Mobile World Congress 2013 Recap March 6, 2013
Posted by chetan in : 4G, AORTA, Chetan Sharma Consulting, European Wireless Market, LTE, Mobile World Congress, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 6 comments“Welcome to Spain, Thank you for your business,” remarked the immigration officer and thus started my yearly pilgrimage to the grand slam of mobile – The Mobile World Congress 2013. It is truly a global event with participants from virtually all countries looking to do business, learn a thing or two, and ponder over what the year will bring forth. The show moved to a new venue which made the logistics work much better for attendees and exhibitors but the venue lost its charm and character. We used this opportunity to feel the pulse of the industry and understand where things are headed. This note summarizes our observations from the show.
While there was no blockbuster announcements or products that will knock your socks off, several interesting trends emerged that will keep the industry exciting to watch in 2013.
The perennial search for the #3 ecosystem continues: Windows sales have disappointed thus far, Blackberry has launched new devices but hasn’t quite hit the mark. So, while consumers seem perfectly happy with iOS and Android, industry’s desire to have a third robust ecosystem is palpable. The biggest announcement in that regard was from Firefox OS and in a matter of 12 months, it has not only forged a strong alliance with operators, it is actually getting ready to ship phones. It is going to be targeting the low-end of the market which is a smart strategy but a lot depends on the range of price points of the devices and how quickly it can attract the developer ecosystem. Given that Android device price points are hovering around $50 and it is a mature ecosystem with great developer reach and support, it will be challenging to convince consumers to go the Firefox route. However, if the price points are attractive enough, with the distribution power of some key operators, we could see some early traction. Ubuntu, Jolla, and Tizen were also vying for attention.
LTE everywhere: LTE deployment is growing at a very fast pace. The US market is ahead of the curve with almost national footprint from Verizon followed by substantial coverage from the remaining three operators. Elsewhere, operators are gearing for deployment once some of the spectrum issues/auctions are sorted out.
The 4th Wave has arrived: Last year, we put forth a framework for future mobile industry revenues in our 4th wave paper. Since then, the framework has been embraced by many leading operators around the globe. It was good to hear operators talking more about services rather than data plans. Several areas were discussed by the leading tier 1 operators such as health, retail, education, cloud, M2M, automobile, enterprise, security, connected living, home security, commerce, identity and privacy, big data and analytics. Operators who are able to steer their giant organizations to focus on services will be able to survive the commoditization of access. We will have more say on the subject later this year.
Yo OTT, luego existo: which is Spanish for “I OTT, therefore I am” To be a player in the digital world, one has to be an OTT provider for communications and beyond. The interesting dichotomy of the communications OTT business is that very few will survive. The end state of a majority of them (if not all) is either an M&A with a telco or an Internet player or they run out of cash. The new breed of OTTs has forced the lumbering giants to think different about their customers and their markets.
Mobile Broadband, Cloud, and Apps: The troika of broadband network access, the cloud infrastructure and the applications are creating a sea change in the enterprise, especially the SMB segment. It is also changing how developers see the enterprise segment as the opportunity migrates from windows to iOS and Android. We conducted some in-depth research in the space and will have more to share later this year. Our Mobile Breakfast Series later this month will be dealing with the topic of Cloud and SDN in more detail.
Redefining Monopoly: The mobile and internet worlds have collided but the regulatory regimes haven’t changed. European operators seemed to indicate that it is time to reassess what a monopoly really means and the rules should apply to all layers of the ecosystem stack and that means devices and OSs as well.
Device Launches: All major OEMs are following the Apple playbook as far as the device announcements are concerned. To garner media attention, it is best to announce the “hero” devices away from major shows. Just like CES earlier this year, MWC lacked any big device announcements. Nokia announced mid-low tier devices to expand its portfolio that will help it in unit sales. ZTE, Huawei, LG, Asus, NEC, Sony, HTC, HP, Asus, Acer, Lenovo all had new devices to display but media’s eyes are set on Samsung’s Galaxy release later this month.
Local OEMs: Traditional OEMs are facing some healthy competition from new entrants in local markets. Players like Fly and Yotaphone in Russia are giving the veterans a run for their money. By both innovating with new features but also by customizing the devices for the local market (e.g. bigger battery that last 3 days), they are creating their own niche. After gaining good market share in Russia, Fly is expanding into other markets.
Connected Cars: When the biggest operator by revenue announces a deal with the biggest car manufacturer, people take notice. GM and AT&T announced LTE cars by 2015 which will pretty much force the entire auto industry to provide broadband connectivity in a hurry. However, the auto industry has misplaced expectations on apps and any incremental revenue they might be able to harness from them.
