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CTIA Wireless 2008 Roundup April 4, 2008

Posted by chetan in : AORTA, Carriers, Enterprise Mobility, Speaking Engagements, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, International Trade, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 2 comments

CTIA Wireless 2008 Roundup

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

The Sin City hosted CTIA Wireless 2008 earlier this week. On Wednesday morning, just before leaving for the convention center, I caught some portion of Ben Bernanke’s congressional testimony on the US economy woes. Few minutes later, strolling the show floor, talking to various companies, and hearing the keynotes, it seemed like I was on a different planet. Either someone failed to deliver the memo or the wireless industry is resilient enough to weather the turmoil in the financial and housing markets with some ease. The show was bigger with more attendees, the booths were returning to their glamorous heydays of the past, and the general buzz and energy at the show all seem to indicate the industry is going to do just fine and is primed for further growth. The general themes were around open network and access, user experience, and bandwidth.

This note summarizes our impressions from the show.

CTIA Wireless in Pictures

First let’s do the numbers: CTIA released their semi-annual statistics on the US market. In summary: For 2007, $23B in data revenues, 2 trillion in MOU, $139B in total service revenues, 48B txt messages/month. (We released our US Market and Global Market updates last month)

Keynotes: In terms of style, Sir Richard Branson stole the show with his pompous exuberance and pep talk (the talk of imaginary flight to Mars was hilarious; investors in Microgin and Viroo must be upset). For substance, Marco Boerries, President, Yahoo Mobile gave a nice compact overview of Yahoo initiatives and products in the market which are pretty darn good. (Marco wrote an opinion piece for our Mobile Advertising Book – “The future of Advertising is in the Consumers’ Pockets”). Yahoo has sewn together a number of deals worldwide that gives them a potential reach of over 600M users.

Vodafone is one operator which has been quite vocal in stating its positions on future infrastructure roadmap and data opportunities. Arun Sarin is probably the only CEO of major global operator who has publicly stated that Mobile Advertising will constitute a significant portion of their revenues in the coming days (Arun’s point person on the initiative Richard Saggers also wrote an opinion piece for our book “Opportunities for Mobile Advertising.” Let me know if you are interested in reading these two opinion pieces).

Microsoft’s Robbie Bach had the tough task of following the Branson-fest. He announced the arrival of a full-blown browser (finally!) for windows mobile. Also, the new windows mobile device from Sony Ericsson (Xperia) looks pretty darn cool. FCC Chairman Martin announced the rejection of Skype petition on the carterphone principle (to Skype’s dismay, it was not an April fool’s joke). Clearly, the definition of “open” is in the eye of the beholder. It means different things to different people. It has also been clear from the various activities and keynotes that the industry is trying its utmost to remain a “Self-regulated” industry and stay away from the clutches of eager politicians.

Lowell McAdam, CEO of Verizon Wireless conducted a panel with CEOs from Alcatel-Lucent, Ericsson, and Nortel and probed them on the 4G migration path, trends in applications and services, and contrasts in adoption and introduction of new technology in various parts of the world. Final day was marked by what is now becoming a trend - keynotes from politicians. This time around Sen. Edwards and Sen. Thompson graced the podium.

Mobile Advertising: In talking with numerous players in the value chain from small developers to large operators to ad networks to media companies, the impression was that things have matured over the last six months. It was gratifying to hear that some companies are adopting strategies and recommendations we propose in our book. Still, some of the basic problems remain – majority of the inventory remain unsold indicating weak demand, CPM rates are still over-rated though they are starting to come down, and fragmentation continues to remain an issue.

The good news is that the size of the mobile campaign budgets are getting bigger with several seven figure RFPs floating around. While some companies are still trying to throw a lot at the wall in the hope that something sticks, others are maturing as companies and are more focused in their positioning and product roadmaps. Integration of various channels is starting to appear on the horizon and the integration with the publishers is becoming tighter. The issue of measurement and auditing standards remains a big issue and unfortunately not much progress to report. There are carrier initiatives and various industry bodies are taking the challenge to rally the ecosystem, but, frankly, consolidation of such efforts is necessary, we can’t afford yet another layer of fragmentation in an already complex ecosystem.

