2012 Mobile Industry Predictions Survey January 3, 2012Posted by chetan in : 3G,4G,AORTA,Applications,ARPU,BRIC,Carnival of Mobilists,Carriers,Connected Devices,CTIA,Disruption,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,IP Strategy,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 insiderâ€™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 whatâ€™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 â€“ 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 â€“ 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 â€“ 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 Amazonâ€™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 industryâ€™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 â€œperception is realityâ€ 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 donâ€™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.3G,4G,AORTA,ARPU,BRIC,Carriers,Connected Devices,Devices,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Infrastructure,Intellectual Property,IP,IP Strategy,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 â€“ Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant â€“ 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
â€“India and China racing to a billion a piece
2.Total Global Mobile Revenues to hit $1.3 Trillion, almost 2% of Global GDP
â€“Top 10 operators control 43% of the global mobile revenues
3.Total Global Mobile Data Revenues to eclipse $300 Billion
â€“Non-messaging data now owns 53% of the global mobile data revenues
4.Mobile Devices are now exceeding traditional computers in unit sales + revenue
â€“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
â€“Over 1 Billion broadband connections by 2011
6.Global Mobile Apps revenue has shifted to off-deck
â€“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
â€“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
â€“Many countries are facing spectrum exhaust in the next 5 years
9.Connected device segment is growing at the fastest pace
â€“Operators will have to quickly adapt their strategies to stay relevant in this segment
10.Several multi-billion dollar opportunity segments are emerging
â€“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
â€“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
â€“ 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
â€“ 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 canâ€™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. Nokiaâ€™s valuation has been cut into half while the newcomer HTC edged past the industry giant in a remarkable story of the year. Nokiaâ€™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 hasnâ€™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. HPâ€™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 wonâ€™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 doesnâ€™t matter if the market is defined by â€œcontrolled regulationâ€ like in China, Korea, and Japan or if it is â€œopen marketâ€ 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 â€œtop 3â€ operator market. Indiaâ€™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 shouldnâ€™t have more than 50% of the market share and the number three player shouldnâ€™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 â€œcommunicationsâ€ and â€œcomputingâ€ 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 â€“ 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 consumerâ€™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&Tâ€™s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoftâ€™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 â€“ the challenges and the opportunities at our annual mobile thought-leadership summit â€“ Mobile Future Forward – brought to you in partnership with our terrific partners â€“ 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 â€“ 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.
US Mobile Data Market Update Q2 2010 August 10, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,CTIA,Enterprise Mobility,European Wireless Market,Indian Wireless Market,IP Strategy,Location Based Services,M&A,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Event,Mobile Future,Mobile Future Forward,Mobile Gaming,Mobile Search,Mobile Wallet,Music Player,Networks,Speaking Engagements,Speech Recognition,Unified Messaging,US Wireless Market,Usability,VoIP,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 2 comments
US Mobile Data Market Update Q2 2010
The US wireless data market grew 6% Q/Q and 22% Y/Y to exceed $13.2B in mobile data service revenues in Q2 2010 – on track so far to meet our initial estimate of $54B for the year.
Having narrowly edged NTT DoCoMo last quarter for the first time, Verizon Wireless maintained its number one ranking for the 1H 2010 in terms of the operator with the most mobile data revenues (though the difference was thinner than the amoeba membrane). The total wireless connections for Verizon were almost 100M with 92.1M being the traditional subscriber base. Rest of the 3 top US operators also maintained leading positions amongst the top 10 global mobile data operators.
Sprint had the first positive netadd quarter in 3 years and has been slowly and steadily turning the ship around. T-Mobile did better on the postpaid netadds but overall additions declined again. The larger question for the market is if 4 large players can stay competitive. Generally, the answer is no. But these are different times and there are a number of permutations and combinations that are possible.
The US subscription penetration crossed 95% at the end of Q2 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 â€œconnected deviceâ€ segment is picking up so much that both AT&T and Verizon added more connected devices than postpaid subs in Q2 2010. Given the slow postpaid growth, operators are fiercely competing in prepaid, enterprise, connected devices, and M2M segments.
Data traffic continued to increase across all networks. By 1H 2010, the average US consumer was consuming approximately 230 MB/mo up 50% in 6 months. 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+ and LTE, most of the cutting edge research in areas 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.
As we had forecasted, the tiered pricing structure for mobile broadband touched the US shores with AT&T becoming the first major operator to change its pricing plan based on consumer consumption. We will see the pricing evolve over the next 2-4 quarters as the US mobile ecosystem adjusts to the new realities and strategies for mobile data consumption.
In the connected device category, iPad like its flashy cousin dominated the headlines, the sales numbers, and the industry profits. The device sent every slate maker back to the drawing board, many projects were cancelled and strategies are still being formulated to capture a new burgeoning space and Apple again has a massive lead of mindshare and pocketbook.
Kids of the now generation are growing with connected electronics that is fundamentally altering the behaviors and expectations of interaction, communication, consumption, and monetization.
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 â€“ Mobile Future Forward which is bringing exceptional industry thought-leaders, inventors, and doers to brainstorm, discuss, and debate whatâ€™s next. Hope you can join the discussion.
What to expect in the coming months?
31% of the US subscription base is now smartphones.
The pace of product introduction is accelerating with each quarter. Devices of all shapes and sizes are coming into the market literally every week. Players are having to re-evaluate their businesses and long-term strategies. Several new impressive devices got introduced during the course of 1H of 2010 including the iPad and EVO.
There are several players whose future is at stake (to put it mildly). The competition has grown fierce and companies are finding it hard to take ideas from R&D to products in market in a short amount of time.
Microsoft announced its comeback with the W7 commercial launch imminent. The change in UI was refreshing and the expectations are quite high. W7 v2 is likely around the corner to update on the flaws of v1. HP acquired Palm in an attempt to become relevant again in the mobile device space. It has been an action packed 1H 2010 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 and the subsequent debate over the course of nations broadband future kept the spectrum, net-neutrality, and exclusivity issues at the forefront.
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. (We will be going in-depth into this subject at our Sept event with some very senior and experienced executives)
2010 is also the year of network rollouts. T-Mobile has been rolling out HSPA+ at an impressive rate, Clearwire announced its intention to move to LTE, Verizon is betting big on LTE and looking for competitive marketing advantage over the course of the next 12 months. 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 â€œState of the â€œMobileâ€ Broadband Nationâ€ 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 released the second edition of our in-depth research paper on data growth – "Managing Growth and Profits in the Yottabyte Era" last quarter.
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 Q2 2010 US wireless data market is:
Service Revenues (Slides 7, 16)
- The US Wireless data service revenues grew 6% Q/Q to $13.2B in Q210. Compared to Q209, the mobile data service revenues grew 22%.
- Verizon and AT&T accounted for 75% of the increase in data revenues in Q2 2010.
- T-Mobileâ€™s 3G drive is starting to pay off. While the net-adds were still in the red, its data growth is starting to match with its peers. The 20% 3G smartphone base definitely helps.
- Verizon Wireless again nudged past NTT DoCoMo in overall mobile data revenues by a whisker. 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 70% of the market data services revenues and 62% of the subscription base.
ARPU (Slides 8-11)
- The Overall ARPU increased by $0.46 reversing the declining trend of the past three quarters. Average voice ARPU declined by $0.13 while the average data ARPU grew by $0.58 or 4% Q/Q.
- The average industry percentage contribution of data to overall ARPU is now 31% in Q210.
- Verizon led in data ARPU with $17.37 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 approximately 25% of its revenue coming from data services.
Subscribers (Slides 12-14)
- Overall netadds stayed stable at just over 3M with AT&T gaining the lion-share (though their count now includes the connected devices while other operators donâ€™t specifically include that in the calculations).
- The texting see-saw between US and Philippines continued in Q210. US averaged around 639 messages/user/mo marginally behind Philippines.
- For the third straight quarter, AT&T reported more net-adds from connected devices than postpaid subs. Connected devices are now 7% of AT&Tâ€™s subscription base.
- Sprint got back into the positive net-adds territory again after 3 years. T-Mobileâ€™s net-adds continued to decline. T-Mobileâ€™s 20% and Sprintâ€™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 earlier this year)
- The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.
- Nokia sold 111M units in Q2 2010 amounting for 36% of the market share. Samsung again had a solid quarter with 64M devices sold with the share at 21%. LG Electronics at 10%, Sony Ericsson and RIM at 3.6% rounded up the top 5.
- Apple shipped 8.4M iPhones in Q2 but the criticism over the antenna design took some shine out from yet another home run.
- Smartphone penetration increased to 31% in the US market
Data Traffic (Slide 15)
Â· As we noted in our last update, the data traffic is now significantly more than the voice traffic. By 1H 2010, the average US consumer was consuming approximately 230 MB/mo up 50% in 6 months. The good news is that there are several solutions available and are being invented that will help manage the data growth starting with the tiered pricing plans.
To discuss all these trends and more, we are putting together a unique Mobile Future Forward Executive Summit and are fortunate to have the company of some of the sharpest minds in the industry, folks who both have the vision to shape the evolution and the authority to invest billions of dollars this decade to make things happen. Hope to see you in Seattle on Sept 8th.
