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 commentYesterday, 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 Amazon’s 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 commentThis 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:
- Keep things in perspective
- Understand the business, not just the technology
- Chant the User Experience mantra
- Give Users Control
- Respect Consumer Privacy
- Focus on the most critical 1%
- Prepare for Data Everywhere
- Visualize Three Screens
- Watch your kids: They are the Market
- Watch for external catalysts to change like Alternate Devices and Open Platforms
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 farLooking 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 , 7 commentsI never think of future, it comes soon enough – Albert Einstein
First things first. Wish you a very happy and successful 2008.
Before we look at what’s to come, let’s do a quick wrap-up of the year that was.
2007 will clearly be remembered as “the year of iPhone.” While there were several other “events/trends of interest” through-out the year, nothing captured the imagination of the world like the iPhone. It was significant for another big reason – it had a profound impact on the business model and ecosystem dynamics. Q4 2007 was also significant for the deafening roar that resonated around “Openness”.
Steve Ballmer exclaimed mobile to be the next battleground while Eric Schmidt pondered why mobile phones are not free (subsidized by Google ads of course).
Google played its chess game effectively and though it is unlikely to play to win the 700 MHz auction or even if they do win would be able to do anything substantive in the short-term, they did, however, with Android and spectrum gambit, force some of the regulation-wary operators to take a stance on openness. Nokia is putting together a brilliant services strategy that looks to connect directly to the consumer. Competition and coopitition will have a different meaning going forward.
Things were looking positive for WiMAX until the end of the year when Clearwire was left standing on its own. It will look towards Google, Sprint, Motorola, and others to rescue its fate.
Mobile Advertising was hailed as a great savior of mobile content and mobile revenues in general. Blyk even launched an advertising-based MVNO. We made significant headway in energizing the sub segment but the tough problems of privacy, education, control, fragmentation, and user experience remain. LBS picked up steam and mobility started to get into the alternate consumer device universe.
In terms of actual dollars, mobile data market continued its steady growth with substantial shifts in revenue towards non-SMS data applications and services. Several operators are doing $2B/quarter+ in data revenues. Several subscription milestones throughout the year: 3B worldwide, 500M China, 250M US, 225M India. 3G continued to inch towards mass-market in western markets (20-25% penetration) while in Korea and Japan, it was getting hard to find people without 3G (70%+ penetration).
Among other events of significance: Cincinnati Bell and T-Mobile launched UMA devices, Motorola lost its Mojo, Amp’D and Disney Mobile shut down, MediaFLO launched, mCommerce initiatives took hold, China continued to delay 3G, WM got updated, Yahoo cemented some impressive operator deals as GYM got more active in mobile, UMPC fizzled, Mobile Web 2.0 got into the industry physce, LTE got embraced worldwide, M&A galored, IP scuffles continued, Muni projects went into coma, and DRM-adorned content became a thing of the past.
2008 will be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments? We put some of the questions to our colleagues in the industry. This survey was a bit different in the sense that the movers and shakers (and folks from the companies discussed here) and industry insiders participated. We were able to glean some valuable insights from their choices and comments. Participants (n=196) were folks from across the mobile value chain and from around the world.
Many thanks to everyone who participated.
Three names were drawn for a copy of our upcoming book “Mobile Advertising” (co-authored with Joe Herzog and Victor Melfi, John Wiley & Sons, 432 pages, Feb 2008).
The winners are:
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David Cushman, Director, Emap
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Larry Shapiro, VP, Disney, and
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Keith Kostuch, SVP, Alltel
Congrats and Thank you.
Now onto the survey analysis.
Figures above and below summarize the responses. We requested respondents to rate the probability of an event happening in 2008 on a scale 1 to 5. 1 being “Not a chance” to 5 being “100% probability” The figure above summarizes the overall probability of the event happening. The figure below provides the breakdown of responses.
1. Will Google introduce a Google Branded Phone in 2008?
Will it? Won’t it? 44.5% gave it a 75% or higher chance of happening while 40% thought it ain’t happening. GPhone is a temptation Google will find hard to resist though a lot will depend on how various initiatives and partnerships shape-up on the ground. In any case, expect another major announcement in the next 2-3 months.
2. Will Google play to win in the 700MHz Spectrum Auction?
Google has played the spectrum chess game effectively. Almost 50% respondents gave it a 75% or higher chance of Google winning the bid. Though expectations are high, Google is unlikely to play to win. Services business is not their cup of tea, they could still fund the Clearwire-Sprint deal but that investment can be spent differently to get better end-results, i.e. mobile ad revenue.
