.
This white paper was a collaboration with Carlos Villamar, Partner, Roberts Mlotkowski Safran & Cole. Carlos is a patent attorney who has also worked as a patent examiner at the USPTO.
Abstract
Patents are a key corporate asset that can give the inventor and the company an invaluable tool to protect and commercialize inventions. The process of obtaining a patent is an important one – from start to finish. Beginning with patent strategy, due-diligence and patent search through the United States Patent Office (USPTO) process to finally getting the grant, one needs to have a good understanding of each step. This increases the probability of success by removing uncertainty from the process. Inside the USPTO: A guide to the patenting process takes a detailed look at the ideation and the patent process, specifically, how patent applications flow through the USPTO. By having a good grasp of the intermediate steps and the various decision points associated with each of them, the paper discusses how entrepreneurs and inventors can maximize their chances of securing a patent.
Introduction
We live in a knowledge economy and Intellectual Property is a key asset in this new ecosystem. Patents are one of the essential elements to creating barriers to entry for rivals, building credibility and confidence of investors, customers, partners, and employees, providing clarity as to the property ownership, demanding leverage from the industry, and for generating revenue from licensing and sale.
The knowledge economy thrives and sustains on ideas and competitive advantage based on intellectual property. For individuals, the prestige associated with being an innovator and “first to secure” patents in a given field motivates them to be creative and innovative. Entrepreneurs, engineers, and inventors can benefit from understanding how to secure and maintain their intellectual property rights. This paper discusses the important steps in designing, filing, procuring, and defending your patent rights.
The following diagram illustrates at a high-level the patenting process and important considerations in the decision flow chart. The flow chart is discussed in detail in the subsequent sections.
Table of Contents
| Abstract | 3 |
| Introduction | 4 |
| Pre filing due diligence | 6 |
| Patent preparation | 9 |
| USPTO filing | 11 |
| USPTO examination | 13 |
| After approval | 16 |
| Conclusions and Recommendations | 17 |
Download the full white paper here.
Your feedback is always welcome.
CTIA Wireless 2008 Roundup April 4, 2008
Posted by chetan in : AORTA, Carriers, Enterprise Mobility, Speaking Engagements, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, International Trade, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 2 commentsCTIA Wireless 2008 Roundup
http://www.chetansharma.com/ctiawireless.htm
The Sin City hosted CTIA Wireless 2008 earlier this week. On Wednesday morning, just before leaving for the convention center, I caught some portion of Ben Bernanke’s congressional testimony on the US economy woes. Few minutes later, strolling the show floor, talking to various companies, and hearing the keynotes, it seemed like I was on a different planet. Either someone failed to deliver the memo or the wireless industry is resilient enough to weather the turmoil in the financial and housing markets with some ease. The show was bigger with more attendees, the booths were returning to their glamorous heydays of the past, and the general buzz and energy at the show all seem to indicate the industry is going to do just fine and is primed for further growth. The general themes were around open network and access, user experience, and bandwidth.
This note summarizes our impressions from the show.
First let’s do the numbers: CTIA released their semi-annual statistics on the US market. In summary: For 2007, $23B in data revenues, 2 trillion in MOU, $139B in total service revenues, 48B txt messages/month. (We released our US Market and Global Market updates last month)
Keynotes: In terms of style, Sir Richard Branson stole the show with his pompous exuberance and pep talk (the talk of imaginary flight to Mars was hilarious; investors in Microgin and Viroo must be upset). For substance, Marco Boerries, President, Yahoo Mobile gave a nice compact overview of Yahoo initiatives and products in the market which are pretty darn good. (Marco wrote an opinion piece for our Mobile Advertising Book – “The future of Advertising is in the Consumers’ Pockets”). Yahoo has sewn together a number of deals worldwide that gives them a potential reach of over 600M users.
Vodafone is one operator which has been quite vocal in stating its positions on future infrastructure roadmap and data opportunities. Arun Sarin is probably the only CEO of major global operator who has publicly stated that Mobile Advertising will constitute a significant portion of their revenues in the coming days (Arun’s point person on the initiative Richard Saggers also wrote an opinion piece for our book “Opportunities for Mobile Advertising.” Let me know if you are interested in reading these two opinion pieces).
Microsoft’s Robbie Bach had the tough task of following the Branson-fest. He announced the arrival of a full-blown browser (finally!) for windows mobile. Also, the new windows mobile device from Sony Ericsson (Xperia) looks pretty darn cool. FCC Chairman Martin announced the rejection of Skype petition on the carterphone principle (to Skype’s dismay, it was not an April fool’s joke). Clearly, the definition of “open” is in the eye of the beholder. It means different things to different people. It has also been clear from the various activities and keynotes that the industry is trying its utmost to remain a “Self-regulated” industry and stay away from the clutches of eager politicians.
Lowell McAdam, CEO of Verizon Wireless conducted a panel with CEOs from Alcatel-Lucent, Ericsson, and Nortel and probed them on the 4G migration path, trends in applications and services, and contrasts in adoption and introduction of new technology in various parts of the world. Final day was marked by what is now becoming a trend - keynotes from politicians. This time around Sen. Edwards and Sen. Thompson graced the podium.
Mobile Advertising: In talking with numerous players in the value chain from small developers to large operators to ad networks to media companies, the impression was that things have matured over the last six months. It was gratifying to hear that some companies are adopting strategies and recommendations we propose in our book. Still, some of the basic problems remain – majority of the inventory remain unsold indicating weak demand, CPM rates are still over-rated though they are starting to come down, and fragmentation continues to remain an issue.
The good news is that the size of the mobile campaign budgets are getting bigger with several seven figure RFPs floating around. While some companies are still trying to throw a lot at the wall in the hope that something sticks, others are maturing as companies and are more focused in their positioning and product roadmaps. Integration of various channels is starting to appear on the horizon and the integration with the publishers is becoming tighter. The issue of measurement and auditing standards remains a big issue and unfortunately not much progress to report. There are carrier initiatives and various industry bodies are taking the challenge to rally the ecosystem, but, frankly, consolidation of such efforts is necessary, we can’t afford yet another layer of fragmentation in an already complex ecosystem.
