Mobile Breakfast Series entered its 5th year of operation this week with our first event of the year in Seattle. The topic of discussion was Cloud, SDN, and the art of mobile computing.
2012 has been an incredible year for mobile. Despite the global economic doldrums, mobile is a $1.5 trillion economy with new entrants, new disruptions, new devices, technologies, networks, etc. One of the major shifts is in how the revenue is generated for the industry. Mobile operators around the world capture over 85% of the industry’s profits. However, if you take a look at the top 5 global players by profits – it is China Mobile, Apple, Verizon, AT&T and DoCoMo. Still dominated by service providers but Apple wasn’t on the list 2 years back. So, how will the list look like 5 years from now?
There is a clear shift going on what I call “the fourth wave” i.e. industry’s new revenues are going to come from services and solutions. And mobile operators are not silent participants on this wave. Players like Verizon, AT&T, Telefonica, and DoCoMo are going toe-to-toe with the OTT or Internet players. If you remember the early 2000s, mobile data wasn’t even registering on the revenue scale; 10 years ago mobile data revenues were less than $1 billion per year in the US. Last year, we reported $79 billion, this year it will grow to $90 billion. In fact, we might see a shift where data revenues > voice revenues this year in the US. It has already happened in Japan, over 65% revenue coming from data. But what happens when data saturates, the revenue is going to come from fourth wave services and solutions. You will start to see operators break out revenues from digital services.
So, the question is what those services are – cloud is on top of the list, big data and analytics is on the top of that list? How are these going to be supported – by LTE network, buy SDN enabled network infrastructure? To discuss all of this we assembled a great panel.
Mitch Lewis, Vice President, Juniper Networks
Biju Nair, EVP and Chief Corporate Strategy Officer of Synchronoss
Randy Wagner, Executive Director, B2B Sales and Marketing, Verizon Wireless
Louis Brun, Senior Vice President, Marketing and Product Strategy, Guavus
Chetan Sharma, President, Chetan Sharma Consulting (moderator)
Before we began, Mitch Lewis gave a talk on “Seven Leadership Principles From Everest” .. yes, you read it right, Everest. Mitch has not only climbed Everest but each of the 7 highest peaks on the 7 continents. If that were not enough, he has run 7 marathons on these continents as well. It was indeed a thrill and a privilege to host my friend Mitch and have him talk about his experiences and the lessons from a dream that he accomplished over the course of 8 years. Just a phenomenal achievement.
Below is his presentation and a video from his talk. Enjoy and get motivated.
We could have just stopped there
But we had plenty to discuss on the state of mobile cloud computing and the emergence of SDN.
Below is the summary of the discussion:
- One can’t think about M2M w/o thinking cloud. The billions of sensors that will come onboard over the next few years will be talking to the cloud in some shape or fashion.
- While there is a lot of focus on enterprise cloud, Synchronoss has been focused on the personal cloud and how personal information from the device is backed-up, shared, and run analytics on to create new services and revenue opportunities.
- (Infinite) Mobile storage is really not free. One way or another consumer is going to pay and the provider is going to get the money either directly or indirectly.
- Health vertical is seeing great traction. Others like retail and transportation are also seeing good action.
- Some of the emerging markets and emerging operators like Bharti see 4th wave as an opportunity to leapfrog some of the traditional thinking and while access is important to them, they want to focus on digital revenues more aggressively than even some of their western counterparts.
- Hybrid clouds are going to be most prevalent.
- Security is hugely important for cloud, for both SMBs and large enterprises and while there are going to be vulnerabilities, it is going to be no different than how things are on the Internet and customers are getting more educated about security issues and best practices.
- While we have made significant progress with cloud solutions, video and associated bandwidth issues remain a problem and there is no specific solution in sight thought LTE-Broadcast seems to be on horizon.
- Cloud interoperability requirements will become much more important and companies are already working on abstracting the complexity of different competing clouds from the application.
- Consumers might not like their service providers but they trust them and hence the opportunity to provide cloud related solutions to them.
- The mobile network traffic for Dropbox is 25 times that of iCloud and 20 times that of Evernote.
- Juniper acquired Contrail Systems, Cisco acquired Cariden, VMware acquired Nicira – accelerating the interest in SDN and what it means to the infrastructure business.
- It is uncertain how SDN is going to impact the financials of the mobile operators and the infrastructure providers. Does the revenue stream just move up to software?
- SDN clearly provides flexibility and more manageability to the network and we can expect some deployments by the end of the year. There are a number of trials underway.
Privacy and Security
- Everything and everyone can be tracked even with the phone off. Keep that in mind next time
- Given that all this data is being sent to the cloud, one can expect that the security requirements to become even more strict.
- Security, scalability, and global IP backbone is how Verizon is differentiating with the likes of Amazon. Verizon has over 200 data centers around the globe.
- There is big internal debate at the operators as well as discussions with the regulators as to how big data should be used and monetized. How much privacy is enough? How do you make your partners also accountable for the data use? What information to sell and when? 2013 might provide some answers.
- Policy plays a significant role in managing privacy and security both in the network and at the device level.
- Identity is emerging as a service offering. We might get rid of the phone number and just use IP address (dynamic or static) for devices that are tied to the user. Dynamic SIM allocation based on usage could be introduced as well.
- For verticals such as Healthcare where HIPAA compliance is necessary, operators typically have private tunnels for added security.
- Big Data has been around for a long time but we are starting to harness useful signals from the noise in real-time to make effective use of the intelligence in data.
- Mobile operators are using the data and exposing it for their own use as well as to the developers with APIs such as customer profile. Same data is also being used for churn management, network performance, etc.
- In Europe, big data is being used to offer insurance on mobile devices by effectively targeting consumers.
- TV stations are also using big data to target consumers when they engage with their content on mobile.
As usual, it was a lively discussion and with the added presentation from Mitch, a memorable one indeed. Mobile cloud has become a layer of computing just like security or connectivity. This fundamental capability has led to a thousand new companies looking to move the art of computing a bit forward. Software Defined Networking is slated to disrupt the infrastructure in a big way, provide more flexibility to service providers and developers to create even more compelling services and user experiences.
We also announced the date of our 2013 Mobile Future Forward. On Sept 10th this year, leaders of the mobile industry will gather in Seattle to brainstorm the future of mobile. As usual, it is going to be a delight to host the best and brightest. So mark your calendars, make your plans, and we hope to see you there later this year. More news to come in the coming weeks.
Thanks to all those who attended and thanks to Synchronoss for being our series partner.
US Mobile Data Market Update Q3 2012 November 12, 2012Posted by chetan in : 3G, 4G, AORTA, ARPU, Applications, Infrastructure, LTE, M&A, Mergers and Acquisitions, Messaging, Mobile Advertising, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Ecosystem, Mobile Future Forward, Mobile OEMs, Mobile Operators, Mobile Payments, Mobile Traffic, Privacy, Security, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
US Mobile Data Market Update Q3 2012
The US mobile data market grew 3% Q/Q and 17% Y/Y to reach $19.9B in Q3 2012. Data is now almost 43% of the US mobile industry service revenues. For the year 2012, the market is on track for mobile data revenues in the US market to reach our initial estimate of $80 billion.
Largely due to the strong postpaid performance by Verizon, the US operators added a net of 2.4M new subscribers. Sprint and T-Mobile saw further postpaid declines. For T-Mobile, Q3 marked the nine straight quarters of postpaid losses.
The quarter also saw a couple of block-buster operator M&As that took many in the industry by surprise. T-Mobile found a soul mate in MetroPCS while Softbank showed up at the altar for Sprint. Once the mergers are executed, Sprint is likely to emerge as the stronger of the two.
The two horse OS race got a new participant entry last month – Windows 8. Microsoft and its partners launched a worldwide campaign for a chance to compete. Microsoft also made a splash with the first computing device in its history – Surface. Both got a mixed reception from the market. We will find out how consumers will react in the Q4 numbers. Of all the OEMs, Q4 will be the most critical for Nokia who is running out of runway in its turnaround effort.
Despite setbacks in the IP battles, Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in Q3 2012. However, Apple dominates both the smartphone revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 95% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs. Apple has the complete stronghold on the supply chain and has sucked out the oxygen from the OEM world.
Amazon hasn’t been shy about its ambitions in the mobile space. While the world awaits an Amazon smartphone, the company launched a slew of tablets to compete primarily with Google though its eyes are on Apple. Apple also launched iPad mini a mid-tier tablet to ward of threats coming from the bottom tier of the market.
As we mentioned it in our last update, smartphones are now past the 50% mark in the US and continue to sell at a brisk pace accounting for over 75% of the devices sold in Q3 2012.
While the US penetration of smartphones is over 50% as we reported last quarter, the 50% of the sub base is concentrated in only 30% of the households thus leaving plenty of growth left in the marketplace.
In terms of Y/Y growth, Connected Devices segment grew 19%, Prepaid 10%, Wholesale 6%, and Postpaid was flat. The connected devices segment picked up some growth after two straight quarters of sub-5% performance growth (Q/Q).
Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.
Postpaid Doldrums and evolution of metrics – ARPU to ARPA to AMPA
The US market has added roughly 400K postpaid subs in the last two quarters. Verizon has added 2.4M, AT&T 400K, and Sprint and T-Mobile have lost a million each. Clearly, Verizon’s performance is far superior to its competitor and its relentless focus on postpaid has yielded significant benefits. Typically, the postpaid ARPU is roughly 2-3 times that of a prepaid subscriber. So, while other operators have been adding prepaid subs, the improvement to the bottom line has been tepid especially for Sprint and T-Mobile. Sprint’s losses have been primarily due to the bleeding of the Nextel customers. The iDEN network should turn off sometime next year and the continuous loss of overall postpaid subs might stop. T-Mobile faces a deeper challenge. Its net-revenue has declined in every quarter since Q4 2008, which is 15 straight quarters of revenue decline. In fact, its current revenue levels is at the Q2 2006 levels – that was six years ago. Though the company has done a terrific job upgrading the network to HSPA+ and doing blocking and tackling until it upgrades to LTE to come at par with its peers, the continuous bleeding of the postpaid subs needs a new strategy. Metro PCS helps gain new subs and spectrum but doesn’t help with postpaid. In fact, one can expect that the churn will rise as consumers migrate from Metro to T-Mobile. 2013 will be a critical transition year for the company as it tries to compete with its larger competitors. Just being a “value” provider is the race to the bottom.
We have been advocating shared data plans to create more consumer demand for over two years. When I talked to CNBC earlier this year (Jan), I said that in all likelihood the family data plans will be introduced in the US market in 2012. I discussed this more with Bloomberg and USA Today and suggested that most likely Verizon will launch them first. Verizon and AT&T launched the shared data plans this summer with AT&T getting the benefit of launching it second. New types of plans also evolved the decades-old operator metric of ARPU to ARPA (Average Revenue Per Account) given that we are seeing a strong influx of multiple devices per individual/household. Verizon was first to transition and we expect others might introduce new matrices to measure progress and performance. AMPA (Average Margin Per Account) will also become an important metric in the coming days, first internally, and then for the markets.
Most western markets have seen the net revenue in the messaging segment decline. The US market has resisted the decline thus far. In Q3 2012, for the first time, there was a decline in both the total number of messages as well as the total messaging revenue in the market. It might be early to say if the decline has begun or the market segment will sputter along before the decline takes place. As we had outlined in our fourth wave paper, once the market segment reaches the 70-90% penetration mark, the decline begins and we might be seeing the start of the decline in messaging revenue. The decline is primarily due to the rise in IP messaging and operators have been slow to evolve their strategies in the segment.
Operator’s Dilemma (And Opportunity): The Fourth Wave
In our paper “Operator’s Dilemma (and opportunity): The Fourth Wave” earlier this year, I proposed that we need a new framework to think about the next generation of revenue opportunities. The fourth curve opportunities are massive but require a different skillset and strategic approach that the past three curves. We are starting to see operators becoming more focused and aggressive. It is being widely adopted in the operator community around the world and some operators have started to break out the 4th wave revenues in their financials. We will have more discussion about how things are shaping up in future research papers.
AT&T has been better prepared in the US market and has embraced the ride on the fourth curve. It is investing in the areas of Digital Life, Mobile Premise Solutions, Mobile Payments, and Connected Vehicles. We discussed the subject at length in our recently concluded annual thought-leadership summit – Mobile Future Forward.
Operator M&A – The Rule of Three Strikes Back
Just when you thought the prospects of any major operator M&A slowed down due to the impending US election, T-Mobile announced its acquisition of Metro PCS giving it more spectrum, access to public markets, a good chunk of subscriber base to become a more competitive number 4. Sprint and Softbank followed the announcement with an absolutely brilliant maneuver. Sun Tzu would have been proud. It provides Sprint access to capital, economies of scale, and becomes a much stronger number 3, and a global telecom player with scale and ambition. There have been some interesting twists and turns but as we have stated before, the US market competitive equilibrium will be complete when Sprint and T-Mobile get together at some point down the road.As outlined in our research paper on the subject, market forces find their way to get to 3 dominant operators that compete for attention and revenues, rest becomes noise. While the regulators might scoff at the idea, the inevitable market forces will find their way around.
In Q3 2012, we released some research around connected devices. If we just look at the active connected devices which can connect to the Internet directly either by wireless or wired means, either using cellular or WLAN, the total number of connected devices in the globe just crossed the 10 billion mark which means that the connected device to human ratio is now 1.3.
- 70% of the connected devices use some form of wireless connection.
- In the US, roughly 80% of the devices use some form of wireless connection.
- For the US Household survey, we asked 1014 HHs about the number of connected devices in their households.
- The average number of devices/HH was 5.
- Over 6% of the HHs had 15 or more devices.
- Splitting the respondents by gender, the results were about the same.
- Splitting the respondents by age group, the 65+ age demographics had the highest number of devices/HH followed by the 18-24 age group.
- The Northeast region of the US had the highest number of devices/HH.
- Suburban HH had the highest number of devices/HH.
More details available here.
Windows 8 arrival – Sept was a big month in Microsoft’s attempt to regain its lost mobile decade. It went from a dominant position to virtually zilch coinciding with the remarkable ascend of iOS and Android. To make any device sell – one needs good and competitive device, distribution channel and marketing muscle, and brand loyalty. I think Windows 8 is genuinely good, is different, and for the first time can stand with its peers (obviously it needs to build a robust apps portfolio and a stronger developer ecosystem).
In the past, while operators, OEMs, and Microsoft announced significant advertising spend, it had almost negligible impact on sales. The actual $ amount spend was tepid, operators didn’t want to be guinea pigs just to prop up a third ecosystem. With Windows 8, things might get better. We can see many more awareness campaigns, more OEMs are launching some quality devices, and operators are warming up to the idea as well. The brand loyalty index for Microsoft Mobile is fairly low and it will take a heavy lift and a few billion dollars of advertising spend to move the needle. The good news is that the devices are shipping and it is not thanksgiving yet.
However, Nokia, once propped at every Windows Phone rally isn’t getting any special love from Microsoft anymore (in public) and it has become one of the many OEMs on the conveyer belt. Its ability to differentiate itself enough in Q4 will decide its 2013.
Last week, Qualcomm eclipsed Intel in market cap marking another milestone in the progression of the mobile ecosystem.
Surface, mini, and the tablet market
Apple launched the iPad mini for some of the same principles that Microsoft launched Surface. It is better to be cannibalized by self than by the enemy. Microsoft saw the notebook market shrink and needed a product to stem the bleeding while Apple saw Amazon and Google attack the bottom tier with a different model that poses a credible threat. Tablet market is indeed fundamentally altering computing in many ways. The changing landscape of computing also has impact on the ecosystem and the application development environment. Developers flock to platform reach, ease of access to the marketplace, and the basic economics of a viable business model. Windows a percentage of computing platform is shrinking which threats not only the platform but also Microsoft’s other software franchises. Surface is classic blocking and tackling to provide a jolt to the shifting ecosystem. With iPad mini, Apple is attempting to lock the mid-top tier of the tablet market and daring its competitors to just play in the bottom tier that leaves no profit on the hardware and revenue stream from services for a very select few.
Apple is getting a lot of grief for its maps app. While the strategic decision to take control of a key application was spot on, it faltered on communications. The half-baked endeavor was nowhere close to being the “best mapping app.”
Infrastructure segment faces a tough road ahead
The infrastructure segment of the wireless industry is facing turbulent and interesting times. The business model for many vendors hasn’t evolved much in the last few years and some of the disruptive forces are bound to have a deep impact on the segment. ALU is facing serious headwinds and will need to figure out its strategic options going forward. Ericsson’s margins are under pressure but more interestingly its services and support revenue exceeded its hardware revenue for the first time. Huawei and ZTE reported decline in revenues but they are making gains in the infrastructure markets outside US and in handsets in the US market. Until Premier Xi Jinping and President Obama sort out their geopolitical differences, the Chinese vendors remain shutout of the US infrastructure market.
What to expect in the coming months?
All this has setup an absolutely fascinating 2013 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. Players who firmly attach themselves to the 4th wave will reap benefits while the ones who miss it will see their fortunes dwindle.
As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.
Against this backdrop, the analysis of the Q3 2012 US wireless data market is:
· The US Wireless data service revenues grew 3% Q/Q and 17% Y/Y to $19.9B in Q3 2012. For the year 2012, we are forecasting that mobile data revenues in the US market will reach $80 billion.
- Verizon and AT&T dominated the quarter accounting for 69% of the mobile data services revenue and had 66% of the subscription base.
- Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q3 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q3 2012.
- The Overall ARPU declined by $0.15. Average voice ARPU declined by $0.58 while the average data ARPU grew by $0.43 or 2% Q/Q.
- The average industry percentage contribution of data to overall ARPU is now at the 43% mark in Q3 2012 and is likely to exceed the 50% mark early next year. All the top three US operators are around the 45% mark with Verizon leading the trio. (For reference, all three major Japanese operators are now over the 60% mark).
- The US operators added 400K postpaid subs and over 2.4M total. It was the lowest net-adds quarter in the US mobile history (barring the early days of tepid growth)
- T-Mobile’s postpaid woes continued for the ninth straight quarter.
- Verizon led the market with 1.7M net-adds followed by AT&T at 678K, and T-Mobile at 160K. Sprint returned to the negative net-add territory after nine straight quarters of positive growth.
