LTE – Asia – Singapore September 14, 2012

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Over the weekend am heading over to Singapore for LTE – Asia where i am giving a keynote, chairing the Signaling day event, chairing a couple of tracks, and moderating a couple of panels – all in a couple of days. It will be fun and am looking forward to engaging with my colleagues across the pacific.

As you can see below it is a fun agenda and am looking forward to it.

08.50 Chairman’s Welcome
Chetan Sharma, Founder & President, Chetan Sharma Consulting, USA

09.00 APAC Signaling Market Overview
o How are vendors addressing the Diameter Signaling need?
o How are they positioning themselves and differentiating themselves?
o What are the demands for signaling solutions and how are operators addressing this need?
Chetan Sharma, Founder & President, Chetan Sharma Consulting, USA

11.45 Panel Discussion: When is the right time and what is the right way to deploy Diameter signaling solutions?
o Is it right to roll out a signaling product at the start of a commercial deployment of an LTE network?
o How much signaling traffic can be accommodated before the investment in a solution is essential?
o Is it necessary to have a standalone solution, independent of other network equipment?
o What is the difference between deployment of Diameter and legacy signaling solutions?
Jason Emery, Director Product Management, Tekelec
Sadayuki Abeta, Director, Radio Access Network Department, NTT Docomo, Japan
Peter Nas, Senior Solution Architect, F5 Traffix

Sept 18th

Track 3 ‐ Service Provision & 3rd Party Collaboration
Chaired By: Chetan Sharma, Founder & President, Chetan Sharma Consulting, USA
12.10 Empowering Broadband Business Innovation – is your OSS/BSS holding back your business growth and stifling innovation?
‐ Enable customer experience management
‐ Enable broadband service innovation and monetization
‐ Enable business efficiency and agility
Tom Darell, Regional Head of OSS‐BSS, South East Asia & Oceania, Ericsson

12.30 Operator partnerships with internet players / OTT
‐ Revenue sharing models and options
‐ Who really ‘owns’ the customer in these scenarios?
‐ Improving the end‐user experience through operators / OTT partnerships

Ian Chin, COO, BesTV, China
12.50 Efficient collaboration and revenue sharing
models between OTT Content Providers and Operators
‐ Partnering with OTT players to monetize traffic and improve the user experience
‐ Challenges to operators looking to provide independent end‐to‐end services
‐ Revenue sharing models and market differentiation strategies
Jay Klein, CTO, Allot Communication
13.10 LGU+’s LTE go‐to‐market strategy
‐ Raising the ARPU and gaining more than 100% share in net‐additional subscribers
‐ Changing the LTE brand preference from 3rd to 1st in the market ‐ Leveraging the world‐first nation‐wide LTE coverage & only HD mobile TV service in Korea
‐ Drastic data plan & promotional offer

Hojoon Lee, General Manager, LG U+, South Korea

14.30 Panel Discussion: Monetisation of apps & OTT
‐ How can operators monetize the rapidly expanding application industry?
‐ Which OTT services will be the biggest revenue (and traffic) drivers?
‐ Examining the advertising opportunity – target marketing to drive revenues
Moderator: Zoran Vasiljev, Managing Partner, Peppers & Rogers Group, Singapore
Chaminda Senewiratne, Head of Data and Broadband Services, Vodafone, Fiji
Michel Guiragossian, Senior Marketing Manager, Subscription Payment, Gemalto
Jason Emery, Director Product Management, Tekelec
Bala Venkat, Sales Director (South East Asia),

The Now Factory
15.00 Service differentiation
‐ Improving end user QoS with a fresh outlook to entertainment and gaming services
‐ Which services over LTE will improve the user experience and reduce churn?
‐ How to increase revenues off the back of service differentiation
‐ Is it possible to charge content providers / OTTs rather than the end user?
Yijing Brentano, Vice President, International
Markets, Sprint
15.20 Applications / social media management ‐ Handling everything being ‘applified’
‐ Huge consumers of signaling & data traffic
‐ Impacts on network quality
Guillaume Le Mener, Director, Globel Product Marketing, Tektronix Communications
15.40 Networking Refreshment Break
16.40 Panel Discussion: Video provision over mobile networks in APAC – driving data usage while increasing returns
‐ Each user on average uses 5x more video data over LTE networks
‐ Content providers – their role in network development
‐ Optimising the mobile video experience
‐ Dumb pipe or content owner? Analysing the various business model options
Debashis Panigrahi, Chief Software
Engineer, R&D, Allot Communication
Hojoon Lee, General Manager, LG U+, South Korea
David Williams PhD, Partner and Lead Digital
Strategist, AsiaDigitalMojo, Hong Kong

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.