We were interviewed on Mobile Advertising prior to the show by several publications. Some of the articles were published this week to coincide with CTIA

Wireless Wave (CTIA) – Moving Targets: Mobile marketing reaches consumers on their terms by Lynn Thorne

BrandWeek – Mobile Marketing – Fantasy vs. Reality by Ken Hein

Wall Street Journal – Personalized promotions: Sending the right ads to your phone – Peggy Anne Salz

NFC: There were many more NFC-enabled devices on display this time and vendors were talking and demoing NFC and Biometrics based payment solutions. While there are handsets on the roadmap, this market is still very nascent in North America and Western Europe.

Inspiration: The inspiration for new and creative services still comes (at least for yours truly) from Japan (and Korea). I love spending time in DoCoMo’s booth for it gives a glimpse into what’s to come. No other company better understands the development of devices, services and applications that overlay on lifestyles than DoCoMo (e.g. a wellness handset that is a pedometer, heart rate monitor, body and bad breath monitor and yes, you can make voice calls too). They view wireless air-interfaces as nothing more than enablers to solutions that enhance daily lives. Various device manufacturers also displayed some really cool devices. The quality and diversity of handsets that have been introduced into the global markets over the last four quarters is just astonishing. The cycle of innovation and time-to-market keeps on accelerating.

Femto Cells: A number of players like Airwalk, Airvana, and others are bringing Femto cell solutions to the market and carriers are starting to pull this into their strategy as well and look forward to deployments beyond the trials.

4G: LTE vs. WiMAX (vs. UMB): Since the decision of Vodafone and Verizon to support LTE, UMB has been disappearing from the discussion. The 4G discussion is convulsing around LTE and WiMAX now (though Nortel did indicate its support TD-SCDMA as a 4G candidate). Without a doubt the operator community is rallying behind LTE and there might be an opportunity to finally converge to a single standard (haven’t we seen this movie before) but frankly, the advances in silicon to integrate multiple radios has made the standards debate less relevant. WiMAX has forced acceleration of LTE standardization process but is starting to lose its time (and cost) advantage. All eyes are on Sprint’s XOHM business rollouts in the coming days and months.

Accessories: I have never seen so many accessory and reseller outfits at a CTIA show. Business must be booming.

Best Booth: Thought there were several good layouts, LG and Samsung continue to impress with their creativity and “art of marketing.”

Developer and Publisher woes: Along with John Philips (Astraware) and Peter Baldwin (Cellmania), I helped facilitate a few developer session at the Mobile Jam Session organized by WIP. The issues of distribution, discovery, and monetization remain challenging for the small developers worldwide. Even with million user base, they are finding it difficult to monetize but we did discuss a number of success stories. The core elements of success that emerged from the discussion were: choosing the right market, embedding viral component into everything you throw out there, there is no room for mediocrity, and personalizing and customizing go a long way to get traction. An interesting tidbit: the number of page views for mobile MySpace app is a magnitude higher on off-deck vs. ondeck. Several of the companies are trying mobile advertising with varying degrees of success. After spending 4 hours with the developers, I sat on a carrier panel discussing mobile advertising. The contrast between the two worlds was so apparent. Clearly, more needs to be done to help both sides understand each other a bit better.

Green CTIA: There is a stronger emphasis on recycling and contributing to save the environment. The show itself is a big resource hog, so every bit helps.

Alternate Mobile Devices: The universe of alternate devices is expanding. Companies are buying wholesale data packages from the operators and integrating broadband chipsets into hardware to do digital signage (ICG), M2M (Sensorlogic), PND and much more. The definition of being “mobile” keeps on changing.

On Being “Open”: Obviously, given the recent activity around openness, getting a penny for each time the word was uttered by a speaker would have paid off for a lifetime of CTIA trips. While talk is cheap, demonstrable progress is being made by the likes Yahoo, Apple (btw, 3G iPhone is on its way), and AOL.

Another MVNO experiences turmoil: Movida - a Spanish focused MVNO which has garnered almost 300K subs filed for chapter 11.

Voice is becoming mainstream: With the product launches from Nuance, SpinVox, Vlingo, Jott, Yahoo, and many others, voice based navigation and its tighter integration with data services is becoming mainstream.