Abhi Ingle, VP, AT&T; Amir Mashkoori, CEO, Kovio; Anand Chandrasekhar, SVP & GM, Intel; Bob Azzi, SVP – Network, Sprint Nextel; Christopher Dean, Chief Strategy Officer, Skype; Danny Bowman, President, Sprint Nextel; David Weiden, General Partner, Khosla Ventures; Dr. Boris Nikolic, Sr. Program Officer, Global Health & Discovery, Bill & Melinda Gates Foundation; Dr. Genevieve Bell, Intel Fellow & Director, User Experience, Intel; Dr. Greg Brandenberg, CEO, Columbia Basin Health Association; Dr. Sailesh Chutani, CEO, Mobisante; Dr. Suzanne Clough, Chief Medical Officer, WellDoc; Erick Tseng, Head of Mobile, Facebook; Glenn Lurie, President, AT&T; Hank Skorny, SVP, Media Mobile Cloud Computing, Real Networks; Jack Kennedy, EVP, News Corp; Joe Sims, Lead Partner – Digital Convergence , Booz & Company; Jon Stross, VP & GM – Babycenter, Johnson & Johnson; Ken Denman, CEO, Openwave; Krishna Vedati, SVP & GM – Mobile, AT&T Interactive; Lirong Shi, President, ZTE; Louis Gump, VP Mobile, CNN; Mario Queiroz, VP – Product Management – Android, Google; Mark Selby, VP, Nokia; Matt Bross, CTO and Vice Chairman, Huawei; Michael Sievert, Chief Commercial Officer, Clearwire; Neville Ray, Chief Network Officer, T-Mobile ; Omar Javaid, CEO, BBDO; Paul Palmieri, Founder and CEO, Millennial Media; Rob Glaser, Chairman, Real Networks and Partner, Accel; Sean Cai, VP – Advanced Technology, ZTE; Stephen David, Former CIO, Proctor & Gamble; Subba Rao, CEO, TataDoCoMo; Takayuki Hoshuyama, CEO D2 Communications; Tim Chang, Partner, NVP;Tony Lewis, VP, Verizon; Wim Sweldens, President, Alcatel-Lucent
Each panel discussion will involve luminaries/experts on specific topics, for e.g.
Opportunities in Mobile
Mike Sievert, CCO, Clearwire
Dr. Genevieve Bell, Fellow, Intel
Shi Lirong, President, ZTE
Subba Rao, CEO, Tata DoCoMo
Evolution of Communication/ Engagement
Christopher Dean, Chief Strategy Officer, Skype
Erick Tseng, Head of Mobile, Facebook
Mario Queiroz, VP, Google
David Weiden, General Partner, Khosla Ventures
The size of the panel will be small and the time duration long so we can delve deep into the issues and questions. For more panel, speaker, sponsor, and program details, please visithttp://www.mobilefutureforward.com
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 Sept 2010.
Disclaimer: Some of the companies mentioned in this paper are our clients.
Announcing Mobile Future Forward Executive Summit June 14, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,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 Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,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 â€œMobile Future Forwardâ€ 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 couldnâ€™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 whoâ€™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 â€“ Wireless Division, Alcatel Lucent
Takayuki Hoshuyama, CEO, D2 Communications
Neville Ray, SVP, T-Mobile
Bob Azzi, SVPâ€”Networks, Sprint Nextel
Mario Queiroz, VPâ€”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
Global Mobile Data Market Update 2009 March 31, 2010Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,Storage,Strategy,Unified Messaging,US Wireless Market,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 Mobileâ€™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 wonâ€™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, SMSâ€™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 whatâ€™s coming.
Â· 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 â€“ 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, AmÃ©rica MÃ³vil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.
Â· 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.
Â· The number of non-carrier appstores jumped to 38 from 8 in the previous year.
Â· 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.
Â· 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 â€œSizing the Global Mobile Apps Marketâ€
- 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.
Â· 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.
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,Mergers and Acquisitions,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,MVNO,Patent Strategy,Privacy,Smart Phones,Speech Recognition,Unified Messaging,US Wireless Market,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,Carnival of Mobilists,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Federal,Gaming,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile Traffic,Mobile TV,Mobile Usability,Mobile Users,Mobile Wallet,Music Player,MVNO,Networks,Partnership,Patent Strategies,Patent Strategy,Patents,Privacy,Smart Phones,Speaking Engagements,Speech Recognition,Storage,Strategy,Uncategorized,Unified Messaging,US Wireless Market,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, letâ€™s do a quick wrap-up of the year that was. Well, since we just completed one heck of a mobile decade, letâ€™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 Appleâ€™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 RIMâ€™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 Microsoftâ€™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 shouldnâ€™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, itâ€™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 â€œsubjectiveâ€ 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 Googleâ€™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 Chinaâ€™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 whatâ€™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 wonâ€™t gain traction, RCS will not happen, Google will not enter handset market directly, iPhone wonâ€™t lose steam, Android wonâ€™t bring coherence, NFC wonâ€™t take off, WiMAX wonâ€™t disappear, Nokia wonâ€™t bounce back, Palm wonâ€™t die, â€œYear of Mobileâ€ noise wonâ€™t subside, carriers wonâ€™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 iPhoneâ€™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 FCCâ€™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?
Itâ€™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
New Whitepaper: The Untapped Mobile Data Opportunity December 16, 2009Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,Enterprise Mobility,European Wireless Market,General,India,Indian Wireless Market,Infrastructure,Intellectual Property,International Trade,IP,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Mobile Users,MVNO,Networks,Smart Phones,Speech Recognition,Storage,Unified Messaging,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 3 comments
The Untapped Mobile Data Opportunity
Sponsored by INQMobile
The last two years in the global mobile market have been truly sensational. Over 1 billion new subscriptions added, over 2 billion new devices sold, and over $300 billion in mobile data revenues. The number of new iconic devices each quarter is on the rise, the consumer engagement is at an all time high and the new startups and entrepreneurs are brimming with ideas and new products. Devices like the iPhone, Storm, Hero, INQ1, Mytouch, Cliq, Droid, N97 and others have captured the imagination of the media like never before. The smartphones or the integrated devices now account for approximately 9% of the global market. However, whatâ€™s often lost in the smartphone euphoria is the remaining 91% of the market and the significant opportunity of data-enabling these customers.
Operators who have focused on data services as their core service have benefited with high data Average Revenue Per User (ARPU). As we quickly transition into the hyper growth phase of mobile data services, players who are designing affordable devices and services with "mobile data" in mind are the ones who will benefit from a higher uptick in adoption and sustainable consumer loyalty. However, as operators have migrated from 2G to 3G, many have missed an opportunity to customize or introduce new services that take advantage of devices being mobile, interactive, and always available.
Traditionally, there has been a big gulf between the functionality of featurephones and the smartphones; however, there is an emerging category of devices that will provide the functionality of a smartphone for the price of a feature phone. Though the average selling price or the ASP of the smartphone has been dropping, the price is still high for a significant majority of the global subscriber base. Consumers who are looking for a sub $50 device still want to the access applications such as Facebook, Twitter, Google search, and make VoIP calls, etc.
In this paper, we will look at the opportunity to attract the 91% of the global user base into the mobile data ecosystem. We will quantify the opportunity, examine what this opportunity means to the mobile value chain specifically to the mobile operators and discuss the success factors to accelerate the migration of non-active data users into the data realm.
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,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Users,MVNO,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:
Â· 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
Â· 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.
Â· 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.
Â· 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.
Â· 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
Â· 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.
Â· Carrier billing is essential for the app economy to survive. Not everyone has iTunes interface for their appstores.
Â· Femtocells/WiFi play an important role in offloading traffic and providing consumers with better bandwidth and coverage options.
Â· 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.
Â· Mobile OS becomes less relevant over time.
Â· Cloud Computing is important for mobile to help with network management, storage, and user experience.
Â· 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.
Â· Developers like to get access to UI APIs that give them more control over the user experience. Access to location
Â· Mobile advertising promising but not there yet. Metrics and standards issues need to be worked out.
Â· 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.
Â· Handset has become a software business. Companies not having a concrete s/w strategy will be exposed
Â· 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.
CTIA Wireless 2008 Roundup April 4, 2008Posted by chetan in : 3G,AORTA,ARPU,BRIC,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Indian Wireless Market,Intellectual Property,International Trade,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,MVNO,Smart Phones,Speaking Engagements,Speech Recognition,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 3 comments
CTIA Wireless 2008 Roundup
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.
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.
Disclosure: Some of the companies mentioned in this note are our clients.
Global Wireless Data Market Update 2007 March 27, 2008Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,CTIA,Devices,European Wireless Market,India,Indian Wireless Market,Infrastructure,Intellectual Property,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Mobile Users,MVNO,Networks,Partnership,Speaking Engagements,Speech Recognition,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 8 comments
Global Wireless Data Market Update 2007
As you read this End of Year (EOY) 2007 Global Wireless Data Market update this week, somewhere in India, a new subscription will catapult India over the US as the number 2 global wireless market. 2007 was a banner year for global wireless data market. The global service revenues for the year touched $700 billion, the data service revenues were more than $120 billion, China signed its 500 millionth subscription, and both India (in feb 08) and the US crossed the 250 million subscription mark. 2007 continued to enhance mobile data’s role in the operator ecosystem with approx 17% of the revenue is coming from data services.
For some leading operators, data is now contributing up to 35% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU. From the true and tested SMS messaging to new services such as Mobile TV, Enterprise apps, and others, different services helped in adding billions to the revenues generated for 2007. Japan and Korea remain the envy of the global markets and the countries to study and learn from w.r.t. new services and applications. The US market has been steadily making strong comeback and for the first time exceeded Japan in service revenue generated from mobile data.
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.
- The worldwide markets continue to grow at an explosive pace reaching 3.3B subscriptions by Q407 up 20% from 2006 levels. Significant growth is coming from India and China with both countries registering close to 8-9M net adds per month. India recorded 8.8M net adds in Jan 08 while China added 9.4M in Feb 08. Overall, the world market is at almost 50% penetration.
- US surpassed Japan as the most valuable mobile data market in service revenue with US adding $24.5B vs. $23.2B for Japan in 2007 mobile data service revenues. China with $12.5B was ranked number 3. US registered the highest growth amongst the top 3 with over 55% increase from 2006 levels followed by China at 37% and Japan at 18%. These top 3 markets account for over 50% of the global data service revenues.
- NTT DoCoMo continues to dominate the wireless data service revenues rankings with over $12.13B in service data revenues for 2007 however Q/Q growth has dropped to single digits. DoCoMo crossed 80% in 3G penetration and is expected to touch 90% by end of the year.
- DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, O2 UK, SK Telecom, Softbank, and China Unicom to round up the top 10 operators by wireless data service revenues. All the top 10 carriers exceeded $3B in data revenues for the year.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping 30%.