Mobile App – E911 on Steroids September 12, 2012

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As we all know mobile apps have changed how we do common things with the mobile phones. One of the key features of the device has always been to call 911 in the case of emergencies. But unlike the wired connection, the E911 implementation for mobile can be flaky – call can drop, GPS location is not completely available, one could move after the call is made making it harder for the law enforcement and medical authorities to help the calling party. One of the apps that is changing that has recently emerged is iHelp Plus which is a personal alarm, panic button tool and emergency support all in one -

How is this different than calling 911? (If you call 911, police does not get exact location by default as it based on the cell tower location, it can take some time to get you help, you have to explain your emergency, your location etc. In an emergency, every second counts. You may not have enough time to call 911, wait to be connected with a dispatch operator, and then provide all the necessary information for the appropriate authorities to respond. If that notification process is averted or interrupted, the opportunity to prevent or minimize the crisis is likely lost. If the crisis moves away from the original location, it may be impossible to locate you when emergency responders are dispatched. While the purpose of 911 is to report an emergency once it’s already in progress, iHelp+ can help you avoid an emergency altogether by alerting our team before something bad happens. In the monitored version, there is a real 24×7 alarm monitoring company like the one you use in your homes. You get a live agent to get you help immediately.

To me this takes E911 to a whole new level. Very useful for parents who can give out the app to their kids and to the elderly and college students who can use the tool to better protect themselves.

Partner Event: GigaOM’s Mobilize September 11, 2012

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Mobilize
September 20 & 21, 2012

UCSF Mission Bay Conference Center, San Francisco

Friends of Chetan Sharma Consulting register here to save 20%.

GigaOM’s Mobilize conference will explore the technical and business opportunities spurred by the proliferation of connected devices, apps and the way it shapes the way we work, play and live. At Mobilize you’ll learn how people and enterprises need to think as we enter a mobile-first world.

Key topics include:

• Future mobile networks: See how the mobile network is evolving to become more intelligent and meet the capacity demand.

• Apponomics: Understand acquisition patterns, in-app user behavior, monetization trends and where new revenue opportunities lie.

• Devices: What’s the future of the smartphone and tablet? How will we interact with our devices?

• Startups: We’ll introduce a whole new crop of startups in the mobile space.

Featured key players in the mobile space include:

• Stephen Bye, CTO, Sprint

• Neville Ray, CTO, T-Mobile

• Stephen Rayment, CTO, Ericsson Wi-Fi Products, Ericsson

• Jack Buser, Senior Director, PlayStation Digital Platforms, Sony Computer Entertainment America

• Chris Jaffe, Director of Product Innovation, Netflix

• Adam Medros, VP, Global Product, TripAdvisor

• Dave Morin, CEO, Path

• Shiva Rajaraman, Director of Product Management, YouTube

• Mike Krieger, Co-Founder, Instagram

Check out our complete schedule and speaker list, then register here to save 20% or use code MFF at checkout.

Mobile Future Forward – Are You Ready? September 5, 2012

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My fellow mobilists,

Did you know we just crossed the 10 billion connected devices mark (devices that can connect to the Internet directly). Do you know how much time do SMB workers save using mobile solutions? Do you know when will mCommerce > eCommerce? Do you know what comes after LTE and how are operators planning their networks to deal with the data and signaling traffic growth? Is there life beyond iOS and Android? Do you know when will tablet revenue exceed notebook revenue? How are multiple screens in the household changing consumer behavior? Do you know how are we going to get to the 50 Billion connections by 2020? Do you know what will be the key technology and business inflexion points this mobile decade? Do you know how to turn data science into big data profits? Do you know who will dominate the 4^th curve of mobile? How are developers going to make money? What’s the future of computing?

On Sept 10^th, at Mobile Future Forward, we will be answering these and many more tough and thought-provoking questions in front of our industry when the mobile industry luminaries gather to share their insights and perspectives of the days ahead. Mobile Future Forward fireside chats and sessions are carefully crafted to give you diverse perspectives. It has been an exciting journey putting together the program and we are looking forward to seeing many of you there on Monday. We are confident that the discussion and the speakers will inspire us with new ideas and inform with actionable insights.

http://www.mobilefutureforward.com

My thanks for our excellent partners who have helped put together a wonderful program: Intel, Amdocs, Compuware, Ericsson, Juniper, SAP, Synchronoss, Tekelec

Full Agenda at http://mobilefutureforward.com/agenda.html

I am really looking forward to seeing many of you on Monday.

