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CTIA Wireless 2008 Roundup April 4, 2008

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

CTIA Wireless 2008 Roundup

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

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

This note summarizes our impressions from the show.

CTIA Wireless in Pictures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

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

Global Wireless Data Market Update 2007 March 27, 2008

Posted by chetan in : AORTA, Infrastructure, Carriers, Security, Speaking Engagements, M&A, 3G, Partnership, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Mergers and Acquisitions, Location based Services, MVNO, Indian Wireless market, India, BRIC, WiMax, Mobile Gaming, Networks, ARPU, Japan wireless market, European wireless market, Mobile TV, mobile users, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wi-Fi, Wireless Value Chain, 4G, CTIA , 7 comments

Global Wireless Data Market Update 2007

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http://www.chetansharma.com/globalmarketupdate2007.htm

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.

Your feedback is always welcome.

Chetan Sharma

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

Mobile Industry Predictions - 2008 January 1, 2008

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

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

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

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

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

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

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

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

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

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

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

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

Many thanks to everyone who participated.

clip_image002

(click for larger image)

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

The winners are:

  1. David Cushman, Director, Emap

  2. Larry Shapiro, VP, Disney, and

  3. Keith Kostuch, SVP, Alltel

Congrats and Thank you.

Now onto the survey analysis.

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

clip_image004

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

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

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

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

3. Will Microsoft launch its own mobile phone?

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

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

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

5. Will WiMAX regroup from its setbacks?

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

6. Will Helio survive 2008?

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

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

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

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

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

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

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

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

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

11. Will Palm survive 2008?

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

12. Will iPhone truly open up?

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

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

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

14. Will Mobile TV move the needle in 2008?

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

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

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

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

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

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

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

The panelists for the discussion were:

(above L to R)

Eric Allen, VP, FunMobility (Moderator)

Ashok Narsimhan, Chairman and CEO, July Systems,

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

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

myself, and 

Niren Shah, Managing Director, Norwest Venture Partners,

It was an honor to be part of this discussion.

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

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

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

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

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

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

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

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

You can access the released report here.

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

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

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

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

Your feedback is always welcome.

Chetan Sharma

Speak your message June 19, 2007

Posted by chetan in : US Wireless Market, Unified Messaging, Speech Recognition , 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, 2007

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

US Wireless Data Market Update - Q1 2007

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

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

Your comments are always welcome.

Chetan Sharma

Mobile Advertising Panel Roundup April 19, 2007

Posted by chetan in : AORTA, Strategy, Carriers, Speaking Engagements, Mobile Advertising, US Wireless Market, Mobile Content, Mobile Entertainment, Indian Wireless market, ARPU, Unified Messaging, Mobile TV, Mobile Applications, Smart Phone, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Microsoft Mobile, Speech Recognition, Mobile Search, Wireless Value Chain, CTIA , 7 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:

(Bios here)

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 -

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 -

(Source: eMarketer, 2001)

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

(Source: eMarketer, 2006)

(Data Source: Informa, 2006)

 (Data Source: ABI Research, 2007)

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

Panel Discussion

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, 2007

Posted by chetan in : AORTA, Carriers, Enterprise Mobility, 3G, Devices, Mobile Advertising, US Wireless Market, Mobile Content, Mergers and Acquisitions, International Trade, ARPU, Japan wireless market, European wireless market, Mobile TV, Mobile Applications, Worldwide Wireless Market, Mobile Usability, Mobile Ecosystem, Speech Recognition, Mobile Search, Wireless Value Chain, 4G, CTIA , 5 comments

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http://www.chetansharma.com/ctia0307roundup.htm

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 wh