jump to navigation

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 , add a comment

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:

The Next Mobile Revolution by Rob Glaser
View more presentations from Lacy Kemp.

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

2010 Mobile Industry Predictions Survey January 3, 2010

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Uncategorized, Unified Messaging, Usability, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 5 comments

2010 Mobile Industry Predictions Survey

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

Mobile Predictions Survey (pdf)

Mobile Predictions Survey (ppt)

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

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

The Last Decade: 2000-2009

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

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

CTIA Wireless IT & Entertainment Roundup 2009 October 12, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, MVNO, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Smart Phones, Speaking Engagements, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , 3 comments

ctia 042ctia 041IMG_0777ctia 031IMG_0775ctia 019ctia 018ctia 017ctia 016ctia 014ctia 013ctia 009

CTIA San Diego Roundup

San Diego is a casual town so this year’s CTIA fit nicely with an equally casual show, that felt more like a networking party sprinkled with some striking keynotes and engaging sessions. However, the biggest tremors were felt a day before the event started with Verizon getting in bed with Google and AT&T embracing VoIP with open arms. FCC’s curiosity into the wireless world has yielded more action in 3 months than many years combined before. I was drawn more to the policy debate and the implications to the wireless industry in the US and to the rest of the world. There was intense discussion on appstores and their place in the future, mobile advertising and its maturity, enhancing retail experience, accelerated growth in mobile health in recent times, and of course the tremendous growth in the US wireless data market but if you already knew that. This note summarizes the observations and opinions from the event, discussions, and briefings.

A friend of mine at the FCC invited me to the FCC Broadband Field Hearing occurring simultaneously with the CTIA at the University of San Diego. I am glad I went. The first panel was on the App Ecosystem with a diverse panel of industry verticals – rural, public safety, health care, environment, air quality, health care complimented by the discussion of the iPhone and its impact on the mobile industry. Chairman Julius Genachowski is to iPhone what President Obama was to Blackberry. He described his love for the apps with tender affection.

I am finding that the whole process of broadband planning to be quite interesting. The proceedings have been open and participatory, interest and feedback has been intense, and the principles have been clearly stated. This helped with a broader question that my CTO team for the FiREGlobal panel (to be held on Oct 15th) is addressing. We are tasked with a unique challenge of coming up with technology solutions for better civic discourse and our team consists of experts in the public and private enterprise to give a set of recommendations. We are currently under intense discussions and will unveil our suggestions on thursday. Stay Tuned.

Coming back to the FCC talk, Julius described four key principles:

  1. Most importantly he described the spectrum shortage as a looming crisis and that additional spectrum capacity is needed to handle the demand of data traffic from data cards and smartphones (something we have illustrated in detail in our paper - "Managing growth and profits in the Yottabyte era")
  2. Removing red tape to allow wireless carriers to build their network faster, for example, the work with cell towers
  3. Codify and enforce net-neutrality policies
  4. Operate more openly

While 1) and 2) have been discussed in the industry for some time, it is the mention of 3) and 4) that has changed industry in more ways than one. AT&T’s Ralph de la Vega took the stage after the Chairman and gave a spirited defense of the industry that requires no regulation. Frankly, the mere mention of the word "open" has had quite an impact on the industry in last 3 months. (I will be moderating two panels at the upcoming Open Mobile Summit on "What open means to apps providers" and "Apps in the cloud" in Nov, 2009)

Of course, as always, it is from the details that the devil flexes it muscles. How FCC will end up defining "open," "net neutrality," "network management" and other key items will determine the course of the industry. I wrote a piece that appeared in RCR Wireless “Defining Mobile Broadband” that outlined some of the same principles but from an operator strategy point of view suggested a much broader strategic imperative of building intelligent platform to survive long-term. The recommendations we made in our Yottabyte paper are being adopted and discussed much more openly since it was released in July. Due to significant interest, we will some follow-up research on the topic in the coming days, so stay tuned. I will be giving a ISACA luncheon keynote on the topic on Oct 20th. Of course, our Mobile Breakfast Series panel on mobile broadband will delve into the details of the broadband ecosystem on Dec 4th. Be sure to register.

024_24

Each year our small community in Issaquah, WA celebrates a festival “Salmon Days.” As I was strolling around the hatchery, it helped me prepare for my talk on the Appstore ecosystem. The fish traveling upstream has several parallels to the developers trying to make in the 80,000 db appond. So, I focused my talk on how the ecosystem needs to come together urgently to build the fish ladder to give more developers a chance to make it to the next level to create a vibrant and sustainable ecosystem. While Microsoft’s mobile strategy is disarray right now, they are one of the few companies who understand the caring and feeding of the developer ecosystem (another one is Ebay). If the ecosystem focuses primarily on their profits and margins, the rich ecosystem might be at a risk of collapsing.

I discussed several factors that can help foster a healthier ecosystem starting with fish ladder. If you are interested in the presentation, please drop me a line. There was pretty good discussion from some experienced and successful developers. The emergence of appstore mania has been a double-edged sword. Developers are back in demand but their attention is finite and they are forced to allocate resources accordingly. I was also surprised to find out about the level of piracy and counterfeit goods in the appstore and how little is being done to protect legitimate developers. Some of the ladder factors I discussed were: greater revenue share, connection with investors, iTunes and carrier billing, location and presence, user profile and context, reports and analytics, $0 signup and certification, better search and discovery, social interaction and virality, flexible payment and billing models, better networks and devices, reduced fragmentation, more open APIs and marketing dollars. If you are interested, drop me a line and I will send you the ppt.

