Welcome to the third edition of the Mobile Future Forward Book Series. It is a journey we embark on every year working with our speakers and thought-leaders in the industry to pen some relevant pieces that seek to inform and inspire. This year, we have expanded the book to do some in-depth interviews to complement the terrific pieces from our community. Before we go deeper into the book and the Mobile Future Forward Summit, let’s quickly review how the mobile industry has progressed since the last year’s book.
The global mobile industry has become the most vibrant and the fastest growing industry. In fact, it is the most exciting trillion dollar industry in the world today. In 2012, the mobile industry will exceed $1.5 Trillion in revenues, $350 Billion in data revenues, will almost touch 7 billion in subscriptions, exceed 1.6 Billion in device sales, over 1 billion broadband subscriptions, over 500 Million smartphones sold, trillions and trillions of human transactions, and the list goes on. It feels like mobile is breaking a new world record every day. The mobile ecosystem has become much more dynamic, lightning fast paced, and breathtakingly unpredictable.
Earlier this year, China crossed the mind-numbing 1 billion subscription mark. India will cross it next year. As M2M and Connected Devices pick up pace, folks in the industry are expecting up to 50 Billion connections within a decade. That’s astounding yet inevitable.
We as an industry have made tremendous progress on many fronts. Operators are briskly upgrading to LTE to provide more bandwidth. Device manufacturers are literally coming out with new devices every week. There is a healthy competition between iOS and Android with Windows eager to get back in the game. Both the smartphones and the tablets are impacting not only the consumers but the enterprises as well.
Consumerization of ideas is in full display. Enterprises and industries who are hungry to innovate and serve their customers better are embracing technology that enables them to focus on the more important things and let technology take care of the mundane. Every industry that mobile touches is getting transformed – retail, energy, health, field force, insurance, entertainment, food, hospitality, travel, and so on and so forth.
To many of us, the progress while scintillating is not all that surprising. After all, Mark Weiser in his seminal essay The Computer for the 21st Century said, “The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it.” Mobile is such a technology. As mobile weaves itself into every industry, into every facet of our lives – from ordinary to the important, there will soon come a time that we won’t consciously be aware of the pervasive connectivity no matter what we are doing. It won’t matter if we are in bustling London or in the quiet valleys of Thimpu.
We had the good fortune to work with UN and ITU in Bhutan recently. In a small nation of only 730 thousand people, mobile penetration is already at 70% which is much higher than fixed telephone (4%) and Internet (22%). The 205 remote villages in 20 districts rely on mobile devices to stay in touch for the basic services such as health, emergency, agriculture, and finance. Even with limited resources, the government is very ambitious and is embarking on citizen projects with mobility at the core. We see this phenomenon being repeated worldwide. Beyond just entertainment and communication, mobility is impacting all layers of the Maslow’s hierarchy.
The networked economy is a great leveler. A developer in Bangladesh has the same access to the market as does an ex-Googler in Silicon Valley. While nuances might vary, an idea can find a solid ground to germinate and grow beyond its initial expectations. The true meritocracy is enabled by such an environment and leads humans to focus on constructive activities like building companies and communities.
For the last 30 years computing progressed from mainframes to desktop computing. The new world of computing is being primarily driven by mobility. The small and medium sized businesses are seeing enormous gains in productivity and cost savings as a result of embracing cloud-driven applications. Millions of students who had never worked on a desktop computer are likely to start working on tablets that will transform their world and their communities.
As we embrace the Gigabyte era, a number of new challenges are ahead of our industry. Each challenge is an opportunity. While the growth in data consumption has strained networks worldwide, as a result of the data tsunami, there are two types of opportunities that are being created, one that takes advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies which help manage the traffic data that will continue to grow exponentially.
To be able to stay ahead of the demand, significant planning needs to go into dealing with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won’t be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach. This brings the hockey stick curves of data cost more in line with the revenues, thus preserving the margins long-term.
The competitive nature of the market is also changing and as such its revenue streams. For much of the last three decades, voice has dominated the revenue streams for almost all operators. However, in 2013, globally, voice revenues will fall below the 60% threshold. 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. But at some point in the future (in some cases near future), access revenue will start to show signs of slowdown as well. As such, it is important to understand the significance 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.