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Mobile Future Forward: Reimagine Everything August 28, 2015

Posted by chetan in : US Wireless Market , add a comment

Mobile Future Forward means business. We got so many deals done that it is a no brainer to attend again this year – CEO and founder, Mobile Startup

Mobile Future Forward connects a lot of high-level people with very progressive thinking and it is at the cutting edge of how technology is absorbed – MD, Leading Private Equity Firm

Mobile Future Forward is the most intellectual conference – CEO and founder, Connected Watch Company

Dear Friends,

Here is a pop quiz to end the week.

When was the first instance of what is today known as IoT recorded?

a) 1991

b) 1980

c) 1812

d) 1836

e) 1901

f) 1930

g) 1958

Each year represents a milestone in the history of Connected Intelligence. The advent of telegraph, radar, telephone, wireless paved the way for 200 years of innovation evolution. Inventors such as Schilling, Gauss, Weber, Morse, Bell, Bose, Marconi, Ericsson, Galvin, Cooper (as you know Marty is joining us at MFF this year), and scores of other extraordinary individuals saw what others couldn’t and changed the trajectory of human civilization. However, the first instance of connected things took place before any of these remarkable individuals came to the scene.

The correct answer is 1812.

If you picked the right answer, you just won an automatic entry into the CI Historian Hall of Fame.

The first use of data transmission was recorded by P.L. Shilling who reported that the Russians telemetered the successful firing of remotely activated mines to stem the French invaders during the war of 1812. After that the notion of connected devices was used quite extensively in wars, weather reports, space exploration, transportation, medicine, entertainment, and the like. The taxonomy changed as different breakthroughs were incorporated into connected devices. From Telemetering, we went to Telemetry to M2M to now IoT. This has set us up nicely for a an explosive “Connected Intelligence” age to reimagine everything, each minute task, every revenue flow, every industry. We will explore “The History and the Future of Connected Intelligence” in the Mobile Future Forward 2015 paper that comes out next week.

In the meantime, we are busy preparing for the summit in four weeks and we have some brilliant minds that will test your thinking and grow your appetite for more.

Registration (First Come, First Served)

Additionally, here are some of the highlights of what we will be discussing during our annual brainstorm:

Connected Intelligence and the evolution of media consumption

Media remains a core part of our society. The entertainment, education, sports, drama, movies, and news events keep us captivated but how does the media creation, delivery, and engagement evolve with the new set of tools.

· Robert Gelick, SVP and GM – Digital, CBSInteractive

· Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs

Disruption is my middle name

Every company present at Mobile Future Forward is disrupting the markets in their own ways, some more fundamentally than others, some more dramatically than others. We will look at the disruption of traditional industries and creation of new ones.

· Sunil Daluvoy, Head of Business Development, Uber Everything

· Dr. João Barros, Founder & CEO, Veniam

· Ralph Derrickson, President and CEO, Carena

5G and the Future of the Network

The 5G discussion is gaining significant momentum at all levels. We will have folks who understand the technology, the standards, and the economics better than most.

· Hossein Moiin, EVP and CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Mark McDiarmid, VP, Radio Network Engineering, T-Mobile

· Bob Azzi, Executive Managing Partner, Argylegriffin

Leading the Connected Intelligence Era

At AT&T, Glenn Lurie saw the emergence of the 4th wave before many of his peers (some still don’t see it). Under his stewardship, AT&T has become a trusted partner and leader in many of the emerging areas such as connected car, enterprise services, IoT, digital home, etc. We will explore the opportunities, the learnings and what does it take to prepare a big company for the Connected Intelligence Era.

Connected CIOs

CIOs play a critical role in keeping their company ahead of the curve in terms of tools and technology. We will have CIOs from different industries address the challenges and the solutions needed to prepare the enterprise for the connected age.

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Julie Woods-Moss, CEO, Tata Communications NextGen Business

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Mark Fernandes, Managing Director, Sierra Ventures

Incredible India

India’s tech sector is on fire. It is the fastest growing economy with many terrific unicorns driving excitement and real revenue. We will have the top two companies who will educate us on what’s working in mcommerce in India and why.

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Vijay Shekhar Sharma, Founder and CEO, Paytm

Convergence of industries, platforms, and opportunities

The IT and Telecom industries have collided and no one understands this better than Oracle as they work with all of the top 100 IT and Telecom clients around the globe. Hear from the executive who runs the global communications business on what’s changing in the enterprise and the wireless world and why.

· Doug Suriano, SVP and GM, Oracle Communications

Funding the next unicorn in the Connected Intelligence Era

It requires a different kind of mindset to invest in the next unicorn that can reshape an industry or the ecosystem. Meet the VCs who have a keen eye on finding such companies

· Tim Chang, Managing Partner, Mayfield

· Lo Toney, Partner – Catalyst Fund, Comcast Ventures

· Bubba Murarka, Partner, DFJ

· Colin Greenspon, Managing Director, Mithril

We will have discussion around Man and Machine, Industrial IoT, Building blocks of Connected Intelligence, New Platforms and Tools, Security, Robotics, Vertical Industries, and a ton more. We will have startups that will blow your mind, projects from the giants that will surprise you, and technology break-throughs that will inspire you.

What will be the $ flows, where are the early opportunities and successes, what are the use cases? We will tackle them all at Mobile Future Forward on Sept 29th. We welcome you to join us in the discussions and contribute to the collective knowledge of our industry. Give us your one day, and we will give you the next 5 years in mobile.

A number of key industry partnerships and relationships are formed at Mobile Future Forward. Make sure you are not left behind.

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson, Neustar, Oracle Communications, and Tata Communications.

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Chairman, Tillman Global Holdings

· Hossein Moiin, CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Josh Will, SVP – Mobile, Best Buy

· Tim Chang, Managing Partner, Mayfield

· Prof. Shyam Gollakota, University of Washington

· Mark Fernandes, Managing Director, Sierra Ventures

· Mark Showers, CIO and EVP, Reinsurance Group of America

· Doug Suriano, SVP and GM, Oracle Communications

· Vishal Gupta, Chief Products and IoT Officer, Silent Circle

· Marty Cooper, Chairman, Dyna

· Vijay Shekhar Sharma, Founder and CEO, Paytm

· Julie Woods-Moss, CMO, CEO – Nextgen Business, Tata Communications

· Andrew Hopkins, Managing Director – IoT, Accenture

· Lo Toney, Partner – Catalyst Fund, Comcast Ventures

· Robert Gelick, SVP and GM – Digital, CBSInteractive

· Bob Azzi, Executive Managing Partner, Argylegriffin

· Anand Chandrasekaran, Chief Product Officer, Snapdeal

· Dr. Tony Yen, MD, CMIO, EvergreenHealth

· Sunil Daluvoy, Head of Business Development, Uber Everything

· Dr. João Barros, Founder & CEO, Veniam

· Sanjay Macwan, SVP and CTO of NBCUniversal Media Labs

· Mark McDiarmid, VP, Radio Network Engineering, T-Mobile

· Bubba Murarka, Partner, DFJ

· Colin Greenspon, Managing Director, Mithril

· Kelly Fitzsimmons, CEO and Founder, Harqen

· Sam Shawki, CEO and Founder, MagicCube

· Ralph Derrickson, President and CEO, Carena

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Thanks.

Chetan Sharma

Mobile Breakfast Series–5G–July 16th June 5, 2015

Posted by chetan in : US Wireless Market , add a comment

Dear friends,

Hope you are enjoying the advent of summer.

For our next mobile breakfast series event, we will tackle one of the hottest topic in the industry – 5G.

LTE is here and now. What’s next?  The networking wizards of the industry will put their heads together to help define 5G. What features are essential? How will our understanding of the data consumption on the 4G networks help define 5G? How should we tackle video and signaling? How do we tackle IoT? What applications will motivate 5G? What does the timeline look like for 5G? Will 5G enable new business models? How are we going to have a sustainable spectrum strategy? Will 5G empower operators to justify the investments? This panel will take a look at the fundamental elements of 5G that will be a key layer for the Connected Intelligence Era.

Our guest speakers are:

Dr. Ron Marquardt, VP – Technology Innovation & Architecture, Sprint

Mark McDiarmid, VP – Radio Network Engineering, T-Mobile

Two of the best network engineers anywhere so am really glad to have them. 5G will impact everyone and every industry. Get an early glimpse into what’s coming.

Background Reading

Registration is open now

Portion of the proceeds will be donated to the Nepal Earthquake Relief Efforts.

Thanks and see you in July.

Regards,

Chetan

Ps. Don’t forget to save your seat for the fall Mobile Future Forward Summit. Early bird expires next week.

Mobile Future Forward 2015 Update June 4, 2015

Posted by chetan in : US Wireless Market , add a comment

Greetings,

Trust your summer is going well. The connected intelligence ecosystem continues to expand with each passing day. From startups like Prosyst, Axeda, 2lemetry getting acquired to mobile operators and chip manufacturers building billion dollar IoT businesses to Google proposing Brillo and Weave, there is tremendous activity all around. On the consumer front, wearable revenue is expected to cross $5B for the first time. In the industrial sector, investments and cost-savings are even bigger.

Partners and speakers at Mobile Future Forward are key companies and executives who are shaping the connected intelligence journey. We are delighted to add more speakers to the roster (see below). At the summit, each topic gets a thorough deep-dive to explore the intricacies of opportunities and challenges. Participants leave with a clearer picture of where the technology world is headed and more importantly what should they do about it, who to partner with, and what to ignore as noise.

At Mobile Future Forward (now in its 6th year), we delve into the nuances of innovation that trigger seismic activity which shapes the future generation of experiences, applications and services. This unique executive summit is a true meeting of the great minds who go beyond the headlines and hype to examine the growth trajectory of the future. It is a daylong data-driven brainstorm designed to make you think. The experts and visionaries from around the globe will gather in Seattle on Sept 29th to explore the world of possibilities, envision the opportunities, and inspire the entrepreneurship spirit within us to achieve more, faster.

We welcome you to join us in the discussions and contribute to the collective knowledge of our industry.

Registration is open now (Early bird expires next week)

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson and Neustar.

Mobile Future Forward is causing everyone to think about what’s the next big thing. – CEO, Global Mobile Operator

Mobile Future Forward is the most intellectual conference  – CEO and founder, Connected Watch Company

The caliber of participants is extraordinary. Mobile Future Forward is a data driven event, the team has put together so much hard to find factual data that is unrivaled anywhere in the industry in terms of building the foundation of facts for analysis. I normally don’t learn new things at events but at Mobile Future Forward, I did. – North American Leader – IoT and Mobile, IBM

Some of the confirmed industry leaders are:

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Faisal Masud, Chief Digital Officer, Staples

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Former CEO, Orange

· Hossein Moiin, CTO, Nokia Networks

· Craig Moffett, Partner, MoffettNathanson

· Prof. Shyam Gollakota, University of Washington

· Tim Chang, Managing Partner, Mayfield

· Josh Will, SVP – Mobile, Best Buy

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Chetan Sharma

CEO, Chetan Sharma Consulting

http://www.chetansharma.com

US Mobile Market Update - Q1 2015 May 18, 2015

Posted by chetan in : 4G, 4th Wave, 5G, AORTA, ARPU, Chetan Sharma Consulting, Connected Devices, Connected Intelligence Era, IoE, IoT, LTE, Mobile 2015, Mobile Future Forward, Tablets, The Golden Age of Mobile, US Wireless Market, Wearables, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update - Q1 2015

http://www.chetansharma.com/usmarketupdateq12015.htm

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Download

Summary

The US mobile data services revenue grew 4% Q/Q and 15% Y/Y. The overall services revenue declined 1%. The device revenue for the operators grew by 41% allowed the overall service revenues to grow 5% Y/Y.

We are forecasting that the mobile data service revenues will increase by 22% to $132 Billion in 2015. Verizon will become the first operator to generate more than $50B from data services in 2015.

After acquiring lusacell and Nextel Mexico AT&T became the biggest North American operator with over 136 million subs.

The average mobile data consumption (cellular) is approximately 2.5GB/mo. In the US, it took roughly 20 years to reach the 1GB/user/mo mark. However, the second GB mark has been reached in less than 4 quarters. An entire year’s worth of mobile data traffic in 2007 is now reached in less than 75 hours.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in 2014, the data pricing has plummeted by 77%. In Q1 2015, the data pricing stayed pretty steady.

The intense competition amongst the operators meant a 6% rise in OPEX QoQ and a 12% decline in CAPEX YoY. The income declined 4% while EBITDA grew modestly at 2%.

Smartphone penetration increased to 76% and roughly 95% of the devices sold now are smartphones.

4th wave services continue to grow at a very past face around the globe. At least 37 companies generated a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

The difference between Sprint and T-Mobile number of subs is just 300K subs now – the narrowest it has ever been. Like we suggested mid-last year, T-Mobile is likely to become the number three operator. This is more or less just a symbolic event with the transfer of bragging rights. Overall, churn was low for all operators in Q1 2015.

T-Mobile accounted for over 40% of the overall net-adds for the year with AT&T and Sprint coming in second at 26%. Verizon slipped to a distant fourth with only 8%.

Operator’s non-phone net-adds were 4 times that of the phone net-adds, highest it has ever been in the history of the industry.