- Both India and China added a whopping 85 million new subscriptions (most of them prepaid). This week India edges past US to become the number 2 wireless market (by subscriptions) in the world. In last two years alone it added almost 150 million new subscriptions (in comparison China added 155 million and the US market added 44 million).
- Vodafone Italy reported the highest increase in data ARPU from 4Q06 with 76% growth. Other notable percentage increases in ARPU were from Rogers, AT&T, Verizon Wireless, Sprint, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.70.
- In terms of absolute dollar amount, 3 UK leads the pack with $29 data ARPU (qualifying limit: 4 million subs). By comparison, the rest of the top 4 operators are below $22. In fact, 3 UK reported the highest ARPU recorded for the year at approximately $94 (in Q2). Other operators who reported overall ARPU above $60 were KDDI, NTT DoCoMo, Rogers, and 3 Sweden.
- The biggest jump in data revenues was experienced by Verizon Wireless with over 68% increase from 2006 followed by AT&T with 63% jump and O2 UK making 49% gain.
- In 2007, SMS’s vice like grip on data revenues continued 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%.
- The top 10 operators increased their revenue by 32% during 2007 (from 2006) to reach almost $62 billion in data service revenues, thus accounting for almost half of the global data service revenues though they account for only 27% of the global subscription base.
- NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI. Their data coordinates stand at ($21.5, 35%) and ($21, 34%) respectively (please see PowerPoint for reference). Since the takeover from Vodafone, Softbank has been making significant strides in the market by taking the highest share of the net-adds in last 9 months.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 55% (or $4) contribution coming from data services.
- Even though China reported approximately $12.5B in data revenues for 2007 and the percentage contribution is over 23%, data ARPU is around $2.3. For India data ARPU dropped below $1 for all major carriers.
- China Mobile with 369M (as of Dec 07, the numbers increased to 384M by Feb 08) remains the #1 carrier in terms of total number of subscribers followed by Vodafone at 252M and China Unicom with 160M subscriptions. Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for many years to come. China Mobile also surpassed Vodafone in market cap which stands at $288B (vs. $164B for Vodafone). Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- As far as 3G is concerned, GSA reported 293 WCDMA commercial launches worldwide with over 270M 3G users (66% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 75-80% penetration. 3G has picked-up steam in both western Europe and North America per our forecast in the 2005 cover story article “3G: Hitting the Mass Market” published in the Wireless World Magazine. Western Europe and US are approximately at 25% 3G penetration (Italy being the exception reaching 40%).
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and has been having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas. In India, regulators are considering inviting bids for the 3G spectrum from foreign entities as well.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. In terms of 4G, there is a strong momentum behind LTE, UMB in its current incarnation is practically dead, and proponents of WiMAX are pushing the technology as a 4G candidate, though it is starting to lose its time advantage.
- In terms of applications, messaging accounts for lion-share of data 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 captured industry’s imagination. 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.
- 2007 also saw the demise of some high-profile MVNOs like Amp’D. Helio continues to struggle while the newer ones like Sonopia and Blyk are testing the treacherous waters with different business models. Asian market is also opening up for MVNOs.
- Nokia eclipsed 100M/quarter unit sale three times in 2007. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokia’s global market share stood at 40.2%.
- While the talk of “Open Access” and “Open Platform” consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizon’s “Open Network” initiative elevated the consternation in the ecosystem.
- Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia launched its ad service as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space. In a matter of weeks, several billion dollar transactions took place highlighting the intensity in preparing for the next battleground. The estimated market for mobile advertising in 2007 was approximately $2.3B with messaging, search, and browsing accounting for over 84% of the revenues.
Your feedback is always welcome.
Disclosure: Some of the companies mentioned in this note are our clients.
Mobile Industry Predictions – 2008 January 1, 2008Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carriers,European Wireless Market,Indian Wireless Market,Intellectual Property,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,MVNO,Privacy,Smart Phones,Speech Recognition,Unified Messaging,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 9 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.
The winners are:
David Cushman, Director, Emap
Larry Shapiro, VP, Disney, and
Keith Kostuch, SVP, Alltel
Congrats and Thank you.
Now onto the survey analysis.
Figures above and below summarize the responses. We requested respondents to rate the probability of an event happening in 2008 on a scale 1 to 5. 1 being “Not a chance” to 5 being “100% probability” The figure above summarizes the overall probability of the event happening. The figure below provides the breakdown of responses.
1. Will Google introduce a Google Branded Phone in 2008?
Will it? Won’t it? 44.5% gave it a 75% or higher chance of happening while 40% thought it ain’t happening. GPhone is a temptation Google will find hard to resist though a lot will depend on how various initiatives and partnerships shape-up on the ground. In any case, expect another major announcement in the next 2-3 months.
2. Will Google play to win in the 700MHz Spectrum Auction?
Google has played the spectrum chess game effectively. Almost 50% respondents gave it a 75% or higher chance of Google winning the bid. Though expectations are high, Google is unlikely to play to win. Services business is not their cup of tea, they could still fund the Clearwire-Sprint deal but that investment can be spent differently to get better end-results, i.e. mobile ad revenue.
3. Will Microsoft launch its own mobile phone?
Unless Google comes out with GPhone, Microsoft will stay content with its operator distribution strategy. 63% of respondents gave it less than a 25% chance of Microsoft releasing their own phone. If GPhone comes out and gets some traction, expect Microsoft to get its “fast follower” strategy into high gear.
4. Will Mobile Payments get traction in North America and Western Europe?
Only 9% thought it is a sure bet for 2008. True mobile commerce hasn’t really started in the western world. While there are significant movements, 2008 will just be a “lay the groundwork” year for mobile payments.
5. Will WiMAX regroup from its setbacks?
Only 35% gave it a 75% or higher chance (of WiMAX resurrecting itself esp. in the US in 2008). A lot depends on how Mr. Hesse deals with Sprint’s WiMAX business. Indications are there will be a deal with Clearwire to off-load the risks via some external investment (Google?).
6. Will Helio survive 2008?
Almost 70% respondents thought Helio won’t make it. Given the flameout of some of the prominent new-generation MVNOs, it is hard to see how Helio will see 2009. It will all come down to how persistent is SK Telecom. Earthlink doesn’t have the bank balance to keep funding this initiative.
7. Will Verizon truly open-up its garden for third-party visitations?
Only 5% thought it is a sure bet for 2008. Verizon’s open posturing was more to ward off any regulators and to improve its image. There is unlikely to be any meaningful progress on this front this year.
8. Will 2008 be the inflection year for Mobile Advertising?
42% gave Mobile Advertising a 75% or higher chance for rapid growth. Market will mature, more consolidation, some privacy gaffes but overall things are looking up for mobile advertising.
9. Will Femto-Cells gain any significant momentum in 2008?
It will be an introduction and experimentation year, so no significant traction is expected. Over 52% thought Femto-Cells will be just a buzz word in 2008.
10. Will Nokia be able to extract iPhone-style rev-share from carriers in 2008?
Less than 20% thought Nokia will be able to do an Apple when it comes to rev-share arrangements. For OEMs, going direct to the consumers was considered treachery to the sacrosanct relationship with the operators. Until Apple showed up with iPhone. Now, Nokia is putting its services strategy in motion and is building a direct relationship with the consumers worldwide and it has a good shot at pulling it off though it will be a long haul.
11. Will Palm survive 2008?
Only 8% gave it a 100% chance of surviving 08 as an independent entity. It will be difficult for Palm to stay in a status-quo mode. They desperately need a hit device that can give them some breathing room. Given all the operational and strategic problems the company is having, a sale is likely.
12. Will iPhone truly open up?
Over 45% thought iPhone won’t open-up in any meaningful way. Apple has built-up one of the most profitable closed empires in the digital world. Are they about open things up? While the iPhone SDK is scheduled for early 08, don’t hold your breath on accessing the critical native APIs.
13. Will there be more unsubsidized devices introduced in the US market in 2008?
Almost 49% thought we are likely to see another unsubsidized device in the US market this year. Nokia is looking to go direct and some GSM handset manufacturers are likely to entertain the idea of testing the market with unsubsidized devices.
14. Will Mobile TV move the needle in 2008?
Almost 70% thought mobile TV won’t make much of a difference in 08.Though AT&T is slated to introduce MediaFLO to join Verizon in the Mobile TV services market, lack of devices and better pricing models will hinder wide adoption in 2008. However, downloadable video and VOD content will experience significant growth.
15. Will Android make a dent in handset shipments in 2008?
Only 15% gave it a more than 75% chance this year. It is going to take some time for Android plans to mature and materialize. Don’t see any material impact in 08.
Of course, 15 questions can’t cover the whole industry. As pointed out our respondents, there are a number of other issues and opportunities that will shape the ecosystem – Rise of Facebook as social networking OS for mobile (social networking as a whole starts to go mobile), LBS beyond navigation, Rev-share shuffles, Chinese OEM start to become prominent in the western world, China and India continue to dominate in net-adds, Mobile device security becomes a nightmare for corporate IT, Consumers wake up to mobile privacy snafus and risks, Will Android spread its tentacles beyond nicheosphere, 3G iPhone, Does China Olympics hold any surprises for the mobile industry? Launch of projection handsets, NFC handsets, IMS .. and much much more ..
All in all, consternation and debate will continue into 2008. We will analyze, dissect, and report as events unfold in the new year.
Look forward to the continuing dialogue and meeting with you in person.
Your feedback is always welcome.
Stanford University Program – Future of Indian Mobile Value Added Services (MVAS) Market December 8, 2007Posted by chetan in : 3G,AORTA,ARPU,BRIC,Carriers,India,Indian Wireless Market,Intellectual Property,Japan Wireless Market,Mergers and Acquisitions,Messaging,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Smart Phones,Speaking Engagements,Speech Recognition,Unified Messaging,US Wireless Market,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 18 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,
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.
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.
