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US Wireless Data Market Update - Q2 2008
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http://www.chetansharma.com/usmarketupdateq208.htm
The US wireless data market grew 40% in Q208 compared to Q207 to reach
$8.2B in data revenues. The total for 2008 stands at $15.7B for the
first six months, 38% higher than the total for the same time period in
2007. The news of Alltel acquisition, iPhone 3G, and the flat rate
pricing wars dominated the news. Though the infatuation for iPhone was a
few degrees lower, Apple managed to keep the device front and center of
the news cycles. US again exceeded Japan in mobile data service revenues
for the quarter and the market is on track to reach $34B in data
revenues for 2008.
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The US Wireless data service revenues grew 8.6% Q/Q to $8.2B in
Q208. Compared to Q107, the data service revenues grew 40%.
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Overall ARPU increased by $0.46. Average voice ARPU declined by
$0.05 while average data ARPU grew by $0.50 or 5%.
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Verizon lead in data ARPU with $12.58 (or 24.41% of the revenues)
closely followed by Sprint at $12 (or 21.4354%), AT&T at $11.59 (or
22.91%) and T-Mobile at $8.60 (or 17%).
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The strongest growth in Q208 came from Verizon with 13% increase in
data revenues from Q108. Verizon generated an industry record $2.6B
in data revenues closely followed by AT&T at $2.5B. Both AT&T and
Verizon are on target to exceed $10B in data revenues for the year
for the first time by any operator worldwide besides NTT DoCoMo (the
two US carriers are already close to 50% of the target). AT&T and
Verizon now account for 62% of the market data services revenues.
Sprint reversed its decline in data revenues during last quarter to
increase its data revenues by 3% in Q208. T-Mobile registered a 5%
uptick.
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The average industry % contribution of data to service revenues
exceeded 21% and now stands at 21.41%. A year ago, the %
contribution stood at approximately 17%.
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The number of data subscribers has been on the rise with Verizon
leading the way. At the end of Q208, Verizon had that 49.6M (or 72%)
data subscribers. Verizon, AT&T and T-Mobile subscribers joined to
send over 169 Billion text messages in Q208 translating into almost
a message every 2 hours or so. This compared to users in Philippines
where average routinely surpasses a message every hour.
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In terms of net-adds, Verizon continued to lead with 1.5M net-adds
again edging AT&T by 200K subscribers for the quarter.
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For the first time, T-Mobile USA entered the top 10 rankings of
global mobile operators by data revenues replacing SK Telecom which
suffered decline for the second straight quarter. In fact, SKT got
pushed to the 12th spot by Orange France. The top three US carriers
again maintained their respective rankings amongst the top 10 global
carriers in terms of data revenues. For the quarter, Verizon, AT&T,
and Sprint Nextel stood at #4, 5, and 6 respectively with Verizon
and AT&T closing in on China Mobile (2nd) and KDDI (3rd). AT&T and
Verizon are in the select group of five global operators who are now
generating $2B or more in data revenues/quarter (the other three are
NTT DoCoMo, China Mobile, and KDDI).
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Non-messaging continues to grab 50-60% of the data revenues for the
US carriers.
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The flat-rate pricing movement that was started by Willcom in Japan
which moved to Europe started to enter the US market with industry
wide flat-rate pricing plans that included data. Sprint has been the
most aggressive with its “Simply Everything” plans that include data
services. 30% of its $100 plan is assigned to data revenues (for
accounting purposes).
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Q208 saw the blockbuster acquisition of Alltel by Verizon which is
likely to close by end of the year. The $28B acquisition will
catapult Verizon ahead of AT&T in total number of subscribers by a
big margin (10M or so) and make it a leader in almost all major
categories.
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There continues to be tremendous activity in the area of Mobile
Advertising. AdInfuse, Admob, Amobee, Millennial Media, Nokia,
Rhythm New Media, Yahoo, and others ran compelling campaigns. There
was also meaningful activity on the carrier front with industry wide
initiatives.