3. Will Microsoft launch its own mobile phone?
Unless Google comes out with GPhone, Microsoft will stay content with its operator distribution strategy. 63% of respondents gave it less than a 25% chance of Microsoft releasing their own phone. If GPhone comes out and gets some traction, expect Microsoft to get its “fast follower” strategy into high gear.
4. Will Mobile Payments get traction in North America and Western Europe?
Only 9% thought it is a sure bet for 2008. True mobile commerce hasn’t really started in the western world. While there are significant movements, 2008 will just be a “lay the groundwork” year for mobile payments.
5. Will WiMAX regroup from its setbacks?
Only 35% gave it a 75% or higher chance (of WiMAX resurrecting itself esp. in the US in 2008). A lot depends on how Mr. Hesse deals with Sprint’s WiMAX business. Indications are there will be a deal with Clearwire to off-load the risks via some external investment (Google?).
6. Will Helio survive 2008?
Almost 70% respondents thought Helio won’t make it. Given the flameout of some of the prominent new-generation MVNOs, it is hard to see how Helio will see 2009. It will all come down to how persistent is SK Telecom. Earthlink doesn’t have the bank balance to keep funding this initiative.
7. Will Verizon truly open-up its garden for third-party visitations?
Only 5% thought it is a sure bet for 2008. Verizon’s open posturing was more to ward off any regulators and to improve its image. There is unlikely to be any meaningful progress on this front this year.
8. Will 2008 be the inflection year for Mobile Advertising?
42% gave Mobile Advertising a 75% or higher chance for rapid growth. Market will mature, more consolidation, some privacy gaffes but overall things are looking up for mobile advertising.
9. Will Femto-Cells gain any significant momentum in 2008?
It will be an introduction and experimentation year, so no significant traction is expected. Over 52% thought Femto-Cells will be just a buzz word in 2008.
10. Will Nokia be able to extract iPhone-style rev-share from carriers in 2008?
Less than 20% thought Nokia will be able to do an Apple when it comes to rev-share arrangements. For OEMs, going direct to the consumers was considered treachery to the sacrosanct relationship with the operators. Until Apple showed up with iPhone. Now, Nokia is putting its services strategy in motion and is building a direct relationship with the consumers worldwide and it has a good shot at pulling it off though it will be a long haul.
11. Will Palm survive 2008?
Only 8% gave it a 100% chance of surviving 08 as an independent entity. It will be difficult for Palm to stay in a status-quo mode. They desperately need a hit device that can give them some breathing room. Given all the operational and strategic problems the company is having, a sale is likely.
12. Will iPhone truly open up?
Over 45% thought iPhone won’t open-up in any meaningful way. Apple has built-up one of the most profitable closed empires in the digital world. Are they about open things up? While the iPhone SDK is scheduled for early 08, don’t hold your breath on accessing the critical native APIs.
13. Will there be more unsubsidized devices introduced in the US market in 2008?
Almost 49% thought we are likely to see another unsubsidized device in the US market this year. Nokia is looking to go direct and some GSM handset manufacturers are likely to entertain the idea of testing the market with unsubsidized devices.
14. Will Mobile TV move the needle in 2008?
Almost 70% thought mobile TV won’t make much of a difference in 08.Though AT&T is slated to introduce MediaFLO to join Verizon in the Mobile TV services market, lack of devices and better pricing models will hinder wide adoption in 2008. However, downloadable video and VOD content will experience significant growth.
15. Will Android make a dent in handset shipments in 2008?
Only 15% gave it a more than 75% chance this year. It is going to take some time for Android plans to mature and materialize. Don’t see any material impact in 08.
Of course, 15 questions can’t cover the whole industry. As pointed out our respondents, there are a number of other issues and opportunities that will shape the ecosystem - Rise of Facebook as social networking OS for mobile (social networking as a whole starts to go mobile), LBS beyond navigation, Rev-share shuffles, Chinese OEM start to become prominent in the western world, China and India continue to dominate in net-adds, Mobile device security becomes a nightmare for corporate IT, Consumers wake up to mobile privacy snafus and risks, Will Android spread its tentacles beyond nicheosphere, 3G iPhone, Does China Olympics hold any surprises for the mobile industry? Launch of projection handsets, NFC handsets, IMS .. and much much more ..
