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Announcing Mobile Future Forward 2013 - Mining the trillion dollar opportunity May 13, 2013

Posted by chetan in : Fourth Wave, Mobile Applications, Mobile Future, Mobile Future Forward, US Wireless Market, Worldwide Wireless Market , add a comment

Greetings,

I hope you are enjoying spring.

I thought I will provide an update on our fall mobile executive summit – Mobile Future Forward (Sept 10^th in Seattle). I am very pleased to announce the preliminary program. We will provide regular updates as we add new executives to the program and continue to refine the discussion topics to give you the best learning and networking experience you can find in the mobile industry. As you know, our programs are deep in content and high on participant caliber. Each year we strive to bring together some of the leading thinkers and doers from around the world to brainstorm the future of mobile. As we like to call it – it is a mobile boot camp with the brightest brains in mobile.

The mobile industry is entering what I call the “golden period” of its evolution. The fourth wave of mobile is going to generate trillions of dollars over the course of the next decade. The ecosystem will become more diverse, each of the major verticals will get redefined by mobile, and consumers around the globe will benefit tremendously from connections to information, intelligence, objects, and each other. Enterprise productivity and efficiency will increase manifold and the golden period of mobile will help shape human history. But how and by whom? That will be the crux of the summit in September.

We are delighted to be partnering with some of the leading players in the ecosystem: CitrixByteMobile, Ericsson, Intel, Synchronoss, and Telefonica.

Some of the outstanding group of executives who are responsible for changing the face of the industry every day will be leading the discussion. Their insights will be invaluable and actionable.

Confirmed Speakers

· Ralph de la Vega, President and CEO, AT&T Mobility · Steve Elfman, President, Sprint · Erik Moreno, EVP, Fox Networks · Danny Bowman, Chief Sales and Operating Officer, Samsung · Terry Myerson, Corporate Vice President – Windows Phone, Microsoft · Marios Zenios, VP – Uconnect, Chrysler Group .. More to come

· Stephen David, former CIO, P&G · Glenn Lurie, President, AT&T Mobility · Marianne Marck, SVP – Consumer Facing Technology, Starbucks · Henning Schulzrinne, CTO, FCC · Fay Arjomandi, Head Vodafone Xone, Vodafone · Biju Nair, EVP and CSO, Synchronoss

The Mobile Future Forward team, our esteemed partners, our fantastic speakers and our engaged community are really looking forward to Sept 10^th.

I hope you will join us in what is shaping up to be an exceptional gathering of the mobile minds. Registration is open now. Early bird will expire May 31^st.

Thanks and best wishes.

Kind regards,

Chetan Sharma

New Research Paper: The ABCs of SMB Transformation: Apps, Broadband, and the Cloud May 6, 2013

Posted by chetan in : 3G, 4G, 4th Wave, AORTA, Applications, Chetan Sharma Consulting, Connected Devices, Enterprise Mobility, European Wireless Market, Mobile Cloud Computing, Mobile Ecosystem, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

The ABCs of SMB Transformation: Apps, Broadband, and the Cloud

- A collaboration between Chetan Sharma Consulting and AT&T

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

Download pdf (1.5 MB)

Introduction

In 2013, the US mobile data revenues will exceed $90 billion accounting for over 165% growth in the last 5 years. This makes US the biggest market for mobile data solutions and services. The smartphone penetration in the US went past 50% by mid-2012. The number of applications available to consumer has quadrupled in just the last two years. While the growth in the smartphone segment has been quite impressive, the tablet adoption rate has been the highest in the consumer electronics history. The advent of mobile broadband, powerful computing devices, reliable cloud services and applications have changed the computing landscape forever.

At the same time, the Consumerization of IT is changing the face of the enterprise architecture as well. This is felt more acutely in the small-and-medium business (SMB) segment. US is also the biggest enterprise market in the world and the SMB segment represents the more agile and technology-savvy of the ecosystem. In fact, we think it is a leading indicator of how technologies are going to be adopted in the enterprise ecosystem, what trends will prove to be disruptive, which vertical segments will embrace efficiency, and most importantly, how should we think about the ever-changing landscape as we look towards rest of the decade.

Small businesses are at the heart of the US economic engine. They represent roughly 45% of the non-farm GDP. Every administration, every president focuses on small business growth and job creation. Given the importance of small businesses to the economy, it is worthwhile to look at how their technology needs are changing. Additionally, it is important to understand how they are adopting technology and the impact it is having on their productivity, competitiveness, and efficiency. The technology adoption is also putting some of the traditional industry segments at risk while creating several new growth areas.

To understand the impact of mobile broadband, devices, and cloud applications, we conducted a survey of eighty SMB companies of different shapes and sizes across the US serving different verticals constituting over ten thousand employees. We also looked at the data from over twelve thousand companies in the SMB segment and over twenty thousand larger enterprises. Additionally, we conducted a series of interviews to better understand the motivations, requirements, and feedback of these companies. These companies have been in business for twenty years on average with over two years of experience with mobile data solutions. By understanding how they use and benefit from mobile data solutions, we can better identify the course of enterprise mobility in the US and around the world.

Some interesting findings:

· Small and medium businesses are leading indicators of technology adoption. As referenced in this paper, SMB smartphone and tablet penetration is more than 90 and 65 percent respectively; whereas national smartphone and tablet penetration is roughly 55 and 22 percent. 

· Mobile First to Mobile Only. Last year, we proposed that we will start moving from mobile first to mobile only economy. We said that we are approaching a pivot point wherein the mobile first doctrine is going to move to mobile only. We are starting to see strong evidence of that shift. In our survey, roughly 30% of the SMBs are transitioning from desktops/notebooks to smartphones/tablets. Business software and solutions are being transformed by the use of smartphones and tablets. With this shift, we’ve seen the emergence of a generation of app developers focusing primarily on the mobile app platform.

· Mobile broadband, cloud, and apps are providing real and tangible ROI. The SMBs in the survey saw an average savings of 40 minutes per worker per day, which translates into significant impact on profits over the course of the year.

Your feedback is always welcome.

Chetan Sharma

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

Abhi Ingle – The Mobile Cloud Connected Enterprise

Posted by chetan in : 4G, 4th Wave, Applications, Enterprise Mobility, Mobile Cloud Computing, Mobile Ecosystem, Mobile Future Forward, Worldwide Wireless Market , add a comment

The following piece is excerpted from the 2011 Mobile Future Forward Book – Connected Universe. Unlimited Opportunities. It was written by Abhi Ingle, then VP, Advanced Mobility Solutions at AT&T and now VP of Innovation and Head of Foundry  at AT&T

Technology and Structural Change

An observation of the technology industry reveals three broad trends having a visible impact on business today. First, mobile computing devices continue to add computing capacity and new capabilities at an exponential rate of growth (Figure 1a and 1b). (Moore’s Law is still very much in effect and shows no signs of slowing). Second, wireline and wireless connectivity is being migrated to a flat, high-speed internet protocol architecture providing the ability for the stack of services to be disaggregated. This allows applications to run seamlessly across multiple devices simultaneously in stationary, nomadic and mobile scenarios. Third, the explosion of cloud computing in terms of infrastructures, platforms and applications continues to develop and is now gaining acceptance in mainstream scenarios, both consumer and business (Figure 2).

Figure 1a and 1b: New Uses for Computing (Source: IDC) and New Model of Computing Innovation (Source: 2011. Intel Investor Meeting).

Figure 2: AT&T Mobile Data Volumes Up 8,000% Over Four Years (Source: 2011. AT&T).

Amplifying the impact of these technological changes is a sea-change in technology purchasing, evaluation and consumption in the marketplace. Technology purchasing–previously a top-down IT-driven process–has now morphed in to a bottom-up consumer-driven phenomenon. Alternately referred to as the “consumerization of IT” or the “Bring Your Own Device” (BYOD) movement, it is having a tremendous influence on business IT, effectively redefining where and how technology decisions are made. (Ted Schadler (Forrester Research) and Josh Bernoff (Forrester Research) have written Empowered, an entire book dedicated to this trend alone).

Any of these advances taken individually is an exciting evolution, but the opportunity presented by the combination of these technologies and trends taken together is revolutionary. This troika of technological advancements and industry trends can be viewed through two lenses, either as an incredible opportunity or an insurmountable challenge.

This dichotomous view is understandable. There are formidable obstacles as companies realize that they may have to reengineer twenty years of PC-centric architecture to contend with multiple connected devices, multiple computing platforms and multiple applications (which may or may not run on all of the same platforms). It can be an overwhelming task even for the most forward-thinking organizations. We choose to view this as a rare opportunity for businesses agile enough to harness these trends to make dramatic business improvements by transforming classic enterprise IT architectures to real-time, business process driven, cloud-based mobile architectures. A systemic phased approach with the right partners can make this a manageable and self-funding transformation.

We find the three technology changes referenced earlier to be mutually reinforcing. For example, the advent of powerful smartphones, tablets and connected devices changes the computing paradigm to be one in which there are many devices per person. Having several devices inherently leads to the necessity to have data and applications accessible by multiple devices simultaneously.

What is the phenomenon ideally suited for housing applications allowing access from multiple end points? The cloud! And, of course, all of this would not work if all of these devices were not always on and connected through incredibly fast flat IP networks (wireless and wireline). The business network is, in fact, the most mature virtualized element, secure MPLS-based connectivity which increasingly forms the core of enterprise connectivity today was the original “cloud or virtualized” service. The virtualization of data centers, servers, storage, processing power and the XaaS phenomenon is taking the other elements towards the same evolution as the network, in effect creating a virtualized or cloud fabric in which network, processing, storage and software can flex to the needs of the enterprise on a dynamic basis (Figure 3).

Figure 3: Cascading Waves of Innovation (Source: 2011. AT&T).

Much has been written about the technologies involved in this change, but surprisingly little about a business framework that can fully take advantage of these changes. Capitalizing on this opportunity will require a holistic framework encompassing people, processes, assets (Figure 4) and linkages between the three in an architecture that provides the enterprise with the ability to sense, analyze and respond in real-time (Figure 5).

Figure 4: Framework for a Real-Time Event Driven Enterprise. (Source: 2011. AT&T).

Figure 5: Sense, Analyze, Respond Relationship. (Source: 2011. AT&T).

Consider two companies we have worked with recently on extreme ends of the spectrum. The first, a large beverage distribution company, with a history of successfully implementing progressive mobility solutions, wanted to retain its competitive advantage.

The second, a 20-person company providing specialized healthcare supplies, with no automation, sought to capitalize on creating a real-time enterprise which they could never have afforded prior to these technological changes. Both of these companies have dramatically transformed their business processes around the concept of the real-time enterprise in which people, process and assets are always connected and can be optimized on the go.

Figure 6: Beverage distribution company scenario illustrates real-time demand and supply adaptation (Source: 2011 AT&T).

To understand how the beverage distribution company is thinking about the future and how they can capitalize on the technology changes, visualize this scenario:

A large group of bicycle riders are out on a long ride on their bicycles on a hot day and require a sports drink to rehydrate (Figure 6, Illustration A). Those of you familiar with road biking will recall that the form fitting lycra outfits that most road bikers wear typically limit what one can carry. Imagine that on the bicycle’s handlebar (where in the past a GPS device would have resided) is instead a sled for the rider’s mobile smartphone, GPS and near field communications, where he or she can use an application to locate the nearest drink machine (Figure 6, Illustration B) and get directions to it (Figure 6, Illustration C).

Once there, the rider can use his or her mobile device to pay for and receive a drink using Near Field Communication (NFC) technology. The process is repeated for the entire group of bikers, depleting the machine of all the sport drinks (Figure 6, Illustration D). In a non-real time world, the company would fail its’ consumer at the moment of truth – it would direct thirsty riders to an empty machine. But in our real-time connected world, the connected vending machine has already signaled its status to the cloud, has been taken off the database before the next set of riders would see, and they are automatically directed to the next closest machine.

Simultaneously, cloud based analytics ensure that “restock work orders” are routed to all supply trucks in the area (Figure 6, Illustration E). (All trucks are equipped with automated vehicle location technologies that are continuously connected). Each supply truck driver has a handheld device to receive the alert and the ability to accept a restocking order and go refill the depleted machine. As soon as this is done the vending machine resignals its status and is immediately shown on the next dynamic search a consumer makes. Imagine the efficiencies and revenue maximization as a result of these real-time interactions!

One could even imagine correlating this cycle to the weather/temperature or time of day to drive even further efficiencies. Clearly, not everything outlined in this scenario has been implemented to date, but by preparing for the future, this company is systemically transforming its business processes and moving to a real-time mobile IT architecture.

Now let’s take a look at the small twenty person specialized health supplies company harnessing these technology trends to completely revise the operations of their company around a mobile, real- time cloud delivered core.

Figure 7: Rehabilitation Company Specializing in Wheelchairs (Source: 2011 AT&T).
(ProntoForms is a trademark of TrueContext Corporation.)

The Scenario Prior to Transformation: The company– a privately owned corporation–supplies custom wheelchairs to customers. The company operated primarily via paper forms requiring extensive calling back and forth using basic phones and a classic company reception system despite the fact that the company could not afford to keep the company phone line staffed around the clock. The company also owned two delivery vans to pick up and deliver wheelchairs the company was either servicing or supplying. Since the company could not afford any more vans, multiple calls to these vans to ensure on time delivery and pickup was critical.

The AT&T Mobility Applications Consultant who called upon this company soon realized the company was too small to either host, manage or support any onsite software or even deploy and maintain PCs. The answer was delivering four applications through the cloud direct to smartphones (in this case iPhones) and to specialized tracking devices. What follows is a summary of the 4 different solutions and the problems they addressed. (Refer to Figure 7 for the following).

Solution #1: The company’s wheelchair technicians used paper forms for everything they did; surveying customers about their needs, taking down specs or noting repairs delivered. This equated to three different forms over four pages in length. Each day field technicians filled out the forms and turned them in. Then they were formally entered/rekeyed at the end of every day. This was a time consuming effort with frequent errors and inaccuracies that had to be found, corrected, and re-entered.

The company was transitioned to a cloud delivered, mobile forms solution. The Pronto Forms Solution delivered by AT&T converted a paper intensive environment into a highly efficient method of capturing data. The forms were automated on iPhones for the field technicians and eliminated all the paperwork and rekeying steps, cutting the previous process time by approximately 75% per form. The information is also available online as soon as the technician fills out the form.

Solution #2: As previously mentioned, this company has two vans on the road constantly making deliveries. But the owner has no visibility as to current vehicle location, if they are on schedule, and if the miles driven are valid.

The TeleNav Vehicle Tracker from AT&T, a vehicle tracking solution involving a box that can be attached to the van and a cloud delivered portal provides visibility of corporate vehicles at all times. This ensures the vehicles whereabouts, if the driver is on schedule, and how far the vehicles have been driven. All this leads to better customer service, better image, and increased safety, security, and business stability.

Solution #3: The owner often needed to send out communication blasts to employees to see if someone could fulfill a particular task when they were short staffed in one department, but the owner and employees were only able to receive messages from customers on a 1:1 basis, slowing communication down. The implementation of AT&T Enterprise Paging allowed the owner to send one message to all employees via a simple text messaging portal and confirm receipt/delivery of messages.

Solution #4: After-hours management of the business was practically non-existent since the company was so small, yet their customers were dependent on their wheelchairs and needed the ability to reach someone in the company immediately.

AT&T Office@Hand, a cloud delivered PBX to the smartphone with a very simple web GUI, provided the customer with the ability to better manage and control after-hours service. It unifies employees in a business-on-one-phone system and includes auto-receptionist, multiple extensions, voicemail, call handling, faxing, and other features. The owner can assign a receptionist, a “sales, technician or repair” department on the fly depending on which employees are available.

The bottom line: The company was able to accomplish with $99 smartphones and asset tracking devices and a monthly software subscription fee of <$500, what would have previously involved buying $800-$1000 PCs , tens of thousands of dollars of enterprise software, a PBX system and an IT person to deploy and manage the software and communications. The difference is startling! Contrast capital and OPEX running into $200,000 vs. a CAPEX of <$1500 and monthly subscription fees of <$500 for the software. Even better, all of this is delivered by one company (AT&T) with a simple monthly bill that includes: Voice charges, data charges and applications charges all as one consolidated bill with one point of contact. This scenario even 3-4 years ago was unimaginable prior to the convergence of the three technology trends. It is the ultimate democratization of technology.

Changing Roles for Everyone In the Value Chain

The trends that we outlined above have profound implications for everyone involved in the technology delivery, evaluation, implementation and support chain. Consider the two examples outlined above. Each of these involved solutions comprised of innovative applications that live in the cloud and are delivered to smartphones or “always on connected devices” and paid for via subscription models.

Consider my own company, AT&T. Many of you are likely surprised that the role AT&T is playing in a rapidly evolving market such as this, and many of you might be skeptical of the need/value /competency of AT&T to play such a role, and rightfully so.