Speak your message June 19, 2007Posted by chetan in : Speech Recognition,Unified Messaging,US Wireless Market , add a comment
In the US, one state after another is banning not only talking while driving but also messaging while driving (the latter can of course be deadlier of the two). So, how can one keep chatting away. Enter TravellingWave. With some sophisticated voice-entry technology, it is like Tegic for your voice. Helps dictate your message quickly and accurately. How soon something like this will be in the phones? Hard to tell but speech is becoming a way to interact with applications already, it won’t be long before messaging is also included in the mix.
Disclaimer. I am advisor to the CEO of TravellingWave.
US Wireless Data Market Update Q1 2007 May 15, 2007Posted by chetan in : 3G,AORTA,ARPU,BRIC,Carriers,European Wireless Market,Indian Wireless Market,Intellectual Property,Japan Wireless Market,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,Smart Phones,Speaking Engagements,Speech Recognition,Strategy,Unified Messaging,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 3 comments
US Wireless Data Market Update – Q1 2007
US wireless data market continues to grow at a steady pace offsetting any decline in voice revenues. Growth in both enterprise and consumer segments resulted in a $5B quarter for the industry (by comparison, in 2004, the total data revenues for the year were $4.6B). Given that approximately 60% of the revenues are from non-SMS applications and the subscriber penetration of data services is still low, we remain bullish on the US data market. However, as the subscriber penetration crossed 80% this month, the subscriber growth continues to slow down from its highs in 2005.
- US wireless data market got over the $5B mark in service revenues in any given quarter for the first time. Revenues jumped 12% from Q406 and over 68% from Q106 to approximately $5.5B for Q107.
- Overall ARPU remained at the same levels as Q106 and Q407, which speaks to the value of data revenues in the declining voice revenue market. While voice ARPU declined 6%, data ARPU rose 46%. The average ARPU in the US stands at $8.34 or almost 16% of the service revenues.
- The strongest growth was experienced by Verizon whose data revenues jumped 83% from Q106 to $1.6B. While Sprint still leads in absolute data ARPU numbers, Verizon is likely to take that mantle by Q307. Sprint with $9.25 was ahead of Verizon at $8.7, AT&T at $7.88, and T-Mobile at $7.5 in data ARPU
- The % contribution of data to service revenues jumped from 11% to 16% during the last year. Verizon leads with 17.4% with AT&T at 16%, Sprint with 15.7%, and T-Mobile at $14.4 close behind.
- US wireless data market continued its rapid growth in 2006. Wireless data service revenues jumped almost 84% to approximately $15.8B (from $8.6B in 2005). The service data revenues are likely to top $27B in 2007.
- In terms of net-adds, the numbers declined 17% from Q406 to just over 5M new subs dropping the rate from 1.92subs/month in 2006 to 1.66 subs/month in 2007. Some of this is expected due to seasonal boost in Q4 however, the decline in net-adds over the course of last 3-4 quarters is indicative of slowing market as discussed in our quarterly updates last year. With subscriber penetration crossing 80%, sub-5M quarters will become the norm rather than the exception. Carriers will have to focus on increasing customer lifetime value and not rely solely on new subs to boost revenues.
- The overall subscriber penetration currently stands at approximately 80%.
- The top three carriers again surpassed $1B/quarter (in data revenues) mark with ease, in fact Verizon and AT&T crossed the $1.5B mark with $1.6B and $1.5B in data revenues respectively. Apart from Sprint, all remaining top four operators experienced double-digit percentage growth
- Verizon narrowed its distance from AT&T. Only 1.5M subscribers separate the two. In Q106, this number stood at 2.8M. Except for Q406, Verizon has added more new customers every quarter (AT&T took the honors last quarter) for past several quarters. Though industry is waiting with much anticipation the release of iPhone by AT&T, I mean, Apple, it is not going to have much impact on the Q2 numbers.
- Helio and Amp’D boasted $100 ARPU and 100K subscriber base but the burn rate and Cost of Customer Acquisition remains quite high.
- Though the overall penetration of messaging is around 40%, in terms of total number of messages in the network, US had another blockbuster quarter. Verizon with 22.75B, T-Mobile with 16B, and AT&T with 14.23B messages (SMS and Multimedia messaging) were the leaders. Notice T-Mobile’s performance with less than half the number of subscribers compared to its peers.
- Q1 also saw the introduction of MediaFLO from Verizon and Qualcomm with AT&T slated for a Q3 launch. The DVB-H camp appears to be disoriented and still looking to move beyond trials to committed launches. Though potential of mobile video is there, we need to be reminded that the current penetration is 2-3% indicating a long-road ahead. However, the user experience on MediaFLO is stellar and if business models fall in place, the future looks good.
- Verizon indicated over 100M in application downloads up over 36% from last quarter. With growth in data-card usage and other data apps, the revenue contribution from non-SMS apps is close to 60%. Even with many of the application below 25% penetration, these trends bode well for the US mobile data industry and the stability of ARPU in general. We expect the year to end at approximately $11 in data ARPU or 20% of the service revenues.
- Amongst other initiatives, AT&T’s banking effort and Visa’s NFC push are noteworthy.
- WiMAX has started to show on the radar screen though not so much in devices. Clearwire reported 258K , $32 ARPU, and $343 in customer acquisition costs. Sprint is planning to launch some UMPCs and data cards with its WiMAX push later this year. Despite these launches, position of WiMAX in western markets remains tenuous.
- As we move into Q2, while Motorola is recovering from ROKR, iPhone is the one to die for though RIM is ahead of the CURVE, and Helio’s OCEAN has set sail. Nokia’s N95, LG’s Prada, and Samsung’s Upstage are vying for attention. With iPhone announced, media rumor mill focused on gPhone.
- There was tremendous activity in the area of Mobile Advertising. There is a lot of confusion around what it means. All carriers are active in the space. Even T-Mobile is running trials. There is debate around how long the carrier influence on this segment will last.
- Though Nokia continues to struggle in the US market, it shipped over 91M handsets worldwide managing a 35.7% market share at the end of Q107. Motorola’s share dropped dramatically to 17.8% from 22.8% in Q406. Samsung seemed to have benefited from the slump of its rival by upping its mark share by two points to 13.6%. Overall the handset vendors shipped over 250M handsets in Q107.
- In terms of investment, over $1.6B was invested in wireless related companies/startups in Q107. (Source: Rutberg)
- US wireless carriers maintained their strong showing vis-à-vis their peers worldwide. Verizon, Cingular, and Sprint maintained their ranking # 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for Q107. US is the only country with 3 operators who generated $1.4B or more in data revenues in the quarter.
- For the third straight quarter- TMO US outperformed its parent TMO Germany.
- Internet brands with Google and Yahoo in particular are pursuing an aggressive subscriber acquisition strategy.
Your comments are always welcome.
Mobile Advertising Panel Roundup April 19, 2007Posted by chetan in : AORTA,ARPU,Carriers,CTIA,Indian Wireless Market,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Search,Mobile TV,Mobile Usability,Smart Phones,Speaking Engagements,Speech Recognition,Strategy,Unified Messaging,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 8 comments
Yesterday, I had the distinct honor to present and moderate a PAN-IIT event on “Mobile Advertising – Technical Challenges and Business Opportunities” at Google’s Kirkland offices.
I will get into the panel discussion in a minute. First, would like to join everyone in paying our sincerest condolences and prayers to the families of Prof. G.V.Loganathan and rest of the folks who were lost in the tragic Virginia-Tech incident. Prof. Loganathan was a fellow IIT alum and colleague and friend of many in the community.
Mobile Advertising Panel Discussion
Our illustrious panel included:
- Brendan Benzing – VP, Products and Marketing, Infospace
- Jai Jaisimha – VP, Engineering, Medio Systems
- Kosar Jaff – Engineering Manager, Google
- Victor Melfi – EVP and CSO, VoiceBox Technologies
Decades of experience in Mobile, Internet, and Advertising.
I started the discussion by giving a broad overview of the mobile advertising industry and some of the things that we should be thinking about. In random order, they are:
Mobile Advertising means different things to different people: Depending on a company’s focus, mobile advertising means different things to different companies. There are over a dozen different channels or strategies at our disposal in this framework, for instance –
- ¨Messaging – SMS/MMS
- ¨WAP/XHTML – on-deck/off-deck
- ¨Search – Mobile, Media, Local
- ¨Video – Unicast, Multicast
- ¨Audio – Streaming, Podcast
- ¨Downloadables – Games, Applications (BREW/JAVA) – Interstitials/In-app
- ¨Directory Assistance/ Call Inst.
- ¨Code based – Barcode, QRcode, Images
- ¨Bluetooth, NFC, WiFi, others
No one provider offers capabilities across a majority of them, you could argue that there is no need but from an advertiser’s perspective, the situation demands aggregation and simplicity.
Forecasts: I put up a graphic that included the US mobile advertising forecasts from several leading analysts and asked the audience to guess the timeframe for the same. The original figure is below –
This is a reminder that a) it is hard to forecast when you are starting from zero and b) we should learn our lessons from history. 2006/7 forecasts stand at
It is not a question of whether these forecasts will prove to be accurate in 4-5 years time, but what will it take to make these forecasts real. Can we learn from the last time around and apply the lessons to this cycle?
Japanese Mobile Advertising market: Clearly, Japan has had more experience with Mobile Advertising than rest of the markets. In 2006, the average revenue/user/year stood at around $4. For US, this figure was less than $1.
Mobile Advertising value chains: As I mentioned above, mobile advertising means different things to different people and hence there are different value chains in place though they are merging rapidly.
Measurement: It is critical for the success of the industry to have measurement tools in place. I discussed Ogilvy’s Lenova campaign that generated 188% lift in brand awareness and 156% lift in product recall.
