Global Wireless Data Market Update - 1H 2008 September 28, 2008
Posted by chetan in : 3G, 4G, AORTA, BRIC, Carriers, Enterprise Mobility, European Wireless Market, Gaming, IP Strategy, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Smart Phones, Speaking Engagements, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far
http://www.chetansharma.com/globalmarketupdate1H08.htm
Global Wireless Markets continued to grow rapidly especially in India and China where the carriers are adding over 9M new subscriptions every month. India crossed the 300M subscription mark in Aug while China whizzed past 600M in September. Overall, the global subscriptions penetration edged past 50%. During the 1H 2008, revenues further tilted towards data services. The overall global mobile revenues (including equipment) for the year are likely to reach the 1 Trillion dollar landmark later this year (enough to bailout an economy or two), with approximately $800 billion attributed to service revenues. Data revenues now account for almost 20% of the global service revenues.
For some leading operators, data is now contributing close to 40% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. From the true and tested SMS messaging to the new services such as Mobile Advertising, Social Networking, Commerce, Mobile Wallet, and others, different services helped in adding billions to the revenues generated for 1H 2008. Japan remains the envy of the global markets and the nation to study and learn from w.r.t. new services and applications. The US market expanded its lead over Japan in mobile data service revenues for the year and is unlikely to cede ground in the months to come.
Buoyed by the global launch of iPhone, Apple is likely to eclipse the 10M goal in Q308. Its App-Store launch along with Android’s imminent arrival dominated the news. Other manufacturers also introduced challengers to iPhone, most notably, Instinct by Samsung on the Sprint network which has also been quite successful in getting users to engage in data services.
WiMAX vs. LTE debate took over the EV-DO vs. WCDMA chatter and while majority of the industry is consolidating around LTE; open-platform advocates are watching the arrival of WiMAX in the US with great interest. Google, Sprint, Motorola, TWC, Comcast and others put new life into the experiment called Clearwire.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights from our work in various global markets.
- The global mobile markets continue to grow at an explosive pace reaching 3.6B subscriptions by 1H08 up 9% from EOY 2007 levels and will likely cross the 4B mark by the end of 2008. Significant growth is coming from India and China with both countries registering on an average 9M net adds per month. India and China combined to add approximately 107M new subscriptions during the first six months of 2008. Overall, the world market is now over the 50% penetration mark.
- US edged past Japan again as the most valuable mobile data market in service revenue with US adding $15.7B vs. $13.6B for Japan in 1H08 mobile data service revenues. China with $7.8B was ranked number 3. US registered the highest growth amongst the top 3 with over 18% increase from EOY 2007 levels followed by China at 9% and Japan at 7%. These top 3 markets account for just under 50% of the mobile global data service revenues.
- NTT DoCoMo continues to dominate the wireless data service revenue rankings with over $6.8B in service data revenues for 1H08; however, Q/Q growth is declining. DoCoMo crossed 84% in 3G penetration and is expected to touch 90% by end of the year.
- DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, China Unicom, Softbank, O2 UK, and T-Mobile USA to round up the top 10 operators by wireless data service revenues. It marks the first time, T-Mobile USA enters the top 10 list as it went past SK Telecom. All the top 10 carriers exceeded $1.5B in data revenues for the first half of 2008.
- For the last couple of years, NTT DoCoMo has been the only carrier exceeding $10B in yearly mobile data revenues. In 2008, it is likely to be joined by China Mobile, KDDI, Verizon Wireless, and ATT in the exclusive 10B club.
- Data revenues for the top 10 operators increased 10.3% from EOY 2007 and now account for almost 50% of the global mobile data revenues though their subscriber share is around 30%.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and Softbank are approaching 40%. 3 UK, O2 UK, Singtel, and 3 Sweden exceeded 30%.
- In March, India edged past the US to become the number two wireless market (by subscriptions) in the world. In last two years alone it has added almost 175M new subscriptions (in comparison China added 169M and the US market added 39M).
- ATT reported the highest increase in data ARPU from 2Q07 with 32% growth. Other notable percentage increases in ARPU were from KDDI, DoCoMo, Softbank Japan, 3 Australia, Vodafone Italy, Rogers, Verizon Wireless, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.65.
- In terms of absolute dollar amount, NTT DoCoMo and 3 UK lead the pack with $22 data ARPU. Operators who reported overall ARPU above $60 were 3 UK, Singtel, Rogers, and 3 Sweden.
- The biggest jump in data revenues was experienced by the US carriers, the top 3 being ATT, Verizon Wireless, and T-Mobile USA respectively. SK Telecom, Sprint and O2 UK experienced declines. (For a complete US Market Update, please see our Q208 research note).
- In 1H 2008, SMS’s vice like grip on data revenues continued to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
- NTT DoCoMo regained its position vis-à-vis KDDI w.r.t. mobile data revenues. Their data coordinates stand at ($22, 39.5%) and ($20.3, 37%) respectively (please see slide 10 for reference).
- Most of the operators in developed nations are contemplating future strategies to boost data revenues such that decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPUs. Comparing the ARPU for last 2 years, amongst the top operators, only Singtel, Rogers, T-Mobile UK, O2 Germany, O2 UK, Verizon Wireless and ATT experienced increase in both overall and data ARPU.
- NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets and exploring new technologies and social experiments ahead of almost anybody else in the market. We looked at the data revenue growth at NTT DoCoMo since the introduction of i-Mode almost 10 years ago (see slide on page 17). During the last 9 years, overall ARPU has declined 33% though data ARPU increased over 1800% and now accounts for almost 40% of DoCoMo’s service revenues. The voice ARPU has declined almost 60%. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends and technologies in these markets to get a sense of what’s coming.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 66% (or $3) contribution coming from the data services. Philippines is also one of the most active messaging nations where users average a message/hr round the clock.
- Even though China reported approximately $7.8B in data revenues for 1H08 and the percentage contribution is over 27%, data ARPU is around $2.3. For India, data ARPU continues to stay below $1 for all major carriers with Reliance experiencing a 50c data ARPU during Q208.
- China Mobile with 428M (as of Aug 08) remains the #1 carrier in terms of total number of subscrptions followed by Vodafone at 269M and China Unicom with 171M subscriptions. Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5 (Verizon will overtake ATT after its Alltel acquisition goes through later this year). The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for many years to come.