All in all, consternation and debate will continue into 2008. We will analyze, dissect, and report as events unfold in the new year.
Look forward to the continuing dialogue and meeting with you in person.
Your feedback is always welcome.
Chetan Sharma
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 commentsUS Wireless Data Market Update - Q3 2007
http://www.chetansharma.com/usmarketupdateq307.htm
US wireless data market continued its growth reaching $6.4B in service revenues for the third quarter. With the holiday quarter to go, the aggregate data revenues for the year are already past the 2006 data revenue mark. Whether it was the first full quarter of iPhone sales, or the debate on the upcoming 700MHz spectrum auction, or the rumors swirling around the gPhone, or the continued M&A activity - the US wireless data market remained vibrant in Q3. Given that majority of the data revenues now comes from non-messaging applications and services and the subscriber penetration for such services is just getting into the inflection zone, US remains one of the most attractive wireless data markets.
- US Wireless data service revenues grew 9.4% Q/Q to $6.4B in Q307. For the first nine months of 2007, the US wireless data service revenues stood at $17.7B jumping 59% from the same time period in 2006.
- Overall ARPU decreased slightly by $0.12 Q/Q to $53.50. The overall voice ARPU declined by $0.35 to $43.93 while data ARPU continued its steady incline, increasing by $0.53 to $9.57.
- Verizon continues to lead in both data ARPU as well as Data as a % of ARPU with $10.6 and 20.30% numbers respectively, in the process becoming the first US carrier to get past the $10 in data ARPU and 20% in data contribution. Sprint also touched $10 in data ARPU but is now last amongst the top four carriers in data % which stood at 16.95%. AT&T’s numbers were $9.35 and 18.4% respectively while T-Mobile’s performance also improved with $8.32 in data ARPU contributing 17.88%
- The strongest growth continues to come from Verizon, accounting for almost 31% of industry’s data revenue in Q307. Its data service revenues jumped by 11% Q/Q to $2B (again becoming the first US carrier to get past the $2B milestone). Verizon was followed by AT&T at $1.8B, Sprint at $1.2B, and T-Mobile at $676M.
- The % contribution of data to service revenues jumped to almost 18% in Q307 and is likely to touch 20% next quarter.
- Last week, US crossed the 250 Million subscription mark. The net-adds stabilized for the quarter even though Sprint lost 337K net subs. While AT&T is the only carrier to cross the 2M mark for net-adds/quarter this year, Verizon is ahead of AT&T in overall net-adds for the year by approximately 820K subs. iPhone couldn’t have come at a better time for AT&T which helped in stemming the tide of losing the market share to Verizon.
- The current net-adds rate for the year is 1.65M subs/month down from 1.92M subs/month in 2006 and 2M subs/month in 2005. Though the growth rate has expectedly slowed down, there is still plenty of room for growth over the next five years.
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the year, Verizon with $5.4B, AT&T with $4.95B, and Sprint with $3.7B in service data revenues stood at #4, 5, and 6 respectively with Verizon closing in on KDDI for the number 3 spot. Verizon became one of only four operators in the world who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI). The carrier indicated that enterprise services such as data card and mobile email are generating in excess of $500M/quarter now.
- Non-messaging data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- There was tremendous activity in the area of Mobile Advertising. Google is also laying out its tactical roadmap in hopes to dominate the space and its every move in the mobile space makes its fellow brethren in Redmond scratch their heads. Meanwhile, Yahoo is busy stitching together carrier deals around the world. We just finished a comprehensive book on the subject. More details coming soon.
- Venture money continued to flow into the mobile sector taking the YTD investments to over $4B. Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- iPhone became the quickest smartphone to eclipse the 1M mark in a quarter (by doing it in its first full quarter). By contrast, RIM took 22 quarters or 5.5 years to crack the 1M/quarter sale mark. Palm is still searching for the elusive milestone and might not find it in this lifetime. iPhone also made its entry into Europe and remains in intense negotiations with operators worldwide.
- Nokia eclipsed 100M unit sale in Q307 for the second straight quarter. Its 9 month tally stood at 303.6M followed by Motorola at 117.8M and Samsung at 114.8M. Nokia’s share of the market went up to 39.1% followed by Samsung at 14.6%, Motorola at 12.8% Sony Ericsson at 8.9% and LG at 7.5%. Apple shipped 1.12M iPhones during the quarter generating the revenue of $118M.