M2M+Connected car is a billion dollar revenue stream for AT&T. M2M+Telematics will become a billion dollar stream for Verizon by 2016.

In our 4th wave series of papers, we had postulated for years that the 4th wave revenues will become bigger than any of the previous curves. This finally happened in 2014 in the US market with the revenues from the 4th wave applications and services built on top of the IP access layer surpassed both voice and data revenues.

Apple Watch – New Interaction Models

Apple is never the first one to introduce a new consumer gadget but it is generally the first to make it work for the market so allies and enemies are all eager for Apple to come in and create awareness. For me, the exciting part wasn’t the watch itself though it clearly the best smartwatch available in the market but the new interaction models it introduced. The reincarnation of Morse code in the language of vibrations and heartbeats. The splitting of screen on two different computers on the body is quite fascinating and has design implications for the developers. It will take time for us (as consumers and developers) to understand and absorb the advantages of such a model. The transmission of signals from the body is enormously powerful in creating the preventive care culture around the globe. The story on wearables is just starting out.

Q1 2015 – 4th wave in action

For a casual observer of the industry, Verizon’s acquisition might have come as a surprise but for the students of the 4th wave, it was normal course of action.  In my talks, I often say that for service providers to compete with the OTTs, they have to become OTTs themselves. One could argue if AOL was the right company for this strategy but large operators are opening up their checkbooks to do cross-domain acquisitions. AOL brings a new billion dollar revenue stream however it doesn’t solve the basic fragmentation problem that operators have. They can’t effectively compete with Google and/or Facebook without covering the entire market. Without domination (in market share) or collaboration, the opportunity will remain small and might even vanish in due time.

As we mentioned earlier this year, globally, 37 companies generated (not valuation) a billion dollar or more in revenue from 4th wave services in 2014 – a 311% jump from 2012.

Unicorns at incumbents

Tech press and the startup world is infatuated with unicorns. The billion dollar is a magical marker that inspires the ecosystem to be in the elite club but what about when a new unicorn stream is created at an incumbent? It rarely makes waves. At a 100+ year old incumbent, even less so. AT&T has been lighting up connected cars faster than any other mobile operator in the world right now. While 3.5M connected cars might not instill excitement, one must consider the replacement cycles of automobiles which is several times that of a smartphone.

Our estimates suggest that the connected car segment will become a billion dollar business for AT&T by 2016. The M2M+Connected Car revenue stream is already a billion dollar business for AT&T. Verizon is also slowly getting there. Their M2M+Telematics revenue stream should reach an annualized revenue stream of over a billion dollars by 2016. Some operators in Europe are also making inroads into the new connected devices revenue streams. Similarly, the likes of Microsoft and Google have created new billion dollar revenue streams in mobile. As a separate entity, these will be decacorns but don’t get appreciated when residing with the parent company.

Google Fi – Google Fiber for Wireless

When Google-Fi was announced, there was plenty of media frenzy around Google going after the operators. Folks who wrote such articles don’t understand the business of either Google or the operators. Google is a brilliant strategist which does some projects to push its strategy in the ecosystem. The goal is generally not a new revenue stream but twisting the value-chain enough to serve its purpose long-term.

However, there are couple of direct and subtle signals that Google did send to the markets. First, there are some technical tricks that Google was able to pull off to make WiFi/Cellular handoffs to work. Second, and perhaps more important is that the control point moved from the network to the device which at scale can be the biggest disruption the mobile industry has ever seen. It is not easy to pull off given the interdependency of OEMs to the operators. But sometime in the future, it is not hard to envision that for every session, the device (and associated cloud infrastructure) initiates the auction amongst the available networks and picks one based on performance, pricing, revenue share, and other parameters. That day is not here yet but service providers should start planning for this scenario.

WiFi-first network has good potential and we will see many of them pop up around the globe but getting scale is the biggest question mark in such endeavors (beyond some technical issues of seamless interop).

One should also remember that while WiFi usage in the US is 3x that of cellular usage, the use of WiFi hasn’t really slowed down the cellular data growth one bit. They both are growing at approximately 100% Y/Y.

Post-PC – Apple has no peer

There are has been a lot of debate around the PC and Post-PC worlds. Apple has benefited from the transition to the Post-PC universe like no other company. Its Post-PC revenue in Q1 was four times the Post-PC revenue of Google, Microsoft, Facebook, and Amazon combined. Largely due to the iPhone, Apple has been able to carve out a dominant space on the current wave of computing.

Service provider M&A

When Comcast initially announced the merger with Time Warner, it looked like a slam dunk but it was swiftly rebuffed by the regulators. This sets up an interesting 18 months for the US market. Unless there is a change in power (democrats to republicans), the big mergers in the same domain are off the table. So, how do existing behemoths grow? They start to look overseas (e.g. AT&T acquiring Mexican operators), look sideways (e.g. AT&T acquiring DirectTV) or look upwards (e.g. Verizon acquiring AOL). There are still a number of questions posed to the likes Comcast, Time Warner, Dish, T-Mobile and Sprint. Will this finally force Comcast to be a more active mobile player by acquiring one of the two smaller operators? Will the regulators allow such a move? Is Sprint back in the equation? How anxious is Deutsche Telecom to offload its US assets? How will Dish use its spectrum assets? We might see all these questions answered in the next 18 months or not.

Net-Neutrality and Zero-Rating Debates

In the tech world few things ignite the discussion with religious fervor as the net-neutrality debates. From Washington DC to New Delhi, from Brussels to Santiago, net-neutrality and zero-rating have inflamed passions. Most of the times those fighting on either sides have no clue about the issues at hand and what are they fighting for. Ask a protester on the street about the intricacies of net-neutrality and you will get blank looks or confused answers. Both issues boil down to “transparency” and “control” – who gets to decide what and what are they going to disclose. The answer to many of these debates is fairly simple – ensure there is enough competition and put the (granular) “control” and the “responsibility” in the hands of the customer for e.g. they should decide which apps should make it into the “Zero Rating” club for them. The problem goes away at least in principle.

The Upcoming 5G wars?

I started my career when 1G was all the rage. My first 4G project was back in 2002. By some measures, we are already behind on the 5G discussions. In general, it takes 7-10 years before the standards are finalized and then the network technology lasts for approximately 20 years before a market moves onto the next generation of technology. US led in the growth of 1G (AMPS, TACS) followed by Europe on 2G (GSM, CDMA). Japan took the leadership role with 3G (WCDMA, EVDO) and US wrestled it back on 4G (LTE). Japan and EU are determined to lead on 5G and have been making very public statements and R&D investments about their ambitions on 5G. Japan of course has a very clear goal of having 5G by Tokyo Olympics in 2020. Am sure some operator(s) somewhere will jump the gun and start calling LTE-A+ as 5G around 2017-18 or sooner. You can expect a lot of activities both in public and private on 5G as companies and governments try to figure out a way to claim the 5G leadership mantle.

We have summarized our thoughts on 5G in this paper – 5G: The past, present, and future of the mobile industry evolution. I have been giving a number of talks on 5G in North America and Europe and many of these will be made public in due course.

What to expect in the coming months?

2014 was a tremendous year for the mobile as it becomes omnipresence in every industry. We saw some massive moves, astounding acquisitions, and interesting strategic endeavors. 2015 promises to be an exciting year for the industry as well.

As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

The next 10 years will generate almost 1000 Trillion dollars in global GDP, which is 60% more than the last 10 years. What will be significant is how the “Connected Intelligence” built using networks, sensors, and software is going to transform every industry, every nation. We will covering the future of the mobile industry in-depth at our Mobile Future Forward summit this fall on Sept 29th.

Against this backdrop, the analysis of the Q1 2015 US wireless data market is:

Service Revenues

· The US mobile data services revenues in Q1 2015 increased 3% and reached $30B.

· After crossing the $100B in data revenues last year, the US market is set for explosive growth and is likely to cross $130B in data revenues in 2015.

· Verizon and AT&T dominated the quarter accounting for 70% of the mobile data services revenue and had 68% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q1 2015. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU fell by 2.71%. 

· Data contribution to the overall revenues is now at 62%.

· The postpaid ARPU continues to decline for all operators with all but Verizon suffering double digit YoY losses.

Subscribers

· The US market had 4.6M net-adds. Probably for the first time, Verizon finished last in terms of net-adds for the quarter. T-Mobile led with 1.8M net-adds mostly postpaid.

· T-Mobile added almost as many postpaid subs as rest of the three operators combined.

· Connected devices (excluding tablets) had the best net-add performance followed by tablets.

· T-Mobile led in the phone category while remaining three operators added more than 1M non-phone customers.

Shared Data Plans

· Shared data plans launched by Verizon and AT&T have been quite successful. The attachment rates have increased tremendously over the course of 2013-14 with more consumers opting for cellular tablets and connected devices. 70% of postpaid accounts at AT&T are now on shared plans.

· Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive on premise Wi-Fi solutions.

· 50% of AT&T’s postpaid accounts are on 10GB+ plans.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 70% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 89% in mobile (of the total advertising revenue) up from 60% in 2013. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

· Verizon reported $150 million revenue from M2M and Telematics. At the current run-rate, this will be a billion dollar business by 2016.

· AT&T reported 684K net-adds on the connected car platform. We estimate that connected car will become a billion dollar revenue stream for AT&T in 2015. Connected cars accounted for 62% of the connected devices for AT&T.

Connected Devices

· Connected devices (non-phones) accounted for almost 52% of the net-adds in Q4 2014. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· For AT&T, Connected cars started to form a significant base of the connected devices segment with 68% of the new connections in the segment coming from cars.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 95% of the devices sold in Q1 2015. The feature phone category is practically becoming extinct in the US market.

· The smartphone penetration in the US is now at 76%.

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 71M making it the #2 LTE operator behind China Mobile which has more than twice LTE subs. Other three operators are also deep into their LTE deployments. Verizon reported that 86% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in Aug 2015.

Disclaimer: Some of the companies mentioned in this paper are our clients.

Announcing Mobile Future Forward 2015 May 13, 2015

Posted by chetan in : 4th Wave, 5G, Connected Intelligence Era, Mobile Future Forward, The Golden Age of Mobile, US Wireless Market, Worldwide Wireless Market , add a comment

Dear friends,

The next 10 years will generate almost 1000 Trillion dollars in global GDP, which is 60% more than the last 10 years. What will be significant is how the “Connected Intelligence” built using networks, sensors, and software is going to transform every industry, every nation. At Mobile Future Forward (now in its 6th year), we delve into the nuances of innovation that trigger seismic activity which shapes the future generation of experiences, applications and services. The unique executive summit is a true meeting of the great minds who go beyond the headlines and hype to examine the growth trajectory of the future. It is a daylong data-driven brainstorm designed to make you think. The experts and visionaries from around the globe will gather in Seattle on Sept 29th to explore the world of possibilities, envision the opportunities, and inspire the entrepreneurship spirit within us to achieve more, faster.

We welcome you to join us in the discussions and contribute to the collective knowledge of our industry.

Registration is open now.

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson and Neustar.

 

Mobile Future Forward is causing everyone to think about what’s the next big thing. – CEO, Global Mobile Operator

Mobile Future Forward is the most intellectual conference  – CEO and founder, Connected Watch Company

The caliber of participants is extraordinary. Mobile Future Forward is a data driven event, the team has put together so much hard to find factual data that is unrivaled anywhere in the industry in terms of building the foundation of facts for analysis. I normally don’t learn new things at events but at Mobile Future Forward, I did. – North American Leader – IoT and Mobile, IBM

Some of the confirmed industry leaders are:

· Glenn Lurie, President & CEO, AT&T Mobility

· Dr. Eric Topol, Chief Academic Officer, Scripps Health

· Faisal Masud, Chief Digital Officer, Staples

· Rima Qureshi, Chief Strategy Officer, Ericsson

· Hank Skorny, SVP – IoT, Neustar

· Raja Rajamannar, CMO, Mastercard

· Sanjiv Ahuja, Former CEO, Orange

· Hossein Moiin, CTO, Nokia Networks

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September. If you are interested in partnering, please reach out at info@mobilefutureforward.com.

Thanks and have a great spring.

Chetan Sharma

Webinar: Empowering the Digital Telco Transformation May 12, 2015

Posted by chetan in : US Wireless Market , add a comment

Oracle and Chetan Sharma Consulting will be hosting a webinar on how Convergent Charging and Policy can enable a telecom service provider to become a more digital player in the ecosystem. It will coincide with the release of a paper I have been working on.

Convergent Charging and Policy – Empowering the Digital Telco Transformation

The mobile industry is transforming the global markets in fundamental ways. The communications and the IT industries are merging. Digital is changing the expectations of both the consumers as well as the enterprises. The digital economy is providing an opportunity to service providers to transform the business processes and become a digital platform where new applications and services can blossom. The massive growth in connected devices and applications means we need a more robust framework for policy and charging.
This webinar will discuss the changing service provider landscape and the tools required to manage this transition.