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Venture money experienced a decline into the mobile sector. During
the first half of the year, private wireless companies announced
$1.8B in 173 financings, compared to $2.7B in 209 financings for the
same time period last year. (Source: Rutberg)
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Nokia eclipsed 100M unit sale in Q208 for the fifth straight
quarter. It sold over 122M handsets in Q208 (out of the total 297M),
almost as many as the next four combined. Nokia’s global market
share edged past 41%. Samsung at 15%, Motorola with 9.5%, LG with
9.3% and Sony Ericsson with 8% rounded out the top five. For the
year, the industry looks to again eclipse the 1 billion handset mark
for 2008
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3G penetration in the US went past 30% in Q208, with Verizon leading
the pack with over 60% 3G subscriber penetration compared to 25% 3G
subscriber penetration at AT&T. T-Mobile is slowly expanding its 3G
coverage. 3G subs have over $23 in data ARPU. These trends are
expected and the diffusion of mobile broadband will continue to
create new opportunities and revenues for the ecosystem.
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Apple announced a 3G iPhone in June and launched an aggressive
expansion plan to reach 70+ countries. The broadband and appstore
capabilities are quite attractive to consumers and it shows. VPN and
direct access to Exchange will get many more users into the mix and
IT folks less apprehensive. The clearcut business model of 30/70
split is also attractive. Apple is likely to announce in Sept (may
wait for its quarterly results in Oct) that it has reached the 10M
goal for iPhone.
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Feeling the threat from Apple and Google, Nokia bought the remaining
portion of Symbian and announced the plan to open-source the OS,
making things interesting in the wireless ecosystem. It puts
Microsoft on the defensive and will be forced to reduce its
licensing fee per device closer to zero. While Apple basked in the
glow of iPhone 2.0, Google spent time swatting rumors of Android
delay. Giving the changing dynamics in the industry, Google might be
forced to play its gPhone hand earlier than it had anticipated.
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After raising $14.5B from friends and family, Clearwire’s net-adds
dropped in Q208. It needs to get its content and handset strategy in
place in short-order.
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In a sign of convergence battles to come, T-Mobile’s @Home and
Sprint’s Femto cell initiatives started to take hold. Cable
operators are also aggressively seeking triple-play by providing the
wireless component of the service.
Global update
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China and India added approximately 52M subscriptions combined in
Q208 with China marginally edging out India. For the year, both
countries have added almost identical number of subscriptions (53M).
By comparison, US added 7.5M for the same time period.
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NTT DoCoMo continues to dominate the wireless data revenues rankings
with almost $3.4B in data services revenue in Q208. Almost 40% of
its revenue now comes from data services. DoCoMo also crossed 84% in
3G penetration in Q208 and is expected to cross 90% by early 2009.
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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 consistently topping 30%.
More details in our worldwide wireless data market update in
our Global Wireless Data Market Update Sept 2008.
Your feedback is always welcome.
Thanks.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our
clients.
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VERNFOTHERINGHAM and CHETANSHARMA
IEEE Press/John Wiley |
Wireless Broadband Technology:
Conflict and Convergence
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Chetan have done a remarkable job in laying out every aspect of this
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thoughtful analysis.”
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Enterprise
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CHETANSHARMA
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Upcoming
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Mobile Search Experts Group,
Napa Valley |
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10-12 Sept |
CTIA, San Francisco |
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18 Sept |
Mobilize, San Francisco |
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Oct |
Seattle Mobility Conference,
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In addition, Chetan will be doing some
private briefings to carriers, content providers and enterprise
solution providers |
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Upcoming
Research |
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Aug |
Enterprise Mobility (Book) |
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Sept |
Global Wireless Data Market:
Half-yearly Update 2008 |
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Oct |
Wireless Broadband
Technology: Conflict and Convergence (Book) |
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Nov |
Measuring your IP ROI
US Wireless Data Market: Q3
2008 Update |
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Dec |
Mobile Industry 2009
Forecasts |
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Missed an update?
All research notes can be found here. |
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© Chetan Sharma Consulting 2008. All
Rights Reserved. |
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Chetan Sharma Consulting is a
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