We were interviewed on Mobile Advertising prior to the show by several publications. Some of the articles were published this week to coincide with CTIA
Wireless Wave (CTIA) – Moving Targets: Mobile marketing reaches consumers on their terms by Lynn Thorne
BrandWeek – Mobile Marketing – Fantasy vs. Reality by Ken Hein
Wall Street Journal – Personalized promotions: Sending the right ads to your phone – Peggy Anne Salz
NFC: There were many more NFC-enabled devices on display this time and vendors were talking and demoing NFC and Biometrics based payment solutions. While there are handsets on the roadmap, this market is still very nascent in North America and Western Europe.
Inspiration: The inspiration for new and creative services still comes (at least for yours truly) from Japan (and Korea). I love spending time in DoCoMo’s booth for it gives a glimpse into what’s to come. No other company better understands the development of devices, services and applications that overlay on lifestyles than DoCoMo (e.g. a wellness handset that is a pedometer, heart rate monitor, body and bad breath monitor and yes, you can make voice calls too). They view wireless air-interfaces as nothing more than enablers to solutions that enhance daily lives. Various device manufacturers also displayed some really cool devices. The quality and diversity of handsets that have been introduced into the global markets over the last four quarters is just astonishing. The cycle of innovation and time-to-market keeps on accelerating.
Femto Cells: A number of players like Airwalk, Airvana, and others are bringing Femto cell solutions to the market and carriers are starting to pull this into their strategy as well and look forward to deployments beyond the trials.
4G: LTE vs. WiMAX (vs. UMB): Since the decision of Vodafone and Verizon to support LTE, UMB has been disappearing from the discussion. The 4G discussion is convulsing around LTE and WiMAX now (though Nortel did indicate its support TD-SCDMA as a 4G candidate). Without a doubt the operator community is rallying behind LTE and there might be an opportunity to finally converge to a single standard (haven’t we seen this movie before) but frankly, the advances in silicon to integrate multiple radios has made the standards debate less relevant. WiMAX has forced acceleration of LTE standardization process but is starting to lose its time (and cost) advantage. All eyes are on Sprint’s XOHM business rollouts in the coming days and months.
Accessories: I have never seen so many accessory and reseller outfits at a CTIA show. Business must be booming.
Best Booth: Thought there were several good layouts, LG and Samsung continue to impress with their creativity and “art of marketing.”
Developer and Publisher woes: Along with John Philips (Astraware) and Peter Baldwin (Cellmania), I helped facilitate a few developer session at the Mobile Jam Session organized by WIP. The issues of distribution, discovery, and monetization remain challenging for the small developers worldwide. Even with million user base, they are finding it difficult to monetize but we did discuss a number of success stories. The core elements of success that emerged from the discussion were: choosing the right market, embedding viral component into everything you throw out there, there is no room for mediocrity, and personalizing and customizing go a long way to get traction. An interesting tidbit: the number of page views for mobile MySpace app is a magnitude higher on off-deck vs. ondeck. Several of the companies are trying mobile advertising with varying degrees of success. After spending 4 hours with the developers, I sat on a carrier panel discussing mobile advertising. The contrast between the two worlds was so apparent. Clearly, more needs to be done to help both sides understand each other a bit better.
Green CTIA: There is a stronger emphasis on recycling and contributing to save the environment. The show itself is a big resource hog, so every bit helps.
Alternate Mobile Devices: The universe of alternate devices is expanding. Companies are buying wholesale data packages from the operators and integrating broadband chipsets into hardware to do digital signage (ICG), M2M (Sensorlogic), PND and much more. The definition of being “mobile” keeps on changing.
On Being “Open”: Obviously, given the recent activity around openness, getting a penny for each time the word was uttered by a speaker would have paid off for a lifetime of CTIA trips. While talk is cheap, demonstrable progress is being made by the likes Yahoo, Apple (btw, 3G iPhone is on its way), and AOL.
Another MVNO experiences turmoil: Movida - a Spanish focused MVNO which has garnered almost 300K subs filed for chapter 11.
Voice is becoming mainstream: With the product launches from Nuance, SpinVox, Vlingo, Jott, Yahoo, and many others, voice based navigation and its tighter integration with data services is becoming mainstream.
Where are the opportunities? Last week, I was moderating a panel with executives from AOL Mobile, T-Mobile, Motricity, and Formotus and the themes that emerged were around platform play, user experience, and productivity. At CTIA, in addition to these areas, there was a lot of discussion around social networking (though the market is being saturated with the MoSo noise). It is also clear that we are moving into the phase of “aggregation of fragmentation” with initiatives from Yahoo, AOL, and Google dominating the landscape.
Home Screen Effect: I have been talking about using the home screen for driving data usage for the last 8 years. I think we will see good innovation this year on that front starting with Yahoo’s One Platform. There are several other initiatives in the works where operators and OEMs will be deploying frameworks and technologies to bring information to a “click-less” idle screen environment.
Overall, no major news but industry stays vibrant, healthy, and exciting.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
Global Wireless Data Market Update 2007 March 27, 2008
Posted by chetan in : AORTA, Infrastructure, Carriers, Security, Speaking Engagements, M&A, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Networks, ARPU, Japan wireless market, European wireless market, Mobile TV, mobile users, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 7 commentsGlobal Wireless Data Market Update 2007
http://www.chetansharma.com/globalmarketupdate2007.htm
As you read this End of Year (EOY) 2007 Global Wireless Data Market update this week, somewhere in India, a new subscription will catapult India over the US as the number 2 global wireless market. 2007 was a banner year for global wireless data market. The global service revenues for the year touched $700 billion, the data service revenues were more than $120 billion, China signed its 500 millionth subscription, and both India (in feb 08) and the US crossed the 250 million subscription mark. 2007 continued to enhance mobile data’s role in the operator ecosystem with approx 17% of the revenue is coming from data services.