- For the twelfth straight quarter, AT&T reported more net-adds from connected devices than postpaid subs.
Applications and Services
- Q3 2012 data suggests that the messaging revenues in the US market might have peaked. For the first time both the overall messaging volume and the revenues declined Q/Q. The task to prolong the access revenue curve and investment in the fourth curve has become all the more urgent.
- The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
- Q3 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months. On the retail side, Starbucks is a player to watch as it tries to become a more active participant in the digital ecosystem.
- Smartphones continued to be sold at a brisk pace accounting to almost 80% of the devices sold in Q3 2012 with Android dominating though iPhone leads in revenue and mindshare.
- Samsung now leads in every major unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
- While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows 8 last quarter.
- Apple’s iPhone sales improved marginally in Q3 but the OEM was more plagued by the supply-chain constraints than demand.
- US continues to sell over 40% of the world’s smartphone every quarter thus making it the most attractive market for OEMs.
- AT&T continues to dominate the connected devices segment with over 46% market share.
- Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 15M making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile announced that it is putting the cash and spectrum it got from AT&T to good use and deploying LTE by 2013. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 35% of its total data traffic is on the LTE network now.
- There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 48% of the iPhones in the US.
Mobile Data Growth
- The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. The smartphone data consumption at some operators is averaging close to 900 MB/mo. Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
- The Signaling traffic has increased 3x.
- Mobile data traffic growth is likely to slow down to roughly 80% after doubling for the last five years. Voice traffic will dip below 10% of the overall traffic in 2012.
- While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.
Your feedback is always welcome.
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 Feb 2013. The next Global Wireless Data Market update will be issued in Mar 2013.
Disclaimer: Some of the companies mentioned in this research note are our clients.
2012 Mobile Industry Predictions Survey January 3, 2012Posted by chetan in : 3G, 4G, AORTA, ARPU, Applications, BRIC, CTIA, Carnival of Mobilists, Carriers, Connected Devices, Disruption, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Payments, Mobile Search, Mobile Traffic, Networks, Patent Strategies, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 12 comments
2012 Mobile Industry Predictions Survey
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2012. My thanks to all who participated in our 2012 Mobile Predictions Annual Survey. It gives our community an insider’s view of trends.
2011 was a terrific year for the mobile industry. With all its ups and down, consumers embraced devices, applications, services, and technology with more gusto than ever before. In the waning hours of 2011, we crossed the 6 billion subscriptions milestone. While the first billion took 19 years, this last billion only took 15 months.
Smartphones are selling like hot cakes. We estimate that by the end of Q4 2011, over 60% of the devices sold in the US were smartphones and over 30% of the global sales were for the evolved brethren of the primordial featurephones. Sparked by insatiable consumer demand for mobile data, LTE and HSPA+ networks are sprouting all over the planet with US leading the charge for broadband deployment.
Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what’s to come. Executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain and around the world participated to help see what 2012 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution.
Fifteen names were randomly drawn for the limited edition of the Mobile Future Forward 2011 book. The winners are:
Tor Bjorn Minde, Head of Ericsson Labs, Ericsson
Sunder Somasundaram, Industry Solutions Practice Director, AT&T
C. Enrique Ortiz, Mobile Technologist, About Mobility
Russell Buckley, CMO, Eagle Eye
Marianne Marck, VP – Engineering, Starbucks
John Foster, President, ZED USA
Angel Luis Saez, Sr. Director, Orange Spain
Dilip Mistry, Senior Director, Microsoft Asia
Phyllis Reuther, Advanced Analytics Lab, Sprint
Gene Keenan, VP of Mobile, Isobar
Elizabeth Day, Director of Finance, Trilogy International
Alan Cole, Research Staff Member, IBM T.J. Watson Research Center
X J Wang, VP – GM China, Vesta Corp
Michelle Lee, Director, SK Telecom
Hemant Chandak, Sr. Analyst, Cisco Systems
Thanks again to everyone who contributed. We will be calling on you again next year. It has been a terrific year for us at Chetan Sharma Consulting and we are looking forward to an engaging and productive 2012.
Be well, do good work, and stay in touch.
Thanks and with warm wishes,
Your feedback is always welcome.
Now onto the 2012 Mobile Industry Predictions Survey Results.
1. What was most newsworthy in Mobile 2011?
Android had a spectacular rise in 2011 around the globe. Android OEMs collectively shipped the most number of devices and while margins shrank, they were able to put a united front to iOS. 2011 will always be remembered for the passing away of the industry transformer Steve Jobs. His work directly or indirectly touched billions of souls around the planet, many times over – something rarest of human beings are able to achieve in their life time. Regulatory tussles and significant increase in IP disputes also occupied the headlines. Amazon announced its intention for the mobile space with the launch of Kindle Fire.
2. What will be the biggest mobile stories of 2012?
As we look towards 2012, our panel voted for the continued growth of mobile data as the biggest story followed by Amazon’s entry into the mobile space. Some key questions for the year are: Will Microsoft/Nokia devices will make any meaningful progress? Will RIM survive the year? How does Google manage the fragmentation, decline in margins (for the OEMs), and the IP issues? Will any high-profile security and privacy mishaps lead to more regulatory entanglements? Facebook IPO and its mobile ambitions? How do operators manage the data demand? Which M&As will capture industry’s attention? Will Apple continue to dominate on both smartphone and tablet front? What does Apple do with mobile payments? and much more. Clearly, it is going to be a terrific year.
3. Who will be the most open player in the mobile ecosystem in 2012?
File this in the “perception is reality” folder. Despite all the criticism, Google has maintained its strong position as the most open player in the mobile industry.
4. What applications will define 4G?
Still looking for a killer-4G app? Video, cloud computing, and access will continue to drive 4G demand and growth.
5. What will be the breakthrough category in mobile in 2012?
For a second year in a row, the panel voted for mobile payments and mobile commerce as the top two category that will find their voice. Mobile advertising has become mainstream so it lost its ranking in the top 3.
6. What will be the most popular consumer mobile applications in 2012?
Apps preferences vary by regions depending on a whole range of factors. Messaging and Commerce are the top two categories for the developing world while consumers in the developed nations are likely to gravitate towards commerce and location based services.
7. Which will be the most dominant (unit sales) tablet platform in 2 years?
iOS and Android will dominate the tablet landscape for the next 24 months. A late entry by Windows 8 tablets could make a dent but don’t count on it.
8. Who will make the biggest mobile acquisition in 2012?
2011 had its fair share of block-buster acquisitions, some successful while others were not. Our panel expects Microsoft and Google to continue making the biggest acquisitions.
9. How will the "Apps vs. Mobile Web" debate shape up in 2012?
It seems like the pendulum is swinging towards the mobile web though hybrid solutions are likely to stay with us for a long time.
10. Who will define the mobile payment/commerce space?
The financial companies safely locked in the mobile payments space and while the value chain is fairly complicated and definition confusion abounds, the likes of Visa, Operators and Google will continue to drive the payments/commerce space.
11. Which solutions will gain the most traction for managing mobile data broadband consumption?
Managing data growth and margins drives all strategies at mobile operators these days which in turns drives the value chain. 4G, tiered pricing, and mobile offload continue to be the top solutions if one has the spectrum that is.
12. Which category will generate the most mobile data revenue in 2012?
Messaging, access, apps, and advertising are the four broad categories that drive mobile data revenues around the world. The developing markets rely on messaging while the developed markets are increasingly looking to access as their dominant form of revenue generation.
13. What will help mobile cloud computing gain traction in 2012?
Mobile cloud computing will continue to be defined by enterprise, storage, and media needs.
14. Which enterprise segment will mobile impact the most?
Best buy is becoming the next Circuit City. Other retailers will follow unless they can successful reinvent themselves. Health is more regulatory driven so the progress will be slow though it is ripe for a complete overhaul and developing nations are moving much faster in this space.
15. What will be the dominant revenue model for apps in 2012?
In-app revenue model made good strides in 2011 but the combination of the various available revenue models will be the norm for most application developers.
16. What mode of mobile payments will get traction in North America and Western Europe in 2012?
2011 was the year to set the ground work for growth in the mobile payments space. Given the investment and focus, we are likely to see more movement and consumer involvement in 2012 with proximity based solutions and commerce of physical goods on mobile.
17. What will be the most successful non-mobile-phone category in 2012?
Tablets dominate. Period.
18. Which of the following are likely to happen in the near future?
The is a significant shift in computing taking place right in front of our eyes wherein tablets are replacing laptops and even desktops in the enterprise. European operators have been experiencing tough times while some of the Asian operators are flush with cash, they might make their move in 2012 though regulatory hurdles might prove to be an issue. 33% of the nations will have elections in 2012, maybe which will move mobile voting to the forefront in some nations. Our panel thought there is a better chance of humans discovering water on another planet than rise of another significant mobile OS.
19. Which areas will feel the most impact from Regulators in 2012?
Net-neutrality and market competitiveness will keep the regulators busy in 2012.
20. Who was the mobile person of the year?
Clearly, Steve Jobs was an easy choice but who will replace him 2012? Jeff Bezos has an early lead followed by Andy Rubin and Mark Zuckerberg. Angry Birds representing the developer community will be in for another terrific year. Other honorable mentions were Tim Cook, Paul Jacobs, Sanjiv Ahuja, Dan Hesse, and Glenn Lurie.
A lot to look forward to in the New Year. My thanks to all who participated and we hope you found it useful as you embark on your journey for a successful 2012.
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 Feb 2012. The next Global Wireless Data Market update will be issued in Apr 2012.
Disclaimer: Some of the companies mentioned in this survey are our clients.
Mobile Breakfast Series – Mobile 2012: Trends and Opportunities December 15, 2011Posted by chetan in : 3G, 4G, AORTA, ARPU, Connected Devices, Enterprise Mobility, European Wireless Market, Patent Strategies, Patent Strategy, Privacy, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
We held our 8th Mobile Breakfast Series event earlier today. As is the tradition, we delved into discussing the trends and opportunities for the coming year. As usual it was a sold out crowd with terrific panelists representing different parts of the value chain.
2011 has been a fascinating year – with all the mergers, sky rocketing data growth especially in the US market. 2011 will also be remembered for the passing away of Steve Jobs, the man who helped change the global mobile industry over the course of the last four years. Locally, lots happening – Microsoft/Nokia alliance is launching new devices, Amazon has entered the mobile space with both feet, mobile gaming remains hot, and on a broader scale, we are going through the process of mobilification of everything.
Mark Anderson, CEO of Strategic News Service. I have known Mark for over 15 years now as one of the early subscribers to his wonderful newsletter. My good friend and coauthor Joe Herzog introduce me to Mark and since then I have been influenced by his writing. If you follow my blog, the name AORTA or Always On Real Time Access was coined by Mark in the late nineties and he generously allowed me to use it. Mark has also been writing about the carry-along-PC aka tablets for sometime and won the bet with bet with Michael Dell on the growth of this sector. He just finished off his annual predictions for 2012, so we had a lot to talk about.
Laura Marriott is CEO of Neomedia which is doing some pioneering work in the mobile barcode/mobile marketing space. But she is more famous for her work at the Mobile Marketing Association where she helped grow the industry and the association to make it a thriving enterprise.
Satya Mallya is Director at Orange. For those of you don’t know Orange is one of the top European Operators but he is based in the silicon valley working on some cool projects. He has been in the telecom space for almost 20 years working at Bell Labs, Octel and two startups
Brian Fling is CEO of pinchZoom a mobile agency that helps big brands like BBC, Paypal, Delta and others understand mobile design and development. He is passionate about mobile user experience, has spoken and written extensively about the subject.
Jay Emmet is GM OpenMarket, SVP, Amdocs and knows the messaging, commerce space on the back of his hand. Very successful stints at mblox, ATG and others. Knows the operator world really well and has been straddling both the on-deck/off-deck world for a long time.
We touched on a range of subjects from IP to platforms, from privacy/security to mobile commerce and payments, from Microsoft to Amazon .. and so on and so forth. Below is the summary of the discussion:
- While the economy in various regions has been shambles, the tech industry has been largely protected, especially, the mobile industry. We are lucky to be working in space. Amen!
- As far as the mobile platforms are concerned, there are only two that matter – iOS and Android with iOS still having a strong upper hand. Android is plagued with IP issues and OEMs are starting to have second thoughts about the cost and risks of supporting Android in the long-term. All this is of course very fluid and will depend on the outcome of a number of IP cases in courts.
- Microsoft has made some progress with Nokia but as recent shuffling indicates, all is not good and there is going to be considerable work needed in the coming days to get alliance working in sync and work a thriving ecosystem long-term.
- Siri has just changed the game at some many levels. Consumers now expect more from their devices and players are scrambling to deliver.
- This year began with the debate of apps vs. mobile web. Mobile Apps have fundamentally changed the mobile UI and design paradigm. Consumers don’t want to just browse a page on their devices, they want great user experiences all of which can’t be delivered on mobile web. Apps stay quite a bit ahead of the game.
- There is systematic IP theft and cyberattacks going on and western nations and companies are finally waking up to do something substantial. However, it is going to be a long journey to get it right.
- Many small companies have built good, attractive IP portfolios in mobile and given the investment and invention, they should be allowed to maximize the value of their IP.
- Amazon’s entry has changed the game. It has already become the number two in tablets and more to come. It will impact retail, advertising, and many other segments of the consumer economy.
- Over the last 20 years, capacity has been an issue every year but this time around, the capacity constraints are significant. While the services and consumption have gotten much better in orders of magnitude, the prices have largely stayed the same. To build capital-intensive networks, operators will have to find ways to increase data revenues.
- Operator channel is still a viable channel for the developers especially the ones who are looking for broader international reach.
- Mobile Security on smartphones remains a worrying concern and is an opportunity area for entrepreneurs.
- Mobile Privacy is a complicated issue. Many businesses are actually based on exploiting the privacy not protecting it so the business models are at odds with the privacy mantra and regulations. Something has to give. More regulations to come.
- QR codes and NFC will live in harmony for sometime.
- There are currently no clear winners in the mobile payments space. It is likely to stay very fragmented and is likely to become even more so over the coming days before any leaders emerge. Payments remains the most complicated ecosystem with many players involved and success stories will depend on the use-case scenarios.
- Cloud offers a differentiating opportunity for the operators and compete effectively with some of the OTT players.
- Many industry verticals are getting transformed by mobile. Big brands are aggressively pursuing mobile as a key strategic project. Health, Retail – opportunities abound.
- While traditional messaging is getting impacted by IP messaging, the decline is not universal and operators are reacting with new business models and technology initiatives.
- 2012 will be another great year for mobile. Fasten your seat belts.
It was a joy to moderate this terrific panel that kept audience glued to their seats till the very end. Thanks all for coming. We have some terrific events planned for 2012, Stay Tuned.
Until then, Wish you and yours a very happy and stress-free holiday season and enormously successful and prosperous 2012.
And don’t forget to fill out our Annual Mobile Predictions Survey for 2012. There are prizes for 10 lucky winners.
ps. As I mentioned in the opening, WA state dept has a wonderful program to help startup with their travel to Mobile World Congress in Barcelona next year. Details here. Startups should check it out.3G, 4G, AORTA, ARPU, BRIC, Carriers, Connected Devices, Devices, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, Mergers and Acquisitions, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Payments, Mobile Search, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Student Paper Contest, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 6 comments
The big picture
The global mobile industry is the most vibrant and fastest growing industry. We expect the total revenue in the industry to touch approximately $1.3 Trillion in 2011 with mobile data representing 24% of the mix. Global Mobile Data revenues are expected to eclipse $300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues will make up the majority of the overall global data revenues at 53%.
We expect the total number of subscriptions to exceed 6 billion by the end of 2011. The first 1 billion took over 20 years and this last one is going to take only 15 months. The primary growth drivers are India and China which are cumulatively adding 75M new subs every quarter. Indian and China are also entangled in the race to the billion. At the end of Q2 2011, China was ahead by 50M but India is adding subscriptions at faster rate and is likely to eclipse China before Q2 2012. By then, both nations are expected to exceed 1 Billion in total subscriptions making up 31% of the global subscriptions.
In Q1 2011, US became the first major market to exceed the 50% mark in smartphone sales. The global figure stands at approximately 26%. Some operators expect 90% of their devices sales to be smartphones by the end of the year. In terms of the actual smartphone penetration, we expect the US market to eclipse the 50% mark in 2012.
China leads in the number of subs but US dominates in both total and data revenue. A number of emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings.
The number of mobile operators with more than $1B in data revenues will increase to 47 in 2011. This number was only at 13 in 2005.
Japan continues to be the leader in mobile data with NTT DoCoMo, KDDI, and Softbank Japan ahead of the pack in terms of mobile data revenue and data as a % of total ARPU. In 2011, it became the first major market to have more than 50% of its mobile revenue from data services. Next, Australia and the US have made good inroads in the last two years. In fact, if we look at the overall data revenue, US is much further ahead than any nation due to the size of the market.
While India has the highest subscriber growth rate in the world right now, the revenue generating opportunity remain down right anemic compared to other major markets with average dropping down to $3.50 in overall ARPU. Even with significant subscriber base, there is going to be a general lack of opportunity in the market for the next couple of years relative to other markets.
Mobile Trends for 2011
1.Total Global Subscriptions to hit 6 Billion
–India and China racing to a billion a piece
2.Total Global Mobile Revenues to hit $1.3 Trillion, almost 2% of Global GDP
–Top 10 operators control 43% of the global mobile revenues
3.Total Global Mobile Data Revenues to eclipse $300 Billion
–Non-messaging data now owns 53% of the global mobile data revenues
4.Mobile Devices are now exceeding traditional computers in unit sales + revenue
–Majority of the device sales in the US are now smartphones. Device Replacement is shrinking
5.Mobile Broadband (4G) is being deployed at a faster rate than previous generations
–Over 1 Billion broadband connections by 2011
6.Global Mobile Apps revenue has shifted to off-deck
–The decline is directly proportional to the increase in smartphone penetration by region
7.All major markets are consolidating with the top 3 players at 85% of the market
–Regulators will have to be more prudent and proactive about managing competitiveness and growth
8.Mobile Data Traffic will be 95% of the global mobile traffic by 2015
–Many countries are facing spectrum exhaust in the next 5 years
9.Connected device segment is growing at the fastest pace
–Operators will have to quickly adapt their strategies to stay relevant in this segment
10.Several multi-billion dollar opportunity segments are emerging
–Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few
11.Mobile Ecosystem has become very dynamic and unpredictable
–Apple, Google, Amazon, and Facebook have become the most important revenue generating mobile platforms
12. There will be more changes in the next 10 years than in the previous 100
– The value chains will keep disrupting every 12-24 months by the new players and business models
13. Intellectual Property has become a key component of long-term product strategy
– Top 20 control 1/3rd of the overall mobile patent pool
Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to catch-up on the features but can’t do on the margins. OEMs can grow the pie by bringing products at a better price points that helps attract different demographics to the mix. Microsoft can make good inroads into the space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue.
Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product planning and execution has left their market share in disarray. Nokia’s valuation has been cut into half while the newcomer HTC edged past the industry giant in a remarkable story of the year. Nokia’s release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of Nokia Windows Phones. While the market hasn’t shown much appetite for Windows phone thus far, a good family of devices might be able to slow the loss trajectory and position the combined team for the up-for-grabs 3rd spot in the ecosystem. HP’s acquisition of Palm is finally bringing some new products to the market but the lack of an effective ecosystem means lack of traction in 2011. Given that the computing is shifting to mobile devices, we can expect some of the weaker desktop/laptop players will exit the industry.
Tablets are primarily being used in the WiFi mode because the primary use case is indoors and WiFi gives a better (and cheaper) user experience. Once operators start to roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher but will still be dominated by WiFi overall.
The number of connected devices per subscriber and per family will continue to increase over the course of this decade. As the cost structure and margin profile for these devices will be different, we are likely to measure performance of various operators using margin analysis for e.g. while the ARPU for connected devices is 5-10 times lower than the postpaid subscribers, the margins are typically higher due to lower costs of sales, marketing, support, and subsidy. As such the overall impact is dilutive ARPU but higher margins. So, instead of focusing on just the ARPU, the efficiency of operators will be measured in how well they maintain average margin per user (AMPU) and average margin per connection (AMPC).
Managing the data growth
As a result of the data tsunami, there are two types of opportunities that are being created, one that take advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially.
To be able to stay ahead of the demand, significant planning needs to go in to deal with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won’t be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach and thus bringing the hockey stick curves of data cost more in line with the revenues and thus preserving the margins.
The decision making process within the operator organizations will need to be streamlined as well. Operators should also consider creating a senior post which focuses on both the cost side and the solution side so they can devise and institute a sustainable long-term policy and keep the margins healthy.
The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average, the top 3 control 93% of the market in an given nation. It doesn’t matter if the market is defined by “controlled regulation” like in China, Korea, and Japan or if it is “open market” driven in markets such as the US, UK, and India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the mobile market.
Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is settling into a “top 3” operator market. India’s brutal price wars are going to trigger the consolidation in the next 12-24 months and will eventually settle into a structure similar to other markets.
The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are 46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some semblance of equilibrium in the market the top operator shouldn’t have more than 50% of the market share and the number three player shouldn’t have less than 20%. This helps create enough balance in the market to derive maximum value for the consumer.
Mobile operators will face some hard choices in developing and protecting the role they want to play in a given region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA margins, investment required over the long-haul, how investors view them, and on the competitive landscape of the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this decade that further define “communications” and “computing” as we know it.
Apps and Services
As expected, mobile commerce and payment discussions are dominating the ecosystem. There is clearly a lot of investment and marketing dollars being spent. However, the traditional payments networks are largely intact. The new opportunities are being built on top of the existing payment platforms with convenience (Square) and offers and advertising (Google Wallet, ISIS, Groupon). Beyond payments, mobile is getting ingrained into every vertical and every facet of our lives – from healthcare to education, from energy to entertainment, from communication to socialization. And we are in the early innings of figuring out the business models, ecosystem leaders, user behavior, regulatory needs, and the overall impact on society.
It is very clear that the ecosystem dynamics can change very quickly, one just can’t take the competitive and friendly forces for granted. In the past, the silos and segments were clearly defined with little overlap. However, over the course of last couple of years, players have been migrating and surfing in segments across the board - from Apple to Visa, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer’s pocketbook. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft’s enterprise business. One product launch, one acquisition, can change the game in an instant. And this is only the beginning.
Mobile is fundamentally reshaping how we as consumers spend from housing and healthcare to entertainment and travel, from food and drinks to communication and transportation. Mobile not only influences purchase behavior but also post purchase opinions. When the share button is literally a second away, consumers are willingly sharing more information than ever before. Mobile is thus helping close the nirvana gap for brands and advertisers who seek to connect advertising to actual transactions. The long-term battle is however for owning the context of the users. Having the best knowledge about the user to help drive the transaction is the simply the most valuable currency of commerce.
Mobile Future Forward
We will be discussing the global mobile ecosystem – the challenges and the opportunities at our annual mobile thought-leadership summit – Mobile Future Forward - brought to you in partnership with our terrific partners – Qualcomm, Millennial Media, Real Networks, AT&T Interactive, Synchronoss Technologies, OpenMarket, Ericsson, and Openwave. Hope to see you in Seattle on Sept 12th.
Some of the distinguished guests include:
Abhi Ingle, VP – Advanced Mobility, AT&T Wireless; Amit Gupta, SVP and CTO, INQMobile; Bob Gessel, VP/Head of Technology and Network Strategy, Ericsson; Braxton Woodham, Head of Engineering, AVOS; Carlos Domingo, CEO, Telefonica; Charlie Herrin, SVP - Products and Technology, Comcast; Dale Nitschke, former President, Target; Danny Bowman, President - Connected Devices, Sprint Nextel; David Messenger, EVP, Head - Online/Mobile, American Express; Erik Moreno, SVP, Fox; Gibu Thomas, SVP - Online/Mobile, Walmart; Glenn Lurie, President, AT&T Wireless; Hank Skorny, Chief Strategy Officer, Real Networks; Janet Schijns, VP, Verizon Wireless; Jason McKenzie, President, HTC-Americas; Jay Emmet, GM, OpenMarket; Jeremiah Zinn, EVP, MTV; Jerry Batt, CIO, PulteGroup; John SanGiovanni, Cofounder, Zumobi; Ken Denman, CEO, Openwave; Ken Wirth, President, Alcatel Lucent Wireless; Kris Rinne, SVP - Networks, AT&T Wireless; Mark Rolston, Chief Creative Officer, Frog Design; Matt Oommen, President, Reliance Communications; Mikael Back, VP of Products and Portfolio Management, Ericsson; Mike Mulica, President, Synchronoss Technologies; Paul Palmieri, CEO, Millennial Media; Prof. Cliff Nass, Human Computer Interaction, Stanford University; Rob Glaser, Partner, Accel; Sanjiv Ahuja, CEO, LightSquared; Stephen Bye, CTO, Sprint; Steve Mollenkopf, EVP and Group President, Qualcomm; Subba Rao, former CEO, Tata DoCoMo; Suja Chandrasekaran, CIO, Timberland; Will Hsu, Chief Product Officer, AT&T Interactive
More information at http://www.mobilefutureforward.com
Your feedback is always welcome.
Thanks and have a great 2H 2011.
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 Aug 2011. The next Global Wireless Market update will be issued in Jan 2012.
Disclaimer: Some of the companies mentioned in this paper are our clients.3G, 4G, AORTA, ARPU, BRIC, Carriers, Devices, Enterprise Mobility, European Wireless Market, Gaming, General, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Networks, Patents, Privacy, Smart Phones, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , 2 comments
Competition and the Evolution of Mobile Markets
A Study of Competition in Global Mobile Markets
Over the course of the last decade, mobile communications has become an essential part of the global fabric of evolution. With almost 70% global subscription penetration as of 2010, mobility is being embedded into almost every facet of our lives. Mobility is also spreading across verticals whether it is m-pesa in Kenya or SMS based counterfeit medicine detection in Ghana or paying for your coffee using your NFC enabled mobile phone in a Tokyo café or watching the cricket world cup broadcast while hiking the Yangtze river near Tibet. Consumers expect access to information everywhere they are and the ecosystem is responding with continued innovation, which has become extremely critical in managing the competitiveness of nations.
It is also apparent that some of the innovation and market dynamics has been evidenced by the competitiveness of these markets at different levels – network, devices, and services. While the market entry conditions into the devices and software services markets have gone through significant overhaul this last decade, the competitiveness framework of the mobile networks has been more structured and controlled in many instances.
Given the importance of the mobile network infrastructure to every nation’s competitiveness, security, and productivity, it is useful to understand how the “competitive mobile markets” are formed. In theory, the perfectly competitive markets are in the best interest of the consumers as they provide the best value given the competitive dynamics and the equilibrium provides good checks and balances for the ecosystem.
The global mobile networks have shown a remarkable adherence to the “Rule of Three” which states that in any mature industry, 3 top players dominate the market. Sometimes it has been dictated by the regulators and in other instances by the markets. Some markets like in Europe have settled into a state of equilibrium while other hyper growth markets like India are shuffling to find the right balance.
The elements of globalization are also shaping how mobile network operators grow. The regulators and the political class are increasingly looking at mobile networks as national assets and any foreign ownership generally goes through tremendous scrutiny.
Having worked in major mobile markets around the world, we have been intrigued by the framework for a competitive market and this is the theme we explore in this working paper. Having the front row seat in an industry that is growing stupendously has given us some unique perspective on the competitive forces at work in the mobile space. We studied the competitive landscape in 40 top mobile markets around the globe.
This paper presents the analysis and an in-depth analytical framework to study the competitive landscape in the global mobile markets.
Download Paper (45 pages, 2MB)
Disclaimer: Some of the companies mentioned in this paper are our clients.
New White Paper: The Promise of Mobile Advertising February 2, 2011Posted by chetan in : 3G, 4G, AORTA, Carriers, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Future, Mobile Future Forward, Mobile Usability, Mobile Users, Privacy, Smart Phones, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
Commissioned by AT&T Interactive
The world of advertising is changing at a dizzying pace. New media are transforming advertising, and consumer expectations have changed accordingly. In this dynamic environment, no communications platform holds more promise than the mobile device.
Mobile platforms present a unique opportunity to reinvent advertising. With mobile, the perception of advertising will shift from interruptive broadcast messages to targeted information services of real value to consumers and positive interactions that have an immediate top-line impact.
Advertisers care about two basic metrics – reach and purity. They want to communicate with as many people as possible (reach) and they want to reach the most accurately targeted audience possible (purity). In the past, advertisers have tried to compensate for a lack of purity by casting a wider net, spending inefficiently and often failing to reach their target audience.
With mobile, advertisers can deliver the right information to the right target at the most opportune time; delight the consumer with instant gratification; complete transactions and measure direct correlations between advertising, transactions, and return on advertising (ROA). With the power of real-time metrics in hand, advertisers can scientifically design, measure, and alter their campaigns and deploy strategies for one-to-one relationship building with customers.
Mobile is having a significant impact on local advertising. The attributes of immediacy, location, always-on connectivity, user profile and segmentation, and the viral nature of the medium make mobile the best channel for local advertisers to engage potential customers.
Disclaimer: Some of the companies mentioned in this paper are our clients.
2011 Mobile Predictions Survey Results January 3, 2011Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Traffic, Networks, Patent Strategy, Patents, Privacy, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment
2011 Mobile Predictions Survey
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy,
healthy, and prosperous 2011. Thanks to all who participated in our 2011 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.
We put some of the questions to our colleagues and industry leaders in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=225) from leading mobile companies across the value chain and around the world opined to help us see what 2011 might bring.
Ten names were randomly drawn the limited edition Mobile Future Forward book. The winners are:
1. Jared Cornfeld, Industry analyst, FCC
2. Abhi Rele, Marketing, Microsoft
3. Christopher Billich ,Head of Mobile Advertising, Deutsche Telekom AG
4. Gary Cohen, VP/GM North America, Flirtomatic
5. Peter Jarich, Service Director, Current Analysis
6. Darren Austin, Director of Mobile, Expedia
7. Craig Fisher, Software Client Leader, IBM
8. Steve Wood, CEO, Perlego Systems, Inc.
9. Elliott Hamilton, Sr. Director of Strategic Planning, TeleCommunication Systems
10. Vishal Gupta, Vice President North America, Qualcomm Inc
Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly
living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific
year for us here at Chetan Sharma Consulting and we are looking forward to 2011 and seeing many of
you along the way. We hope you enjoyed gaining from the collective wisdom.
Be well, Do Cool Work, Stay in touch.
Thanks. With warm wishes,
Your feedback is always welcome.
Now onto the 2011 Mobile Industry Predictions Survey Results
The panel comprised of movers and shakers of the mobile industry from around the world.
What will be the biggest stories of 2011?
In last year’s survey, Google/Android narrowly missed out to be the biggest story of the year but this year, the verdict was clear that Google will continue to dominate the headlines with Android devices and new updates and apps. Given that we are in the midst of 4G deployments and ITU’s flipflop on the definition, we could be in for an interesting year.
When will Verizon iPhone launch?
Inordinate amount of ink has been spilt over Verizon’s iPhone speculation. However, given the chatter, our panel voted for a Q1 launch.
Who will be the most open player in the mobile ecosystem in 2011?
In all our surveys Google has consistently cemented its perception of being the most open in the ecosystem.
Will Android tablet sales exceed iOS tablet sales in 2011?
Last year, Android OS edged past iOS, however, given the lead iOS has had in tablets, it might be hard to overcome the number of shipments in 2011.
Who will make the biggest mobile acquisition in 2011?
Got Cash? Big players are likely to go shopping but who will score the blockbuster deal of the year. Google and Microsoft will duke it out with Google taking the spoils.
How will the "Apps vs. Mobile Web" debate shape up in 2011?
Apps vs Mobile Web has been as hotly debated in the industry as the CDMA vs. GSM battles of the past. Our panel thought Apps will continue to grow though mobile web starts to show its muscle.
By how much will the mobile advertising ad-spend increase in 2011?
Our panel was more bullish on mobile advertising than last year with a good 50% of respondents aiming for 200% growth and higher.
Which market will be the biggest infrastructure in 2011 for sales opportunities?
India and China are laying out 3G and North America is expanding on 4G. Infrastructure contracts abound.
Who will be the mobile come back story of 2011?
Many long-time players are under the gun this year. Will Windows 7 help Microsoft or will Meego make Nokia competitive. Story will unfold this year.
Who will end up having the strongest position in the mobile payment/commerce space?
While Japan/Korea markets have developed mature mobile payments solutions, the battle royale of mobile payments in North America will play out between the financial guys and Operators with Internet players making a strong run at it as well. 2011 might help decide the long-term winners in the space. Our panel thinks, the likes of Mastercard and Visa will edge out others in the tussle.
Which areas will feel the most impact from Regulators in 2011?
Regulators can have a huge impact on the course of the industry and nation’s competitiveness. With the laws all but laid out, the real rulings might come from the courts.
Which solutions will gain the most traction for managing mobile data broadband consumption?
2010 saw the emergence of tiered data pricing in North America and operators all over the world are bracing for a long-term challenge of managing mobile data growth. We have written extensively on this subject in our Yottabyte series. Our panel voted for Tiered pricing and 4G as the top two solutions.
Which category will generate the most data revenues in 2011?
Global markets are quite different and while data service revenues have been growing in all regions, our panel breaks down by categories in terms of expected contribution from various segments.
What will help mobile cloud computing gain traction in 2011?
Mobile Cloud Computing is expected to take several strides in 2011 with Media and Enterprise demand at the forefront.
What will be the most successful non-mobile phone category in 2011?
As we have highlighted in our previous research, Connected devices have shown tremendous growth in 2010. Tablet seems to be clear category winner.
What will be the breakthrough category in mobile in 2011?
Mobile payments and commerce are starting to take off and are expected to show the most growth in 2011.
By the end of 2011, how will we end up defining 4G?
ITU’s flipflop means, anything above HSPA+ will be deemed a 4G technology.
Which enterprise segment will mobile impact the most?
Mobile as a platform is booming with Retail finally getting into the swing of things and will show the most activity in 2011.
What will be the dominant revenue model for apps in 2011?
While paid apps dominated the revenue stream in the early days, advertising and in-app payments are taking off on iOS and Android. Developers will play with a combination of models depending on what works on a given platform.
What mode of mobile payments will get traction in NA and WE in 2011?
Operators experimented with mobile payments over the last few years, now is the time to put the solutions to the test.
Who was the mobile person of the year?
Who can compete with King Jobs. Launching iconic devices year after another, Steve Jobs has set the direction of the industry since 2007 and was a clear favorite for the mobile person of the year. The tremendous success of the apps personified by blockbuster hit of "Angry Birds" took away the second spot with Andy Rubin’s Android effort won him the third spot.
Well, there you have it. The top trends and stories we will be talking about in 2011. Thanks again for all who participated and we hope that you found this useful as you embark on your journey for the year.
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 2011. The next Global Wireless Data Market update will be issued in Mar 2011.
Disclaimer: Some of the companies mentioned in this paper are our clients.
CTIA Enterprise and Applications 2010 Wrap-up October 11, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Future Forward, Privacy, Speaking Engagements, US Wireless Market, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment
CTIA Enterprise and Applications 2010 Wrap-up
Déjà vu - the experience of thinking that the current CTIA had occurred before.
This note summarizes the observations and opinions from the event, discussions, and briefings from the CTIA event that just concluded in San Francisco.
The Mobile Ecosystem
For me, the proceedings started with my talk “Mobile Apps: The Big Picture.” I generally start my talks these days by explaining the complexity of the mobile ecosystem. The traditional value-chains are morphing (and some cases being decimated) and the new ones are getting coalesced very fast. It is hard to summarize without going into the intricacies and the dynamic nature of the game. (I will be expanding on this theme again during my talk at University of Oxford this friday)
It is like a long marathon composed of 100m sprints where new players can enter and leave midstream. Players can merge en route to gain strength and speed or blow up before reaching the next 100m. The friends in this segment of the race might turn into competitors in the next segment. To throw a wrinkle into the mix, regulators or any one player can change the rules of the game such that 100m can become 50m or 200m and the players have to adapt and respond accordingly.