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

http://chetansharma.com/USmarketupdateQ22012.htm

Summary

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.

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

The Economist: Joyn Them or Join Them August 12, 2012

Posted by chetan in : US Wireless Market , 1 comment so far

I talked to The Economist about the OTT landscape. Our 4th Wave paper is also referenced in this piece. On newsstands now.

Over-the-top phone services

Joyn them or join them

Mobile operators are trying both to repel and to imitate invaders

Aug 11th 2012 | LONDON AND SEOUL | from the print edition

THE rise of the smartphone has been a mixed blessing for operators of mobile networks. People have been pleasingly eager to buy smartphones and to clock up data charges by playing games, watching videos and dawdling on social networks, as well as to make calls and send text messages. Yet smartphones have also opened the door to disruptive newcomers. Suppliers of “over the top” (OTT, or “value added”) services have been pinching the network operators’ customers by offering messaging and voice-over-internet-protocol (VOIP) calls via smartphone apps.

OTT services can take many forms, but voice and message apps have been the operators’ biggest headache. Rather than pay for an SMS message or a phone call, people may use Skype (bought by Microsoft last year), WhatsApp (brainchild of two alumni of Yahoo!), Rebtel (a Swedish start-up), Viber, Voxer or some other upstart to send messages and videos or make VOIP calls for nothing. They may still incur data charges but with Wi-Fi access may avoid even those. Ovum, a consultancy, has estimated that OTT messaging cost operators $13.9 billion, or 9% of message revenue, last year.

For operators that do not react quickly, worse may follow. In a recent paper, “Operator’s Dilemma”, Chetan Sharma, a consultant, identifies four “waves” of revenue for the mobile industry. The first, voice, is declining in most rich countries; in many markets the second, messaging, is waning too; the third, access to data, may peak in three or four years.

The fourth wave comprises a huge range of OTT services. Mr Sharma points to dozens, from health-care apps to billing services. Operators, he says, will have to strive to provide these—competing not only with each other and with start-ups but also with the giants of the internet. Those that cannot will be reduced to mere utilities, with much thinner margins.

The immediate worry, though, is the erosion of revenue from voice and (especially) messaging. Although the penetration of smartphones makes operators more vulnerable, says Stephen Sale of Analysys Mason, a research firm, prices are also important: firms that rely on costly calls and texts beyond the amounts bundled into users’ contracts are more at risk.

In Europe Dutch, Spanish and Swiss operators are most vulnerable. A year ago KPN of the Netherlands was pushed into a profit warning. Operators have also been weighed down by the continent’s economic ills. In the second quarter of 2012, KPN’s revenues from Dutch consumer-mobile services were 9.4% lower than a year before. Flat revenue and falling profits in the first half of 2012 caused Spain’s Telefónica to cancel its dividend.

Operators can respond in four ways. First, they can block the interlopers, if regulators let them. Last month South Korea’s telecoms watchdog said that the country’s three network operators could restrict access to mobile VOIP. About half of South Koreans have smartphones and almost all of those use KakaoTalk, a messaging app that has wrecked the operators’ SMS businesses. When KakaoTalk introduced a voice service in June, the incumbents feared the worst. However, the regulator’s decision is unpopular and may not last long, especially in an election year.

Second, they can adjust their pricing to make OTT services less attractive, either by charging more for rival services that piggyback on their networks or by making their own cheaper. In April Yoigo, a Spanish operator controlled by Sweden’s TeliaSonera, introduced charges for mobile VOIP (although it is still free in several packages). TeliaSonera has similar plans for Sweden.

KPN has introduced unlimited texts for Hi, a brand aimed at young people, which it hopes will help to stop the rot. AT&T and Verizon Wireless, America’s two biggest operators, have lately introduced new pricing plans partly aimed at seeing off OTT voice and message raiders—though both have been less troubled by them than their European and Asian counterparts.

Third, the GSMA (the mobile operators’ industry body) is promoting a collective response, formally titled Rich Communication Suite-enhanced (RCS-e) but marketed more snappily as “joyn”. At first joyn will offer messaging, “rich” calls allowing simultaneous sending of pictures and video, and file-sharing. Eventually, hopes the GSMA, it will be a base for other services. Joyn’s selling point is that it will be built into phones and thus available automatically across networks. So there will be no need to install an app and no need to check that your friends have too. Joyn’s slogan is: “It’s just there, it just works.”