For some leading operators, data is now contributing up to 35% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU. From the true and tested SMS messaging to new services such as Mobile TV, Enterprise apps, and others, different services helped in adding billions to the revenues generated for 2007. Japan and Korea remain the envy of the global markets and the countries to study and learn from w.r.t. new services and applications. The US market has been steadily making strong comeback and for the first time exceeded Japan in service revenue generated from mobile data.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India. This note summarizes the findings from the research.
- The worldwide markets continue to grow at an explosive pace reaching 3.3B subscriptions by Q407 up 20% from 2006 levels. Significant growth is coming from India and China with both countries registering close to 8-9M net adds per month. India recorded 8.8M net adds in Jan 08 while China added 9.4M in Feb 08. Overall, the world market is at almost 50% penetration.
- US surpassed Japan as the most valuable mobile data market in service revenue with US adding $24.5B vs. $23.2B for Japan in 2007 mobile data service revenues. China with $12.5B was ranked number 3. US registered the highest growth amongst the top 3 with over 55% increase from 2006 levels followed by China at 37% and Japan at 18%. These top 3 markets account for over 50% of the global data service revenues.
- NTT DoCoMo continues to dominate the wireless data service revenues rankings with over $12.13B in service data revenues for 2007 however Q/Q growth has dropped to single digits. DoCoMo crossed 80% in 3G penetration and is expected to touch 90% by end of the year.
- DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, O2 UK, SK Telecom, Softbank, and China Unicom to round up the top 10 operators by wireless data service revenues. All the top 10 carriers exceeded $3B in data revenues for the year.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping 30%.
- Both India and China added a whopping 85 million new subscriptions (most of them prepaid). This week India edges past US to become the number 2 wireless market (by subscriptions) in the world. In last two years alone it added almost 150 million new subscriptions (in comparison China added 155 million and the US market added 44 million).
- Vodafone Italy reported the highest increase in data ARPU from 4Q06 with 76% growth. Other notable percentage increases in ARPU were from Rogers, AT&T, Verizon Wireless, Sprint, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.70.
- In terms of absolute dollar amount, 3 UK leads the pack with $29 data ARPU (qualifying limit: 4 million subs). By comparison, the rest of the top 4 operators are below $22. In fact, 3 UK reported the highest ARPU recorded for the year at approximately $94 (in Q2). Other operators who reported overall ARPU above $60 were KDDI, NTT DoCoMo, Rogers, and 3 Sweden.
- The biggest jump in data revenues was experienced by Verizon Wireless with over 68% increase from 2006 followed by AT&T with 63% jump and O2 UK making 49% gain.
- In 2007, SMS’s vice like grip on data revenues continued to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
- The top 10 operators increased their revenue by 32% during 2007 (from 2006) to reach almost $62 billion in data service revenues, thus accounting for almost half of the global data service revenues though they account for only 27% of the global subscription base.
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI. Their data coordinates stand at ($21.5, 35%) and ($21, 34%) respectively (please see PowerPoint for reference). Since the takeover from Vodafone, Softbank has been making significant strides in the market by taking the highest share of the net-adds in last 9 months.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 55% (or $4) contribution coming from data services.
- Even though China reported approximately $12.5B in data revenues for 2007 and the percentage contribution is over 23%, data ARPU is around $2.3. For India data ARPU dropped below $1 for all major carriers.
- China Mobile with 369M (as of Dec 07, the numbers increased to 384M by Feb 08) remains the #1 carrier in terms of total number of subscribers followed by Vodafone at 252M and China Unicom with 160M subscriptions. Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for many years to come. China Mobile also surpassed Vodafone in market cap which stands at $288B (vs. $164B for Vodafone). Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- As far as 3G is concerned, GSA reported 293 WCDMA commercial launches worldwide with over 270M 3G users (66% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 75-80% penetration. 3G has picked-up steam in both western Europe and North America per our forecast in the 2005 cover story article “3G: Hitting the Mass Market” published in the Wireless World Magazine. Western Europe and US are approximately at 25% 3G penetration (Italy being the exception reaching 40%).
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and has been having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas. In India, regulators are considering inviting bids for the 3G spectrum from foreign entities as well.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. In terms of 4G, there is a strong momentum behind LTE, UMB in its current incarnation is practically dead, and proponents of WiMAX are pushing the technology as a 4G candidate, though it is starting to lose its time advantage.
- In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industry’s imagination. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- 2007 also saw the demise of some high-profile MVNOs like Amp’D. Helio continues to struggle while the newer ones like Sonopia and Blyk are testing the treacherous waters with different business models. Asian market is also opening up for MVNOs.
- Nokia eclipsed 100M/quarter unit sale three times in 2007. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokia’s global market share stood at 40.2%.
- While the talk of “Open Access” and “Open Platform” consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizon’s “Open Network” initiative elevated the consternation in the ecosystem.
- Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia launched its ad service as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space. In a matter of weeks, several billion dollar transactions took place highlighting the intensity in preparing for the next battleground. The estimated market for mobile advertising in 2007 was approximately $2.3B with messaging, search, and browsing accounting for over 84% of the revenues.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
Mobile Advertising Events March 14, 2008
Posted by chetan in : Speaking Engagements, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem, Mobile Search, Wireless Value Chain , 1 comment so farIt will be a very busy next few weeks
March
Next week on 19th, we are at Stanford University being hosted by Mobile Momentum to do a book event. Details here. RSVP at stanfordevent at chetansharma dot com. Bring your friends and colleagues.
The book discussion will be followed by a panel discussion with some of the smartest brains in the business - Ujjal Kohli, CEO, Rhythm New Media, Brian Cowley, CEO, AdInfuse, and Tony Nethercutt, VP, Admob.
AdInfuse, Admob, and Rhythm New Media are also the generous sponsors of the event. So, many thanks again.
