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US Wireless Data
Market Update - Q2 & 1H 2007 |
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http://www.chetansharma.com/usmarketupdateq207.htm
US wireless data market continued its impressive growth
reaching $5.85B in service revenues for the quarter. Data and Voice ARPU
increased 8% and 1% Quarter/Quarter (Q/Q) respectively. Given that
majority of the data revenues now comes from non-messaging applications
and services and the subscriber penetration for such services is just
getting into the inflection zone, we remain bullish on the US wireless
data market. The introduction of iPhone in Q2 marked a new era of UX-driven
devices and applications.
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US Wireless data market grew 7% Q/Q to $5.85B in Q207. For the first
half of 2007, the US wireless data service revenues stood at $11.35B
jumping 81.6% from 1H06.
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Overall ARPU increased by $1.05 Q/Q to $53.62 due to strong data
performance and stable voice ARPU. The untold story has been the
surprising resiliency of Voice ARPU over the past 3 quarters. Data
ARPU grew 8% from Q107 and 19% from Q406 to $9.04. As estimated in
our Q107 update, Verizon overtook Sprint in data ARPU with a 13%
increase from its Q107 numbers to $9.84 while Sprint’s data ARPU
increased only by 5% to $9.75. AT&T’s data ARPU increased by 11% to
$8.77 and T-Mobile’s 4% jump accounted for its $7.8 data ARPU for
Q207.
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The strongest growth continues to come from Verizon, accounting for
almost 31% of industry’s data revenue in Q207. Its data service
revenues jumped by 13% Q/Q to $1.8B. Verizon was followed by AT&T at
$1.65B, Sprint at $1.2B, and T-Mobile at $613M.
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The % contribution of data to service revenues jumped from 14.5% to
almost 17% in Q207 and is certainly going to cross 20% by the end of
this year. Considering the market was only at 6% in 2004, it is a
significant improvement in 3 years. Verizon led in % data
contribution to ARPU with 19% followed by AT&T at 17.3%, Sprint at
16.3%, and T-Mobile at 15%.
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As we have been discussing in our quarterly updates, the net-adds
continue to decline for the industry. The current net-adds rate for
the year is 1.65M subs/month down from 1.92M subs/month in 2006 and
2M subs/month in 2005.
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The US wireless industry crossed 80% subscription penetration in
Q207. Though the growth rate has expectedly slowed down, there is
still plenty of room for growth over the next five years.
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The top three US carriers again maintained their respective rankings
amongst the top 10 global carriers in terms of data revenues. For
the year, Verizon with $3.4B, AT&T with $3.2B, and Sprint with $2.4B
in service data revenues stood at #4, 5, and 6 respectively with
Verizon closing in on KDDI for the number 3 spot.
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AT&T stemmed the tide of losing customers to Verizon with the
strongest performance in terms of net-adds in Q2 adding almost 1.5M
new subscriptions. While the distance between the two giants is
getting closer, AT&T is likely to stay perched at the top with most
subs in the US market for the remainder of 2007. iPhone mania and 3G
penetration helped in gaining new subs.
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Q2 marked the demise of another high profile MVNO – Amp’D. Boasting
$100 ARPU in Q1, the company couldn’t control the burn rate and cost
of customer acquisition resulting in a spectacular crash.
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Q2 also saw the folding of the DVB-H camp in the US with the mobile
broadcast market firmly in the hands of MediaFLO.
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Non-messaging data revenues continue to be in the 50-60% range for
the US carriers. T-Mobile recorded $644M or 53% of its data revenues
from non-messaging applications and services during 1H07.
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Verizon recorded 10B TXT messages in June setting a record of
messaging volume at a single carrier. For the quarter 28.3B TXT
messages were sent on its network. AT&T recorded 18B TXT messages
for the quarter.
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There was tremendous activity in the area of Mobile Advertising with
the acquisitions of Third Screen Media, Telephia, and ScreenTonic.
We just finished a comprehensive book on the subject. More details
in the coming months.
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In 1H07, 203 private companies announced $2.3B in venture financing
down from $3.6B in 2H06 and $2.9B in 1H06. Source: Rutberg. Mobile
TV/Video, Mobile Personalization, Mobile Search and Advertising,
Semiconductor, Carrier infrastructure, Device design and development
are hot areas. M&A activity also picked up quite significantly.
Intel Capital and Sequoia Capital opened their purses the most. We
also saw 7 major IPOs with Aruba performing the best and Glu
performing the worst. Other notables were Clearwire, Airvana, and
MetroPCS.
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Nokia eclipsed 100M unit sale in Q207 for the second time in history
(first being in Q406). Its 1H07 tally stood at 191.9M followed by
Motorola at 80.9M and Samsung at 72.2M. Nokia’s share of the market
went up to 37.9%. Motorola lost significant ground dropping 3.2% Q/Q
to 12.4%. Samsung gained as a result and ascending again to the
number 2 spot with a 14.1% marketshare. Sony Ericsson with 9.4% and
LG with 7.2% rounded up the top 5. Samsung benefited from its Ultra
edition, Sony Ericsson from its Walkman/Cybershot, and LG from
high-end Chocolate/Shine models.
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Despite the sale of over 426M handsets by the top 5 manufacturers,
the talk of the industry for 1H07 was the imminent launch of the
iPhone. It captivated and mesmerized the media like no other device
in history. Despite some limitations, device was an instant hit and
a game changer for the industry.
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86-88% of the handsets sold in the US are now replacement devices.
Globally this figure stands at just over 50%.
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GSM Association announced the 200 millionth 3G mobile subscription.
As estimated in our widely referenced 2005 paper on 3G, 2007 is
proving to be the inflection year for many western nations including
the US where the penetration crossed 15% in Q2.
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WiMAX gained headlines with some significant announcements in Q2.
Clearwire-Sprint partnership on network expansion slightly reduces
the risk for both players. Clearwire increased its subscriber base
to 299K with ARPU at $38. Sprint-Google announcement on applications
and open APIs was quite telling. FCC’s 700 MHz auction drama kept
the lobbyists gainfully employed though its impact on the industry
will be marginal.
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T-Mobile has had good success with its myFaves launch. Since Oct,
they have added 2.5M users which add $4/month on average to the
plan. If only carriers could extend this interoperability to
content.
Global update
(more details in our worldwide wireless data market update coming out
soon)
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The worldwide markets continue to grow at an explosive pace reaching
3B subscriptions by Q207 up 13% from 2006 levels. Significant growth
is coming from India and China with both countries registering close
to 7M net adds on average in Q2. India recorded 7.34M net adds (its
highest) in June. In Q3, China will cross the amazing 500M
subscriptions mark which is more than the next two big markets (US
and India) combined. India will cross the 200M mark in Q3 and will
cross US in 2008. US will cross 250M by Q4. Overall, the world
market is almost at 50% penetration.
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NTT DoCoMo continues to dominate the wireless data revenues rankings
with over $5.5B in service data revenues however Q/Q growth has
dropped to single digits. DoCoMo crossed 70% in 3G penetration and
is expected to cross 80% within 9 months.
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Most of the major carriers around the world have double digit
percentage contribution to their overall ARPU from data services.
Operators like KDDI, DoCoMo, and O2 UK are topping 30%.
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Global Wireless Data Market Update,
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© Chetan Sharma Consulting 2007. All
Rights Reserved. |
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Chetan Sharma Consulting is a
consulting and advisory firm helping companies in the mobile and
voice communications sector. Our expertise is in developing
innovation-driven product, marketing, and IP strategy. We've
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