Where are the opportunities? Last week, I was moderating a panel with executives from AOL Mobile, T-Mobile, Motricity, and Formotus and the themes that emerged were around platform play, user experience, and productivity. At CTIA, in addition to these areas, there was a lot of discussion around social networking (though the market is being saturated with the MoSo noise). It is also clear that we are moving into the phase of “aggregation of fragmentation” with initiatives from Yahoo, AOL, and Google dominating the landscape.

Home Screen Effect: I have been talking about using the home screen for driving data usage for the last 8 years. I think we will see good innovation this year on that front starting with Yahoo’s One Platform. There are several other initiatives in the works where operators and OEMs will be deploying frameworks and technologies to bring information to a “click-less” idle screen environment.

Overall, no major news but industry stays vibrant, healthy, and exciting.

Your feedback is always welcome.

Chetan Sharma

Disclosure: Some of the companies mentioned in this note are our clients.

US Wireless Market Update - 4Q07 and 2007 March 10, 2008

Posted by chetan in : AORTA, Strategy, Carriers, M&A, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 3 comments

US Wireless Market Update - 4Q07 and 2007

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http://www.chetansharma.com/usmarketupdateq407.htm

The US wireless data market grew 55% in 2007 ending the year with $24.5 billion in data services revenues with 4Q yielding $6.9B. 2007 also saw significant industry milestones like: iPhone launch, US crossing 250 million subscriptions, 3G penetration in the US touching 25% subscriber base, consternation around 700 MHz spectrum auction, MediaFLO launch, Android launch, Nokia crossing 40% market share, WiMAX and Femto Cell trials, and much more. US almost equaled Japan in mobile data service revenues for the year (rounding error and currency fluctuation difference). With several significant launches coming up in 2008, US remains one of the most attractive wireless data markets.

Global update

          More details in our worldwide wireless data market update coming out later this month.

Your feedback is always welcome.

Chetan Sharma

Mobile Industry Predictions - 2008 January 1, 2008

Posted by chetan in : AORTA, Carriers, Middleware, Security, M&A, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, Privacy , 7 comments

I never think of future, it comes soon enough – Albert Einstein

First things first. Wish you a very happy and successful 2008.

Before we look at what’s to come, let’s do a quick wrap-up of the year that was.

2007 will clearly be remembered as “the year of iPhone.” While there were several other “events/trends of interest” through-out the year, nothing captured the imagination of the world like the iPhone. It was significant for another big reason – it had a profound impact on the business model and ecosystem dynamics. Q4 2007 was also significant for the deafening roar that resonated around “Openness”.

Steve Ballmer exclaimed mobile to be the next battleground while Eric Schmidt pondered why mobile phones are not free (subsidized by Google ads of course).

Google played its chess game effectively and though it is unlikely to play to win the 700 MHz auction or even if they do win would be able to do anything substantive in the short-term, they did, however, with Android and spectrum gambit, force some of the regulation-wary operators to take a stance on openness. Nokia is putting together a brilliant services strategy that looks to connect directly to the consumer. Competition and coopitition will have a different meaning going forward.

Things were looking positive for WiMAX until the end of the year when Clearwire was left standing on its own. It will look towards Google, Sprint, Motorola, and others to rescue its fate.

Mobile Advertising was hailed as a great savior of mobile content and mobile revenues in general. Blyk even launched an advertising-based MVNO. We made significant headway in energizing the sub segment but the tough problems of privacy, education, control, fragmentation, and user experience remain. LBS picked up steam and mobility started to get into the alternate consumer device universe.

In terms of actual dollars, mobile data market continued its steady growth with substantial shifts in revenue towards non-SMS data applications and services. Several operators are doing $2B/quarter+ in data revenues. Several subscription milestones throughout the year: 3B worldwide, 500M China, 250M US, 225M India. 3G continued to inch towards mass-market in western markets (20-25% penetration) while in Korea and Japan, it was getting hard to find people without 3G (70%+ penetration).

Among other events of significance: Cincinnati Bell and T-Mobile launched UMA devices, Motorola lost its Mojo, Amp’D and Disney Mobile shut down, MediaFLO launched, mCommerce initiatives took hold, China continued to delay 3G, WM got updated, Yahoo cemented some impressive operator deals as GYM got more active in mobile, UMPC fizzled, Mobile Web 2.0 got into the industry physce, LTE got embraced worldwide, M&A galored, IP scuffles continued, Muni projects went into coma, and DRM-adorned content became a thing of the past.