- China Mobile remains the most valuable telecom operator with over $200B in market cap. It is followed by Vodafone at around $125B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- As far as 3G is concerned, there were over 350M 3G users (69% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 80%+ penetration. 3G has picked-up steam in both western Europe and North America per our forecast in the 2005 cover story article “3G: Hitting the Mass Market” published in the Wireless World Magazine. Western Europe and US are at approx. 30% 3G penetration (Italy being the exception exceeding 40%).
- China and India represent the biggest opportunities for the Infrastructure providers. China postponed its 3G decision again and couldn’t launch a network for the otherwise wildly successful 2008 Olympics. India is also going through its 3G spectrum policy and is likely to resolve some of the contentious issues shortly. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing strong uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) is also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. For 4G, there is a strong momentum behind LTE, proponents of WiMAX are pushing the technology as a 4G candidate, and though it is starting to lose its time advantage, all eyes are on the imminent Clearwire launch.
- In terms of applications, messaging accounts for the lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have also captured industry’s imagination. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than the other hot category - Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- 1H 2008 saw the demise of the last standing next-generation MVNO in the US market - Helio, which got sold to Virgin Mobile at bargain basement prices. In Europe, Blyk continues to make good progress with its unique mobile advertising-based model. Asian market is also opening up for MVNOs.
- Nokia eclipsed 100M/quarter unit sale in both the quarters thus far. It has sold over 237M handsets in 2008, more than the next three handset manufacturers combined. Nokia’s global market share edged past 41%. Samsung at 15%, Motorola with 9.5%, LG with 9.3% and Sony Ericsson with 8% rounded out the top five. For the year, the industry looks to again eclipse the 1 billion handset mark for 2008.
- While the talk of “Open Access” and “Open Platform” consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizon’s “Open Network” initiative elevated the consternation in the ecosystem. Apple launched its 3G iPhone while Android’s first device is slated to see the light of day next month courtesy of T-Mobile USA.
- Apple launched its App-Store with iPhone 3G which has been quite successful though there is significant clutter to muddle through. The company is likely to announce soon that it eclipsed its 10M goal in Q308, a full quarter earlier than the stated target. These days, any new device that gets launched in the market is looked through the prism of iPhone.
- In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018 (see slide 8). For a more detailed analysis, check out our research paper sponsored by The United Nations Foundation on “Mobile Services Evolution: 2008-2018.” It was presented at The Rockefeller Foundation Healthcare summit in Bellagio, Italy in July 08. (Note: The dichotomy between developed and developing nations is a very simplified concept that has been around for about 50 years. It is clear that a transformation in the distribution of wealth worldwide will change the picture in the next 10 years. Countries that are considered developing in today’s definition will become economic superpowers in 10 years and more dominant than some of the developed nations, even if they have not caught up then with some in terms of GDP per capita. However, for purely the purposes of comparison and illustration, we are using the existing definitions to discuss the shift in the mobile ecosystem).
- Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia and Google are getting active in the space as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space and while it slowed down during 2008, it is likely to pick-up again in 2009 as consolidation looms.
- Wireless Broadband continues to be a significant growth driver for the industry. We partnered with our good friend Vern Fotheringham - a true industry entrepreneur and who has been behind many of the industry firsts, to write an exhaustive treatment of the subject in our upcoming book - Wireless Broadband: Conflict and Convergence being jointly published by IEEE Press and John Wiley (see below). Details forthcoming.
Your feedback is always welcome.
Thanks.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
New Book: Enterprise Mobility: Applications, Technologies and Strategies August 24, 2008
Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, IP, IP Strategy, Indian Wireless Market, Japan Wireless Market, Location Based Services, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Mobile Wallet, Networks, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments
Enterprise Mobility: Applications, Technologies and Strategies
IOS Press
Chapter Contribution
“Enterprise mobile product strategy using scenario planning”
SAMIMUNEER (SAP) and CHETANSHARMA
http://www.chetansharma.com/enterprise_mobility_scenario_planning.htm
Each year, we work on strategies and product plans for our clients around the world that end up touching millions of consumers worldwide and do behind-the-scenes research, due-diligence, and analysis work on several critical deals and transactions that move our industry forward. But, rarely do we talk or write about them, due to obvious reasons.
However, last year, I got an opportunity to briefly write about some of the strategy work. On the request of Dr. Basole at Georgia Tech, my colleague Sami Muneer (Sr. Director, Enabling Solutions at SAP – responsible for all things mobile) and I drew from some of the long-term strategy and product planning work we had done for SAP to put together a paper on “Enterprise mobile product strategy using scenario planning.” SAP is the leading global enterprise player and their view of the world is both comprehensive and long-term. It was a privilege to work with their global team on the project.
Our paper is being published as a chapter in the just released book “Enterprise Mobility: Applications, Technologies and Strategies” (IOS Press, Amsterdam. 272 pages, Editor R. Basole, 2008) as part of The Tennenbaum Institute Series on Enterprise Systems. The chapter is also being published in the special issue of peer-reviewed International Knowledge Systems Management (IKSM) journal published by Georgia Tech.
The book is a collection of 13 chapters from academics and practitioners in enterprise mobility. I often use scenario planning techniques when doing long-term strategic assessment and forecasting. In this chapter, we hope to provide a framework for scenario planning in mobile that can go across verticals, applications, and services.
You can download the chapter here.
IKSM is making available all the chapters online (for free) if you register for a free one year subscription.
For those interested in reading the paper copy can order the book here.
Book Introduction
As the number of enterprises using mobile ICT increases, it becomes imperative to have a more complete understanding of what value and impact enterprise mobility has, what drives and enables it, and in what ways it can and will transform the nature and practices of work, organizational cultures, business processes, supply chains, enterprises, and potentially entire markets. Enterprise mobility is therefore a topic of great interest to both scholars and practitioners. Enterprise Mobility: Researching a new paradigm aims to contribute to and extend both our theoretical and practical understanding of enterprise mobility by exploring the necessary strategic, technological, and economic considerations, adoption and implementation motivators and inhibitors, usage contexts, social implications, human-centered design issues, support requirements, and transformative impacts. The main objective is to discuss applications, technologies, strategies, theories, frameworks, contexts, case studies, and analyses that provide insights into the growing reality of enterprise mobility for scholars and practicing managers. This volume contains thirteen articles from leading scholars and practitioners and includes an examination of the changing nature of work, work practices, and the work environment; a discussion of critical enablers of enterprise mobility; authors exploring strategic considerations; and insightful case studies of enterprise mobility across multiple domains. Together, the articles explore enterprise mobility across the entire continuum.