The next day (20th), I fly back to Seattle to moderate a panel on Mobile Advertising being organized by TiE. Event and Registration details here. Panelists are Jeff Giard, Director, Alltel, Brian Lent, CEO, Medio Systems, Scott Silk, CEO, ActionEngine, and Jason Guenther, Director, Disney.
The following week on the 27th, I will be moderating a panel being organized by Washington Technology Industry Association. The topic is Mobile Mania - Show me the Money. Event and Registration details here. Speakers are Jai Jaisimha, VP, AOL, Brendan Benzing, VP, Motricity, F. Joseph Verschueren, CEO, Formotus, and Ian McKerlich, Director, T-Mobile USA.
April
Then, I head off to CTIA in Vegas.
In late April (24th), I will be giving a talk in Sacramento - Mobile Advertising - The $20B Opportunity?. The event is being organized by TechCoire - Sacramento region’s only business-technology education and networking organization. More info on them here. Thanks Gopan for the invite.
I got to know two wonderful people at Stanford University last year - Prof. Tom Kosnik and his student Mohit Gundecha. It was in context of the event that Mobile Momentum organized on the Indian Wireless Market. I serve on the advisory board. In fact, Mohit is single-handedly organizing our Stanford event next week.
Prof. Tom Kosnik has invited me to give a class to his students on Mobile Advertising which is great honor. His course - Global Entrepreneurial Marketing is a very popular course at Stanford and always gets full very quickly.
May
After a brief break, we head down to San Diego on 20th for another book event being organized by CommNexus - a very active High Tech and Communications Industry association.
The same week, I will be at FiRe (Future in Review) conference being organized by SNS and Mark Anderson and will be moderating a brilliant panel on Mobile Advertising. Event and Registration details here.
US Wireless Market Update - 4Q07 and 2007 March 10, 2008
Posted by chetan in : AORTA, Strategy, Carriers, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 3 commentsUS Wireless Market Update - 4Q07 and 2007
http://www.chetansharma.com/usmarketupdateq407.htm
The US wireless data market grew 55% in 2007 ending the year with $24.5 billion in data services revenues with 4Q yielding $6.9B. 2007 also saw significant industry milestones like: iPhone launch, US crossing 250 million subscriptions, 3G penetration in the US touching 25% subscriber base, consternation around 700 MHz spectrum auction, MediaFLO launch, Android launch, Nokia crossing 40% market share, WiMAX and Femto Cell trials, and much more. US almost equaled Japan in mobile data service revenues for the year (rounding error and currency fluctuation difference). With several significant launches coming up in 2008, US remains one of the most attractive wireless data markets.
- The US Wireless data service revenues grew 7.8% Q/Q to $6.9B in Q407. For the year 2007, the US wireless data service revenues grew to $24.5B, up 55% from 2006.
- Overall ARPU declined by $0.81and reversed the trend of overall ARPU uptick of the last two quarters. Average voice ARPU declined by almost $1.50 while average data ARPU inched up by $0.68 or 7%.
- Sprint lead in data ARPU with $11.50 (or 19.83% of the revenues) closely followed by Verizon at $11.06. Verizon was ahead in terms of data as % ARPU with 21.3% of its ARPU coming from data services. AT&T with $10 (or 19.89%) and T-Mobile with $8.2 (or 16%) rounded up the top 4.
- The strongest growth in 2007 came from Verizon and AT&T, with both of them tied at 64% YOY jump in data revenues. However, Verizon was ahead in dollar terms at $7.4B, accounting for almost 31% of the US industry data services revenue for the year. The top two were followed by T-Mobile at 56% and Sprint with 31% increase YOY.
- The average industry % contribution of data to service revenues jumped to 19.34%.
- In terms of net-adds, thanks to the Dobson acquisition and the iPhone sales, AT&T added 2.7M new subscribers followed by Verizon at 2M. The overall net-adds improved by 6.2M subs taking the total for the year to 20.8M, down slightly from 2006. Despite the 7% slowdown, there is plenty of growth left in the US wireless market.
- In spite of AT&T’s prolific quarter, Verizon ended up with the highest net-adds for the year at 7.7M subs vs. AT&T’s 6.9M.
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the year, Verizon with $7.4B, AT&T with $6.9B, and Sprint with $5.2B in data services revenues stood at #4, 5, and 6 respectively with Verizon closing in on KDDI for the number 3 spot. AT&T became the second US operator after Verizon to be in the select group of five global operators who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI).
- Non-messaging data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- There was tremendous activity in the area of Mobile Advertising. Google is also laying out its tactical and strategic roadmap in hopes to dominate the space and while it succeeded in pushing FCC to change the 700 MHz auction rules, the future of Android alliance remains uncertain. It did however; help open the “open” debate in the industry. Meanwhile, Yahoo is busy creating some compelling applications and is stitching together carrier deals around the world.
- Venture money continued to flow into the mobile sector with over $4.9B investment in 2007 (Source: Rutberg). Location Services, Mobile Personalization, Mobile Video, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- iPhone helped AT&T find its voice. Since the introduction of iPhone in June 07, AT&T has reversed the multi-quarter trend of narrowing total subscriber difference with Verizon. Aided by the Dobson acquisition, the difference between the two companies stood at 4.4M subscribers in favor of AT&T (vs. 1.5M in Q107). iPhone also accounted for (higher) disproportionate mobile web usage exciting the ecosystem and media alike.
- Nokia eclipsed 100M unit sale in Q407 for the third straight quarter. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokia’s global market share stood at 40.2%. Quite impressive.
- 3G penetration in the US touched 25% in 2007, with Verizon leading the pack with over 53% 3G subscriber penetration. AT&T reported that 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- There was tremendous discussion around “openness.” Bowing to the industry pressure, FCC’s 700 MHz spectrum auction included clauses for opening up the network by the winner. Sprint made progress with its upcoming launch of XOHM. Verizon launched its Open initiative. Google’s Android was announced in Q407. Though devices are slated to hit the market in 08, its overall impact remains uncertain.
