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TiE-Seattle: Mobile Content Monetization - Challenges and Strategies June 1, 2007

Posted by chetan in : AORTA, Strategy, Carriers, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mobile Wallet, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Mobile Search, Wireless Value Chain , 6 comments

TiE Seattle Chapter hosted its annual mobile event earlier today. Given that Seattle is the mecca for wireless, it was no surprise that it was a sold out event with standing room only. I had the privilege of coordinating the event with my friend Sandeep Sinha - Director, Motorola. The keynote was given by Cole Brodman, Chief Development Officer, T-Mobile USA, a charismatic leader in the industry who rarely speaks at industry events, so it was great to have him participate.

The panel discussion was on “Mobile Content Monetization - Challenges and Strategies” - clearly a hot topic where lot of industry attention is these days. The panel was moderated by Len Jordan, General Partner, Frazier Technology Ventures. The panelists included:

Brendan Benzing, VP of Products and Marketing, Infospace

Jai Jaisimha, VP Product Development, Medio Systems

Satoshi Nakajima, CEO, UIEvolution

Hank Skorny, Executive VP, Business Dev & Partnering, OZ Communications

First let’s discuss the keynote and then I will get into the panel discussion. Cole walked us through the history of data growth in T-Mobile (he has been with the company for 11 years) and made some observations about the industry and the potential challenges and industry opportunities. Salient points included -

Then the discussion moved to a panel discussion with distinguished experts pondering over issues and future of the industry. key discussion points were:

When there is a carrier on the panel, it will be dishonest for the moderator to not touch upon the “closed garden” issue, the elephant in the room that no one wants to talk about in front of the carrier but endlessly ponder behind the backs. Well, Len didn’t shy away and put it straight to the panel. Satoshi, a veteran in the industry was bold to address it head-on, telling it like it is — carrier model in the US is a closed model and that hurts the entrepreneurs and if you think you will be in the next company which gets sold to Google, forget it. Lead time are so long that you might not survive. Brendan said it takes patience and commitment to scalability and reliability before you can crack the nut.

Cole to his credit acknowledged the issue and said, yes, as carriers, we do make things hard for the entrepreneurs to work with us, we haven’t built enough tools to make things simpler. However, he said, carriers need to take few issues into consideration, the biggest one being customer support costs. If there is a minor issue, multiply that by 26M and it can quickly become a nightmare. Secondly, User experience needs to be solid. We as an industry haven’t done a good job, he thought, by pushing out some of the half-baked solutions. And, finally, the spectrum isn’t free like the Internet, even when broadband comes, it will be an issue. However, industry needs to set the bar for introduction of apps a bit lower to test out the market, so instead of releasing it to 26M, introduce it to a small subset, test and expand. T-Mobile is working on figuring this out.

When asked, what’s the driving factor for mobile content, everyone agreed (of course) the personal nature of the device, the asynchronous capability, and personalization capability is important. Satoshi mentioned his nirvana moment was when he saw the first version of a mobile fishing game in Japan, where users could set the location for fish and when the back-end server ‘caught’ the fish, an SMS alert was sent. It affirmed the “different nature of this medium”. Hank narrowed it down to communication, jewelry, and entertainment being the key elements for mobile. Jai said that presence and location are going to make a huge difference in mobile UX.

The challenge of discovery of content was mentioned. Brendan thought the opportunity for “mobile advertising” is huge but it will take good amount of time for the market to develop. The models for advertising based content monetization will start to happen. Jai also thought indirect monetization models will start to happen soon and also Long tail content monetization will be significant as it is an untapped territory right now.

Len asked, how things are different in Intl market? Brendan said, some of the differences are in how people consume media, and how mobile fulfills the need for media consumption demands and needs.

To the question of how we pay for all this, Satoshi pointed out two business models, one is people will pay for mobilizing their Internet experiences. He said, Myspace is free online but the mobile version is $3.99 but is the biggest selling app on AT&T (value is in immediacy) and second the standard comcast/cable model of flat fee for services like VCast irrespective of the apps and content you consume (with bundling of course).

Brendan thought that Personalization will always be a big market. Also, an untapped market is the commerce on the phone. Online, 30% of search revenue is based on checkout or from ecommerce players. Micropayments for commerce and content will be big.

Cole emphasized that things need to be made very simple like RIM did for email - intuitive and easy to use. He said, carriers should focus on horizontal things instead of focusing too much on vertical elements. To the question on alternate billing models, they are looking at Paypal and other means for billing.

Satoshi thought that offdeck market is another opportunity that hasn’t been fully exploited yet but the challenge is getting eyeballs.

Finally, there was a question around why US is so behind. Cole countered that there is a perception that US is behind but we are doing fairly well. I agree, if you look the numbers, 12-15% growth Q-over-Q over past 10+ quarters ain’t bad. That’s clearly a misconception in the market as highlighted in our Q107 update.

So, a variety of issues tackled, some fun discussion, good networking, and a very successful event. Thanks to all those who were able to make it. The Wireless SIG is doing another event in June, stay tuned.

Chetan Sharma Consulting was a proud sponsor of the event along with other great sponsors.