To illustrate my position, I would ask anyone who is curious to conduct a simple experiment. While inside of Apple’s App Store or the Android Market, type in “business application” and stand back as you compile thousands of results. How does a small company determine which application is right for them? How does a small company perform the due diligence to determine which platforms each application will run on, and on which models provided by which service providers? How does a business support, manage and develop to these platforms? Finally, try to find application providers able to provide enterprise billing as opposed to a consumer centric credit card only option.

We came to the conclusion that AT&T needed to adapt to the times by morphing our role to provide solutions to help businesses harness the mobile cloud phenomenon. As a supplier of mobile hardware, virtual private networks and data centers which can serve up mobile applications, we are uniquely qualified to deliver integrated solutions to customers.

But the change from delivering monolithic communication products to a collaborative enterprise partnering with dozens of hardware and software providers is not easy. It requires a significant transformation. First, in our people; hiring and training Mobile Application Consultants, ecosystem managers and vertical specialists. Second, in our process; moving from a product sale architected, managed and supported by AT&T, to a complex solution assembled across many different participants and supported through partnerships. And third, in our assets; from managing a network to a fixed set of devices, to managing a network that connects virtual private mobile application clouds to millions of smartphones, tablets and connected end points.

We felt we had no choice but to make this journey to stay relevant in the brave new world of mobile IT, cloud platforms and connected devices. The AT&T objective is, in effect, to help businesses master the melding of communications and computing together by knitting a series of ecosystem partnerships and providing a platform for other companies to innovate on via hardware and software and services. We believe we can simplify the process of harnessing technology for many business segments and serve as a broad distribution channel for small innovative companies (such as the types of companies showcased in the examples provided earlier) that struggle with brand, distribution and enterprise billing.

Given the far reaching impact of these changes, we believe it is important for all participants in the value chain to rethink their role, assets, people and partnerships for the years to come. Provided below is a quick synopsis of practical implications and considerations for different participants.

Changing Role of the CIO and the Enterprise IT Department

As outlined, in the Advisory Board Article (The Space Race – The Competitive Implications of Next-Generation IT Architecture, Research Summary, The Research Board. June 2010) on the changing role of the CIO, dramatic changes are occurring in the IT department as well. In effect, many companies have gone from having IT departments that DO things (own and drive projects) to an IT department that MANAGES things (potentially working with outside service providers).

This change has an influence on the balance of power between IT departments and Line-of-Business (LOB) departments. In some cases LOB departments find themselves in the unique situation of no longer requiring the assistance of IT and go directly to an external service provider (supplanting the internal IT department). In these cases, the IT department finds itself in the unique situation of having to compete against other service providers as an alternate provider. Enterprise IT should ask themselves if their highest value is in buying piece parts and spend time integrating these solutions or developing them in-house? Or does it make more sense to turn your department into high value business process analysis groups supplemented by strong architects who can put the various solution providers together?

The answer for each company will vary, but there is little doubt that a journey towards the latter is necessary. This may warrant changing hiring profiles to shift from maintenance and integration talent to personnel with strong architecture, business analysis and skills in user interfaces and experiences.

1) Software Providers: Consider how software is going to be delivered in the future. Do you stick with shrink wrapped software or begin delivering software over the cloud? Should you do that yourself or partner with others to do that? Who should the partners be? Should the cloud be private or public? Once again, there is no one-size-fits-all answer, for the larger companies such as SAP, it may make sense to build out their own cloud as well as partner with service providers like AT&T. For the smaller companies, they need to also consider the value of distribution, brand, billing and support services in addition to just the cost/capital to build out the cloud.

2) Hardware Suppliers: The success of the iPhone and iPad, tightly integrated mobile platforms and hardware, has every hardware manufacturer wondering if they need to also provide an end-to-end controlled experience. HP has clearly chosen to go down that path with the purchase of Palm/WebOS. Dell on the other hand has bet on a loose coupling with Android and Windows Phone 7. Nokia on the other hand has tightly coupled itself to Windows Phone 7 while Samsung and HTC continue to play across both. How far do hardware manufacturers go down the route of content/application services? How far into systems integration and services do they extend without alienating their downstream channels? How does the entire PC ecosystem transition the set of support, management and application services from the WINTEL era to the post PC, multi-OS environment? These are important issues that the established hardware ecosystem is dealing with even now.

3) Systems Integrators: As hardware and software players forward integrate, is it enough to ally with purely software providers to build “practices” or does it make more sense to ally with new emerging or established service providers? Is there a way for Systems Integrators to move upstream and focus on complex custom application development and service/change management (which most service providers will have little appetite for) and leave the simpler pre-packaged and configured applications to be delivered directly by software providers and/or service providers?

4) Service Providers: Does one move up the value chain and become an integrated supplier of cloud, application and mobile computing service or do you strip away complexity and focus purely on providing bandwidth? What is the set of systems integration and software relationship needed to accomplish this? What is the set of cloud/network APIs that will need to be opened up to truly build a platform on which an ecosystem can build and thrive on and act as a pull through for the infrastructure services? Again, as with all other players in the value chain, the answer will be different depending on the scale, scope and ambitions of the service provider.

Whichever path the companies in the value chain pick, they must all remember the familiar dictum of “adapt or die”. The list of companies throughout many different industries that were unable to adapt to changes in innovation is long. Consider some companies that were considered “unsinkable”: One invented the instant film camera (among many other camera-based devices) that was on the market from 1948 through 2008, or the computer company that employed over 33,000 and had revenues of over $3B in the 1980s, or the airline that was a cultural icon of the 20^th century and shaped the international airline industry… All utterly dominated their respective markets for extended periods of time, then failed to either recognize change, or adjust to it, and ended up perishing.

The current force of technology change is powerful enough that if Mary Meeker from Morgan Stanley is to be believed, we are in the middle of a significant evolution in computing. She calls it the “5^th wave” (Figure 8).

Figure 8: The 5^th Wave of Computing (Source: Morgan Stanley).

One can debate whether it is the 3^rd, 4^th or 5^th wave, but the historical shift in market position and innovation that have accompanied every such wave, one thing we can all agree upon is that the only constant will be change itself. I hope that companies will seize upon this opportunity to unleash an era that we will look back on as the ultimate democratization of computing and connectivity.

At this time of uncertainty, it is edifying to remember a quote from the 35^th President of the United States:

Change is the law of life. And those who look only to the past or present are certain to miss the future.
- John F. Kennedy

Mobile Breakfast Series – Dallas – LTE & Beyond: The future of mobile networks April 3, 2013

Posted by chetan in : 4G, 4th Wave, LTE, Mobile Breakfast Series, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

We are pleased to announce Mobile Breakfast Series is coming to Dallas for the first time. Below are some details about the program:

Mobile Breakfast Series - Excellent Speakers. Invaluable Insights. Peerless Networking.

Mobile Breakfast Series is a quarterly event that brings together thought leaders and visionaries from the global mobile industry to interact and share ideas, insights, and best practices with the entrepreneurs, enthusiasts, and everyone who is passionate about mobile. We dive into the most important issues and opportunities in front of our industry with the executives who are making things happen.

Date: June 25^th, 2013

Time: 7:30-11am. 7:30am – Registration, 8:30am – Discussion Begins, 10:00am - Networking

Venue: Tower Club, 1601 Elm Street, Thanksgiving Tower, 48th Floor, Dallas, TX 75201

Registration is open now.

Topic: LTE and Beyond – The future of mobile networks

US is leading the globe in LTE deployment. In fact, most of the cutting-edge engineering with mobile networks is happening here with all major operators deploying LTE. What’s next for mobile networks? How will they evolve over the course of the next decade? Will we be able to keep ahead of the insatiable consumer demand for more? We will have an in-depth discussion with our distinguished speakers.

 

Fireside Chat:

Kris Rinne, Senior Vice President – Network Technologies, AT&T Labs

Vish Nandlall, Chief Technology Officer & Head of Strategy, Ericsson

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Kris Rinne, SVP – Network Technologies, AT&T Labs

Kris Rinne is responsible for network architecture, service platforms, radio access roadmap and initial implementation, wireless device requirements and certification, network platforms, network performance analysis, and industry standards development at AT&T. Previously, Rinne served as Cingular’s chief technology officer with similar responsibilities. She earlier served as vice president—Technology and Product Realization, responsible for new product development from a technology standpoint, handset certification, and infrastructure vendor coordination. Prior to joining Cingular, she was vice president—Technology Strategy for SBC Wireless, responsible for new product development and network operations support. She has worked for Southwestern Bell Mobile Systems as managing director—Operations. In 2011, Kris was named as “The Most Influential Woman in Wireless” by Fierce Wireless and was a member of the Global Telecom Business Power 100 list of the most powerful telecom executives.

Vish Nandlall, CTO and Head of Strategy, Ericsson

Vish Nandlall is Head of Strategy, Marketing and Chief Technology Officer for Ericsson’s North American region. He is responsible for identifying Ericsson’s long-term vision, defining the overall company strategy, and driving business value creation for Ericsson’s customers in North America. Nandlall joined Ericsson in 2010, most recently serving as Chief Technical Officer for the company’s AT&T Customer Unit. He previously served as CTO of Extreme Networks and CTO and distinguished member of technical staff for Nortel Carrier Networks. Nandlall has led architecture and standards direction for product portfolios ranging from GSM, CDMA, WiMAX, LTE, metro DWDM, carrier routing and switching, and carrier VoIP portfolios. His recent areas of research include M2M, augmented reality, and mobile virtualization.

New Research Paper: Mobile Patents Landscape: An In-depth Quantitative Analysis – 2013 edition March 26, 2013

Posted by chetan in : 4th Wave, Intellectual Property, Patent Strategies, Patent Strategy, Patents, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

 

Introduction

The first recorded reference to patents seems to be in Aristotle’s Politics, composed in the fourth century B.C. However, the first regular administrative apparatus for granting patents – the first patent “system” arose in Venice in the late fifteenth century. As the trade opened up in Europe, the concept of patents spread and reached Great Britain and helped lay the foundations of the modern patent system.

Intellectual Property is the backbone of today’s knowledge economy. The very competitiveness and durability of the nation’s economy 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. Intellectual property 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.

Increasingly, the role of mobile devices, networks, and applications has become an important component of the growth story worldwide. Mobile is playing a central role in all of the trillion dollar industries whether it is healthcare or retail, energy or entertainment, transportation or hospitality, enterprise or consumer. Over the past decade there has been a significant increase in investment and innovation in mobile related technologies that can power the larger economies of nations. As the penetration of mobile devices increases in any given nation, so does the GDP. As more consumers adopt smartphones, the access to information spawns a thousand new entrepreneurs from Abu Dhabi to Johannesburg, from Seattle to New Delhi, and from Beijing to Santiago.

All the innovation and economic activity has also increased the patent activity around the world. While US, Europe, and Japan remain the overall leaders in patents both in quantity and quality, China surpassed the US for the first time in the total patents granted in 2011. China’s growth rate in patents was 22% that year compared to 3.8% for the world and 3.3 for the US.

According to the US Patent Office (USPTO), in 2012, the number of applications grew over 61% from a decade ago. Similarly, the number of patents granted grew over 50%by the end of 2012 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. In Europe, similar trends were observed where the EPO (European Patent Office) patent grants increased by 23%.

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 591% increase while the European market saw a 76% increase in mobile related patent grants.

Another interesting fact is that in 2013, we expect roughly quarter of all patents granted in the US will be mobile related. This grew from around 2% in 1991 and 5% in 2001. In Europe, roughly 10% of the patents granted are now related to mobile.

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 second in the series that does an in-depth quantitative analysis of the mobile patents landscape.

Paper can be downloaded here

Mobile Breakfast Series – June Events

Posted by chetan in : HTML5, LTE, Mobile Breakfast Series, Mobile Future Forward, Wireless Value Chain, Worldwide Wireless Market , add a comment

Greetings,

It was awesome to see so many of you at the Mobile Breakfast Series Event last week. For those of you who couldn’t make it, here is the summary.

We also announced the date for our Mobile Future Forward program – Sept 10th in Seattle. Stay tuned for some really exciting announcements regarding speakers and the program.

Also pleased to announce the next two breakfast series events.

June 11th – Seattle – HTML5 – Is it really disruptive?

HTML5 has been talked about for a long time as the most disruptive force for mobile applications since the Apple Appstore was launched 5 years ago. But, can it really change the industry dynamics? How do you solve the reach problem for the developers? Many interesting initiatives in 2013 like Firefox OS but will they make a difference? How do developers view HTML5? We will take the pulse of the industry and ask the tough questions.

Hank Skorny, Vice President and GM – Consumer Software, Intel

June 25th – Dallas – LTE and Beyond – The Future of Mobile Networks

US is leading the globe in LTE deployment. In fact, most of the cutting-edge engineering with mobile networks is happening here with all major operators deploying LTE. What’s next for mobile networks? How will they evolve over the course of the next decade? Will we be able to keep ahead of the insatiable consumer demand for more?

Kris Rinne, Senior Vice President, Architecture and Network Planning, AT&T

Vish Nandlall, Chief Technology Officer and Head of Strategy, Ericsson

.. more speakers to be announced.

Registration is open now. First come, first served.

If you have any burning questions or any feedback, please feel free to send us a note.

Have a great spring and we will see you soon.

Thanks

Mobile Breakfast Series Recap – Cloud, SDN, and the art of mobile computing March 25, 2013

Posted by chetan in : 4th Wave, AORTA, ARPU, Applications, Big Data, Mobile Applications, Mobile Breakfast Series, Mobile Cloud Computing, Privacy, Security, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 2 comments

Mobile Breakfast Series entered its 5th year of operation this week with our first event of the year in Seattle. The topic of discussion was Cloud, SDN, and the art of mobile computing.

2012 has been an incredible year for mobile. Despite the global economic doldrums, mobile is a $1.5 trillion economy with new entrants, new disruptions, new devices, technologies, networks, etc. One of the major shifts is in how the revenue is generated for the industry. Mobile operators around the world capture over 85% of the industry’s profits. However, if you take a look at the top 5 global players by profits – it is China Mobile, Apple, Verizon, AT&T and DoCoMo. Still dominated by service providers but Apple wasn’t on the list 2 years back. So, how will the list look like 5 years from now?

There is a clear shift going on what I call “the fourth wave” i.e. industry’s new revenues are going to come from services and solutions. And mobile operators are not silent participants on this wave. Players like Verizon, AT&T, Telefonica, and DoCoMo are going toe-to-toe with the OTT or Internet players. If you remember the early 2000s, mobile data wasn’t even registering on the revenue scale; 10 years ago mobile data revenues were less than $1 billion per year in the US. Last year, we reported $79 billion, this year it will grow to $90 billion. In fact, we might see a shift where data revenues > voice revenues this year in the US. It has already happened in Japan, over 65% revenue coming from data. But what happens when data saturates, the revenue is going to come from fourth wave services and solutions. You will start to see operators break out revenues from digital services.

So, the question is what those services are – cloud is on top of the list, big data and analytics is on the top of that list? How are these going to be supported – by LTE network, buy SDN enabled network infrastructure? To discuss all of this we assembled a great panel.

Mitch Lewis, Vice President, Juniper Networks

Biju Nair,  EVP and Chief Corporate Strategy Officer of Synchronoss

Randy Wagner, Executive Director, B2B Sales and Marketing, Verizon Wireless

Louis Brun, Senior Vice President, Marketing and Product Strategy, Guavus

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

Before we began, Mitch Lewis gave a talk on “Seven Leadership Principles From Everest” .. yes, you read it right, Everest. Mitch has not only climbed Everest but each of the 7 highest peaks on the 7 continents. If that were not enough, he has run 7 marathons on these continents as well. It was indeed a thrill and a privilege to host my friend Mitch and have him talk about his experiences and the lessons from a dream that he accomplished over the course of 8 years. Just a phenomenal achievement.

Below is his presentation and a video from his talk. Enjoy and get motivated.

 

We could have just stopped there

But we had plenty to discuss on the state of mobile cloud computing and the emergence of SDN.

Below is the summary of the discussion:

Cloud Computing

• One can’t think about M2M w/o thinking cloud. The billions of sensors that will come onboard over the next few years will be talking to the cloud in some shape or fashion.
• While there is a lot of focus on enterprise cloud, Synchronoss has been focused on the personal cloud and how personal information from the device is backed-up, shared, and run analytics on to create new services and revenue opportunities.
• (Infinite) Mobile storage is really not free. One way or another consumer is going to pay and the provider is going to get the money either directly or indirectly.
• Health vertical is seeing great traction. Others like retail and transportation are also seeing good action.
• Some of the emerging markets and emerging operators like Bharti see 4th wave as an opportunity to leapfrog some of the traditional thinking and while access is important to them, they want to focus on digital revenues more aggressively than even some of their western counterparts.
• Hybrid clouds are going to be most prevalent.
• Security is hugely important for cloud, for both SMBs and large enterprises and while there are going to be vulnerabilities, it is going to be no different than how things are on the Internet and customers are getting more educated about security issues and best practices.
• While we have made significant progress with cloud solutions, video and associated bandwidth issues remain a problem and there is no specific solution in sight thought LTE-Broadcast seems to be on horizon.
• Cloud interoperability requirements will become much more important and companies are already working on abstracting the complexity of different competing clouds from the application.
• Consumers might not like their service providers but they trust them and hence the opportunity to provide cloud related solutions to them.
• The mobile network traffic for Dropbox is 25 times that of iCloud and 20 times that of Evernote.