It isn’t there yet. Joyn is so far available only in Spain, although it is due to be launched in Germany in October and South Korean operators and others are expected to start RCS-e services soon. It will spread gradually, as people replace their phones with joyned-up devices, which should be on sale before long. All the leading handset-makers have agreed to embed joyn—with a big exception: Apple, which happens to be an OTT provider too.

Meanwhile, the clock is ticking. Operators’ fourth option is to provide OTT services themselves. Telefónica is the keenest—although, hedging its bets, it is also backing joyn. In May Telefónica Digital, a subsidiary, begat TU Me, a message, VOIP and photo-sharing app that has 600,000 users so far. Its biggest market is Spain, but its second and third are India and America, where Telefónica is not present. Telefónica seems wise to the operators’ dilemma. It may cannibalise its core business but at least it will keep its customers. And it may snaffle some from other operators, too.

Mobile Future Forward Update August 1, 2012

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Greetings,

Hope you have been bitten by the Olympics bug as I have. I can bet that mobile will be setting all kinds of new world records this summer.

As is the tradition, we released our annual Mobile Future Forward Research paper earlier this month – Operator’s Dilemma (And Opportunity): The Fourth Wave. The research and the paper look into the mobile industry growth and revenue curves and discuss the evolution of our industry. We have gotten tremendous response from around the globe. WSJ did a Q&A with me on how startups can benefit from the mobile fourth wave. (Seattle Times also did a piece). I have been traveling in North America and Europe talking to executives about the impact of the fourth curve on their businesses and how to best prepare for the next 10 years. Which brings us back to our upcoming summit – Mobile Future Forward on Sept 10^th in Seattle at the beautiful Newcastle Golf Club.

We are delighted to be partnering with some of the leading players in the mobile ecosystem: Intel, Amdocs, Compuware, Ericsson, Juniper, Synchronoss, Tekelec.

We are announcing additional confirmed speakers since our last update and the panels are shaping up nicely. As you know, the focus is always on in-depth discussion, insights, and the future.

The Future of Mobile Devices

Mobile devices are being introduced into the marketplace at breathtaking pace. Consumers are starting to own more than one connected device with a strong desire to own more. How are consumer’s expectations evolving in the age of n-Screens? How do you go about innovating faster than ever before? In a marketplace where iOS and Android dominate, is there a room for other platforms? What will it take to build and keep the ecosystems together? Can an OEM succeed without having a services business? How would a consumer buy a device in 2020? Senior executives from two of the leading device manufacturers will explore how the device world is likely to evolve this decade.

Kevin Packingham, Chief Product Officer, Samsung

Mike Woodward, President, HTC

LTE is here and now. What’s Next?

US has regained its leadership in the mobile ecosystem with each of the top 4 mobile operators launching LTE networks. By the end of 2013, there will be sizable network deployment from all the major players. So, what comes next? How will the networks evolve beyond the current LTE deployments. We are looking at a 1000x increase in data consumption in the next 10 years. How will the network, infrastructure, and the OSS/BSS components evolve over time to meet the demand of the consumers with voracious data appetite. The panel of experts will delve into how they are thinking about the network evolution and what will keep them competitive in the market place.

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

Health, Retail, Energy, Services, Government – industries are getting disrupted and changed by broadband mobility and the cloud. From SMB to large enterprises, mobile affords the opportunity to re-architect and design for a better tomorrow. Where are the opportunities? What are the key enablers? Where is the ROI? What are the challenges for the CIOs? How do we secure the enterprises in the BYOD era? The industry practitioners will expound on what works and what doesn’t. They will help us separate reality from hype and discuss the best practices across various industry verticals.

Gus Hunt, Chief Technology Officer, CIA

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

Dave Whalen, VP/GM – Software Services, Intel

Marianne Marck, VP – Software Engineering, Starbucks

Ed Cantwell, SVP, West Wireless Health Institute

Todd Simpson, Chief Innovation Officer, Mozilla joins The Fight for developers – Apps, OTT, APIs, and Dollars panel while Jorge Espinel, SVP – Digital Strategy, News Corp joins the nScreen Era – Engagement and Commerce panel.

… and much more

We are expecting a full house so grab your seats today. SuperSaver expires Friday – Aug 3^rd.