Global update
- China and India added approximately 86M subscribers in 2007 dwarfing growth in other regions by a distance (China marginally edged out India to retain the top honors). Similar growth trends will continue into 2008. In fact, India will overtake US as the number two wireless market in the world (by total subscriptions) during the week of March 24th 2008.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $12B in data services revenue in 2007. 35% of its revenue now comes from data services. DoCoMo will also cross 80% in 3G penetration this month. China Unicom edged past SK Telecom to occupy the number 9 spot.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are consistently topping 30%.
More details in our worldwide wireless data market update coming out later this month.
Your feedback is always welcome.
Chetan Sharma
Busy News day February 11, 2008
Posted by chetan in : AORTA, Mobile Advertising, Mergers and Acquisitions, International Trade, Japan wireless market, European wireless market, Worldwide Wireless Market, Mobile Ecosystem, Wireless Value Chain , add a commentOf course, MWC is underway but even otherwise, there are plenty of news items trickling in
- Microsoft is in the mood to buy, while Yahoo! takeover is pending, Microsoft acquired Danger of Sidekick fame for an undisclosed amount
- Starbucks divorces T-Mobile, marries AT&T, does iPhone have anything to do with it?
- Cellfire - mobile coupon company raises $12M
- As expected, Google’s Android demos make special appearance in Barcelona
- Plenty of Mobile Advertising News as well
- Nokia launches global mobile ad network
- O2 started its mobile advertising service
- GSMA and Operators are working on standards for measuring mobile ads
Mobile Industry Predictions - 2008 January 1, 2008
Posted by chetan in : AORTA, Carriers, Middleware, Security, M&A, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, Privacy , 7 commentsI never think of future, it comes soon enough – Albert Einstein
First things first. Wish you a very happy and successful 2008.
Before we look at what’s to come, let’s do a quick wrap-up of the year that was.
2007 will clearly be remembered as “the year of iPhone.” While there were several other “events/trends of interest” through-out the year, nothing captured the imagination of the world like the iPhone. It was significant for another big reason – it had a profound impact on the business model and ecosystem dynamics. Q4 2007 was also significant for the deafening roar that resonated around “Openness”.
Steve Ballmer exclaimed mobile to be the next battleground while Eric Schmidt pondered why mobile phones are not free (subsidized by Google ads of course).
Google played its chess game effectively and though it is unlikely to play to win the 700 MHz auction or even if they do win would be able to do anything substantive in the short-term, they did, however, with Android and spectrum gambit, force some of the regulation-wary operators to take a stance on openness. Nokia is putting together a brilliant services strategy that looks to connect directly to the consumer. Competition and coopitition will have a different meaning going forward.
Things were looking positive for WiMAX until the end of the year when Clearwire was left standing on its own. It will look towards Google, Sprint, Motorola, and others to rescue its fate.
Mobile Advertising was hailed as a great savior of mobile content and mobile revenues in general. Blyk even launched an advertising-based MVNO. We made significant headway in energizing the sub segment but the tough problems of privacy, education, control, fragmentation, and user experience remain. LBS picked up steam and mobility started to get into the alternate consumer device universe.
In terms of actual dollars, mobile data market continued its steady growth with substantial shifts in revenue towards non-SMS data applications and services. Several operators are doing $2B/quarter+ in data revenues. Several subscription milestones throughout the year: 3B worldwide, 500M China, 250M US, 225M India. 3G continued to inch towards mass-market in western markets (20-25% penetration) while in Korea and Japan, it was getting hard to find people without 3G (70%+ penetration).
Among other events of significance: Cincinnati Bell and T-Mobile launched UMA devices, Motorola lost its Mojo, Amp’D and Disney Mobile shut down, MediaFLO launched, mCommerce initiatives took hold, China continued to delay 3G, WM got updated, Yahoo cemented some impressive operator deals as GYM got more active in mobile, UMPC fizzled, Mobile Web 2.0 got into the industry physce, LTE got embraced worldwide, M&A galored, IP scuffles continued, Muni projects went into coma, and DRM-adorned content became a thing of the past.
2008 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. This survey was a bit different in the sense that the movers and shakers (and folks from the companies discussed here) and industry insiders participated. We were able to glean some valuable insights from their choices and comments. Participants (n=196) were folks from across the mobile value chain and from around the world.
Many thanks to everyone who participated.
Three names were drawn for a copy of our upcoming book “Mobile Advertising” (co-authored with Joe Herzog and Victor Melfi, John Wiley & Sons, 432 pages, Feb 2008).
The winners are:
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David Cushman, Director, Emap
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Larry Shapiro, VP, Disney, and
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Keith Kostuch, SVP, Alltel
Congrats and Thank you.
Now onto the survey analysis.
Figures above and below summarize the responses. We requested respondents to rate the probability of an event happening in 2008 on a scale 1 to 5. 1 being “Not a chance” to 5 being “100% probability” The figure above summarizes the overall probability of the event happening. The figure below provides the breakdown of responses.
1. Will Google introduce a Google Branded Phone in 2008?
Will it? Won’t it? 44.5% gave it a 75% or higher chance of happening while 40% thought it ain’t happening. GPhone is a temptation Google will find hard to resist though a lot will depend on how various initiatives and partnerships shape-up on the ground. In any case, expect another major announcement in the next 2-3 months.
2. Will Google play to win in the 700MHz Spectrum Auction?
Google has played the spectrum chess game effectively. Almost 50% respondents gave it a 75% or higher chance of Google winning the bid. Though expectations are high, Google is unlikely to play to win. Services business is not their cup of tea, they could still fund the Clearwire-Sprint deal but that investment can be spent differently to get better end-results, i.e. mobile ad revenue.
3. Will Microsoft launch its own mobile phone?
Unless Google comes out with GPhone, Microsoft will stay content with its operator distribution strategy. 63% of respondents gave it less than a 25% chance of Microsoft releasing their own phone. If GPhone comes out and gets some traction, expect Microsoft to get its “fast follower” strategy into high gear.