SDN

• Juniper acquired Contrail Systems, Cisco acquired Cariden, VMware acquired Nicira – accelerating the interest in SDN and what it means to the infrastructure business.
• It is uncertain how SDN is going to impact the financials of the mobile operators and the infrastructure providers. Does the revenue stream just move up to software?
• SDN clearly provides flexibility and more manageability to the network and we can expect some deployments by the end of the year. There are a number of trials underway.

Privacy and Security

• Everything and everyone can be tracked even with the phone off. Keep that in mind next time
• Given that all this data is being sent to the cloud, one can expect that the security requirements to become even more strict.
• Security, scalability, and global IP backbone is how Verizon is differentiating with the likes of Amazon. Verizon has over 200 data centers around the globe.
• There is big internal debate at the operators as well as discussions with the regulators as to how big data should be used and monetized. How much privacy is enough? How do you make your partners also accountable for the data use? What information to sell and when? 2013 might provide some answers.
• Policy plays a significant role in managing privacy and security both in the network and at the device level.
• Identity is emerging as a service offering. We might get rid of the phone number and just use IP address (dynamic or static) for devices that are tied to the user. Dynamic SIM allocation based on usage could be introduced as well.
• For verticals such as Healthcare where HIPAA compliance is necessary, operators typically have private tunnels for added security.

Big Data

• Big Data has been around for a long time but we are starting to harness useful signals from the noise in real-time to make effective use of the intelligence in data.
• Mobile operators are using the data and exposing it for their own use as well as to the developers with APIs such as customer profile. Same data is also being used for churn management, network performance, etc.
• In Europe, big data is being used to offer insurance on mobile devices by effectively targeting consumers.
• TV stations are also using big data to target consumers when they engage with their content on mobile.

As usual, it was a lively discussion and with the added presentation from Mitch, a memorable one indeed. Mobile cloud has become a layer of computing just like security or connectivity. This fundamental capability has led to a thousand new companies looking to move the art of computing a bit forward. Software Defined Networking is slated to disrupt the infrastructure in a big way, provide more flexibility to service providers and developers to create even more compelling services and user experiences.

We also announced the date of our 2013 Mobile Future Forward. On Sept 10th this year, leaders of the mobile industry will gather in Seattle to brainstorm the future of mobile. As usual, it is going to be a delight to host the best and brightest. So mark your calendars, make your plans, and we hope to see you there later this year. More news to come in the coming weeks.

Thanks to all those who attended and thanks to Synchronoss for being our series partner.

Chetan

US Mobile Market Update Q4 2012 and full year 2012 March 13, 2013

Posted by chetan in : 3G, 4G, 4th Wave, AORTA, Chetan Sharma Consulting, Intellectual Property, Mobile Cloud Computing, Mobile Commerce, Mobile Future Forward, Patent Strategy, Smart Phones, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

http://www.chetansharma.com/usmarketupdateq42012.htm

The US mobile data market grew 3% Q/Q and 15% Y/Y to cross $20B for the first time in Q412. Data is now almost 44% of the US mobile industry service revenues and as we had forecasted a few years back, the cross-over point of 50% might occur later this year. For the year 2012, the market ended up with $79 Billion in data revenues much higher than any other market. The overall mobile services revenue were $182 Billion. For the year 2013, we are expecting $90 Billion in mobile data service revenues for the US market.

For the year, the market added 9 million new connections, a decline of 56% from 2012. The postpaid category suffered a 97% decline despite Verizon and AT&T collectively adding 6.3M postpaid subs. Sprint and T-Mobile collectively lost over 3.3M postpaid subs in 2012.

The last year T-Mobile had Y/Y positive postpaid net-adds growth, George Bush was still the president, Facebook was in diapers, and Pinterest wasn’t even born yet. T-Mobile suffered its tenth straight quarter of postpaid declines. Cumulatively, in the last fifteen quarters, while Verizon and AT&T have added 15M and 8M postpaid subs respectively, Sprint and T-Mobile have lost approximately 4.7M each. Once Nextel is sunsetted for good (it is down to 2.1M subs), we can expect a pick-up of net-postpaid subs at Sprint.

2012 saw a couple of block-buster operator M&As that took many in the industry by surprise. T-Mobile found a soul mate in MetroPCS while Softbank showed up at the altar for Sprint. T-Mobile is adopting the challenger role while Sprint that of a disruptor.

As we mentioned in our previous update, smartphones are now past the 50% mark in the US and continue to sell at a brisk pace accounting for over 90% of the devices sold in Q4 2012. Apple led the smartphone sales amongst the top 4 operators with 51% share for the year. While the US penetration of smartphones is over 50% as we reported last year, the 50% of the sub base is concentrated in only 30% of the households thus leaving plenty of growth left in the marketplace.

In terms of Y/Y growth, Connected Devices segment grew 12%, Wholesale 9%, Prepaid 6%, and Postpaid was flat. The connected devices segment only grew 1% in Q4 2012 Q/Q.

Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.

Race for the 3^rd ecosystem

2013 might help define the 3^rd ecosystem or at least separate wannabes from the true contenders. While iOS and Android duel out on the top (with iOS ahead in the US market), there is fight for the distant #3. Windows made a grand entry in Q4 but the sales have disappointed. Blackberry is hoping its Q/Z10s will do the trick and help revive its fortune or at least boost the asking price.

Last quarter, Microsoft and its partners launched a worldwide campaign for a chance to compete. It went from a dominant position to virtually zilch coinciding with the remarkable ascend of iOS and Android. To make any device sell – one needs good and competitive device, distribution channel and marketing muscle, and brand loyalty. I think Windows 8 is genuinely good, is different, and for the first time can stand with its peers (obviously it needs to build a robust apps portfolio and a stronger developer ecosystem).

In the past, while operators, OEMs, and Microsoft announced significant advertising spend, it had almost negligible impact on sales. The actual $ amount spend was tepid, operators didn’t want to be guinea pigs just to prop up a third ecosystem. With Windows 8, things might get better. We can see many more awareness campaigns, more OEMs are launching some quality devices, and operators are warming up to the idea as well. The brand loyalty index for Microsoft Mobile is fairly low and it will take a heavy lift and a few billion dollars of advertising spend to move the needle. The good news is that the devices are shipping at all price points.

Microsoft also made a splash with the first computing device in its history – Surface. Both got a mixed reception from the market. In the US, Nokia is selling 80% of the windows volume making the future of the two companies inextricably tied together. Can the windows ecosystem thrive without Samsung’s support?

Additionally, there has been movement with other OSs like Firefox, Tizen, Jolla, and Ubuntu.

Apple’s dominated 2012 – what’s next?

For 2012, Apple dominated the device sales accounting for 51% of the smartphone sales amongst the top four mobile operators. In Q4, its share rose to 59% of the sales on the back of a successful iPhone 5 launch. AT&T sold a record 8.6M units followed by Verizon’s 6.2M. For the year, AT&T sold a record 21.3M iPhones. So, while globally, Android dominates iOS more than 2:1, the US subsidy model has helped Apple keep its lead from Android. But, will it last? Enough ink has been spilt to answer that question. Undoubtedly, Samsung and others have caught up Apple on device specs and ease of use, even created new categories that Apple didn’t foresee, but, Apple is still the player to beat in 2013. Apple has clearly exposed its Achilles heel – software and services. It will take some heavy lifting to gain back confidence and momentum.

Samsung’s rise

The rise of Samsung and its domination of the Android ecosystem was clearly one of the most captivating stories of 2012. Samsung is making more revenue from Android than rest of the ecosystem put together. Samsung is firing on all cylinders, works better with its distribution partners, and has the bank balance to fight toe-to-toe for its share of the market. It is also in the unique position of having good perch in all the three major screens – mobile, laptops, and TV. But, software and services is also a weak spot for the company. How quickly it beefs up its offerings and how ambitious it is in providing end-to-end solutions will determine its competitiveness in the next 24 months.

Despite setbacks in the IP battles, Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in 2012. However, Apple dominates both the smartphone revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 95% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs.

The Fourth Wave has arrived – the shift towards services

If you attended the AT&T developer summit and Verizon keynote at CES this January, you might have noticed the subtle shift from devices/access to services/solutions. In our paper on the topic “Operator’s Dilemma (and opportunity): The Fourth Wave”, I proposed that we need a new framework to think about the next generation of revenue opportunities. The fourth curve opportunities are massive but require a different skill set and strategic approach than the past three curves. It is being widely adopted in the operator community around the world and some operators have started to break out the 4^th wave revenues in their financials. We will have more discussion about how things are shaping on the fourth wave in future research papers.

The Patent Battles

In 2012, Samsung had a strong showing not only in the market place but also in the patents area. It edged past Nokia to become the overall mobile patents leader in the industry. IBM and Microsoft also improved their rankings. Nokia, Ericsson, and Alcatel-Lucent slid in rankings. Motorola dropped out of top 10. Not surprisingly, companies who have been around for a while especially in the infrastructure and the platform space lead the overall mobile patents. Samsung has been fiercely building its patent portfolio in both Europe and the US and the efforts have paid off as it has built a significant portfolio and a formidable lead that is likely to serve it well in the coming years.

A more startling observation is the mobile patent grants as a percentage of the total patent grants in a given year have risen significantly for the US market indicating the importance innovators attach to mobile in their business. In the US, one out of every five patent granted in 2012 was related to mobile. Less than a decade ago, this number was less than 10%. The European market has seen lower growth relative to the US market. Roughly one out of every ten patents granted in Europe are mobile related.

We will have a more detailed analysis of the patent landscape of the mobile industry later this month.

The vanishing Tier-2s

The so called Tier-2s in the US market are practically done. For the year 2012, the top 4 Tier-2 operators suffered a drastic 77% decline in net-adds. Combined they added a measly 366K subscriptions. One of the reasons is that the tier-1s are now squarely focused on the prepaid market as a growth engine. Sprint has had a long history in the segment with brands like Boost and Virgin. T-Mobile’s has retooled itself to go after the prepaid and wholesale opportunities. Additionally, the top 2 have also been launching attractive plans for the prepaid segment. That’s why the top 4 added ten times the prepaid subs compared to the next 4 operators. With Metro gone and Clearwire on the blocks, we expect the Tier-2s to lose their relevancy in the market.

Operator M&A – The Rule of Three Strikes Back

Just when you thought the prospects of any major operator M&A slowed down due to the impending US election, T-Mobile announced its acquisition of Metro PCS giving it more spectrum, access to public markets, a good chunk of subscriber base to become a more competitive number 4. Sprint and Softbank followed the announcement with an absolutely brilliant maneuver. It provides Sprint access to capital, economies of scale, and becomes a much stronger number 3, and a global telecom player with scale and ambition. The T-Mobile-Metro merger has been approved by the FCC and we expect Sprint merger to go through as well.

There have been some interesting twists and turns but as we have stated before, the US market competitive equilibrium will be complete when Sprint and T-Mobile get together at some point down the road. As outlined in our research paper on the subject, market forces find their way to get to 3 dominant operators that compete for attention and revenues, rest becomes noise. While the regulators might scoff at the idea, the inevitable market forces will find their way around.

Surface, mini, and the tablet market

Apple launched the iPad mini in 2012 for some of the same principles that Microsoft launched Surface. It is better to be cannibalized by self than by the enemy. Microsoft saw the notebook market shrink and needed a product to stem the bleeding while Apple saw Amazon and Google attack the bottom tier with a different model that poses a credible threat. Tablet market is indeed fundamentally altering computing in many ways. The changing landscape of computing also has impact on the ecosystem and the application development environment. Developers flock to platform reach, ease of access to the marketplace, and the basic economics of a viable business model. Windows as a percentage of computing platforms is shrinking drastically which threats not only the platform but also Microsoft’s other software franchises. Surface is classic blocking and tackling to provide a jolt to the shifting ecosystem. Surface RT was an expected disaster but Surface Pro will see takers in the corporate world. With iPad mini, Apple is attempting to lock the mid-top tier of the tablet market and daring its competitors to just play in the bottom tier that leaves no profit on the hardware and revenue stream from services for a very select few.

2012 – US Highlights and Milestones

2012 provided enough drama and suspense for the year, good enough for a hit Spielberg flick. Here were some of the highlights from the US market:

· Samsung went past Nokia to become the world’s biggest OEM by unit volume

· Qualcomm eclipsed Intel in market cap marking another milestone in the progression of the mobile ecosystem.

· Verizon sold 29M smartphones (with half of them being LTE) and AT&T sold 10.2M in Q4 – all US records.

· Shared data plans were introduced by Verizon and AT&T which have been viewed by the consumers favorably.

· The focus of operator metrics is changing from ARPU to ARPA to AMPA.

· After dealing with the AT&T-T-Mobile merger in 2011, the regulators were back to work with the T-Mobile-MetroPCS and Softbank-Sprint mergers.

· Verizon and AT&T Wireless became the top two mobile operators globally by mobile data revenues.

· US market saw its first decline in both messaging revenues and volumes.

· Smartphones penetration eclipsed the 50% mark.

· Over 42M tablets were sold in the US with more than half being iPads. Globally, Apple went past 100M iPads in cumulative sales making it the fastest computing platform.

· mCommerce started to eclipse eCommerce for some companies.

· Amazon made a splash with its Kindle line of tablets, the sales have been steady. Google’s Nexus devices also got good traction.

· The average number of connected devices per household was over five.

What to expect in the coming months?

All this has setup an absolutely fascinating 2013 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. Players who firmly attach themselves to the 4^th wave will reap benefits while the ones who miss it will see their fortunes dwindle. We are gearing up for our annual Mobile Brainstorm Summit – Mobile Future Forward on Sept 10^th, hope you can join us. Details to come.

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 2012 and full year 2012 US wireless data market is:

Service Revenues

• The US Wireless data service revenues grew 3% Q/Q and 17% Y/Y to over $20B in Q4 2012 becoming the first country to have a $20B quarter. For the year 2013, we are forecasting that mobile data revenues in the US market will reach $90 billion.
• Verizon and AT&T dominated the quarter accounting for 69% of the mobile data services revenue and had 66% of the subscription base.
• Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q4 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q4 2012.
• For the year, Verizon aggregated an astonishing $28.2 Billion haul from mobile data with AT&T close behind at almost $26 Billion. The mobile data business for the US was around $1 Billion a decade ago.

ARPU

• The Overall ARPU declined by $0.15. Average voice ARPU declined by $0.64 while the average data ARPU grew by $0.48 or 2% Q/Q.
• The average industry percentage contribution of data to overall ARPU is now at the 44% mark in Q4 2012 and is likely to exceed the 50% in 2013. All the top three US operators are over the 45% mark. (For reference, all three major Japanese operators are now over the 60% mark).

Subscribers

• The US operators added 2.3M postpaid subs and approximately 3M total. It was the lowest net-adds Q4 quarter in the US mobile history (barring the early days of tepid growth)
• T-Mobile’s postpaid woes continued for the tenth straight quarter.
• Verizon led the market with 2.2 M net-adds accounting for 73% of the market’s net-adds. It was followed by AT&T at 1.1M, and T-Mobile at 61K. Nextel continues to drag Sprint’s postpaid additions. Sprint is expecting the transition from Nextel to Sprint to be complete in the next few months.
• For the last three years, at AT&T, the connected device growth had exceeded that in the postpaid segment. In Q4 12, postpaid share increased significantly as the connected device growth slowed primarily due to shared data plans and tablet users becoming postpaid users.

Applications and Services

• The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
• The cloud and security segments have also gained significant traction with incumbents as well as startups launching new initiatives and technologies.
• Q4 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months.

Handsets

• Smartphones continued to be sold at a brisk pace accounting to almost 84% of the devices sold in Q4 2012.
• iPhone dominated smartphone sales for Q4 as well as the full year of 2012. In Q4, iPhone accounted for 59% of the total smartphone sales at the top four operators. For the year, its tally was over 51%.
• At the end of 2012, Samsung now leads in unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
• 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 in Q4 2012 but the sales in the US market were disappointing for just over 1M in unit sales for the full year.
• Apple’s iPhone sales almost doubled in Q4 from Q3 but the company faces significant innovation and perception challenges as it prepares for its product launches in 2013. 
• AT&T continues to dominate the connected devices segment with over 47% market share.  
• Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 21.6M making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile is also ramping up its LTE deployment. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 50% of its total data traffic is on the LTE network now.
• There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 50% of the iPhones in the US.

Mobile Data Growth

• The smartphone data consumption at some operators is averaging close to 1 GB/mo. Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
• While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.