The race is in the open so the weather elements can impact but doesn’t stop the race. In such a brutally competitive environment, only the players who are super-agile or super-innovative or both have enough juice left to compete effectively in the next leg of the marathon. The successful ones are those where the C-suite and the troops are watching the KPIs of each step at the granular level so they have real-time intelligence of taking the next stride.
It requires the perfect blend of Usain Bolt and Samuel Wanjiru to compete in the “new” mobile landscape.
For example, Samsung, HTC, and Motorola (recently) have adapted remarkably well to this fast-paced marathon but their friendly rival LG has suffered and will need some time to regroup and be a force again. Microsoft faltered and didn’t adapt while new entrants like Apple and Google set the terms of the race. Watch out for what Facebook does in the space. Given their scale, their user understanding, and their product portfolio, if they execute certain elements of their strategy right, Facebook can be front runner in this ecosystem.
Some of the operators who have traditionally felt safe on their home turf are getting challenged. They are reinvigorating the industry segments they could have dominated before though it is probably too late in some areas.
Mobile Enterprise - The unglamorous cousin of the consumer segment
Enterprise is hot again. AT&T and Sprint have become very focused on becoming the “total solution providers” vs. just providing data subscriptions and devices. A&T is making a big push for the enterprise market and showcased several of its wins in the healthcare, education, retail, shipping, and other verticals. As I have talked about before, (mobile platform will) let a thousand industries bloom! Cloud computing is another area where we are going to see some interesting developments over the course of next 6 months (I will be moderating a panel on Mobile Cloud Computing at the upcoming Open Mobile Summit in Nov)
At CTIA, Verizon formally announced their LTE plans with almost 40 markets. It has moved aggressively in the last 24 months to get the network and slew of devices ready. Verizon’s marketing machine will let loose come Christmas and CES. AT&T also announced its “LTE ready” devices.
Mobile Devices: Competitive landscape
iPhone is likely to be launched on a second US carrier in Jan and is going to offer first true iPhone vs. Android test. In the meantime, a stable of Windows Phone 7 launched today after the announcement 8 months back in Barcelona. I do like a fresh approach to UI design akin to flipboardification of the apps icon-based layout (which is so desktopish). Things started to move in this direction with Motorola Blur last year and INQ a bit earlier.
The question is not if Microsoft has done a good job with WP7. It has. The question is - how soon does Microsoft come with its second round of handsets and software upgrades? And how soon will it be able to sign up additional OEMs. Remember, a few extra hops doesn’t guarantee unfair competitive advantage for the next 100m. Microsoft is starting from 0 and will have to execute on all fronts to be considered a serious contender come 2011 Christmas season. Finally, there is always room for another player, another platform. These things go in cycles. The trick is to capitalize on your opportunity and not be the one left standing when the music stops.
Coming back to my talk, I do think that an analytics driven UI is where we will end up on the smartphone UI and the whole debate around “mobile web vs apps” will be rendered moot to some extent. I expect Apple will come out with its iteration of the next generation UI soon.
Mobile as a platform is maturing and we can see this in the growth in connected devices and vertically focused solutions - healthcare, energy, education, etc. The fact that the connected devices have become the next battle ground was clear from the fact that Ford had a major presence at the show. Their telematics strategy is very well executed. In our own work in the space, there is some cool stuff that is going to get rolled out in the next 24 months. Secondly, Samsung was displaying its tablet as if it was the only device it built. Apple has created a new category and others are lining up to cash in.
Mobile Apps vs. Web
The noise around “mobile apps vs. web” is reaching a fervent pitch. It is rather a silly debate. Developer care about reach, revenue potential, and the cost of the reach. Users care about the best user experience and cheapest access. Ecosystems are built around these two simple notions. Recent data from Comscore revealed something interesting. Looking at the smartphone data between apps and browser, while overall, the apps usage was higher compared to that of the browser, browser was considered a better way to navigate in various categories like news, search, and social networking by a good margin. However, games which happens to be generating the lion share of the apps revenue will continue to be a native play for some time to come because developers don’t want to compromise and the browsers are not there yet.
Over all, great to catch-up with friends and colleagues. CTIA, thanks for the networking party. 2011 looks pretty darn interesting already (we will be discussing the trends and opportunities in 2011 in our upcoming Mobile Breakfast Series event on Dec 8th)
Some of the other news worthy items were:
Sprint launched Sprint ID that helps customize the clutter on the device. Again, the limitations of the icon based UI are becoming clearer.
Androids keep multiplying like gremlins. Motorola launched a series of Android devices, some squarely focused on the enterprise.
CTIA released its semi-annual industry survey results: 293M subs, $79B in rev in first 6 months, data revs $25B up 12.4% in the first 6 months. Capital investment of $21.6B in last 12 months. SMS traffic in June 10 - 173B.
Some are realizing that a flatter network architecture is needed to manage data growth and margins. We have written extensively about this subject in our Yottabyte Series.
In a show devoid of cool demos, OpenMarket demoed interaction with the vending machine using a mobile device something Finns have been doing for a decade.
NFC was barely discussed but if all things line up, it could be one of the top stories of 2011.
Your feedback is always welcome.
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 Nov 2010. The next Global Wireless Data Market update will be issued in Oct 2010.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Mobile Future Forward 2010 Summit Summary September 20, 2010Posted by chetan in : 3G, 4G, AORTA, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Japan Wireless Market, Location Based Services, Mobile Advertising, Mobile Applications, Mobile Ecosystem, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Wallet, Networks, Partnership, Patents, Privacy, Smart Phones, Speaking Engagements, Student Paper Contest, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
In proud partnership with
Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, Openmarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce
Earlier this month, Chetan Sharma Consulting hosted its first mobile thought leadership executive summit – Mobile Future Forward. The sold-out event attracted leaders from the global mobile industry across the ecosystem to discuss and debate the future of mobile. This note summarizes the various discussions from the summit.
Some of the key themes discussed by the speakers and panelists were:
1. The Mobile Ecosystem is becoming more complex and competitive by the day
2. Broadband is exploding around the globe, Nation’s competitiveness and prosperity is being defined by the quality and depth of Broadband
3. Mobile Device is becoming central to our existence
4. Understand the user, generational usage patterns, geographical differences and customs
5. Communication modes are evolving and morphing rapidly
6. Emerging Devices are taking the lion of share of growth in some western markets
7. Given the devices and networks, content, media, services are moving to the cloud
8. New experiences are being introduced that will impact monetization and interaction with computing and technology
9. World is becoming flatter by the day
10. Mobile as a platform is booming and several industry verticals are exploding
11. Context and Analytics are key currency for tomorrow
12. There is significant reallocation of revenues underway
13. The fight for developer mind share is getting intense
As technologists, we get too enamored with the technical details and specs but what’s most important is how can technologies be applied to make lives of every day consumers better. If a new solution or a service only benefits or thrills a few, it is destined to miss the mass market. No one understands the mass market better than Procter & Gamble, and no company in the world touches more consumers with more products than Procter & Gamble (with over 40-50 billion items per year). Technology plays a central role in how P&G thinks about engaging consumers. Last year, I had the privilege of spending some time with Steve David, our first keynote speaker. His understanding of the interplay between technology and consumer interaction and behavior is very deep and his enthusiasm for using technology to change the world infectious. Steve spent over 30 years at P&G , the final assignment as P&G’s CIO responsible for their Internet Strategy.
Steve laid out the case for Advocacy being the new measure of marketing. It has a lasting impact on the brand, the sales, and the relationship with the consumer. Companies who have a better understanding of the customer via sophisticated analytics and can quickly take the solutions and products that consumer want and need gain long-term competitive advantage. Insights from the market must be processed in real-time that can empower decision making at every level of the company. And mobile is central to this strategic shift. Mobile is being used to attack the counterfeit problem worldwide, in formulating personal recommendations as trust in brands erodes, in collecting analytics, and engaging interactions with products and services using NFC, etc. Steve ended with the old Chinese proverb, “When the wind changes direction, there are those who build walls and there are others who build wind mills.” What are you going to build?
Fred Devereux, President, AT&T West in his address on “The Next Big Thing” honed in on the emerging connected devices ecosystem and how AT&T is retooling itself to take advantage of the boom. The AT&T Emerging Devices organization is setup to behave and operate like a startup with hundreds of devices being approved in a short amount of time. The new generation of connected devices range from eReaders, PNDs, Telematics, Cameras, Camcorders, Picture Frames, Tablets, Tracking Devices, Gaming Devices, and Smart Meters. While the ARPU of these connection is low, the margins are high due to negligible overhead in operations, sales, and marketing. The importance of this category is evident from the research data we reported in our last quarterly report which indicated that there are more connected devices being added than postpaid net-adds and operators are starting to list them as separate line items in their financial statements. Fred also discussed AT&T’s plans to deploy LTE in 2011-.
Dr. Genevieve Bell, Fellow at Intel is one of the most fascinating anthropologists out there with an acute sense of technology evolution and how humans react and adapt to changes around them and how technology needs to adapt to humans and their needs in different habitats. She had some interesting stats from her research e.g. the household sizes vary significantly by countries – India has only 5% of the households as single-person households while France and Germany have over one third households as single-person. Boomers will represent more than half of the population of China, Japan, and EU by 2012. These demographic shifts have significant impact on how technology is used and how media is consumed. The keynote was filled with priceless anecdotes and research items that informed and gave the technologists something to think about and that the technologists are not the proxy for rest of the population. Her book “Telling Techno-Cultural Tales” is being published by MIT Press and is coming out next year. So, be on the lookout for that.
Mobile Advertising is in the news lately in the US. About 11 years ago, a young man named Takayuki Hoshuyama was making waves in the mobile advertising space. In 1999, he helped found D2Communications - a successful joint venture between the largest advertising firm in Japan - Dentsu and the largest and one of the most innovative operator on the planet - NTT DoCoMo. He was one of the original members of the Mobile Advertising Team for the i-mode service 11 years ago. In June, he was appointed CEO of D2C. Hoshuyama-san talked about the future of mobile advertising. Japanese mobile ad market is over $1B (though it represents only 1.7% of the overall ad spent) and with the advent of 4G/LTE the opportunities are enormous. Display outscores Search by 3:1 in ad revenues. Mobile is some embedded in Japanese culture that it is just assumed just like my good friend and coauthor Dr. Yasuhisa Nakamura, then CTO of NTT DoCoMo wrote back in 2002 in our book “the wireless infrastructure will become indistinguishable from air i.e. omnipresent”
Hoshuyama-san also talked about the evolving role of the operators in the ecosystem with some of them focused on becoming the cloud service providers and broadcasters.
After the keynotes, we shifted to panel discussions. The first one dealt with the disruptive forces in the ecosystem with Mike Sievert, Chief Commercial Officer, Clearwire, Lixin Cheng, CEO, ZTE USA, and Subba Rao, CEO, Tata DoCoMo – three leaders who are disrupting the status quo. All three agreed that the openness of Android will make it the most dominant OS in the coming years. Lixin talked about how the infrastructure business is becoming a software business with SDR design of technology standards and evolution. He also suggested that we as an ecosystem need to simplify the business models and the consumer purchasing process of bandwidth and connectivity before the connected device revolution takes significant hold. India is the fastest growing market but the ARPU levels are 1/10th of what they are in the US. Given that the market just spent over $100B on the 3G auction, the investment recovery model is unclear and the market is ripe for a big shakeout. Telenor, having lost over half a billion dollars is desperate to get out of the market. The pains of globalization are showing up in other regions as well. Mike mentioned the high average data consumption at Clearwire (currently at 7 GB/mo) – clearly a precursor of what’s to come (our research shows the national average was 230 MB/mo as of Q2 2010). In terms of new technology areas, the panel was interested in products that help with spectrum efficiency, reducing the cost structure, and in improving the battery performance.
As part of the Mobile Future Forward Initiative, we had also worked on two other projects:
· The Mobile Future Forward Book that consisted of thought provoking essays on the future of mobile from the speakers of the summit and
· The global student paper contest that invited the papers form university students from the around the world
It required enormous collaboration with the folks around the globe in a very short amount of time. We are very proud of the outcome.
Mobile Future Forward Book
The second project related to a limited edition book by Chetan Sharma Consulting (published by Futuretext) exclusively for the event. Some of these summit speakers put their insights and ideas on paper that resulted in this book. We are very grateful to the authors (and their respective organizations) who carved out time from their busy schedules to pen some really insightful commentary on how they see the mobile industry evolve both holistically and in the various segments of the ecosystem. While the views are quite diverse and bring together perspectives from different angles, everyone agrees, 2010-2020 will be one heck of a time period for innovation.
The book has the following pieces:
1. The Next 10 Years - 15 Trends That Matter - Chetan Sharma
2. Sustainability in a Mobile World - Stephen David
3. Managing The Mobile Data Explosion - Wim Sweldens
4. Show Me The Money! - Brian Shepherd
5. Mobility Revolutionizing Every Product, Service, and Process - Russ McGuire
6. How Constant Connection Is Changing Our World - Ken Denman
7. 4G: The Next Big Thing - Mike Sievert
8. The Untapped Potential of Mobile Advertising and Marketing - Takayuki Hoshuyama
9. Mobile Operators are at the Center of Mobile Advertising - Krishna Vedati
10. Mobile Challenges - Three Imperatives in the Changing Game - Russ Shaw
11. Interacting With Everyday Things - Amir Mashkoori
12. In The End, It’ll All Go Through “Browse and Buy” - Anil Malhotra
13. The Future of Mobile: 5 Trends That Matter Most - Jay Emmet
14. India’s Mobile Future Forward - Subba Rao
15. Cellphone As The New Computing Platform - Sailesh Chutani
16. What 5 billion Phones Could Mean for Health Literacy - Jon Stross
17. Privacy: From Compliance To Competitive Advantage - Sarla Sharma
18. Managing Growth and Profits in the Yottabyte Era - Chetan Sharma
We will be giving out some copies of the book during our Annual Predictions Survey in Dec, so be on the lookout for that participation request.
Student Paper Contest
Despite, the summer recess, we received an a very positive response from students around the globe. The top six entries went through rigorous scrutiny of our judges:
1. Pankaj Kedia, Head of Mobile Ecosystems, Intel
2. Subba Rao, CEO, Tata DoCoMo
3. Len Barlik, VP, Sprint Nextel
4. Jeff Giard, Director, Clearwire
5. Paul Palmieri, CEO, Millennial Media
6. Matt Oommen, CTO, Sprint Nextel
7. Paul Struthers, Head of Regional Marketing, Amdocs
The top two students were Lun Huang and Smruthi Pariccha and they were invited to join us for the event and receive their prizes.
The final ranking was as follows:
1. UWB Based on Multi-Band MC-CDMA and Magnetic Near-Field –Lun Huang, Electrical and Computer Engineering, Illinois Institute of Technology, US
2. Ubiquitous Peer Proximity Awareness in Mobile Environments –Smruti Parichha, Dept of Computer Science and Engineering, University of California, Riverside, US
As a mobile strategist, I get to see some of the cool technologies before they hit the market. For the demo this year, we selected Microvision’s cool projection technology where you can interact with the projected screen in thin air by waving hands. Yes, you got it. You had to be there to see it. It was shown for the first time to the general public and we are thankful to Selvan Vishwanathan and Andrew Rosen, the two engineers (and their colleagues) behind this exciting emerging technology that will expand the horizons of mobile interactivity and media engagement.
The afternoon sessions started delving into specific topics and details that were touched upon at the high level during the morning sessions. Each of the panels had an absolutely stellar cast who are deeply engaged in defining the mobile ecosystem right now.
Network and Mobile Data Evolution 2010-2015
Wim Sweldens, President - Wireless Division, Alcatel-Lucent,
Neville Ray, Chief Network Officer, T-Mobile,
Bob Azzi, Senior Vice President, Sprint,
Matt Bross, CTO and Vice Chairman, Huawei
Sean Cai, Vice President - Advanced Wireless Technology, ZTE,
Ken Denman, CEO, Openwave (moderator)
There is a big debate about network evolution - how fast does LTE need to come to the market? Will LTE be enough to help with the data tsunami. The consensus was a resounding No but LTE brings in some key capabilities like an all-IP network that enables new capabilities for multimedia applications and services, lowers the per bit cost, and reduces latency for superior user experience. Of course, the RAN is only part of the story, the backhaul needs to get upgraded as well to handle the load. The panel also emphasized simplicity in services without making things burdensome for the consumer with new technology. The other area of concern is of course the spectrum. Will there be ever enough spectrum? The issue is more acute for some operators. Finally, the focus need not to be on the bandwidth or the latency, from a user’s point of view, it is always about the services and things they can do with more bandwidth and lower latency.
Future of Content, Engagement, and Monetization
Louis Gump, Vice President - Mobile, CNN,
Omar Javaid, Vice President, Converged Media, Motorola (moderator),
Paul Palmieri, CEO, Millennial Media,
Rob Glaser, Chairman, Real Networks and Partner, Accel
Superphones and smartphones have changed the landscape for content, engagement and monetization. Superphones are most open and it is reflected in the results, more engagement and higher app usage. Apple/Android have also put US back in the leadership role when it comes to devices. CNN has seen high degree of non duplicated reach and reach is king when it comes to mobile advertising. The ad platforms are going into the next stage of evolution with more multimedia, better monetization opportunities, and higher value for the consumer. For content providers, ads can’t be the only strategy to generate revenue, subscriptions and/or micro transactions need to be part of the equation as well.