010_10

I also had a chance to moderate a panel on Mobile Advertising and the current state of affairs. While mobile advertising is the only advertising sector that has shown growth this year, it is not breaking out to stand on its own. Large media companies are primarily looking mobile as a complimentary channel though they are clearly enamored by its potential. Lack of clear, uniform, auditable metrics is another issue though various industry bodies have been working together and some guidelines are expected to be released next quarter.

Overall, the show felt like a sponsored networking party with hardly any new announcements, the show floor was easier on the feet, the attendance was down again. However, the hallway conversations and running into friends and colleagues from the distant past is always priceless. The only newsworthy highlight for me was the emergence of mobile healthcare and mobile retail as separate categories at CTIA. There is clearly much potential and interest in these areas. We will have more on these topics in the coming months.

Some of the news worth items were:

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

US Wireless Data Market Update Q408 and 2008 March 2, 2009

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Middleware, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

US Wireless Data Market Update Q408 and 2008

Download PPT (1.9MB)

Download PDF (3.1MB)

http://www.chetansharma.com/usmarketupdate2008.htm

Executive Summary

The US wireless data market continued to ignore the recession doldrums in Q4 2008 and grew 7.3% Q/Q and 38.7% from Q407 to reach $9.4B in mobile data services revenues. In 2008, the mobile data services revenues reached our original estimate of $34B. Even as the global industry crossed 4B in subscriptions and $1T in total revenues, the nervousness due to the current recession has been palpable. While the flailing economy has started to hit hard on the wireless data ecosystem esp. the infrastructure and handsets segments, consumers haven’t really pulled back on mobile data spending overall, just yet. There are sub-segments within mobile data revenue stream that are starting to feel the pinch like data card subscriptions and downloadables. Also, in an event of a longer recession, the fate of the US mobile industry will be more closely tied to the overall economy this time compared to the previous recessions.

clip_image001

US Wireless Industry in Recession - A collision of two perfect storms

Back in 2005, we published a paper titled “3G - Hitting the Mass Market” in which we presented the case for an explosive market growth in the US market riding on the back of 3G and posited that by 2009, US will become the leading nation in terms of the number of 3G subscribers. As of 2008, US crossed 100M 3G subscribers catapulting ahead of all industrialized nations in terms of total subscribers (% penetration was around 40%). The paper was based on our work in various markets and study of diffusion trends in the global markets. That study became the subject of several articles and cover stories and was one of the central documents (including our testimony in the case and a report to the President) referred to in one of the most prominent wireless industry cases in front of the US International Trade Commission. Our basic thesis was simple - once you have the favorable ecosystem factors in place, the market is ripe for explosive growth.

2008 was a key year for growth in the mobile data services adoption in the US market. The confluence of 3G, better devices and the smartphones, and the applications ecosystem set the stage for tremendous growth. We already saw signs of significant user adoption and the market grew 7-9% QoQ each quarter in 2008. From almost being in the bottom-most square in 2005 (in our 9-box ARPU charts), US market gained strength to find itself amongst the leaders by the end of 2008 (more on this in our Global Wireless Data Market update for 2008 coming out later this month). At mid-2008 point, 2009 looked to be another year of growth and adoption.

However, the current recession is not your parent’s recession. The problems with the economy are so deep and its impact on the consumer spending and sentiment is so massive that most economists are scrambling to make sense of it. Nobody really has a firm grip on how to fix the current mess because a recession of this magnitude complicated by a globalized economy hasn’t occurred before, so there is no playbook to lean on. We might get lucky and things could turn around in a couple of quarters but things could also take a turn for the worst that might take many more quarters to recover. Markets are incredibly volatile and so are the consumers. All consumer confidence indices are down to their worst ratings ever (The Conference Board Consumer Confidence Index was down to 25 (on a relative scale of 100) to reach yet another all-time low in February (index began in 1967)).

So, we stand at the junction of two perfect storms - one that has the promise of an incredible surf to take the mobile industry to new heights while the other is hell bent on destroying everything in its path. Will the growth surf be strong enough to absorb the economic tidal wave? or will it set us back in time? or will we end up somewhere in between?

The answer lies in how quickly the consumer sentiment and market psychology improves and stays consistently positive over a period of 3-6 months. If the situation improves in the next 1-2 quarters, the recession will be all but a blip in the overall US mobile data market historic charts. If however, this downward spiral continues and the confidence in the markets is not restored, consumers will start cutting some of the discretionary mobile data spending, even cutting down some family lines, and downgrading of mobile plans (including data) at an accelerated rate. If it is the latter, we are in for a fundamental reset of the economy as Steve Ballmer eloquently outlined in his talk to the Democratic Caucus in Feb.

Impact on the US Wireless Industry during Recessions (Slides 11 and 12)

The current recession is not the first one that the US wireless industry has faced but it is quite different this time around. The first one came in 1990 and lasted for one year and the second came amidst the dot-com bubble and terrorist attacks in 2001 and lasted for two years. Historically and logically, GDP and consumer spend is closely correlated. When the economy contracts, so does the consumer spending. A look into the income elasticity of demand indicates a change in consumer mobile services demand as a result of drop or change in consumer income. Different patterns of consumer demand emerge in different countries depending on the state of the industry during the specific downturn.