Intellectual Property/Patents

• Samsung was the leader in the mobile patents granted in 2012 in the US and that propelled the company to the top ranking in overall patents (1996-2013). Samsung was followed by IBM, Sony, Microsoft, RIM, LG, Qualcomm, Ericsson, Panasonic, Alcatel-Lucent, and Nokia for the top 10 companies by mobile patent grants in 2012.
• The top 5 categories for patents grants in the US for 2012 were Telecommunications, Digital Multiplexing, Digital Processing – Data Transfer, Digital Processing – Financial, and Digital Processing – Databases.
• The top 5 filers of mobile patents in the US were IBM, Microsoft, Samsung, Qualcomm, and Sony. Apple made it to top 10 for the first time on the strength of its patents filed in the computer graphics processing category.

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, and articles. The next US Wireless Data Market update will be released in May 2013. The next Global Wireless Data Market update will be issued in Apr 2013.

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

Mobile World Congress 2013 Recap March 6, 2013

Posted by chetan in : 4G, AORTA, Chetan Sharma Consulting, European Wireless Market, LTE, Mobile World Congress, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 6 comments

“Welcome to Spain, Thank you for your business,” remarked the immigration officer and thus started my yearly pilgrimage to the grand slam of mobile – The Mobile World Congress 2013. It is truly a global event with participants from virtually all countries looking to do business, learn a thing or two, and ponder over what the year will bring forth. The show moved to a new venue which made the logistics work much better for attendees and exhibitors but the venue lost its charm and character. We used this opportunity to feel the pulse of the industry and understand where things are headed. This note summarizes our observations from the show.

While there was no blockbuster announcements or products that will knock your socks off, several interesting trends emerged that will keep the industry exciting to watch in 2013.

The perennial search for the #3 ecosystem continues: Windows sales have disappointed thus far, Blackberry has launched new devices but hasn’t quite hit the mark. So, while consumers seem perfectly happy with iOS and Android, industry’s desire to have a third robust ecosystem is palpable. The biggest announcement in that regard was from Firefox OS and in a matter of 12 months, it has not only forged a strong alliance with operators, it is actually getting ready to ship phones. It is going to be targeting the low-end of the market which is a smart strategy but a lot depends on the range of price points of the devices and how quickly it can attract the developer ecosystem. Given that Android device price points are hovering around $50 and it is a mature ecosystem with great developer reach and support, it will be challenging to convince consumers to go the Firefox route. However, if the price points are attractive enough, with the distribution power of some key operators, we could see some early traction. Ubuntu, Jolla, and Tizen were also vying for attention.

LTE everywhere: LTE deployment is growing at a very fast pace. The US market is ahead of the curve with almost national footprint from Verizon followed by substantial coverage from the remaining three operators. Elsewhere, operators are gearing for deployment once some of the spectrum issues/auctions are sorted out.

The 4^th Wave has arrived: Last year, we put forth a framework for future mobile industry revenues in our 4^th wave paper. Since then, the framework has been embraced by many leading operators around the globe. It was good to hear operators talking more about services rather than data plans. Several areas were discussed by the leading tier 1 operators such as health, retail, education, cloud, M2M, automobile, enterprise, security, connected living, home security, commerce, identity and privacy, big data and analytics. Operators who are able to steer their giant organizations to focus on services will be able to survive the commoditization of access. We will have more say on the subject later this year.

Yo OTT, luego existo: which is Spanish for “I OTT, therefore I am” To be a player in the digital world, one has to be an OTT provider for communications and beyond. The interesting dichotomy of the communications OTT business is that very few will survive. The end state of a majority of them (if not all) is either an M&A with a telco or an Internet player or they run out of cash. The new breed of OTTs has forced the lumbering giants to think different about their customers and their markets.

Mobile Broadband, Cloud, and Apps: The troika of broadband network access, the cloud infrastructure and the applications are creating a sea change in the enterprise, especially the SMB segment. It is also changing how developers see the enterprise segment as the opportunity migrates from windows to iOS and Android. We conducted some in-depth research in the space and will have more to share later this year. Our Mobile Breakfast Series later this month will be dealing with the topic of Cloud and SDN in more detail.

Redefining Monopoly: The mobile and internet worlds have collided but the regulatory regimes haven’t changed. European operators seemed to indicate that it is time to reassess what a monopoly really means and the rules should apply to all layers of the ecosystem stack and that means devices and OSs as well.

Device Launches: All major OEMs are following the Apple playbook as far as the device announcements are concerned. To garner media attention, it is best to announce the “hero” devices away from major shows. Just like CES earlier this year, MWC lacked any big device announcements. Nokia announced mid-low tier devices to expand its portfolio that will help it in unit sales. ZTE, Huawei, LG, Asus, NEC, Sony, HTC, HP, Asus, Acer, Lenovo all had new devices to display but media’s eyes are set on Samsung’s Galaxy release later this month.

Local OEMs: Traditional OEMs are facing some healthy competition from new entrants in local markets. Players like Fly and Yotaphone in Russia are giving the veterans a run for their money. By both innovating with new features but also by customizing the devices for the local market (e.g. bigger battery that last 3 days), they are creating their own niche. After gaining good market share in Russia, Fly is expanding into other markets.

Connected Cars: When the biggest operator by revenue announces a deal with the biggest car manufacturer, people take notice. GM and AT&T announced LTE cars by 2015 which will pretty much force the entire auto industry to provide broadband connectivity in a hurry. However, the auto industry has misplaced expectations on apps and any incremental revenue they might be able to harness from them.

Samsung Knox, Blackberry – can you hear me now: Android is probably the most insecure mobile platform out there. Blackberry has long been the gold standard, iOS has improved, Windows has security features built in but security has always been a step-child of Android. Samsung’s Knox announcement elevates Samsung’s role in the mobile enterprise and to some extent takes over some of the development capability of Android that are squarely aimed at Blackberry. The container security feature set with MDM integration is well thought out and opens up the mobile enterprise market for Samsung especially in North America and Western Europe.

Spectrum and Regulations: While spectrum was a universal issue with the operators, more is better, European operators were particularly vocal about the state of the regulatory affairs on the continent. Regulators, they complained, are killing the industry by cutting of revenue opportunities, are fostering too much competition, too much taxation, and too involved in the operations of the operators. This is leading to declining revenues and turmoil at the operators. There might be some unintended consequences of weakening operators and regulators will have to grapple with some interesting questions that a free market economy will pose in the coming days.

TU Go – Take your phone number everywhere: In our opinion, Telefonica has done the best job of dealing with the digital world in putting forth an org structure that can crank out applications and services at Internet speed. TU Go is a new service (launched in UK) that allows users to take their phone number to any supported device and use it for calling and texting – number in the cloud at its best.

NFC is dead, Long Live NFC: Vodafone CEO’s frank admission that he doesn’t expect to make much money from NFC gave the audience a bit of a pause. Several NFC initiatives have floundered without clear goals or vision. Instead of working together, the industry has remained fragmented and thus the lack of scale has hampered progress. For too long, the industry has focused on payments but the opportunity lies in the engagement with the customer. For better or for worse, the financial industry has sequestered its commission for the foreseeable future. We saw some clever NFC implementations to drive consumer engagement and commerce in retail environments, primarily in Europe.

Consolidation looms: The question that is on everyone’s mind but was hardly discussed at the show was the coming onslaught of consolidation at virtually all layers of the ecosystem.

Developing Markets: Connecting the next billion was a recurring theme. The smartphone penetration in the developing world is in the single digits. More than that, introducing consumers to a computing platform for the first time is an exciting opportunity. Creating services that are tailored to the local environment remains an opportunity that can have a profound impact on society. Our own work with the UN/ITU has shown the transformative role of mobile in almost every walk of life. The device unit growth is coming from the developing markets and as they get connected, the world becomes flatter, and the competitive dynamics in a globalizing world will create for some interesting policy and political battles.

M2M and Internet of Things: As we wrote in our book “Wireless Data Services” back in 2004, the connectivity is becoming pervasive. The module costs are coming down fast and the desire to measure and track every number that is important in our lives is creating a massive opportunity. However, privacy, battery life, environment, security remain key issues that need to be tackled.

Identity as a business opportunity: In a digital world where access to information and resources depend on verification of your identity, the guards and keepers of the identity information have a big role to play. As such, “identity” management is emerging as an opportunity that can be monetized. In the online world, Facebook has become the dominant way to integrate apps and services. In the mobile world, operators can play a significant role in authentication and verification. Will the two worlds collide? Fasten your seat belts.

The Post PC world: As an experiment, for the MWC trip, I carried just the Nexus 7 tablet and an iPhone. I felt liberated. In the past, for day trips, I have relied just on iPad/iPhone for taking care of my computing needs. For this trip, I wanted something that I can carry in jacket pocket. Nexus was good enough for taking simple notes, email, browser and even some phone calls. I could easily switch back-and-forth between the tablet and the phone, and the combined battery life lasted the whole day.

The Miscellaneous:

· Google’s absence from the show puzzled many

· The enthusiasm for RCS/Joyn seems to have subsided as reality sets in

· Nokia is broadening the reach of its HERE platform to other operating systems

· AT&T/Ericsson showed WebRTC demo

· Facebook announced messaging partnerships with operators in developing countries

· Small cells remained a hot topic though seen more of a compliment for the macro network

· Signaling traffic continues to grow at a faster pace than the data traffic as more LTE devices come on the network

· Qualcomm launched RF360 solution to deal with frequency band fragmentation which is serious problem for LTE roaming

· Yotaphone with its dual screen (front and back) and NEC Medias with its stacked up screens had something fresh to offer in the devices space when 99% of the devices look the same

· Virtualization is the new black in mobile networks

Best booth: Ericsson’s networked world theme was well thought-out and provided a unique exploratory view of the opportunities and technology evolution. A close second – Connected City.

Best party: There won’t be an MWC without the bevy of parties every night. Qualcomm again stole the show with the jam-packed confluence of the mobile elite.

2013 Mobile Industry Predictions Survey January 2, 2013

Posted by chetan in : Chetan Sharma Consulting, Connected Devices, European Wireless Market, IP Strategy, Mobile Commerce, Mobile Ecosystem, Mobile Predictions, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2013. My thanks to all who participated in our 2013 Mobile Predictions Annual Survey. It gives our community an insider’s view of the trends and predictions for the New Year.

2012 was a terrific year for the mobile industry. Mobile data continued to drive most of the mobile growth around the world. Mobile also started impacting every major vertical industry around the globe. In fact, mobile has become so ingrained in the fabric of business productivity and social interaction that it is not longer the new growth engine, it has become the engine.

The competitive dynamics stayed quite vibrant in 2012. We saw epic battles in the markets as well as in the courts. 2012 also saw the PC value chain struggling for relevance while the smartphones and tablets unit sales captured all the attention and headlines.

As we peer into 2013, we will see the total number of cellular subscriptions eclipsing humans on the planet. The connected device made steady progress. Anything that should be connected is being connected - creating a web of new opportunities and challenges.

LTE has become the fastest deployed cellular technology in the approximately 35 year history of the industry. Broadband combined with connected devices and applications are changing the way we live, we interact with others, do business, and consume information.

The European economic crisis impacted many players especially the large telcos, making the transition to digital ever more urgent. As voice and messaging revenue curves decline and access revenue approaches its high mark in the next few years, investment in the fourth curve becomes critical for all players.

Our annual survey is a way for us to engage our community on the trends for the next year. We put some of the pressing questions to our colleagues and industry leaders. We are able to glean some valuable insights from their choices and comments, some tangible shifts, and get a sense of what’s to come. Executives, developers, and insiders (n=200) from leading mobile companies and startups from across the value chain and from around the world participated to help see what 2013 might bring to keep us on our toes. What makes this survey unique is that it draws upon the collective wisdom of folks who are at the center of the mobile evolution. The survey provides a view of how they see the upcoming year for mobile.

30 names were randomly drawn for the limited edition of the Mobile Future Forward 2012 book. The winners are:

• Ryan Carney, UX, Gfk
• Wes Biggs, CTO, Adfonic
• Volker Hirsch, Head of BD, RIM
• Bobby Morrison, President, Verizon Wireless
• Chris Walls, Strategy, Huawei
• Von Cameron, EVP, Smith Micro
• Sami Makelainen, Manager, Telstra
• Martin Fichter, VP, HTC
• Jeff Hasen, CMO, Hipcricket
• Paul Brody, VP, IBM
• Michael Mullany, CEO, Sencha
• Mick Welch, Manager, Nokia
• Jana Messerschmidt, VP, Twitter
• Akio Orii, SVP, Toyota
• Gina Bovara, Software Services, Intel
• Mark Brill, Lead Partner, Brand Emotivity
• Stuart Saunders, CEO, Mobile Defense
• Tony Greco, Director, ZTE
• Venu Vasudevan, Sr. Director, Motorola
• Elliott Hamilton, Sr. Director, TeleCommunication Systems
• Biljana Jovicic, VAS, Digitel
• Robin Jewsbury, Cofounder, Promoht
• Julie Dey, VP, Rootmetrics
• Pat Nunally, VP, Upaid
• Paul Upham, Director, Welldoc
• Sagar Tamang, Director, Nielsen
• Andrew Meadors, Engineer, Cisco
• Nikao Yang, SVP, Adcolony
• Pelle Larsen, Director, SingTel
• Kelly Amsbry, Sr. Planner, Microsoft
• Elisabeth Rainge, Head – Strategy, NSN

Thanks again to everyone who contributed. We will be calling on you again next year.

Be well, do good work, stay in touch, and stay away from Triskaidekaphobiacs.

Thanks and with warm wishes,

Chetan

What was most newsworthy in Mobile 2012?

2012 was a spectacular year for smartphones. Smartphones in most western nations are now over 80% of the devices sold every quarter. China will soon become the biggest market by unit volume and the rest of the world is catching up fast as we see sub-$50 Android devices flood the market. Apple vs. Samsung has become akin to Lakers vs. Celtics of the eighties or the India vs. Pakistan rivalry in cricket. The passion and intense competition between the two super powers was clearly the headline of the year. That pushed the Android vs. iOS tussles as the subheading for 2012. As we enter into 2013, the legacy computing aka PC players will need to reinvent themselves or expect substantial decline in their fortunes.

1. What will be the biggest mobile stories of 2013?

The role of mobile data in industry’s growth has been cemented by the insatiable appetite for higher speeds, more apps, and social interaction and is expected to continue at a feverish pace as LTE roles out around the world and the developing world catches up. We are likely to see the Apple and Google rivalry intensify. One is a master of hardware and the other of software. Both have their Achilles heel and much is at stake in the coming year. Many expect Microsoft’s Windows to make progress to lay claim to become a viable 3^rd ecosystem. 2013 will try to answer that question.

Who will be the most open player in the mobile ecosystem in 2013?

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

Many in the industry talk about Apple, Google, Facebook, and Amazon as the most important platform players in the business today. However, when it comes to mobile, in addition to the defacto top-two, our survey picks Samsung as number three by a good margin. Samsung has become a strong player in the digital ecosystem that commands attention and respect. The top 10-15 global operators play a strong role in the mobile ecosystem and collectively edged out Amazon and others for the number four spot. Facebook and Microsoft while strong in the desktop world have a lot to prove to be considered a top tier player in mobile.

What will be the breakthrough categories in mobile in 2013?

Our industry seems fascinated with the potential of mobile payments and voted it to be the top mobile applications and services category for 2013. Given the importance of Cloud in all apps/services, it is no surprise that it is part of the top 2. Mobile Commerce, Big data, and connected devices rounded up the top 5.

What will be the most popular consumer mobile applications in 2013?

There are regional variations when it comes to the popularity and revenue potential of mobile applications. Messaging, mobile commerce, and social dominate the developing world while location based services replaces messaging in the developed world as the key mobile application. Mobile health and gaming made a strong show in both regions.

Which will be the most dominant tablet platform in 2 years?

So far, iOS has dominated the tablet landscape. With iPad, Apple has effectively carved out the mid-high tier of the tablet space. Android players are losing or barely making any revenue from this device category. Windows tablets are priced so high that it is trying to compete with laptops rather than the tablets. Our panel expects Android to catch-up in unit sales and iOS to dominate the revenues by good margins. Windows is likely to stay a marginal player.

Who will make the biggest mobile acquisition in 2013?

Microsoft and Google both have big cash balanced to make some sizable acquisitions in 2013. Microsoft lacks traction and attention and will try to make a move but which player can give them an edge? Apple also needs to beef up its software operations significantly but doesn’t have the history of big acquisitions. Operators are also looking to become OTT players themselves and might make moves to shore up their strategic interests. Many participants think that Nokia and RIM have seen their final year as an independent entity.

How will the "Apps vs. Mobile Web" debate shape up in 2013?

 

In 2012, many expected the resurgence of “mobile web” but it hasn’t panned out that way. Google has doubled up on apps, Facebook realized HTML5 isn’t going to cut it, and the expectations pendulum swung back to the apps and might stay there for 2013.

Who will dominate the mobile payment/commerce space?

Three years ago, mobile payments/commerce seemed to be the “blue ocean” opportunity but financial guys have firmly protected their turf, at least for now. Hopes were high for operator led initiatives but the enthusiasm has tapered off. Startups like Square are doing more to disrupt the payments space than some of the established players. The only exception is PayPal, which has so far been able to create good distance with the competitors. Microsoft has surprisingly been absent in a critical space.