Enterprise mobile product strategy using scenario planning
Author(s): Sami Muneer and Chetan Sharma
The Mobile industry is changing at a rapid pace and so is the behavior of enterprise workforce which uses mobile technologies. When planning for a long-term product roadmap, one has to consider a myriad of evolution trends and forecasts to determine the probable list of product functionality and their introduction timing in the lifecycle of the product. One has to look at the technology trends by market, the competitive landscape, and the mobile worker adoption trends. However, one can only come up with a prioritized list of capabilities by taking into context the company’s own core competencies, skill sets, and overall mission. This paper looks at how mobile product companies can use scenario-planning methodology to formulate their product strategy and roadmap.
The listing of the chapters is as follows:
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Enterprise mobility: Researching a new paradigm
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The convergence of wireless, mobility, and the Internet and its relevance to enterprises
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Business mobility: A changing ecosystem
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A socio-technical perspective of mobile work
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Designing productive spaces for mobile workers: Role insights from network analysis
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Telecommuting and corporate culture: Implications for the mobile enterprise
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User requirements of mobile technology: A summary of research results
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Mobile interaction design: Integrating individual and organizational perspectives
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A comparative anatomy of mobile enterprise applications: Towards a framework of software reuse
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Protecting data on mobile devices: A taxonomy of security threats to mobile computing and review of applicable defenses
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Enterprise mobility and support outsourcing: A research model and initial findings
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Enterprise mobile product strategy using scenario planning
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The strategic value of enterprise mobility: Case study insights
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Exploring enterprise mobility: Lessons from the field
Your feedback is always welcome.
Thanks.
Chetan Sharma
New Paper: Mobile Services Evolution 2008-2018 July 11, 2008
Posted by chetan in : 3G, AORTA, ARPU, BRIC, CTIA, Carriers, Intellectual Property, Japan Wireless Market, MVNO, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Smart Phones, Speaking Engagements, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 commentsMobile Services Evolution 2008-2018
Bellagio, Italy. July 13 - Aug 1, 2008
| This project has been made possible by the generous funding from THE UNITED NATIONS FOUNDATION
|
 |
http://www.chetansharma.com/UNF-MobileServicesEvolution.htm
This weekend in Bellagio, Italy begins a 4 week long dialogue on the subject of eHealth. The Conference - Making the eHealth Connection: Global Partnerships, Local solutions is being organized by the eminent Rockefeller Foundation. It will bring in experts and organizations from around the world to discuss, share, develop, agree on solutions going forward. Each week deals with a different nuance of the eHealth framework. This will allow for an in-depth study and discussion. Full conference info here.
Week 3 deals with mHealth and Mobile Telemedicine being organized by The UN Foundation, Vodafone Group Foundation, and the Telemedicine Society of India. As part of this conference The Rockefeller Foundation and its partners have released a series of white papers on various subjects. I was asked by The UN Foundation to look into the potential Mobile Services Evolution going forward and how a platform could be developed that will enable a number of applications focused on enterprise, health, public safety and associated sub-segments. While it is difficult to predict with any precision what might happen 10 years from now, one can try to understand the evolution of technologies, business models and their interrelated ecosystems and see the impact on various vertical segments where we use technology to solve some basic problems. Most of the time, technology itself doesn’t cut it, it requires partnerships, collapsing of the bureaucracy, innovative funding means, and just the burning desire to make a difference that matter the most. I strongly believe in Mobile’s central role in a number of social and public services. Mobile Services Evolution 2008-2018 is a small effort to forward that discussion.
Abstract
Over the last 10 years, the progress made in the global mobile industry has been truly stunning. Mobile device ownership has gone from being a luxury item to necessity as the feverish rate of adoption has spread mobile technologies into every corner of the world. As we look into the next 10 years, it is certain that the mobile phone will be used for much more than just voice communications. There is an opportunity for private institutions and public enterprises to build a vision of cohesive mobile services platform that enables and engages the masses to both fundamentally enhance the quality of their daily existence as well as lead to new opportunities globally. This paper takes a look at the potential evolution of mobile technology and services over the course of the next 10 years and discusses an M-Services framework for building and deploying diverse mobile services. The paper also looks into the challenges of such an endeavor and steps that will be needed to achieve the vision.
Table of Content
| Abstract | 3 |
| Introduction | 4 |
| Mobile device: The Remote control of our lives | 5 |
| Mobile Technology Evolution 2008-2018 | 7 |
| Deployment and adoption of mobile technologies in the developing countries | 9 |
| Mobile Services Platform | 10 |
| What does it take to make it happen? | 15 |
| Conclusions and Recommendations | 18 |
Thanks to THE UNITED NATIONS FOUNDATION for making this work possible. I will be presenting the paper at the conference later this month.
Your feedback is always welcome.
Thanks
Chetan Sharma
US Wireless Data Market Update - Q1 2008 May 18, 2008
Posted by chetan in : 3G, AORTA, Carriers, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Intellectual Property, International Trade, Japan Wireless Market, M&A, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 1 comment so farUS Wireless Data Market Update - Q1 2008
http://www.chetansharma.com/usmarketupdateq108.htm
The US wireless data market grew 38% in Q108 compared to Q107 to reach $7.5B in data revenues. iPhone is not only having an impact on data revenues but also on device design, mobile advertising roadmaps, and applications and services that are being contemplated for future. US exceeded Japan in mobile data service revenues for the quarter and the market is expected to reach $34B in data revenues in 2008.
- The US Wireless data service revenues grew 7.5% Q/Q to $7.5B in Q108. Compared to Q107, the data service revenues grew 38%.
- Overall ARPU declined by $1.12 and for the first time since Q405, the average ARPU dropped more than a dollar Q/Q. Average voice ARPU declined by almost $1.50 while average data ARPU inched up by $0.49 or 5%.