To put things in perspective, US represents 21% of the global economy and the US services revenue represents 1.1% of the US economy as of 2008. In access of 70% of the US economy is linked to consumer consumption so you can see the tight linkage between the GDP and the consumer spending (the US consumer spending alone is more than the economies of China and India combined).

If we compare the US GDP data to the mobile services revenues and subscriber data, there is some correlation during recessions i.e. service revenues contract but the state of the industry was quite different around on previous occasions. The % change in mobile services revenues and subscriptions went down with the drop in GDP in both instances and recovered as the GDP pulled back after the recession. During the first recession, mobile was a niche service. By 2001, mobile had passed the inflection point on to become a mass-market phenomenon but data services market was largely non-existent. By 2008, the US mobile market had matured with high-degree of subscriber penetration and mobile data had become a healthy and vibrant industry.

Let’s look at how the mobile industry behaved in the various recessionary periods over the past two decades.

1990-1991 The % GDP change (GDP compared to previous year) dropped from 5.8% in 1990 to 3.3% in 1991. The mobile services revenues % change dropped from 36% to 26% over the same time period, the subscriber % growth dropped from 51% to 43%. Subscriber penetration at the end of 1990 was around 3%. Given the smaller base, the drop in mobile numbers can be partially attributed to the fact that as the % subscriber penetration grows the % change numbers come down anyway. In 1992, when % GDP jumped to 5.7%, the % change in mobile services revenues and total subscribers jumped to 46% and 37% respectively, thus quickly reversing the downward trend.

2001-2003 The % GDP change dropped from 5.9% in 2000 to 3.2% in 2001. Over the same period, % change in mobile services revenues dropped from 31% to 24% and % change in total subscribers dropped from 27% to 17%. However, as you would see in slide 11, these numbers have been slowly dropping regardless of the recession as the subscriber and revenue base grew. The subscriber penetration in 2000 was 39%.

2007- The % GDP change dropped from 4.8% in 2007 to 2.3% in 2008. Q4 2008 reported a drop by 6.2% QoQ in one of the sharpest declines in the last quarter century. The nature of this recession is quite different as well. While the previous recessions were limited to certain segments of the overall economy, the current recession has touched almost all sectors with a vengeance. The subscriber penetration at the end of 2008 was 89%. The overall ARPU stayed pretty steady around $50 between 2001 and 2008, while data ARPU became a growing component of the overall mobile services revenue.

What to expect in the coming months?

As we noted in our Q3 2008 note, in some sense, the Christmas quarter might have masked some of the microtrends within the mobile data segment of the industry though Europe started to feel the pinch in Q4. If one looks deeper into the sub segments, as we contemplated in our Q3 research note, it is clear that the layoffs are having an impact on the data card revenues (which account for approx. 10-12% of the overall mobile data revenues in the US) as the enterprises are dropping access cards with employees. Downloadables revenues were down from some segments of the user base as discretionary spending tightens.

Also, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid constituted 57% of the net-adds in Q408 sharply up from 23% in Q407 (though Suncom subscriber base probably has something to do with it). Rising unemployment has accelerated another trend - landline replacement by Mobile which reached almost 20% by Q408 (of course this benefits the mobile industry). This trend is irreversible unless new experiences can be introduced.

Messaging continues to grow. The messaging volume jumped 15% and messaging revenue was up 5.5% QoQ. The data access (excluding data card) including flat rate data plan subscriptions have also showed significant strength offlate. In addition to smartphones, we are also seeing increased mobile data activity amongst feature phone users.

The key question is - will the increase in the mobile data subscriber base nullify the loss in data subscriptions? and the answer seems to be - likely yes. But, if the job losses continue at the current rate, we will start to see flattening of data revenues in Q109 for some operators and a gradual decline over the course of the year. We have already started to see infrastructure (operators are slowing down 3G/4G investment) and device segments (replacement cycles are getting longer) getting hit pretty hard. Smartphones remain a bright spot, which in turn has a direct positive impact on the data revenues. Even with the decline in handset sales, smartphone segment will continue to increase in 2009 accounting for almost 30% of the overall device shipments.

As we eluded to earlier, another factor at play is the growth in 3G and smartphone penetration in the US market, both of which have been responsible for increasing the usage and hence the data revenues. At the end of Q408, 3G penetration was approximately 40% and the data penetration had reached 60%. Smartphone penetration has been inching up as well. In fact, all the service providers and OEMs have been targeting sub-$200 price point, which seems to be a good sweet spot for consumer adoption. The above two factors have also been helping negate any cancellations or downgrading of data plans.

We are likely to see continued price and margin pressure on subscription plans and as a result, voice ARPU will continue its downward trend and data ARPU will become a more prominent factor of the overall ARPU mix by the end of 2009. The longer the recession lasts, the more permanent the shift in voice ARPU becomes. Customer retention will edge customer acquisition. Same would be true with the consumer behavior and expectations. This will lead to new business and pricing models for e.g. some will find the low flat rate pricing untenable in the long-run without a fundamental rethink of the network and business architecture.

The percentage contribution to the overall ARPU from data reached almost 25% in 2008 and is likely to exceed 30% by the end of 2009. For the first time since 1998, the voice ARPU dip below $40 in the US.

