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Mobile Predictions 2017 January 2, 2017

Posted by chetan in : 4th Wave,5G,Chetan Sharma Consulting,Connected Devices,Connected Intelligence Era,Fourth Wave,Internet of Things,IoT,M&A,Mergers and Acquisitions,Mobile Applications,Mobile Future Forward,The Golden Age of Mobile,Wireless Value Chain,Worldwide Wireless Market , trackback

Mobile Predictions 2017

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A very happy, healthy, and prosperous 2017 to you and your family. Hope you had a good holiday and are ready to take on the new year with vigor and purpose. My thanks to all who participated in our 10th annual Mobile Predictions Survey. It is a unique polling of the insiders to get a glimpse into what the ecosystem is thinking about the future.

As I have mentioned before, we are entering the Connected Intelligence Era and the mobile industry is growing beyond its traditional borders to transform every vertical industry and by extension – the global GDP. Proof is in the numbers. 7 Zettabytes of digital information created. 1.3 billion smartphones sold. Over 60 Exabytes of mobile data traffic (which btw will grow 15x+ in the next 5 years). Almost 100 million wearables sold.  More than 16 billion connected devices. Almost half trillion dollars in data revenues. Over 400 billion dollars in OTT revenues. At least 77 companies generating a billion or more from 4th wave. At least 8 companies generating a billion or more from IoT.

The improved economy empowered consumers to spend more. Europe despite its political troubles did well economically. China slowed down but India picked up the slack. Affordability remains a key issue to address to bring in the next billions into the fold.

IoT emerged as a big category last year and we are just starting. While the potential is unlimited, industry needs to come together on a number of issues around fragmentation, security, policy, and privacy. The fact that we are selling more non-phone devices than phone devices on cellular networks in the US should be a hint of things to come. 2015-16 saw a wave of consolidation and we will continue to see stronger player get more aggressive this year across domains which is very exciting. The next five years are going to be full of action, surprises, and transformation. Stay with us and we will keep you posted.

We do our annual survey to engage our knowledgeable community on trends and events to keep us informed. The composite view gives a glimpse into the future scenarios. Executives, developers, and insiders from leading mobile companies and startups from across the value chain and from around the globe participated to educate us on what to expect of 2017. The survey draws upon the unique collective wisdom of the folks who are making it happen. Thanks for being part of the annual ritual.

5 names were randomly drawn for the limited edition of the Mobile Future Forward 2016 book and they have been notified. Congrats.

Welcome 2017!

Kind regards,

Chetan

What was most newsworthy in Mobile 2016?

In 2016, there was no one blockbuster event that stood out. Samsung’s Note debacle was perhaps the one that captured the most headlines and consumer’s imagination as they were inundated with recall messages and airline announcements. But, perhaps, the most meaningful undercurrent of the industry was the continued success of T-Mobile USA that shaped the US and global markets. There were no blockbuster devices that excited consumers at scale. There were some big M&A announcements most notably – AT&T-Time Warner, Qualcomm-NXP, Softbank-ARM. We expect the M&A activity to pick up significantly in the coming months and could see a big announcement within weeks. IoT made steady progress though slower than initially expected. AI/ML is on the top of the hype cycle curve. AR/VR grew but also disappointed. Regulatory tussles continued and are likely to intensify in 2017. Voice UI made a comeback lead by “I will tell you a joke” Alexa. Microsoft surged while Apple faltered. Facebook and Google dominated the mobile ad landscape. Chinese players are making impact globally.

What will be the biggest mobile stories of 2017?

There is a lot of hope for IoT to grow from experiments to seep into the fabric of society and enterprise (but it will take time). Folks are expecting new experiences aided by AR/VR, ML/AI, displays, networks to shine in 2017. 5G got its voice in 2016 and we can expect a tremendous amount of activity and noise on this front around the globe. After the US election, major tech companies started to lay the ground work for potential M&A activity in 2017. We expect some big announcements depending on how the policy framework for the new administration looks like.

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

Since the iPhone came out (did you notice, 2017 is the 10-year anniv. for the legendary device – Apple kept some of the killer features for this year’s release), Apple have dominated our “most important players” rankings. This year, Google edged out Apple. Operators made a comeback and were ranked third. Facebook, Samsung, Amazon, Qualcomm rounded out the top 7. Our more scientific analysis puts Amazon at the top followed by Apple, Google, Facebook, and Microsoft.

What will be the breakthrough categories in mobile in 2017?