Chetan Sharma, CEO, Chetan Sharma Consulting

Richard Hallett, Senior Director, Product Marketing, Oracle Communications

When: May 27 2015 7:30 – 8:30am PDT

Registration

Vancouver Mobile Breakfast Series Recap: Mobile Commerce and Payments April 16, 2015

Posted by chetan in : 4th Wave, Chetan Sharma Consulting, Mobile 2015, Mobile Breakfast Series, Mobile Commerce, Mobile Future Forward, The Golden Age of Mobile, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

We hosted our second event of the year in Vancouver (our first in Canada) earlier this week and had a great time. I have been going to Vancouver for 20+ years and have been thinking about doing something north of the border. It is also one of my favorite cities in the world. By strange coincidence, all 3 of our MBS cities outside Seattle have been Olympic cities – Atlanta, London, and now Vancouver. I guess we will have to go to Beijing or Seoul next.

With the help of my good friend Pankaj Agarwal and his team at Optimus Information and Wavefront, we were able to plan out a sold-out event. We continued the theme of Mobile Commerce and Payments given that it is such a hot topic right now and brought together three startup CEOs who are right in the middle of the action.

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The mobile ecosystem is evolving exactly we envisioned it in our 4th wave paper in 2012. The 4th wave is becoming the most dominant portion of the revenue stream as was witnessed from the revenue results in 2014 in the US.

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As I have said before in various public forums, one of the metrics I use to track progress in any segment is the number of $1B businesses being created each year. In 2012, there were only 9 companies mostly large enterprises like AT&T, Apple, Google, and Amazon that had > $1B digital businesses. However, in 2014, this number jumped to 37 with several new entrants – from known brands like Twitter, Walmart, and Xiaomi but several companies unknown to the western world like WeChat, FlipKart, Otto Group, GungHo, Suning Appliance, and others. While most of the concentration of digital wealth in the US, China is emerging very strongly as a player to reckon with. In fact, how China and US companies interact and play will perhaps define the next 10 years. While other economies like India, EU will play a role, I find China and US to be the most fascinating.

The speakers were:

Sam Gadodia, CEO & Co-Founder, Lotusflare

Sam co-founded LotusFlare with couple of his colleagues from Facebook with the objective to make mobile internet more accessible across the globe. Prior to LotusFlare, Sam worked at facebook and worked with Mobile Operators’ on SMS, Zero rating and other initiatives to drive growth on FB mobile app. Before this, Sam built and scaled TeleSign, one of the leaders in mobile authentication and verification space. Sam also co-founded and successfully built Global eProcure, a leading SaaS based SCM analytics Company with operation spanning from North America to Asia. While at Global eProcure, he received the Stevie award and was named by American Business Awards as Best Operation Executive.

Michael Gokturk, CEO & Founder, Payfirma

Michael Gokturk is the kind of entrepreneur who takes a company public in 3 years then launches a new business 3 days later. In 2011, Michael founded Payfirma with the goal of disrupting the highly competitive payments market by creating a solution to merge online, in-store and mobile payments. He has since grown Payfirma from the first company to introduce mobile payments in Canada into one of the top multichannel payment platforms. Before Payfirma, Michael founded and was the CEO of Versapay. A payments company specializing in point of sale systems and electronic bill presentment and payment (EBPP).

Ajay Hans, CEO and Co-Founder, Mobetize

Ajay Hans, Founder of Alligato Inc. and Co-Founder of Mobetize Corp brings over 15 years of diverse experience in the development, marketing and implementation of complex billing and payment related software technologies dedicated for MNO’s and MVNO’s. Ajay has overseen Mobetizes’ strategic vision and tactical execution since inception. He has held senior executive positions with leading telecom software technology companies where he successfully implemented solutions for brands including SaskTel, Sprint and AT&T.

Chetan Sharma, CEO and Founder, Chetan Sharma Consulting (moderator)

The three panelists are involved in advertising, payments, and commerce working with all parts of the value chain – banks, operators, startups, credit card companies, retailers, etc. We had a very interesting discussion that covered a breadth of topics.

The salient points of the session were:

In summary, mobile commerce remains a hot area and we are approaching a tipping point wherein mobile commerce dominates ecommerce in all parts of the world. I really enjoyed the moderation and questions from the audience. My thanks to Optimus Information and Wavefront for being our partners for the event. and thanks to the Vancouver mobile community for embracing us with open arms.

Our next event is going to be in our annual mobile summit – Mobile Future Forward on Sept 29th in Seattle. Stay tuned for announcements and details.

Mobile Patents Landscape - An In-Depth Quantitative Analysis - 4th Ed - 2015 April 1, 2015

Posted by chetan in : 4G, 5G, Intellectual Property, Mobile Patents, The Golden Age of Mobile, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Mobile Patents Landscape 2015

- Fourth Edition

http://www.chetansharma.com/MobilePatentsLandscape_2015.htm

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Highlights

· The study looked at over 7 million patents granted in the US and Europe. The analysis focused on the patents granted to 65 technology companies in the mobile space.

· The gap between the number of mobile patents granted in the US vs. Europe widened again. US now accounts for roughly 79% of the mobile patents granted in the two jurisdictions.

· US companies comprise of 48% of the top 50 list followed by Japan, China, and South Korea.

· By the end of 2014, over 26% of all granted patents in the US were mobile related. In 2001, the percentage was 5%. In Europe, roughly 10% of the patents granted were mobile related.

· IBM recaptured its top spot from Samsung to become the leader in mobile patents granted in 2014 in the US while Samsung dominated Europe. Samsung still dominates the overall rankings. Samsung was followed by IBM, Microsoft, Sony, Ericsson, Qualcomm, Nokia, Google, Alcatel-Lucent, and Blackbery for the top 10 companies by mobile patent grants in 2014.

· Google was number 5 in mobile patent grants in 2014. Apple was behind at number 8.

· Despite dwindling market fortunes, Blackberry continues a healthy patents grant rate and appears in several top 10 categories.

· US Mobile Operators dominate the top 10 operator rankings: Patent top 10 Rankings: AT&T, NTT DoCoMo, Verizon, Sprint, British Telecom, Telecom Italia, T-Mobile, Swisscom, Orange, and SK Telecom.

· Mobile Infrastructure Patent top 10 Rankings: Samsung, Ericsson, Qualcomm, Alcatel-Lucent, LG, Intel, NEC, Siemens, Broadcom, and HP.

· Mobile OEM Patent top 10 Rankings: Samsung, Microsoft, Sony, Google, Blackberry, LG, Fujitsu, Panasonic, NEC, and Siemens.

· The top 5 categories for patents grants in the US for 2014 were Digital Multiplexing, Telecommunications, Digital Processing – Data Transfer, Digital Processing – Financial, and Computer Graphics.

· The top 10 filers of mobile patents in the US were Samsung, IBM, Qualcomm, Microsoft, Intel, Google, Apple, LG, Sony, and Ericsson. It was the second time that Samsung, Microsoft, Google and Apple showed up in the top 10 patent filers list together.

· Some of the Chinese companies started to increase their filings substantially. Notable amongst them are: Alibaba, Xiaomi, Mediatek, and Huawei.

· Huawei appeared in the top 10 rankings in Europe for the first time.

· Information security category saw the highest jump in patent filings in 2014.

Introduction

The idea of Intellectual Property (IP) is as old as the debates Aristotle used to have about philosophy and society. All mature civilizations and societies come to appreciate the value in preserving the IP created by its citizen and give the rights to the benefits that such IP creates. IP is enshrined in laws and principles of doing trade and business. It is also how nations outmuscle each other over long periods of time to become dominant economies.

In a knowledge economy, the very competitiveness and durability of the nation’s prosperity depends on how well the framework of IP and patents works in the country and the steps it takes to avoid theft and misuse of the laws while enforcing the rules and regulations on the books. IP has been an integral part of the economic engine of the western world for many decades if not centuries. Over the past two decades, nations and corporations have competed on the creation, funding, execution, and protection of the new ideas.

Mobile is first computing based technology that will encompass the entire human race and then some. In 2014, the number of cellular connections went past the human population. Additionally, the rise of IoT and Wi-Fi-led usage has meant that the use-cases for mobile and the impact it can have across verticals have exploded. Mobile has outgrown its own universe and now expanded to segments such as health, industrial, retail, education, agriculture, and more. As such, the intellectual property being generated has become very mobile centric. In 2014, the US crossed a major milestone, more than a quarter of the overall patents that were granted had something to do with mobile.

Mobile expertise and by extension the IP is being developed by more companies around the globe beyond the traditional ecosystem players such as Samsung, IBM, Microsoft, Qualcomm, and Ericsson. Billion dollar mobile companies are emerging from India, China, and Europe. Africa and Latin America are not far behind. As expected, mobile has removed the artificial boundaries of time and distance and empowered developers across regions. Mobile is also leveling the playing field, increasing the opportunities for entrepreneurs far and wide. A dreamer in Nairobi has as good a shot at success as anyone else in the west.

All the innovation and economic activity has also increased the patent activity around the world. While US remains the leader in terms of overall quality and quantity. China and its companies are starting to flex some muscles on the big stage. In 2014, China went past the European leaders Germany, France to become the 3rdplayer behind US and Japan to file the number of patent applications. While US, Europe, and Japan remain the overall leaders in patents both in quantity and quality; China’s is at the top in terms of growth rate. Amongst the top 3 filers, Huawei and ZTE are from China (Qualcomm was the third player on the list).

According to the US Patent Office (USPTO), in 2014, the number of patents granted grew over 8% by the end of 2014 for the same time period. The numbers of foreign filings are now in the majority for both the applications filed as well as the patents granted.

As we look into the mobile related patents, the growth is much more striking. The number of mobile related patents that were granted by the USPTO and the EPO increased significantly over the course of last decade. The US market saw a 440% increase while the European market saw a 71% increase in mobile related patent grants.

Another interesting fact is that in 2014, for the first time, over a quarter of all patents granted in the US were mobile related. This grew from around 2% in 1991 and 5% in 2001. In Europe, roughly 9% of the patents granted are now related to mobile. Europe saw a decline of 4% in mobile patents in contrast of 16% growth in the US market.

It is also interesting to note that a number of new Asian companies like Mediatek, Alibaba, and Xiaomi have stepped up their IP efforts and substantially increased the filings in the US.

Chetan Sharma Consulting analyzed over 7 million patents granted by the USPTO and EPO over the last two decades to understand how mobile has become a key enabler for all technology companies. Furthermore, we looked at patent granted to the top 65 technology companies who are active in the mobile space to understand their relative strengths and weaknesses in the mobile patents landscape. This study is fourth in the series that does an in-depth quantitative analysis of the mobile patents landscape.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in May 2015.

Disclaimer: Some of the companies mentioned in this paper are our clients.

Mobile World Congress 2015 Recap March 9, 2015

Posted by chetan in : 4th Wave, 5G, Connected Intelligence Era, Emerging Markets, Enterprise Mobility, European Wireless Market, Mobile World Congress, The Golden Age of Mobile, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Mobile World Congress 2015 Recap

Barcelona hosted its 10th edition of MWC last week. The beautiful weather in a lovely city provided the perfect setup to pontificate about the future direction of the mobile industry. This note presents the summary of the discussions and the observations from the show.

For a second year in a row, Mark Zuckerberg was the highlight of the show. The crowd and the buzz for his panel was probably more than for rest of the keynotes combined. Last year, Mark introduced the project, this year it was about the progress report. The operators look at Internet players with deep suspicion. The goal of getting more folks online is a shared objective in the industry but there is tension around the business model and the mechanics. Executives from Telenor, Bharti Airtel, and Millicom shared their experience (mostly positive) and the impact it has had on their data growth and revenues. All were cautiously optimistic.

One thing that will help the operators is to look at Internet players a bit differently and it requires a mental shift. Just like operators work with and compete against other service providers, they can find common grounds for collaboration in some areas and in other segments they will of course compete but having a one-track mind will detrimental to their progress. On the flip side, Internet players should appreciate the competitive dynamics in the market, the financial metrics that drives the business and the work to deliver a more customized partnership – something the Internet players are not that accustomed to. The Internet segment does a better job of managing coopetition than the telecom sector.

Probably the second most watched keynote was from Sundar Pichai. Rumors of a Google MVNO have been around for many months. The plans to launch the “nexus of networks” were discussed. Additionally, Sundar discussed how project Loon and project Titan could be used to provide the Internet backbone. The connectivity projects are nice science experiments at this stage but the MVNO project could have some implications depending on how far Google wants to take it. Will it be the Rokr project for Google or something more? Only time will tell.

Just like it has been for many years, Apple was at the center of many discussions at the show. In carefully orchestrated leaks, there was a steady flow of the news on Apple Watch. It will set the competitive bar for the segment and help everyone figure out their place in the market. Folks were deeply divided on the likelihood of success. Battery life might end up being the key-determining factor. There was also a lot of discussion around the news reports on Apple Pay fraud issues.

For the first 3 generations, technical guys were in charge of the wireless technology Gs. With 4G, the marketing department took over and it looks like they are not ready to relinquish their position anytime soon. The hype around 5G was at its highest at the show. In the last 3 months, every major entity has had something to say about what 5G should be and what will it enable. There is also a tussle for who gets to lead the industry on 5G.