- Verizon lead in data ARPU with $11.94 (or 23.37% of the revenues) closely followed by Sprint at $11.50 (or 20.54%), AT&T at $10.80 (or 21.52%) and T-Mobile at $8.50 (or 17%).
- The strongest growth in Q108 came from AT&T with 15% and 53% increase in data revenues from Q407 and Q107 respectively. Both AT&T and Verizon generated $2.3B in data revenues and are on target to exceed $10B in data revenues for the year for the first time by any operator worldwide besides NTT DoCoMo. AT&T and Verizon now account for 61% of the market data services revenues. Verizon and T-Mobile registered 10% increase in data revenues from Q407 while Sprints declined by 6%.
- The average industry % contribution of data to service revenues exceeded 20% and now stands at 20.62%.
- The number of data subscribers has been on the rise with Verizon leading the way. At the end of Q108, Verizon had that 48.1M (or 72%) data subscribers. Verizon and AT&T subscribers joined to send over 100 Billion text messages in Q108 translating into almost a message every 3 hours. This compared to users in Philippines where average routinely surpasses a message every hour.
- In terms of net-adds, T-Mobile was helped by SunCom acquisition and crossed the 30M subscription mark. Verizon regained its quarterly net-adds title from AT&T by edging its rival 1.5M to 1.2M. Sprint lost customers again, this time exceeding 1M. In March, the US market also slipped behind India to third position in terms of total number of subscriptions (India is predominantly a prepaid market while US is a postpaid market).
- The top three US carriers again maintained their respective rankings amongst the top 10 global carriers in terms of data revenues. For the quarter, Verizon, AT&T, and Sprint Nextel stood at #4, 5, and 6 respectively. AT&T and Verizon are in the select group of five global operators who are now generating $2B or more in data revenues/quarter (the other three are NTT DoCoMo, China Mobile, and KDDI).
- Non-messaging data revenues continue to be in the 50-60% (of the data revenues) range for the US carriers.
- The eagerly anticipated 700 MHz played out as we expected with Google doing enough to make Verizon pay more and kick-in the open-gardens provisions. However, the actual impact on the market dynamics is likely to be negligible. It did however, help open the open debate in the industry.
- There continues to be tremendous activity in the area of Mobile Advertising. While fending off the Microsoft acquisition, Yahoo is busy creating some compelling applications and is stitching together carrier deals around the world.
- Venture money continued to flow into the mobile sector with over $1.5B investment in Q108 (Source: Rutberg). Location Services, Mobile Personalization, Mobile Video, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas.
- Nokia eclipsed 100M unit sale in Q108 for the fourth straight quarter. It sold over 115M handsets in Q108, more than the next three handset manufacturers combined. Nokias global market share stood at 39%. For the year, the industry looks to again eclipse the 1 billion handset mark for 2008
- 3G penetration in the US was approaching 30% in Q108, with Verizon leading the pack with over 56% 3G subscriber penetration. T-Mobile finally did its 3G launch in limited cities with plans for expansion in 08. 3G subs have over $20 in data ARPU accounting for 30% contribution to the overall ARPU from such subs. These trends are expected and the diffusion of mobile broadband will continue to create new opportunities and revenues for the ecosystem.
- Apple is slated to announce a 3G iPhone next month, has been aggressively expanding the distribution partners, and is expected to blow past the 10M unit (it is already past 5M) sale mark easily by the year-end especially as operators consider giving rebates to attract potential users and their mobile data usage.
- As expected, Clearwire and Sprint banded together to raise $14.5B from friends and family which included the likes of Google, Comcast, Time Warner and others. IF the companies can execute on their strategy in 2008/9 and get the devices out in the market without messing up with pricing, this venture can be quite disruptive to the market much more than any other open initiative.
Global update
- China and India added approximately 55M subscriptions combined in Q108 with India marginally edging out China with a whopping 10.16M net-adds in March (probably for the first time history, monthly net-adds for country have exceeded 10M). By comparison, US added 4.5M in Q1
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $3.4B in data services revenue in Q108. 35.7% of its revenue now comes from data services. DoCoMo also crossed 80% in 3G penetration in Q108 and is expected to cross 90% by early 2009.
- Most of the major carriers around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, and O2 UK are consistently topping 30%.
More details in our worldwide wireless data market update in our Global Wireless Data Market Update Mar 2008.
Your feedback is always welcome.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
Sprint-Clearwire announce long awaited deal May 6, 2008
Posted by chetan in : US Wireless Market, Wi-Fi , add a commentIt took a long time but it is finally here and it is likely to be more significant than the 700MHz drama earlier this year. I have been saying for a long time that if Sprint and Clearwire with some external help (i had Motorola and Google as supporters along with Intel) can put a nationwide network together with open architecture and open devices, it will help change the dynamics of the industry. See the discussion here and here.
Of course, strategy is nothing without execution so it will be interesting to see who leads the efforts and how soon the devices come in the market but definitely a big event in the US market.
Disclaimer: Sprint Nextel is a client of ours.
Interview with Padmasree Warrior April 23, 2008
Posted by chetan in : 3G, AORTA, Carriers, European Wireless Market, Intellectual Property, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments
Last year, I had a chance to interview Padmasree Warrior who was CTO of Motorola at the time and since then she has moved on to Cisco (as their CTO). The interview was conducted for the PiTech Magazine but for various delays the print edition never got released. I am publishing the interview in its entirety for our readers. Padmasree is a terrific technology leader and there are a lot of good insights in her answers.
1. What are some of the exciting initiatives you and your team are working on at Motorola?
The next decade is about the Mobile Revolution. It is quite remarkable how something as simple as the cell phone is transforming the human race by connecting the entire planet. Today almost half the planet communicates via a mobile device. The social, economic, cultural and technological implications of this are profound, particularly in under-developed countries of the world. The Motorola team is working on delivering products and experiences to enable Seamless Mobility which is our vision to enable access to communication, information and entertainment whenever, wherever and however people need it.
For example, recently we announced the world’s first wind and solar commercial network GSM cell site in Namibia. By incorporating renewable energy technology into this cell site, we created a cost-effective solution for operators in the region who find fuel generators too costly and dont want to wait a long time for a main grid connection. Most importantly, weve created the infrastructure for people to be able to communicate with each other. Thats powerful and exciting.