4. Will Mobile Payments get traction in North America and Western Europe?
Only 9% thought it is a sure bet for 2008. True mobile commerce hasn’t really started in the western world. While there are significant movements, 2008 will just be a “lay the groundwork” year for mobile payments.
5. Will WiMAX regroup from its setbacks?
Only 35% gave it a 75% or higher chance (of WiMAX resurrecting itself esp. in the US in 2008). A lot depends on how Mr. Hesse deals with Sprint’s WiMAX business. Indications are there will be a deal with Clearwire to off-load the risks via some external investment (Google?).
6. Will Helio survive 2008?
Almost 70% respondents thought Helio won’t make it. Given the flameout of some of the prominent new-generation MVNOs, it is hard to see how Helio will see 2009. It will all come down to how persistent is SK Telecom. Earthlink doesn’t have the bank balance to keep funding this initiative.
7. Will Verizon truly open-up its garden for third-party visitations?
Only 5% thought it is a sure bet for 2008. Verizon’s open posturing was more to ward off any regulators and to improve its image. There is unlikely to be any meaningful progress on this front this year.
8. Will 2008 be the inflection year for Mobile Advertising?
42% gave Mobile Advertising a 75% or higher chance for rapid growth. Market will mature, more consolidation, some privacy gaffes but overall things are looking up for mobile advertising.
9. Will Femto-Cells gain any significant momentum in 2008?
It will be an introduction and experimentation year, so no significant traction is expected. Over 52% thought Femto-Cells will be just a buzz word in 2008.
10. Will Nokia be able to extract iPhone-style rev-share from carriers in 2008?
Less than 20% thought Nokia will be able to do an Apple when it comes to rev-share arrangements. For OEMs, going direct to the consumers was considered treachery to the sacrosanct relationship with the operators. Until Apple showed up with iPhone. Now, Nokia is putting its services strategy in motion and is building a direct relationship with the consumers worldwide and it has a good shot at pulling it off though it will be a long haul.
11. Will Palm survive 2008?
Only 8% gave it a 100% chance of surviving 08 as an independent entity. It will be difficult for Palm to stay in a status-quo mode. They desperately need a hit device that can give them some breathing room. Given all the operational and strategic problems the company is having, a sale is likely.
12. Will iPhone truly open up?
Over 45% thought iPhone won’t open-up in any meaningful way. Apple has built-up one of the most profitable closed empires in the digital world. Are they about open things up? While the iPhone SDK is scheduled for early 08, don’t hold your breath on accessing the critical native APIs.
13. Will there be more unsubsidized devices introduced in the US market in 2008?
Almost 49% thought we are likely to see another unsubsidized device in the US market this year. Nokia is looking to go direct and some GSM handset manufacturers are likely to entertain the idea of testing the market with unsubsidized devices.
14. Will Mobile TV move the needle in 2008?
Almost 70% thought mobile TV won’t make much of a difference in 08.Though AT&T is slated to introduce MediaFLO to join Verizon in the Mobile TV services market, lack of devices and better pricing models will hinder wide adoption in 2008. However, downloadable video and VOD content will experience significant growth.
15. Will Android make a dent in handset shipments in 2008?
Only 15% gave it a more than 75% chance this year. It is going to take some time for Android plans to mature and materialize. Don’t see any material impact in 08.
Of course, 15 questions can’t cover the whole industry. As pointed out our respondents, there are a number of other issues and opportunities that will shape the ecosystem - Rise of Facebook as social networking OS for mobile (social networking as a whole starts to go mobile), LBS beyond navigation, Rev-share shuffles, Chinese OEM start to become prominent in the western world, China and India continue to dominate in net-adds, Mobile device security becomes a nightmare for corporate IT, Consumers wake up to mobile privacy snafus and risks, Will Android spread its tentacles beyond nicheosphere, 3G iPhone, Does China Olympics hold any surprises for the mobile industry? Launch of projection handsets, NFC handsets, IMS .. and much much more ..
All in all, consternation and debate will continue into 2008. We will analyze, dissect, and report as events unfold in the new year.
Look forward to the continuing dialogue and meeting with you in person.
Your feedback is always welcome.
Chetan Sharma
Request for Participation: 2008 Mobile Industry Predictions December 18, 2007
Posted by chetan in : Carriers, 3G, Mobile Advertising, US Wireless Market, Mergers and Acquisitions, Indian Wireless market, Japan wireless market, Mobile Applications, Worldwide Wireless Market, Mobile Ecosystem , 2 comments2008 is upon us. We are doing a short survey (15 questions, Multiple Choice, One Answer) to gather insights from the collective brain trust - our readers, friends and colleagues. If you could please take this short survey and let us know what you think. You can answer any or all questions. If you leave your email address, we will enter you in the drawing for winning a signed copy of our upcoming book “Mobile Advertising” (John Wiley & Sons, Feb 2008).
We will share the summary of the results during the first week of 2008.
Please click here to start responding. If the link doesn’t work for you, please cut-n-paste this URL -
http://www.surveymonkey.com/s.aspx?sm=vGkMMvzoWGvFvfCC5TNDUg_3d_3d
Survey ends Dec 28th.
The questions are:
1. Will there be a Google Phone in 2008?
2. Will Google play to win in the 700MHz Spectrum Auction?
3. Will Microsoft launch its own mobile phone?
4. Will Mobile Payments get traction in North America and Western Europe?
5. Will WiMAX regroup from its setbacks?
6. Will Verizon truly open-up its garden for third-party visitations?
7. Will 2008 be the inflection year for Mobile Advertising?
8. Will Android make a dent in handset shipments in 2008?
9. Will Femto-Cells gain any significant momentum in 2008?
10. Will Nokia be able to extract iPhone-style rev-share from carriers in 2008?
11. Will Helio survive 2008?
12. Will Palm survive 2008?
13. Will iPhone truly open up?
14. Will there be more unsubsidized devices introduced in the US market in 2008?
15. Will Mobile TV move the needle in 2008?
Please feel free to pass this on to anyone who might be interested or have something to say.