2008 will be a pretty eventful year from several perspectives: business models, user experience and expectations, ecosystem posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How will competition shape up the new sub-segments? We put some of the questions to our colleagues in the industry. This survey was a bit different in the sense that the movers and shakers (and folks from the companies discussed here) and industry insiders participated. We were able to glean some valuable insights from their choices and comments. Participants (n=196) were folks from across the mobile value chain and from around the world.

Many thanks to everyone who participated.

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(click for larger image)

Three names were drawn for a copy of our upcoming book “Mobile Advertising” (co-authored with Joe Herzog and Victor Melfi, John Wiley & Sons, 432 pages, Feb 2008).

The winners are:

  1. David Cushman, Director, Emap

  2. Larry Shapiro, VP, Disney, and

  3. Keith Kostuch, SVP, Alltel

Congrats and Thank you.

Now onto the survey analysis.

Figures above and below summarize the responses. We requested respondents to rate the probability of an event happening in 2008 on a scale 1 to 5. 1 being “Not a chance” to 5 being “100% probability” The figure above summarizes the overall probability of the event happening. The figure below provides the breakdown of responses.

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

Will it? Won’t it? 44.5% gave it a 75% or higher chance of happening while 40% thought it ain’t happening. GPhone is a temptation Google will find hard to resist though a lot will depend on how various initiatives and partnerships shape-up on the ground. In any case, expect another major announcement in the next 2-3 months.

2. Will Google play to win in the 700MHz Spectrum Auction?

Google has played the spectrum chess game effectively. Almost 50% respondents gave it a 75% or higher chance of Google winning the bid. Though expectations are high, Google is unlikely to play to win. Services business is not their cup of tea, they could still fund the Clearwire-Sprint deal but that investment can be spent differently to get better end-results, i.e. mobile ad revenue.

3. Will Microsoft launch its own mobile phone?

Unless Google comes out with GPhone, Microsoft will stay content with its operator distribution strategy. 63% of respondents gave it less than a 25% chance of Microsoft releasing their own phone. If GPhone comes out and gets some traction, expect Microsoft to get its “fast follower” strategy into high gear.

4. Will Mobile Payments get traction in North America and Western Europe?

Only 9% thought it is a sure bet for 2008. True mobile commerce hasn’t really started in the western world. While there are significant movements, 2008 will just be a “lay the groundwork” year for mobile payments.

5. Will WiMAX regroup from its setbacks?

Only 35% gave it a 75% or higher chance (of WiMAX resurrecting itself esp. in the US in 2008). A lot depends on how Mr. Hesse deals with Sprint’s WiMAX business. Indications are there will be a deal with Clearwire to off-load the risks via some external investment (Google?).

6. Will Helio survive 2008?

Almost 70% respondents thought Helio won’t make it. Given the flameout of some of the prominent new-generation MVNOs, it is hard to see how Helio will see 2009. It will all come down to how persistent is SK Telecom. Earthlink doesn’t have the bank balance to keep funding this initiative.

7. Will Verizon truly open-up its garden for third-party visitations?

Only 5% thought it is a sure bet for 2008. Verizon’s open posturing was more to ward off any regulators and to improve its image. There is unlikely to be any meaningful progress on this front this year.

8. Will 2008 be the inflection year for Mobile Advertising?

42% gave Mobile Advertising a 75% or higher chance for rapid growth. Market will mature, more consolidation, some privacy gaffes but overall things are looking up for mobile advertising.

9. Will Femto-Cells gain any significant momentum in 2008?

It will be an introduction and experimentation year, so no significant traction is expected. Over 52% thought Femto-Cells will be just a buzz word in 2008.

10. Will Nokia be able to extract iPhone-style rev-share from carriers in 2008?

Less than 20% thought Nokia will be able to do an Apple when it comes to rev-share arrangements. For OEMs, going direct to the consumers was considered treachery to the sacrosanct relationship with the operators. Until Apple showed up with iPhone. Now, Nokia is putting its services strategy in motion and is building a direct relationship with the consumers worldwide and it has a good shot at pulling it off though it will be a long haul.

11. Will Palm survive 2008?

Only 8% gave it a 100% chance of surviving 08 as an independent entity. It will be difficult for Palm to stay in a status-quo mode. They desperately need a hit device that can give them some breathing room.  Given all the operational and strategic problems the company is having, a sale is likely.