Europe is anxious to regain the mantle it lost after GSM. But there is a big problem. The 4G penetration in Europe won’t even get past 50% until 2020, the investment wouldn’t have been recovered by then. Someone bring out the econ 101 book, please! It seems like 5G is going to revolve around mmWave spectrum and technologies (very few see a new interface coming) but this has massive capex and opex implications in addition to the practical implications of millions of nodes to deliver the desired throughput. That doesn’t mean they shouldn’t continue to work on pushing the boundaries and take leadership position in developing the standards and use cases. However, from a deployment point of view, we need a filter of reality.

Also, the industry is getting ahead of itself. Keep the marketing guys in the barn, settle on the definition, the how, the use cases, and then figure out the technical and marketing roadmap. (there was plenty of talk about pre-5G as well). Of course, one can achieve 10 Gbps today but mostly under impractical configurations. What’s also troubling is that the Internet players are not part of the standards process. Matt Grob, CTO of Qualcomm responding to a question about the timeline for getting 5M 5G subs suggested we might get there by 2022. As a reference, 4G reached the 5M mark in 2010. KT CEO gave a delightful presentation of 5G optimism. A number of position papers were released – fun reading for geeks if you are into these long reads. We will be releasing our own thoughts on 5G later this month expanding on piece we explored earlier this year.

All eyes were on FCC Chairman Wheeler after the landmark ruling last month. There was no new news per say but the topic was hotly discussed and debated in public and private forums. While the journey is just starting, the world is looking to see how things will end-up. As I mentioned to the WSJ, no country wants to be viewed backwards and whatever happens in the US market will have implications worldwide over the next decade and beyond. I also get the sense that we don’t quite understand the impact of unintended consequences. For e.g. there are several use cases like transportation, medical, financial, etc. where prioritization is required. Voice has been prioritized for ages and will be in the future. 5G will have different prioritization schemes depending on the radio, the applications, and the requirements. Ideally, you want the application to request a prioritization level. It is hard to justify that a moisture sensor in a sprinkler should get the same prioritization as the x-ray going over the wires. Prioritization exists in all forms of access and embedded in the way of life for good reasons. It is not quite clear what will be allowed and what will be dealt on a case-by-case basis. Maybe all this is taken care of in the ruling. Hopefully, the 300+ page tome will answer some of these questions.

The best phone launch belonged to Samsung. Learning from past mistakes, it was a no-nonsense presentation. The S6 edge looks sleek and beautiful, the camera is remarkable. However, for the purists the lack of the SD card and the removable battery is troubling. The price point for the highest end might go past $1K. It is unlikely that S6 will steal share away from i6 but it will probably take it away from other Android OEMs and will see a nice revenue bump in the 2nd half of the year. It might help stabilize the severe decline in profits from 2014. Samsung Pay puts Android on the mobile payments map as well. There were device launches from Nokia, HTC, and others but nothing captured the attention of the show. Orange/Mozilla came out with a unique offering of a 35 Euro package that includes a decent smartphone, 6 month of 500MB/mo, unlimited voice and messaging. It will be launched in the African markets to get more people transition over to smartphones and data services.

The current money in IoT is clearly in the industrial projects. IoT is a great enabler to re-architect business processes, revenue streams, business models, companies, and industries. While industrial IoT didn’t make a splash, in conversations with folks, there are all sorts of projects being done around the globe and there is serious money being spent. One project can sometimes account for the entire consumer IoT revenue stream. Accenture/Intel had some cool demonstrations to tell the story. Lot of work is going into IoT driven factories, buildings, and the supply-chain.

Consumer IoT didn’t make a big splash like it did at CES in January. There were no drones, robots, or humanoids running around. A number of OEMs came out with watches and sensor bands – nothing that will take the industry by storm. Huawei probably gets the vote for the best watch launch at MWC. In general, for the current stream of connected watches, the technical specs have triumphed the fashion specs. Can Apple change the equation this year?

In case, it wasn’t clear to some – AT&T is undergoing a significant transformation into becoming an international solutions provider – it was apparent from the show. In the European show, AT&T had the best presence amongst its peers. European operator landscape is dominated by the quad-play moves and consolidation. As usual, the Koreans and the Japanese impress with their quirky art of storytelling. Using a robot to emphasize low 5G latency by SK Telecom was my favorite. AT&T has been signing up the most number of connected car contracts and the numbers are starting to impact the financials in a material way. A select group of the operators are showing meaningful revenues from the 4th wave.

VR helps tell a good story. Several companies used VR headsets (mostly Oculus and Samsung) to have attendees experience their product, services or vision. Ericsson had a cool setup to remotely controlled excavator thousands of miles away. Will VR enter the boardrooms? Quite likely.

After a slow start, LTE-U is gaining quite a bit of traction. Qualcomm’s efforts are bearing fruit and we should be seeing some deployments in 2016. The Wi-Fi ecosystem has expressed concerns but nothing that can’t be overcome. Most of tier-1 operators in the western markets have some form of SDN/NFV initiatives in place. AT&T’s Donovan announced that they have already 5% coverage and are on track to reach 75% by 2020.

Security and privacy continue to be hot topic in the post-snowden era especially in Europe. Regulations are also tightening up. EU wants much stronger privacy regulations. European operators want harmonization of privacy regulation between operators and the Internet players. IoT multiplies the attack nodes and it has serious implications for both enterprise and consumer domains.

Few M&A transactions during the week got the attention of the industry. The biggest one was from Freescale and NXP who announced a mammoth $40B merger. Then Mavenir got acquired by Mitel for $560M. HP acquired Aruba to boost the Wi-Fi business and paid a premium at $3B.

Other items of interest were 3D biometric fingerprints (Qualcomm), autonomous cars in 2016 (Nissan), zero rating (Wikipedia), B2B $1B revenues (Ooredoo), sub-$50 devices (Android, Mozilla), Windows 10 (Microsoft), 100M mobile money users (GSMA), 5G Holograms (KT), Smart Home Air Service (Conway), Lighting as a Service (Philips), Resiliency and Fault-Tolerant SDN/NFV layer (Stratus), 6G (DoCoMo), Runcible (Monohm), Selfie’d Journalists (they were everywhere), Wireless charging furniture (Ikea), MoDe Electric Bike (Ford), Connected carry-on (Bluesmart), and more

Best launch – Samsung S6. Well executed. Generated lot of interest from media and partners.

Best booth – Ericsson. They have really mastered the art of storytelling through physical and digital assets.

Best parties – Siris Capital and Qualcomm

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward.

Disclaimer: Some of the companies mentioned in this update are our clients.

US Mobile Market Update Q4 2014 and 2014 February 23, 2015

Posted by chetan in : 4G, 4th Wave, 5G, AORTA, ARPU, Chetan Sharma Consulting, Connected Devices, Connected Intelligence Era, Devices, European Wireless Market, Fourth Wave, Internet of Things, IoE, IoT, LTE, Mobile Applications, Mobile Cloud Computing, Mobile Devices, Mobile Future Forward, Technology Cycles, The Golden Age of Mobile, US Wireless Market, Wi-Fi, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update Q4 2014 and 2014

 

Summary

The US mobile market continues to be the biggest market by revenue and 2014 was a key transition year for the industry. The overall market grew 21% to almost $400B. Voice revenues declined by 15%, messaging by 16%, and tablets by 4%. The biggest winners were the 4th wave/OTT services which grew by 92%. Access revenues increased by 32%, handsets by 11%, and wearables by 150%. Verizon, AT&T, and Apple were the top 3 players by revenue (from the US market).

Last Jan, we had estimated $108 Billion in mobile data revenues for the market and the revenues ended spot on at $108B making US the first market to surpass the $100B mark. We are forecasting that the mobile data service revenues will increase by 22% to $132 Billion in 2015. Verizon will become the first operator to generate more than $50B from data services in 2015.

Verizon became the second operator after China Mobile to cross the milestone of 100 Million postpaid subs. After acquiring lusacell and Nextel Mexico (still pending), AT&T became the biggest North American operator with over 131 million subs. In 2014, US also crossed the 350 million subscription mark.

The average mobile data consumption (cellular) crossed 2GB/mo in 2014. In the US, it took roughly 20 years to reach the 1GB/user/mo mark. However, the second GB mark has been reached in less than 4 quarters. An entire year’s worth of mobile data traffic in 2007 is now reached in less than 100 hours.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in 2014, the data pricing has plummeted by 77%. It is having an impact on the industry financials which might help clear the way to further M&A in the US market.

The intense competition amongst the operators meant a whopping 20% rise in OPEX QoQ and a 1% decline in CAPEX YoY. The income stayed flat while EBITDA grew modestly at 3%.

In our 4th series of papers, we had postulated for years that the 4th wave revenues will become bigger than any of the previous curves. This finally happened in 2014 in the US market with the revenues from the 4th wave applications and services built on top of the IP access layer surpassed both voice and data revenues. The operator share of the US mobile industry revenues fell below 50% for the first time since the birth of the industry.

Smartphone penetration increased to 75% and roughly 95% of the devices sold now are smartphones.

The Android OEM ecosystem suffered its first major profit decline in 2014 - the profits dropped precipitously by 44%. iOS revenues increased by 31%. The difference in profits between the two major ecosystems is now $33 Billion – the highest it has ever been.

Apple broke more records in a single quarter than most athletes break in their lifetime. The amount of revenues and profits generated by a rectangular screen sent everyone in a tizzy. To get a sense of the scale, consider this – Apple’s iPhone generated more revenue than revenues generated by entire portfolio of products from Microsoft, Google, Facebook, and Twitter combined. Add in Macs and Tablets and you can mix a dozen more companies in the mix. The laser focus on quality and the benefit of the brand loyalty and aspiration catapulted into the business stratosphere that few can even dream of reaching.

Apple also introduced two new products late last year – Watch and Apple Pay. While it is too early to figure out the overall impact of Apple Watch (it clearly will put some Swiss Watchmakers out of business), Apple Pay appears to be more disruptive. Apple’s classic approach of embracing the ecosystem and thinking end-to-end might finally disrupt the otherwise staid financial sector. Apple Pay is already seeing significant traction and the financial industry is nervously promoting the service. Rumors of Apple Car will keep media on its toes for the next few years.

4th wave services continue to grow at a very past face around the globe. At least 37 companies generated a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

The difference between Sprint and T-Mobile number of subs is less than a million now – the narrowest it has ever been. Like we suggested mid-last year, T-Mobile is likely to become the number three operator in a matter of weeks now. This is more or less just a symbolic event with the transfer of bragging rights.

T-Mobile accounted for over 40% of the overall net-adds for the year with Verizon coming in second at 30%. After having a lack-luster year in 2013, the operators doubled the net-adds in 2014 with connected devices driving most of the growth.

Race To The Bottom?

The mobile data traffic has been doubling YoY in the US. The consumption is clearly growing with the introduction of new devices, network upgrades, and application enhancements. Operators are seeing tremendous pressure on data pricing due to the competitive environment. EBITDA declined for the second straight quarter.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in the first 9 months of 2014, the data pricing has plummeted by 77%. It is having an impact on the industry financials which might help clear the way to further M&A in the US market.

Is Android in trouble?

Samsung suffered one of the biggest mobile revenue and profit declines in its history. As the dominant leader of the Android ecosystem, it is caught in the middle of two major trends that ironically enough Samsung had influenced. The bigger screen phone segment that Samsung seeded has become the fastest growing segment in smartphones. Apple following Samsung into the segment meant that it took away the single biggest differentiating factor and as such a serious impact on its high-end line. The lower end which yields higher volumes but much smaller ASP has attracted hordes of local developers in China, India, and Russia who have better logistics and operational advantage. Many of these players are becoming successful. To damage Samsung, they all don’t need to be successful, just enough to be in the market to sway the market. As such, Samsung has seen its share dwindle in the two biggest emerging markets.

Much of the current situation has been predictable for some time. While Samsung has ridden the smartphone wave masterfully, it hasn’t been able to build a platform moat, something that helps fundamentally differentiate its products in the sea of Android devices around the planet. They are not in a Blackberry or Nokia panic situation yet as some in the media have surmised. But, they need to figure a way out of the middle band. Unlike Nokia or Blackberry who were blinded by their success and ignorance, Samsung has shown it is a more nimble competitor. Samsung’s R&D and marketing is also second to none. Its diversified portfolio also helps in cushioning the drop in the phone segment. Historically, OEMs with such sharp revenue declines haven’t been able to arrest the decline. Can Samsung do it? Samsung is launching Galaxy 6 at MWC this weekend.

Given that Samsung controls most of Android ecosystem profits, the Android ecosystem suffered a 44% decline in profits. The woes of OEMs such as Sony, Motorola, and others also contributed to the decline. We can expect some of the Android OEMs leaving the device business altogether.

Operator M&A

In his classic book, “Competition in Telecommunications,” Nobel Laureate Jean Tirole wrote, “With digital technology, telecommunications, cable TV, broadcasting, and computers have become a single industry, which will be a critical element of our economies’ backbone. With the impending opening of competition, industrial restructuring is progressing at a fast pace.” The book was written almost 15 years ago. As I have written before, the computing and communications industries are merging into one and that collision is generating ripple effects some of which we are starting to understand (more on the Connected Intelligence Era trends here)

One of the implications of the 4th wave evolution is that there will be fewer mobile operators in the world. As we have argued in the papers, many of the smaller players just won’t be able to keep up and compete. AT&T acquired Mexican operator Iusacell (it also made the bid for Nextel Mexico) which made AT&T a clear leader in North America with almost 131 Million subscriptions. As we mentioned in our 4th wave series of papers, the number of operators will continue to shrink with fewer global operators who will seek to combine wireless and wireline assets to strengthen their moat. It is quite likely that US Cellular will be acquired in 2015.