Mobile Advertising Framework: Finally, I presented my view of the technical advertising framework that is needed to make the experience work for the user
We had a packed house and a very engaged audience. We had influential engineers, VCs, biz dev, mobile enthusiasts in the mix. I asked the panelists to summarize their view of the Mobile Advertising space and what they saw as some of the challenges going in. (paraphrasing of their comments is mine)
Everyone was bullish on the segment, however they cautioned that it will take time, as the “reach” is not there yet. Jai mentioned the oft-quoted 15% penetration for browsing in the US as a limitation of “reach”. Kosar discussed Google’s initiatives in Japan where they are doing a lot of testing to hone in on the “user experience”. Victor talked about the challenges of “user interface” and that voice represents a good solution to cut through the archaic menu hierarchy to find things. He is not worried about the supply and demand but the brokerage in the middle. Brendan talked about the “ecosystem friction” wherein we have too many players for advertisers to deal with and an aggregated or simplified view is needed for the advertisers to jump in with both feet. Coming from the broadcast and Internet marketing background at TW/AOL, Brendan thought measurement authority like Nielsen is a must.
Kosar described the concept of “signals” that Google uses to discern “intent” and how mobile presents a great experimentation field to test some search techniques and algorithms that can also be applied to online search at a later date. The reason being low threshold for wrong results on mobile.
On the question of targeting, Brendan and Jai mentioned the use of demographic data available from the carrier to make search results (and advertising) better. Kosar said that Google’s focus is on tailoring experiences for device capabilities and cannot always rely on user preferences on mobile devices since they are not always available. They want to make sure an ad shows up where user expects it to show up. Google is concerned for both the user and the advertiser. Victor used to the run probably the biggest direct marketing research org in the world at Reader’s Digest and he thought that the targeting is actually much easier in mobile due “declared intent”.
There was some discussion on the meaning of mobile advertising and how promotions and marketing are part of the same mix. Jai said that recommendation is another form of advertising which appears non-intrusive and is actually useful for the consumers. Amazon gets a good chunk of their revenues from recommendation clicks. I myself find them quite useful and end up buying dozens of books this way every year.
Victor thought that the “promotions” piece (tied to local search) is actually going to be a much more lucrative business than the banner ads or even media search related advertising.
Kosar reiterated Google’s philosophy – “focus on the best products and experiences, and monetization opportunities will emerge naturally both for users and advertisers”.
There was active participation from the audience as well.
Katie Thompson from Trilogy (a prominent VC firm in PNW) wondered about the ad saturation levels we might be reaching and how do we address that and if agencies are worried about that aspect.
Mohan Venkataramana, President of IITPNW chapter and a veteran in the industry saw history repeating itself w.r.t. advertisements and evolution of the mobile industry.
There was general agreement that industry needs to focus on user’s needs rather than CPC and CPMs at this stage in the game. And that user privacy issues should stay at the forefront.
Another one lamented that first the carriers need to fix the voice quality, reduce data rate plans, and make things usable before consumers are going to tolerate ads.
Someone narrowed things down to two key aspects a) location and b) relevant targeting.
There were questions about the Japanese market and if it is different from the US and if that’s the reason advertising will take longer in the US. A lot of people misunderstand the Japanese (and Korean) market. I was advisor to the senior management team of NTT DoCoMo when they were active in the US and we used to laugh about the misconceptions and the myths that perpetuated in the US market. We dealt with this issue in quite a bit of detail in our previous book (co-authored with Dr. Nakamura, SVP, DoCoMo).
We could have gone on for the rest of the night but had to wrap things up. Mobile Advertising is a broad topic and it is hard to cover all aspects of it in 90 minutes, but touched on quite a number of items and honed in on a couple.
Thanks to our hosts Google for space and food, the panelists for an illuminating evening and spirited discussion, and the participants for making it a lively exchange.
CTIA Wireless 2007 Roundup April 2, 2007Posted by chetan in : 3G,AORTA,ARPU,Carriers,CTIA,Devices,Enterprise Mobility,European Wireless Market,Intellectual Property,International Trade,Japan Wireless Market,Mergers and Acquisitions,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Search,Mobile TV,Mobile Usability,Speech Recognition,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 5 comments
Orlando was the venue for CTIA Wireless 2007. Pre-show events include Mobile Entertainment Live (Billboard), day long seminars on Mobile Advertising and Emerging Technology. The main themes from the show were Mobile Advertising, NFC and Mobile Payments, Mobile TV, and WiMAX. This note summarizes the observations, interviews of executives, pre-show briefings, and commentary from the above shows.
First let’s do the numbers Just before CTIA, M:Metrics released some numbers from their most recent survey. At the end of 2006, amongst the western nations, US had approximately 11% 3G penetration with Italy leading the way with 27%. Photo messaging is picking up reaching 15-30% penetration in most markets. CTIA also released their survey numbers. 233M subs, 76% penetration, and $8.7 billion for the latter six months of 2006, up 82% from $4.8 billion in the latter half of 2005. You probably already knew most of the above after reading our research note here. Instat reported that for the first time the handset replacement market was greater than the new purchase market. Replacement market is expected to take 80% share by 2011.
Keynotes Attendees come to keynotes to be inspired, to get a sense of the direction of our industry. Unfortunately, some use the opportunity as a sales platform and rehash of press releases. What a waste of time and the platform. What an insult to the audience. I thought the best keynote came from EMI CEO Eric Nicoli, who first eloquently laid out the potential of the industry and then brought us back to reality by outlining the hurdles that we need to overcome to realize the potential. At the most basic level, it is all about simplicity, valuable functionality, and the right pricing. However, the highlight of the show was being in the same room (along with a few hundred others) with two former heads of state – Presidents Bush and Clinton.
Mobile Advertising As expected, the hottest theme out of this CTIA was Mobile Advertising. The pre-event seminar on the subject was packed with discussions and viewpoints from all parts of the value chain. The involvement of agencies was refreshing. They can help guide the industry by articulating the needs of the brands and agencies in an overall advertising framework, develop standards, and not develop point solutions that won’t scale beyond MDF campaigns. But they are keenly aware of mobile and reported positive results from their tests for some big brands. David Rittenhouse from Ogilvy noted that Lenova experienced 188% lift (n=1495) in awareness from a mobile ad campaign. Third Screen reported up to 7.5% click rates on its network. Still missing were Internet players like Google and Yahoo. Vendor driven standardization processes are not very productive and take too long to become meaningful. Since, mobile advertising is the most buzzable topic in the industry right now; companies are adjusting their positioning to become mobile advertising players (akin to becoming Web 2.0 compliant). There was some debate whether off-deck impression is worth more than an on-deck impression. CPMs are a bit out of whack and will need to drop and stabilize. Premium CPMs range from $27-35 going as high as $60. User profile is of course the holy grail of mobile advertising. Visa demonstrated that mobile advertisements isn’t really limited to messaging, keyword auction, and banner ads, but also includes promotions that drop in your applications based on your transaction history. Can carriers stop them from running this downloadable app on the device? They are running some trials to find that out. Code/Image-based advertising is also picking up – Qcode, NFC, barcodes, pictures, etc as input to trigger content/ad delivery is making its way to the US.
Amongst the various enablers (that I was able to talk to and look at), The Hyperfactory has the most comprehensive view of the space and it shows in their campaigns. Not only cross carriers and cross handsets, but also cross modality and cross countries. Mobile Advertising needs to seamlessly fit in the overall digital strategy of a brand or else there will be too much friction. GSM association has taken some lead in helping define standards in this space. MMA is also updating its best practice guide though it needs to do more to expand its vision. Companies that made their presence felt were Third Screen Media, Ad Infuse, Millennial Media, Yahoo, Smaato, Mindmatics, Bango, Medio, JumpTap, Blyk, Admob, iLoopMobile, GreyStripe, Enpocket, and Rhythm.
Not to be outdone, Alcatel-Lucent and Motorola were also showing some future mobile advertising concepts that allow for cross medium advertising. For e.g. purchasing or activating advertising subsidized content on one device (like mobile) and viewing on another (like IPTV) and the experience is subsidized and interstitialized with advertisements.
Note: As some of you know, we have been involved in helping players in the value chain with mobile advertising strategy for the past two years. Well, we are now writing the book on it, literally! This book on Mobile Advertising is a collaboration with two brilliant co-authors and is going to be published by a major publisher. It will explore the key elements that will make mobile advertising tick. If you know of interesting case studies or people we should talk to, please do let us know. Check out our two part series on the subject published in Wireless World Magazine. Track the progress and become part of the conversation and the book at http://www.chetansharma.com/blog/category/mobile-advertising
Mobile TV With Mediaflo’s launch, the discussion in the US has changed from unicast/multicast to broadcast. With Cingular and Verizon adopting Mediaflo, it is hard to see DVB-H’s future in the US. Spent some time with Dr. Kamil Grajski, Chairman of the FLO forum. FLO’s advantage comes from better channel switching time and slightly better spectrum efficiency. The goal is to pursue individual partnerships by geography that fuses spectrum, technology, and content. KDDI partnership is such an example. The quality is very impressive and the user experience raises the bar. With the introduction of clipcasting that enables some personalized content filtering on the device (e.g. Entire NASDAQ quotes are streamed but only your portfolio is displayed), broadcast can extract more value from the spectrum. Though Mediaflo has an edge, the future beyond the US shores is tough. Majority of Europe is going to go to DVB-H and similar standards. But, the potential customers are not only cellular operators but also include cable and satellite operators. Companies looking for Triple and Quad play strategies will have to come up with their mobile Broadcast strategy in the next couple of years. While Mobile TV has been in the headlines for some time, the penetration in the US remains quite low – around 2% and represents less than $350M revenue in 2006 (European trends are similar). For the opportunity to scale, pricing and business models will need to be adjusted to market realities. Mobile TV has been around in Japan and Korea for a longer duration and has reached critical mass penetration. Unicast becomes expensive if the usage gets into double digits because pricing pressure doesn’t allow for monetizing by the MB. Broadcast becomes the natural solution but it is limited by spectrum, less interactivity, and lack of handsets in the short-term. Clearly, hybrid models will continue to exist for the foreseeable future. For broadcast, it is about the spectrum first and the technology second.