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

· Wim Sweldens, President, Alcatel-Lucent Wireless

· Kevin Packingham, Chief Product Officer, Samsung

· Mike Woodward, President - Americas, HTC

· Stephen Bye, Chief Technology Officer, 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

· Dan Deeney, Partner, New Venture Partners

· Houck Reed, VP – Broadband Solutions, Tekelec

· Gus Hunt, Chief Technology Officer, CIA

· Mark Hillman, SVP, Product Management, Compuware

· Todd Simpson, Chief Innovation Officer, Mozilla

· Dave Whalen, VP/GM, Intel

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

.. 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

· Jorge Espinel, EVP – Digital Strategy, News Corp

· Marianne Marck, VP – Engineering, Starbucks

· Tim Chang, Partner, Mayfield

· Erik Ekudden, Head of Technology Strategies, Ericsson

· Carlos Domingo, President and CEO, Telefonica R&D

· Frank Meehan, Executive, Horizons Ventures

· Oke Okaro, Global Head of Mobile, Bloomberg

· Mark Anderson, CEO, SNS

· Michael Bayle, SVP and GM, ESPN Mobile

· 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 Reporter, GigaOM

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. SuperSaver will expire Aug 3rd. The last two summits 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

Seattle Times: Wireless Spending July 24, 2012

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Following our 4th Wave paper, Brier Dudley and I talked at length about the US consumer and how they spend. Article below

Wireless bills biting into consumer spending?

Posted by Brier Dudley

Here’s my theory on the ominous decline in consumer spending, the widening crack in the economy that suggests leaner times ahead.

When the Commerce Department reported the spending slowdown last week, unemployment and stagnant wages received the blame.

But I think there’s another reason Americans are cutting back: They’re trying to pay their enormous bills for wireless phone service.

Consumers may be spending less overall, but they’re still trading up to smartphones with more expensive service plans. Those who already own smartphones are adding iPads and other gadgets that increase their monthly bills.

These gadget sales aren’t turning the economy around, but they’re doing wonders for the wireless industry.

A few days after the consumer-spending news, Verizon Wireless said half of its customers are now using smartphones. It also surprised analysts by reporting that it’s now making $56.13 per month per customer, up about 4 percent from last year.

AT&T may bring even more surprises Tuesday when it reports earnings.

Broadly, global wireless revenues should reach $1.5 trillion this year, tripling over the past decade, according to Chetan Sharma, an Issaquah-based industry analyst.

"Astronomical" sales of data — largely since the iPhone’s debut in 2007 — have more than offset declines in voice and message services, he noted in a report last week.

AT&T — the largest beneficiary of the iPhone effect — saw data sales grow from $689 million in 2004 to $22 billion in 2011, he noted.

To maintain profit margins and keep a handle on surging data usage, the leading carriers have moved from unlimited data plans to tiered plans.

Now, to encourage the use of multiple devices, AT&T andVerizon are rolling out shared-data plans. This new billing approach may bring the average monthly revenue per smartphone user to $90 or more.

The cost per gigabyte may go down for some, but the carriers will do fine. That’s because overall usage continues to grow as people use faster, higher-resolution devices to access more video and other content via wireless networks.

Sharma expects carriers will see strong growth in data-access sales for several years. He believes this will peak in three or four years, after which the industry will look to services and applications for its next wave of growth.

So will industry sales triple again over the next decade?

"I wouldn’t be surprised," Sharma said. "There’s a tremendous amount of growth left in the developing markets."

Where this money will come from is the big question.

Households typically spend around $1,000 a year on technology, including their phone, cable and Internet bills. In general, tech has taken about 4 percent of disposable income over the last decade, Sharma said.

As people spend more on wireless, they reallocate and cut back on things like wired phone service, he explained. Consumers are now spending about 43 percent of their tech budgets on wireless and he expects that to reach 50 percent early next year.

"The spend on cable and Internet is growing but slowing, and the majority of the growth is coming from the spend on cellphones — that is, on both voice, as well as data," Sharma said.

This has to be consuming a larger share of Americans’ disposable income. Consider the new Verizon and AT&T plans. For smartphones, they charge a minimum of $90 to $95 per month, with 1 gigabyte of data access. That’s close to $1,200 per year.

Yet if wireless costs are affecting overall consumer spending, this isn’t yet apparent in national spending reports, according to economic consultant Joel Naroff in Holland, Pa.

Naroff said spending on services isn’t rising much. In fact services — which includes real estate and health care, and accounts for about 65 percent of spending — is seeing weak increases.

"More than likely it’s putting pressure on people’s budgets and they’ve cut back in other places," he said.

New devices and online services will also encourage people to spend even more on wireless data services in the next few years.