2. What will the mobile device in 2012 look and feel like? What new features and functionality will be introduced by then?
The mobile device in 2012 will become an extension of your persona. In other words, it will know your preference, know where you are and will understand the context of what you need. This will simplify how people access communication, information and entertainment. For example, the mobile device will be your computer, wallet, TV, camera, music player, FM radio, alarm clock, flash light, calendar, game system and so on. By 2012 the mobile device will become your remote control for life.
3. How does Always On environment change how media and entertainment will evolve over the course of next five years? What does digital convergence mean to you?
The on-demand genie is out of the bottle and there is no way it is going back in. This fundamental shift in consumers expectations of being able to watch video when they want is having profound impact on nearly every technology component of every network that is capable of delivering a moving series of images . . . LANs, WANs and wireless.
I see convergence not as technology-driven, but experience driven. Convergence is the mobilization, socialization and personalization of content and communicationsthe technologies are being driven by the desired experiences. This is how Motorola researchers are going about their thinking. With deep expertise across mobile devices, home networking components, set-tops and next-generation networks, Motorola is focused on creating an integrated experience network topology that will excite the consumers and grow business for every player in the new media ecosystem.
4. If you were advising entrepreneurs, which problems would you advise them to tackle? Where is the most innovation needed? What are some of the problems that our industry hasnt solved? Whats holding us back?
There are many problems to be solved, some are technological and others regulatory. I will answer this question more from a technological perspective. My advice to entrepreneurs is to focus on value added applications for the mobile platform that has many constraints such as battery life, screen size etc. Just forcing the internet designed for a PC onto the mobile device will not work. We need to think about innovation in areas of internet mobility, content mobility and broadband mobility. Areas of particular challenge are power management and battery life. Another exciting opportunity is to think about how this device may be used, when Wireless Broadband becomes a reality with WiMax. I dont think anything is holding us back. I am an optimist I believe the human mind can solve most problems. The scale of the mobile revolution is so massive that innovation will occur at many levels both in developed and emerging markets simultaneously.
5. At Java One you talked about Platform Disturbia. How do we solve the problem (or ease the pain) of industry fragmentation at multiple levels? Or is it a fact of life?
“Platform Disturbia” which is my anecdotal way of describing the fragmentation in the mobile industry can be a great opportunity for developers, but brings with it significant challenges. As content and communications go mobile - How does one move content easily and transcode it from one format to another? How does one set the hooks between different networks and mobile devices so the hand off is seamless? With personalization, where should the authentication and personalization engines be located - on the mobile device or on backend servers? Should context and location awareness work with authentication; how much should they reveal and to whom?
It is hard enough dealing with the sheer number of different mobile handsets, screens and separate operating systems. Now we want those devices to talk effortlessly with enterprise infrastructures - to enable secure communications and data sharing with field service people. We want to extend into the home and be able to upload and download content automatically from set top boxes. And deliver a whole new generation of location and context-based services that will make mobile devices even more personal and interactive.
The way to ease the pain of industry fragmentation is through the adoption of standards and for large innovative companies to be transparent about intellectual property rather than extract high royalty rates for patented technologies. The former accelerates time to market and therefore expands market creation with a unified approach. Of course, companies must protect their intellectual property and get fair, reasonable payment for their patent rights. However, often fragmentation occurs when competing technologies are created to avoid high royalty taxation.
The mobile world is a huge and divergent ecosystem where innovation needs all of us to be both visionary and pragmatic - so that we can move to Platform Utopia!
6. Indias wireless market has been exploding at a rapid pace. Could you please discuss the role of wireless communications in Indias economy? What role does India play in the global wireless market?
Yes, the wireless communications market is certainly growing very rapidly in India nearly every global manufacturer has production and research presence in the country. India adds almost 6 million subscribers every month that is equivalent to connecting the entire country of Denmark in India every month!
This rapid adoption of mobile communications will have a positive impact on economic empowerment over the long run. This is already starting to happen in other emerging markets. For example, merchants in Zambia use mobile phones for banking. Health workers in S. Africa use them to update records while visiting patients. In Tanzania fishermen use mobile phones to get market, weather and the price of fish while still off shore. Already mobile connectivity is generating big economic benefits according to a London Business School study. The study says that in a typical developing country, a rise of 10 mobile phones per 100 people boosts GDP growth rate by 0.6%. That may not seem much but compounded over a few years it adds up to a substantive increase in the standard of living
India plays a critical role in the global wireless market because the scale of people yet to be connected is large. This demand will become a hotbed for creativity and innovation. When we connect the billions of people, we will see new use cases with mobility. Looking forward, the opportunity in India and support of the government is quite strong. The Indian government has set the target of 500 million subscribers by 2010.
7. How do you manage uncertainty? How do you keep the team of 26,000 focused and motivated?
Managing uncertainty is exactly what innovation is all about. Not knowing the answers, taking risks, disrupting the status quo and challenging conventional wisdom are necessary ingredients to invent and innovate. As inventors, it is our responsibility to think beyond the possible and break barriers to create the never before imagined solution.
However, with this creativity comes the need of one shared vision. At Motorola, our shared vision is of a world in which communications transcends the barriers of space and time to deliver an on-demand consumer experience what we call seamless mobility. It is this vision that connects our work and keeps our 26,000 focused on one end goal.
Most importantly, I surround myself with very smart people individuals who are not only experts in their fields, but also possess strong business acumen blended with an entrepreneurial spirit to succeed. It is tough to find people like that, but ultimately people are the backbone of an organization, they are the catalysts for growth and success. Leadership is not about YOU but them the teams you lead. My advice is to leaders be humble and dont be afraid to hire talent that is better than you.
- How do you keep up with all the information and technology evolution around you? You have your own blog; do you have some favorites that you read regularly?
I stay connected to people and information. I read just about anything and everything that comes my way, it is almost addictive. I also spend a lot of time meeting customers, visiting universities across the world, chatting with students - all the way from elementary to post doctoral and interacting with industry thought leaders. This has exposed me to some truly remarkable individuals from all fields. Recently while in San Francisco, Dr. Jill Tarter invited me to the SETI Institute where I met with some brilliant astronomers and scientists and gained a unique perspective on their contributions and achievements.