Samsung Knox, Blackberry – can you hear me now: Android is probably the most insecure mobile platform out there. Blackberry has long been the gold standard, iOS has improved, Windows has security features built in but security has always been a step-child of Android. Samsung’s Knox announcement elevates Samsung’s role in the mobile enterprise and to some extent takes over some of the development capability of Android that are squarely aimed at Blackberry. The container security feature set with MDM integration is well thought out and opens up the mobile enterprise market for Samsung especially in North America and Western Europe.
Spectrum and Regulations: While spectrum was a universal issue with the operators, more is better, European operators were particularly vocal about the state of the regulatory affairs on the continent. Regulators, they complained, are killing the industry by cutting of revenue opportunities, are fostering too much competition, too much taxation, and too involved in the operations of the operators. This is leading to declining revenues and turmoil at the operators. There might be some unintended consequences of weakening operators and regulators will have to grapple with some interesting questions that a free market economy will pose in the coming days.
TU Go – Take your phone number everywhere: In our opinion, Telefonica has done the best job of dealing with the digital world in putting forth an org structure that can crank out applications and services at Internet speed. TU Go is a new service (launched in UK) that allows users to take their phone number to any supported device and use it for calling and texting – number in the cloud at its best.
NFC is dead, Long Live NFC: Vodafone CEO’s frank admission that he doesn’t expect to make much money from NFC gave the audience a bit of a pause. Several NFC initiatives have floundered without clear goals or vision. Instead of working together, the industry has remained fragmented and thus the lack of scale has hampered progress. For too long, the industry has focused on payments but the opportunity lies in the engagement with the customer. For better or for worse, the financial industry has sequestered its commission for the foreseeable future. We saw some clever NFC implementations to drive consumer engagement and commerce in retail environments, primarily in Europe.
Consolidation looms: The question that is on everyone’s mind but was hardly discussed at the show was the coming onslaught of consolidation at virtually all layers of the ecosystem.
Developing Markets: Connecting the next billion was a recurring theme. The smartphone penetration in the developing world is in the single digits. More than that, introducing consumers to a computing platform for the first time is an exciting opportunity. Creating services that are tailored to the local environment remains an opportunity that can have a profound impact on society. Our own work with the UN/ITU has shown the transformative role of mobile in almost every walk of life. The device unit growth is coming from the developing markets and as they get connected, the world becomes flatter, and the competitive dynamics in a globalizing world will create for some interesting policy and political battles.
M2M and Internet of Things: As we wrote in our book “Wireless Data Services” back in 2004, the connectivity is becoming pervasive. The module costs are coming down fast and the desire to measure and track every number that is important in our lives is creating a massive opportunity. However, privacy, battery life, environment, security remain key issues that need to be tackled.
Identity as a business opportunity: In a digital world where access to information and resources depend on verification of your identity, the guards and keepers of the identity information have a big role to play. As such, “identity” management is emerging as an opportunity that can be monetized. In the online world, Facebook has become the dominant way to integrate apps and services. In the mobile world, operators can play a significant role in authentication and verification. Will the two worlds collide? Fasten your seat belts.
The Post PC world: As an experiment, for the MWC trip, I carried just the Nexus 7 tablet and an iPhone. I felt liberated. In the past, for day trips, I have relied just on iPad/iPhone for taking care of my computing needs. For this trip, I wanted something that I can carry in jacket pocket. Nexus was good enough for taking simple notes, email, browser and even some phone calls. I could easily switch back-and-forth between the tablet and the phone, and the combined battery life lasted the whole day.
The Miscellaneous:
· Google’s absence from the show puzzled many
· The enthusiasm for RCS/Joyn seems to have subsided as reality sets in
· Nokia is broadening the reach of its HERE platform to other operating systems
· AT&T/Ericsson showed WebRTC demo
· Facebook announced messaging partnerships with operators in developing countries
· Small cells remained a hot topic though seen more of a compliment for the macro network
· Signaling traffic continues to grow at a faster pace than the data traffic as more LTE devices come on the network
· Qualcomm launched RF360 solution to deal with frequency band fragmentation which is serious problem for LTE roaming
· Yotaphone with its dual screen (front and back) and NEC Medias with its stacked up screens had something fresh to offer in the devices space when 99% of the devices look the same
· Virtualization is the new black in mobile networks
Best booth: Ericsson’s networked world theme was well thought-out and provided a unique exploratory view of the opportunities and technology evolution. A close second – Connected City.
Best party: There won’t be an MWC without the bevy of parties every night. Qualcomm again stole the show with the jam-packed confluence of the mobile elite.