The Balance of Privacy and Monetization from Consumer Data
Krishna Vedati, Senior Vice President, AT&T Interactive,
Chris Murphy, Head of Digital Strategy, adidas
Dr. Nitin Shah, CEO, Feeva,
John Giere, Senior Vice President, Openwave,
Jeremy Lockhorn, Vice President - Emerging Media, Razorfish (moderator)
It is a complex issue and our insightful panel talked through the intricacies and the balance of monetizing using consumer data while meeting user’s expectations on privacy. One has to give something of value to the consumer before they trade up. Advertisers like adidas want to move from 1-2-many to 1-2-1 relationship with the consumer that increases the volume and quality of the transactions. The valuable variables to track are location, propensity to buy, past actions, traffic inputs, etc. Discovery and recommendations also become important part of the whole process. Of course, regulators are eager to jump in as well. It will be one of the key issues defining the industry landscape over the next 5 years.
mHealth - The Impact on Society and Global Health
Dr. Sailesh Chutani, CEO, Mobisante (moderator)
Jon Stross, General Manager and VP, Babycenter.com
Tim Wood, Director, Grameen Foundation
Greg Brandenberg, CEO, Columbia Basin Health Association
Dr. Suzanne Clough, Chief Medical Officer, Welldoc
mHealth is one of those areas which has been talked about for a long time and where mobile is starting to have a truly disruptive run at the industry. While the regulations and the dinosaur health care industry have been slow to adapt, there are a number of innovative companies like Welldoc, Babycenter.com, Mobisante, and others who are forcing rethink and change in the status quo. Greg’s CBHA is forced to think differently and has looked to technology to solve their challenges. Serving in the rural areas of WA state, his team has been testing out new solutions such as cell phone based ultrasound system from Mobisante that is 1/10th the cost of what GE sells for. It is much more portable and flexible and works well with the field work force. Tim’s Grameen Foundation is similarly leading the charge in nations like Ghana where mobile has been used to solve real-life health issues. Jon’s Babycenter has been expanding in other regions and increasing revenues at the same time. However, the test results and trials can still take inordinate amount of time (it was 3 years for one of the trials). The opportunity is immense but regulators, healthcare industry, pharma giants, and the rest are starting to come to grips with the role that mobile can play in transforming lives and P&Ls.
Mobile Cloud Computing - At the Tipping Point?
Hank Skorny, Senior Vice President - Media Cloud Computing, Real Networks
Brian Shepherd, President - Mobile Services and Marketing, Amdocs
Marianne Marck, Senior Vice President, BlueNile
Mike Wolf, Vice President - Research, GigaOM (moderator)
Erez Yarkoni, Chief Information Officer, T-Mobile
Cloud is changing IT and cloud is going to change mobile media. It helps take out some of the complexities of media consumption, management, and sharing for the consumers and provides a lower cost structures for the media companies. There are opportunities for operators to provide cloud based services at many levels - storage, media, billing, bandwidth, profile, analytics, network intelligence and so on and so forth. Some are easier to implement while others requires more investment and change in DNA. From a developer’s perspective, cloud based services will be ideal to increase reach but we are not there yet as the capabilities of the browser are not comparable to the native environment on platforms like iOS and Android. Better user experience is essential and developers won’t compromise.
Evolution of Communication and Social Interaction
Mario Queiroz, Vice President - Product Management, Google
David Weiden, General Partner, Khosla Ventures
Robin Schofeld, Principal, Booz&Co (moderator)
Erick Tseng, Head of Mobile, Facebook
Pankaj Kedia, Head of Mobile Ecosystems, Intel
The panel delved into how the communication ecosystems might evolve. While there is discussion about open and closed (too much at times), it is about executing on a strategy that touches the most number of consumers. The closed gardens of Apple is quite dominating and so is the evolving Android ecosystem which is relatively open. At the end of the day, developers are looking to make a buck with the least amount of resources and reach the most of amount of users. Cloud based communications services are about to change the landscape in a big way. Google and Facebook both have had good successes and both suggested that we are just getting started and more innovation is going to come in the form of personalization and social interaction. Operators while ceding some of the communication territory can still have a viable broadband business. As far as social on mobile is concerned, we are still in the early days with lots of opportunities to enhance and engage.
Internet of Things - Emerging Ecosystems
Amir Mashkoori, CEO, Kovio
Danny Bowman, President - Integrated Solutions Group, Sprint
Mark Selby, Vice President - Industry Collaboration, Nokia
Chetan Sharma, President, Chetan Sharma Consulting (moderator)
Abhi Ingle, Vice President - Industry & Mobility Application Solutions, AT&T
Peter Koo, Vice President, Ericsson
The fact that there are more mobile phones than toothbrush brings home the point of the pervasiveness of mobile around the globe. The panel gave several examples of how “connectedness” is spreading across other electronic devices as well e.g. in Netherlands, 30K home care workers are equipped with NFC enabled devices which help interact with the patients (opens the door as well) without the need for paperwork, the records, helps with navigation. Overall result - happier workers, higher efficiency, and reduced carbon emission. The mobility for “connected devices” will try to leverage all RF radios as needed - 3G, 4G, Bluetooth, WiFi, Zigby, etc. Digital signage is emerging as a new area for consumer interaction and information. Some of the industries are on the verge of significant change - e.g. insurance where car insurance rates are given based on driving habits learned via telemetry vs. the old actuary table based rating systems. NFC is also enabling a lot of commerce opportunities by bringing the online world together with the physical world. However, as the ecosystem evolves, we need to also worry about QoS, security, and reliability concerns that various vertical industries have. Of course, the net-neutrality debate impacts the evolution. There are several scenarios where prioritization of data traffic is essential in emergency situations (ambulance transmission, fire fighting, etc.).
At the Intersection of Gaming, Social, and Commerce
Tim Chang, Partner, NVP (moderator)
Prashant Fuloria, Director - Facebook Credits, Facebook
David Marcus, CEO, Zong
Andrew Lacy, Senior Vice President, Disney Games
Alex Tokman, CEO, Microvision
Micro transactions is the new currency that scales up to billions of dollars in gaming and social networking. Free drives interest and the core 2-5% drive the revenues. If you ask for payment up front, virality component fizzles and the longevity declines. iTunes has been the gold standard for payments, carrier billing is starting to shape up and it will benefit the developers. HTML5+ in theory makes sense and is nice enhancement but the app experience is compelling for users. Discovery continues to be the sore spot and the burning opportunity. Whichever platform and mode of operation helps developers make more money, that’s where the momentum will shift. Today it is the iPhone but rival models are starting to pop up.
Our heartfelt thanks to everyone who helped in making Mobile Future Forward successful especially the sponsors (Amdocs, Millennial Media, Real Networks, ZTE, Clearwire, Ericsson, OpenMarket, Bango, Intel, Openwave, Wavefront, and Department of Commerce), participants, the moderators, and the speakers. Thanks to Caroline Lewko and David Smith for taking good notes. Planning for Mobile Future Forward 2011 is underway. Until then, best wishes and good luck in your pursuits, and we hope to see you next year. Thank You.
Announcing Mobile Future Forward Executive Summit June 14, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Event, Mobile Future, Mobile Future Forward, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Speaking Engagements, Speech Recognition, Strategy, US Wireless Market, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
You have seen some hints of the project that we have been working on for sometime. We are proud to announce “Mobile Future Forward” Executive summit to be held in Seattle on Sept 8th, 2010.
MFF is a gathering of some of the most brilliant minds in the mobile industry. The goal is to look at how mobile is likely to evolve over the course of this decade. We couldn’t have done this without the tremendous support of our excellent sponsors who are paving the way in their respective segments.
The speaker list includes the who’s who of the mobile industry:
Glenn Lurie, President, AT&T
Subba Rao, CEO, TataDoCoMo,
Mike Sievert, Chief Commercial Officer, Clearwire
Louis Gump, VP Mobile, CNN,
Paul Palmieri, Founder and CEO, Millennial Media
Dr. Sailesh Chutani, CEO, Mobisante
Abhi Ingle, VP, AT&T Wireless
Ken Denman, CEO, Openwave
Amir Mashkoori, CEO, Kovio
Stephen David, Former CIO, Proctor & Gamble
Dr. Genevieve Bell, Intel Fellow, User Experience, Intel
Hank Skorny, SVP, Real Networks
Jon Stross, VP & GM - Babycenter, Johnson & Johnson
Dr. Suzanne Sysko, Chief Medical Officer, WellDoc
Dr. Boris Nikolic, Sr. Program Officer, Bill & Melinda Gates Foundation
Krishna Vedati, SVP & GM - Mobile, AT&T Interactive
Christopher Dean, Chief Strategy Officer, Skype
Russ McGuire, VP, Sprint Nextel
Jack Kennedy, EVP, News Corp
David Weiden, General Partner, Khosla Ventures
Anand Chandrasekhar, SVP and GM, Intel
Chamath Palihapitiya, VP Growth/Mobile, Facebook
Rob Glaser, Chairman, Real Networks
Wim Sweldens, President – Wireless Division, Alcatel Lucent
Takayuki Hoshuyama, CEO, D2 Communications
Neville Ray, SVP, T-Mobile
Bob Azzi, SVP—Networks, Sprint Nextel
Mario Queiroz, VP—Android, Google
Matt Bross, Global CTO, Huawei
We will be covering the following topics in detail:
Internet of Things
Content, Media, and Entertainment
New sources of Revenue and Business Models
Evolution of Communication and Interaction
Mobile Cloud Computing
Globalization and Competition
Mobile as a platform
The economics and politics of consumer data and privacy
Nurturing Developer Ecosystems
Shifts in the Ecosystem
Mobile Health and Implications
Japanese Mobile Industry
Innovations at each level of the value chain
Mobile Social and Commerce
Managing network growth
You can read more about what you can expect at the executive summit in the following whitepaper.
I hope to see you there.
Mobile Future Forward
Mobile Breakfast Series – Startup Nation Roundup June 11, 2010Posted by chetan in : 3G, 4G, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Privacy, Smart Phones, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
With the fourth Mobile Breakfast Series event yesterday, we completed one full year of hosting the popular quarterly event and each one has been sold out. Thanks to the outstanding speakers and an engaged audience, the program has grown since its inception last Sept. Thanks also to our wonderful sponsors - Motricity, OpenMarket, Openwave, WDSGlobal, and Clearwire for supporting the program throughout the year.
Also, thanks to our attendees. Proud of the quality of attendees we are able to attract. Over 250 companies have attended the event over the past one year.
The 4th MBS event was held at Columbia Club in Seattle which offers one of the best views in the country.
Our focus for this event was Startups in the Mobile Industry. We wanted to take a pulse of the innovation, competition, turbulence, opportunities in the mobile ecosystem through the eyes of 8 brilliant CEOs who are focused on different segments of the value chain and different segments and business models.
The startup DNA is quite unique to the US. While great ideas and technologies can come from anywhere, no country celebrates the risk-taking, failures, and successes of startups like the US. The entrepreneurial spirit burns bright and that’s what keeps the pace of innovation in the mobile industry at an all time high. I have witnessed that first hand in working with startup executives from the inception of the idea at the back of a napkin to multi-million dollar exits to shattering of dreams due to changing dynamics or strategic errors or just dumb luck. What’s most fascinating and inspiring is that these guys just get up and keep going. Obviously, not everyone is cut out to be an entrepreneur, some folks just can’t take the sensation of a plunge and the unknown. The event was to highlight and celebrate the successes of these startup companies.
The one thing that trips most of the startups is how do you “scale” in terms of transactions, users, or revenues. The startups at MBS have a keen understanding of that. They are ambitious, focused, and disruptive.
The participants were:
Mike McSherry – CEO, Swype
Swpe is reinventing how consumers interact with mobile devices. Founded by Cliff Kushler, the inventor of T9 that has ended in billions of devices, the company is looking to repeat the success by getting onto billions of devices over the course of next few years. Quite an astonishing feat if they are able to pull it off. They have had good success with the OEMs who have also become strategic investors. The management team has navigated the waters very well w/o raising any VC money.
Paul Palmieri – CEO Millennial Media
Millennial Media is known for its mobile ad network which is the biggest independent ad network. MM deals with billions of ad impressions across devices and Paul has grown the company from the early days in 2006 by keeping the focus on technology, the team, advertisers, and publishers. They seem to be well positioned to take advantage of the current turbulence in the mobile advertising market. Will have more on it at a later date.
Dr. Sailesh Chutani – CEO Mobisante
Many people don’t realize that “mobile devices” represent a computing platform that can start to do amazing things. Mobisante is trying to take advantage of that by using the platform to provide a cheap ultrasound solution. This can be enormously disruptive and beneficial. Hundreds of people die every day because they don’t get diagnosed properly or on time. With a device like what Mobisante is developing, can you imagine the number of lives saved, the improvement in the quality of life, and the health care cost savings.
Paul Griff – CEO Root Wireless
Root Wireless has a unique value proposition – collecting network and device data to help consumers make informed decisions. “True” network data is really not available to the consumers, Root Wireless is changing that by turning the data on its head and making it useful to the consumers.
Kevin Foreman, CEO, PointInside
Location is red-hot, it has become an integral layer over which all content/transactions reside. While most of location players have justifiably focused on the outdoor position location, indoor location is still a challenge esp. in malls and airports, one has to still rely on kiosks and paper maps. PointInside is try to change that by providing a framework to create an indoor location platform that can be licensed and used to create transaction opportunities While SMS has been around for a generation, in the US, it really took off since the American Idol debuted. But have we done all we can with SMS?
Derek Spratt, CEO, Mobidia
Mobile data network issues have dominated the headlines for the last 18 months. We have discussed the topic in detail in our Yottabyte paper. I was intrigued by Mobidia’s approach to managing congestion, the technology can be used in all forms of network and allows operators to free capacity. Mobidia and Derek demonstrate their resilience as a startup in the infrastructure business which is very capital intensive and the sales cycles are measured in years but once you get cemented into the core, you are good to go. The journey is clearly not for the faint hearted. Derek has been shepherding the turbulent waters well.
Scott Kveton, CEO, Urbanairship
Urbanairship is exploited the push messaging phenomenon on startphones with over 470M notifications to 27M devices and 500K storefront transactions. They are also doing some clever rich media messaging and the model is transaction based so it can scale really well
John Lauer, CEO, Zipwhip
Zipwhip has an interesting application that sends SMS to both the device as well as the desktop so you can txt directly from the desktop. They have already gotten traction with some key carrier customers. There is no reason SMS has to be constrained to the device.
This group of brilliant entrepreneurs was ably supported by Bill Bryant, Managing Partner, DFJ and a well known investor in pacific northwest, Jeff Giard who has been a key supporter for us throughout the year and is Director at Clearwire, and Peter Wilson who has had successful stints at Accenture, Microsoft, and Google and now is on the entrepreneurial road himself.
The first panel was moderated by Olga Kharif, Senior writer at Businessweek who through her incisive questioning gets to the heart of the story. The panel touched on various aspects of the mobile ecosystem. Swype is focused on working the carriers and OEMs while Millennial sees diminished role for the operators. Out of the 10 billion impressions, around 100 million are from ondeck. The role of operators in the US with respect to media and content has slipped away as more smartphones came into the market, something we wrote about it in Mobile Advertising book in 2007. The situation is generally not black or white. There are areas for operators to innovate and be dominant while in others it is just hard to compete due to the changing circumstances and the entry of new players. Root Wireless was surprised by the open approach operators have taken to their offering by participating and collaborating in data analysis that can benefit all in the ecosystem.
One of the areas of exploration was – how do startups survive in the turbulent waters – by adapting as fast as they can to the changing dynamics and by having solid IP and unique value proposition. Swype has been developing the technology since 2001 and has multiple patents. Millennial devised a key server side technology to differentiate. Mobisante while new is tapping into a specific vertical and Root Wireless is trying out a new approach to measurement and performance analysis.
One of the other issue that startups face is that of expansion, which markets should they go after. Kevin mentioned that they are turning down six figure checks to keep the focus on their business – a very hard thing to do as a startup (turning down money that is). Millennial is more focused on the western markets because that’s where the advertising money is. Mobisante is likely to go after the rural market first because the need for their offering is the most in those areas.
On the hot topic of privacy, Paul from Root noted that there is a generational gap. He has been astonished how little the younger demographics care about privacy. They are easily willing to trade value for privacy. In terms of how the ecosystem is shaking up Paul from MM expected RIM and Amazon to come up with some interesting offerings in the coming days.
I hope this gives you a flavor of the event. You can also read Tricia Duryee’s column at moconews.
My thanks to all who attended, esp the speakers.
Our next event is Mobile Future Forward which has a stellar roster of speakers. If the future of mobile keeps you up at night, you wouldn’t want to miss this event. These guys personally are responsible for managing billions of dollars worth of investment and operations and their insights will be valuable. We will have more on that in the near future.
Be sure to check it out and register early as the Early bird expires on June 30th and 30% of the spots are already taken.
The quarterly event will resume in Dec 2010.
US Wireless Data Market Update – Q1 2010 May 16, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Wallet, Networks, Partnership, Patent Strategies, Patents, Privacy, Speaking Engagements, US Wireless Market, Unified Messaging, WiMax, Wireless Value Chain, Worldwide Wireless Market , 5 comments
US Wireless Data Market Update – Q1 2010
The US wireless data market grew 5% Q/Q and 22% Y/Y to exceed $12.5B in mobile data service revenues in Q1 2010 - on track so far to our initial estimate of $54B for the year.
In a significant milestone that went largely unnoticed, Verizon Wireless edged past NTT DoCoMo - the decade old leader in mobile data revenues to become the biggest mobile data operator by data revenues. Helped by its 93M subscriber base and high ARPU, the Verizon juggernaut is steamrolling. Rest of the 3 top US operators also occupy leading positions amongst the top 10 global mobile data operators.
The US subscription penetration was approximately 94% at the end of Q1 2010. If we take out the demographics of 5 yrs and younger, the mobile penetration is now past 100%. While the traditional net-adds have been slowing, the “connected device” segment is picking up so much so that both AT&T and Verizon added more connected devices than postpaid subs in Q1 2010. Given the slow postpaid growth in, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.
Data traffic continued to increase across all networks. US has become ground zero for mobile broadband consumption and data traffic management evolution. While it lags Japan and Korea in 3G penetration by a distance, due to higher penetration of smartphones and datacards, the consumption is much higher than its Asian counterparts. Given that it is also becoming the largest deployment base for HSPA+, LTE and WiMAX, most of the cutting edge research in terms of data management and experimentation with policy, regulations, strategy, and business models is taking place in the networks of the US operators and keenly watched by players across the global ecosystem.
We are starting to see the inevitable changes in broadband pricing starting with T-Mobile and MetroPCS. Over the course of this year, we are likely to see newer pricing models that tie usage to pricing and add multiple devices to a single data bucket.
The fabled iPad landed in the market and it is a winner. Apple’s latest gizmo has created a new user experience category of casual and couch computing that will foster growth in the connected device space. Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.