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

4G, mobile offload, and tiered pricing have been most effective in managing the costs of mobile data consumption though spectrum has garnered more of the noise share.

Which category will generate the most mobile data revenue in 2013?

Access dominates the developed world while messaging has the lion share in the developing world. We will see access becoming the dominant category in the emerging markets fairly soon.

Which European operator is likely to emerge stronger from the current economic climate?

European operators have been battered by struggling economy and regulatory changes. Many are rethinking their strategy, shedding off assets, and just trying to keep their head above water. The leaner operations and refocused strategic direction might help them recover better when the economy improves. While our global panel picked Vodafone to have the strongest recovery, our European panel picked Telefonica to emerge stronger.

When will mobile commerce be greater than ecommerce?

A majority of the panel thinks that mobile commerce will eclipse ecommerce in revenues generated by 2015 in North America and Asia and by 2020 for the rest of the world. There are already strong signs that commerce is shifting from online to mobile.

The company bringing the most successful mobile gadget of the year - 2012 and 2013?

Apple continues to produce the most desirable devices. iPhone and iPad dwarf everything else and easily was the company with the most successful gadget in 2012. However, the panel expects Samsung to best its rival in 2013. Google and Amazon might mount a credible challenge but their chances of producing something truly dominating remain low.

Which platform has a credible shot at becoming a viable and durable 3rd ecosystem in mobile?

Windows 8 phones finally launched in 2012. The design is solid, the OEM support is growing, the number of apps are rising and while it is still a long ways to becoming a credible 3^rd ecosystem, it has the best shot at becoming one. The only rival seems the HTML5-based OS initiatives. The application developer community actually voted for HTML5 over Windows as the 3^rd ecosystem that has some chance of competing with iOS and Android which completely dominate in revenues and unit sales respectively.

Mobile company of the year - 2012 and 2013?

Samsung eclipsed Nokia and Apple to become the most dominating device player in unit volume in almost all major markets. The speed with which it is churning out devices has pretty much crushed the rest of the Android ecosystem and is going head-to-head with Apple. For this performance, the panel voted Samsung to be the mobile company of the year for both 2012 and 2013 with Apple and Google close behind.

Which of the following are likely to happen in 2013?

The rumor chamber is ablaze with the possibilities of Apple TV, smartphones from Amazon and Microsoft, and data-only plans to make their appearance in 2013. Square and Twitter could be the hot acquisitions of the year though Twitter is likely to chose IPO glory. Will Samsung fork Android? Will Sprint and T-Mobile merge? Will European operators get acquired? These are some of the questions that are likely to keep the media on their toes this year.

Which operator is best positioned for the digital world?

As we outlined in our research paper “Operator’s Dilemma: The Fourth Wave,” the business of being a mobile operator is at a critical juncture and operators are investing heavily into creating the digital business. AT&T, Verizon, NTT DoCoMo, Softbank, and Telefonica are already generating billions of dollars from these initiatives and lead the operator contingent in the digital world.

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

In the past, Steve Jobs was consistently the person of the year in mobile. In 2012, Tim Cook effectively managed to produce record profits for the investors and navigated Apple to keep its “most valuable enterprise” title intact for the year. Apple is still the company on top of the hill. JK Shin of Samsung was voted number two for 2012. For 2013, the landscape changed. Our panel overwhelmingly voted Jeff Bezos to impress us the most in 2013. Amazon has done a good job disrupting the device model and with its strong commerce expertise, it is looking to take on both Google and Apple at the same time. Andy Rubin of Google with the 1 billion Android units milestone coming up this year will be a good contender for the title as well.

There were several other leaders who impressed in 2012 e.g. Paul Jacobs (eclipsing Intel in market cap), Jack Dorsey (disrupting the mobile payments market with Square), Masayoshi Son (for Sprint acquisition and global ambitions), Dan Hesse (for navigating Sprint through rough waters), Glenn Lurie and Matthew Key (for leading the digital transformation of the two giants – AT&T and Telefonica respectively), Rhen Zhengfei (for making Huawei into a dominating infrastructure provider), Lowell McAdam (for making Verizon the number 1 mobile data operator in the world) and Ralph de la Vega (for making AT&T the number 2 ahead of NTT DoCoMo).

All in all, a great collection of thoughts and comments. Thanks again to everyone who participated. Have a great 2013.

US Mobile Data Market Update Q3 2012 November 12, 2012

Posted by chetan in : 3G, 4G, AORTA, ARPU, Applications, Infrastructure, LTE, M&A, Mergers and Acquisitions, Messaging, Mobile Advertising, Mobile Applications, Mobile Cloud Computing, Mobile Commerce, Mobile Ecosystem, Mobile Future Forward, Mobile OEMs, Mobile Operators, Mobile Payments, Mobile Traffic, Privacy, Security, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

US Mobile Data Market Update Q3 2012

http://www.chetansharma.com/usmarketupdateq32012.htm

 

 

Summary

The US mobile data market grew 3% Q/Q and 17% Y/Y to reach $19.9B in Q3 2012. Data is now almost 43% of the US mobile industry service revenues. For the year 2012, the market is on track for mobile data revenues in the US market to reach our initial estimate of $80 billion.

Largely due to the strong postpaid performance by Verizon, the US operators added a net of 2.4M new subscribers. Sprint and T-Mobile saw further postpaid declines. For T-Mobile, Q3 marked the nine straight quarters of postpaid losses.

The quarter also saw a couple of block-buster operator M&As that took many in the industry by surprise. T-Mobile found a soul mate in MetroPCS while Softbank showed up at the altar for Sprint. Once the mergers are executed, Sprint is likely to emerge as the stronger of the two.

The two horse OS race got a new participant entry last month – Windows 8. Microsoft and its partners launched a worldwide campaign for a chance to compete. Microsoft also made a splash with the first computing device in its history – Surface. Both got a mixed reception from the market. We will find out how consumers will react in the Q4 numbers. Of all the OEMs, Q4 will be the most critical for Nokia who is running out of runway in its turnaround effort.

Despite setbacks in the IP battles, Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in Q3 2012. However, Apple dominates both the smartphone revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 95% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs. Apple has the complete stronghold on the supply chain and has sucked out the oxygen from the OEM world.

Amazon hasn’t been shy about its ambitions in the mobile space. While the world awaits an Amazon smartphone, the company launched a slew of tablets to compete primarily with Google though its eyes are on Apple. Apple also launched iPad mini a mid-tier tablet to ward of threats coming from the bottom tier of the market.

As we mentioned it in our last update, smartphones are now past the 50% mark in the US and continue to sell at a brisk pace accounting for over 75% of the devices sold in Q3 2012.

While the US penetration of smartphones is over 50% as we reported last quarter, the 50% of the sub base is concentrated in only 30% of the households thus leaving plenty of growth left in the marketplace.

In terms of Y/Y growth, Connected Devices segment grew 19%, Prepaid 10%, Wholesale 6%, and Postpaid was flat. The connected devices segment picked up some growth after two straight quarters of sub-5% performance growth (Q/Q).

Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.

Postpaid Doldrums and evolution of metrics – ARPU to ARPA to AMPA

The US market has added roughly 400K postpaid subs in the last two quarters. Verizon has added 2.4M, AT&T 400K, and Sprint and T-Mobile have lost a million each. Clearly, Verizon’s performance is far superior to its competitor and its relentless focus on postpaid has yielded significant benefits. Typically, the postpaid ARPU is roughly 2-3 times that of a prepaid subscriber. So, while other operators have been adding prepaid subs, the improvement to the bottom line has been tepid especially for Sprint and T-Mobile. Sprint’s losses have been primarily due to the bleeding of the Nextel customers. The iDEN network should turn off sometime next year and the continuous loss of overall postpaid subs might stop. T-Mobile faces a deeper challenge. Its net-revenue has declined in every quarter since Q4 2008, which is 15 straight quarters of revenue decline. In fact, its current revenue levels is at the Q2 2006 levels – that was six years ago. Though the company has done a terrific job upgrading the network to HSPA+ and doing blocking and tackling until it upgrades to LTE to come at par with its peers, the continuous bleeding of the postpaid subs needs a new strategy. Metro PCS helps gain new subs and spectrum but doesn’t help with postpaid. In fact, one can expect that the churn will rise as consumers migrate from Metro to T-Mobile. 2013 will be a critical transition year for the company as it tries to compete with its larger competitors. Just being a “value” provider is the race to the bottom.

We have been advocating shared data plans to create more consumer demand for over two years. When I talked to CNBC earlier this year (Jan), I said that in all likelihood the family data plans will be introduced in the US market in 2012. I discussed this more with Bloomberg and USA Today and suggested that most likely Verizon will launch them first. Verizon and AT&T launched the shared data plans this summer with AT&T getting the benefit of launching it second. New types of plans also evolved the decades-old operator metric of ARPU to ARPA (Average Revenue Per Account) given that we are seeing a strong influx of multiple devices per individual/household. Verizon was first to transition and we expect others might introduce new matrices to measure progress and performance. AMPA (Average Margin Per Account) will also become an important metric in the coming days, first internally, and then for the markets.

Messaging Decline

Most western markets have seen the net revenue in the messaging segment decline. The US market has resisted the decline thus far. In Q3 2012, for the first time, there was a decline in both the total number of messages as well as the total messaging revenue in the market. It might be early to say if the decline has begun or the market segment will sputter along before the decline takes place. As we had outlined in our fourth wave paper, once the market segment reaches the 70-90% penetration mark, the decline begins and we might be seeing the start of the decline in messaging revenue. The decline is primarily due to the rise in IP messaging and operators have been slow to evolve their strategies in the segment.

Operator’s Dilemma (And Opportunity): The Fourth Wave

In our paper “Operator’s Dilemma (and opportunity): The Fourth Wave” earlier this year, I proposed that we need a new framework to think about the next generation of revenue opportunities. The fourth curve opportunities are massive but require a different skillset and strategic approach that the past three curves. We are starting to see operators becoming more focused and aggressive. It is being widely adopted in the operator community around the world and some operators have started to break out the 4^th wave revenues in their financials. We will have more discussion about how things are shaping up in future research papers.

AT&T has been better prepared in the US market and has embraced the ride on the fourth curve. It is investing in the areas of Digital Life, Mobile Premise Solutions, Mobile Payments, and Connected Vehicles. We discussed the subject at length in our recently concluded annual thought-leadership summit – Mobile Future Forward.

Operator M&A – The Rule of Three Strikes Back

Just when you thought the prospects of any major operator M&A slowed down due to the impending US election, T-Mobile announced its acquisition of Metro PCS giving it more spectrum, access to public markets, a good chunk of subscriber base to become a more competitive number 4. Sprint and Softbank followed the announcement with an absolutely brilliant maneuver. Sun Tzu would have been proud. It provides Sprint access to capital, economies of scale, and becomes a much stronger number 3, and a global telecom player with scale and ambition. There have been some interesting twists and turns but as we have stated before, the US market competitive equilibrium will be complete when Sprint and T-Mobile get together at some point down the road.As outlined in our research paper on the subject, market forces find their way to get to 3 dominant operators that compete for attention and revenues, rest becomes noise. While the regulators might scoff at the idea, the inevitable market forces will find their way around.

Connected Devices

In Q3 2012, we released some research around connected devices. If we just look at the active connected devices which can connect to the Internet directly either by wireless or wired means, either using cellular or WLAN, the total number of connected devices in the globe just crossed the 10 billion mark which means that the connected device to human ratio is now 1.3.

• 70% of the connected devices use some form of wireless connection.
• In the US, roughly 80% of the devices use some form of wireless connection.
• For the US Household survey, we asked 1014 HHs about the number of connected devices in their households.
• The average number of devices/HH was 5.
• Over 6% of the HHs had 15 or more devices.
• Splitting the respondents by gender, the results were about the same.
• Splitting the respondents by age group, the 65+ age demographics had the highest number of devices/HH followed by the 18-24 age group.
• The Northeast region of the US had the highest number of devices/HH.
• Suburban HH had the highest number of devices/HH.

More details available here.

Device ecosystem

Windows 8 arrival – Sept was a big month in Microsoft’s attempt to regain its lost mobile decade. It went from a dominant position to virtually zilch coinciding with the remarkable ascend of iOS and Android. To make any device sell – one needs good and competitive device, distribution channel and marketing muscle, and brand loyalty. I think Windows 8 is genuinely good, is different, and for the first time can stand with its peers (obviously it needs to build a robust apps portfolio and a stronger developer ecosystem).

In the past, while operators, OEMs, and Microsoft announced significant advertising spend, it had almost negligible impact on sales. The actual $ amount spend was tepid, operators didn’t want to be guinea pigs just to prop up a third ecosystem. With Windows 8, things might get better. We can see many more awareness campaigns, more OEMs are launching some quality devices, and operators are warming up to the idea as well. The brand loyalty index for Microsoft Mobile is fairly low and it will take a heavy lift and a few billion dollars of advertising spend to move the needle. The good news is that the devices are shipping and it is not thanksgiving yet.

However, Nokia, once propped at every Windows Phone rally isn’t getting any special love from Microsoft anymore (in public) and it has become one of the many OEMs on the conveyer belt. Its ability to differentiate itself enough in Q4 will decide its 2013.

Last week, Qualcomm eclipsed Intel in market cap marking another milestone in the progression of the mobile ecosystem.

Surface, mini, and the tablet market

Apple launched the iPad mini for some of the same principles that Microsoft launched Surface. It is better to be cannibalized by self than by the enemy. Microsoft saw the notebook market shrink and needed a product to stem the bleeding while Apple saw Amazon and Google attack the bottom tier with a different model that poses a credible threat. Tablet market is indeed fundamentally altering computing in many ways. The changing landscape of computing also has impact on the ecosystem and the application development environment. Developers flock to platform reach, ease of access to the marketplace, and the basic economics of a viable business model. Windows a percentage of computing platform is shrinking which threats not only the platform but also Microsoft’s other software franchises. Surface is classic blocking and tackling to provide a jolt to the shifting ecosystem. With iPad mini, Apple is attempting to lock the mid-top tier of the tablet market and daring its competitors to just play in the bottom tier that leaves no profit on the hardware and revenue stream from services for a very select few.

Apple is getting a lot of grief for its maps app. While the strategic decision to take control of a key application was spot on, it faltered on communications. The half-baked endeavor was nowhere close to being the “best mapping app.”

Infrastructure segment faces a tough road ahead

The infrastructure segment of the wireless industry is facing turbulent and interesting times. The business model for many vendors hasn’t evolved much in the last few years and some of the disruptive forces are bound to have a deep impact on the segment. ALU is facing serious headwinds and will need to figure out its strategic options going forward. Ericsson’s margins are under pressure but more interestingly its services and support revenue exceeded its hardware revenue for the first time. Huawei and ZTE reported decline in revenues but they are making gains in the infrastructure markets outside US and in handsets in the US market. Until Premier Xi Jinping and President Obama sort out their geopolitical differences, the Chinese vendors remain shutout of the US infrastructure market.

What to expect in the coming months?

All this has setup an absolutely fascinating 2013 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems. Players who firmly attach themselves to the 4^th wave will reap benefits while the ones who miss it will see their fortunes dwindle.

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 2012 US wireless data market is:

Service Revenues

· The US Wireless data service revenues grew 3% Q/Q and 17% Y/Y to $19.9B in Q3 2012. For the year 2012, we are forecasting that mobile data revenues in the US market will reach $80 billion.

• Verizon and AT&T dominated the quarter accounting for 69% of the mobile data services revenue and had 66% of the subscription base.
• Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q3 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q3 2012.

ARPU

• The Overall ARPU declined by $0.15. Average voice ARPU declined by $0.58 while the average data ARPU grew by $0.43 or 2% Q/Q.
• The average industry percentage contribution of data to overall ARPU is now at the 43% mark in Q3 2012 and is likely to exceed the 50% mark early next year. All the top three US operators are around the 45% mark with Verizon leading the trio. (For reference, all three major Japanese operators are now over the 60% mark).

Subscribers

• The US operators added 400K postpaid subs and over 2.4M total. It was the lowest net-adds quarter in the US mobile history (barring the early days of tepid growth)
• T-Mobile’s postpaid woes continued for the ninth straight quarter.
• Verizon led the market with 1.7M net-adds followed by AT&T at 678K, and T-Mobile at 160K. Sprint returned to the negative net-add territory after nine straight quarters of positive growth.
• For the twelfth straight quarter, AT&T reported more net-adds from connected devices than postpaid subs.

Applications and Services

• Q3 2012 data suggests that the messaging revenues in the US market might have peaked. For the first time both the overall messaging volume and the revenues declined Q/Q. The task to prolong the access revenue curve and investment in the fourth curve has become all the more urgent.
• The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
• Q3 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months. On the retail side, Starbucks is a player to watch as it tries to become a more active participant in the digital ecosystem.