Mobile World Congress 2012 Recap March 6, 2012
Posted by chetan in : 3G, 4G, AORTA, Applications, Connected Devices, LTE, MWC, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Future Forward, Mobile Payments, Mobile World Congress, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a commentMobile World Congress 2012 Recap
The mobile industry had its biggest industry show last week in Barcelona. Going by the attendee numbers, the global economy seems to have rebounded though riots on the streets indicated tough time for Spain ahead. While there weren’t any blockbuster announcements, there was plenty to chew on. LTE, Connected Devices, Mobile Commerce, Privacy, WiFi offload, small cells, platform wars, mobile money, RCS, Connected Home, NFC, Cloud, and HTML5 had their share of debates and discussions. This note summarizes my observations from the show.
China passes the 1B mark – As we noted in our research piece last month “A Tale of Two Mobile Markets – China and India,” China crossed the 1B subscription mark this past weekend (Economist did a piece based on our research as well). In the last ten years, China has become the 2nd largest economy in the world behind the US while India which crossed the 900M mark last month is edging past Japan to be the #3. Given that mobile will have a central role in the ICT evolution of global markets and economies, what happens in the mobile markets of China and India will influence rest of the world.
Convergence of three screens – One of the fascinating trend is the convergence of the desktop, tablets, and smartphones at the OS/Apps layer with Apple, Microsoft, and Google being the three major pillars. Each has its strength in a given segment though Apple has the most mindshare across all three. Microsoft dominates the desktop world with over 90% share, Apple dominates the tablet world with over 60% share and runs a close second to Google on the smartphone segment. As I mentioned to the New York Times, this has significant implications on commerce, distribution, and life time value of the customer.
Operators vs. OTT – Round 2 - Mobile World Congress Keynotes started with two of the most prominent mobile operators proclaiming that the industry has significant challenges in the form of OTT providers commoditizing their revenue streams without any significant investment of their own into the network. Both Franco Bernabe, Chairman and CEO of Telecom Italia and Li Yue, President of China Mobile painted a gloomy picture and how operators need to focus on fundamentals if they were to survive the ever growing pressure on the margins. Some like KPN and SMART are seeing deterioration of their business fundamentals. However, there are some good case studies of success as discussed in my GigaOM column. I also discussed the subject in my paper released last month “Mobile Internet 3.0: How Operators can become service innovators and drive profitability” A number of operators announced their support for Joyn – the face of RCS services. The Operator/OTT story will be one of the most fascinating ones to watch in the coming months.
Mobile payments and commerce – There is significant activity in the mobile payments space but activity shouldn’t be confused for progress. Number of announcements with actual product offerings or roadmap is limited. There are some interesting case studies that are emerging however, like the one in Czech Republic where operators are collaborating with the banks to lower the commission and share the proceeds. That’s the primary way the operator model is going to work. Financial guys have protected their turf very well. And now retailers are forming their union. There has been too much focus on NFC payments rather than NFC as a platform for doing other things besides payments. As I said to the New York Times, “It will take a long time.”
Mobile Cloud – The discussion of Mobile Cloud has moved to Smart Cloud. From devices to the network to the apps, all elements of the chain are looking for the cloud to drive efficiencies in cost and performance.
Mobile Security – Mobile Security has emerged as one of the key opportunity areas for the ecosystem. Given that mobile devices are multiplying like gremlins, it is time to reign in the security. Both consumers and enterprise customers will benefit from a safety net that can protect customers from loss of data, viruses, targeted attacks, and malware. You can expect a number of offerings in this space over the course of this year.
Intel is serious about Mobile – Paul Otellini, CEO of Intel said at the launch event that they are introducing mobile technology at twice the pace of Moore’s law and is a clear statement that Intel is serious about mobile. Intel announced Orange, Lava, ZTE, and Visa as their new partners (in addition to previously announced Motorola and Lenovo) for their mobile chipset platform (smartphones and tablets). While the industry watchers are waiting for one of the big shoe to drop (the likes of Samsung, HTC, Nokia), Intel is making steady progress and the devices are blazing fast especially for 1080p video. Partners are all looking for mass-market devices (read sub-$50 after subsidy) within the next 2-4 months.
Managing Signaling traffic – While the data capacity issues get discussed a lot, signaling traffic and the problems they cause don’t get the same treatment. However, it is very clear that management of signaling traffic will remain quite important. Many of the applications are atrocious when it comes to signaling efficiency for e.g. I saw one of the mapping apps at Procera’s booth which requested connection for every single tile on the map, every time the map was rendered, so one map view could generate over a dozen signaling requests. So far, a lot of attention has been on policy management of data traffic, we better start paying attention to policy management of signaling traffic.
LTE/WiFi – Infrastructure providers and operators are looking to tighten the bond between LTE and WiFi such that the traffic can be policy managed at a granular level by application type so that based on the real-time traffic conditions, traffic can be optimized and routed accordingly. Alcatel-Lucent with its LightRadio technology and SK Telecom were some of the players demoing the concept.