12. Will iPhone truly open up?

Over 45% thought iPhone won’t open-up in any meaningful way. Apple has built-up one of the most profitable closed empires in the digital world. Are they about open things up? While the iPhone SDK is scheduled for early 08, don’t hold your breath on accessing the critical native APIs.

13. Will there be more unsubsidized devices introduced in the US market in 2008?

Almost 49% thought we are likely to see another unsubsidized device in the US market this year. Nokia is looking to go direct and some GSM handset manufacturers are likely to entertain the idea of testing the market with unsubsidized devices.

14. Will Mobile TV move the needle in 2008?

Almost 70% thought mobile TV won’t make much of a difference in 08.Though AT&T is slated to introduce MediaFLO to join Verizon in the Mobile TV services market, lack of devices and better pricing models will hinder wide adoption in 2008. However, downloadable video and VOD content will experience significant growth.

15. Will Android make a dent in handset shipments in 2008?

Only 15% gave it a more than 75% chance this year. It is going to take some time for Android plans to mature and materialize. Don’t see any material impact in 08.

Of course, 15 questions can’t cover the whole industry. As pointed out our respondents, there are a number of other issues and opportunities that will shape the ecosystem - Rise of Facebook as social networking OS for mobile (social networking as a whole starts to go mobile), LBS beyond navigation, Rev-share shuffles, Chinese OEM start to become prominent in the western world, China and India continue to dominate in net-adds, Mobile device security becomes a nightmare for corporate IT, Consumers wake up to mobile privacy snafus and risks, Will Android spread its tentacles beyond nicheosphere, 3G iPhone, Does China Olympics hold any surprises for the mobile industry? Launch of projection handsets, NFC handsets, IMS .. and much much more ..

All in all, consternation and debate will continue into 2008. We will analyze, dissect, and report as events unfold in the new year.

Look forward to the continuing dialogue and meeting with you in person.

Your feedback is always welcome.

Chetan Sharma

Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market December 8, 2007

Posted by chetan in : AORTA, Carriers, Speaking Engagements, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, Messaging, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G , 15 comments

Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market

Stanford University hosted a program focused on the Indian Wireless Market – Why Mobile?, Why India?, Why Now? Under the tutelage of Prof. Tom Kosnik of Stanford, Graduate Student Mohit Gundecha and BDA worked on a study looking at the Mobile Value Added Services (MVAS) market in India and presented their research at the event along with the release of their in-depth report on the subject. Prof. Kosnik started the evening by giving a presentation on his Global Leaders Entrepreneurs and Altruists Network (GLEAN) initiative. This was followed by a keynote from Jeffrey Belk, SVP Strategy and Market Development, Qualcomm (sponsor for the event) providing an overview of mobile growth in emerging and developing markets. The evening ended with a panel discussion on the opportunities and challenges of the MVAS space. This note summarizes the discussion from the event and our random musings on the market.

The panelists for the discussion were:

(above L to R)

Eric Allen, VP, FunMobility (Moderator)

Ashok Narsimhan, Chairman and CEO, July Systems,

Ojas Rege, VP, Global Mobile Products, Yahoo!,

Vin Dham, Executive Managing Director, NEA-IndoUS Ventures,

myself, and 

Niren Shah, Managing Director, Norwest Venture Partners,

It was an honor to be part of this discussion.

First, let’s do the numbers. As we have reported in our previous research notes, India’s growth has been going through the roof. We are likely to end up with over 80M net-add (subscriptions) for the year taking the overall tally to 232M. In the last 5 months, India has added more subs than China. By early April, Indian Market will cross US as the number 2 wireless market in the world. China remains untouchable with over 500M subs. Indian Government is targeting 500M subs by 2010. So, what does this all mean?

Couple of points on the numbers – Just like in other prepaid markets especially Europe, there is a lot of double counting of subs. Many of the unused SIMs are still being counted so the number of “actual” subscribers is less than the numbers that are generally discussed for the market. Secondly, the new subs that are being added are primarily voice subs and hence ARPU (esp. data ARPU is steadily going down for the market. Overall ARPU is approximately $8-9 with 8-9% from data services (where P2P SMS still dominates). Despite low ARPUs, operator margins remain good. The overall MVAS market is close to $1B. The revenue splits are approx 60% for the operators, 20% for the aggregator and rest for the developer and content owner.