Handsets

• Smartphones continued to be sold at a brisk pace accounting to almost 80% of the devices sold in Q3 2012 with Android dominating though iPhone leads in revenue and mindshare.
• Samsung now leads in every major unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
• 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 8 last quarter.
• Apple’s iPhone sales improved marginally in Q3 but the OEM was more plagued by the supply-chain constraints than demand. 
• US continues to sell over 40% of the world’s smartphone every quarter thus making it the most attractive market for OEMs.
• AT&T continues to dominate the connected devices segment with over 46% market share.  
• Verizon continues to sell more LTE smartphones as its LTE sub tally rose to 15M making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile announced that it is putting the cash and spectrum it got from AT&T to good use and deploying LTE by 2013. Expect the “fastest network” marketing to continue for at least another seven quarters. Verizon reported that 35% of its total data traffic is on the LTE network now.
• There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 48% of the iPhones in the US.

Mobile Data Growth

• The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. The smartphone data consumption at some operators is averaging close to 900 MB/mo. Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
• The Signaling traffic has increased 3x.
• Mobile data traffic growth is likely to slow down to roughly 80% after doubling for the last five years. Voice traffic will dip below 10% of the overall traffic in 2012.
• While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.

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, and articles. The next US Wireless Data Market update will be released in Feb 2013. The next Global Wireless Data Market update will be issued in Mar 2013.

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

Connected Consumer 2012 September 13, 2012

Posted by chetan in : AORTA, Connected Devices, Wireless Value Chain, Worldwide Wireless Market , add a comment

Connected Consumer 2012

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

We just concluded another successful Mobile Future Forward Executive Summit on Monday. The theme of the summit was Connected Universe. Monetizing Opportunities. During my opening, I discussed some results from the research we just completed on Connected Devices. This note summarizes the findings.

If we just look at the active connected devices which can connect to the Internet directly either by wireless or wired means, either using cellular or WLAN, the total number of connected devices in the globe just crossed the 10 billion mark which means that the connected device to human ratio is now 1.3.

· 70% of the connected devices use some form of wireless connection.

· In the US, roughly 80% of the devices use some form of wireless connection.

· For the US Household survey, we asked 1014 HHs about the number of connected devices in their households.

• The average number of devices/HH was 5.
• Over 6% of the HHs had 15 or more devices.
• Splitting the respondents by gender, the results were about the same.
• Splitting the respondents by age group, the 65+ age demographics had the highest number of devices/HH followed by the 18-24 age group.
• The Northeast region of the US had the highest number of devices/HH.
• Suburban HH had the highest number of devices/HH.

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We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Nov 2012. The next Global Wireless Data Market update will be issued in Oct 2012.

Mobile Future Forward 2012 Book – Connected Universe. Monetizing Opportunities.

Posted by chetan in : Mobile Future Forward, US Wireless Market, Worldwide Wireless Market , 6 comments

We just concluded another sold-out and successful Mobile Future Forward on monday. As is the tradition, we released our annual thought-provoking book containing some brilliant essays and interviews from leaders in the industry.

We requested some of our speakers and industry leaders to put their ideas on paper. We are very grateful to all the authors and interviewees who survived our grueling publication schedule. Hopefully, this collection will give you a good insights into how these leaders view the emerging landscape. Our thanks to Dan Hesse, Glenn Lurie, Mark Hillman, Stephen Bye, Kevin Packingham, Rebecca Prudhomme, Doug Suriano, Biju Nair, Vince Spinelli, Wim Sweldens, Erik Moreno, Abhi Ingle, and Carlos Domingo.

The thought-pieces and the interviews in this book are:

1. Operator’s Dilemma (And Opportunity): The Fourth Wave – Chetan Sharma, President, Chetan Sharma Consulting

2. Q&A with Dan Hesse, CEO, Sprint Nextel

3. The “Aha” Moment – The Case for the Embedded Tablet – Glenn Lurie, President, AT&T

4. Wasted Mobile Data – The $1B problem for Operators – Mark Hillman, SVP, Compuware

5. Q&A with Vince Spinelli, Managing Director, Juniper Networks

6. Growing the Fourth Revenue Wave – It is Now or Never – Biju Nair, Chief Strategy Officer, Synchronoss Technologies

7. LTE is here and now. What’s Next? – Stephen Bye, CTO, Sprint

8. Evolution of mobile phones: Consumer demand drives the evolution – Kevin Packingham, Chief Product Officer, Samsung

9. Q&A with Rebecca Prudhomme, VP, Amdocs

10. Mobile Operators as ‘Enablers’ to personalized ‘Anywhere, AnyTime’ Services – Doug Suriano, CTO, Tekelec

11. Q&A with Wim Sweldens, President, Alcatel-Lucent Wireless

12. The FUTURE of web is mobile – Carlos Domingo, CEO, Telefonica R&D

13. Q&A with Erik Moreno, SVP, Fox Networks

14. Mobile Patents Landscape – Chetan Sharma, President, Chetan Sharma Consulting

15. Industries That Will Never Be the Same Again – Abhi Ingle, VP, AT&T Services, Inc.

These brilliant pieces delve into all facets of the mobile economy from the chipsets to the applications, from new monetization strategies to innovative business models, from supply-chain dynamics to spectrum issues, from competitiveness to collaboration, from cloud computing to connected devices, and from data analytics to connecting with the consumers, and much more. The authors are executives who are deeply engaged in accelerating the evolution of the mobile industry, their insights will give you practical advice on how to apply knowledge to your own businesses over the course of this decade.

The book was again produced in record time but it was an exhilarating ride. Thanks to all the authors and our publishing team for making this happen.

Announcing Preliminary Agenda - Mobile Future Forward Leadership Summit, Sept 10, 2012 August 21, 2012

Posted by chetan in : Mobile Future Forward, Worldwide Wireless Market , add a comment

Greetings Everyone!

Hope you are having a great summer.

I am very excited to announce our preliminary agenda for our upcoming Mobile Future Forward thought-leadership summit with an incredible line-up of speakers, thinkers and doers. The meeting of the minds will hopefully inspire you, help meet the most influential decision makers in the mobile ecosystem, and learn a thing or two about the future direction of the mobile industry.

Give us your one day and we will give you the next 5 years in mobile.

Registration and other information at  http://www.mobilefutureforward.com

Please note: Olympics Saver is expiring this Thursday, Aug 23, 2012. Limited Seats.

In proud partnership with: Intel, Amdocs, Compuware, Ericsson, Juniper, Synchronoss, Tekelec.

Preliminary Agenda: Mobile Future Forward – Seattle – Sept 10, 2012

 

8:30 am

Keynote Panel: Looking back from Mobile 2020 – the last 10 years.

Erik Ekudden, Head of Strategy, Ericsson (moderator)

Stephen David, former CIO, P&G

Jeff Bradley, SVP – Devices and Developer Services, AT&T

Jason Hoffman, CEO, Joyent

9:30 am

1-on-1 with Renee James

Renee James, SVP – Software and Services, Intel

Chetan Sharma, President, Chetan Sharma Consulting

10:30 am

Future of Mobile Devices

Kevin Packingham, Chief Product Officer, Samsung

Mike Woodward, President, HTC Americas

Nick Wingfield, Reporter, New York Times (moderator)

11:30 am

Mobile Operators: Succeeding on the 4^th Wave

Steve Elfman, President, Sprint

Glenn Lurie, President, AT&T

Chetan Sharma, President, Chetan Sharma Consulting (moderator)

1:30 pm

LTE is here and now. What’s Next?

Stephen Bye, Chief Technology Officer, Sprint

Neville Ray, Chief Technology Officer, T-Mobile USA

Vince Spinelli, MD – Mobility Solutions, Juniper Networks

Soren Elsborg, Head of Mobile Broadband, Ericsson

Tyler Davidson, Vice President, Amdocs

Kevin Fitchard, Senior Writer, GigaOM (moderator)

Mobile Enterprise and the Cloud

Gus Hunt, Chief Technology Officer, CIA

Abhi Ingle, VP – Advanced Mobility Solutions, AT&T

Dave Whalen, VP/GM – Software Services, Intel

Marianne Marck, VP – Software Engineering, Starbucks

Ed Cantwell, SVP, West Wireless Health Institute

2:30 pm

When will Mobile Commerce eclipse Ecommerce? And How?

Michael Bayle, EVP, ESPN (moderator)

Jana Messerschmidt, VP, Twitter

Antonio Benjamin, Global CTO, Citi

Mark Young, VP, NBC Universal

Stefan Happ, SVP – mobile and online, American Express

nScreen Era – Engagement and Commerce

Oke Okaro, Global Head and GM – Mobile & Connected Devices, Bloomberg

Martin Fichter, VP - Products, HTC

Jorge Espinel, EVP, News Corp

Hank Skorny, VP/GM, Intel

Wilson Rothman, Deputy Editor, NBC News (moderator)

4:00 pm

Managing network growth in the Yottabyte Era

Dan Deeney, Partner, New Venture Partners (moderator)

Houck Reed, VP, Tekelec

Wim Sweldens, President, Alcatel Lucent Wireless

Erik Moreno, EVP, Fox

Biju Nair, SVP, Synchronoss

The fight for developers – Apps, OTT, APIs, and Dollars

Frank Meehan, Executive, Horizons Ventures

Todd Simpson, Chief Innovation Officer, Mozilla

Mark Hillman, SVP – Strategy and Business Development, Compuware

Carlos Domingo, CEO, Telefonica R&D

Brad Duea, SVP – Product Management, T-Mobile

John Malloy, General Partner and co-founder, Blue Run Ventures (moderator)

5:00 pm

Big Data, Big Opportunities

Anjul Bhambri, VP – Big Data, IBM

Jeff Warren, VP – Mobile, Expedia

Internet of Things – Journey to 50 Billion

Mark Anderson, CEO, SNS (moderator)

Amir Mashkoori, CEO, Kovio

Jeff Smith, CTO, Numerex

Kevin Howard, CEO, ICG

Bobby Morrison, President, Verizon

Sebastien Taveau, CTO, Validity

US Wireless Market Update – Q2 2012 August 13, 2012

Posted by chetan in : Connected Devices, Enterprise Mobility, Mobile Advertising, Mobile Cloud Computing, Mobile Future, Mobile Future Forward, Strategy, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

US Wireless Market Update Q2 2012

The US mobile data market grew 5% Q/Q and 19% Y/Y to reach $19.3B in Q2 2012. Data is now almost 42% of the US mobile industry service revenues. For the year 2012, the market is on track for mobile data revenues in the US market to reach our initial estimate of $80 billion.

The US operators reversed the postpaid decline in last quarter to add almost 400K postpaid subs largely due to the strong performance of Verizon Wireless. Sprint and T-Mobile saw further postpaid declines. For T-Mobile, Q2 marked the eight straight quarters of postpaid losses.

In terms of Y/Y growth, Connected Devices segment grew 21%, Prepaid 12%, Wholesale 4%, and Postpaid was flat. AT&T, AT&T, Sprint, and Verizon are number one respectively in these categories. The connected devices segment has been an area of growth for the industry but for the second straight quarter, the Q/Q growth fell below 5%. This is largely driven by lower growth in the M2M segment.

Driven largely by the economy, the prepaid subscriptions went past 100 M for the first time in the US market. Given that the revenue from new subscribers has fallen below the 5% mark for the first time, the revenue growth will be primarily driven by services to the existing subscriber base. The new revenue will be dominated by data access revenues for the next couple of years.

As has been obvious for some time, the device ecosystem has become a two horse race – iOS and Android. Apple and Samsung. Google’s acquisition of Motorola finally closed and everyone is watching as to what comes next. Amazon showed off its ambition with Kindle Fire and is now getting ready to launch a new set of devices in time for the holiday season. Apple launches its iPhone 5 with LTE and gives some more polish to iOS next month. Microsoft will start selling its Surface tablet in a matter of weeks. The only one left out of the launching musical chairs is RIM which has pushed out its launch into 2013. 

Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in Q2 2012. However, Apple dominates both the device revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 97% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs. Apple has the complete stronghold on the supply chain and has sucked out the oxygen from the OEM world.

Nokia’s Lumia launch in Q2 fizzled in the US and elsewhere. It will get another shot at glory and perhaps its last with the Windows 8 launch in Sept.

If we exclude the M2M subscriptions and just look at the human subscriptions, the smartphone penetration went past 50% for the first time in the US market. Smartphone sales continued at a brisk pace crossing the 70% mark (of the devices sold) in Q2 2012.

Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.

Zuned Out

Apple launched iPod in 2001. During the early days, Microsoft ignored it until it realized it better start paying attention to the growing phenom. It asked its suppliers to build them a Microsoft iPod. One by one, they all failed. Depressed and frustrated, it took matters in its own hand and introduced Zune in 2006, full five years after the first iPod came into the market. By that time, Apple had already sold 66M units and still hadn’t hit its peak. As is customary, Microsoft took another few iterations to get it right. By the time a competitive product came out, it didn’t matter. The main reason was that the customers were Zuned Out. They had already made their choice, invested their time and money into a platform and it will take more than a crowbar to move them onto something new. Microsoft retired Zune in 2011

Fast forward to 2007. iPhone came out. Nokia, RIM, Microsoft and others dismissed it and more importantly failed to understand and acknowledge its impact. Their corporate schizophrenia is well documented. Microsoft wisely realized that it can’t just keep paring down the mothership OS for mobile and took time to rewrite it. The new OS was actually good and well designed, it was quite fresh. iOS and Android would do well to borrow some ideas from it to enhance the user experience. However, Microsoft’s partners by this time were more enamored with Android. So in Nokia, Microsoft found a partner who can help shine the light on its new shiny OS. By the time initial credible versions of the new windows OS started to ship, Apple had already shipped over 200M units of iPhone. By the time RIM ships devices with the new OS (if it gets to that point), Apple would have shipped over 300M units. Consumers have already invested their time and money into platforms and ecosystems. Will Microsoft, Nokia, and RIM get a second chance or will they be Zuned Out?

Then came the iPad that completely took Microsoft by surprise. It pioneered the concept a decade earlier but was completely outflanked by the wily Apple. Zune wasn’t significant to Microsoft’s core business. It had ignored mobile as well for the better part of the decade as it didn’t disturb the Office and Windows PC franchises. But tablets are different. Apple singlehandedly created a new category in 2010 and has dominated it ever since. It is altering the basic notion of computing. Enterprises are dumping their PCs and moving to iPad. We have seen that in our work as well. All of a sudden, there is a direct threat to Microsoft’s core business. This time the implications are very serious. It can no longer afford a misstep. So, instead of letting partners produce mediocre products that have no chance of success in the market, Microsoft is taking the matters in its own hands early on and produce something that on surface looks a pretty compelling product. If it can get the pricing right, it can make a dent and be a contender in the new computing landscape. It can use its products, distribution power, developer ecosystem, and the bank balance to alter the scales. But Apple has a big lead. By the time Surface comes out, Apple would have sold over 100M iPads. If Microsoft executes, maybe there is a chance to not get Zuned Out this time around. If it fails, the company itself might be Zuned Out in due course along with many of its longtime partners.

In the theory of market entry, fast follower is actually a smart strategy. Microsoft was a master at it. However the strategy has its limitations. Against an agile and ruthless competitor like Apple or Google, you better be a really fast follower (Samsung) else time starts to work against you. A slow follower strategy only works if you have something truly innovative (iPhone) or the incumbents are asleep at the switch (Xbox) or the business model is disruptive (Netflix). Also, the fast follower strategy is only sustainable when you are adept at anticipating competitor’s future chess plays.

Shared Data Plans

We have been advocating shared data plans to create more consumer demand for over two years. When I talked to CNBC earlier this year (Jan), I said that in all likelihood the family data plans will be introduced in the US market in 2012. I discussed this more with Bloomberg and USA Today and suggested that most likely Verizon will launch them first. Verizon and AT&T launched the shared data plans this summer with AT&T getting the benefit of launching it second. While it is a great start, to be truly effective, some of the fees need to be reduced or completely eliminated.

Operator’s Dilemma (And Opportunity): The Fourth Curve

While the European operators are feeling the heat from the OTT players (which is further compounded by an abysmal economy), the impact on the US operator revenues hasn’t been significant, yet. Last quarter we released our Mobile Future Forward Research 2012 Paper that took an in-depth look at the evolving landscape. The first of its kind study looks at the revenue curves over the course of the mobile history and discusses the need to invest in the fourth curve. The paper results were discussed in WSJ, The Economist, GigaOM, Seattle Times, and many other fine publications around the globe. The fourth curve will define the fate of many providers. Earlier this year, we discussed the topic in-depth in our Seattle and London forums and we will go even deeper into the subject at our annual brainstorm - Mobile Future Forward on Sept 10^th with all major participants.

mCommerce > eCommerce: Mobile First to Mobile Only

In the last couple of years, the realization in the industry set in that mobile is going to reallydominate the world. Very quickly, we are at another pivot point wherein the mobile first doctrine is going to move to mobile only. It is not that the desktop world will disappear into oblivion. Far from it. But, the investments, strategy, and execution will be driven by mobile. As we said in our global research update earlier this year, in 3-5 years, with few exceptions, if a company is not doing majority of its digital business on mobile, it is going to be irrelevant. There are already several data points to support the theory. Leading apps and services like Facebook, Twitter, Pandora are already operating in the world where mobile is driving majority of their user engagement. Expedia, Fandango and others are seeing the early signs of migration into the mobile dominated world. Starting soon we will start to see businesses with mCommerce Revenues > eCommerce Revenues.