Apple’s "retina display" technology started a race toward devices with higher density displays, which consume more data. Just around the corner is ultrahigh definition video with 4,000 lines of resolution.

The push toward online "cloud" services also will increase wireless data usage.

As people embrace online services that store and stream content, they’ll depend even more on carriers to provide constant, fast service. And it’s going to cost them.

I’ve been thinking about this while testing new Android phones that come preloaded with Dropbox, a service that automatically uploads photos and videos to an online storage locker.

It also struck me when testing Microsoft’s upcoming version of Office. By default, it stores copies of all files online in the SkyDrive storage service, though Microsoft has also built it in a way that minimizes the amount of data that’s transferred.

A bigger concern is the potential cost of streaming video services like Netflix, which uses up to 2.3 gigabytes per hour to stream a movie in high-definition. That means watching one could cost $60 if you’re streaming it over AT&T and you’ve used up the data allocated by your "Mobile Share" wireless plan.

That would definitely lead to reduced consumer spending in my household.

WSJ: Q&A with Chetan Sharma: Start-Ups Can Grab Bigger Share of $1.5T Mobile Market July 23, 2012

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WSJ’s Lora Kolodny did an interview based on our paper – Operator’s Dilemma (And Opportunity): The Fourth Wave

The mobile-services industry has been generating revenue for 30 years, but the way mobile businesses make money will change dramatically over the next decade, new research suggests, and it won’t be in traditional services like voice, messaging and data plans.

The findings come from Chetan Sharma, chief executive of an eponymous tech consultancy, frequently called to testify as an expert about all matters of mobile business in cases before the U.S. International Trade Commission.

Sharma predicts mobile operators won’t be able to hang on to the lion’s share of revenue in the $1.5 trillion mobile-services market world-wide if they focus on sales of traditional services.

In major markets, Sharma said, “revenue curves have peaked for voice and messaging and are [already] on the decline.” Voice revenue is decreasing in the U.S., Japan and Western Europe, he said. Data revenue should continue to rise for the next three to five years but will then start to decline, he predicts.

Sharma predicts a new wave of service providers stand to win in mobile, a so-called “fourth wave” of mobile businesses that won’t necessarily need mobile operators’ help to rise to the top, the way they did in the early years.

We interviewed Sharma about the impact of mobile market dynamics on start-ups and the funds backing them. Below is an edited excerpt of the conversation.

Q. Who’s going to make money in mobile in coming years?

A. Mobile operators will have to organize themselves and invest in the “fourth wave” in mobile, which creates opportunities for start-ups and the venture community.

Look at the acquisitions, and services some [operators[ are launching: SingTel acquired the mobile advertising company Amobee, Verizon Wireless acquired Hughes Telematics,Telefonica acquired Jajah and is launching TUMe [a chat app that competes with Skype], AT&T has an emerging enterprises organization…

Competitive dynamics will lead to new funding and go-to-market channels for mobile start-ups for several years.

Read rest of the interview here.

New Research Paper: Operator’s Dilemma (And Opportunity): The 4th Wave July 20, 2012

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Operator’s Dilemma (And Opportunity): The 4^th Wave

A Mobile Future Forward Paper

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

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Introduction

In 2012, the global mobile industry revenue will hit $1.5 trillion. This revenue has tripled in the last 10 years. Mobile operator’s revenue reached a new milestone at the end of 2011. The total global mobile operator revenue exceeded $1 trillion for the first time. The operator profits have more than doubled in the last 10 years. The trifecta of fast broadband networks, well-designed mobile computing devices, and the insatiable supply of content, applications, and services has unleashed consumer demand for more like never before. If we look at the history of the mobile industry, the first generation was primarily focused on voice and this era persisted for a good 10-15 years before 2G messaging and very basic data services were introduced. A decade later, data services started to become more interesting as 3G networks enabled faster access speeds and new applications. When Apple released iPhone in 2007, followed by Google’s Android in 2008, the industry was turned on its head. While the implications were apparent at the time, the far-reaching impact of these new devices on how people work and live is still unraveling.

The changing face of the industry also impacted the business models, the revenue streams, and the value chain power structure. For much of the last three decades, voice has dominated the revenue streams for almost all operators. However, in 2013, voice revenues will fall below the 60% threshold globally. The drop in voice revenues has been compensated by the rise of messaging revenues and the data revenues. However, some nations and operators have started to experience declines in messaging revenues. The access revenue stream is still very much a growth story and is rising fast for almost all the operators.