Near Field Communication (NFC) VISA has been running NFC trials around the country for some time with VISA credit cards (30K) and POS terminals (50K). The goal is to do NFC on the phone. VISA also released numbers from their NA survey (n=800) – 57% interested, 64% of Gen X/Y will consider switching carriers and credit card for mobile payment capability, by 5:1, consumers prefer to have charges on their credit card bill rather than their phone bill. The first generation of NFC phones is hitting the US market later this year. Kyocera demonstrated buying from a vending machine, downloading content, and doing internet transactions using an NFC-enabled prototype handset. It also had a biometric fingerprint sensor. Korea and Japanese market have been using phone as a wallet for some time (e.g. DoCoMo’s FeliCa) and it will be great to see such enhancements in Europe and North America. There is a demand for such solutions, Visa is providing leadership, and hopefully, the ecosystem will step up. Last year, in US, $7.2Trillion dollars worth of consumer financial transactions took place. Taking a small cut of this pie will be a big deal. Enabler to watch – Ecrio.
Biometrics NTT DoCoMo introduced handset with biometric capability in 2003, we expect to see it introduced in the US in first half of 2008. AuthenTec has been dominating the market for both PC/laptops and mobile phones. Japan has reached about 10% penetration for biometric sensors in mobile devices. ROW is just getting started. HTC is introducing some devices (for the US market) with biometric sensors later this year.
Mobile Search Google and Yahoo announced their next release of mobile/local search. Google’s attempts at mobile search reminds me of Microsoft’s early attempts to build an OS for mobile phones. I thought AskMeNow’s semantic search was pretty good though they are still working on indexing which can take a long time due to understanding content. With the recent purchases of BeVocal and TellMe, voice is getting its due attention. V-enable showed their local 411 app and Nuance talked about voice-enabled music search. Voice has become an integral part of any mobile search (and ad) strategy.
Interesting handsets While the industry is waiting for the June launch of iPhone, several new concepts and phones emerged at the show. Hopefully, NA operators got inspired from the handsets available in Asia and will bring some of that experience here. Samsung launched its dual-faced Ultra. While, it is a first for the industry, the user experience left lot to be desired, the Sharp touch UI is confusing. DoCoMo had the best selection on display. Flipstart is launching a $2000 mobile device (UMPC form factor), which has full PC running on it. It does have some clever user experience enhancements that make the usability acceptable but I am not sure if the price point will hold in the market where you can find an equally powerful laptop for half the price.
User Interface Apple’s iPhone has raised the bar on device user experience. Zenzui announced their UX technology (based on Microsoft IP) that takes us away from the boring menu-based navigation schemes. Punchcut showed what’s possible utilizing the idle screen. Flipstart had some clever UX enhancements that I hope can get integrated into other forms of computing. Biometric sensors also surprisingly prove to be a good navigation element, better than 5 key dial and even iPOD dial.
Simplicity EMI’s Nicoli had emphasized on simplicity of applications and services. AT&T’s COO Randall Stephenson echoed similar sentiments. It is a no-brainer, right? So, why do we make things inherently complex and hard-to-use? Hasn’t Apple taught us enough? Ontela’s mobile imaging platform is following on Apple’s footsteps. The technology allows you to take the picture and store it on any other device or destination within 30-60 seconds. No user intervention. It just works.
GYM is in the house It was the first CTIA with Google and Yahoo having their own booths, announcing their arrival. Their presence was telling of the battles to come. Microsoft has been coming to the show for some time but primarily to show their devices and talk about enterprise (email) applications.
LBS and Telematics There were a number of firms talking about telematics or navigation on the phone or devices for your car. Navteq, TeleAtlas, TeleNav, Inrix, Pharos, Kore, deCarta, and many others displayed their wares. On the consumer side, navigation is getting embedded into Local search apps which are enhancing the user experience quite a bit. FindIt and Google Maps are two examples. TCS is working on a framework for LBS based mobile advertising that allows carriers and users to control location availability to applications, something I wrote about back in 2001. Sprint has raised the bar by opening the APIs for developers and loosening the pricing friction. GSM operators are awaiting the arrival of OMA compliant phones. European carriers are targeting Christmas 2007 to launch several OMA SUPL devices while US will see such devices from Cingular next year. The best navigation was from Churchill Navigation which gives you a bird’s eye view in a fun-interactive experience.
WiMax. Sprint showed some potential launch devices for their WiMax service. Initially, the focus is limited to data cards and UMPCs. There will be restrictions on data usage and the move to handset form factor devices is uncertain. Samsung showed video conferencing at 12fps and VoIP on WiMax devices (PDA form factor). Since Intel put a boat load of money into Clearwire and Sprint’s endorsement, WiMax industry has been surging ahead but long-term viability is still not certain, how fast will device pricing drop?
China While China can’t make up its mind on TD-SCDMA, Chinese manufacturers are increasingly competing with the big boys, the handset rollouts and infrastructure wins are a testament to that. They should just let go of their obsession with TD-SCDMA, there are plenty of opportunities for their manufacturers. Canada, Finland, Taiwan, Sweden, Spain, Ireland, Korea, and UK also had Intl pavilions.
The ecosystem friction The mobile data ecosystem tension is bubbling up. It was highlighted in the first session of the conference – Jim Ryan (Cingular) vs. Larry Shapiro (Disney) well moderated by Tom Wheeler (past CTIA President). Carriers want control (some more than others) so that they can manage user experience and minimize customer support calls. Content companies want to bypass the carrier and go direct to the consumer. Things are improving but not at the pace everyone would like it to be. This debate is not going away. Perhaps, CTIA can demonstrate some leadership in kicking-off some content interoperability (and treat ad as content) initiatives.
Test equipment Whether it is entertainment or enterprise, very little attention is given to testing and monitoring data applications and services. Keynote launched its on-demand platform for testing and monitoring for developers who for $500/day can test on live devices anywhere in the world. This service can significantly lower down the cost of procuring handsets and doing testing.
Coolest booth In my travels around the world, in every major city, you can’t escape the massive ads from Samsung and LG. CTIA is no different. The plastered ads all over and the booth from these two Korean companies were clearly the pick of the show with LG edging out its arch-rival by creating a gigantic music player.
- Performance of the free WiFi at the convention center was much better than previous CTIAs.
- Community Currency – Hookmobile has been working with carriers and content owners to create variable currency for content – branded, ads, or UGC. It is around Mobile Trading Community and using content to digitize trading cards, create some exclusivity and hence some viral effect. In future users can create their own trading cards for their social network. This is a good use for the MMS infrastructure that is collecting dust right now.
- Enterprise – Mobile Advertising, NFC/Mobile Payments, and Mobile TV overwhelmed any discussion on enterprise mobility. Motorola (Symbol) launched their Enterprise Digital Assistant – MC35.
- M&A scene was as dry as the Sahara desert, but several funding press releases hit the wires. Deal of the week – Verizon’s $6 billion deal with Alcatel-Lucent.
- FMC. Lot of FMC discussion. As triple/quadplay and convergence get closer to reality, there is a lot of focus on FMC. From IPTV to Mobile to Vo[X] to Push-to-X, there were lots of demos and discussions.
- DoCoMo showcased their “Bone Conduction Receiver Microphone” that helps hearing in noisy locations and for people with hearing difficulties. Very cool.
- 3rd Dimension demonstrated a live mobile traffic cam application.
Your comments are always welcome.
CTIA, MES, MECCA Fall 2006 Roundup September 18, 2006Posted by chetan in : 3G,4G,AORTA,ARPU,Carriers,CTIA,Devices,Enterprise Mobility,Federal,Gaming,General,Infrastructure,Intellectual Property,Location Based Services,M&A,Mergers and Acquisitions,Microsoft Mobile,Middleware,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,MVNO,Networks,Partnership,Patents,Smart Phones,Speech Recognition,US Wireless Market,Wireless Value Chain,Worldwide Wireless Market , 2 comments
Los Angeles was the venue for the annual CTIA Wireless IT and Entertainment 2006. Pre-show events included Mobile Entertainment Summit (Chetan Sharma Consulting was a research partner) and MECCA. This note summarizes the observations and commentary from the above shows.
First let’s do the numbers. Just before CTIA, M:Metrics released some numbers from their most recent survey. Amongst the western nations, US has just over 5% 3G penetration with UK leading the way at 11.4%. Spain and France are at 8.9% and 7.9% respectively. In the US, Verizon is ahead with over 17% 3G subscriber penetration followed by Sprint at 6%. CTIA also released their survey numbers. 12.5 billion messages in the month of June 2006, up 71% from 7.3 billion messages in June 2005. There was 70% growth in service data revenues. You probably already knew most of the above after reading our research notes here and here, weeks and months ahead of the mainstream media.
MES and MECCA. The central theme from both the shows was community and advertising. The buzz shifted from “Mobile Search”, “Mobile TV”, and “IMS” during the last couple of shows to “Mobile Advertising”. The prospective lifecycle of product development goes like this – build community (whether it is around user generated content, games, artists, bands or other) and monetize the community by advertising. The permutation and combination of the business models are: free application and/or free content, subscription, earn credits for watching ads, more credits for feedback/surveys, etc. Companies who are able to build a large mobile community (at least 5-10M active users) and gather some specific demographic data become hot property of the moment. It is important to note that the mindset for an exit strategy for companies in the social media and user generated content space has changed a bit. Instead of getting acquired by software or computing companies like Google and Yahoo (yes, yes, they are media companies as well) to traditional Media companies like FOX and HBO. This was quite apparent in a number of discussions I had with the executives from new media content companies.