Net-Neutrality Debates

After a blockbuster spectrum auction, FCC is looking to put its stamp on the future of the Internet by proposing net-neutrality rules later this week. President Obama decisively tilted FCC’s position on the subject. However, this is not a done deal yet. The legal and political apparatus is likely to react quite strongly to the ruling and we are in for a tough fight on this one. Other governments and regulators are also keenly watching the debate and the final ruling. Dish ended up acquiring a bulk of the spectrum wares. Is this a precursor of their wireless moves or was this just old-fashioned asset hoarding?

4th Wave Revenues

For the first time, US operators revealed some of their 4th wave (digital) services metrics publicly. Verizon reported $585 million in 2014 up 45% from a year ago. At the current run-rate, this will be a billion dollar business by 2016. AT&T reported 2.8M connected car connections and 140K home security connections. The connected car segment is clearly on its way to becoming a billion+ dollar business for AT&T. Connected cars accounted for 62% of the connected devices for AT&T.

Globally, 37 companies generated a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

The Upcoming 5G wars?

I started my career when 1G was all the rage. My first 4G project was back in 2002. By some measures, we are already behind on the 5G discussions. In general, it takes 7-10 years before the standards are finalized and then the network technology lasts for approximately 20 years before a market moves onto the next generation of technology. US led in the growth of 1G (AMPS, TACS) followed by Europe on 2G (GSM, CDMA). Japan took the leadership role with 3G (WCDMA, EVDO) and US wrestled it back on 4G (LTE). Japan and EU are determined to lead on 5G and have been making very public statements and R&D investments about their ambitions on 5G. Japan of course has a very clear goal of having 5G by Tokyo Olympics in 2020. Am sure some operator(s) somewhere will jump the gun and start calling LTE-A+ as 5G around 2017-18 or sooner. You can expect a lot of activities both in public and private on 5G as companies and governments try to figure out a way to claim the 5G leadership mantle.

We have a 5G paper coming out in March. You can read the summary here – 5G: The history of the future.

Apple Pay

Mobile Payments has long infatuated mankind. Many players with deep pockets have invested in the segment but in truth, the market was waiting for Apple to show up and show up it did with the launch of Apple Pay. In an ambitious orchestration of the financial supply chain, Apple introduced a simple payment proposition. The basic strategy is for commerce to flow through iOS. The institutions are even paying a share of the transaction to Apple which previous payment explorers are watching in utter disbelief. Ladies and Gentlemen, get ready for iTunes 2.0.

What to expect in the coming months?

2014 was a tremendous year for the mobile as it becomes omnipresence in every industry. We saw some massive moves, astounding acquisitions, and interesting strategic endeavors. 2015 promises to be an exciting year for the industry as well.

As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

Against this backdrop, the analysis of the Q4 2014 and 2014 US wireless data market is:

Overall Industry Revenues

· The overall market grew 21% to almost $400B.

· Voice revenues declined by 15%, messaging by 16%, and tablets by 4%.

· The biggest winners were the 4th wave/OTT services which grew by 92%.

· Access revenues increased by 32%, handsets by 11%, and wearables by 150%.

Service Revenues

· The US mobile data services revenues in Q4 2014 increased 3% and crossed the $25B market for the first time.

· The mobile data services revenue crossed the $100B mark in mobile data services revenue to become the first country to generate $100B from mobile data services.

· Verizon and AT&T dominated the quarter accounting for 70% of the mobile data services revenue and had 68% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q4 2014. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU fell by 2.57%. 

· Data contribution to the overall revenues is now at 60%.

· The postpaid ARPU continues to decline for all operators with AT&T and T-Mobile experiencing double digit losses for the year.

Subscribers

· The US market had the best net-add year in the last 7 years.

· The US operators added 20M new subscriptions with T-Mobile leading the pack at 40%.

· Verizon’s tablet net-adds accounted for almost 50% of the overall tablets that were added in Q4. Verizon has caught up with AT&T on the tablet front.

· T-Mobile’s postpaid continued to see the positive growth for the seventh straight quarter. It has recovered all its losses that began in Q3 2009 and is now growing in the positive territory.

Shared Data Plans

· Shared data plans launched by Verizon and AT&T have been quite successful. The attachment rates have increased tremendously over the course of 2013-14 with more consumers opting for cellular tablets and connected devices. 61% of postpaid accounts at Verizon are now on shared plans. For AT&T, the number is even higher at 70%.

· Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive on premise Wi-Fi solutions.

· 52% of AT&T’s postpaid accounts are on 10GB+ plans.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 69% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 88% in mobile (of the total advertising revenue) up from 60% in 2013. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· In 2014, we are also seeing continued investments from the operators especially AT&T, Verizon, and Sprint in non-traditional segments like home security, healthcare, insurance, automotive, enterprise mobility, advertising, and security, and others. Collectively, this is already a multi-billion dollar business in the US.

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

· Verizon reported $585 million in 2014 up 45% from a year ago. At the current run-rate, this will be a billion dollar business by 2016.

· AT&T reported 2.8M connected car connections and 140K home security connections. The connected car segment is clearly on its way to becoming a billion+ dollar business for AT&T. Connected cars accounted for 62% of the connected devices for AT&T.

Connected Devices

· Connected devices (non-phones) accounted for almost 52% of the net-adds in Q4 2014. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· For AT&T, Connected cars started to form a significant base of the connected devices segment with 62% of the new connections in the segment coming from cars.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 95% of the devices sold in Q4 2014. Within the next two years, the feature phone category will practically be extinct in the US market.

· The smartphone penetration in the US is now at 75%.

· After ceding the lead to Android for the last three straight quarters, iOS roared back to reclaim the lead with 54% share of the smartphones sold. For the year though, Android edged out iOS.

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 67M making it the leading LTE operator in the world (this year China Mobile will overtake Verizon to become the number 1 LTE operator by subscriptions). Other three operators are also deep into their LTE deployments. Verizon reported that 84% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in May 2015.

Disclaimer: Some of the companies mentioned in this update are our clients.

Mobile Breakfast Series–The Future of Mobile Commerce/Payments January 30, 2015

Posted by chetan in : US Wireless Market , add a comment

Greetings,

In 2014, Mobile Commerce is going to generate over $100 billion+ in revenue. Mobile Commerce already accounts for over 12% of the digital commerce in the US. This is the revenue that didn’t exist a few years ago. We will talk to executives who are driving mobile commerce and who are powering the technology behind these billion dollar initiatives. Digital only retailers are likely to take 75% of the mobile commerce revenue share. How are the traditional players reacting to the threat and the opportunities? How does the difference in behavior on smartphones and tablets impact commerce? As we move into the Connected Intelligence Era, how will commerce change in both the physical and the digital worlds? How will Apple Pay transform the financial industry? We will tackle some of the thorniest questions in front of our industry.

Sam Liang, CEO and founder of Alohar Mobile (Alibaba)

Prat Vemana, VP – Mobile and Commerce, Staples

Sebastien Taveau, VP and Chief Developer Evangelist, MasterCard

Chetan Sharma, CEO, Chetan Sharma Consulting (moderator)

We will explore the mobile commerce opportunities and shifts in the ecosystem in detail across the globe. You don’t want to miss this one.

Registration: http://www.mobilebreakfastseries.com/register.html

Venue: Columbia Tower Club, 701 5th Ave #7500, Seattle, WA 98104

Date: Feb 17th 7:30 – 10:30am

Look forward to seeing you soon.

Regards,

Chetan

CES Observations 2015 January 16, 2015

Posted by chetan in : 4th Wave, 5G, CES, Chetan Sharma Consulting, Connected Intelligence Era, The Golden Age of Mobile, US Wireless Market, Worldwide Wireless Market , add a comment

CES 2015 Observations

International CES – the annual gadget fest is a cauldron of hopes and aspirations of big and small entrepreneurs, crazy and whacky ideas, the place where roadmaps are laid bare – some obliterated by the time the show is over while others benefit from the infusion of interest and inspiration. The promise of the Connected Intelligence Era was in full display last week in Vegas where the faithful converge to get a glimpse of what’s to come. More than anything else it is the time to meet friends and colleagues that provide much more insights than any of the booths, launches, and press conferences could disseminate.

Here is the summary of our observations from 2015 CES.

Transcendence – Coincidentally my trip started by watching Transcendence – a story about the metamorphosis of man and machine. It was interesting to view the show from this angle and try to connect the dots of the future.

First, let’s do the numbers – CEA expects the overall electronics market to grow by 3% primarily because of growth in the new category of connected and emerging devices (also includes 4K Ultra HDTV) which are likely to reach $11 billion in revenue in the US market.

Connected Intelligence Landscape – CES lay bare the evolution of the connected intelligence landscape. Millions of end-points are propping up that communicate and interact in ways unexpected. We are all grapple with what it means to progress of technology and humanity and how can we harness the power of “connectivity” and “intelligence.” Some things are moving forward at a much faster pace for e.g. autonomous vehicles, self-watering plants, cancer detecting pills are all examples of connected computing and actionable intelligence. Selfie sticks – not so much.

The IoT Show – If CEA had switched its name to the “The IoT Show,” it won’t be too far off for all the major discussions at the show were around the promise of IoT. The number of companies having something to do with IoT grew manifold this year. Though nothing significant has emerged from the level tricks and trinkets, the overarching theme is that one will see hundreds of these floating around each consumer to prepare an aura of information and intelligence around them that anticipates problems, provides guidance, and keeps them from getting into trouble. But where is the money? As usual, it seems pretty clear that the money will be in the tools and components and not the actual end points. Big winners will be the component suppliers and software players who can tie all of the complexity together in an easy to use human language and interface. There is probably more money in battery packs right now than IoT sensors.

Wearables – Humankind’s first rendezvous with a wearable was back in 1286 in Italy when the Dominican friar figured out the art of making glasses. More progress has been made in this segment in the last 12 months than all the centuries’ prior. In my last year’s CES note, I surmised that the market will segment into high-end luxury (Apple, etc.) and low-end commodity (Chinese OEMs). This theory is unraveling in front of our eyes. Apple is due for its Apple watch splash this quarter and the Chinese are flooding the market. For every $150 fitbit, there was a $20 identical unit from a Shenzhen vendor. For every $200 basis watch, there was an identical watch for a fraction of the cost. Obviously, the Chinese firms need distribution to the western markets and it is not an easy problem to solve. On top of that zero marketing and brand loyalty means there is an opportunity for someone to step in a distribution platform and make a killing.

The value is in the intelligence – As I outlined in my Connected Intelligence paper, the “sensing” part of the ecosystem is going to be commodity. Any new performance enhancements will last only a few months if not days so the value has to be built beyond “sensing” and in “making sense of the data” part. The two big aggregation islands at the OS layers are obviously Android and iOS but there is room for someone to congregate these data points in hubs that control a home or an office, an airport or the mall. Historically, each new wave brings in its own set of aggregation pods – windows for PCs and Android/iOS for smartphones. So, it is likely we will see new plays in the IoT space.

Ma, the Robot is home now – the Robots are getting real in how they interact with humans that some of the science fiction movies look very real today. The Japanese are leading the way with robots and what can be done with them especially in the consumer environment.

Handsets – Just when we thought the market for > $5K mobile handsets was over, Lamborghini launches a $6.5K handset. One sale to an unsuspecting Saudi sheikh has been confirmed. For the rest of us, the market stays flooded with innumerable choices. As I mentioned in my year-end update, the Chinese OEMs control over 40% of the smartphone market now. It is going to be over 50% this year and strolling the show floor you can see why. The market is getting flooded with cheap Android devices. With some really good-looking Android smartphones at $25, the ability to charge more uniformly around the world is virtually gone. I even saw some Samsung look-alikes with 14K gold for only $120. You can’t tell the difference between the brands.

Autonomous Cars – Last year’s show was about connected cars. This year we moved to very possibility of autonomous cars. It is quite likely that a kid born this decade might never need a driver’s license. Thanks to the market push by Google and Tesla, this segment is moving incredibly and excitingly fast and we are going to see some fascinating science fiction concepts come to life over the course of the next 5 years. Regulations obviously need to be figured out but this train is moving so fast that we better get on board. On the operator front, AT&T continues to corner the US market with OEM deals.

3D printing – Is there anything you can’t print with 3D printers – organs, food, rockets, fuel – you name it, you got it. But will you?

Connected Home – Continuing the theme of IoT, connected home innovators were in full display mode. Solutions are starting to come together though they are still cumbersome, work only in silos, battery life is a problem, security is iffy, and the pricing is not attractive just yet for it to be a mass market but slowly and steadily we are cracking the code.

Healthcare – The CES highlight for me was to attend the talk by Dr. Eric Topol (if you haven’t read his new book, do so now). He is a great champion of technology transforming the health care system and as a result changing the doctor-patient relationship forever and for good. As he mentioned in his address, the healthcare profession hasn’t been challenged since the 200 BC. He listed an endless stream of companies who are changing how various aspects of health and wellness gets measured and analyzed that lays bare the futility of today’s healthcare system.