- Despite the sale of over 239M handsets by the top 5 manufacturers during Q307, the industry remained mesmerized by the advent of iPhone. Uncharacteristically, Apple lowered the price of the phone ahead of the holiday season.
- After the launch of iPhone, the talk of gPhone filled the rumoid. While the possibility of a gPhone launch remains open for 1H08, Google launched Android to keep things interesting in the industry.
- T-Mobile USA launched the first device with HotSpot @Home service in Q3.
- There was a renewed interest in LBS and it generated some huge M&A transactions in the sub-sector led by Nokia’s acquisition of Navteq.
- In terms of messaging, T-Mobile keeps their users more engaged than other carriers. Each T-Mobile subs exchanged on an average 758 messages last quarter compared to 584 messages by a Verizon sub and followed by 370 messages by an AT&T subscriber. By comparison, subscribers in Philippines engage in almost 2000 messages every quarter or pretty much a message every hour.
- In our 2005 paper on 3G diffusion, we estimated that 2007 will be the inflection year for 3G in the US market. In Q307, the 3G penetration was just shy of 20% with Verizon leading the pack with 50% 3G subscriber penetration. AT&T reported that 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- Being “Open” is the new Black. Apple announced SDK for iPhone, Sprint touted XOHM, 700 MHz spectrum auction became a subject of great debate and posturing, and Google launched Android (in nov). The convergence of mediums is creating friction, introspection, fear, and opportunities (FIFO). We clearly live in interesting times.
Global update (more details in our worldwide wireless data market update coming out in Q108)
- The RIC in BRIC: We had a chance to visit and spend some time in Russia, India, and China during the past few months. These markets remain vibrant especially China and India adding an aggregate of 15.3M subs a month last quarter. India outpaced China with 24.2M net-adds vs. 21.68M in Q307. Mobile coverage in China is ridiculously good. We found strong RSSI in deep gorges on Yangtze as well as high up on the mountains. Regulators in both countries also gave some indications of granting spectrum for 3G.
- NTT DoCoMo continues to dominate the wireless data revenues rankings crossing the $3B/quarter mark and taking its tally for the year to over $8.6B. They also crossed the 75% mark for 3G penetration. China Unicom edged past SK Telecom to occupy the number 9 spot. Rest of the rankings remained the same.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are topping 30%.
Your feedback is always welcome.
Chetan Sharma
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 commentshttp://www.chetansharma.com/ctiaoct07.htm
The early morning full moon over the San Francisco bay was much more inspiring than any gizmos or gimmicks at the annual CTIA Wireless IT and Entertainment show. Maybe it is the conference fatigue setting in but the scaled back event failed to gather steam and one had to rely on alternate sources to get a sense of where things are headed in the next 6-12 months. This note summarizes the observations and commentary from the show.
First let’s do the numbers. CTIA released its mid-year data survey for the year. In summary, as of June 2007 - 243M subs, $67.9B in revenues (first 6 months), $10.5B in data revenues for the year accounting for 15.5% of the total service revenue, MOU exceeded 1 Trillion minutes, 1B TXT messages daily. These numbers were in line with the numbers we reported back in Aug.
Keynotes - The central theme that tied the three keynotes was “Be Open, Do Good Work, and Rest will take care of itself.” The keynotes from Steve Ballmer, Microsoft, Dustin Moskovitz, Facebook, and Atish Gude, Sprint Nextel emphasized the need to have an “open platform” for innovation, applications, and services. Haven’t we been down this lane before?
Steve started by taking a page out of our (upcoming) book, literally (page 243 to be exact) and describing a vision where mobile device becomes the remote control of your life for both workstyle and lifestyle. Too often we focus on separating out personal vs. professional but our lives are so intertwined that one minute you are setting up a doctor’s appointment and the next minute closing a sale. Companies that focus on managing the experience start to finish (waking to sleeping) independent of everything else will be the ones that dominate these turf wars. Microsoft’s big announcement was the release of device management server that includes mobile devices in addition to the desktop world (but it is limited to windows mobile devices only, Open?). Microsoft has been making impressive strides in occupying its place in the mobile ecosystem. Though windows mobile and battery life don’t go together, the fact that they are deployed with 160 operators in 55 countries, shipping 20M devices/year places them at a significant advantage in the coming days.