During the last downturn, the likes of Google emerged. These players didn’t have much to do with the mobile market at the time but have gradually put their indelible stamp on the future of the industry. It is almost certain that new media and telecom models will emerge as a result of the current crises with new players shaping the next decade of the mobile industry.

Whether this recession invites regulatory intervention remains to be seen. Government can encourage mobile adoption by reducing taxes and fees on mobile services, avoiding unnecessary regulations, making more spectrum readily available, increasing competition, investing and incentivizing in mobile broadband.

Also, will the industry price or innovate its way out of this recession? The short-term knee-jerk reaction is to generally lean on price-differentiation but innovative services and business models can lay the ground work for a more sustainable differentiation and long-term benefits from new services adoption.

Coming back to the 2008 forecasts, our estimate of the mobile data revenues was spot on. The annual mobile data services revenue stood at $34B. 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. Q109 numbers will give us a better insight into the impact of the current recession on the US mobile industry and the global markets at large.

The bottom line is that in an event of a long and deep recession (i.e. beyond 2009), which I am afraid seems to be the case, the fate of the US mobile industry will be more closely tied to the overall economy this time compared to the previous recessions. If the consumer and market sentiment improves within the next 3-6 months, the mobile data industry will continue its rapid growth. Despite a difficult environment, we expect the mobile data services revenues to grow by at least 15% YOY in 2009.

Against this backdrop, the analysis of the Q408 and 2008 US wireless data market is:

Service Revenues (Slides 14 , 21, 22)

ARPU (Slides15-18)

Subscribers (Slides 19-20)

Applications and Services

Handsets

Misc. (Slide 23)

Preliminary Global Update (Slides 21-22)

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

To the 1% of you who have made it this far, thanks very much for your time and attention.

Your feedback is always welcome.

Should you need assistance in 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.

DoCoMo Labs Masters of Innovation July 2, 2008

Posted by chetan in : 3G, AORTA, Intellectual Property, Japan Wireless Market, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Wireless Value Chain, Worldwide Wireless Market , add a comment

Yesterday, I had the honor to present at DoCoMo Labs annual Masters of Innovation program in Palo Alto along with Julie Ask of Jupiter and Tim Bajarin of Creative Strategies. The event was made possible by Richard Felix of Aesthetics Scientist. The theme for the afternoon was “What’s to come in the next 2-3 years?” Given my recent work on Mobile Advertising, I talked about what we can expect in the coming days, who the main players are going to be, etc.

Berna Erol, Senior Research Scientist from Ricoh California Research Center was present at the event and did a pretty nice summary. An excerpt below:

Chetan Sharma, President of Technology and Strategy Consulting, talked about mobile advertising. He made a good point that when thinking about mobile advertising one should not only think about cell phones but also other mobile devices such as Amazons Kindle, iPod Touch, etc.

Chetan emphasized that from advertisers point of view, the following points are most important:

1. Reach: How many people you can touch with your advertisement
2. Targeting/Purity: Reaching the right target audience
3. Effectiveness: Measuring the effectiveness of the advertisement, does user take any action?
4. Efficiency: Getting the benefit and revenue increase for the money spent on advertising.

Clearly mobile advertising has advantages especially in advertising targeting and measuring the effectiveness of the advertisement.

            Chetan predicts that mobile advertisement will be
            bigger than online advertisement and the mobile ad business
            has potential to be $20B industry by 2013.

When I was listening Chetan I was thinking how annoying it would be to receive mobile advertisements. Then, unknowingly Chetan made a comment and made me a believer: He thinks that idle screen of mobile phones are the holly grail of mobile advertisement, everything will start from there. He thinks, and I agree, people would be willing to receive advertisement and coupon on their idle screen, especially in exchange for reduced monthly mobile provider fees. Another good point was that the location based advertisements (e.g., a restaurant coupon can be delivered when you are close by) would be very important in the near future.

Julie had some really good insights into the social networking impact on mobile while Tim talked the consumer adoption of various technologies over time. Like most, he is a big fan of iPhone.

After our presentations, Ken of Kenradio fame moderated a 90 minute panel discussion and we covered pretty much everything under the sun.

Btw, just for the record, i talked quite a bit about the steps necessary to help enable the market reach $20B in 5 years. Lot of work needs to be done and we have to watch the trigger points.

Recap of Mobile Advertising Events - Stanford and Seattle March 22, 2008

Posted by chetan in : AORTA, ARPU, Carriers, Indian Wireless Market, M&A, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Speaking Engagements, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

This week I had the opportunity to moderate two distinguished panels on Mobile Advertising in two days, one at Stanford University and the other one in Seattle. This post summarizes the issues and points discussed during these two sessions.