Traffic Onloading – Most vendors and operators talk about traffic offloading, but Wim Sweldens, President of Alcatel-Lucent Wireless division had much to say about traffic onloading. Even at the show, WiFi offload was being discussed along with LTE in the same sentence. With traffic, operators are also offloading the customer, he said – exposing the customer to potential security problems and perhaps loss of revenue opportunities during that session. With Light Radio WiFi®, operators will be able to more intelligently onboard the customer to their network and provide the same level of service and security as they do with their cellular network. Wim suggested that this is a good marriage between the radio and the IP world to give the best to customer while preserving the value for the operators. My discussion with Wim in this GigaOM column has more details. I will have more research coming out on the subject later in the year.
GAMAF moves - While Eric Schmidt will argue Microsoft isn’t in the mix; the platform world in mobile revolves around the furious five – GAMAF. Each has their strengths and weaknesses. Amongst the five, Google had the biggest presence at the show while Apple and Amazon were just there to scout talent, deals, and competition. Amazon and Facebook lack an OS to go with their ambitions and are pinning their hopes on HTML5. Amazon has thus far used Google’s efforts to its advantage and done a better job in some areas. MWC12 was coming out party for Facebook Mobile. Microsoft is making steady progress with 8 and hoping that it will prove to be its lucky number.
Empire strikes back – Microsoft and Nokia have been making steady progress in their quest to regain market share that stands decimated by previous strategic errors. While it is going to take unforeseen amount of time to make up for the lost market value, Nokia’s product line looks good, operators seem to provide a helping hand in creating the third viable ecosystem. Microsoft has been scrambling to get Windows 8 ready for the market so it can launch tablets and tie the three screens together. Things finally are coming together. Though a number of things can still go wrong, the two work horses are moving in the right direction. However, the biggest question still is whether consumers will give them a chance or not?
Facebook – HTML5 R Us – Facebook has been a bit tentative in mobile over the last few years but is making a concerted effort in building its strategy around HTML5. It is also doing this by rallying partners from across the ecosystem. With its massive reach, it will be a significant player in mobile, commerce, and advertising.
Connected Home – One of my favorite MWC things to do is to visit the Connected Home to see how close we are getting to the reality of connected home. AT&T and other partners showcased some of their latest technologies in home automation and the remote monitoring and home automation platform is almost ready for prime time. AT&T expects the Digital Life platform to be available later this year.
Devices – There were a number of devices launched at the show. HTC got going first with HTC One. The most significant part of the announcement was the distribution deal with 140+ operators. They are going to have a good Q2. Sony, LG, ZTE, Huawei also announced their lineup. Nokia’s pureview stood out for me with its incredible new camera technology (even though it was built on Symbian). Apple, you can finish your Lytro acquisition now. Samsung feverishly pushed its Galaxy Note.
The Untouchables – With Apple launching its LTE iPad on March 7th, the non-Apple tablet market is pretty much frozen. While there were some new tablets launched at the show, an opportunity to change the game likely won’t occur until Microsoft comes out with 8 or Google springs in a surprise. Amazon will continue to sell Kindle Fire but it is hardly making a dent to Apple’s trajectory. Apple is so far ahead of its competitors in the top tier of this key emerging segment that you might as well classify the company as the untouchables.
HyperLocal on a Global Scale - Hyperlocal targeting has been around for some time, one can do polygon targeting meaning draw a polygon of the area where the advertiser wants to target the users. The advantage is that the ads are specific and more context-aware and hence the rate of engagement is higher. Advertisers get better leads and are quite useful for time sensitive campaigns. However, the capability is generally limited to certain regions or countries. Millennial Media extended their dev platform - mMedia allows developers and advertisers to do hyperlocal targeting on a global scale.
Privacy – There was a lot of discussion on privacy. Everyone has an opinion but not necessarily a good solution. Everyone wants to be guardian of consumer data but don’t want to be held responsible for breaches. This pretty much means regulators are going to move in and it will be hard to predict the impact.
Retailers in mobile – Some of the retailers seem frozen in Mesozoic era and can’t seem to free themselves of their archaic strategies. They realize something is wrong but can’t bring them to change how they drive commerce. There is still a lot of focus on driving traffic to the stores rather than driving commerce to the stores.
Mobile Health and Wellness – Developed countries are driving mobile wellness and developing countries are driving mobile health.
2012 is going to be another fast-paced roller coaster for the mobile industry. Looking forward to a terrific year ahead.
Your feedback is always welcome.
Chetan Sharma
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Mar 2012. The next Global Wireless Data Market update will be issued in Apr 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.