I also stay connected to information - from blogs to technical papers to trade journals to books, there is always something fascinating that sparks my interest (and keeps me busy on those long cross-Atlantic flights!). Yes, I have my own blog called Bits at the Edge - http://blogs.motorola.com/author/padmasree-warrior/. I read many blogs and enjoy the perspective of different bloggers, whether they agree with my opinions or not.
- What are the key ingredients of a strategy to outsmart competition?
I always say a Vision without a plan is just a Dream. The key to success is Think Big and Act Fast. Focus on delivering value by solving relevant problems.
10. How can technology companies better understand the needs of customers?
It may sound simple but I would say that we could better understand the needs of customers by being better listeners - especially earlier in the product development cycle. As corporations grow, it is easy to get stifled by what is going inside our own walls and forget to open the doors in the early stages of concepts, to understand the pulse of the marketplace.
At Motorola, we are shifting our focus to delivering enhanced experiences to our customers. Similarly, our research efforts stay focused on discovering the problems of tomorrow and then creating solutions to solve these problems.
Lets take the example of the original RAZR our researchers perceived that consumers were in search of a phone that would fit in their shirt pocket; our scientists then brainstormed and developed the solution of an embedded antenna that allowed for a slimmer form.
11. How do you manage work-life balance?
I actually dislike the word balance in this context, because it conjures up images of conflict. My work is an integral part of my life and so are my family, my community, my friends and my self. I prefer to think of this more as an integration challenge. I have one life in which I must INTEGRATE each of these. Therefore, it is not important HOW we decide to apportion the time spent on each of these because there is no right answer. The challenge is to COPE with the guilt that comes with however we choose to spend time on each of these. Over the years, I have tried not to feel guilty about things that I am unable to do, but rather enjoy the experiences of what I am able to do. Recently I had to miss our senior leadership strategy session, instead I chose to attend my sons middle school commencement where he received a President honor award. I had a blast being a proud mom that evening.
12. You are an inspiration to many. Who inspires you? Who has been your role model(s) and why?
Mother Teresa continues to be an inspiration to me. I do not see her just as a martyr but as a pioneer and a bold risk taker. She looked at the world holistically and her work broke down barriers race, color, ability, wealth and economic status. She left her home country and comfort zone to improve the lives of the poorest of the poor.
13. Who are some people you would really like to meet with that you havent been able to meet yet?
Restricting my wishes to people that are living, I would like to meet Nelson Mandela who single handedly and irreversibly influenced the course of apartheid in the world. I would also like to meet Scott Adams I Iove Dilbert!
14. Whats the last book that you read that really made a difference in your life?
The Alchemist poetic style of prose that is thought provoking, makes you pause.
15. What are some of your favorite memories of being at IIT?
Dating my then boyfriend (now husband), all night chat sessions in the dorm room, the perennial hikes to street cafes at odd hours in search of chai (tea) that had nothing at all to do with drinking tea per se, heated debates about everything from solving world hunger to cutting classes the next day.
CTIA Wireless 2008 Roundup April 4, 2008
Posted by chetan in : 3G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, Enterprise Mobility, European Wireless Market, Indian Wireless Market, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Smart Phones, Speaking Engagements, Speech Recognition, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 commentsCTIA Wireless 2008 Roundup
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The Sin City hosted CTIA Wireless 2008 earlier this week. On Wednesday morning, just before leaving for the convention center, I caught some portion of Ben Bernankes congressional testimony on the US economy woes. Few minutes later, strolling the show floor, talking to various companies, and hearing the keynotes, it seemed like I was on a different planet. Either someone failed to deliver the memo or the wireless industry is resilient enough to weather the turmoil in the financial and housing markets with some ease. The show was bigger with more attendees, the booths were returning to their glamorous heydays of the past, and the general buzz and energy at the show all seem to indicate the industry is going to do just fine and is primed for further growth. The general themes were around open network and access, user experience, and bandwidth.
This note summarizes our impressions from the show.
First lets do the numbers: CTIA released their semi-annual statistics on the US market. In summary: For 2007, $23B in data revenues, 2 trillion in MOU, $139B in total service revenues, 48B txt messages/month. (We released our US Market and Global Market updates last month)
Keynotes: In terms of style, Sir Richard Branson stole the show with his pompous exuberance and pep talk (the talk of imaginary flight to Mars was hilarious; investors in Microgin and Viroo must be upset). For substance, Marco Boerries, President, Yahoo Mobile gave a nice compact overview of Yahoo initiatives and products in the market which are pretty darn good. (Marco wrote an opinion piece for our Mobile Advertising Book The future of Advertising is in the Consumers Pockets). Yahoo has sewn together a number of deals worldwide that gives them a potential reach of over 600M users.
Vodafone is one operator which has been quite vocal in stating its positions on future infrastructure roadmap and data opportunities. Arun Sarin is probably the only CEO of major global operator who has publicly stated that Mobile Advertising will constitute a significant portion of their revenues in the coming days (Aruns point person on the initiative Richard Saggers also wrote an opinion piece for our book Opportunities for Mobile Advertising. Let me know if you are interested in reading these two opinion pieces).
Microsofts Robbie Bach had the tough task of following the Branson-fest. He announced the arrival of a full-blown browser (finally!) for windows mobile. Also, the new windows mobile device from Sony Ericsson (Xperia) looks pretty darn cool. FCC Chairman Martin announced the rejection of Skype petition on the carterphone principle (to Skypes dismay, it was not an April fools joke). Clearly, the definition of open is in the eye of the beholder. It means different things to different people. It has also been clear from the various activities and keynotes that the industry is trying its utmost to remain a Self-regulated industry and stay away from the clutches of eager politicians.
Lowell McAdam, CEO of Verizon Wireless conducted a panel with CEOs from Alcatel-Lucent, Ericsson, and Nortel and probed them on the 4G migration path, trends in applications and services, and contrasts in adoption and introduction of new technology in various parts of the world. Final day was marked by what is now becoming a trend - keynotes from politicians. This time around Sen. Edwards and Sen. Thompson graced the podium.