We studied the revenue growth patterns for 65 leading operators in 30 major global markets to understand when the revenue in certain segments rise, stagnate and fall. The underlying data yields some interesting and consistent patterns that are instructive on how things might shape up over the course of the next decade.

The sigmoid or the S-curve growth has been well understood and applied to various disciplines. To understand the various revenue growth curves, we segmented the operator revenues by voice, messaging, and access and correlated them with subscription growth. In a majority of the cases, as the subscriber penetration approaches 70-90% band in a given segment, the Net-Revenue starts to hit its peak, stagnates for a bit and declines. The amount of time the revenue curve stays in the stagnation phase depends on the market competitive dynamics and usage profile of the subscribers in a given country.

The first revenue curve of voice is already in decline for majority of the developed markets like the US, Japan, and Western Europe. The second revenue curve of messaging is on the decline in some nations like the Philippines, Netherlands, Taiwan, Spain, and Italy while approaching saturation in countries such as the UK, France, and the US. Both these curves are on the rise in developing countries, which are still in the subscriber growth phase. The third revenue curve of access is in the growth mode around the world for all nations; however, the margin pressure on this revenue base is the strongest of the three as the operators rush to meet the growing data demand that is doubling every year in most major markets. We are likely to see the growth continue for the next 3-4 years before this curve also starts approaching its peak. At this stage, all three revenue curves will be in decline. This means that the net revenue for some of the operators and for some nations will start to go down, in some cases precipitously. This will happen to operators around the world at different time intervals, unless the fourth revenue curve starts to take shape in the near term to help cushion the decline.

The growth of revenue in this fourth curve will be critical. For some operators, a weak fourth curve will be fatal. They won’t be able to arrest the fall in the overall net revenue and investor pressure will force them to consolidate or learn to live with lower margins or go out of business.

As such, it is important to understand the importance of the fourth curve and formulate strategies that extend the lifetime of the previous three curves such that net revenues and net profitability stay healthy over the course of this decade. The most interesting dynamics of this fourth curve is that other racers are not only the fellow operators but some new well-funded service and application providers. They are using new gear, are not constrained by the same rules, can change gears at will, and are ruthless in their execution. All this renders the traditional telecom organizational structure and the way of life - obsolete.

Based on the strategy chosen, the operators will likely fall into three major buckets: access only, enabler, and digital lifestyle solution providers. The operator might play all three roles depending on the vertical in a given country. However, without playing a significant role in the latter two categories, operator revenues over the long haul will start to resemble those of utilities – billions of dollars in revenue but the margins might shrink to 8-12% from the current 30-40%.

The next 2-5 years will be critical for operators worldwide. The strategies they pursue and the investments they make will define their future existence for the coming decade. Operators who are investing heavily in the 4^th curve have a good shot at seeing the end of the decade but a good many will succumb to the powers of the growth curves, leading to consolidation in almost all markets or they will gradually morph from operators to utility providers. Many will be caught unawares by the shifting sands of revenue and their inability to mutate to compete effectively in the IP world.

Operator’s dilemma – The 4^th wave analyzes the four mobile revenue curves in detail and discusses the strategies needed to increase the net revenue and the investment areas that can lead to new revenue and healthier margins for operators around the world.

Download Paper (2 MB)

Your feedback is always welcome.

Chetan Sharma

We will be discussing a number of issues raised in this paper 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; 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; Hank Skorny, VP/GM, Intel; Houk Reed, VP, Tekelec; Jana Messerschmidt, VP, Twitter; Jeff Smith, CTO, Numerex; 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; Mung Ki Woo, Head of Mobile, Mastercard Worldwide; Neville Ray, Chief Network Officer, T-Mobile; 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; Tim Chang, Partner, Mayfield; 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 Aug 2012. The next Global Wireless Data Market update will be issued in Sept 2012.

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

Businessweek: NFC Stickers Make Smartphones Smarter July 16, 2012

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

Talked to Businessweek about the potential and the future of NFC.

NFC Stickers Make Smartphones Smarter

By Olga Kharif

In the fall, Toronto resident Pearl Chen placed quarter-size stickers on the 30 or so spice containers in her kitchen. Now whenever she taps her Samsung smartphone against a bottle of turmeric, say, the device does a Google (GOOG) search for recipes featuring the spice. “I can scan it and get ideas for what to cook,” says Chen, 31, the founder of Karma Laboratory, a technology startup focused on education. She sees the stickers as a way to squeeze a bit more utility from everyday objects, which usually “just stand there and don’t say very much.”