Enterprise focus, Finally!. I have been involved in the mobile enterprise space since 1999 and have been coming to the CTIA for a number of years. The fall show is supposedly about dual personalities of Entertainment and Enterprise. For the first time it felt that the Enterprise side was given its due respect and was on an equal footing to its sibling personality – the glamorous, the attention-seeking “Entertainment”. CTIA started the conference with an Enterprise panel discussion (of course after the surprise Governator keynote). Though the discussion was too high-level to provide any key insights, CIOs confirmed what is well known now that the spending on wireless-data related projects is going up significantly. A surprise revelation was that China’s growth in enterprise solution is among the highest in the world. It is all about productivity and ROI. Companies are also looking to outsource their IT operations related to wireless devices. Handset guys are coming out with Enterprise targeted devices though we are still in the very early stage development of the cycle. Throwing an email client on the device doesn’t make it an enterprise device. Email client is a given in all new handsets now. When will we start seeing embedded enterprise apps? Mobile web services clients and frameworks?
It’s an Ad, Ad, Ad, Ad world. Mobile advertising is clearly the buzz of the moment. Everyone wants to build an ad-supported model and also build their own ad network. Currently, most of the talk is around simple rotation of ads or tying ads to the category the user is interacting with. Not much attention on demographics, profiles, or context. That’s where the “big” impact and value will come into play. Currently, carriers sit on goldmine of user data that is begging to be leveraged for enhancing user experience. Unexpectedly, they sit on a big opportunity that will start to change the advertising industry over the course of the next 5 years. To see where things are going, we just need to look at trends in Japan and Korea. It was interesting that in almost all of the mobile advertising discussions, nobody talked about the elephant that was not in the room – Google, trendsetter in monetizing content. Also, missing were the agencies and their perspective. I have looked at this space quite a bit over the last two years and while agencies are excited about the prospect, they are not ready to jump yet. It will be quite entertaining to watch the new-generation media companies compete/collaborate with the carriers. For the next 3 years or so, carriers will still have an upper hand and if they execute it right, could dominate the space for a long time to come. People also talked about different types of ads – IVR, Voice, Interstitials, banner, in-game, before-and-after, etc. Of course, click-to-call or click-to-action are going to be an especially important ingredient of this game. Sprint Nextel and Enpocket announced their mobile advertising program. Amp’D also announced mobile advertising plans with Rhythm New Media. Bango launched its Ad initiative as well. Virgin mobile’s Ad program “Earn Airtime in Your Spare Time” is innovative. They are truly in tune with their subscribers.
FMC. Kyocera had some trial handsets that supported WiFi/VoWiFi. One could theoretically make VoIP calls and download content over WiFi but will carriers allow it and how long will they resist. Non-traditional carriers like the MVNOs and the cable operators are very interested in exploring bundling offers. Sprint also announced EV-DO Rev A data cards that provide data rates up to 400-600kpbs. Cingular announced that they will have a majority of the top 100 markets deployed with UMTS/HSDPA by year-end. However, the choice of handsets is still missing and as such adoption for Cingular is behind schedule.
4G. While, we are just starting with 3G (except Japan and Korea), seven of the wireless industry’s leading carriers have joined forces to “develop a common vision” for the future of mobile networks technology. Members of the Next Generation Mobile Networks initiative include China Mobile, KPN, NTT DoCoMo Inc., Orange, Sprint Nextel Corp., T-Mobile and Vodafone. The group said it has created a set of requirements “for a future wide area mobile broadband network designed to offer enhanced customer benefits by delivering competitive broadband performance alongside high levels of interoperability.” In plainer terms, the NGMN appears to be devising a roadmap for interoperable 4G networks. You can sense the arm-wrestling to come. 4G could end up having some serious IPR issues if all major patent-holders don’t participate. The 3GPP licensing regime has been a failure, industry needs to be proactive, dedicate resources to the problem and get is solved to the extent it can.
Telematics. The number of firms talking about telematics or navigation on the phone or devices for your car increased quite a bit. Navteq, TeleAtlas, TeleNav, Inrix, Pharos, Kore, Teydo, and many others displayed their wares. On the consumer side, navigation is getting embedded into Local search apps which are enhancing the user experience quite a bit. FindIt and Google Maps are two examples. There were enterprise focused solutions from Tierravision, LiveCargo and @Road.
WiMax. Spent sometime with Lars Johnsson, VP at Beceem Communications talking about the prospect of WiMax worldwide. Clearly, Intel and Clearwire’s announcement has reenergized the industry and taken some uncertainty out. Lars is extremely knowledgeable person on everything WiMax. He co-founded Flarion which got sold to Qualcomm last year. It looks like the benefits of 802.16e will render 802.16d useless in short order. “e” provides better link capacity, Forward Error Correction, power efficiencies, and optimization. The cost of building a WiMax modem is lower than the WCDMA counterpart. A number of cable and wireline players are looking for triple-play offerings. Beceem has strong partnerships with OEMs worldwide and is actively involved in several trials in Korea, Taiwan, Japan, India, and US. The biggest challenges are around interoperability (as always) and quick resolution of IPR issues. From an application perspectives, gaming companies are the ones watching it closely. Also, automobile media player vendors are interested in using WiMax for Broadcast video. Tropos believes that Mesh technology will continue to have relevance in a WiMax-enabled world as the practical ranges of base stations won’t exceed 5-10miles.
M&A. Some major M&A news at the show– Real acquiring WiderThan for $365M, Lucent acquiring Mobilitec for undisclosed amount, and FOX acquiring 51% stake in Jamba for $188M. This follows Sybase’s acquisition of Mobile365 last week for $400M. There are several factors at play. Clearly, some segments of the industry that have matured are facing price pressure and hence consolidation. Media companies are also realizing the potential and don’t want to miss out or get behind the curve so acquiring companies that have traction, not necessarily the best technology. Some of the valuations just don’t make sense but I guess some over-exuberance is to be expected at this time.
Handset launches. You might have missed the announcement; there was no Steve Jobs, no iPhone release. Pearl was probably the highlight of the show though plans had been leaked in the media sometime back. RIM has Razresque aspirations from the device. The big three didn’t have anything interesting. Nokia launched E62 (thankfully, taking a cue from Motorola, they are getting rid of their number scheme), however it is missing 3G and WiFi support of its European cousin E61. Kyocera had some interesting devices as discussed above. Sprint launched two EV-DO Rev A data cards from Pantech and Sierra Wireless. Cingular announced a $150 HTC Smartphone. Linux handsets are also on the rise. Obigo/Teleca had some nice tools/products for mobile Linux – Browser, IM, Media and Email client. The user experience was quite nice.
Mobile TV/video. At the last two shows, Mobile video and Mobile TV were all the rage. The solutions seem to have matured though uncertainty of its success remains (primarily around time-horizon to success). There are too many providers in the space offering solutions from individual codecs to end-to-end solutions, do-it-yourself toolkits (Nexage) to user-generated video solutions (ComVu, Juicecaster – ComVu’s one click mobile broadcast capability was pretty good) to niche demographics (Viva Vision is getting good traction in the Latino market). Various pieces of the mobile video puzzle have been commoditized, now, it is all about packaging. There were a number of Mediaflo handsets on display as well. The quality of Broadcast is really good. I saw some Broadcast TV services in Seoul earlier this year and the user experience is pretty good. My partner watched the entire South Korea soccer world cup game on his mobile device as he wasn’t near a TV. Once the market gets seeded with enough phones and service pricing settles to mass-market scale, we can expect good adoption rate for such services. Imagination Technologies out of UK showed some innovative SoC (System on Chip) solutions targeting Mobile Broadcast video. Some new names in the space are QuickPlay, Picsel (nice user experience), and Convisual. Expect some consolidation in this space over the next 12 months.
The ecosystem friction. The mobile data ecosystem tension is bubbling up. Carriers want control (some more than others) so that they can manage user experience and minimize customer support calls. Content companies want to bypass the carrier and go direct to the consumer. This was also evident in the Walt Mossberg’s grilling of the carriers as well as other conversations with participants in the value chain. Things are improving but not at the pace everyone would like it to be. Clearly, ecosystem only proliferates if it is allowed to make money. If certain sections of the chain get strangled, holes start to develop which pollutes the system.
User experience. Didn’t see much progress on the UX front. Saw a cool implementation from FAST for Optus in Australia where they used search technology to populate the Active Screen with user preferred content. Optus has been using this offering to entice users to 3G as it is not available on lower bandwidth network and is apparently having good success. Add context and some multimedia and it becomes very very compelling. It is one area that hasn’t been exploited that much yet. In the US Cingular’s MediaNet implementation uses the same concept but is more browser-based. In different sessions, carriers agonized over limited shelf space and mountain of content. That’s why man invented “mobile search”. The concept of “deck” is very limiting. Content needs to get exposed via search whether it is post-query or pre-populated dashboard based on context and preference.
Test equipment – Whether it is entertainment or enterprise, very little attention is given to testing and monitoring data applications and services. Keynote launched a really useful product offering (Mobile Device Perspective) that enables developers to test their app from distance on a live network and live devices and control it through manual steps or automation. Currently, such testing is done by flying a team of testers, test, and optimize. This offering can reduce the cost of such operations. I took a look at their R&D and test setup and found it quite compelling. TestQuest also showed a product along the same lines though it is more of a platform play than a service offering.
MVNOs. There is a realization that MVNO business is hard. The unrealistic expectations for customer growth are being recalibrated. It is still a viable business model but one has to give time and execute like a carrier. Virgin Mobile noted that it requires at least 2M subs before a nationwide MVNO (in the US) will cross the line from red to black.
IMS. Talked to Lucent and NMS about their pre-IMS solutions. NMS was displaying a technology around P2P mobile video sharing while talking (though the tasks happened in time-slice mode). Lucent had a solution “extensions” which converged PBX and Mobility. An example would be you dial a 4 digit extension on your mobile phone that connects you to the other party as if you dialed it from your desktop phone. BUT, networks aren’t there yet and devices will arrive a bit later. In the interim, companies are looking to stimulate the simulated IMS experience.
Funding news. Several funding news from the show, the one that caught my eye was $10m for Bubble Motion in VoiceSMS (funded by Sequoia Capital). It should be noted that there is prior art in this space and the likelihood that the company is infringing on somebody’s patents are high.
Coolest gadget. MyVu’s media viewer
Coolest booth. Infospace’s Tony Hawk show was probably the most exciting thing happening on the show floor. Watching the masters go swing-swong had the crowd go wild with ooohs and aaahs.