Mobile Advertising Market in India – Having looked at the mobile advertising space in depth for our upcoming book, we found the Indian market one of the most active esp. in coming up with interesting business models both operator driven as well as new startups. One of the first in-application mobile advertising services was launched by Reliance, they have several other interesting programs in place that cater to the advertising industry. One of the mobile advertising campaigns that we discuss in the book generated over 21M impressions and won the Cannes award. Companies like mGinger have come up with simple pyramid viral scheme to use SMS mobile advertising. As Admob numbers indicate, the number of impressions are second only to the US market despite low penetration. Finally, operators in India are quite innovate when it comes to integrating the back-end for triple and quad-play unlike their western counterparts who have primarily focused on bill-integration vs. service and application integration.

So, who is actually making money? Clearly the most amount of money is in the infrastructure-related items. Infrastructure is something that is absolutely needed to expand and though the margins shrink quite a bit, it is somewhat made up in volumes. Unless you have unique Intellectual Property that creates barriers to entry, software and/or content companies haven’t had much luck (similar to the trends in China) as the local competition is stiff. Overseas companies who jump in without understanding the market lured by the growing numbers are destined to be surprised.

Cricket, Bollywood, and Education remain the top categories for MVAS apps. Panelists were bullish on new MVAS applications and services around UGC, LBS, high-end segmentation, and enterprise applications. Everyone agreed that the next couple of years are primarily for educating the market and subscription acquisition and it will take another 2-3 years for the MVAS to mature and take off. Unless you are in for the long haul, tread carefully. This market is not for the faint-hearted. IP issues can pose significant risks and challenges.

Jeff thought 3G rather than WiMAX will drive growth in the Indian Market, while Vin suggest Fixed WiMAX is going to be significant. I think the primary use of WiMAX will be to provide Internet connectivity to desktops and laptops and for backhaul of backend systems.

We kind of joked that Indian market might become the second largest market for iPhones within a few months given the pace of unlocked phone shipment to the region.

A question was asked how is working with operators in India different, if at all? Apart from a larger value chain share, things are quite similar. Indian operators do exhibit the desire to move fast and they can take an app to the market quite rapidly where some of their western brethren can keep trialing forever.

You can access the released report here.

You can watch the video from the panel discussion here (Part I, Part II, you can access other videos from the evening on the same page).

Prof. Kosnik and Mohit are launching a new program called “Mobile Momentum” to create an ongoing dialog between Silicon Valley companies and the vibrant mobile industry in Asia. I have signed on as the founding member of the advisory board and look forward to working with entrepreneurs and companies on both sides of the pacific to share thoughts, research, and best practices.

If you would like to receive my slides from the event, please let me know.

2008 promises to be even more exciting than 07. Happy Holidays.

Your feedback is always welcome.

Chetan Sharma

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

Posted by chetan in : AORTA, Strategy, Carriers, Middleware, Enterprise Mobility, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, BRIC, WiMax, ARPU, Japan wireless market, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Ecosystem, Microsoft Mobile, Mobile Search, Wireless Value Chain, 4G , 2 comments

US Wireless Data Market Update - Q3 2007

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http://www.chetansharma.com/usmarketupdateq307.htm

US wireless data market continued its growth reaching $6.4B in service revenues for the third quarter. With the holiday quarter to go, the aggregate data revenues for the year are already past the 2006 data revenue mark. Whether it was the first full quarter of iPhone sales, or the debate on the upcoming 700MHz spectrum auction, or the rumors swirling around the gPhone, or the continued M&A activity - the US wireless data market remained vibrant in Q3.  Given that majority of the data revenues now comes from non-messaging applications and services and the subscriber penetration for such services is just getting into the inflection zone, US remains one of the most attractive wireless data markets.

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

Your feedback is always welcome.

Chetan Sharma

CTIA Wireless IT and Entertainment 2007 Roundup October 28, 2007

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

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

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

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

Keynotes - The central theme that tied the three keynotes was “Be Open, Do Good Work, and Rest will take care of itself.” The keynotes from Steve Ballmer, Microsoft, Dustin Moskovitz, Facebook, and Atish Gude, Sprint Nextel emphasized the need to have an “open platform” for innovation, applications, and services. Haven’t we been down this lane before?