Facebook’s Moskovitz made the plea for openness of networks, devices, and applications to enable the social networking phenomenon on mobile. The fact that Microsoft and Facebook were doing the keynotes on the eve of strategic investment wasn’t a coincidence. Dustin brought out the elderly statesman Mike Lazaridis to announce the facebook app for Blackberry smartphones. The interesting thing was how the app was introduced - Facebook chose RIM and RIM chose T-Mobile for this app. Device manufacturers are surely getting bolder. Facebook extended its platform to mobile. Getting social networking apps on mobile is a no-brainer. In fact, the coming enhancements with Presence, IMS, Broadband, Profiling, Location, can make mobile social network a society of its own.
I thought the most forceful case for “openness” was delivered by Atish Gude, SVP of the XOHM (WiMAX) initiative at Sprint Nextel. In fact, it was exactly along the lines of our recommendations for the operators in our book. Atish talked about openness across network, devices, content, and applications to deliver a great “customer experience.” Operators focus on delivering the intelligent network by focusing on QoS, Network elements like Presence and Location, Security, and Consistency of throughput and performance and leave the innovation in applications and services on the ecosystem who know how best to exploit the medium. His definition of “device” expanded beyond the mobile phone into consumer electronics and appliances which is a smart way of looking at things. However, vision is one thing and execution is another. Will Sprint be able to deliver on this vision in a timely fashion amidst quarterly Wall Street pressure is going to define the industry more than any of the hoopla of 700MHz.
Enterprise MIA - One of the personalities was clearly missing from the show. Yes, there was an enterprise pavilion but nothing new and different surfaced. Microsoft’s late foray into the device management space was the only worthwhile news that emerged.
LBS - The LBS industry proudly presented its posterchilds TeleAtlas, Navteq, TeleNav, and others. Their imposing presence on the show floor and in some of the sessions was palpable. I have been working in or following this space since 1995 and it finally feels that there is going to be some activity in this space after years of posturing, delays, and hype. However, the true value of “location” can’t be unlocked unless it truly becomes “open” for the application and service developers. The delivery of coordinates for every request is not cheap so some form of business model or technical break through is needed to make the use pervasive. Some of the newer players displaying their wares were Telmap, locr, and earthcomber.
Mobile Advertising - It is great to see the progress over the last 12 months. The distribution, inventory, and ad networks are all improving and size of the campaigns are starting to reach six figures on average. Some of the working demos I saw were really compelling and some unique solutions are going to be introduced in the market in the next six months. Though the space is still nascent, some trends have started to emerge - companies who are focused on solving the problem end-to-end from strategy to execution to understanding the results are separating themselves from the plethora of technology providers in the space. There is tremendous amount of work that needs to be done in the metrics and auditing space in addition to the integration of silos.
WiMAX picks up steam On the heels of WiMAX being declared as part of the IMT-2000 family, WiMAX is slated to gather momentum though a lot still depends on carriers like Sprint to deploy nationwide networks and device manufacturers like Nokia, Motorola, and Samsung to bring cheap devices to the market. Nevertheless, Cisco’s acquisition of Navini, Beceem’s deal with NEC and others are signs of positive movement in this sector.
Mobile Video a dying market? Already? Only a couple of CTIAs ago, Mobile video took the event by storm only to find defending itself as a viable business in a short span of time. The video quality has improved significantly but the business models have not.
Entering the US market - US remains one of the most attractive market for mobile data but very few overseas firm succeed. One of the big European brands “Zed” is making an aggressive and impressive push into the US market and is expecting up to 30% (or $150M) of its revenues coming from the US market in the next 12 months. They have developed a good platform for interactive games that tie the experience across mobile and online really well. EA and the likes should take notice.
Open - not in my backyard The keynotes were in sharp contrast with some of the carrier panels. One of them seemed to be the replay of a session I attended in 2001 or was it 1997. Eerie.
Presence, IMS - The discussion around presence and IMS is intensifying. Demos are getting better and the coordination between carriers to standardize and interoperate is improving but we still have a long way to go.
Coolest gadget - NeuroSky filled the void of a gadget less show by showcasing its mind-over-matter technology. Using brainwaves which are detected by a sensor attached to your head, it allows the user to move, push, and float objects by just concentrating on them. Remember The Matrix. Now, if you throw in Philip’s amBX and Microvision’s PicoP, your cell phone becomes this gaming platform that takes the die-hards to the transcendental state of nirvana.
iPhone continues to dominate the talk - iPhone continues to set the tone of discussion in the industry. Since July, there has hardly been a mobile conference worth its salt that hasn’t had a session on “impact of iPhone.” There hasn’t been a mobile device like this one and it shows. Attendees proudly fiddled with their iPhones in public and were eager to discuss their experience and forecasts.