Postpaid Doldrums

The prepaid subscriber base exceeded 100M in the US for the first time. As postpaid growth sputters, prepaid is picking up the net-adds. So, the question emerges, where will the net-sub and net-revenue growth going to come from in the next few years. The smartphone penetration in the US is at 50% (excluding M2M), so the significant opportunities are in the upgrades and non-data to data conversion. Family data plans (see above) will help in bolstering data revenues as well. Multiple devices/consumer will increase the sub penetration which is at 110%.

Mobile Data Growth – The Gigabyte Generation

The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. Since the advent of the iPhone five years ago, the US market has seen triple digit growth in mobile data consumption. In 2012, we expect the mobile data growth to be around 80%. This has largely been driven by the introduction of data tiers, the use of WiFi offload, more developer education, throttling in some instances, and some compression and offloading solutions. However, as LTE becomes more widespread in the US, we expect the traffic growth to pick up again.

Market Consolidation

Even though the regulators have indicated their distaste for big mergers, it hasn’t stopped the industry to play the M&A speculation parlor game. Except for a few impossible scenarios, all sorts of deals are being contemplated. The market economics is clearly crying out for more consolidations. The smaller M&As won’t move the needle and bigger M&A are not going to be on the table until we get into a new calendar year.

New Revenue

At the turn of the century, roughly 15% of the service provider revenue came from new subscribers. By the end of the year, we expect this will drop down to 3%. This means that the new revenue will have to come from a) converting non-data to data subs and b) launching new services in different verticals for the existing subs.

Connected Universe, Monetizing Opportunities

While 2011 was the year of figuring what the opportunities are in the new connected era, 2012 is starting to focus on how to monetize those opportunities. That will be the theme of our Mobile Future Forward Thought-leadership summit on Sept 10^th. Almost all the vertical industries are benefiting from the connected devices and ubiquity of broadband networks – security, health, retail, utility, transportation, entertainment, and others. We will take a deep dive into the issues, the best case studies, the opportunities, and the players. We are assembling industries who’s who to help you figure out where the industry is headed next.

What to expect in the coming months?

All this has setup an absolutely fascinating 2012 in the communication/computing industry. Convergence is everywhere and is leading to a fundamental reset of the value chains and ecosystems.

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 Q2 2012 US wireless data market is:

Service Revenues

• The US Wireless data service revenues grew 5% Q/Q and 19% Y/Y to $19.3B in Q2 2012. For the year 2012, we are forecasting that mobile data revenues in the US market will reach $80 billion.
• Verizon and AT&T dominated the quarter accounting for 68% of the mobile data services revenue and had 66% of the subscription base.
• Verizon and AT&T maintained its #1 & #2 mobile data revenue ranking in Q2 2012. Sprint and T-Mobile maintained their #5 and #9 rank in the top 10 mobile data operators list for Q2 2012.

ARPU

• The Overall ARPU declined by $0.03. Average voice ARPU declined by $0.63 while the average data ARPU grew by $0.60 or 3% Q/Q.
• The average industry percentage contribution of data to overall ARPU is now at the 42% mark in Q2 2012 and is likely to exceed the 50% mark early next year. All the top three US operators are above the 40% mark with Verizon leading the trio. (For reference, all three major Japanese operators are now over the 60% mark).

Subscribers

• The US operators bounced back from its first ever decline and added 400K postpaid subs.
• T-Mobile’s postpaid woes continued for the eight straight quarters.
• AT&T and Verizon both added more than a 1 M subs while Sprint added 283K.
• For the eleventh straight quarter, AT&T reported more net-adds from connected devices than postpaid subs.

Applications and Services

• While many of its brethren are seeing messaging volume declines, messaging in the US market grew by 5% YOY and 1% Q/Q. US consumers are now sending messages at the rate of 696 messages/sub/mo. However, most operators are seeing decline in messaging revenue growth due to IP messaging. As expected, this transition will continue around the world at different rates. In the US, while the change is underway, we don’t expect any dramatic declines like in Philippines or the Netherlands in the near-term.
• The market is finally starting to see activity in the mobile commerce and payment services as well as in various industry verticals like healthcare, retail, and education.
• Q2 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months. On the retail side, Starbucks is a player to watch as it tries to become a more active participant in the digital ecosystem.

Handsets

• Smartphones continued to be sold at a brisk pace accounting to over 70% of the devices sold in Q2 2012 with Android dominating though iPhone leads in revenue and mindshare.
• Samsung now leads in every major unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
• 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 renews its entry into the battlefield with Windows 8 next quarter.
• Apple’s iPhone sales declined in Q2 but with iPhone 5 round the corner, it is all set to dominate the remainder of the calendar year.
• US continues to sell over 40% of the world’s smartphone every quarter thus making it the most attractive market for OEMs.
• AT&T continues to dominate the connected devices segment with over 47% market share. 
• Verizon continues to sell more LTE smartphones as it added another 3.2M subs in Q2 2012 making it the leading LTE operator in the world. AT&T’s and Sprint’s LTE rollouts are gathering steam. T-Mobile announced that it is putting the cash and spectrum it got from AT&T to good use and deploying LTE by 2013. Expect the “fastest network” marketing to continue for at least another seven quarters.
• There is always a beauty contest amongst operators as to who sold more iPhones. AT&T again bested its rivals by selling roughly 47% of the iPhones in the US. However, iPhone sales in the US declined as consumers await iPhone 5. T-Mobile’s date with Apple is starting to look like a possibility in the near future.

Mobile Data Growth

• The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. The smartphone data consumption at some operators is averaging close to 850 MB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
• The Signaling traffic has increased 3x.
• Mobile data traffic growth is likely to slow down to roughly 80% after doubling for the last five years. Voice traffic will dip below 10% of the overall traffic in 2012.
• While the spectrum debate rages on, in addition to the network and backhaul upgrades, policy management and data offload have emerged as top two solutions that operators deploying around the world. Signaling management solutions like Diameter routing are also getting good traction. However, a long-term video solution is still elusive. As we have been saying in our Yottabyte series of research papers, a comprehensive solution strategy is needed to effectively manage margins/bit.

Global Update

• Race to a billion – China became the first nation to go past a billion subscriptions. See our detailed analysis of the Chinese and Indian mobile market.
• For more details, please see our Global Mobile Wireless Market Update released in April 2012.

Your feedback is always welcome.

Chetan Sharma

We will be discussing a number of issues raised in this report in our annual mobile executive thought-leadership summit - Mobile Future Forward on Sept 10th in Seattle. Confirmed speakers include: Abhi Ingle, VP, Advanced Solutions, AT&T; Antonio Benjamin, Global CTO, Citi; Brad Duea, SVP – Products, T-Mobile; Biju Nair, EVP and Chief Strategy Officer, Synchronoss; Bobby Morrison – President, Verizon; Carlos Domingo, President and CEO, Telefonica R&D; Dan Deeney, Partner, New Venture Partners; Dave Whalen, VP/GM, Intel; Ed Cantwell, SVP, West Wireless Health Institute; Erik Ekudden, Head of Strategy, Ericsson; Erik Moreno, EVP, Fox; Frank Meehan, Executive, Horizons Ventures; Glenn Lurie, President, AT&T Mobility; Gus Hunt, CTO, CIA; Hank Skorny, VP/GM, Intel; Houk Reed, VP, Tekelec; Jana Messerschmidt, VP, Twitter; Jeff Smith, CTO, Numerex; Kevin Fitchard, Senior Reporter, GigaOM; Kevin Packingham, SVP – Product Innovation, Samsung; Marianne Marck, VP – Engineering, Starbucks; Mark Anderson, CEO, Future in Review; Mark Young, VP – Mobile and Connected Devices, NBC Universal; Michael Bayle, SVP and GM, ESPN Mobile; Mike Woodward, President - Americas, HTC; Neville Ray, Chief Network Officer, T-Mobile; Nick Wingfield, Reporter, New York Times; Oke Okaro, Global Head of Mobile, Bloomberg; Renee James, SVP, Software and Services Group, Intel; Stephen Bye, CTO, Sprint; Stephen David, former CIO, Proctor & Gamble; Steve Elfman, President, Sprint; Todd Simpson, Chief Innovation Officer, Mozilla; Wim Sweldens, President, Alcatel-Lucent Wireless.

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Nov 2012. The next Global Wireless Data Market update will be issued in Oct 2012.

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

Mobile Future Forward 2012 Update - Connected Universe. Monetizing Opportunities. June 25, 2012

Posted by chetan in : AORTA, Applications, European Wireless Market, Mobile Cloud Computing, Mobile Commerce, Mobile Future Forward, Mobile OEMs, Mobile Operators, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Greetings,

Hope all’s well. Just a quick update on how the program is shaping up.

We have been working steadily on our fall mobile executive summit – Mobile Future Forward (Sept 10th in Seattle) and I am very pleased to announce the preliminary program. We will provide an update as we continue to refine the program and announce more speakers. As you know, our programs are deep in content and high on participant caliber. Each year we strive to bring together some of the leading thinkers and doers from around the world to brainstorm the future of mobile. As we like to call it – it is a mobile boot camp with the brightest brains in mobile.

I am delighted to be partnering with some of the leading players in the mobile ecosystem: Intel, Ericsson, Synchronoss, and Tekelec.

Steve Elfman, President, Sprint will give us an update on the state of the wireless industry – the opportunities and the investment areas. Glenn Lurie, President, Emerging Enterprises and Partnerships at AT&T Mobility will provide us with a glimpse into the world of emerging devices and opportunities. Both Steve and Glenn are mobile industry veterans with decades of experience and their perspective will be invaluable for our Mobile Future Forward community.

Mobile commerce has been a hot topic lately. We have two terrific speakers – Mung Ki Woo, Head of Mobile at Mastercard Worldwide and Antonio Benjamin, Global CTO at Citi to lay the roadmap of the mobile commerce ecosystem evolution.

When it comes to retail, brands, and technology, there are not many people with deeper insights than Stephen David, former CIO of Procter & Gamble. He is a highly sought-after advisor to global brands around the world. I have had the good fortune to work with him in the past and his grasp on how wireless is going to disrupt retail is just brilliant. We are delighted to have him back to have a conversation about mobile, brands, retail, and IT.

As you can see below, we have an outstanding group of executives who are responsible for changing the industry every day. Their viewpoints and commentary will be invaluable. The Mobile Future Forward team, our esteemed partners, our fantastic speakers and our engaged community are really looking forward to Sept 10^th.

Confirmed Speakers

· Steve Elfman, President, Sprint · Glenn Lurie, President, AT&T · Renee James, SVP, Software and Services Group, Intel · Wim Sweldens, President, Alcatel-Lucent Wireless · Michael Bayle, SVP and GM, ESPN Mobile · Martin Fichter, President, HTC · Stephen Bye, CTO, Sprint · Bobby Morrison, President, Verizon Wireless · Erik Moreno, EVP, Fox · Stephen David, former CIO, Procter & Gamble · Ed Cantwell, SVP, West Wireless Health Institute · Jana Messerschmidt, VP, Twitter .. More to come

· Mung Ki Woo, Head of Mobile, Mastercard Worldwide · Antonio Benjamin, Global CTO, Citi · Biju Nair, EVP and Chief Strategy Officer, Synchronoss · Hank Skorny, VP/GM, Intel · Jack Kennedy, EVP, News Corp Digital Media · Marianne Marck, VP – Engineering, Starbucks · Tim Chang, Partner, Mayfield · Vish Nandlall, CTO and EVP, Ericsson · Carlos Domingo, President and CEO, Telefonica R&D · Kevin Packingham, SVP – Product Innovation, Samsung · Frank Meehan, Executive, Horizons Ventures · Oke Okaro, Global Head of Mobile, Bloomberg

Discussion Topics

· Looking back from Mobile 2020 – the last 10 years

· The fight for developers – Apps, APIs, and Dollars

· Will Privacy get in the way of mobile growth?

· PostPC era and the tablets – commerce, engagement, and consumption

· Quantified Self. Quantified Enterprise – how to benefit from big data?

· Gamification of Everything – How to reinvent business models and revenue streams

· When will Mobile Commerce eclipse Ecommerce? And How?

· Mobile Broadband – LTE is here and now. What’s Next?

· Mobile Competitive Policy – Balancing competitiveness, consumer interests, policy, and innovation

· nScreen Connected Consumer – Expectations, Solution roadmap, and Revenue flows

· Operators vs. OTT – Competition, Co-opetition, and the new landscape. Measuring the seismic shifts.

· Big (Mobile) Data – Collection, Management and Use of Data

· Mobile Cloud Computing – Innovation, Competition, and Business Models

· Mobile CIO Prism – Disruption in the enterprise. Opportunities for growth and cost reductions

· Managing networking growth in the Yottabyte Era – strategies to tame signaling and data tsunamis

· Mobile Platforms and Ecosystems – The Cycles and the Eternal Debate

· Mobile Security – BYOD, Hacking, Protecting, and Monetization

· Emerging Markets, Emerging Opportunities

· Battle for the Home – Devices, Apps, Networks

· Retail channel transformation – how are we going to shop and who makes money?

I hope you will join us in what is shaping up to be an exceptional gathering of the mobile minds. Registration is open now. Early bird will expire July 10^th. The last two events were sold out so be sure to grab your seat to one of the most anticipated mobile gathering of the year.

Thanks.

Kind regards,

Chetan Sharma

Mobile Breakfast Series Recap – Atlanta – Connected Devices, Cloud, and Consumer June 24, 2012

Posted by chetan in : 3G, 4G, AORTA, ARPU, Applications, Connected Devices, European Wireless Market, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Cloud Computing, Mobile Commerce, Mobile Content, Mobile Devices, Mobile Ecosystem, Mobile Future Forward, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , 2 comments

We started doing Mobile Breakfast Series in Seattle back in 2009 and after hosting10 straight events, it was time to expand the wings and explore other cities. The first stop in this journey was Atlanta and we worked closely with our partners at “Wireless Technology Forum” to make it a successful event last friday. I also had the good fortune of participating in WTF’s event the night before. Both events focused on Connected Devices and their impact on the consumer, the ecosystem and the value-chains thus making it a “connected week” in Atlanta.

As I mentioned, the night before the event, I had the opportunity to present and moderate a panel on Connected Devices with Glenn Lurie, President of Emerging Enterprises at AT&T and Jeff Smith, CTO at Numerex. Both are movers and shakers in the space and it was such a pleasure meeting with many WTF members and interacting with the top-notch panelists. The event was recorded and is available on WTF’s Youtube Channel.

We hosted the Atlanta Mobile Breakfast Series Event in Atlanta at the Commerce Club of Atlanta which has beautiful views of the Atlanta area.

There is an old Chinese saying, “When the wind of change blows, some build walls others build windmills.” Our industry is going through tremendous change; it won’t be an exaggeration if I say that the tectonic plates are moving and moving fast. The motion is being forced both by the economic conditions but also the technology and business progress. I have been around the industry long enough but it still amazes me – the stuff that’s in the pipeline and how quickly consumers absorb it.

The topic of our discussion was Connected Devices, the Cloud, and the Consumer. With connected devices, I am referring to the broad availability of devices that are connected to data networks – so they include smartphones, tablets, connected auto but also wellness devices like fitbit, energy meters, dog collars, medical devices, etc. as of last year, the subscription penetration was at 6B, next year, we will have more connections than people on this planet. In another 5-7 years, we might touch 20 Billion sensors on the planet. So you can see the growth is going to be astronomical.

Another phenomenon is that of cloud. If a startup mentions Cloud in their presentation to a VC, the valuation doubles, you say mobile, and it quadruples. I don’t know how many of you are a fan of Mark Weisier, the Xerox Parc researcher who pioneered what became “always on, always connected” tagline of pervasive computing. It was more than 20 years ago, we finally are seeing that with the help of broadband networks, amazing devices, and open business models, information is truly available at the fingertips.

The third leg of our discussion was the consumer – their appetite for new and the latest is creating this tremendous opportunity that is shaping their behavior and expectations.

We had an awesome panel to discuss things in detail. First I discussed the topic with David Christopher, Chief Marketing Officer at AT&T Mobility. As most of you might be aware, AT&T is leading not only the US but the globe in their efforts to bring connected solutions to the market. I work around the world with top operators, and I can tell you there is no exciting place in mobile right now than right here in the US of A. US is leading in innovation, technology, and business model. We had lost touch after 1G and US truly teaching rest of the world how to do 4G right. David has a terrific background – a product and operationally driven CMO at one of the world’s biggest mobile operator and it was a delight to have him on the panel.

I have known both Biju Nair and Louis Gump for sometime – several decades of mobile expertise. Louis is with CNN, has been running their mobile efforts which are top-notch. He is a recognized leader in the mobile advertising space and given that CNN’s properties span across multiple screens, he has really great insights as to how consumers behave across n-screens.