We had a continuous stream of AI/ML news and breakthroughs throughout 2016 and we expect that to continue in 2017. You can tell the importance of the category by looking at the fight for talent. Right now, the AI/ML recruits are most in demand. Google dominates and the education engine is struggling to feed the pipeline. IoT activity was most successful in the enterprise and we expect the likes of GE and Siemens to continue to invest in IoT making it a big category for the year. Fueled by demonetization in India and the rise of viable mobile payment solutions worldwide, we expect mobile payments to enter the consumer consciousness in a big way in 2017. Another category that is seeing tremendous activity and excitement is that of autonomous vehicles. Google did well to kickstart the market but other tech players and OEMs are not sitting idle. This will be a fascinating tech and policy space to watch for 2017 with significant implications for the society. Given the cyberwars and hacking that has become second nature, we expect a lot of commercial activity in the space. This is one problem that is hard to get a handle on and it will only get worse. Flexible displays haven’t made their mark so far, perhaps, they will in 2017.

What will be the most popular consumer mobile applications in 2017?

Our participants thought mobile payments and commerce will be the most popular consumer app in 2017 in the developing world while IoT and Connected Cars will dominate the developed markets. Social and messaging will continue to make inroads in the emerging markets while AR/VR, health and wellness will be popular in developed markets.

Who will dominate the mobile payment/commerce space?

Financial institutions have cornered the payments/commerce market for a long time but Apple, Amazon, and startups are making inroads. The Financial networks haven’t been disrupted in decades and the time seems ripe though the level of difficulty is the highest. Facebook has so far sat on the sidelines with only minor half-hearted initiatives. Perhaps, it along with some of the other tech players can reinvent the sector. It needs a breath of fresh air.

Who will make the biggest mobile acquisition in 2017?

After the US election, the probability of AT&T-Time Warner merger going through flipped from 30% to 70%. It is likely to become the biggest merger of the year though don’t underestimate Masa who is readying his own set of M&A announcements. Depending on what happens on the tax repatriation front, we could see the tech companies to flex their muscles and purses as well.

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

Startups continue to do some of the most interesting work in IoT space. We have documented the evolving landscape in our Connected Intelligence series of papers. Amongst the big companies, AT&T, GE, Verizon are probably at the forefront. Google had a chance to define the space that needs leadership but many missteps has left the room for someone else to take that mantle. Still a lot of fragmentation and issues around security, privacy, cost, implementation, etc. will continue to plague the segment in 2017 thought long-term, we stay quite bullish on the prospect of IoT shaping the tech ecosystem.

Who will dominate in the autonomous vehicles race?

Tesla is the iPhone of the autonomous vehicles car race. No other company is further ahead than Tesla. The primary reason is that it already has millions of miles of autonomous driving under its belts and is significantly ahead of the competitive landscape. We expect the self-driving, ride-sharing, logistics management, and car manufacturing to all converge making it one of the most interesting tech segment for the next decade.

What impact will the new US administration policies have?

If there is one word that can describe what to expect after the last US elections, it is “uncertainty.” We just don’t know how things will play out on a quarter-to-quarter basis. However, there are a lot of assumptions and hopes going forward. Folks are quite divided based on geography, their own beliefs about where the economy is headed, and how the policy framework is likely to break out. In some areas there was quite a bit of consensus. For example, respondents expect the new administration policies to have a positive impact on operators and service providers (net-neutrality seems history, M&As are going to be allowed, and they will gain on the OTTs). The impact on Internet players, startups, overall tech and mobile industry, and the US economy seems to be positive but more uncertain. Trade and the global economy might be up for a beating in the coming years. We are in unchartered territory so it is all speculation at this point.

Which category will generate the most mobile data revenue in 2017?

Mobile data has driven growth in the mobile industry for many years in the western world and we expect that to continue. In North America, Japan, Korea, and Western Europe, Access, Apps, Advertising, and OTT services are expected to dominate 90%+ revenue base in 2017. In emerged markets like China and India, messaging is still important but its contribution is shrinking as expected. In emerging markets like Africa and South America, are a bit behind but on the same 4th wave trajectory.

Which region will end up leading the world in 5G by 2020?

With its Winter Olympics firmly in sight, Korea is expected to lead the industry in setting 5G standards and commercial deployments but it is getting a close fight from its US counterparts as the 5G activity is expected to pick up in 2017 with Verizon and AT&T eyeing commercial deployments of some shape and form this year. There is still a lot of hype and definition meddling but expect the noise to get louder in the coming months.

What protocol will dominate IoT communications?