Stanford University by Mobile Momentum

The first one was part our book tour and was organized by Mobile Momentum, an organization lead by Prof. Tom Kosnik and his student Mohit Gundecha. The event was sponsored by three of the pioneers in Mobile Advertising space - AdInfuse, Admob, and Rhythm New Media. My co-author Victor Melfi and I walked through some of the salient points of our book. We discussed the history of advertising, the digital revolution of the Internet, delved a bit into the definition of mobile advertising, the challenges and accelerators of this nascent industry, pondered over the business models, illustrated some of the successes using the case studies and our five-points framework (reach, engagement, targeting, viral, and transactions), briefly touched on the technology issues and gave our 2c on what it will take for the industry to go from its current state of “cautious optimism” to promise of “contextual nirvana.” Some of the key points were:

P3203384 P3203393
P3203379 P3203373

Our talk was followed by a panel discussion with Ujjal Kohli, CEO, Rhythm New Media, Tony Nethercutt, VP, Admob, and David Staas, VP, AdInfuse. All these guys have had distinguished careers in mobile, advertising, and digital evolution of our industry and hence the depth of knowledge on the panel was just great. Each of them has had successes with campaigns around the world, not just in North America. Admob with its billions of impressions every few weeks has blazed the way in the off-deck world. Rhythm has been quite successful with advertising with mobile video snacking at 3 in UK.

AdInfuse has been running some interesting campaigns in Europe like with Swisscom.They were achieving 8% CTR on WAP banner campaigns, 50% of users who clicked through to the WAP landing page completed a purchase. Recall rates were as high as 27%, more than 80% of the users rated the model of “free video content in return of advertising” positively vs. 2% who didn’t like the idea. Rhythm has also experienced similar numbers with their 3 UK campaigns. It is remarkable that 40% of the subscriber base is using the service and one can still watch the ad subsidized videos even if they have run out of prepaid minutes. The reach provided by Admob to its advertisers is phenomenal. Coca-cola’s campaign touched 125 countries. We cover Rhythm’s and Admob’s case studies in more detail in our book as well.

We touched on a wide variety of topics and I was struck by something that Ujjal said. He was previously CMO of AirTouch Cellular so brings in a very unique perspective to the table. He said, “For the carrier, No amount of Mobile Advertising Revenue is worth the risk of losing a customer.” The issues around privacy, customer satisfaction, customer care costs are critical for an operator to assess as they dive deeper into this new emerging medium.

There are a number of developers who are interested in exploiting the opportunity of mobile advertising but don’t want to deal with the complexity of the ecosystem and ad networks. There is an opportunity for some of the existing players to open up the APIs to broaden the reach.

Seattle by TiE

Next day, TiE Seattle organized a panel discussing “Mobile Advertising: Making the most of the next generation in advertising.” The panelists were Scott Silk, CEO, ActionEngine, Brian Lent, CEO, Medio Systems, Eric Hertz, CEO, Zumobi, Jeff Giard, Director, Alltel, and Jason Guenther, Director, Disney. Again, a pretty diverse panel representing various players in the value chain.

I started by probing the panelists on how we go about defining “Mobile Advertising.” Brian, not surprisingly, thought Mobile Search is going to take a lion share of the revenues just like how things evolved in the online world. Eric and Scott articulated their view around On-Device Portals, Widgets, and User Experience. Action Engine has been having good success with many of the large media brands such as MSNBC and WSJ while Zumobi has come out with a platform that takes user experience at the center of its strategy.

Though at number 5, Alltel has been introducing innovations quicker than some of its peers. Its Celltop application is yielding significant results with over 400% increase in usage if the application is within Celltop framework. Next, they are going to be putting the Celltop as a Home Screen (Idle Screen) app like what Koreans and Japanese have been doing for some time. It was refreshing for Jeff to right away state that this industry is not going to move forward if we don’t solve the “fragmentation” problem. I have said before that “Fragmentation is the biggest enemy of the mobile industry” and w/o solving the issues of fragmentation at different layers, we won’t get into the hypergrowth mode that will take the industry from $2B today to $20B in five years. Jeff thought that mobile advertising presents significant opportunities for the industry including the carriers but we need to be mindful of the issues around privacy, customer care, and customer satisfaction.

Disney is world’s premier consumer brand and very few companies understand the three screens better than Disney. Jason’s perspective on how mobile fits into the larger picture was an important one. He views mobile as a critical channel for any content company but reminded that a lot of work needs to be done in terms of standardization, metrics, auditing, and  privacy before mobile advertising becomes a thriving industry.

In both places, audience was well informed and highly engaged. Questions ranged from business models to technology intricacies. People didn’t think some of the newer MVNO models like that from Blyk will last too long and that for the trends will different for different geographies. For example, in emerging markets, mobile is going to be the only means to bring digital advertising to the masses, a point we make in our book as well. Will high-end phones be free subsidized by advertising as Eric Schmidt had proclaimed, well, don’t bet your life on it, at least not just yet though if someone like Google makes up its mind, it can, as Victor says, “make the market.”

I really enjoyed engaging with the panelists and the audience. Plenty of questions, we could have gone on for hours if not days. It was quite hectic but fun. Next week, I am moderating a panel “Mobile Mania - Show me the Money” at Washington Technology Industry Association and then facilitating a developer forum “Mobile Jam Session” at CTIA on 31st. On 24th April, I will be giving a class on Mobile Advertising at Stanford University (Prof. Kosnik’s course) and the same evening, I head to Sacramento to give a talk being organized by TechCoire on “Mobile Advertising: A $20B Opportunity?” In May, on the 13th, I will be in NY giving a talk on mobile advertising to the advertising executives, on 20th will be doing a book event being organized by CommNexus in San Diego, and on 21st will be moderating a panel discussion on the promise of mobile advertising at the highly regarded Future In Review Conference.

Hope to see some of you on these sojourns.