US vs. Europe - There was quite a bit of us vs. them discussion. CTIA’s Wireless Wave magazine started the discussion by its cover story article “The Continental Divide” (for which we were interviewed). It was soon covered by the likes of WSJ (Walt Mossberg - Free My Phone), GigaOM (How far behind is the US vs. Europe?), Steve Largent (Largent to Mossberg .. Wish you were here in San Francisco), and others. As I say in the article - the picture is more complicated .. and one needs to take a holistic view. This topic is crying for a detailed study.
MCommerce - Behind closed doors there is a lot of discussion on MCommerce and how to enable phone to become the wallet of choice (this will be music to the ears to my colleagues in Japan and Korea). Some new and interesting models are starting to appear. One is from Mobilians, a company that has had good success in South Korea and is now setting its sight on the US market. Their focus is to use the phone to enable payment of online and offline goods. In Korea, Mobilians is registering 7M transactions/ month and over $1B in goods sold/year with up to $250 items (which appear on the carrier bill). This is a totally untapped space for the carrier and is a threat to the credit card companies especially for the low cost items where the 2%+20-25c fee drives up the effective rate for the merchant. A tier-1 carrier is also looking to firm up its mCommerce strategy in the next few weeks. It should be noted that some of the smaller regional carriers who survive due to laser focus customer service are testing and rolling out innovative solutions ahead of their bigger peers. For e.g. CellularSouth launched picture application (with Ontela) and after their successful trials with NFC based payments is looking into launching WirelessWallet. Similarly, some others are in the process of getting some LBS, Mobile Search, and Mobile Advertising solutions in the next quarter or so.
Misc
· AOL Mobile re-launched its mobile suite of products. It has a good suite of assets and the company is starting to integrate and enhance the user experience.
· More M&A activities are expected in the mobile advertising space in the next 6-12 months as startups use every advantage to maximize the returns before the big boys catch-up.
· There was hardly any mention of the gPhone or the zPhone.
· Verizon and Sprint are boosting the holiday season lineups to counter the onslaught of iPhone with similar looking phones.
· Becker - a 60 year old company which launched the first ever car radio showed off its “Traffic Assist” unit which had a good user interface and free real-time traffic info for life.
· M2M players such as Telit and Numerex showed their solutions in the machine-to-machine communications space.
· Talkster talked about its free global calls in exchange of listening to ads.
Your feedback is always welcome.
Chetan Sharma
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 commentWhitepaper
Unified Mobile Data Platform An Analytics based approach
Sponsored by InfoSpace Mobile
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 silo’d 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 can’t 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 farHave 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 commentsUS Wireless Data Market Update - Q1 2007
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.
- US wireless data market got over the $5B mark in service revenues in any given quarter for the first time. Revenues jumped 12% from Q406 and over 68% from Q106 to approximately $5.5B for Q107.
- Overall ARPU remained at the same levels as Q106 and Q407, which speaks to the value of data revenues in the declining voice revenue market. While voice ARPU declined 6%, data ARPU rose 46%. The average ARPU in the US stands at $8.34 or almost 16% of the service revenues.
- The strongest growth was experienced by Verizon whose data revenues jumped 83% from Q106 to $1.6B. While Sprint still leads in absolute data ARPU numbers, Verizon is likely to take that mantle by Q307. Sprint with $9.25 was ahead of Verizon at $8.7, AT&T at $7.88, and T-Mobile at $7.5 in data ARPU
- The % contribution of data to service revenues jumped from 11% to 16% during the last year. Verizon leads with 17.4% with AT&T at 16%, Sprint with 15.7%, and T-Mobile at $14.4 close behind.
- US wireless data market continued its rapid growth in 2006. Wireless data service revenues jumped almost 84% to approximately $15.8B (from $8.6B in 2005). The service data revenues are likely to top $27B in 2007.
- In terms of net-adds, the numbers declined 17% from Q406 to just over 5M new subs dropping the rate from 1.92subs/month in 2006 to 1.66 subs/month in 2007. Some of this is expected due to seasonal boost in Q4 however, the decline in net-adds over the course of last 3-4 quarters is indicative of slowing market as discussed in our quarterly updates last year. With subscriber penetration crossing 80%, sub-5M quarters will become the norm rather than the exception. Carriers will have to focus on increasing customer lifetime value and not rely solely on new subs to boost revenues.