Privacy brouhaha has been brewing for some time and the polity class is getting interested in stepping in. If people are really serious about tackling privacy, OEMs and carriers should build a physical/soft privacy button on the device with 3-5 levels (just like for the ringer volume) that allows users to open/close privacy across all applications and services with the touch of a button. All apps and services should adhere to the principle via APIs. The other mistake companies make about privacy is by treating everyone the same. Privacy is about the perception of control and transparency. If it is given back to the consumer, they are likely to engage more and have a more positive impact on revenue streams that are likely to flow.
In an another global milestone, Softbank became the first major operator to have more service revenues from data services than voice services. In Q1 2010, 55% of its service revenues were attributed to data services. (While Smart and Globe have been reporting 50%+ revenues from data services for a long time, the total revenues are not at scale with the leading global operators. Incidentally, for the first time in many years, the data revenue % slipped below 50% for the both operators in Q1). Based on current projections, US is likely to cross the 50% data revenue threshold in late 2012 or early 2013. NTT DoCoMo is next in line to cross the 50% mark this year.
All this has setup an absolutely fascinating period in the communication/computing industry. Convergence is everywhere and is leading to fundamental reset of the value chains and ecosystems. We are going to be discussing the ins and outs of how the industry is going to evolve in the next decade in our Sept 8th event – Mobile Future Forward which is bringing leading industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate what’s next. Hope you can join the discussion.
What to expect in the coming months?
The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market. Players are having to re-evaluate their businesses and long-term strategies. Several new impressive handsets got introduced during the course of 1H of 2010. iPad finally launched and even the next generation iPhone walked into a bar.
Microsoft announced its comeback with the W7 launch though the time it is taking to launch is making partners nervous. The change in UI was refreshing though the inability for the OEMs to differentiate is not winning friends. HP acquired Palm in attempt to become relevant again in the mobile device space. Some other players missed out in buying an attractive IP portfolio. It has been an action packed 2010 thus far and we can expect more of the same for the remainder of the year.
2010 has also been active on the regulatory front as the national broadband plan was unveiled in March (our thoughts on the plan). The Comcast ruling delivered a blow to the FCC and any directives or policies will hardly have any impact on the ecosystem in the short-term.
With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. Many countries in South America have imposed unnecessary spectrum caps. Others are behind in sorting out their spectrum allocations. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.
To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (Former FCC Chairman, Kevin Martin headlined our Mobile Breakfast Series event in March and discussed the Spectrum Crises. Our June 10th event is bringing CEOs of some of the most innovative mobile startups to discuss the ecosystem)
2010 is also the year of network rollouts. T-Mobile has been rolling out HSPA+ at an impressive rate, Clearwire has been expanding the network so fast that it has become the biggest construction company in the US, Verizon is betting big on LTE and AT&T has been adding backhaul, upgrading to HSPA+ and planning for LTE all at once. Even the smaller carriers like MetroPCS are looking for competitive advantage with quicker LTE launch and beat others by carrying the first LTE smartphone. (We will be releasing the next edition of our “State of the “Mobile” Broadband Nation” paper later this year)
As we had mentioned last year, the mobile data traffic kept on growing disproportional to the revenues. A series of solutions have come into the market from players big and small. We will be releasing the second edition of our in-depth research paper on data growth - "Managing Growth and Profits in the Yottabyte Era" later this month.
We will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.
Against this backdrop, the analysis of the Q1 2010 US wireless data market is:
Service Revenues (Slides 7, 16)
- The US Wireless data service revenues grew 5% Q/Q to $12.5B in Q110. Compared to Q109, the mobile data service revenues grew 22%.
- Verizon and AT&T accounted for 60% of the increase in data revenues in Q4 2009.
- T-Mobile’s 3G drive is starting to pay off. While the net-adds were still in the red, it experienced the highest % growth amongst its peers in mobile data service revenues for the quarter.
- In a significant milestone, Verizon Wireless edged past NTT DoCoMo, the mobile data revenue leader since the late nineties. By the end of the year, China Mobile and AT&T are also likely to cross their Japanese counterpart in quarterly mobile data service revenues.
- AT&T and Verizon now account for 69% of the market data services revenues and 62% of the subscription base.
ARPU (Slides 8-11)
- Overall ARPU decreased by $0.17. Average voice ARPU declined by $0.84 while the average data ARPU grew by $0.67 or 4.6% Q/Q.
- As expected, the average industry percentage contribution of data to overall ARPU crossed the 30% mark in Q110 and is likely to get past 35% by end of the year.
- Verizon led in (blended) data ARPU with $17.06 followed by AT&T and Sprint. In terms of % contribution, all the top three operators exceeded the 30% mark. T-Mobile ended the quarter with 23.70% of its revenue coming from data services.
Subscribers (Slides 12-14)
- In Q409, the net-adds had increased from past several quarters, however, in Q110, the net-adds declined again.
- The texting see-saw between US and Philippines continued in Q110. US average was around 615 messages/user/mo just behind Philippines.
- In a sign of the times, for the first time, AT&T and Verizon reported more net-adds from connected devices than postpaid subs.
- T-Mobile and Sprint improved their net-add declines from last quarter though it was primarily from the prepaid segment. T-Mobile’s 21% and Sprint’s 23% subscriber base is now prepaid. The national prepaid penetration is touching 20%.
Applications and Services
- Non-messaging services continues to grab 60-65% of the data revenues for the US carriers.
- There is a significant shift taking place in terms of app revenues. In 2010, there will be more revenues generated (globally) from off-deck than on-deck for the first time and while the on-deck revenues are in billions, the decline trend looks irreversible. In the US, this shift will occur next year. (We released our mobile apps economy research paper last quarter)
- The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.
- The news reports of resuscitation of the media industry by iPad were premature.
- Nokia sold 108M units in Q1 2010 including 21.5M smartphones. Samsung again had a solid quarter with over 64M devices sold increasing its market share to 22%. LG Electronics at 9%, Sony Ericsson at 3.6% rounded up the top 4. For the first time, Motorola didn’t figure in the top 5 device makers. Android, Apple, and RIM made gains as well.
- The constant drumbeat of new devices continued with Droid, Nexus One, HD2, EVO, and iPad.
- The battle for “Open” is breaking out in the street with latest episode being Apple vs. Adobe. We tend to forget that open is a means to an end, not an end in of itself. We are experiencing a fascinating period of transition in the mobile industry and some of the biggest brands in computing and communications are right in the middle of it.
Data Traffic (Slide 15)
· As we noted in our last update, the data traffic is now significantly more than the voice traffic. The good news is that there are several solutions that available and are being invented that will help manage the data growth. The question is how fast will the operators deploy some of these solutions.
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 Aug 2010. The next Global Wireless Data Market update will be issued in Sept 2010.
Your feedback is always welcome.
Should you have any questions about navigating or understanding the economic and competitive icebergs, please feel free to drop us a line.
Disclaimer: Some of the companies mentioned in this note are our clients.
Global Mobile Data Market Update 2009 March 31, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments
The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (combined) are adding almost 30M new subscriptions every month. Amongst the two, India is outpacing China 2:1. China touched 750M subscriptions while India crossed 525M by the end of 2009. With 4.6B subscriptions, the global subscriptions penetration was above 68%.
The global mobile data revenues reached $220B and mobile data now contributes 26% of the overall global mobile service revenues.
As expected, the overall global mobile revenues stayed pretty flat for the year at around $1.1 trillion as many regions were hit by the recession and the competition pushed the ARPU lower for many operators. While the countries like US, Japan, China, and India showed very little signs of pullback, most of Europe and the developing world experienced a decline in overall service revenues in 2009. All the major markets have their data contribution percentages above 10% now.
For some of the leading operators, data is now contributing almost 50% of the overall revenues. However, the increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. NTT DoCoMo continues to dominate the carrier ranking in terms of the mobile data service revenues, Verizon Wireless which became #2 replacing China Mobile and is slowly edging towards the #1 spot and is likely to overtake DoCoMo within the next few quarters.
Though 4G as a standard hasn’t been defined yet, the discussions around LTE and WiMAX deployments grew intense. Telia Sonera became the first operator to commercially launch LTE. At CTIA, Sprint/HTC became the first players to launch a WiMAX smartphone and MetroPCS/Samsung took the honors for the LTE smartphone.
2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic. In the US, the yearly mobile data traffic exceeded the voice traffic for the first time.
We are also entering the phase of global mega-mergers in telecom. Bharti Airtel of India just acquired Kuwait-based Zain Group to become the 5th largest telecom group in the world (at the end of 2009, it was #9). There are now 14 telecom groups with 100M or more subscriptions. While China Mobile’s ARPU is 1/5th of its western counterparts, it operates its business at higher margin, around 51%. There are a number of global players mainly in Europe and Asia who have mastered the art of running lean operations and if they have good bank balance they are going to go shopping in the days ahead.
From the revenue perspective, the $50 billion revenue club is more exclusive with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
As we sit at the cusp of the iPad era, there is a bigger transformation taking place and that is of the connected consumer electronic devices (CEDs). Few years from now, most popular CEDs will have connectivity. We are also approaching the start of phase where pricing of access will start to morph - we will see the introduction of family data plans (something we have been advocating for some time), ability to connect multiple devices to the same GB plan, more granular use plans (per session/day/week/mo/yr etc, roll-over GBs anyone?). As the number of connected devices/consumer increases, we will start worrying about Average Margin Per User (AMPU) or Average Margin Per Connection (AMPC) because ARPU won’t quite capture the dynamics of the industry.
Exciting times indeed.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights from our work in various global markets.
Impact of Global Recession
Telecom in general fared better than other industries. In some regions, it hardly caused a tremor. However, in most nations, the impact was felt by the operators. Amongst the 40 major operators we studied, SK Telecom, 3 Australia, KTF, T-Mobile Netherlands, Rogers, Softbank Japan, Singtel, Vodafone Italy, T-Mobile Germany, 3 Sweden, Telstra, China Unicom, and Vodafone Germany experienced increase in both the data ARPU and the overall ARPU during 2009. Some of increase was due to the fluctuation in international currencies e.g. Korea.
Looking at the data at a country level, most nations noted a decline in overall ARPU. Only Venezuela, Pakistan, Argentina, Bangladesh, Australia, and Poland showed positive increase in ARPU since 2008.
Rule of Three is kicking in most markets with smaller players having to consider the M&A option to remain viable. T-Mobile/Orange, Bharti/Zain tie-ups are just the start of that process. We are likely to see many international mergers in 2010 and beyond as power in the mobile ecosystem self-adjusts.
5 new players joined the 100M subscriptions club. The new members are: Bharti Airtel (India), MTN Group (South Africa), Orascom (Egypt), Etisalat (UAE), and MTS (Russia). The top 9 telecom groups in the world are: China Mobile, Vodafone, Telefonica, America Movil, Telenor, T-Mobile, China Unicom, TeliaSonera, and Orange.
- US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $44.56B vs. $32.5B for Japan in 2009. China with $20.3B was ranked number 3. US registered the highest growth amongst the top 3 with over 40% increase from EOY 2008 levels followed by Japan and China.
- The top 10 nations by service revenues are: US, China, Japan, France, Italy, UK, Germany, Brazil, Spain, and India.
- The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Australia, Spain, and Korea.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $16B in data services revenue in 2009. Almost 46% of its overall revenue now comes from data services. DoCoMo also crossed the 95% 3G mark.
- NTT DoCoMo was followed by Verizon Wireless, China Mobile, AT&T, KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to round up the top 10 operators by wireless data service revenues.
- Each of the top 5 carriers exceeded $10B in yearly mobile data service revenues in 2009
- Data revenues for the top 10 operators now account for almost 43% of the global mobile data revenues.
- The biggest jump in data revenues was experienced by Verizon, Softbank, and AT&T. DoCoMo saw an 11% increase for the year.
- Most of the operators in the developed nations are contemplating future strategies to boost data revenues such that the decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPU.
- China reported approximately $20.3B in data revenues for 2009 and the percentage contribution from data services is around 32%, data ARPU is around $3.2. For India, data ARPU continues to stay below $0.50 as most of the new adds are voice only subscribers and there is continued price pressure in the market.
- China Mobile remains the most valuable telecom operator with over $195B in market cap. It is followed by Vodafone at around $122B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans.
- In 2009, SMS’s vice like grip on data revenues continues to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets. They are exploring new technologies and social experiments ahead of almost anybody else in the market. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends, technologies, and ecosystem dynamics in these markets to get a sense of what’s coming.
· From the revenue perspective, the $50 billion revenue club has limited membership with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like DoCoMo, and Softbank are over 46%. KDDI, 3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, Telstra, and 3 Sweden exceeded 35% and many others are on the verge of crossing the 30% mark.
- NTT DoCoMo reported the highest data ARPU for the year while Rogers took away the honors for the highest overall ARPU. Other notable percentage increases in ARPU were from 3 Italy, SK Telecom, KTF, T-Mobile Germany, 3 Sweden, and T-Mobile Austria. The Japanese operators saw a decline in ARPU by 3%.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 53% (or $2) contribution coming from the data services.
- Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.
Mobile Data Traffic
- We have been calling attention to the tremendous increase in mobile data traffic for some time. The discussion has hit mainstream and many operators are scrambling to nail-down their short-term and long-term strategies to manage the data traffic growth in their networks. See our paper on the subject "Managing growth and profits in the Yottabyte era." The recommendations discussed in the paper are slowly being adopted by various vendors and operators worldwide.
- The global mobile data traffic exceeded an Exabyte for the first time in 2009. In fact, the data usage is growing so fast that this year, the two territories experiencing the most growth - North America and Western Europe are both going to exceed an Exabyte in mobile data traffic.
- 2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic.
- For many of the superphone heavy operators, devices like iPhone and Android account for more than 50% of their total data traffic.
- 2010 will mark the first year when the total number of mobile broadband connections will exceed the total number of fixed broadband connections.
For more mobile data traffic analysis, please stay tuned for the second edition of our Yottabyte research
- India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Combined, one year of growth in these two market is equivalent to the size of the third largest market - the US, to date. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
- Thanks to the explosive growth in the emerging markets, the global mobile market went past 4.6B in 2009 and is likely to cross the 5B mark in 2010. The global mobile subscriptions now represent over 68% of human population on planet earth.
- China crossed the 700M subscription mark in July while India’s total went past 500 in Nov. In the meantime, US crossed the 90% subscriptions mark in 2009.
- In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018.
- The top 10 nations by subscriptions are: China, India, US, Russia, Brazil, Indonesia, Japan, Germany, Pakistan and Italy.
- China Mobile became the first operator (and likely to be the only one for a very long time) to cross the 500M mark. It remains the #1 carrier in terms of the total number of subscriptions followed by Vodafone. Telefonica, América Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.
· The total number of app downloads in 2009 reached 7 billion resulting in approximately $4.1B in revenues 12% of which was from mobile advertising.
· The number of non-carrier appstores jumped to 38 from 8 in the previous year.
· While Asia had the highest percentage of the download share, North America had the highest share of the apps revenue accounting for over 50% of the total revenue.
· The paid ASP in 2009 was approximately $1.9 and the advertising revenue generated from the free applications was approximately $0.09/user/app/year
For a more detailed analysis of the mobile apps market, please see our paper “Sizing the Global Mobile Apps Market”
- Messaging still accounts for the lion-share of data service revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have gradually chipped away the share from messaging. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- Nokia dominated the year as usual but the revenue share is shrinking and so is the lucrative smartphone share. Apple, RIM, and Google are relentlessly attacking the top tier while Samsung, LG, and others giving a tough fight for the bottom tier. We see a new middle tier emerging that has the form factor of a featurephone and functionality of a smartphone. The smartphone category is getting further split into regular qwerty smartphones like Blackberry and the touch and full browser based superphones like the iPhone and Droid.
- The year was dominated by several blockbuster device launches like the iPhone 3GS.
- Next few years will be big for infrastructure providers as many countries both developed and developing get into upgrading their infrastructure.
- Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
- In the US, the increase in messaging volume catapulted US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
- Deployment of 3.5G technologies is in full swing. However, it is the discussion of 4G that is occupying the headlines, even though 4G hasn’t been fully defined yet and the current candidates for 4G are nowhere near the performance goals of 4G (150Mbps/50+Mbps). Many larger operators have laid out their plans for deploying LTE starting this year.
We are also seeing regulators playing an active role in making the markets competitive and attractive in the long-term.
· The velocity with which the smartphones are being introduced into the market esp. the western markets, one wonders if in five years, we will be using the moniker to describe devices and if the "dumbness" in the device market will be practically eliminated. Led by Apple’s Appstore success, significant investments are pouring into the appstore world. In parallel, the debate over apps vs. mobile web is intensifying. The implications of the transition will be significant on the ecosystem on many levels.
2010 will be a critical year on many fronts. As usual, 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 May 2010. The next Global Wireless Data Market update will be released in Sept 2010.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this note are our clients.
Mobile Breakfast Series Event Roundup March 12, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Carriers, European Wireless Market, International Trade, Japan Wireless Market, Location Based Services, MVNO, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Traffic, Music Player, Privacy, Smart Phones, Speaking Engagements, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments
Wednesday Morning we hosted the third edition (sold out) of the Mobile Breakfast Series and were grateful for the time and insights from two outstanding speakers. Thanks to our sponsors for the support: Motricity, Openwave, WDSGlobal, and Clearwire
First up was Kevin Martin, former FCC Chairman and current co-chair of the communications practice and partner at the leading law firm of Patton Boggs in Washington DC.
Second speaker was Rob Glaser, Chairman and Founder, Real Networks. This was his first public appearance since he stepped down as CEO of Real Networks.
Kevin talked about the National Broadband Plan that is going to be released this coming tuesday and Rob opined on the opportunities in mobile. I had the good fortune of asking and moderating the Q&A after the initial presentation.
Summary of his comments:
- In response to my question if we are becoming too dependent on the spectrum as a way to alleviate data congestion issues, he said that spectrum should be viewed as a renewable resource, however, we should look for expanding fiber as close to end point as possible, look for alternate ways to offload traffic (something I agree with completely)
- Technology advancements are allowing for more efficient use of the spectrum
- Current carriers have about 450 Mhz, broadband plan seeks to double the spectrum by adding another 500 Mhz though it will be hard to get given the constraints
- Broadcasters can make some spectrum available for auction and share the proceeds
- We are still early in the Open Access process but full impact is yet to be felt
- Beyond the carriers and airwaves, the regulatory authority of the FCC is limited as we go deeper into the ecosystem
- Wireline infrastructure shouldn’t be looked as a separate entity. Since there will be a lot of wireless traffic that will go over wireline, it is part of the same infrastructure
- USF could be used to expand the broadband services to the masses
Rob’s talk (embedded below) was about the opportunities created by the introduction of smartphone/superphones over the next 34 years.