Pacific Northwest Wireless Summit January 15, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, Devices, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Privacy, Speaking Engagements, Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

Looking forward to meeting new friends and colleagues at the upcoming PNWS conference in beautiful Vancouver, BC this Thursday.There are some really great speakers and panelists. I have the privilege to present, participate, and moderate in two of the panels.

Mobile Marketing and Advertising

I will be sharing some research from our upcoming book on Mobile Advertising and then participate in a panel discussion with Alfredo Tan, Yahoo! Mobile, Matt Snyder, ADO Strategies (formerly with Nokia), and Olivier Vincent, Canpages. The panel is moderated by Michael Bidu of WINBC.

Understand Mobile Asia

I will be moderating this panel consisting of Asokan Thiyagarajan, Motorola, David Dai, CellOn China, and Karl Weaver, Newport Technologies.

If you would like to see any specific questions answered, please let me know. I will do a conference report later this weekend.

Apart from these panels, there are other panels on Mobile Commerce, Mobile Entertainment and Social Networking, Mobile Trends, Insights, Undeserved Vertical Markets, Mobile Enterprise, Disruptive Technologies, Smart DNAs, Wireless Innovation and Accelerated Commercialization, Go-to-market strategy. CEOs and executives from prominent companies in the region are going to be there. There are keynotes throughout the day including Luni from Medio, Fred Ghahramani, AirG, and Sue Abu-Hakima, Amika Mobile.

Caroline Lewko of WIP and WINBC fame also be moderating a couple of sessions.

There will be discussion about 2010 Olympics as well.

All in all a very packed day from 8am to 9pm and then a mixer that will probably go till midnight.

Hope to see some of you there.

Mobile Industry Predictions - 2008 January 1, 2008

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, European Wireless Market, Indian Wireless Market, Intellectual Property, 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 Usability, Privacy, Smart Phones, Speech Recognition, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 8 comments

I 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 whats to come, lets 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, AmpD 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.

clip_image002

(click for larger image)

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:

  1. David Cushman, Director, Emap

  2. Larry Shapiro, VP, Disney, and

  3. 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.

clip_image004

1. Will Google introduce a Google Branded Phone in 2008?

Will it? Wont it? 44.5% gave it a 75% or higher chance of happening while 40% thought it aint 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 hasnt 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 Sprints 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 wont 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 doesnt 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. Verizons 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 wont 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, dont 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 wont 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. Dont see any material impact in 08.

Of course, 15 questions cant 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

US Wireless Data Market Update - Q3 2007 November 18, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, Indian Wireless Market, Intellectual Property, Japan Wireless Market, Location Based Services, MVNO, Mergers and Acquisitions, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Search, Smart Phones, Strategy, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments

US Wireless Data Market Update - Q3 2007

Download PDF (2.1 MB)

Download PPT (1.2 MB)

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.

Global update (more details in our worldwide wireless data market update coming out in Q108)

Your feedback is always welcome.

Chetan Sharma

CTIA Wireless IT and Entertainment 2007 Roundup October 28, 2007

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Infrastructure, Intellectual Property, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Partnership, Privacy, Smart Phones, Strategy, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments

cid:image001.jpg@01C81817.0F453F50

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Misc

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

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

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

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

Whitepaper: Unified Mobile Data Platform - An Analytics based approach June 11, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, Devices, European Wireless Market, Indian Wireless Market, Intellectual Property, International Trade, Japan Wireless Market, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Strategy, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , add a comment

Whitepaper

Unified Mobile Data Platform An Analytics based approach

Sponsored by InfoSpace Mobile

Download PDF (30 pages, 1MB)

Executive Summary

2006 was a banner year for mobile data. Revenues from mobile data increased for all major carriers across all major regions around the world with data contributing 10-30% to overall revenues. In Q1 2007, US carriers recorded over $5B in data revenues with mobile data contributing to over 16% of the more than $32B in carrier service revenues. In fact, the Average Revenue Per User (ARPU) from data jumped 43% from last year. It has been a long journey though. Driven initially by SMS messaging, the market embraced ringtones, graphics, music, and gaming, each creating multi-billion dollar markets. As we look into the next five years, not only are new content applications such as broadcast video, idle screen, user-generated-content, community, and mobile search being introduced, but the functionality available with these applications, such as the sharing and tagging of data, is also increasing the demand on the mobile entertainment platform to be adaptive to the growing needs of the market. To stay competitive in this rapidly evolving and challenging market place, service providers must move from silod point solutions to integrated unified platforms to maximize their returns from the declining services and better prepare for the technical and business challenges in front of them. The vast potential of mobile data services in general and mobile search and advertising specifically cant be realized without a retooling of the fundamental approach to deploying services, engaging partners, and serving users with the best possible analytics-driven contextual user experience. This paper outlines the evolution of data services, discusses the need for unified mobile data services approach, and lays out the basics and the merits of a services-oriented analytics-driven framework.

Table of Contents

Executive Summary                                                               2

Evolution of data services                                                      3

Integrated solution offering                                                   11

Mobile Search - providing impetus for integration                   15

Rise of the brands - What’s your Audience Strategy?               17

Analytics driven unified framework                                        21

Mobile Advertising                                                               26

Recommendations                                                               29

Conclusions                                                                         30

Your comments are always welcome.