Chen is an early adopter in the world of programmable tags, pieces of paper or plastic that sell for a few bucks apiece and communicate with gadgets via a short-range radio technology known as near field communication, or NFC. They can be customized to trigger an action on any phone with an NFC chip: Tap the phone against a tag on a business card to automatically download contact information, for instance, or tap a tag on your nightstand to set the morning alarm. “It’s very convenient,” says John Devlin, an analyst at ABI Research.

NFC tags are gaining a following as the number of smartphones able to scan them skyrockets. This year the research firm IHS iSuppli (IHS) expects manufacturers of smart devices will ship nearly 21 million NFC-enabled handsets in the U.S. and 186 million worldwide, up from 93 million last year. According to press reports,Apple (AAPL) is considering adding an NFC chip to the new iPhone expected this fall, which would give the technology a significant boost.

The tags are available from independent websites, and ABI estimates that by the end of this year there will be about 10 million of them in the U.S. as major mobile companies begin marketing them as a must-have feature. Earlier this year, Sony (SNE) began selling $20 SmartTags that can change the volume or launch news or weather apps on the company’s Xperia phone. In the past month, Samsung started selling TecTiles, a $15 package of five NFC tags, in T-Mobile (DTE) and Sprint (S) stores and will soon make them available on Amazon.com (AMZN). Some of the tags come already programmed to do a specific task, while others require users to download an application to customize each tag with one of several dozen possible actions.

Tagstand, which sells NFC tags and develops the software to program and manage them, was founded a year ago and now employs seven staffers. Its revenue tripled over a three-month period to $30,000 in May, the company says, and Tagstand expects to be profitable within six months. “We think the opportunity is massive,” says Chief Executive Officer Kulveer Taggar, a Brit who uses NFC tags to check into the location-based service Foursquare at his boxing gym. Tagstand has sold about 1 million NFC tags in the past year, and in June the company released a mobile app that simplifies the tag-programming process.

Some of NFC’s biggest advocates are event planners, who hand out specialized gear integrating NFC tags that can be scanned at stations set up around a venue. In May a third of the attendees at the Manhattan Cocktail Classic, held at the New York Public Library, used NFC-enabled bracelets that were linked to their e-mail addresses. As partygoers sampled the hundreds of cocktails available, they could tap their bracelet against NFC readers to have recipes sent to them.

On June 7 roughly 1,000 people at the Lobster Roll Rumble in New York City’s Metropolitan Pavilion used NFC bracelets to vote for their favorite crustacean dish. “Everyone thought it was the coolest thing,” says Kai Mathey, director of communications for event organizer Tasting Table, which paid Tagstand about $6,000 to set up the system.

Scanning NFC tags could become commonplace as they make their way into stores and books and onto movie posters. Says wireless-industry analyst Chetan Sharma: “Just like Google has become the starting point of interaction with information on the Web, NFC could become the starting point of interaction with the physical world.”

The bottom line: With nearly 21 million NFC phones shipping in the U.S. this year, early adopters are expected to deploy 10 million programmable tags.

Mobile Future Forward – Early Bird expires tomorrow July 9, 2012

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

Greetings,

Hope all’s well and that you are enjoying summer. Seattle is finally seeing its share of sun this week.

We just finished off a busy June with Mobile Breakfast Series events in Seattle, Atlanta, and London. Great discussions around OTT, Cloud, and Connected Devices with some of the leaders in the space. Check out the event recaps. We have more research coming out on the subject so stay tuned.

One thing is pretty clear – it is a great time to be a consumer. Choices abound. However, the key question in industry shifts is how the revenue will get distributed amongst the players and if any new money is going to come into the ecosystem. That will be the core of the discussion themes at our fall mobile executive summit – Mobile Future Forward on Sept 10^th in Seattle and I am very pleased how the program is shaping up. We will provide regular updates 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, Juniper, Synchronoss, and Tekelec.

We are expecting a full house so grab your seats today. Early bird expires Tuesday – July 10^th.

Confirmed Speakers

· Steve Elfman, President, Sprint

· Glenn Lurie, President, AT&T

· 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, Proctor & Gamble

· Ed Cantwell, SVP, West Wireless Health Institute

· Jana Messerschmidt, VP, Twitter

· Dan Deeney, Partner, New Venture Partners

· Houck Reed, VP – Broadband Solutions, Tekelec

.. 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

· Erik Ekudden, Head of Technology Strategies, Ericsson

· Carlos Domingo, President and CEO, Telefonica R&D

· Kevin Packingham, SVP – Product Innovation, Samsung