- The overall subscriber penetration currently stands at approximately 80%.
- The top three carriers again surpassed $1B/quarter (in data revenues) mark with ease, in fact Verizon and AT&T crossed the $1.5B mark with $1.6B and $1.5B in data revenues respectively. Apart from Sprint, all remaining top four operators experienced double-digit percentage growth
- Verizon narrowed its distance from AT&T. Only 1.5M subscribers separate the two. In Q106, this number stood at 2.8M. Except for Q406, Verizon has added more new customers every quarter (AT&T took the honors last quarter) for past several quarters. Though industry is waiting with much anticipation the release of iPhone by AT&T, I mean, Apple, it is not going to have much impact on the Q2 numbers.
- Helio and Amp’D boasted $100 ARPU and 100K subscriber base but the burn rate and Cost of Customer Acquisition remains quite high.
- Though the overall penetration of messaging is around 40%, in terms of total number of messages in the network, US had another blockbuster quarter. Verizon with 22.75B, T-Mobile with 16B, and AT&T with 14.23B messages (SMS and Multimedia messaging) were the leaders. Notice T-Mobile’s performance with less than half the number of subscribers compared to its peers.
- Q1 also saw the introduction of MediaFLO from Verizon and Qualcomm with AT&T slated for a Q3 launch. The DVB-H camp appears to be disoriented and still looking to move beyond trials to committed launches. Though potential of mobile video is there, we need to be reminded that the current penetration is 2-3% indicating a long-road ahead. However, the user experience on MediaFLO is stellar and if business models fall in place, the future looks good.
- Verizon indicated over 100M in application downloads up over 36% from last quarter. With growth in data-card usage and other data apps, the revenue contribution from non-SMS apps is close to 60%. Even with many of the application below 25% penetration, these trends bode well for the US mobile data industry and the stability of ARPU in general. We expect the year to end at approximately $11 in data ARPU or 20% of the service revenues.
- Amongst other initiatives, AT&T’s banking effort and Visa’s NFC push are noteworthy.
- WiMAX has started to show on the radar screen though not so much in devices. Clearwire reported 258K , $32 ARPU, and $343 in customer acquisition costs. Sprint is planning to launch some UMPCs and data cards with its WiMAX push later this year. Despite these launches, position of WiMAX in western markets remains tenuous.
- As we move into Q2, while Motorola is recovering from ROKR, iPhone is the one to die for though RIM is ahead of the CURVE, and Helio’s OCEAN has set sail. Nokia’s N95, LG’s Prada, and Samsung’s Upstage are vying for attention. With iPhone announced, media rumor mill focused on gPhone.
- There was tremendous activity in the area of Mobile Advertising. There is a lot of confusion around what it means. All carriers are active in the space. Even T-Mobile is running trials. There is debate around how long the carrier influence on this segment will last.
- Though Nokia continues to struggle in the US market, it shipped over 91M handsets worldwide managing a 35.7% market share at the end of Q107. Motorola’s share dropped dramatically to 17.8% from 22.8% in Q406. Samsung seemed to have benefited from the slump of its rival by upping its mark share by two points to 13.6%. Overall the handset vendors shipped over 250M handsets in Q107.
- In terms of investment, over $1.6B was invested in wireless related companies/startups in Q107. (Source: Rutberg)
- US wireless carriers maintained their strong showing vis-ŕ-vis their peers worldwide. Verizon, Cingular, and Sprint maintained their ranking # 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for Q107. US is the only country with 3 operators who generated $1.4B or more in data revenues in the quarter.
- For the third straight quarter- TMO US outperformed its parent TMO Germany.
- Internet brands with Google and Yahoo in particular are pursuing an aggressive subscriber acquisition strategy.
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 farhttp://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.
- 2006 was a great year for mobile data. Revenues from mobile data were up in all major regions and for all major carriers with data contributing double digit percentage to overall revenues in most cases. The overall subscriptions rose to approximately 2.7B and we should be crossing 3B by the end of 2007. The wireless industry is on its way to gain the quickest billion subscribers within the next 3 quarters.
- Japan led the way with almost $20B in annual mobile data revenues. US and China were next with $15.8B and $9.2B respectively.