Chetan Sharma

Mobile Advertising Book Progress May 29, 2007

Posted by chetan in : AORTA, Carriers, Indian Wireless Market, Japan Wireless Market, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

Have been hiding working on the book for the last few days. Getting close to finishing up two more chapters

Market analysis

a. How big is the market?

i. Trends and forecasts

b. Implications of mobile advertising

c. Addressing the problem

i. The problem of mobile reach

ii. The problem of storefront

iii. The problem of understanding the customer

iv. Push vs. Pull

d. Publishers the old and new guard

e. What do advertisers want?

i. Advertising industry growth

ii. How does mobile fit in?

iii. What ads might be mobile only? What ads might be multi-channel (Web, Mobile etc)

Mobile Advertising Value-Chain Analysis

a. Introduction: Mobile Advertising Value Chains

i. How does the value chain compare to other advertising mediums?

b. Messaging

c. WAP/XHTML

d. Mobile Search

e. Local Search

f. Downloadables

g. Mobile Video/TV

h. Mobile Audio

i. Mobile Community

j. Directory Assistance

k. Code based

l. Bluetooth, WiFi, NFC

m. Active Screen

n. Differences in value chain across regions

o. Evolution of value chains

p. Takeaways

Thoughts?

Have been interviewing many of the leaders in the space. More on that a bit later.

US Wireless Data Market Update Q1 2007 May 15, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, European Wireless Market, Indian Wireless Market, Intellectual Property, Japan Wireless Market, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Smart Phones, Speaking Engagements, Speech Recognition, Strategy, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , 3 comments

US Wireless Data Market Update - Q1 2007

PPT Download (1.2MB)

PDF Download (2.4MB)

http://www.chetansharma.com/usmarketupdateq107.htm

US wireless data market continues to grow at a steady pace offsetting any decline in voice revenues. Growth in both enterprise and consumer segments resulted in a $5B quarter for the industry (by comparison, in 2004, the total data revenues for the year were $4.6B). Given that approximately 60% of the revenues are from non-SMS applications and the subscriber penetration of data services is still low, we remain bullish on the US data market. However, as the subscriber penetration crossed 80% this month, the subscriber growth continues to slow down from its highs in 2005.

Your comments are always welcome.

Chetan Sharma

Global Wireless Data Market Update 2006 April 29, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, Gaming, Indian Wireless Market, Intellectual Property, Japan Wireless Market, MVNO, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Networks, Speaking Engagements, Strategy, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

PPT Download (1.3MB)

PDF Download (2.2MB)

http://www.chetansharma.com/worlddatatrends2006.htm

In 2006, mobile data industry grew across every geography. From the true and trusted SMS messaging to new services such as Mobile TV, LBS, and others, different services helped in adding billions to the revenues generated for the year. Japan and Korea remain the envy of the global markets and the countries to study and learn from. The US market has been steadily making strong comeback and is soon going to become the biggest mobile data revenue generating market in the world. Chetan Sharma Consulting conducted its bi-annual study of the global mobile data industry. We took a look at wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and France to high-growth markets such as China, India, Brazil, and Russia. The study also took a detailed look at over 30 prominent operators. This note summarizes the findings from the research.

Your comments are always welcome.

Chetan Sharma

US Wireless Data Market Update - 4Q06 and 2006 March 4, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, European Wireless Market, India, Indian Wireless Market, Intellectual Property, Japan Wireless Market, MVNO, Mergers and Acquisitions, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile TV, Mobile Usability, Smart Phones, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

US Wireless Data Market Update - 2006

PPT Download (1MB)

PDF Download (2.7MB)

 

US Wireless Data Market update 4Q06 and 2006

Global update (more details in our worldwide data market update coming out soon)

2007 Early signs

Your comments are always welcome.

Chetan Sharma

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

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

PPT Download (849 KB)

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

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

The full version of the paper is available now -

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

Introduction

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

How big is the market?

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

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

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

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

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

Technology Requirements

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

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

Figure 4. Mobile advertising channels[12]

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

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

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

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

Figure 6. Mobile Advertising and Marketing Framework

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

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

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

The value chain

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

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

(Advertisers)

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

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

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

Aggregators mBlox, Infospace, WSC, etc.

Carriers Sprint Nextel, NTT DoCoMo, Vodafone, Telefonica, Verizon, Cingular, Virgin, ampD, Clearwire, etc.

Consumers You and Me

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

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

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

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

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

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

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

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

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

Purity how good is the user profile information?

Frequency how often is the audience exposed to advertisements?

Performance whats the quantitative measurement criterion to determine effectiveness of the campaigns?

Advertising inventory whats the availability of ad slots on premium properties?

Advertising units whats the size and shape of advertising content?

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

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

Risks

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

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

Value-chain dynamics

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

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

Conclusion

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

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

Acknowledgements

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

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

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

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

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

[5] Source: Dentsu, Chetan Sharma Consulting

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

[7] Source: Dentsu, Chetan Sharma Consulting

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

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

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

[11] Source: Chetan Sharma Consulting

[12] Source: Chetan Sharma Consulting, Q206

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

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

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

[16] Source: Chetan Sharma Consulting

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

Sell Phones: What will make mobile advertising tick? October 12, 2006

Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Devices, European Wireless Market, Gaming, Indian Wireless Market, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Search, Mobile TV, Networks, Privacy, Smart Phones, Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 4 comments

This column is going to appear in FierceMobileContent tomorrow.