- Melodeo won a major podcasting deal with Cingular.
- Medio Systems announced the big Verizon deal (mobile search including use of voice as input).
- Hookmobile – Got a preview of the services coming out next week on all four operators. It is around Mobile Trading Community and using content to digitize trading cards, create some exclusivity and hence some viral effect. In future users can create their own trading cards for their social network. Carrier keeps 35% of the subscription fee. Hookmobile gets 27% and rest goes to the content guys. This could be good for the MMS infrastructure that is collecting dust right now. And yes, you guessed it right; there is an Ad model as well.
- New York City is going to use IPWireless technology to build a $500 million network for police, firefighters and other public-safety agencies
- Users of EV-DO data cards were much happy customers than free Wi-Fi users. Though things were better, under load, the free network comes to its knees fairly quickly.
- SpinVox had a simple but useful offering – converting voicemails to text messages. Use case – you are in a meeting, somebody leaves a voice message, can’t go out to listen, peek under the desk to see (the SMS) if it is important.
- SNAPin’s solution is designed to address Carrier’s customer calls. It wouldn’t be a stretch if carrier starts selling “the deck” to other companies especially in the airlines, insurance, and credit-card industry. You dial the number; phone captures it, goes into the system and brings you the answers to the questions you might be most interested in (in a data format).
Your comments are always welcome.
US Wireless Data Market – Mid Year Update 2006 August 13, 2006Posted by Chetan in : 3G,AORTA,ARPU,Carriers,Devices,Enterprise Mobility,European Wireless Market,Japan Wireless Market,Microsoft Mobile,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,MVNO,Networks,Partnership,Smart Phones,Speech Recognition,Strategy,US Wireless Market,WiMax,Worldwide Wireless Market , 2 comments
Download PPT – http://www.chetansharma.com/midyearupdate06.htm
- US wireless data market is growing at an impressive rate. Top 4 US carriers (Cingular, Verizon, Sprint Nextel, and T-Mobile) accounted for over $6.3B in wireless data revenues for the first half of 2006. Overall, wireless data service revenues exceeded $7B and the figures are likely to exceed $15B for the year 2006. This is almost a 75% jump from end-of-2005 number of $8.6B. The growth rate slowed down only slightly from 2004-2005 growth rate of 87%. SMS and data transport still drives bulk of data revenues but their percentage share is declining.
- Among the top 4 US carriers, Verizon has made the most impressive strides in the last 4 quarters, increasing their wireless data revenues by a whopping 114%. Next Sprint with 71%, T-Mobile with 65%, and Cingular with 54% also netted impressive gains.
- Verizon became the first US carrier to net over $1B in wireless data revenues in a quarter. Cingular was close second with $979M and Sprint with $935M are likely to cross the $1B mark next quarter.
- Sprint retains its leadership position of highest wireless data ARPU in terms of absolute dollar amount at $7.25 but lost its number one spot in the % data ARPU to Verizon which now leads the US carriers at almost 13%. Average data ARPU is now $6.3 or 12%.
- Overall ARPU (voice + data) increased slightly from Q106 but declined $0.27 from Q405. The general trend is towards slow decline. Data revenue is barely keeping up with the decline in voice ARPU. On an average voice ARPU has declined 8% from a year ago and data ARPU has increased 48%. Average Overall ARPU was $53.04. Sprint led with $62 followed by T-Mobile at $51, Verizon at $49.7, and Cingular with $48.4.
- If the current trends hold, Verizon Wireless is likely to surpass Cingular Wireless as number 1 US carrier by Q307.
- US had about 7M 3G subscribers by Q206, primarily from Verizon and Sprint Nextel. With Cingular joining the fray, the 3G growth is expected to accelerate with 2007 being the inflection year.
- US wireless subscriber penetration stands at approximately 74% and is likely to exceed 78% by the end of the year.
- Top 4 carriers added 12.7M subscribers from Jan-Jun 2006.
- The top 4 US carrier account for 79% of the subscribers, 86% of the service revenues, and approximately 95% of the wireless data revenues.
- US Off-net revenues for the year are likely to exceed $750M.
- Data ARPU of CDMA/EV-DO carriers was 20% higher than GSM/WCDMA carriers.
- Several high-profile MVNOs were also launched in the last few months and the overall results have been disappointing primarily due to poor execution, instant crowding effect, and competition from big 4.
- US wireless carriers are steadily climbing in their wireless data performance as compared to their peers worldwide. Verizon, Cingular, and Sprint ranked number 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for first half of 2006.
- The #1 carrier worldwide in terms of total wireless data revenue for the first six months of 2006 is NTT DoCoMo which has maintained its position for a number of years. It is now generating almost $900M/month from wireless data revenues.
- The top 10 carriers in terms of total wireless data revenues for 1H06 in order of rank are NTT DoCoMo, China Mobile, KDDI, Verizon Wireless, Cingular Wireless, Sprint Nextel, O2 UK, Vodafone Japan, SK Telecom, and China Unicom. (6 Asian, 3 US, 1 Europe. Who says US is behindJ). Vodafone Germany, TMO Germany, and TMO US are also closing in.
- All the top 10 carriers in the list exceeded $1B in data revenues for the first six months of 2006. China Mobile and China Unicom benefited from their huge subscriber base of 274M and 135M respectively while DoCoMo and KDDI did well because they are generating over $17 (or 28%) in wireless data ARPU.
- The top 10 carriers accounted for almost $24B in wireless data revenues for the first six months of 2006. The top 10 carriers account for approximately 700M (or approx 28%) subscribers worldwide.
- In terms of wireless investments, over $2.8B was invested in wireless related companies/startups from Jan-Jun 2006 (this figure jumped to $4.1B in July). Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas. M&A activity also picked up quite significantly.
- WiMax industry got a big boost with almost $1B investment in Clearwire and due to Sprint Nextel’s announcement of WiMax deployment. Sigh of relief for Intel and Samsung. Puts pressure on Qualcomm. Maybe Intel will renegotiate with Clearwire.
- Worldwide Handset market share: Nokia and Motorola dominated with 35% and 23% market share respectively. Samsung with 12% stands third. Source: iSuppli. Though Apple’s iPhone rumors have been clouding the market, it is Motorola which continues to lead in launching must-have handsets. Windows mobile is starting to make serious inroads in the handset market but performance issues and high price points deter mass market adoption.
Download PPT http://www.chetansharma.com/midyearupdate06.htm
Click to call: New revenue models from Mobile Search August 10, 2006Posted by Chetan in : 3G,AORTA,ARPU,General,Mobile Search,Mobile Usability,Smart Phones,Speech Recognition,Strategy,US Wireless Market,Worldwide Wireless Market , 1 comment so far
From time to time, I will be contributing some posts to Ajit’s Open Garden Blog – http://opengardensblog.futuretext.com/. This post is first in the series.
“What we find changes who we become” – Ambient Findability, Peter Morville
As the discoverable content increases in depth and breadth, it is inevitable that mobile search will drive user navigation on devices. Whether it is by user keying in a few keywords or short cuts or search engine generating a personalized, to-the-minute “always-active” user interface that directs user navigation, mobile search strategies will start taking center-stage for most consumers.
There are several differences between Internet (aka Google) search and mobile search. While Google on desktop might return a useless list of 2M hits (the useful results are generally in the first dozen links), mobile search needs to take in more variables before it figures out the “answer” to the user input. These variables are driven by context, history, preferences, and social network. You weir off a bit and the experience starts to waffle. Understanding “user’s intent” is key.
The business models are also different. While Google might present the paid-search-results on top, on the side or even blended in the main body, search results needs to very optimized and customized to the query and context. In addition, several new models come into play like “click-to-call” or “push-to-call” where real money is to be made. Click-to-call has a simple revenue model which most businesses understand. It is conceptually same as ‘referral fees’. Some calls such as in real-estate or mortgage business can yield over $30-40 per call for referrals. Some of the emergency services like plumbers, dentists, locksmiths have up to 50-60% conversion rates. You can do the math. The provider who has the best and most updated inventory has a big leg up in the race for mobile search domination. Local inventory plays a huge role, the hard part is to keep the numbers refreshed and encourage the ecosystem to participate and update the information while also getting involved in the advertising side of the business. Click-to-call already exists on Google on the Web http://www.google.com/help/faq_clicktocall.html . But on mobile devices, it takes on a much more useful and immediate dimension due to the nature of the medium.
Advertising also takes a new dimension with mobile. The wealth of user information and the capability to have 1-to-1 relationship with the user makes it a very powerful platform for the multi-billion dollar advertising industry. Advertisers design their campaigns based on the hard and real user demographic information and also get the confirmation of a “view” which is gold for advertisers. Having said that, a few missteps can also alienate users for months. Advertisements and/or promotions will also have the “click-to-call” functionality. Several travel agencies and big brands have already experimented with clickable ad campaigns. Earlier this year, Google filed the patent application for the same. Similar functionality could be built for audio content and other pieces of content types. Click-to-call will also become a very social and viral feature.
Click-to-call in combination with automated attendant is also very disruptive to the multi-billion directory-assistance (DA) and yellow page industry. If a smart analytical engine backs up the voice recognition system (could be tied to mobile search), majority of the consumer queries can be taken care of without reaching a live person thus deceasing the $1-$2 per call charge to the consumer.
Click-to-call can also be offered as a customer service-enhancing tool by the carrier or as an instant survey or feedback tool for different industries.
The majority of the searches initially will happen via browser and by using keypad input from the user but will gradually be integrated tightly across applications and platforms and will accept voice, image, bar code, and others input mechanisms. Mobile search will also renew the “dumb-pipe” debate, disrupt the value chain, and force players to form new alliances that weren’t conceivable before. New business models such as “click-to-call” will bring new sources of revenue to the wireless industry. In the end, mobile search will help drive quality of content and better user experience.
I welcome your thoughts on this model and others in relation to Mobile Search.