Biju is a hard core technologist, has been working at solutions that make Louis’ stuff work across networks and devices. Many of you might not know but Synchronoss where Biju is the Chief Strategy Officer and Products EVP, powers online activation at AT&T. If you bought the iPhone over the last few years at AT&T, there is a good chance your order was processed by Synchronoss.

Highlights from the discussion below:

• Many in the industry expected AT&T to take a hit after the iPhone exclusivity ended but AT&T continued to perform better than Verizon and others with devices. David has been the person leading the charge to ensure AT&T maintains its competitiveness. AT&T did that by a) conveying the overall value proposition of an iPhone on the AT&T network b) build out the Android portfolio and c) conveying crisply the benefits of being an iPhone on the AT&T network (talk and text at the same time, etc.)
• Consumers understand that 4G is faster than 3G but necessarily understand (beyond the techie crowd) the benefits of LTE.
• AT&T is a big supporter of Windows ecosystem. It is good to have more choice for the consumers. While the initial version of Surface is WiFi only, the hope are high for Windows 8. Having a viable third ecosystem for mobile is important for the mobile industry.
• Microsoft has done a good job with the design of the OS but have been poor on the opening up of the API front. Developers find the closed ecosystem to be stifling. Unless Microsoft remedies that, interest in the platform might be limited.
• It is RIM’s battle to lose. They have good software, loyal users, security framework, email is the best but have been asleep on the wheel for a while. They can turn things around though the probability of that happening are fairly low at this point.
• AT&T is studying data share plans and how consumers might react to them. It is a new paradigm in the evolution of mobile data plans and services.
• CNN has been doing mobile for a long time but was surprised by the pick up of the tablets. The reach is highest on the browser for them but the engagement is much higher on apps.
• Cloud is essentially Client-Server from the years past but applied to new use cases that brings together user experience new and different ways. The trifecta of devices, broadband networks, and content is enabling new services.
• Privacy and Security of cloud services is of paramount importance. There is a view that the industry needs to self-regulate and come up with some better solutions quickly.
• HTML5 is an important step for the industry but it is clearly not a panacea. It will have a role in the ecosystem but won’t obliterate the need for apps. The holy wars to continue.
• There is some conflict between the cloud data usage and data tier plans but WiFi (US consumers have access to WiFi 80% of the time) and smarter configuration to manage data have helped.
• Mobile advertising only 1% of the overall mix but mobile has 10% usage so a tremendous growth opportunity (yep, we said that back in 2007).
• APIs are open but monetization is still challenging. The first task is to get developers understand the benefits and find ways to enhance the user experience.
• Toll free data plans is not a new concept. Remember Sugar Mama from Virgin Mobile from years ago? Still experimental. Content providers like CNN are willing to engage if there is some value exchange that yields to revenue which can be shared. Some interesting opportunities with prepaid.
• To some extent there is more ARPU innovation in the developing countries like India which are borne out of necessity – like the Kissan program in India.
• In terms of what’s next, virtually every industry is going to be disrupted. Tremendous change on the horizon however a lot will depend on the battery innovation in the coming days and months.

The team at Chetan Sharma Consulting really enjoyed taking the Breakfast Series to Atlanta. My thanks to the terrific team at WTF for their support and to the Atlanta Mobile Community for making the event so successful. Finally, the event wouldn’t have been possible without the support of our series partner – Synchronoss.

As you might be aware, our fall mobile executive summit – Mobile Future Forward is going to be on Sept 10th. Registration is open. We are likely to sell out so grab your tickets early.

Next Stop – London for our first venture across the pond. On June 29th, we host the discussion on Operator/OTT – The way forward with Telefonica, Orange, Rebtel, and Horizons Ventures. Read Frank Meehan’s pre-event interview about the topic here.

Operators and OTT - The Way Forward - London

Operator traditional revenue streams are under threat esp. voice and messaging. Access margins will continue to stay under pressure. OTT players are coming in fast and furious and it is not just the big ones like Google but also players like Whatsapp, Voxer, Viber and others. How do operators play in the new landscape – lessen the decline of their traditional revenues while investing in new areas that improve their overall margins and revenues. Do they play the role of an enabler, a utility player, or become the OTT player themselves? In a software-driven world, how do they stay nimble? On the flip side, what are some things that operators can provide to the OTT players that make them successful, take them to the market quickly and maintain a long-term healthy and mutually-beneficial partnership? Operators still generate 70% of the global mobile industry revenues, so they are an important part of the chain but how do they ensure they have an equally relevant share in the profits. The panel will discuss how operators and OTT players think about the challenges and the opportunities, the competition and the coopetition.

Announcing Mobile Future Forward 2012 June 13, 2012

Posted by chetan in : 4G, AORTA, Connected Devices, Mobile Applications, Mobile Future Forward, Mobile Operators, US Wireless Market, Wireless Value Chain, Worldwide Wireless Market , add a comment

Greetings,

I hope you are enjoying the advent of summer.

We have been working steadily on our fall mobile executive summit – Mobile Future Forward and I am very pleased to announce the preliminary program. We will provide an update as we continue to refine the program and announce more speakers. As you know, our programs are deep in content and high on participant caliber. Each year we strive to bring together some of the leading thinkers and doers from around the world to brainstorm the future of mobile. As we like to call it – it is a mobile boot camp with the brightest brains in mobile.

I am delighted to be partnering with some of the leading players in the ecosystem: Intel, Ericsson, and Synchronoss.

Renee James, Senior Vice President of Software and Services at Intel will be giving an opening keynote. Renee is leading the charge that is making Intel a software powerhouse. It will be great to get her perspective how the trends are shaping up-and-down the innovation stack.

Dr. Vish Nandlall, CTO of Ericsson will be leading a fascinating panel discussion with some terrific industry leaders – Mobile in 2020: the last 10 years. I have had a chance to interact with him in the past and he will be a great person to help us visualize the back from the future journey.

As you can see below, we have an outstanding group of executives who are responsible for changing the industry every day. Their insights will be invaluable. The Mobile Future Forward team, our esteemed partners, our fantastic speakers and our engaged community are really looking forward to Sept 10^th.

Confirmed Speakers

· Steve Elfman, President, Sprint · Glenn Lurie, President, AT&T · Renee James, SVP, Software and Services Group, Intel · Wim Sweldens, President, Alcatel-Lucent Wireless · Michael Bayle, SVP and GM, ESPN Mobile · Martin Fichter, President, HTC · Stephen Bye, CTO, Sprint · Bobby Morrison, President, Verizon Wireless · Stephen David, former CIO, Proctor & Gamble .. More to come

· Mung Ki Woo, Head of Mobile, Mastercard Worldwide · Biju Nair, EVP and Chief Strategy Officer, Synchronoss · Hank Skorny, VP/GM, Intel · Jack Kennedy, EVP, News Corp Digital Media · Marianne Marck, VP – Engineering, Starbucks · Tim Chang, Partner, Mayfield · Vish Nandlall, CTO and EVP, Ericsson · Carlos Domingo, President and CEO, Telefonica R&D · Kevin Packingham, SVP – Product Innovation, Samsung

Topic Discussions

· Looking back from Mobile 2020 – the last 10 years

· The fight for developers – Apps, APIs, and Dollars

· Will Privacy get in the way of mobile growth?

· PostPC era and the tablets – commerce, engagement, and consumption

· Quantified Self. Quantified Enterprise – how to benefit from big data?

· Gamification of Everything – How to reinvent business models and revenue streams

· When will Mobile Commerce eclipse Ecommerce? And How?

· Mobile Broadband – LTE is here and now. What’s Next?

· Mobile Competitive Policy – Balancing competitiveness, consumer interests, policy, and innovation

· nScreen Connected Consumer – Expectations, Solution roadmap, and Revenue flows

· Operators vs. OTT – Competition, Co-opetition, and the new landscape. Measuring the seismic shifts.

· Big (Mobile) Data – Collection, Management and Use of Data

· Mobile Cloud Computing – Innovation, Competition, and Business Models

· Mobile CIO Prism – Disruption in the enterprise. Opportunities for growth and cost reductions

· Managing networking growth in the Yottabyte Era – strategies to tame signaling and data tsunamis

· Mobile Platforms and Ecosystems – The Cycles and the Eternal Debate

· Mobile Security – BYOD, Hacking, Protecting, and Monetization

· Emerging Markets, Emerging Opportunities

· Battle for the Home – Devices, Apps, Networks

· Retail channel transformation – how are we going to shop and who makes money?

I hope you will join us in what is shaping up to be an exceptional gathering of the mobile minds. Registration is open now. Early bird will expire June 22^nd.

Thanks.

Kind regards,

Chetan Sharma

MBS London – Frank Meehan Interview June 9, 2012

Posted by chetan in : Mobile Breakfast Series, OTT, Wireless Value Chain, Worldwide Wireless Market , 1 comment so far

With MBS Seattle behind us, we are gearing up for Atlanta and London. Our good partner Mobile Groove did a nice interview with one of our speakers and my good friend – Frank Meehan who will be with us in London on the Operators/OTT panel. Frank has done terrific stints at Ericsson, 3 UK, INQMobile and now is with Horizons Venture -

Some highlights:

What must mobile operators do?

Yes, OTT players have had a hearty meal at the expense of the mobile operator, but there is still money to be made if mobile operators concentrate on what they do best.

As Frank puts it: “Going out and trying to build a social network is probably not the right thing to do, but there are some great things that operators are doing.  I particularly like the way Telefónica Digital has set up really a separate company which is designed to go after digital opportunities.  That’s the right way to do it.”

Facing the talent crisis

Operators should stake their turf (connected home, security, the Cloud, etc) and build their business. But, Frank warns, the biggest challenge for operators is talent. “A lot of the young and upcoming talent is going off to work for startups.”

What can operators do to stem the flow of talent to startups (that may one day be their rivals)? A lot! Follow the Telefónica Digital blueprint and give your talent freedom to innovate. “You’ve got to have incentives that compete with startups, or with the Facebooks and Googles otherwise it will become very difficult.”

When it comes to software solutions or the way they are developed, mobile operators should see these are the work of a “separate team outside of the operator standard operations.”

What awaits operators?

As a VC, Frank is convinced there is money to be made. “Operators are cash rich and it’s still a good business and they will snap up things, so certainly there’s an opportunity for investments to crystallize, particularly from a sale — then operators are very interesting.”

Overall, Frank says 2012 has been a great year from “an investment and a start-up perspective.” In his view, it’s “booming” — in part thanks to the Facebook IPO and the excitement it has generated around other companies that tap into our mobile Zeitgeist and requirement for social, sharing and connectedness. “Facebook is literally now the electricity of the Internet … and it’s a huge shift — you’re seeing the big companies like Spotify and others — and it’s just really dragging a huge start-up industry along with it, and it’s accelerating.”

You can listen to the whole interview here.

Mobile Breakfast Series Recap – Operators/OTT – The Way Forward June 8, 2012

Posted by chetan in : AORTA, Applications, Carnival of Mobilists, Connected Devices, Mobile Advertising, Mobile Applications, Mobile Breakfast Series, Mobile Ecosystem, Mobile Future Forward, OTT, US Wireless Market, Unified Messaging, VoIP, Worldwide Wireless Market , 4 comments

June is the Mobile Breakfast Series Month with 3 programs planned in 3 cities across 2 continents. We kicked things off with the first one earlier today in Seattle. The topic of discussion was Operators and OTT – The Way Forward.

We also announced our fall program of Mobile Future Forward. More about that later.

There is an old Chinese saying, “When the wind of change blows, some build walls others build windmills” Our industry is going through tremendous change; it won’t be an exaggeration if I say that the tectonic plates are moving, in some places quite violently. The motion is being forced both by the economic conditions but also by the technology and business progress. I have been around the industry long enough but it still amazes me – the stuff that’s in the pipeline and how quickly consumers absorb it.

The topic of our discussion was Operators and OTT or Over the Top. These are services like Skype, Youtube, Amazon video, HBO, etc. things that go over the network. I wanted to broaden the discussion to another acronym – VAS or value added services – both for the consumer segment and the enterprise segment. These will be simple things like address backup or CRM applications to more sophisticated supply chain management, in-store location targeting, advertising etc. To discuss this we have an absolutely brilliant panel representing various parts of the value chain.

RealNetworks has been the Kevin Bacon of startups in Seattle. Thanks to the people Rob Glaser hired, RN has done a better job at spawning up new ideas that your bigger cousins in town. Rob is well known for his pioneering work in giving Internet its voice (in the words of Kara Swisher in the 1998 article for WSJ). But lately, Rob has been busy with Sidecar – a next generation communication app that does more things than messaging and voice. If you haven’t tried, please do so.

Mary Jesse is one of the most distinguished engineers in WA State going back from the McCaw days, VP of Eng at AT&T, CTO of RadioFrame and now CoFounder and CEO of an enterprise communications company called Ivytalk. Again, if you haven’t tried it out, please do so.

Michael Shim was with Yahoo before Groupon and Yahoo was one of the true pioneers in the mobile space and now at Groupon he is seeing the new opportunities on the VAS, payments, and commerce. It will be great to get his view of how Groupon thinks about the space.

Have you tried T-Mobile’s Bobsled? Well, Alex Samano is the man and energy behind this service and T-Mobile is one of the few operators globally who are taking this OTT opportunity head-on. At TMO, he has been involved some really interesting initiatives like @home and wifi calling.

Last but not the least, Abhi Ingle from AT&T who heads up the mobile enterprise business. The industry has been talking about enterprise mobility for ages but his team generates more revenue than majority of the industry players combined. Did you know that AT&T is one of the biggest app developer on the planet? I bet you didn’t know that.

Operator traditional revenue streams are under threat esp. voice and messaging. Access margins will continue to stay under pressure. OTT players are coming in fast and furious and it is not just the big ones like Google but also players like Whatsapp, Voxer, Viber and others. How do operators play in the new landscape – lessen the decline of their traditional revenues while investing in new areas that improve their overall margins and revenues. Do they play the role of an enabler, a utility player, or become the OTT player themselves? In a software-driven world, how do they stay nimble? On the flip side, what are some things that operators can provide to the OTT players that make them successful, take them to the market quickly and maintain a long-term healthy and mutually-beneficial partnership? Operators still generate 70% of the global mobile industry revenues, so they are an important part of the chain but how do they ensure they have an equally relevant share in the profits. The panel discussed how operators and OTT players think about the challenges and the opportunities, the competition and the coopetition.

Some highlights from the discussion:

• You have heard it before, but Apple really changed the game. It allowed for the OTT players to be born and thrive. iPhone drove the networks to adopt faster and better technologies over a span of 4-5 years and the world changed as a result.
• The capabilities that are available in an robust IP environment are leading to tremendous opportunities around the ecosystem.
• Groupon drives 30% of its business from mobile. If the payments/commerce piece was more seamless, this could be much higher.
• Groupon thinks that if the consumer data is productized by the operators, there are some big opportunities that players like Groupon can take advantage of.
• There is significantly more cooperation with the operators in the developing world as the Groupon brand is not well known and the operator channel is great for distribution.
• For AT&T, 65% of the postpaid base is using smartphones, 80% of the new devices sold to this group is now smartphones. Changing the landscape pretty dramatically.
• Web 3.0 is Mobile Internet.
• App providers and Operators have natural tension because they want to compete for the same set of communication features/functionality. However, for some apps like Sidecar cooperation is must because of the QoS issues. While it is hard to do things simultaneously with all the operators, things can be achieved working 1-2 carriers at a time.
• To some extent the story is repeating itself, operators used to be in the hardware business but Apple and Samsung rule segment now. Things always change, who knows what the next cycle will bring.
• We are just at the start of a phenomenal run that will dwarf the achievements of the past. Like I say, more changes in the next 10 years than in the last 100 years.
• Collectively, operators need a better strategy for opening APIs to startups. Currently, they find it tedious and time consuming.
• Bobsled user base is growing fast but the contrast to other OTT players is stark. The scale is different because they are driven by different performance metrics. At the end of the day, Operators have to show revenues while OTT players are going after the audience and then worry about revenues later. It is obvious, many of the communication OTT providers won’t succeed, a few will reach the next level but this forces the marketplace to shrink and more players to go after that pie.
• RCS has been talked about since 2007 but it has taken 5 years for the functionality to come to market from limited number of operators on limited number of handsets. That’s the dilemma for the operators. While interoperability is important and desired, the rate of time-to-market is more important.
• Operators have started to offer cross carrier services for messaging, location APIs and others which will help the ecosystem.
• Operators and OTT players will have to settle into a more collaborative approach to reach new heights of service and application deployment.
• There was an agreement that too much is made out of the Operators vs. OTT trash talk and there are more synergies than there are differences in overall objectives to make the consumer experience better.

Our next breakfast event is in Atlanta on Connected Devices on June 22nd. Then we revisit the Operator/OTT discussion again from the European point of view in London on June 29th. Tell your colleagues and friends about it. They will thank you for that.

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