 Photo Credits: Shashi Shashidhar

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

Posted by chetan in : AORTA, Infrastructure, Strategy, Carriers, Middleware, Security, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Mobile Wallet, Location based Services, Usability, MVNO, Indian Wireless market, BRIC, ARPU, Japan wireless market, Unified Messaging, Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Mobile Search, Wireless Value Chain, 4G, Privacy , 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 what’s to come in this space. According to Dentsu, mobile advertising revenues for 2006 will be approximately $373M or close to $3.8 per subscriber (for the year). By 2009, this number is likely to scale to over $6/sub/year[5] (Figure 1). According to InfoPlant, almost 60% of the Japanese consumers use mobile coupons and discounts more than once a month[6]. The US market is just starting to get organized and move from SMS marketing to mobile/local search marketing, interstitials, in-content ads, banner ads, etc. In 2006, US will do less than $1/sub (for the year) in mobile advertising revenues, bulk of which will be SMS marketing. Europe is also slowly waking up to the possibilities around mobile ads and has been experimenting with some clever business models such as Operator “3” subsidizing usage and phones in lieu of advertising on the phone. These models are also being offered in the microenvironments of downloadables, subscriptions, video streams, etc.

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

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

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

 

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

Technology Requirements

 

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

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

Figure 4. Mobile advertising channels[12]

Most of the effective mobile advertising and marketing will be search driven – whether it is based on declared intent from the user or passive impressions based on user’s context, history, and preferences. Google is an example of the former while Amazon is a brilliant case study of the latter. Local search and advertisements will be a significant part of the equation. As Mark Anderson, CEO of Strategic News Service[13] recently quipped in his recent column “Searching for Transactions”, “Search isn’t about advertising, it’s about shopping, which is why the advertisers have to be there”. It is truer in the mobile environment. Astute advertisers realize the proximity and intimacy of the medium and already conjuring up clever ways to engage the consumer. Service providers with good “mobile” search engine technology will be at competitive advantage as they build a strategic framework to address the bigger opportunity.

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

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

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

Figure 6. Mobile Advertising and Marketing Framework

The internet brands have good reach but limited purity. Purity is about good profile data. The customer profile information that Internet players have assimilated doesn’t really always translate well into a view of a customer’s interests and preferences. They can and will build a direct relationship with consumer but it will take time and has to overcome some technical and business hurdles.

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

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

The value chain

 

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

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

(Advertisers)

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

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

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

Aggregators mBlox, Infospace, WSC, etc.

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

Consumers You and Me

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

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

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

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

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

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

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

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

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

Purity – how good is the user profile information?

Frequency – how often is the audience exposed to advertisements?

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

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

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

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

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

Risks

 

While the potential is immense, there are also significant risks and potential challenges that need to be tackled before the industry evolves into a vibrant advertising medium. The prominent amongst them are privacy and data security. Once you start mining user data, significant profile information can be developed. Then how that information is used and by whom becomes an issue, and a significant legal minefield. In addition, if the industry doesn’t want regulators to get involved, the security policies and procedures need to be in place to protect the data from theft or misuse. Next, the advertising ecosystem needs to be fostered so that everyone in the value chain benefits relative to their contribution.

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

Value-chain dynamics

 

It is clear that mobile advertising and marketing has big potential if certain technical and business requirements are met and industry strives to take into account the user considerations that matter the most. But, which players will dominate and control the ecosystem. Without a doubt, carriers have the purest profile information available, but can they execute their strategies? Well, they have approximately 3-4 year window. Once 3G and Smartphone penetration curves collide and pass 20-30%, if the carriers haven’t built a good mousetrap (value proposition) by then, all bets are off. Different dominant players will start to emerge, as it will get easier for Internet and traditional brands to build direct relationships with a good proportion of the subscriber base. It is also possible that in some geographies carriers and brands will work closely to establish a tight service offering and equitable revenue split. Role of savvy brands like P&G who are generally ahead of the curve on most technology trends is going to be important. Brands and service providers who are able to integrate user experience across channels will benefit the most (Microsoft will be a strong player in cross-channel advertising). There is real value in understanding user behavior on the Internet and mobile and cross-leverage in a) building a solid profile fingerprint and b) using it to push content.

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

Conclusion

 

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

HP’s Memory Spot July 24, 2006

Posted by Chetan in : AORTA, Middleware, Enterprise Mobility, General, 3G, Devices, US Wireless Market, Mobile Wallet, Usability, Mobile TV, Storage , add a comment

Last week, HP spoke about Memory Spot - http://www.hp.com/hpinfo/newsroom/press/2006/060717a.html

The experimental chip, developed by the “Memory Spot” research team at HP Labs, is a memory device based on CMOS (a widely used, low-power integrated circuit design) and about the size of a grain of rice or smaller (2 mm to 4 mm square), with a built-in antenna. The chips could be embedded in a sheet of paper or stuck to any surface, and could eventually be available in a booklet as self-adhesive dots.

The chip has a 10 megabits-per-second data transfer rate – 10 times faster than Bluetooth™ wireless technology and comparable to Wi-Fi speeds – effectively giving users instant retrieval of information in audio, video, photo or document form. With a storage capacity ranging from 256 kilobits to 4 megabits in working prototypes, it could store a very short video clip, several images or dozens of pages of text. Future versions could have larger capacities.

A step forward in our AORTA world. Potential apps listed in the press release

CTIA and Mobile Entertainment Summit Roundup April 10, 2006

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Your comments are always welcome.

Copyright, 2006 Chetan Sharma Consulting. All Rights Reserved

Mobile Wallet March 21, 2006

Posted by Chetan in : AORTA, 3G, Devices, Mobile Wallet , add a comment

There is a good article on “Mobile Wallet” in NY Times today. I have been talking about this in my recent talks. Frankly, US companies should just license DoCoMo’s Felica, invest in infrastructure and get on with the program.