Thanks and Have a safe and wonderful holiday.
Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market December 8, 2007
Posted by chetan in : AORTA, Carriers, Speaking Engagements, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G , 15 commentsStanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market
Stanford University hosted a program focused on the Indian Wireless Market – Why Mobile?, Why India?, Why Now? Under the tutelage of Prof. Tom Kosnik of Stanford, Graduate Student Mohit Gundecha and BDA worked on a study looking at the Mobile Value Added Services (MVAS) market in India and presented their research at the event along with the release of their in-depth report on the subject. Prof. Kosnik started the evening by giving a presentation on his Global Leaders Entrepreneurs and Altruists Network (GLEAN) initiative. This was followed by a keynote from Jeffrey Belk, SVP Strategy and Market Development, Qualcomm (sponsor for the event) providing an overview of mobile growth in emerging and developing markets. The evening ended with a panel discussion on the opportunities and challenges of the MVAS space. This note summarizes the discussion from the event and our random musings on the market.
The panelists for the discussion were:
(above L to R)
Eric Allen, VP, FunMobility (Moderator)
Ashok Narsimhan, Chairman and CEO, July Systems,
Ojas Rege, VP, Global Mobile Products, Yahoo!,
Vin Dham, Executive Managing Director, NEA-IndoUS Ventures,
myself, and
Niren Shah, Managing Director, Norwest Venture Partners,
It was an honor to be part of this discussion.
First, let’s do the numbers. As we have reported in our previous research notes, India’s growth has been going through the roof. We are likely to end up with over 80M net-add (subscriptions) for the year taking the overall tally to 232M. In the last 5 months, India has added more subs than China. By early April, Indian Market will cross US as the number 2 wireless market in the world. China remains untouchable with over 500M subs. Indian Government is targeting 500M subs by 2010. So, what does this all mean?
Couple of points on the numbers – Just like in other prepaid markets especially Europe, there is a lot of double counting of subs. Many of the unused SIMs are still being counted so the number of “actual” subscribers is less than the numbers that are generally discussed for the market. Secondly, the new subs that are being added are primarily voice subs and hence ARPU (esp. data ARPU is steadily going down for the market. Overall ARPU is approximately $8-9 with 8-9% from data services (where P2P SMS still dominates). Despite low ARPUs, operator margins remain good. The overall MVAS market is close to $1B. The revenue splits are approx 60% for the operators, 20% for the aggregator and rest for the developer and content owner.
Mobile Advertising Market in India – Having looked at the mobile advertising space in depth for our upcoming book, we found the Indian market one of the most active esp. in coming up with interesting business models both operator driven as well as new startups. One of the first in-application mobile advertising services was launched by Reliance, they have several other interesting programs in place that cater to the advertising industry. One of the mobile advertising campaigns that we discuss in the book generated over 21M impressions and won the Cannes award. Companies like mGinger have come up with simple pyramid viral scheme to use SMS mobile advertising. As Admob numbers indicate, the number of impressions are second only to the US market despite low penetration. Finally, operators in India are quite innovate when it comes to integrating the back-end for triple and quad-play unlike their western counterparts who have primarily focused on bill-integration vs. service and application integration.
So, who is actually making money? Clearly the most amount of money is in the infrastructure-related items. Infrastructure is something that is absolutely needed to expand and though the margins shrink quite a bit, it is somewhat made up in volumes. Unless you have unique Intellectual Property that creates barriers to entry, software and/or content companies haven’t had much luck (similar to the trends in China) as the local competition is stiff. Overseas companies who jump in without understanding the market lured by the growing numbers are destined to be surprised.
Cricket, Bollywood, and Education remain the top categories for MVAS apps. Panelists were bullish on new MVAS applications and services around UGC, LBS, high-end segmentation, and enterprise applications. Everyone agreed that the next couple of years are primarily for educating the market and subscription acquisition and it will take another 2-3 years for the MVAS to mature and take off. Unless you are in for the long haul, tread carefully. This market is not for the faint-hearted. IP issues can pose significant risks and challenges.
Jeff thought 3G rather than WiMAX will drive growth in the Indian Market, while Vin suggest Fixed WiMAX is going to be significant. I think the primary use of WiMAX will be to provide Internet connectivity to desktops and laptops and for backhaul of backend systems.
We kind of joked that Indian market might become the second largest market for iPhones within a few months given the pace of unlocked phone shipment to the region.
A question was asked how is working with operators in India different, if at all? Apart from a larger value chain share, things are quite similar. Indian operators do exhibit the desire to move fast and they can take an app to the market quite rapidly where some of their western brethren can keep trialing forever.
You can access the released report here.
You can watch the video from the panel discussion here (Part I, Part II, you can access other videos from the evening on the same page).
Prof. Kosnik and Mohit are launching a new program called “Mobile Momentum” to create an ongoing dialog between Silicon Valley companies and the vibrant mobile industry in Asia. I have signed on as the founding member of the advisory board and look forward to working with entrepreneurs and companies on both sides of the pacific to share thoughts, research, and best practices.
If you would like to receive my slides from the event, please let me know.
2008 promises to be even more exciting than 07. Happy Holidays.
Your feedback is always welcome.
Chetan Sharma
US Wireless Data Market Update - Q3 2007 November 18, 2007
Posted by chetan in : AORTA, Strategy, Carriers, Middleware, Enterprise Mobility, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, ARPU, Japan wireless market, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 2 commentsUS Wireless Data Market Update - Q3 2007
http://www.chetansharma.com/usmarketupdateq307.htm
US wireless data market continued its growth reaching $6.4B in service revenues for the third quarter. With the holiday quarter to go, the aggregate data revenues for the year are already past the 2006 data revenue mark. Whether it was the first full quarter of iPhone sales, or the debate on the upcoming 700MHz spectrum auction, or the rumors swirling around the gPhone, or the continued M&A activity - the US wireless data market remained vibrant in Q3. Given that majority of the data revenues now comes from non-messaging applications and services and the subscriber penetration for such services is just getting into the inflection zone, US remains one of the most attractive wireless data markets.