Security and privacy – Last year, we released paper on “IoT Data Privacy Framework.” FTC seems to agree with many of the arguments and concepts laid out in the paper for connected device privacy and security. The agency is expected to release its recommendations in a paper later this year. In general, security continues to be a hot topic with every keynote addressing it. Even President Obama is expected to make cyber security as one of the key themes of this year’s state of the union address.

Dish $20 – Probably the biggest surprise of the show came from the most unlikeliest quarters of the industry. Dish announced a $20 service that provides basic set of channels + the prized ESPN channel. Consumers are likely to switch in droves to accelerate the cord-cutting trend.

TV – What will be a CES show without some TV splash? 3D TVs have been a flop but consumers still crave for high-res and slim designs. Samsung, LG, Sony, and others continue to impress with new designs however pixel based strategy is getting old.

Samsung’s strategy – Samsung has taken the expected hit in the second half of 2014. At CES, some of the early elements of a strategy could be sensed out from the tea leaves – Tizen led IoT strategy, convergence of Samsung products glued by common interfaces, and rethink of the smartphone product lines around the globe. The company still needs to do a better job of telling its story.

Virtual Reality – There are many more players jumping into the VR space after the spectacular rise of Occulus last year.

Enterprise – A well-organized AT&T developer summit kicks off CES every year. As you might have gathered from my past writings, the new mobile money is flowing into the enterprises. Vertical industries and players who serve them are utilizing mobility, IoT, and cloud to change how they design their own business processes and instruments, manage their employees and engage with the customers. I am always impressed with what developers are able to come up with during Hackathons. It is surprising that the governments and corporations around the world don’t invest more in bringing entrepreneurs under a common umbrella to see the possibilities. AT&T also opened up its digital life platform for partners in the ecosystem.

Coolest keynote – Intel – Brian Krzanich excelled in driving home his three points around computing unleashed, intelligence, and wearable revolution. The new Realsense technology can expand the use cases from desktops to drones. Diamler’s Zetsche also scored points for bringing a cool looking autonomous concept car on the stage.

Overall, CES is a good show to sense the pulse of the industry at the start of the year and catch-up with colleagues who provide real insights into what’s going to be important.

Have a fabulous 2015

Chetan Sharma

Request for input–Annual Mobile Predictions Survey 2015 December 8, 2014

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Dear friends,

Trust that the end of a fabulous mobile year is treating you well. Wish you and yours a very happy holiday season and best wishes for a terrific 2015.

As is the tradition, we are doing our 8th Annual Mobile Predictions Survey for 2015. I would like to request your input in the process. We rely on our community and colleagues to help us understand the trends for the upcoming year.

The survey is available at https://www.surveymonkey.com/s/N26NKZT

The questions are:

1. What was most newsworthy in Mobile 2014?

2. What will be the biggest mobile stories of 2015?

3. Who are the top 4 important players in the mobile ecosystem?

4. What will be the breakthrough categories in mobile in 2015?

5. What will be the most popular consumer mobile applications in 2015?

6. What is likely to happen in the wearables category in 2015?

7. Who will dominate the mobile payment/commerce space?

8. Who will make the biggest mobile acquisition in 2015?

9. Who is doing the most interesting work in the IoT space?

10. Which solutions will gain the most traction for managing mobile data broadband consumption?

11. Which category will generate the most mobile data revenue in 2015?

12. When will mobile commerce be greater than ecommerce?

13. The company bringing the most successful mobile gadget of the year - 2014 and 2015?

14. Mobile company of the year - 2014 and 2015?

15. Automation and Digitization of industries will lead to?

16. Which of the following are likely to happen in 2015?

17. Which operator is best positioned for the digital world?

18. What category will be impacted the most by mobile in the next 5 years?

19. Which segments are likely to get disintermediated the most by algorithms in the next 5 years?

20. Who was and will be the mobile person of the year?

As an incentive, we will be giving away 10 copies of our exclusive edition Mobile Future Forward 2014 book (Connected Intelligence Era: Golden Age of Mobile) that is a collection of essays and interviews from some of the most influential mobile executives on the future of mobile.

Deadline: Dec 29th. Results will be released in early January.

Thanks and see you in 2015.

Kind regards,

Chetan Sharma

US Mobile Market Update – Q3 2014 November 10, 2014

Posted by chetan in : 4G, 4th Wave, 5G, AORTA, Chetan Sharma Consulting, Connected Intelligence Era, Mobile Cloud Computing, Mobile Ecosystem, Technology Cycles, The Golden Age of Mobile, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update – Q3 2014

http://www.chetansharma.com/usmarketupdateq32014.htm

Download

Summary

The US mobile data services revenue exceeded $25B for the first time and increased 23% YoY and 7% QoQ. The US market will easily exceed the $100B mark in data revenues in 2014 thus becoming the first nation to do so.

Verizon became the second operator after China Mobile to cross the milestone of 100 Million postpaid subs.

The average mobile data consumption (cellular) crossed 2GB/mo. In the US, it took roughly 20 years to reach the 1GB/user/mo mark. However, the second GB mark has been reached in less than 4 quarters. An entire year’s worth of mobile data traffic in 2007 is now reached in less than 100 hours.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in the first 9 months of 2014, the data pricing has plummeted by 77%. It is having an impact on the industry financials which might help clear the way to further M&A in the US market.

Smartphone penetration increased to 72% and roughly 93% of the devices sold now are smartphones.

Samsung suffered one of the biggest mobile revenue and profit declines in its history. As the dominant leader of the Android ecosystem, it is caught in the middle of two major trends that ironically enough Samsung had influenced.

After a relatively quiet year, Apple had a blockbuster quarter with new product introductions. The expected bigger screen device arrived and was an instant big hit. It is going to do really well in Q4. The 6+ was in severe short supply and in Q3, the ratio of 6:6+ was 10:1 in the US market.

Apple also introduced two new products – Watch and Apple Pay. While it is too early to figure out the overall impact of Apple Watch (it clearly will put some Swiss Watchmakers out of business), Apple Pay appears to more disruptive. Apple’s classic approach of embracing the ecosystem and thinking end-to-end might finally disrupt the otherwise staid financial sector.

4th wave services continue to grow at a very past face around the globe. We expect 37 companies to be generating a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

T-Mobile recovered all of its postpaid losses since Q3 2009. At its peak, T-Mobile had cumulatively lost almost 5 million subscribers. However, in the last 4 quarters, the 4th place operator has added over 4.5M subs to recover in a dramatic fashion. Sprint on the other hand lost postpaid subs for the 11th straight quarter.

Due to its strong performance, T-Mobile has narrowed the gap with Sprint to roughly 1M subs. As expected, Sprint launched a series of price cuts to counter T-Mobile’s uncarrier moves to recapture the value share of the market. The Sept and Oct numbers show that Sprint has improved its performance but will it be enough to maintain its #3 spot that it has had forever?

The US market had the best net-add quarter in a decade and probably the 2nd best quarter in the history of the US wireless market.

The net-adds rebounded strongly in Q3 2014 on the back of strong performances by Verizon, AT&T, and T-Mobile. The ratio of non-phone to phone net-adds was 1.66. 62% of net-adds were connected devices.

Race To The Bottom?

The mobile data traffic has been doubling YoY in the US. The consumption is clearly growing with the introduction of new devices, network upgrades, and application enhancements. Operators are seeing tremendous pressure on data pricing due to the competitive environment. EBITDA declined for the second straight quarter.

From 2010 to 2013, the data pricing declined by only single digits YoY. However, in the first 9 months of 2014, the data pricing has plummeted by 77%. It is having an impact on the industry financials which might help clear the way to further M&A in the US market.

Samsung – Can It Rediscover Its Mojo?

Samsung suffered one of the biggest mobile revenue and profit declines in its history. As the dominant leader of the Android ecosystem, it is caught in the middle of two major trends that ironically enough Samsung had influenced. The bigger screen phone segment that Samsung seeded has become the fastest growing segment in smartphones. Apple following Samsung into the segment meant that it took away the single biggest differentiating factor and as such a serious impact on its high-end line. The lower end which yields higher volumes but much smaller ASP has attracted hordes of local developers in China, India, and Russia who have better logistics and operational advantage. Many of these players are becoming successful. To damage Samsung, they all don’t need to be successful, just enough to be in the market to sway the market. As such, Samsung has seen its share dwindle in the two biggest emerging markets.

Much of the current situation has been predictable for some time. While Samsung has ridden the smartphone wave masterfully, it hasn’t been able to build a platform moat, something that helps fundamentally differentiate its products in the sea of Android devices around the planet. They are not in a Blackberry or Nokia panic situation yet as some in the media have surmised. But, they need to figure a way out of the middle band. Unlike Nokia or Blackberry who were blinded by their success and ignorance, Samsung has shown it is a more nimble competitor. Samsung’s R&D and marketing is also second to none. Its diversified portfolio also helps in cushioning the drop in the phone segment. Historically, OEMs with such sharp revenue declines haven’t been able to arrest the decline. Can Samsung do it?

Operator M&A

In his classic book, “Competition in Telecommunications,” Nobel Laureate Jean Tirole wrote, “With digital technology, telecommunications, cable TV, broadcasting, and computers have become a single industry, which will be a critical element of our economies’ backbone. With the impending opening of competition, industrial restructuring is progressing at a fast pace.” The book was written almost 15 years ago. As I have written before, the computing and communications industries are merging into one and that collision is generating ripple effects some of which we are starting to understand (more on theConnected Intelligence Era trends here)

As expected Iliad gave up its dream of acquiring T-Mobile. The deal never made sense and had no market merit. This has left DT scratching for other options. The most likely scenario is that Sprint and T-Mobile try to get married in 2017 again or the FCC/DOJ have a change of heart due to declining financial performance of the two players. Another possibility is America Movil getting into the fray. And finally, some cable companies are likely to flex their muscles at an opportune time.

AT&T acquired Mexican operator Iusacell last week. If approved (and there is little reason why it won’t), it will make AT&T a clear leader in North America with almost 127 Million subscriptions. As we mentioned in our 4th wave series of papers, the number of operators will continue to shrink with fewer global operators who will seek to combine wireless and wireline assets to strengthen their moat. Perhaps, US Cellular should sharpen its pencil.

4th Wave Revenues

For the first time, US operators revealed some of their 4th wave (digital) services metrics publicly. Verizon reported $150M revenues from M2M and Telematics. At the current run-rate, this will be a billion dollar business by early 2016. AT&T reported 2M connected car connections and 140K home security connections. The connected car segment is clearly on its way to becoming a billion+ dollar business for AT&T. Sprint is also quite active on the 4th wave front but hasn’t shared any details yet.

Globally, we expect 37 companies to be generating a billion dollar or more from 4th wave services in 2014 – a 311% jump from 2012.

Microsoft Freemium Moves

First it was the OS, Now it is the Office portfolio – Microsoft is leaving no sacred cow unturned in order to gain relevancy in mobile. However, it seems that for the Office apps, Microsoft is essentially doing what it did for Windows Mobile i.e. just pare down the desktop OS for mobile. It never worked. The Office apps on competitive platform is a good strategy but they are still the pared down versions of the desktop app. As such, while people are downloading these apps out of curiosity, they are really not using them. However, the recent moves do indicate a willingness to rethink the business models, the platforms, and the distribution models which is a good start.

Amazon’s Mobile Aspirations

While Amazon is the biggest mobile commerce player in the world by a distance, its hardware aspirations have failed to impress. As expected, the Fire Phone was a complete dud. As we explained previously, it never had a shot. It was Zuned out of the market in record time (Facebook Phone probably holds the world record but Fire Phone wasn’t too far behind). A product without any substantial differentiation doesn’t stand a chance in this crowded market. While Kindle tablets had a tempting price point that made them relatively successful, Fire Phone failed across all dimensions. Software mistakes can be iterated upon. Hardware mistakes show up on the balance sheet.

In the meantime, Amazon is poised to have a blockbuster mobile commerce quarter to make it one of the most dominant players on the 4th wave.

The Upcoming 5G wars?

I started my career when 1G was all the rage. My first 4G project was back in 2002. By some measures, we are already behind on the 5G discussions. In general, it takes 7-10 years before the standards are finalized and then the network technology lasts for approximately 20 years before a market moves onto the next generation of technology. US led in the growth of 1G (AMPS, TACS) followed by Europe on 2G (GSM, CDMA). Japan took the leadership role with 3G (WCDMA, EVDO) and US wrestled it back on 4G (LTE). Japan and EU are determined to lead on 5G and have been making very public statements and R&D investments about their ambitions on 5G. Japan of course has a very clear goal of having 5G by Tokyo Olympics in 2020. Am sure some operator(s) somewhere will jump the gun and start calling LTE-A+ as 5G around 2017-18 or sooner. You can expect a lot of activities both in public and private on 5G as companies and governments try to figure out a way to claim the 5G leadership mantle.

Apple Watch

After visiting the show floor at CES in January, we noted that “The space is going to get commoditized very quickly and it is likely going to get stratified into two major buckets – really cheap $10-20 wearables. The other bucket will be high-end fashion driven wearables.”

Earlier in the year, Xiaomi released a $13 tracker and Apple announced its new product in almost 5 years – the Apple Watch. The mid-market will be under tremendous stress.