- NTT DoCoMo became the first carrier to cross the $10B barrier for a given calendar year amassing $10.5B for 2006 in data revenues. The Japanese market was followed by China Mobile at $6.9B, KDDI at $6.6B, Verizon Wireless at $4.5B, and Cingular Wireless at $4.3B. They were followed by Sprint Nextel, SK Telecom, Softbank, O2 UK, and China Unicom to make up the top 10.
- A majority of countries we tracked got double digit growth in mobile data ARPU except for a handful of countries which registered a decline from EOY 2005. Some of the prominent ones being US (33%), Czech (40%), Brazil (32%), Netherlands (31%), UK (20%), and Japan (14%). Japan registered the largest dollar amount increase with $2.08 increase from 2005 levels. US and UK data ARPU levels grew by $1.72.
- In 2006, SMS’s vice like grip on data revenues loosened a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 30-40%.
- The top 10 carriers increased their revenue by 13% during the second half of 2006 to reach an aggregate amount of $46.8B for the year in data revenues.
- In terms of data ARPU, Japan continues to lead the pack with almost 30% of its revenues coming from data services amounting to almost $17 data ARPU. Ireland, Norway, Switzerland, UK and South Korea also registered significant data ARPU. US crossed the ($5, 10%) block, where $5 is the data ARPU and 10% represents the % share of overall ARPU. As of Dec 2006, US stood at ($7, 13%). For detailed US Wireless Market update, please see “US Wireless Data Market Update 2006” (For more details, please refer to the 9-box diagram in the ppt”; for 2005 comparative numbers, please refer to our paper from last year titled “Perspectives: Wireless Data ARPU”)
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI which surged past DoCoMo and remained ahead pretty much for the entire year. Their data coordinates stand at ($17, 31%) and ($17, 30%) respectively. However, it is 3 UK that is inching towards ($20, 30%) mark with $26 in data ARPU contributing over 29% to its overall ARPU. 3 Italy with ($16, 35%) is also amongst the leaders.
- The biggest % contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 50% (or $3) contribution coming from data services.
- Even though China reported approximately $9.2B in data revenues, and the % contribution is over 20%, data ARPU is around $2, confirming what we already know – it’s a volume game. For India data ARPU is just under $1. Approximately same for Brazil and Russia. Actually, in 2006 the overall wireless service revenue for US was two times the overall revenues of the four BRIC (Brazil, Russia, India, and China) countries combined. So, lessons are pretty clear as to which markets to approach for what products and services.
- In terms of overall ARPU, it has been a mixed picture compared to 2005. Of the 40 countries we looked at, it was an even split, with half of the countries registering increase in overall ARPU while the other half were at the same level or experienced decline in ARPU. US, China, and India all registered declines while Japan, Russia, Italy, UK, and Canada had an uptick in their ARPU numbers.
- All the carriers in the top 10 wireless carriers by wireless data revenues list exceeded $1B in data revenues for the second six months of 2006 and $2B for the year.
- Western Europe officially crossed the 100% wireless subscriber penetration mark (primarily due to multiple SIMs and double reporting) with several nations reporting up to 140% subscriber penetration. US crossed the 75% penetration mark.
- China crossed the 400M subscriber market in 2006 and is on its way to cross the 500M mark this year. However, its growth rate was overtaken by India which is experiencing tremendous growth. Its net-adds approached 7M subs/month compared to 6M/month for China (though in March 07, monthly net-adds dipped below 4M probably due to the pressure from the government to prove the reported numbers). India crossed Japan and Russia to stand number 3 behind China and US and is going to get past US in terms of total number of subscribers by 2008.
- As expected, China Mobile is way ahead of the second ranked Vodafone w.r.t total number of subscribers. China Unicom, América Móvil, Telefonica, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next six largest telecom groups in the world. In terms of individual carriers, Cingular and Verizon now occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for some years to come. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- Japan became the first nation to have more than 50% of its subscribers using 3G. DoCoMo and KDDI have 60% of their subscriber base using 3G devices. Korea is close second approaching 50% 3G penetration. 3G is starting to pick-up steam in both western Europe and North America per our discussion in the cover story article “3G: Hitting the Mass Market” published in Wireless World Magazine. US and Western Europe crossed the 10% mark for 3G penetration (Italy stayed ahead with over 25% of its subscriber using 3G phones). The difference between 2G/2.5G/2.7G and 3G is palpable, for example, for DoCoMo the difference FOMA (3G) and mova (2G) was approaching 200%.
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and is having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets.
- In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industry’s imagination. Though