- •“Digital Persistence”
- •Universal Access across Devices
- •Making Discovery Easy
- •Empowering Social Expression and Engagement
- •Leveraging The Global Nature of These Trends
and of course challenges are:
- •Delivering solutions that scale with variable bandwidth and device capabilities
- •Creating commercial models across an extremely complex value chain
- •Vertical versus horizontal industry structure
- •Media industry adaption of new business models
- •Educating users on privacy and social implications
- The Next Mobile Revolution is both a huge opportunity and a massively disruptive force
- §It will ultimately be bigger than the PC or Web 1.0 or 2.0 revolutions
- Cross-industry collaboration, while complex, is essential
- §“We must all hang together, or most assuredly we shall all hang separately”
After the intense 30 minute talk that the sold out crowd tried to absorb as much as possible, I asked him what Real would do if he were starting today. And there was a similar question from Andy Kleitsch from Billing Revolution about advise to startups. Here is some of what he had to say (courtesy: Techflash)
On the question of vertical vs. horizontal integration (question from Tricia Duryee of Moconews), he had this to say (courtsey: Techflash)
His presentation below:
We also announced the June 10th event that will all about Mobile Startups. Registration is open. It should be a great discussion with startup CEOs.
Also, announced the Sept 8th event which is of the long-form (day long) – Mobile Future Forward. Great speakers and useful discussion. Stay tuned for more details. We are working feverishly on the details.
Many thanks to our generous sponsors who believe in the vision behind the MFF event – Real Networks and Millennial Media. Your support is much appreciated.
Finally, a personal thanks to all those of you who helped out. You know who you are. We are a pretty lean operation and need assistance from our friends to make every event successful and useful to the mobile community.
Overall, we had as much fun hosting the event as we had in preparing for it. Please let us know your feedback.
Some pictures from the event:
Some additional coverage of the event by some of the most outstanding reporters in the industry - Seattle Times, Techflash, Moconews, GigaOM, and PC World. Thanks.
New Whitepaper: Mobile VoIP – Approaching the Tipping Point February 17, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, India, Intellectual Property, Japan Wireless Market, M&A, MVNO, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Patent Strategy, Privacy, Smart Phones, Speech Recognition, US Wireless Market, Unified Messaging, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments
Mobile VoIP - Approaching the Tipping Point
Sponsored by Skype
This paper is a collaboration with Ajit Jaokar (FutureText) in London
Over the course of the last decade, mobile devices have become the most ubiquitous consumer electronic devices ever invented. Even in the poorest of the nations, mobile phones have evolved from being a luxury to an indispensible necessity. The paradigm of communication itself has undergone a significant transformation from just voice to multimode interaction. The trend is also discernable in the revenue numbers from the advanced mobile markets where voice revenue per user have been declining over the course of the last decade while most of the growth is coming from mobile data services. Mobile data services have evolved significantly from simple text messaging to multimode communication involving text, VoIP (voice over IP), video, and other forms of messaging and social networking interactions.
As we head into the next decade, the competitive landscape is going to change from year to year and sometimes even quarter to quarter. For major service providers, competition is no longer just from an operator who provides voice and data services but any company that captures the communication value chain. It is no longer sufficient to rely on voice revenues but providers need to think communications in a much more holistic form. Once the transport layer becomes all-IP in a given network, voice is nothing but another application that will work and interact with other applications in tandem often in real-time. The fear of cannibalization are unwarranted as our research shows that by offering consumers comprehensive services, the lifetime value of customers can be increased, churn can be reduced, and the overall value proposition of the operator increases tremendously.
The forces of technology, business models, consumer expectations, regulatory regimes, competition, and collaboration will help define the communication landscape of the next ten years. This paper will take a look at the evolution of the Internet, mobile broadband, and mobile communication and how consumer behavior and expectations have changed. Next, the emergence and the role of VoIP is discussed in further detail before we delve into the intricacies of communication economics to dispel some myths and layout the framework for how operators should approach the new communications world.
Given the embrace by major tier-one operators, we believe that mobile VoIP is on the verge of becoming an integral part of the communications framework. This acceptance represents a tipping point in the evolution of mobile VoIP. The ecosystem participants who embrace and collaborate to provide a holistic and comprehensive communication solutions stand to benefit the most.
2010 Mobile Industry Predictions Survey January 3, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Uncategorized, Unified Messaging, Usability, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 6 comments
2010 Mobile Industry Predictions Survey
First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2010. Thanks to all who participated in our 2010 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming our way.
Before we dive into the survey results, let’s do a quick wrap-up of the year that was. Well, since we just completed one heck of a mobile decade, let’s do a quick jog down the memory lane.
The Last Decade: 2000-2009
Each new decade brings its own consumer and technology trends. During the 2000s mobile cemented its place in the global society fabric, the use of mobility became addictive and pervasive, to be without mobile seemed a curse and innovation blossomed and took user expectations to new heights.
From a pure statistical point of view, the global mobile subscription penetration grew from 12% in 2000 to approximately 68% in 2009 - phenomenal by any measure. The overall revenues grew over 400%, the data revenue grew 32,600% and the total subscriptions grew 563%. NTT DoCoMo paved the way with the i-mode launch in 1999 and they were the operator to emulate throughout the last decade, leading every single year in data revenues, in new application and service revenue sources, and in innovation and risk taking. They tried to export the success to other regions with little reward but DoCoMo clearly led the industry in taking mobile devices where they have never gone before.
China and India were late to the party but during the second half of the decade caught up with the western world and eventually surpassed all nations becoming number one and two nations by subscriptions respectively. In 2006, China Mobile became the most valuable operator passing Vodafone.
Mobile devices went significant transformation as well. From the early Bluetooth, camera, and music phones to the iPhones, the Storms, and the Androids, the industry was transformed by the introduction of Apple’s iPhone in 2007. While Bluetooth, sleek designs, camera phone defined the first half of the decade, the second half was all about the applications and the mobile web. While Nokia dominated the entire decade in terms of the sales and profits, having missed the touch revolution, it leaves the decade a bit battered and a bit behind playing catch-up to the newcomers who profoundly disturbed the status quo.
Razr carried Motorola through 2006 when its global share peaked but was left to reinvent itself during the second half. It seems to have redeemed itself with the successful launch of Droid and upcoming Android devices. While many in the industry predicted RIM’s demise, the company has only gotten stronger and is looking good for the 2010s. The emergence of Samsung and LG as strong players in the mobile ecosystem was also a big story of the decade with Samsung increasing its share by 380% and LG by 575% becoming the number 2 and 3 players respectively.
While Microsoft’s Windows Mobile had an early start and the enterprise market share, it lost its way through several missteps and is on dialysis as we enter the new decade. One shouldn’t count WM out though but there is a lot of work to be done before it can capture the imagination of the ecosystem which has been sequestered away by iPhone and Android.
While many new application areas were introduced during 2000s, none was able to displace SMS as the leading app category by usage and revenues. However, it’s relative share has started to come down especially in North America and Western Europe.
As data usage grew, so did the data traffic bringing many data networks to their knees. We expect the data traffic consumption to only accelerate. Many people are underestimating the growth rates (as they did previously) and the strain the increase in consumption will put on the unprepared networks. Projector phones will take media consumption to a new level. Data management is going to be big business in the 2010s.
Overall, the mobile industry became a trillion dollar industry in 2008 and the data revenues are increasing in almost all regions. Voice is being commoditized at fast pace and that has put the traditional economics and ecosystem wealth distribution in topsy-turvy.
The US market also experienced tremendous growth with mobile data service revenues climbing 21,327% and becoming a mainstay in the mobile economy. In 2008 it crossed Japan as the most valuable mobile data market. US was late in adopting SMS but caught fire once American Idol started using it and even played a good role in the 2008 Presidential election in showcasing the power of mobile. Verizon started the decade being the number one operator and after trading places with Cingular and ATT grabbed the title back in 2009 (after the Alltel acquisition) to become the most dominant carrier in North America. Many smaller players competed by being innovative with Cincinnati Bell launching the fist UMA device, Sprint the first mobile eReader, and TMO launched the hotspot business which has now become an essential component of an operator strategy going forward.
Mobile is also replacing landline at a much faster pace than expected and within the first half of the new decade, we will have majority of the users using mobile vs. landline. Just like the last decade, this one starts with a new standard deployment of LTE that will keep operators and vendors busy throughout the decade. However, a lot of the developing markets will still be deploying 3G during the first half of the decade.
Infrastructure providers suffered the most in the decade bookended by the two recessions. Consolidation of giants (Alcatel Lucent, Nokia Siemens), bankruptcies of the famous (Nortel), and uprising of the upstarts (Huawei) pretty much defined the decade for the segment. Ericsson and Huawei enter the new decade from a strong position and looking to dominate the global markets.
The last decade was also marked by some prominent IP battles such as RIM vs. NTP, Qualcomm vs. Broadcom, Sony Ericsson vs. Samsung, Upaid vs. Satyam etc. (disclaimer: we worked on some of these cases and testified as an expert)
Here is our “subjective” list of movers and shakers of the last decade
Operator of the Decade
DCM led the way in almost all new category of apps and services. Its data service revenue was highest in each of the last 10 years
DCM will continue to lead along with KDDI and SKT. However, it might be the carriers with tremendous scale who will have the calling cards in the new decade. Watch for China Mobile, Vodafone/Verizon, Telefonica, Orange, Bharti, Unicom, Singtel
OEM of the Decade
Nokia dominated in sales and revenues in each of the 10 years and while the last couple of years took some shine off its glorious past, the company nevertheless came out ahead
RIM, Apple, Nokia, Samsung
Smartphone OEM of the Decade
Smartphones as we know them were introduced by RIM but Apple defined the category and the subsequent ecosystem
This space will be very competitive with Apple still the gold standard to beat
Infrastructure Provider of the Decade
Its prime rivals struggled to stay afloat while Ericsson grabbed most of the revenues from infrastructure contracts and is very well positioned for the next decade
Ericsson is joined by Huawei as the two top infrastructure provider with Huawei giving tough competition for LTE contracts. ZTE and other Chinese infrastructure providers will also replace some of the incumbents
Nation that led in mobile data
This is a no brainer. Japan led with Korea a close second. Finland, UK also impressed
US, China, and India are well positioned to make an impression but most likely during the second half. Japan will still be a major player
Device of the decade
iPhone followed by Razr
iPhone impressed with form and function while Razr with its global sales making it a top selling device of all times
The field might get more crowded as all OEMs focusing on the smartphone category. However, OEMs who also focus on the 90% of the market w/o smartphones might win the top prize
The year 2009
Apple continued to dominate the headlines for the third straight year - whether it was the launch of 3GS or the upcoming introduction of the fabled tablet. Google too kept the ecosystem active. It has executed on its mobile strategy with brilliant acumen though causing significant consternation amongst its partners who it needs to be successful. It has been often misunderstood by competitors, regulators, and partners. Often, they have focused on Google’s tactics vs. its strategy. Look for these two players to be very aggressive as they try to fight for the mantle and the mindshare.
While Nokia leads the OEM space by a good distance, its momentum in the smartphone space left a lot of question marks. Motorola made a credible comeback with Cliq and Droid. Samsung and LG continued to innovate and expanded on their share of shipments and revenues.
India outpaced China in net-adds and crossed 500M though it is still quite behind China’s 750M. The M&A and the consolidation process became active in Asia with several of the big regional operators looking to flex muscles in the international markets. After several delays, China started deploying 3G while India again fumbled and postponed its 3G auction.
US mobile data market continued its pace in 2009 with each of the four quarters exceeding $10B in data service revenues. The gap between the top two operators and the rest grew to be the biggest in the decade and the industry weathered the recession with ease. There was a clear shift towards prepaid especially for Sprint, T-Mobile, and the tier 2/3 operators.
2009 was also defined by significant activity on the application front. With Facebook eclipsing 100M subscribers and Appstore exceeding 2.5B downloads, sky is the limit.
The year also saw an unprecedented growth in mobile data consumption. As we had predicted, for some of the networks, the growth proved to be a double-edged sword. Many in the industry are banking on LTE to help relieve the pain but will be surprised that depending solely on the upgrade strategy will not be enough. Declaring spectrum as a looming crisis, FCC also started tinkering with the mobile industry and the broadband plan.
Japan exceeded 90% in 3G penetration while US subscriptions ventured into the 90% territory. Most of western Europe is way past 130%.
All in all, a terrific year considering that we went through one of the worst recessions in a generation. As we bid goodbye to the last decade, Nexus One and iTablet only serve to whet our appetite of what’s to come.
On a personal note, we started our consulting practice this last decade as we were coming out of the bubble recession and have been fortunate to work with some of the brightest brains and companies in the global ecosystem. We also had a chance to work on some key initiatives that impacted the ecosystem in profound ways. Many thanks to our clients, colleagues, friends, and readers. We will be involved with many new initiatives over the next decade and are looking forward to the conversations through the research notes, books, speeches, panels, whitepapers, blog posts, facebook and twitter feeds, and more.
Thanks and Happy New Year. May the upcoming decade leave you happier, healthier, and more successful than the previous one.
As we eluded to earlier, 2010 will be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments?
We put some of the questions to our colleagues in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that it includes industry movers and shakers participation. Executives and insiders (n=150) from leading mobile companies across the value chain and around the world opined to help us see what 2010 might bring.
11 names were randomly drawn for 3 special prizes. The winners are:
Claire Boonstra, Cofounder, Layar- INQMobile 3G Chat device
Michael Libes, CTO, GroundTruth - Open Mobile Book
Henri Moissinac, Head of Mobile, Facebook - Open Mobile Book
Subba Rao, CEO, TataDoCoMo - Open Mobile Book
Saumil Gandhi, Product Manager, Microsoft - Open Mobile Book
Sarah Reedy, Senior Editor, Connected Planet - Open Mobile Book
Mike Vanderwoude, VP & GM, Cincinnati Bell Wireless - 2010 Mobile Almanac
Pinney Colton, VP, GfK - 2010 Mobile Almanac
Tim Chang, Principal, Norwest Ventures - 2010 Mobile Almanac
Laura Marriott, President - 2010 Mobile Almanac
Asha Vellaikal, Director, Orange - 2010 Mobile Almanac
Thanks to INQMobile and my friend Ajit Jaokar for contributing the prize gifts.
Despite conventional wisdom, what will not happen in 2010?
There were many. Sampling - Verizon iPhone, Microsoft Phone, Sprint will not be bought, Femtocells won’t gain traction, RCS will not happen, Google will not enter handset market directly, iPhone won’t lose steam, Android won’t bring coherence, NFC won’t take off, WiMAX won’t disappear, Nokia won’t bounce back, Palm won’t die, “Year of Mobile” noise won’t subside, carriers won’t be delegated as dumb-pipes.
It is hard to cover the mobile industry in 20 questions. As pointed out by our panelists, there are a number of other issues and opportunities that will help shape our ecosystem - monetization of social networks, augmented reality, the fight for mobile advertising dollars, continued impact of globalization, security and privacy, NFC, IMS, VoIP, enterprise apps beyond email, battery improvements, new interaction modalities, health risks of RF radiation, Mobile 3.0, LTE, single purpose devices, 3G in India, Bada, app vs web, developer turmoil, featurephones, smart grids, M2M, Chrome, etc.
However, be rest assured, we will be tracking these and much more throughout the year and sharing them through various channels.
Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly living in "interesting times" with never a dull moment in our dynamic industry. It has been a terrific year for us here at Chetan Sharma Consulting and we are looking forward to the next decade and seeing many of you along the way.
We hope you enjoyed gaining from the collective wisdom. Your feedback is always welcome.
Be well, Do Cool Work, Stay in touch.
With warm wishes,
Disclaimer: Some of the companies mentioned in this note are our clients.
Now onto the 2010 Mobile Industry Predictions Survey Results
The panel comprised of movers and shakers from around the world
What will be the biggest stories of 2010?
Jan seems to be the Google Phone vs. Apple Tablet matchup. Our panel though voted for the continued growth in mobile data as the top story.
Have we recovered from the recession? (Please select one)
Majority thought we are out of it though some might still feel the pinch
Who will be the most open player in the mobile ecosystem in 2010? (Please select one)
Google has done a great job at maintaining its image as THE open leader
Will Android handset sales exceed iPhone’s in 2010? (Please select one)
Despite Androids coming in droves, iPhone will still be the king of the hill
When will we see tiered pricing plans for smartphones in the US from tier 1 operators? (Please select one)
There are indications that this might happen sooner rather than later
What will happen to the mobile prepaid subscriber base in the US? (Please select one)
Prepaid made a strong comeback in 2009 and a good majority thought that the trend is likely to continue
By how much will the mobile advertising ad-spend increase in 2010? (Please select one)
Mobile Advertising was the only advertising segment with positive growth last year so it is no surprise that folks expect it to more than double this year
What will be the impact of the FCC’s national broadband plan on the mobile industry in 2010? (Please select one)
Not much is expected from the various rulings that might come this year with most expecting the courts to have the final word.
Who will be the mobile comeback story of 2010?
Having bet its future on Android, Motorola was voted as the comeback kid of 2010
What will be the impact of Google Phone?
It’s pretty clear, Google and Apple are duking it out for the developer mindshare. Google wins in either case.
Which areas will feel the most impact from FCC?
Net neutrality is the area where they will have the most impact
Which solutions will gain the most traction for managing mobile data broadband consumption?
While only a holistic approach can provide complete relief, tiered mobile data pricing might have the most impact
When will the carrier-branded appstores lose steam? (Please select one)
Most expect carrier-branded appstores to be a thing of the past in 2010
What will help mobile cloud computing gain traction in 2010?
Mobile cloud computing is gaining steam and the reason is storage and media
What will be the most successful non-mobile-phone category in 2010? (Please select one)
Netbooks seem to be the strongest category followed by eReaders, Tablet, and M2M
What will be the breakthrough category in mobile in 2010? (Please select one)
Mobile Advertising and Mobile Payments share the top honors
By the end of 2010, which will have more subscribers? (Please select one)
LTE might have the momentum but WiMAX has the subscribers
How will Netbooks do through the operator channel? (Please select one)
No major impact from the operator channel
Which standards will gain traction?