When it comes to protocols for IoT, the industry is all over the place. All of this is not surprising though. Market is expected to stay fragmented with NB-LTE making inroads along with Cat-M. Lora, Sigfox, and other standards and proprietary protocols are unlikely to make any discernable impact over the long run. A piece of advice – stay away from non-standard approaches on projects that expect a 10-year lifecycle.

The company bringing the most successful mobile gadget of the year – 2016 and 2017?

While Apple didn’t have a blockbuster feature set in 2016, it’s ecosystem is so strong that even a weaker launch was enough to make it the most desirable device in 2016. We expect 2017 to be a much more successful launch – akin to the iPhone 6+. Google made inroads with Pixel but its supply-chain and global support is not at par with Apple and Samsung (and perhaps the desire is lacking as well) so the results were good but not spectacular. Samsung was ideally placed to exploit a weak Apple launch but stumbled with an exploding device that put it on back foot for much of the last quarter. Microsoft messed the handset market but made inroads with Surface where it outshone Apple for the first time in its history. Will that inspire a reentry into the handset space? We will have to just wait and see. Chinese darling Xiaomi struggled. As expected, besides Huawei and ZTE, other Chinese OEMs also had a hard time gaining traction outside of China.

Mobile company of the year – 2016 and 2017?

For the first time, a mobile operator was named at the top. T-Mobile was voted company of the year. It easily beat Apple, Google and Facebook. With its uncarrier series of announcements, T-Mobile has changed the market not only in the US but also globally. For 2017, participants expect Apple and Google to shine more than others. We expect Amazon and Facebook to make more inroads and see further expansion of their revenue base. Amongst other operators, AT&T is best poised to gain in areas such as IoT and Media services.

Automation and Digitization of industries will lead to?

We have been researching this question for a long time. The respondents who expect net losses of jobs to increase continues to rise each year and might go past 50% in 2017. Most people expect to benefit from automation (reminder, the respondents don’t represent the larger consumer base) but the percentage of folks who expect automation to negatively impact them has started to creep up. There is a lot of misconception that it is robots that impact the job. Automation more than anything is the key element for research as automation of tasks is what eliminates the need for those tasks to be carried out by humans. How the governments and societies deal with the opportunity (and the threat) of automation is perhaps one of the most important question facing our generation. The best solution is of course the revamping of the education system and the training program but this won’t be able to catch all those who are getting impacted or will be affected so there need to be policies to deal with edge cases that will generate the most political noise.

Which of the following are likely to happen in 2017?

The big 5 tech companies lead the stock exchanges. Apple, Google, Amazon, Facebook, and Microsoft are racing towards the $1 Trillion mark. Will we see it in 2017? Unlikely but it is fun to speculate. Repeal of net-neutrality in the US almost a given. So, is Twitter acquisition, Sprint and/or T-Mobile M&A, 5G commercial announcements, and data only smartphone plans. Soft-SIM smartphones might make an entry which could upend the market in unexpected ways. Samsung is likely to bounce back from the Note fiasco. Microsoft might introduce a smartphone. Google glasses anyone? More progress on the autonomous car front. It is going to be an exciting year in the industry.

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

I am fond of saying that mobile is perhaps the most impactful industry because it has transformed every other industry. We expect the impact to be felt in health, IoT, Home automation, entertainment, automobile, transportation, AI/ML, Commerce, and much more.

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

With automation comes shift in labor requirements and needs. The first ones to get displaced are the skill-less jobs but also jobs that serve as middlemen for transactions. Some of the areas that will face pressure in the coming years are: Car drivers, transportation personal, real estate agents, retail staff, advertising agencies, even journalism. Impact on healthcare and doctors is not imminent but it is coming. On the flip side, it is up to these professions as how they evolve taking advantage of technology in doing things better but that does require an upgrade of skills. However, the gap between skill-less and skilled jobs would be the story of the next decade.

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

Not surprisingly, for the second straight year, John Legere, CEO of T-Mobile was voted person of the year for his impact on the industry followed by Sundar Pichai (Google), Jeff Bezos (Amazon), and Mark Zuckerberg (Facebook). Mukesh Ambani (Reliance) with his Jio announcement transformed the most competitive market on the planet. Masa never sits idle and is expected to play a major role in defining 2017 for the industry. For 2017, all eyes are on Jeff Bezos as the person of the year followed by Mark Zuckerberg, Tim Cook, John Legere, and Sundar Pichari. Other notable mentions – Jack Ma, Satya Nadella, Evan Spiegel, Randall Stephenson, Jony Ive, Neville Ray, Tom Wheeler, and Glenn Lurie.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in Feb 2017.

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

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