Mobile Advertising: In talking with numerous players in the value chain from small developers to large operators to ad networks to media companies, the impression was that things have matured over the last six months. It was gratifying to hear that some companies are adopting strategies and recommendations we propose in our book. Still, some of the basic problems remain majority of the inventory remain unsold indicating weak demand, CPM rates are still over-rated though they are starting to come down, and fragmentation continues to remain an issue.
The good news is that the size of the mobile campaign budgets are getting bigger with several seven figure RFPs floating around. While some companies are still trying to throw a lot at the wall in the hope that something sticks, others are maturing as companies and are more focused in their positioning and product roadmaps. Integration of various channels is starting to appear on the horizon and the integration with the publishers is becoming tighter. The issue of measurement and auditing standards remains a big issue and unfortunately not much progress to report. There are carrier initiatives and various industry bodies are taking the challenge to rally the ecosystem, but, frankly, consolidation of such efforts is necessary, we cant afford yet another layer of fragmentation in an already complex ecosystem.
We were interviewed on Mobile Advertising prior to the show by several publications. Some of the articles were published this week to coincide with CTIA
Wireless Wave (CTIA) Moving Targets: Mobile marketing reaches consumers on their terms by Lynn Thorne
BrandWeek Mobile Marketing Fantasy vs. Reality by Ken Hein
Wall Street Journal Personalized promotions: Sending the right ads to your phone Peggy Anne Salz
NFC: There were many more NFC-enabled devices on display this time and vendors were talking and demoing NFC and Biometrics based payment solutions. While there are handsets on the roadmap, this market is still very nascent in North America and Western Europe.
Inspiration: The inspiration for new and creative services still comes (at least for yours truly) from Japan (and Korea). I love spending time in DoCoMos booth for it gives a glimpse into whats to come. No other company better understands the development of devices, services and applications that overlay on lifestyles than DoCoMo (e.g. a wellness handset that is a pedometer, heart rate monitor, body and bad breath monitor and yes, you can make voice calls too). They view wireless air-interfaces as nothing more than enablers to solutions that enhance daily lives. Various device manufacturers also displayed some really cool devices. The quality and diversity of handsets that have been introduced into the global markets over the last four quarters is just astonishing. The cycle of innovation and time-to-market keeps on accelerating.
Femto Cells: A number of players like Airwalk, Airvana, and others are bringing Femto cell solutions to the market and carriers are starting to pull this into their strategy as well and look forward to deployments beyond the trials.
4G: LTE vs. WiMAX (vs. UMB): Since the decision of Vodafone and Verizon to support LTE, UMB has been disappearing from the discussion. The 4G discussion is convulsing around LTE and WiMAX now (though Nortel did indicate its support TD-SCDMA as a 4G candidate). Without a doubt the operator community is rallying behind LTE and there might be an opportunity to finally converge to a single standard (havent we seen this movie before) but frankly, the advances in silicon to integrate multiple radios has made the standards debate less relevant. WiMAX has forced acceleration of LTE standardization process but is starting to lose its time (and cost) advantage. All eyes are on Sprints XOHM business rollouts in the coming days and months.
Accessories: I have never seen so many accessory and reseller outfits at a CTIA show. Business must be booming.
Best Booth: Thought there were several good layouts, LG and Samsung continue to impress with their creativity and art of marketing.
Developer and Publisher woes: Along with John Philips (Astraware) and Peter Baldwin (Cellmania), I helped facilitate a few developer session at the Mobile Jam Session organized by WIP. The issues of distribution, discovery, and monetization remain challenging for the small developers worldwide. Even with million user base, they are finding it difficult to monetize but we did discuss a number of success stories. The core elements of success that emerged from the discussion were: choosing the right market, embedding viral component into everything you throw out there, there is no room for mediocrity, and personalizing and customizing go a long way to get traction. An interesting tidbit: the number of page views for mobile MySpace app is a magnitude higher on off-deck vs. ondeck. Several of the companies are trying mobile advertising with varying degrees of success. After spending 4 hours with the developers, I sat on a carrier panel discussing mobile advertising. The contrast between the two worlds was so apparent. Clearly, more needs to be done to help both sides understand each other a bit better.
Green CTIA: There is a stronger emphasis on recycling and contributing to save the environment. The show itself is a big resource hog, so every bit helps.
Alternate Mobile Devices: The universe of alternate devices is expanding. Companies are buying wholesale data packages from the operators and integrating broadband chipsets into hardware to do digital signage (ICG), M2M (Sensorlogic), PND and much more. The definition of being mobile keeps on changing.
On Being Open: Obviously, given the recent activity around openness, getting a penny for each time the word was uttered by a speaker would have paid off for a lifetime of CTIA trips. While talk is cheap, demonstrable progress is being made by the likes Yahoo, Apple (btw, 3G iPhone is on its way), and AOL.
Another MVNO experiences turmoil: Movida - a Spanish focused MVNO which has garnered almost 300K subs filed for chapter 11.
Voice is becoming mainstream: With the product launches from Nuance, SpinVox, Vlingo, Jott, Yahoo, and many others, voice based navigation and its tighter integration with data services is becoming mainstream.
Where are the opportunities? Last week, I was moderating a panel with executives from AOL Mobile, T-Mobile, Motricity, and Formotus and the themes that emerged were around platform play, user experience, and productivity. At CTIA, in addition to these areas, there was a lot of discussion around social networking (though the market is being saturated with the MoSo noise). It is also clear that we are moving into the phase of aggregation of fragmentation with initiatives from Yahoo, AOL, and Google dominating the landscape.
Home Screen Effect: I have been talking about using the home screen for driving data usage for the last 8 years. I think we will see good innovation this year on that front starting with Yahoos One Platform. There are several other initiatives in the works where operators and OEMs will be deploying frameworks and technologies to bring information to a click-less idle screen environment.
Overall, no major news but industry stays vibrant, healthy, and exciting.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
Global Wireless Data Market Update 2007 March 27, 2008
Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, Devices, European Wireless Market, India, Indian Wireless Market, Infrastructure, Intellectual Property, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Mobile Users, Networks, Partnership, Speaking Engagements, Speech Recognition, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 8 commentsGlobal Wireless Data Market Update 2007
http://www.chetansharma.com/globalmarketupdate2007.htm
As you read this End of Year (EOY) 2007 Global Wireless Data Market update this week, somewhere in India, a new subscription will catapult India over the US as the number 2 global wireless market. 2007 was a banner year for global wireless data market. The global service revenues for the year touched $700 billion, the data service revenues were more than $120 billion, China signed its 500 millionth subscription, and both India (in feb 08) and the US crossed the 250 million subscription mark. 2007 continued to enhance mobile datas role in the operator ecosystem with approx 17% of the revenue is coming from data services.