Mobile Marketing and Advertising is the new it in the industry. All the recent industry shows have been buzzing with the potential of mobile advertising. Is mobile marketing going to be another over-hyped industry segment or will it actually help generate revenues, drive exits for VC investments, and most importantly, deliver value to the consumers? While the potential exists, there are several technical, business, and legal hurdles that need to be overcome before mobile advertising becomes a successful industry.

To get a grip on the potential market, we take a look at Japan as the harbinger of whats to come in this space. According to Dentsu, mobile advertising revenues for 2006 will be approximately $373M or close to $3.8 per subscriber (for the year). By 2009, this number is likely to scale to over $6/sub/year. In 2006, US will do less than $1/sub (for the year) in mobile advertising revenues, bulk of which will be SMS marketing. Clearly, potential is big. It is apparent that due to the availability of context, immediacy, and personalization, mobile has significant advantages over the other channels as an advertising medium.

First, lets discuss the technology piece. As we have seen in Japan and Korea, higher processing power handsets and 3G pipes play a significant role in the adoption of rich advertising content. In the US, by 2008, 3G penetration will reach over 25%. Adoption of Smartphones is also increasing. By next year, we will start seeing $100 smartphones. User interfaces are also getting better. UIOne, MYDAS, Flash, Screen 3, 1mm, and other proprietary solutions are extending the possibilities. In addition, search (including local) is going to be at the epicenter — whether advertising is based on declared intent from the user or passive impressions based on users context, history, and preferences.

For mobile advertising to be successful, one needs reach, purity, and analytics. Reach is how many real customers do you have? Purity is the quality of information on the customers. Name and address just dont cut it. Analytics is matching users interests implicit and explicit, context, preferences, network and handset conditions to ads and promotions in real-time. Not just bucketing a user in a group and giving them a number but understanding the user in every way possible and customizing every single interaction to the finest degree possible. Also, what is absolutely needed is an easily accessible control framework for permission advertising so that the user can selectively or globally switch-on or off the types of ads/promotions they would like to entertain and when.

It is clear that mobile advertising and marketing has big potential if industry strives to take into account the user considerations that matter the most. But, which players will dominate and control the ecosystem. Without a doubt, carriers have the purest profile information available, but can they execute their strategies? Well, they have approximately 2-3 year window. Once 3G and Smartphone penetration curves collide and pass 20-30%, if the carriers havent built a good mousetrap (value proposition) by then, all bets are off. Different dominant players will start to emerge, as it will get easier for Internet and traditional brands to build direct relationships with a good proportion of the subscriber base. Brands and service providers who are able to integrate user experience across channels will benefit the most.

Then, there is the whole world of off-net advertising and marketing, where carriers are going to play a lesser role. Here, creative technical and business solutions are needed for accurate targeting. Finally, ads and promotions should be super-distribution-friendly meaning — treat ads and promotions like content that can be passed around easily.

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

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

Note: An expanded version of this article will be published soon.

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

Mobile Advertising Bubble September 27, 2006

Posted by chetan in : Middleware, Mobile Advertising, Mobile Entertainment, US Wireless Market , 2 comments

There will be a lot of companies that will be funded in this space as it is new and hot. Lot is unknown, people are just trying to figure things out. Couple of new announcements from Boris Fridman - Crisp Wireless’s CEO

The first announcement is our partnership with WPP-owned interactive agency VML to develop mobile promotions and advertising solutions for major brands. This is one of the first official alliances between a major agency and a mobile content delivery firm. Already, Crisp Wireless and VML have collaborated on the Burger King WAP site, part of the fast food giant’s growing mobile presence.

http://www.crispwireless.com/news?content_id=932

The second announcement, with Washingtonpost.Newsweek Interactive (WPNI), is yet another high-profile validation of Crisp’s mLogic platform in the publishing industry. WPNI has launched three new ad-supported mobile Internet sites–washingtonpost.com, Newsweek.com and Slatebuilt with and managed by mLogic Media, and ads served by mLogic AdServer.

http://www.crispwireless.com/news?content_id=933

In other news Visto is raising another round of money - $51m to be precise.

IBM and Telenor invent PASTA September 22, 2006

Posted by chetan in : AORTA, Carriers, Enterprise Mobility, Middleware, Partnership, Strategy , add a comment

It is great to see some progress in this space. I have been talking about such a system for some time.

IBM and Telenor have developed new mobile communications technology for global business users that will allow mobile devices and networks to automatically learn about their users whereabouts and preferences as they commute, work and travel.

Code-named PASTA for Presence Advanced Services for Telco Applications and developed by the two companies as part of a joint research initiative, the technology provides infrastructure for deploying next-generation mobile presence services. Presence technology used in applications such as instant messaging makes it possible to locate and identify a computing or communications device wherever it might be, as soon as the user connects to the network. Privacy issues are addressed by allowing users to control when they are available.

The PASTA infrastructure has the ability to learn about users preferences. As the network becomes smart about its users preferences, we believe we can reduce outgoing network load by up to 70 percent, said Vova Soroka, IBMs lead researcher on the project. That is a huge benefit to a network operator, but PASTA can also be used to create new end-user applications to enable new services in medicine, tourism, financial services, logistics and home care industries among others. Any business with a large mobile workforce will find potential uses.

I am sure it won’t be perfect but definitely a step in the right direction.