- US Wireless data service revenues grew 9.4% Q/Q to $6.4B in Q307. For the first nine months of 2007, the US wireless data service revenues stood at $17.7B jumping 59% from the same time period in 2006.
- Overall ARPU decreased slightly by $0.12 Q/Q to $53.50. The overall voice ARPU declined by $0.35 to $43.93 while data ARPU continued its steady incline, increasing by $0.53 to $9.57.
- Verizon continues to lead in both data ARPU as well as Data as a % of ARPU with $10.6 and 20.30% numbers respectively, in the process becoming the first US carrier to get past the $10 in data ARPU and 20% in data contribution. Sprint also touched $10 in data ARPU but is now last amongst the top four carriers in data % which stood at 16.95%. AT&T’s numbers were $9.35 and 18.4% respectively while T-Mobile’s performance also improved with $8.32 in data ARPU contributing 17.88%
- The strongest growth continues to come from Verizon, accounting for almost 31% of industry’s data revenue in Q307. Its data service revenues jumped by 11% Q/Q to $2B (again becoming the first US carrier to get past the $2B milestone). Verizon was followed by AT&T at $1.8B, Sprint at $1.2B, and T-Mobile at $676M.
- The % contribution of data to service revenues jumped to almost 18% in Q307 and is likely to touch 20% next quarter.
- Last week, US crossed the 250 Million subscription mark. The net-adds stabilized for the quarter even though Sprint lost 337K net subs. While AT&T is the only carrier to cross the 2M mark for net-adds/quarter this year, Verizon is ahead of AT&T in overall net-adds for the year by approximately 820K subs. iPhone couldn’t have come at a better time for AT&T which helped in stemming the tide of losing the market share to Verizon.
- The current net-adds rate for the year is 1.65M subs/month down from 1.92M subs/month in 2006 and 2M subs/month in 2005. Though the growth rate has expectedly slowed down, there is still plenty of room for growth over the next five years.
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the year, Verizon with $5.4B, AT&T with $4.95B, and Sprint with $3.7B in service data revenues stood at #4, 5, and 6 respectively with Verizon closing in on KDDI for the number 3 spot. Verizon became one of only four operators in the world who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI). The carrier indicated that enterprise services such as data card and mobile email are generating in excess of $500M/quarter now.
- Non-messaging data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- There was tremendous activity in the area of Mobile Advertising. Google is also laying out its tactical roadmap in hopes to dominate the space and its every move in the mobile space makes its fellow brethren in Redmond scratch their heads. Meanwhile, Yahoo is busy stitching together carrier deals around the world. We just finished a comprehensive book on the subject. More details coming soon.
- Venture money continued to flow into the mobile sector taking the YTD investments to over $4B. Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- iPhone became the quickest smartphone to eclipse the 1M mark in a quarter (by doing it in its first full quarter). By contrast, RIM took 22 quarters or 5.5 years to crack the 1M/quarter sale mark. Palm is still searching for the elusive milestone and might not find it in this lifetime. iPhone also made its entry into Europe and remains in intense negotiations with operators worldwide.
- Nokia eclipsed 100M unit sale in Q307 for the second straight quarter. Its 9 month tally stood at 303.6M followed by Motorola at 117.8M and Samsung at 114.8M. Nokia’s share of the market went up to 39.1% followed by Samsung at 14.6%, Motorola at 12.8% Sony Ericsson at 8.9% and LG at 7.5%. Apple shipped 1.12M iPhones during the quarter generating the revenue of $118M.
- Despite the sale of over 239M handsets by the top 5 manufacturers during Q307, the industry remained mesmerized by the advent of iPhone. Uncharacteristically, Apple lowered the price of the phone ahead of the holiday season.
- After the launch of iPhone, the talk of gPhone filled the rumoid. While the possibility of a gPhone launch remains open for 1H08, Google launched Android to keep things interesting in the industry.
- T-Mobile USA launched the first device with HotSpot @Home service in Q3.
- There was a renewed interest in LBS and it generated some huge M&A transactions in the sub-sector led by Nokia’s acquisition of Navteq.
- In terms of messaging, T-Mobile keeps their users more engaged than other carriers. Each T-Mobile subs exchanged on an average 758 messages last quarter compared to 584 messages by a Verizon sub and followed by 370 messages by an AT&T subscriber. By comparison, subscribers in Philippines engage in almost 2000 messages every quarter or pretty much a message every hour.
- In our 2005 paper on 3G diffusion, we estimated that 2007 will be the inflection year for 3G in the US market. In Q307, the 3G penetration was just shy of 20% with Verizon leading the pack with 50% 3G subscriber penetration. AT&T reported that 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- Being “Open” is the new Black. Apple announced SDK for iPhone, Sprint touted XOHM, 700 MHz spectrum auction became a subject of great debate and posturing, and Google launched Android (in nov). The convergence of mediums is creating friction, introspection, fear, and opportunities (FIFO). We clearly live in interesting times.
Global update (more details in our worldwide wireless data market update coming out in Q108)
- The RIC in BRIC: We had a chance to visit and spend some time in Russia, India, and China during the past few months. These markets remain vibrant especially China and India adding an aggregate of 15.3M subs a month last quarter. India outpaced China with 24.2M net-adds vs. 21.68M in Q307. Mobile coverage in China is ridiculously good. We found strong RSSI in deep gorges on Yangtze as well as high up on the mountains. Regulators in both countries also gave some indications of granting spectrum for 3G.
- NTT DoCoMo continues to dominate the wireless data revenues rankings crossing the $3B/quarter mark and taking its tally for the year to over $8.6B. They also crossed the 75% mark for 3G penetration. China Unicom edged past SK Telecom to occupy the number 9 spot. Rest of the rankings remained the same.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are topping 30%.
Your feedback is always welcome.
Chetan Sharma