Steve started by taking a page out of our (upcoming) book, literally (page 243 to be exact) and describing a vision where mobile device becomes the remote control of your life for both workstyle and lifestyle. Too often we focus on separating out personal vs. professional but our lives are so intertwined that one minute you are setting up a doctor’s appointment and the next minute closing a sale. Companies that focus on managing the experience start to finish (waking to sleeping) independent of everything else will be the ones that dominate these turf wars. Microsoft’s big announcement was the release of device management server that includes mobile devices in addition to the desktop world (but it is limited to windows mobile devices only, Open?). Microsoft has been making impressive strides in occupying its place in the mobile ecosystem. Though windows mobile and battery life don’t go together, the fact that they are deployed with 160 operators in 55 countries, shipping 20M devices/year places them at a significant advantage in the coming days.

Facebook’s Moskovitz made the plea for openness of networks, devices, and applications to enable the social networking phenomenon on mobile. The fact that Microsoft and Facebook were doing the keynotes on the eve of strategic investment wasn’t a coincidence. Dustin brought out the elderly statesman Mike Lazaridis to announce the facebook app for Blackberry smartphones. The interesting thing was how the app was introduced - Facebook chose RIM and RIM chose T-Mobile for this app. Device manufacturers are surely getting bolder. Facebook extended its platform to mobile. Getting social networking apps on mobile is a no-brainer. In fact, the coming enhancements with Presence, IMS, Broadband, Profiling, Location, can make mobile social network a society of its own.

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

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

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

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

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

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

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

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

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

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

iPhone continues to dominate the talk - iPhone continues to set the tone of discussion in the industry. Since July, there has hardly been a mobile conference worth its salt that hasn’t had a session on “impact of iPhone.” There hasn’t been a mobile device like this one and it shows. Attendees proudly fiddled with their iPhones in public and were eager to discuss their experience and forecasts.

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

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

Misc

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

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

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

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

NY Times Article - Fever Builds for iPhone (Anxiety Too) June 4, 2007

Posted by chetan in : Carriers, Speaking Engagements, US Wireless Market, Mobile Content, Mobile Entertainment, Mobile Gaming, ARPU, Mobile Applications, Smart Phone, Mobile Usability, Wireless Value Chain , add a comment

John Markoff of NYT interviewed me for this iPhone article. It will appear in tomorrow’s paper.

(Source: NYT)

http://www.nytimes.com/2007/06/04/technology/04iphone.html

Fever Builds for iPhone (Anxiety Too)

By JOHN MARKOFF

SAN FRANCISCO, June 3 — During an onscreen demonstration of the iPhone in Apple’s sprawling retail store here recently, an employee, clad in a black T-shirt, of course, surprised a potential customer.

Nonplused, the customer stammered, “You mean it’s a cellphone, too?”

Such is the spell that Steven P. Jobs has cast on the American consumer.

It has been almost six months since Mr. Jobs, the world’s consummate salesman, introduced the iPhone as the Ronco Veg-O-Matic for the Internet era. Tongue only partly in cheek, Mr. Jobs promised that Apple’s entry into the cellular handset market would be a better phone, Web browser and music player.

Mr. Jobs succeeded in building expectations for what some have called “the God machine.” The bar-of-soap-size phone is being coveted as a talisman for a digital age, and iPhone hysteria is beginning to reach levels usually reserved for video-game machines at Christmas.

Although the phones are expected to cost as much as $600 when they go on sale at Apple and AT&T stores later this month, each company has received more than a million inquiries about the product’s availability. Apple disclosed in television commercials Sunday night that the phone would be released June 29.

Further evidence that expectations have been wound up to a fever pitch: the phones, or promises to deliver a phone, are already on sale on eBay for $830. A pundit as unlikely as Arianna Huffington sought out Mr. Jobs directly for advice on being the first to score a phone. (He told her to go to an AT&T store.)

Last week, during an appearance at a technology industry conference in Southern California, Mr. Jobs teased the audience by briefly pulling an iPhone out of his jeans pocket and immediately slipping it back out of sight.

The anticipation, which is intense even by Jobsian standards, has led to some quiet, behind-the-scenes anxiety at Apple. Some Apple executives worry privately that expectations for the one-button phones may be too high and that first-generation buyers will end up disappointed.