No major impact from the standards
What mode of mobile payments will get any traction in North America and Western Europe in 2010?
The category will expand in different ways with more items being charged on the operator bill
Roundup of the first Mobile Breakfast Series event September 29, 2009Posted by chetan in : 3G, 4G, AORTA, ARPU, Carriers, Enterprise Mobility, European Wireless Market, Japan Wireless Market, Location Based Services, M&A, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Users, Privacy, Speech Recognition, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment
The views from the venue are stunning both at the crack of dawn and as the sun lit the valley
The first Mobile Breakfast Series Event was held at the beautiful Newcastle Golf Club on Sept 22nd with our elite panelists - Marianne Marck - SVP, BlueNile, Michael Mace, Principal, Rubicon Consulting, Mike Woodward, VP, AT&T, and Jim Hudak, VP & GM, INQMobile. Before I get into what was discussed, would like to thanks the founding sponsors - Openwave, Motricity, and Clearwire who stepped in right away to make the Mobile Breakfast Series possible. Also, Jeff Giard and Brendan Benzing helped shape the event along the way. Finally, thanks to the extended pacific northwest mobile community for such a tremendous response. Hope you guys keep coming back for more.
The diversity and the experience on the panel was apparent. Mike Woodward has a long history with ATT and has been managing the broad device portfolio for the company. Michael Mace with Rubicon worked with Palm and Apple and is a veteran of the mobile industry cycles, Marianne Marck with BlueNile has seen the growth of mobile digital content like few have and brought in the perspective from the developer and content provider point of view. Finally, Jim Hudak has worked in a wide variety of roles and is now with INQMobile which won the best handset award in Barcelona. This gave us a good forum to explore the various aspects of our evolving industry (Moconews coverage here).
The salient points of the 90 minute discussions were:
· The panel thought the big opportunities are in:
o Specialized devices, though there is little VC investment in the area, there is an opportunity to build something unique by verticals or segments
o Network Optimization and Management, given the tremendous growth in mobile data usage, more technologies are needed to effectively manage the growth
o Besides voice and data, location based services represent the biggest opportunity in mobile
o Empower Impulse buys, embed technology to make it simple for users to buy
o Taking advantage of the mobile browser economy. Companies like Skyfire are expanding the capabilities of the browser that enables better application reach and penetration
· ATT has experienced 5000% growth in mobile data usage in the last 12 quarters. And it is good for business but the future growth needs to be more effectively managed.
· Mobile data is clearly taking off but are there limits to this growth? Will everyone pay $50/month extra? It is probably not for everyone.
· LTE brings down cost of delivering the bits. If EDGE costs $1 to deliver one MB, then HSPA costs 13c and LTE is around 3c. There is significant motivation to move towards LTE.
· While the total number of apps downloaded have exceeded 2B, it is not clear if there are new companies emerging out of the app economy. Developers are still struggling to make ends meet and if we don’t cultivate the ecosystem, very few will be left at the end of the day
· For developers, browser provides the broadest reach but for some apps the richness of the feature/functionality is only available in client apps. Over the long run, browser platform is preferable and is likely to win out.
· Carrier billing is essential for the app economy to survive. Not everyone has iTunes interface for their appstores.
· Femtocells/WiFi play an important role in offloading traffic and providing consumers with better bandwidth and coverage options.
· 75% of ATT’s devices are converged devices. Significant uptick in the last few quarters. Data consumption has been growing as a result. ATT is investing $18B or so in upgrading the network as well.
· Mobile OS becomes less relevant over time.
· Cloud Computing is important for mobile to help with network management, storage, and user experience.
· Microsoft was a freakish event in history, something similar is not going to happen in the mobile space and the fragmentation is not going to go away any time soon.
· Developers like to get access to UI APIs that give them more control over the user experience. Access to location
· Mobile advertising promising but not there yet. Metrics and standards issues need to be worked out.
· TV is a passive experience, Online is less passive, and Mobile is interactive experience. We should be designing apps and services keeping that in mind.
· Handset has become a software business. Companies not having a concrete s/w strategy will be exposed
· We live in interesting times
If you liked the first event, you would love the next one.
The topic is Mobile Broadband and we are getting some of the top notch experts to discuss the very important evolution of the global mobile broadband markets. Date: Dec 4th.
Our good friend Om Malik has kindly consented to moderate the event. Current confirmed panelists are Scott Richardson, former Chief Strategy Officer and now Strategic Advisor at Clearwire and Ken Denman, CEO of Openwave. More panelists to be confirmed in the coming days. Registration is open at http://mobilebreakfastseries.com/
Finally, we would love to hear your feedback. Please help us shape the event and make it your own. How can we make it better? What topics would you like to see discussed? Which speakers would like to hear from? What venues work best for you, etc? Answers will help shape the future events so every bit of feedback is much appreciated. If you could please take a short survey and let us know what you thought of the event as well any guidance on future events, that will be great.
Thanks and see you on Dec 4th.
NAB recap - Open, Personalization, Advertising April 26, 2009Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Devices, European Wireless Market, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Privacy, Speaking Engagements, Strategy, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
Last week, I was invited to present and moderate at the biggest Broadcaster’s show - the NABSHOW in Las Vegas. Compared to CTIA, the show was almost double with registered attendees exceeding 83K. For me, it was a day trip. I was involved with the Mobile Entertainment Summit being held on the 22nd.
The day started with the keynote from Matt Oomen, VP of Product and Technology development at Sprint Nextel. He laid the foundation for the day’s discussion with some overarching themes of Open Platforms, Open Devices, Social Networking, Personalization, and Broadband capabilities of the mobile industry. There were a number of great panels discussing the growth in the mobile video and applications space with panelists from all across the value chain. The bottom-line:
- For mobile video to succeed, we need to reduce the number of global standards so that there is some standardization for OEMs and content providers instead of running around integrating new standards every year.
- People didn’t think that was going to happen anytime soon
- Apple’s Appstore has been a boon to some developers as they have refocused their monetizing strategies from advertising to subscription or charging for downloads which is good for the industry as it can diversify and experiment more. A company that has been successful at that is Glu Mobile
- Zynga has an interesting model of social networking based games. The games are free but as you get more involved and want to raise the stakes, the price goes up, quite significantly with over $50 chips, etc. Idea is that a small population can fund a large base involvement for free
- Texting has been quite successful with mobile marketing and advertising. Hipcricket and Singlepoint with support from Entravision and Fox argued (and rightly so) that to be successful, broadcasters should start developing their audiences and provider personalized services.
Next up were two of my panels. First one was on Mobile Trends being jointly presented with Brian Jurutka, VP Comscore. The session was moderated by Jay Frank, SVP, CMT. Brian presented some really interesting data on mobile video in the US market. A good number of video downloads are happening sideloaded and overall usage remains low.
Another interesting tidbit was for 3G vs. non-3G users
And while iPhone helped change the ecosystem, video usage looks quite similar to G1. Another interesting data point was that the video consumption tapers off with time for users meaning that content providers need to keep users engaged with different strategies.
I presented data on the overall US market and how that is evolving and ended up some observations and recommendations.
Next up was my panel discussion on how Mobile Innovations will impact Mobile Entertainment Experiences. I had the honor of moderating four very clued-in folks
Rebecca Hanson, VP, Strategic Initiatives, Sprint. She has been behind the WiMAX launch
Sajal Sahay, Director, Product Marketing, T-Mobile USA. He has been behind the Android G1 launch
Tim Chang, Principal, Norwest Venture Partners. He has been involved in the mobile industry for over 10 years as an investor and sits on several technology company boards and is very active in discussing emerging trends
and Raj Ray, Director, VAS, Qualcomm. He has been behind developing the VAS business for Qualcomm globally, esp. in the emerging economies
Salient points of our discussion:
- Broadband provides great incentive for user to experiment with new apps and content
- Appstore while increasing fragmentation will also increase competition and hence innovation
- Openness drives innovation and carriers play an important role in driving that
- For 3G, Usage growth is much higher than revenue growth so we need to figure out ways to bring them in alignment
- Social networking needs to be embedded into everything
- Role of alternate devices like kindle and cameo is increasing and we will see all sorts of vertically integrated devices. More and more consumer electronics devices will have cellular connection
- Thanks to iPhone, interesting gaming models are emerging and gaming might provide guidance on how the ecosystem will develop
- Data MVNOs anyone?
- Emerging economies are bringing forth some interesting monetization and device technologies that will benefit everyone like high-end smartphones for less than $50
- Advertising based monetization model is not everyone. One has to scale first
- The biggest areas to invest: Personalization, Audience Measurement, QoS related, Payments, Android Games, Carrier agnostic user profile platforms, mobile cloud computing, augmented reality and much more
Overall a great show. I noticed that even Google had a booth (was absent at CTIA). Something to put on the calendar for next year. My thanks to Michael and Zahava for inviting me to participate.
My next events are at:
TiECON - May 16th - Mobile Monetization
Future in Review - May 20th - Future of Mobile Broadband
mHealth - May 22nd
Hope to see some of you there
Mobile Industry Predictions 2009 January 1, 2009Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Enterprise Mobility, European Wireless Market, Gaming, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Privacy, Speaking Engagements, Strategy, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments
Mobile Industry Predictions 2009
First things first. From all of us at Chetan Sharma Consulting, wish you and yours a very happy and prosperous 2009.
Before we get into what’s to come, let’s do a quick wrap-up of the year that was.
While 2007 was remembered as “the year of the iPhone,” in 2008, though iPhone and Appstore again dominated the headlines as “Touch” became the new black, iPhone shared the spotlight with Android and the resurgent RIM. The deafening roar of “Openness” that started to bubble up during Q407 permeated the ecosystem in 2008. Responding to the iPhone, OEMs raced to introduce Touch phones - Instinct, Armani, Storm, N2, Glimmer, Vu, G1, Diamond, Dare, N97, 5800, and others.
Apple reached its 10M goal a full quarter early and Gphone’s 1M number was impressive. The Clearwire deal was consummated though it meanders through the clouds of uncertainty. Blyk continued to defy expectations. We made significant headway in energizing the mobile advertising 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 which with the help of Amazon kindle and PNDs have started a new chain of AORTA devices.
In terms of actual numbers, the mobile industry exceeded 1 Trillion USD in revenues for the first time with services revenue making up 80% of the mix and 20% being contributed by infrastructure, handsets, and misc. Several operators are now exceeding $2B/quarter in data revenues.
Several subscription milestones throughout the year: 50% penetration, almost 4B worldwide, 600M China, 300M India. India and China both added more than 100M subs in 2008. As expected, 3G crossed the inflection point in the western markets (30%+ penetration) while in Korea and Japan, it was getting hard to find people without 3G (85%+ penetration). Mobile web penetration is above 25% and is becoming quite significant.
Thanks to the iPhone, we seem to have settled on sub-$200 smartphones with race to $150 and $100 on the cards. Flat-rate data subscriptions went above 10% in the western markets. Over 20% of the global service revenues are not dependent on data while non-SMS revenues surged past 40%. With the advent of Femto and UMA, we might see a new front in the battle for the digital home, esp. as bundling and quad-play offers become common place and convergence starts to take different shapes, forms, and business models. Carriers are starting to worry about mobile data usage and looking for alternate strategies and business models. Chinese OEMs started to become more dominant and started to win some major accounts. Don’t be surprised by a major acquisition by them in 09.
Among other events of significance: Mobile TV continued to suffer from highpricendititis, Helio shut down, China and India delayed 3G, WM got updated as MS got behind, Yahoo cemented some impressive operator deals as GYM got more active in mobile, Microsoft entangled Yahoo in a mating dance, Mobile Open got into the industry physce, 700 MHz auction drama ensued, Beijing Olympics rocked, SMS handed the presidency to Obama, Whitespaces and FCC tangled, LTE dominated, UMB died, Admob exponentiated, M&A slowed, IP scuffles continued, over 1.2B new devices shipped, Nokia sold more than 100M devices in each quarter, Samsung surged, Motorola pondered, AT&T iJoyed, Vodafone said Namaste India, US edged past Japan in mobile data revenues, DoCoMo continued to dominate the mobile data revenues rankings, India edged past US in total mobile subscribers, Mobile Facebook spread, Twitter tweeped, Symbian went open source, Sequoia panicked, INQ launched, Economy tanked, WalMart started selling iPhone, Palm got a lifeline, Change was in the air.
2009 will also be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments?
We put some of the questions to our colleagues in the industry. We were able to glean some valuable insights from their choices and comments. This survey is different from some of the others in the sense that industry movers and shakers participate. Executives and insiders (n=200) from leading mobile companies across the value chain and around the world opined to help us see what 2009 might bring.
Six names were randomly drawn for one of our three books released in 2008 (Mobile Advertising, Enterprise Mobility and Wireless Broadband)
The winners are:
Akio Orii, CFO and VP, Toyota
Declan Carew, New Product Strategy Manager, Vodafone
Helen Keegan, Consultant, Beep Marketing
Rich Begert, CEO, Singlepoint, and
Russ McGuire, VP, Sprint Nextel
Jonathan Ebinger, General Partner, Blue Run Ventures
Congrats and Thank You.
Now onto the survey results. The makeup of the respondents below:
Will we see a pull-back in mobile data spending globally/in the US?
The wireless data industry has been somewhat unharmed so far (though OEMs and Infrastructure providers are bearing the brunt of the economic storm). Flat rate pricing, smartphones, 3G networks, better UX are all helping in the continued surge of mobile data consumption and hence revenues. Most expect that though we might see some scaling back in mobile data spending, overall, the growth will continue. The global markets will be slightly better off than the US.
Will Android handset sales exceed iPhone’s in 2009?
The overwhelming majority thought that iPhone will continue to dominate Android in 2009 though 2010 could be a different story. Android has had a good start and if the number of handsets keep on increasing with more carriers carrying it in more countries, Android might not exceed but can come awfully close.
Mirror, Mirror on the wall, who will be the most open of them all?
“OPEN” was the biggest buzzword of 2008 though it means different things to different people. Almost everyone thinks, Google is likely to set the agenda on “open” for others to follow.
Will Apple launch new iPhone models in 2009?
The answer is yes but will they be just minor upgrades or shake-the-market new models. With Android, Nokia, and RIM breathing down its neck, Apple will need more than just upgrades to maintain the limelight.
Will Mobile Advertising see a rise in ad-spend in 2009?
There might be some slow down but mobile advertising ad-spend will keep on increasing. Targeting capability is increasing and CPMs are coming down making for a more efficient mobile channel for advertising. In our own work, we have seen brands fall into two camps: one who are scaling down on inefficient channels like print and radio and moving money into digital including mobile and the others who don’t have quite the appetite for mobile and want to keep investing in channels that they are most familiar with.
Will India and China launch nationwide 3G in 2009?
After many years of delay, the two powerhouses set to launch 3G in 2009. China with TD-SCDMA/WCDMA and India with WCDMA are set to doll out some of the largest contracts seen in the industry.
Will Mobile Payments get any traction in North America and Western Europe?
The plans for mobile payments launch will get pulled back a bit due to the economic crisis. Limited rollouts and trials to continue. Some progress will be made in international mobile remittances.
Will Microsoft launch its own mobile phone?
Will they, Won’t they? How can they not? The probability increased from last year for an Mphone coming to a store near you. But, with the boeingification of Microsoft, it is hard to get any decisions to the market quickly.
Will Clearwire meet the 1.3 million subscriber target in 2009?
The economic climate might force slow-down of expansion and thus the optimistic subscriber forecasts could be impacted.
Will Mobile Open Source mitigate fragmentation?
Not a clear cut answer. Depends on how other versions of Android phones do in the market and if the application development remains a challenge across the Android and Symbian family of devices.
Will cable companies make a major play in wireless in 2009?
Quad-Play is the name of the game. Cable companies have invested half-heartedly thus far. 2009 might be the year they move in aggressively.
Will Microsoft buy RIM?
RIM has become too big and powerful to be consumed by Microsoft easily but desperate times call for desperate measures.
Will Obama’s administration have a major impact on network neutrality and open networks debate?
Not a priority for now. No high expectations, just regular bureaucratic grind.
Will carriers start launching Apple/Android style appstores?
Opinions remain divided. I think most are tempted to build but will outsource the development.
Will Microsoft make windows mobile free to OEMs?
Android (and to some extent Symbian) has pushed Microsoft in a corner. Will it preempt the demise of its pricing strategy? Reduction in price might be the safest bet at this time.
Will the smartphone penetration hit the inflection point in the western markets?
We are getting to that inflection point. 2009 seems to be the year with major implications for the ecosystem.
Will UMA/Femtocells cement their place in the mobile ecosystem?
As 3G networks get burdened by data usage, carriers will look to making UMA and Femtocells as a critical piece of their network strategy
Will consumer privacy and data security rise to be one of the important issues of 2009?
Privacy? What Privacy? Another celebrity mishap might pull this issue to the front burner.
Despite conventional wisdom, what will not happen in 2009?
There were many. Sampling - Microsoft will not buy Yahoo. US Cellular will not be sold. Global economy will not recover in 2009. LTE won’t be commercially deployed. India and China will struggle to get substantial progress with 3G. Motorola will not breakup. Nortel will not disappear. 2009 won’t be the year of mobile advertising.
It is hard to cover the mobile industry in 20 questions. As pointed out by our panelists, there are a number of other issues and opportunities that will help shape our ecosystem - monetization of social networks, the fight for mobile advertising dollars, continued impact of globalization, security and privacy, NFC, IMS, VoIP, enterprise apps beyond email, battery improvements, new interaction modalities, health risks of RF radiation, OpenSocial, GF/FB Connect, Comes with Music, Mobile Widgets, Mobile 3.0, LTE, MIDs, Off-portal, Embedded Mobile, M2M, and others.
However, be rest assured, we will be tracking these and much more throughout the year and sharing them through various channels.
Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly living in “interesting times” with never a dull moment in our dynamic industry. It has been a terrific year for us here at Chetan Sharma Consulting and we are looking forward to 2009 and seeing many of you along the way.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this note are our clients.