Apple Pay

Mobile Payments has long infatuated mankind. Many players with deep pockets have invested in the segment but in truth, the market was waiting for Apple to show up and show up it did with the launch of Apple Pay. In an ambitious orchestration of the financial supply chain, Apple introduced a simple payment proposition. The basic strategy is for commerce to flow through iOS. The institutions are even paying a share of the transaction to Apple which previous payment explorers are watching in utter disbelief. Ladies and Gentlemen, get ready for iTunes 2.0.

What to expect in the coming months?

2014 has been a tremendous year for the mobile as it becomes omnipresence in every industry. We have already seen some massive moves, astounding acquisitions, and interesting strategic endeavors.

As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

Against this backdrop, the analysis of the Q3 2014 US wireless data market is:

Service Revenues

· The US mobile data services revenues in Q3 2014 increased 7% and crossed the $25B market for the first time.

· The mobile data services revenue is on track to exceed the $100B mark in mobile data services revenue to become the first country to generate $100B from mobile data services.

· Verizon and AT&T dominated the quarter accounting for 70% of the mobile data services revenue and had 68% of the subscription base.

· Verizon and AT&T are at #2 & #3 global mobile data revenue ranking respectively in Q3 2014. Sprint and T-Mobile also maintained their rankings in the top 10 global mobile data operators.

ARPU

· The Overall ARPU rebounded to increase by $0.08. 

· Data contribution to the overall revenues is now at 58%.

Subscribers

· The US market had the best net-add quarter in a decade and probably the 2nd best quarter in the history of the US wireless market.

· The US operators added 6.3M new customers with T-Mobile leading the pack.

· 62% of the net-adds in Q3 2014 were from the non-phone category. The net-effect has been that while overall subscriber count has increased, there has been a negative impact on the ARPU. 

· Verizon’s tablet net-adds soared accounting for almost 71% of the overall tablets that were added in Q3. Verizon has caught up with AT&T on the tablet front.

· T-Mobile’s postpaid continued to see the positive growth for the sixth straight quarter. It has almost recovered all its losses that began in Q3 2009.

Shared Data Plans

· Shared data plans launched by Verizon and AT&T have been quite successful. The attachment rates have increased tremendously over the course of 2013-14 with more consumers opting for cellular tablets and connected devices. 57% of postpaid accounts at Verizon are now on shared plans. For AT&T, the number is even higher at 62%.

· Some more granular data plans for tablets have also spurred interest as the cellular broadband is becoming available on demand vs. expensive on premise Wi-Fi solutions.

· 50% of AT&T’s postpaid accounts are on 10GB+ plans.

4th Wave Progress

· The number of players making $250M/quarter on mobile continues to increase rapidly and these aren’t your traditional wireless players. For example, Mobile is now contributing 66% (up from 30% in Q1 2013) to Facebook’s quarterly revenues. Latest addition to the club is Twitter which is now doing 85% in mobile (of the total advertising revenue) up from 60% in 2013. Even traditional players like Hertz, Sears, and Starbucks are generating meaningful revenues from mobile. There are now dozens of such players and the list is just growing. (for more discussion on the topic please see: “Mobile 4th Wave: Evolution of the Next Trillion Dollars”)

· In 2014, we are also seeing continued investments from the operators especially AT&T, Verizon, and Sprint in non-traditional segments like home security, healthcare, insurance, automotive, enterprise mobility, advertising, and security, and others. Collectively, this is already a multi-billion dollar business in the US.

· The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.

Connected Devices

· Connected devices (non-phones) accounted for almost 62% of the net-adds in Q3 2014. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· Tablets form 70% of the connected devices sold.

· QoQ, the non-phone segment grew 30%.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 93% of the devices sold in Q3 2014. Within the next two years, the feature phone category will practically be extinct in the US market.

· The smartphone penetration in the US is now at 72%.

· Android again outperformed iOS by a good margin. iOS is likely to bounce back in Q4.

· While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows phone last year but sales have been poor. While Microsoft has made steady progress in other regions, in the US, it’s not gaining any traction and its share remains at a measly 1-3%. (Read our paper to get more insights into why Windows hasn’t been able to make a dent so far).

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 59M making it the leading LTE operator in the world (next year China Mobile will overtake Verizon to become the number 1 LTE operator by subscriptions). Other three operators are also deep into their LTE deployments. Verizon reported that 79% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in Feb 2015.

Disclaimer: Some of the companies mentioned in this paper are our clients.

Mobile Future Forward: Q&A with Dev Gandhi, CEO of moBack September 5, 2014

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Mobile Applications are the lifeblood of the mobile economy. However, scaling the app from the early prototypes to an app that serves millions can be daunting. A number of players have come out with tools to assist the app developer community. We caught up with Dev Gandhi, CEO of moBack to ask about the state of the mobile app world.

MFF: What are some of the most common problems you see with the mobile app backend infrastructure?

DG: The most common mobile app backend infrastructure problems are:

- Implementing core services such as data persistence, push notifications, maps integration, social integration, analytics, etc.

- Building scalable infrastructure such as virtualization, storage, security layers, etc.

- Writing application business logic.

The main challenge for app companies is to to build these three layers within the project’s scheduled budget and time frame.

App developers can either build all three layers on their own by investing in business logic development, core services, and infrastructure dev ops or opt for third party cloud based service providers such as Amazon, thus saving cost and development time.

Infrastructure service providers such as Amazon only solve infrastructure issues while some service providers only provide core services.

moBack provides both core services as well as scalable infrastructure thus helping app developers focus solely on app development business logic.

MFF: Are app companies trying to do too much on their own? What APIs have proven to be most used and why?

DG: Yes, app companies need to build not only applications but also manage backend services and IT infrastructure. They need to invest in app developers, IT/Dev Ops engineers and hardware infrastructure.

Commonly used APIs are data persistence, analytics, push notifications, social sharing, and maps/geocoding. Most app companies leverage these core service APIs to build their apps.

MFF: What is the business model for the APIs?

DG: APIs are typically provided on a freemium model. App companies can sign up for a free account and start paying later based on usage (number of calls, bandwidth, and storage). This provides app companies a great way to scale without investing too much upfront.

MFF: Majority of the apps are not used after download. How can developers keep their users engaged for a long time?

DG: App companies need to think about various aspects of an application life cycle during design phase:

- App discovery (improving app downloads)

- App engagement (improving long-term app usage)

Application artifacts such as social sharing, gamification, push notifications and mobile messaging help increase engagement.

MFF: In this day and age of constant security threats, how does a developer keep the data secure and maintain user privacy?

DG: Data security and user privacy is usually an after thought when it comes to app design, in turn making apps vulnerable and exposed to security threats. It’s better to incorporate security and user privacy elements in an application design and architecture. Key elements to consider are:

- Using PKI infrastructure to encrypt both data at motion and data at rest.

- Anonymize user data for analytics and reporting purposes thus addressing user privacy concerns.

- Build ACL based privileges allowing granular access to administrators.

- Fine grained logging helps detect security infractions.

- Run security audits (penetration tests, etc.) during QA phase and fix exposed vulnerabilities.

- Apply security patches as early as possible.

Partner Event: FierceWireless: 5G and IoT

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Are you in Las Vegas for Super Mobility Week? Our partner FierceWireless will host the first panel The 5G Roadmap: How Do We Plan For Tomorrow’s Wireless Networks? on Tuesday, September 9 at 7am.

Sue Marek will moderate the panel

· Kristin Rinne, SVP, Network Technologies, AT&T Labs

· Mike Haberman, VP, Network Support, Verizon Wireless

· Arun Bhikshesvaran, VP of Marketing & CMO, Ericsson

· Aicha Evans, VP, Platform Engineering Group, Intel

· Chris Pearson, President, 4G Americas

On Wednesday, September 10, at Mike Dano will moderate a discussion on the Internet of Things: Uncovering the Top Growth Segments. His panel will be comprised of industry executives including:

· Chris Penrose, SVP Emerging Devices, AT&T Mobility

· Matt Thompson, GM, Developer Evangelism, Microsoft

· Alec Saunders, VP, Cloud Business, BlackBerry and member of the Industrial Internet Consortium

· Larry Zibrik, VP of Market Development, Sierra Wireless

· John Horn, President, RacoWireless

They will discuss the market segments where IoT technologies are blossoming now, and explore where the next opportunities may lie.

Both events are part of the official CTIA program. You may add these events to your existing show pass through the CTIA Web site.

There are just a few seats left at each event. Register today before they’re gone!

Mobile Future Forward: Enterprise Mobility: IBM July 24, 2014

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Last week Apple and IBM announced their historic Enterprise Mobility deal. Microsoft in a series of memos and presentations this month declared that it is essentially betting the company on redefining productivity. In one of the hottest mobile segments – IoT – Enterprises are the ones who are driving the most revenue and tangible value. Enterprise mobility is getting redefined in so many respects – from the use of sensors to drive tactical decisions, from securing a global and mobile workforce, from creating collaborative moments of productivity, from putting true “analysis” and “data” at the fingertips of managers and field engineers, that it will see a complete transformation of what the world thinks of enterprise mobility. We saw some of these trends coming in our work with AT&T last year.

The Apple/IBM deal can have a significant impact on how enterprises use devices and think of applications. We are fortunate to have Paul Brody, VP and Mobile Practice Leader at IBM, one of the leaders who was behind this deal from day 1, to talk about how enterprises worldwide are thinking about mobility, workflows, operations, ROI, and business models. Paul has a deep global understanding of the enterprise challenges and has the experience of coming up with solutions. He joins a stellar cast of leaders to discuss the present and the future of enterprise mobility.

Rethinking Enterprise Mobility

· Tim Campos, CIO, Facebook

· Steve Mills, CIO, Motorola Mobility

· Dave Webb, CIO, Equifax

· Paul Brody, VP/Mobile Practice Leader, IBM

· Mark Fernandez, Managing Partner, Sierra Ventures (moderator)

We at Chetan Sharma Consulting are deeply involved in these changes and use our global mobile executive brainstorm forum to kick-off another year of ideas, networking, and industry collaboration. Our work on the 4th wave has shaped strategies of players around the world and we continue to strive to bring you the best of “global mobile thinking” at Mobile Future Forward.

When: Sept 24th in Seattle.

Registration (Summer Saver Expires 7/25 – Friday)

We are excited to partner with the industry leaders and thank them for their ongoing support: Ericsson, Intel, Oracle, Qualcomm, Synchronoss, and Tata Communications.

Some of the confirmed industry leaders are:

· Dan Hesse, CEO, Sprint

· Bill Ruh, VP, GE

· Tim Campos, CIO, Facebook

· Erik Moreno, SVP, Fox Networks

· Glenn Lurie, President, AT&T

· Steve Mills, CIO, Motorola Mobility

· Hank Skorny, VP/GM, Intel

· Dr. John Saw, CNO, Sprint

· JD Howard, VP/GM, Lenovo

· Dave Webb, CIO, Equifax

· Dr. Hassan Ahmed, CEO, Affirmed Networks

· Mark Fernandez, Managing Partner, Sierra Ventures

· Ujjal Kohli, Founder, Rhythm NewMedia

· Vik Kathuria, Global Chief Media Officer, Razorfish

· Erin Kienast, SVP, Starcom Worldwide

· Josh Will, Senior Category Manager, Best Buy

· Steve Elfman, President, Sprint

· Jason Hoffman, VP, Ericsson

· Matt Grob, EVP/CTO, Qualcomm

· Julie Woods-Moss, CMO, CEO of Nextgen Business, Tata Communications

· David Richter, VP, Uber

· Paul Brody, VP & Mobile Practice Leader, IBM

.. more to come

We will be announcing new speakers and partners through the course of the summer and look forward to seeing you in September.

Thanks

Mobile Breakfast Series - Q&A with Prof. Mischa Dohler, cofounder Worldsensing June 12, 2014

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We are really looking forward to seeing many of you next Tuesday. Here is the final installment of the Q&A series with our speakers. Prof. Dohler has been looking at the IoT space for a long time as a researcher, entrepreneur, and an academic.

We caught up with Prof. Dohler to get a preview of our upcoming Mobile Breakfast Series event in London on June 17th.

You have looked at the IoT opportunity both as an academic as well as an entrepreneur. What’s your sense of the opportunity? Are we beyond IoT being a theoretical exercise?

IoT was a dream 25 years ago with the first DARPA projects; it started to migrate from an interesting academic exercise to industrial innovation via standards work/etc. about 15 years ago; and has become commercial reality some 5 years ago. The potential market is enormous, the problem is that the market has not fully developed yet. This will require time and money. IoT is thus an enormous opportunity today, yes!

You have done quite a bit of work in the Smart Cities space? How does the implementation impact the common man? How should governments think about funding such initiatives? Does it offer any significant competitive advantage to the city?

The problems of Smart Cities today had been summarized in a recent blog of mine under https://connect.innovateuk.org/web/design-sig/article-view/-/blogs/designing-smart-cities-in-2013.

It boils down to "smart" (ie IoT, Big Data, etc.) not properly synch’ing with "city" (i.e. infrastructure providers, etc). Despite the enormous potential of bringing smartness into cities, very little is visible today. The problem with the uptake is that the market is not developed yet, which means that innovative companies have to survive long sales cycles, etc., etc. Difficult times, still!

If you look 5-10 years out, what are some of the exciting developments in R&D that we will start seeing in real-life?

The most exciting thing for me would be if wireless finally really became invisible - and I hope by 2020 we won’t have to stress out which technology we use to connect our IoT devices. Another exciting area is the combination with robotics since the IoT would allow us to collect data; Big Data process it; and robotics act on it - and thereby close the data cycle.

The IoT space is quite fragmented right now. Will that hinder progress? Where will the value lie in the value-chain?

The value currently is in the verticals, and with some specific industries, such as health, transport, construction, and oil/gas. Once these verticals have expanded, the horizontals will start to become important because one can leverage the true Big Data value by cross correlating data sets which each individual vertical cannot do.

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: June 17th. Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration

Internet of Things: Exploring the next big thing in mobile

Prof. Mischa Dohler, King’s College, London and Cofounder, Worldsensing

Dominik Fromm, GM – Mobility Services, BMW

Carlos de otto Morera, CEO, Thinking Things, Telefonica

Raine Bergstrom, VP and GM, Intel

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Look forward to seeing you next week.

US Mobile Market Update – Q1 2014 June 2, 2014

Posted by chetan in : 4G, 4th Wave, AORTA, ARPU, Chetan Sharma Consulting, Mobile Future Forward, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

US Mobile Market Update – Q1 2014

Summary

The US mobile data service revenues grew 4% Q/Q and 23% Y/Y to $25.9B in Q1 2014. In 2014, we expect US to become the first country to cross the $100B mark in mobile data services revenue. We have also started to see digital services appear in the revenue maps as more companies rely on mobile to generate their revenues.

With the acquisition of Leap, AT&T has virtually tied Verizon for market share at 34%.

T-Mobile continued to impress with 66% share of the net-adds. Even Verizon felt the heat in Q1 resulting in a subpar performance. Smartphone penetration increased to 68% and roughly 93% of the devices sold now are smartphones.

M&A Season

FCC must have cancelled all summer vacations for its staff as it is going to have a busy summer. As expected, Comcast made a bid for Time Warner and AT&T for DirectTV. Encouraged by the M&A season, Softbank is going to make a run for T-Mobile and pop the question to the FCC – so what do you think?

This in addition to the net-neutrality religious wars that have been triggered.

So, how will this all end-up?

It’s complicated.

The basic problem is that the communications and computing worlds have collided and nobody told the politicians. One can’t develop a policy framework in vacuum. It has to synchronize with the real world and with the facts on the ground. In my travels around the globe, I find that some of the most underdeveloped countries have better policy framework than some of the developed nations. Obviously, they don’t have the legacy to work with but they are more progressive in terms of national competitiveness and creation of jobs as the central underpinning of their framework.

As we noted in our 2011 research paper, “Competition and the Evolution of the mobile markets,” the mobile markets gravitate towards three player composition. Over time, every market approaches this equilibrium. We looked at the world’s top 36 markets and the average HHI (Herfindahl-Hirschman Index) for these markets is 0.344. If we just look at the developed markets, the HHI is 0.327. The US market HHI stands at a relatively lower number of 0.25 which is right at the cusp of what DOJ calls heavily concentrated and moderately concentrated markets. In fact, 30 of the 36 markets are over this line and that includes pretty much every developed market except UK.

If and when Softbank proposes the T-Mobile merger, the HHI will increase to 0.28 and will clearly cross the DOJ marker of heavily concentrated markets. For contrast, the cable industry is at 0.13 HHI. Clearly, just looking at HHI is inadequate and misleading as we showed in our paper back in 2011.

In heavy Capex industries, it is natural to have consolidation. It allows more efficient deployment of the capital or else everyone gets bloodied in the turf war as is evident in Indian mobile market which is on the verge of a major restructure.

In the last 20 years, the share of top 3 operators has grown from roughly 40% to 80%. The number of mobile subscriptions have grown 14x during the same time period.

So, will there be further consolidation in the mobile industry? Short answer is – Yes. The only thing up for debate is whether it happens in this administration or the next. As we said in the last note, T-Mobile has complicated things by being successful in the short-term. A third player with 30% market share will of course be better but T-Mobile has been able to change the market by being the fourth at 14%.

FCC’s dilemma is that it can’t evaluate these proposed mergers in isolation and Congress hasn’t done a good job of clearly defining FCC’s authority.

It is going to be an interesting summer for sure.

What’s next for Microsoft?

With a new CEO at the helm, Microsoft made some key (albeit late) changes to its strategy: Office for non-windows devices, zero-rating the OS licensing fees, doubling down on the enterprise class Surface. In light of the plummeting PC sales, Microsoft is trying to figure out its place in the post-PC world. Surface 3 is good device but there are also significant hurdles. Having failed to stem the tide of iPad and Android tablets, Microsoft seems to be focusing on the high-end by trying to change the discussion around the wisdom of carrying multiple devices.

One of the basic problem that the current strategy faces is that of articulating a valid value proposition. On the pricing axis, it doesn’t make a dent. MacBook Air is still the best notebook around and iPad is still the best tablet and you can get both of them for $1500 while a comparable Surface configuration will set you back $1200-1300, a drop of less than 20%. The reason Kindle and other sub $200 tablets got some traction was that the price difference was 60%. It forced Apple to reconsider and launch the mini to secure the mid-tier.

However, it is smart of Microsoft to fight the battle on the top end in the enterprise where their biggest strength lies rather than in the low-mid tier consumer segment which is nothing but a bloodbath for new OEMs.

The mobile ecosystem will clearly benefit from a stronger Microsoft but it has to address some key strategic questions for its partners and customers. It has started to shed some legacy constraints, is getting some product thinking behind its strategy, and is becoming more open which is a good start.

About that Google Car

The autonomous car that Google showcased earlier this week is probably the most interesting technology development in the last couple of years (in addition to whatever Elon Musk does). Given that going from point A and point B is so central to our civilization, a rethink of how it should be done is going to have profound effect on not only the existing value chains and industries but more fundamentally, how humans organize themselves as social beings. There are a number of exciting and terrifying (for some) questions in front of us – how quickly will autonomous cars become the norm in major markets – 5 years? 15 years? What does this do to the driver segment? Auto sales? Cost of transportation? Design and investment of infrastructure? Privacy and security of data? Mobile network infrastructure to support a radical societal architecture? Will tech companies become car OEMs? Should they? How quickly will the regulators catch-up? Months? Years? Decades?

I do think Google car is a perfect embodiment of the connected intelligence era and this is going to have such profound implications that we haven’t yet built a model to grasp its impact (more to come on this topic).

What to expect in the coming months?

2014 has had an excellent start and rest of the year is looking great with a slew of announcements and activities planned for the rest of the year. We have already seen some massive moves, astounding acquisitions, and interesting strategic moves.

As usual, we will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

Against this backdrop, the analysis of the Q1 2014 US wireless data market is:

Service Revenues

ARPU

Subscribers

Shared Data Plans

4th Wave Progress

Connected Devices

· Connected devices (non-phones) accounted for almost 50% of the net-adds in Q1 2014. This means that while there is a healthy smartphone sales pipeline, it is for the existing subs and as such net-adds for the phone business is tapering off and we can expect that new net-adds will continue to be dominated by the connected devices segment.

· Tablets form 63% of the connected devices sold.

· YOY, the connected devices segment grew 23%.

We hosted our IoT Americas session last quarter with Verizon, Ericsson, Samsung, and adidas and are planning our IoT Europe panel with Telefonica, BMW, Intel, and Worldsensing in London on June 17th.

Handsets 

· Smartphones continued to be sold at a brisk pace accounting almost 93% of the devices sold in Q1 2014. Within the next two years, the feature phone category will practically be extinct in the US market.

· The smartphone penetration in the US is now 68%.

· Android had its best showing in the US market with 54% share of the quarter. Q2 is expected to strong as well.

· While it is fairly clear that Windows will acquire the #3 spot behind iOS and Android, the journey to a substantial and competitive market share is still ways off. It renewed its entry into the battlefield with Windows phone last year but sales have been poor. While Microsoft has made steady progress in other regions, in the US, it’s not gaining any traction and its share remains at a measly 3%. (Read our paper to get more insights into why Windows hasn’t been able to make a dent so far).

· Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 48M making it the leading LTE operator in the world. Other three operators are also deep into their LTE deployments. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 73% of its total data traffic is on the LTE network now, clearly the fastest technology transitions we have seen in the US wireless industry.

· Mobile operators also announced their VoLTE launches.

· Verizon and AT&T sell more iPhones than Android while the reverse is true for T-Mobile (by a big margin) and Sprint. There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 36% of the iPhones in the US.

Mobile Patents/IP

· 24% of the patents granted by the USPTO were mobile related. Samsung, IBM, Microsoft, Sony, and Ericsson make the top 5 patent players in mobile. We will have more details in our coming paper on Mobile Patents Landscape next month.

· US companies comprise of 50% of the top 50 list followed by Japan, China, and South Korea.

· Samsung was again the leader in mobile patents granted in 2013 in the US and worldwide. Samsung was followed by IBM, Qualcomm, RIM, LG, Sony, Microsoft, Ericsson, Google, and AT&T for the top 10 companies by mobile patent grants in 2013.

· Google made an entry into the top 10 overall mobile patents list for the first time. AT&T did the same for the mobile patents granted in 2013.

· US Mobile Operators dominate the top 10 operator rankings: Patent top 10 Rankings: AT&T, NTT DoCoMo, Sprint, Verizon, Telecom Italia, Swisscom, T-Mobile, Orange, SK Telecom, and TeliaSonera.

· Mobile Infrastructure Patent top 10 Rankings: Samsung, Ericsson, Alcatel-Lucent, Qualcomm, LG, Intel, Siemens, Fujitsu, NEC, and Panasonic.

· Mobile OEM Patent top 10 Rankings: Samsung, Microsoft, Sony, Nokia, Google, LG, RIM, Siemens, Fujitsu, and Panasonic.

· The top 5 categories for patents grants in the US for 2013 were Telecommunications, Digital Multiplexing, Digital Processing – Data Transfer, Digital Processing – Financial, and Computer Graphics.

· The top 10 filers of mobile patents in the US were IBM, Samsung, Microsoft, Sony, Qualcomm, Nokia, Ericsson, Google, LG, Intel and Apple. It was the first time that Samsung, Microsoft, Google and Apple showed up in the top 10 patent filers list together.

· Facebook’s mobile patent filings increased by 177% YoY.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in Aug 2014. The next Global Wireless Data Market update will be issued in July 2014.

Disclaimer: Some of the companies mentioned in this paper are our clients.

We will be discussing many of the ecosystem and technology issues, opportunities and challenges for the coming years in our annual mobile executive summit Mobile Future Forward on Sept 24th in Seattle. Some of the confirmed speakers are Dan Hesse, CEO, Sprint; Tim Campos, CIO, Facebook; Ben Fried, CIO, Google; JD Howard, GM and VP, Lenovo; Erik Moreno, SVP, Fox Networks; Glenn Lurie, President, AT&T; Steve Mills, CIO, Motorola Mobility; Mark Fernandez, Partner, Sierra Ventures; Dave Webb, CIO, Equifax; John Saw, CNO, Sprint; Hank Skorny, VP/GM, Intel; Hassan Ahmed, CEO, Affirmed, and many more to come. We hope to see you there for the brainstorm.

Mobile Breakfast Series–London–June 17th May 14, 2014

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I am excited to add Professor Mischa Dohler of King’s College in London to the program. Prof. Dohler is a distinguished researcher and an entrepreneur and is focused on IoT, Smart Cities, and 5G. His work has been referenced by PM Cameron at CeBIT

The topic of discussion will be “Internet of Things: Exploring the next big thing in mobile.” Internet of Things (IoT) has been hailed as the next big thing in the mobile industry. As connections from objects and things interconnect with existing and new end points, the networked effect can provide tremendous opportunities, reshape existing processes, user experiences, and expectations. But, really, how real is IoT? and what will it take to reach the billions of dollars promised? Will it fundamentally alter how we do things? We are starting to see signs of tremendous progress. GE is investing $4B+ into its version of IoT – the industrial Internet and it is making the difference in operations and machine learning. Connected consumer gadgets are enabling us to lead healthier lives, work more efficiently, and manage our time more effectively.

Venue: Telefonica, 20 Air Street, London, W1B 5AN London, UK

When: Breakfast and Registration: 8-9am, Panel Discussion: 9-10:30am, Networking: 10:30-11:30am

Registration (limited seats) Early Bird expires next week

We have an exciting panel planned with some leading experts on the subject:

Prof. Mischa Dohler, King’s College, London and Cofounder, Worldsensing

Dominik Fromm, GM – Mobility Services, BMW

Francisco Jariego, Director – Industrial IoT, Telefonica

Raine Bergstrom, GM – IoT, Intel

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Dominik Fromm is responsible for expanding BMW Group’s Mobility Services in the United Kingdom under the BMW, MINI and BMW i brands. Francisco is responsible for the Industrial IoT projects including Smart Cities for Telefonica. Raine is a mobile industry veteran and is driving Intel’s investment in IoT and related services.

Look forward to seeing you in June.