For some leading operators, data is now contributing up to 35% of the revenues however increase in data ARPU is not completely offsetting the drop in voice ARPU. From the true and tested SMS messaging to new services such as Mobile TV, Enterprise apps, and others, different services helped in adding billions to the revenues generated for 2007. Japan and Korea remain the envy of the global markets and the countries to study and learn from w.r.t. new services and applications. The US market has been steadily making strong comeback and for the first time exceeded Japan in service revenue generated from mobile data.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India. This note summarizes the findings from the research.
- The worldwide markets continue to grow at an explosive pace reaching 3.3B subscriptions by Q407 up 20% from 2006 levels. Significant growth is coming from India and China with both countries registering close to 8-9M net adds per month. India recorded 8.8M net adds in Jan 08 while China added 9.4M in Feb 08. Overall, the world market is at almost 50% penetration.
- US surpassed Japan as the most valuable mobile data market in service revenue with US adding $24.5B vs. $23.2B for Japan in 2007 mobile data service revenues. China with $12.5B was ranked number 3. US registered the highest growth amongst the top 3 with over 55% increase from 2006 levels followed by China at 37% and Japan at 18%. These top 3 markets account for over 50% of the global data service revenues.
- NTT DoCoMo continues to dominate the wireless data service revenues rankings with over $12.13B in service data revenues for 2007 however Q/Q growth has dropped to single digits. DoCoMo crossed 80% in 3G penetration and is expected to touch 90% by end of the year.
- DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, O2 UK, SK Telecom, Softbank, and China Unicom to round up the top 10 operators by wireless data service revenues. All the top 10 carriers exceeded $3B in data revenues for the year.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping 30%.
- Both India and China added a whopping 85 million new subscriptions (most of them prepaid). This week India edges past US to become the number 2 wireless market (by subscriptions) in the world. In last two years alone it added almost 150 million new subscriptions (in comparison China added 155 million and the US market added 44 million).
- Vodafone Italy reported the highest increase in data ARPU from 4Q06 with 76% growth. Other notable percentage increases in ARPU were from Rogers, AT&T, Verizon Wireless, Sprint, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators with average data ARPU dropping to $0.70.
- In terms of absolute dollar amount, 3 UK leads the pack with $29 data ARPU (qualifying limit: 4 million subs). By comparison, the rest of the top 4 operators are below $22. In fact, 3 UK reported the highest ARPU recorded for the year at approximately $94 (in Q2). Other operators who reported overall ARPU above $60 were KDDI, NTT DoCoMo, Rogers, and 3 Sweden.
- The biggest jump in data revenues was experienced by Verizon Wireless with over 68% increase from 2006 followed by AT&T with 63% jump and O2 UK making 49% gain.
- In 2007, SMSs vice like grip on data revenues continued to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
- The top 10 operators increased their revenue by 32% during 2007 (from 2006) to reach almost $62 billion in data service revenues, thus accounting for almost half of the global data service revenues though they account for only 27% of the global subscription base.
- NTT DoCoMos position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI. Their data coordinates stand at ($21.5, 35%) and ($21, 34%) respectively (please see PowerPoint for reference). Since the takeover from Vodafone, Softbank has been making significant strides in the market by taking the highest share of the net-adds in last 9 months.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers Smart Communications and Globe Telecom with almost 55% (or $4) contribution coming from data services.
- Even though China reported approximately $12.5B in data revenues for 2007 and the percentage contribution is over 23%, data ARPU is around $2.3. For India data ARPU dropped below $1 for all major carriers.
- China Mobile with 369M (as of Dec 07, the numbers increased to 384M by Feb 08) remains the #1 carrier in terms of total number of subscribers followed by Vodafone at 252M and China Unicom with 160M subscriptions. Telefonica, Amrica Mvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for many years to come. China Mobile also surpassed Vodafone in market cap which stands at $288B (vs. $164B for Vodafone). Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.
- As far as 3G is concerned, GSA reported 293 WCDMA commercial launches worldwide with over 270M 3G users (66% of them are WCDMA users vs. EV-DO). Both Japan and Korea continue to expand their 3G base with both reporting over 75-80% penetration. 3G has picked-up steam in both western Europe and North America per our forecast in the 2005 cover story article 3G: Hitting the Mass Market published in the Wireless World Magazine. Western Europe and US are approximately at 25% 3G penetration (Italy being the exception reaching 40%).
- China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and has been having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural areas. In India, regulators are considering inviting bids for the 3G spectrum from foreign entities as well.
- Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. In terms of 4G, there is a strong momentum behind LTE, UMB in its current incarnation is practically dead, and proponents of WiMAX are pushing the technology as a 4G candidate, though it is starting to lose its time advantage.
- In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industrys imagination. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- 2007 also saw the demise of some high-profile MVNOs like AmpD. Helio continues to struggle while the newer ones like Sonopia and Blyk are testing the treacherous waters with different business models. Asian market is also opening up for MVNOs.
- Nokia eclipsed 100M/quarter unit sale three times in 2007. It sold over 437M handsets in 2007, more than the next three handset manufacturers combined. Nokias global market share stood at 40.2%.
- While the talk of Open Access and Open Platform consumed much of North America, it barely registered a decibel elsewhere. Several significant events including 700 MHz Auction, Android, and Verizons Open Network initiative elevated the consternation in the ecosystem.
- Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia launched its ad service as well. 2007 saw tremendous M&A activity in both the online and mobile advertising space. In a matter of weeks, several billion dollar transactions took place highlighting the intensity in preparing for the next battleground. The estimated market for mobile advertising in 2007 was approximately $2.3B with messaging, search, and browsing accounting for over 84% of the revenues.
Your feedback is always welcome.
Chetan Sharma
Disclosure: Some of the companies mentioned in this note are our clients.