Certainly there are skeptics. The high price will limit the phones’ appeal to true believers. The cellular network that the iPhone operates on is slower than those of many of its rivals. Several of Apple’s handset competitors hope that its decision not to include a keyboard, relying instead on a touch-screen virtual keyboard, will limit the attractiveness of the iPhone in text-intensive business markets.

“It’s very media-centric,” said a director at a handset competitor who declined to be identified, saying that his company did not want to elicit comparisons with the iPhone. “It will hit one sweet spot, but not necessarily all of the sweet spots — we hope.”

As has often been the case during the last three decades, Mr. Jobs’s timing may be impeccable.

While entire industries have been struggling for more than half a decade to find the right combination of features to merge cellphones and computers, Apple appears to have stepped in at precisely the right moment.

“These devices have become ubiquitous, and there’s an enormous hunger out there,” said Peter Schwartz, the chairman of Global Business Network, a consulting firm based here.

Most analysts believe that Apple will easily exceed its initial goal of selling 10 million phones by the end of next year.

“It will be just 1 percent of the handset market,” said Jagdish Rebello, director of wireless communications research at iSuppli, a market research firm based in El Segundo, Calif. “But it is essentially shifting the balance of power into the hands of the mobile device manufacturers.”

News reports out of Asia in recent weeks indicate that Apple may have placed an order for an additional five million phones with Quanta Computer, a Taiwanese manufacturer that is a leading maker of laptop computers. Another Taiwanese manufacturer, Hon Hai Precision Industry, was earlier reported to have been awarded the original order. Apple declines to comment on its plans.

Although a tiny fraction of the global phone industry, a 1 percent market share would make Apple a head-to-head competitor with the high-end version of Microsoft’s Windows Mobile software, which is used on a number of smartphones.

During the first quarter of 2007 Microsoft’s software was used on about 3.2 million personal digital assistants, or about 60 percent of the market, according to Gartner, the market research firm. Microsoft has come to dominate the market against competitors like Palm, Research In Motion and Symbian, but Apple’s entry is likely to reset the most profitable high end of the handset market.

“It will change the whole category of what people think a phone is,” said Richard Doherty, president of the Envisioneering Group, an industry consulting firm.

To head off potential consumer disappointment, Apple said several months ago that it would have the ability to add features to the iPhones after they were purchased. The company’s executives say that the capability to upgrade the iPhone in the field will give it a significant advantage over other cellphones, which are usually replaced frequently.

“Other carriers are scrambling to figure out what their strategies should be,” said Chetan Sharma, an industry consultant who follows the wireless data market.

One potentially crucial factor in determining the iPhone’s success that has yet to be clarified by the company: How willing is Apple to permit independent software vendors to develop programs for the iPhone? When he introduced the phone in January, Mr. Jobs seemed unwilling to permit outside software development. He said that opening that door would tend to raise both security and stability issues that were unacceptable in the wireless handset market.

Last week, however, at the D: All Things Digital conference, he seemed to relent. He said Apple was looking for ways to make it possible for developers to create software for the iPhone.

A person briefed on Apple’s plans said that at its software developer conference this month, Apple intends to announce that it will make it possible for developers of small programs written for the Macintosh to easily convert them to run on the iPhone.

Software, Mr. Jobs said last week, is what would make the difference. Poor software, he said, is what undermined the Japanese consumer electronics industry. And by that same token, software is what will give the iPhone what he said would be a five-year lead on the rest of the handset industry.

“If you look at the iPhone, it’s software wrapped in wonderful hardware,” he said.

US Wireless Data Market Update Q1 2007 May 15, 2007

Posted by chetan in : AORTA, Strategy, Carriers, Middleware, Speaking Engagements, 3G, Mobile Advertising, US Wireless Market, Mobile Content, Indian Wireless market, BRIC, Mobile Gaming, ARPU, Japan wireless market, Unified Messaging, European wireless market, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wireless Value Chain, 4G , 3 comments

US Wireless Data Market Update - Q1 2007

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

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

Your comments are always welcome.

Chetan Sharma

Mobile Advertising Panel Roundup April 19, 2007

Posted by chetan in : AORTA, Strategy, Carriers, Speaking Engagements, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Indian Wireless market, ARPU, Unified Messaging, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile,