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US Wireless Data
Market Update - Q3 2007 |
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http://www.chetansharma.com/usmarketupdateq307.htm
US
wireless data market continued its growth reaching $6.4B in service
revenues for the third quarter. With the holiday quarter to go, the
aggregate data revenues for the year are already past the 2006 data
revenue mark. Whether it was the first full quarter of iPhone sales, or
the debate on the upcoming 700MHz spectrum auction, or the rumors
swirling around the gPhone, or the continued M&A activity - the US
wireless data market remained vibrant in Q3. 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, US remains one of the most attractive wireless data
markets.
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US Wireless
data service revenues grew 9.4% Q/Q to $6.4B in Q307. For the first
nine months of 2007, the US wireless data service revenues stood at
$17.7B jumping 59% from the same time period in 2006.
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Overall ARPU
decreased slightly by $0.12 Q/Q to $53.50. The overall voice ARPU
declined by $0.35 to $43.93 while data ARPU continued its steady
incline, increasing by $0.53 to $9.57.
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Verizon
continues to lead in both data ARPU as well as Data as a % of ARPU
with $10.6 and 20.30% numbers respectively, in the process becoming
the first US carrier to get past the $10 in data ARPU and 20% in
data contribution. Sprint also touched $10 in data ARPU but is now
last amongst the top four carriers in data % which stood at 16.95%.
AT&T’s numbers were $9.35 and 18.4% respectively while T-Mobile’s
performance also improved with $8.32 in data ARPU contributing
17.88%
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The strongest
growth continues to come from Verizon, accounting for almost 31% of
industry’s data revenue in Q307. Its data service revenues jumped by
11% Q/Q to $2B (again becoming the first US carrier to get past the
$2B milestone). Verizon was followed by AT&T at $1.8B, Sprint at
$1.2B, and T-Mobile at $676M.
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The %
contribution of data to service revenues jumped to almost 18% in
Q307 and is likely to touch 20% next quarter.
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Last week, US
crossed the 250 Million subscription mark. The net-adds stabilized
for the quarter even though Sprint lost 337K net subs. While AT&T is
the only carrier to cross the 2M mark for net-adds/quarter this
year, Verizon is ahead of AT&T in overall net-adds for the year by
approximately 820K subs. iPhone couldn’t have come at a better time
for AT&T which helped in stemming the tide of losing the market
share to Verizon.
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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. 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 $5.4B, AT&T with $4.95B, and Sprint with $3.7B in
service data revenues stood at #4, 5, and 6 respectively with
Verizon closing in on KDDI for the number 3 spot. Verizon became one
of only four operators in the world who are now generating $2B or
more in data revenues/quarter (the other three are NTT DoCoMo, China
Mobile, and KDDI). The carrier indicated that enterprise services
such as data card and mobile email are generating in excess of
$500M/quarter now.
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Non-messaging
data revenues continue to be in the 50-60% (of the data revenues)
range for the US carriers.
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There was
tremendous activity in the area of Mobile Advertising. Google is
also laying out its tactical roadmap in hopes to dominate the space
and its every move in the mobile space makes its fellow brethren in
Redmond scratch their heads. Meanwhile, Yahoo is busy stitching
together carrier deals around the world. We just finished a
comprehensive book on the subject. More details coming soon.
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Venture money
continued to flow into the mobile sector taking the YTD investments
to over $4B. Source: Rutberg. Mobile TV/Video, Mobile
Personalization, Mobile Search and Advertising, Semiconductor,
Carrier infrastructure, Device design and development are hot areas.
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iPhone became
the quickest smartphone to eclipse the 1M mark in a quarter (by
doing it in its first full quarter). By contrast, RIM took 22
quarters or 5.5 years to crack the 1M/quarter sale mark. Palm is
still searching for the elusive milestone and might not find it in
this lifetime. iPhone also made its entry into Europe and remains in
intense negotiations with operators worldwide.
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Nokia
eclipsed 100M unit sale in Q307 for the second straight quarter. Its
9 month tally stood at 303.6M followed by Motorola at 117.8M and
Samsung at 114.8M. Nokia’s share of the market went up to 39.1%
followed by Samsung at 14.6%, Motorola at 12.8% Sony Ericsson at
8.9% and LG at 7.5%. Apple shipped 1.12M iPhones during the quarter
generating the revenue of $118M.
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Despite the
sale of over 239M handsets by the top 5 manufacturers during Q307,
the industry remained mesmerized by the advent of iPhone.
Uncharacteristically, Apple lowered the price of the phone ahead of
the holiday season.
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After the
launch of iPhone, the talk of gPhone filled the rumoid. While the
possibility of a gPhone launch remains open for 1H08, Google
launched Android to keep things interesting in the industry.
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T-Mobile USA
launched the first device with HotSpot @Home service in Q3.
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There was a
renewed interest in LBS and it generated some huge M&A transactions
in the sub-sector led by Nokia’s acquisition of Navteq.
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In terms of
messaging, T-Mobile keeps their users more engaged than other
carriers. Each T-Mobile subs exchanged on an average 758 messages
last quarter compared to 584 messages by a Verizon sub and followed
by 370 messages by an AT&T subscriber. By comparison, subscribers in
Philippines engage in almost 2000 messages every quarter or pretty
much a message every hour.
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In our 2005
paper on 3G diffusion, we estimated that 2007 will be the inflection
year for 3G in the US market. In Q307, the 3G penetration was just
shy of 20% with Verizon leading the pack with 50% 3G subscriber
penetration. AT&T reported that 3G subs have over $20 in data ARPU
accounting for 30% contribution to the overall ARPU from such subs.
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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Being “Open”
is the new Black. Apple announced SDK for iPhone, Sprint touted XOHM,
700 MHz spectrum auction became a subject of great debate and
posturing, and Google launched Android (in nov). The convergence of
mediums is creating friction, introspection, fear, and opportunities
(FIFO). We clearly live in interesting times.
Global update
(more details in our worldwide wireless data market update coming out in
Q108)
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The RIC in
BRIC: We had a chance to visit and spend some time in Russia, India,
and China during the past few months (we are working on the Brazil
invitation). These markets remain vibrant especially China and India
adding an aggregate of 15.3M subs a month last quarter. India
outpaced China with 24.2M net-adds vs. 21.68M in Q307. Mobile
coverage in China is ridiculously good. We found strong RSSI in deep
gorges on Yangtze as well as high up on the mountains. Regulators in
both countries also gave some indications of granting spectrum for
3G.
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NTT DoCoMo
continues to dominate the wireless data revenues rankings crossing
the $3B/quarter mark and taking its tally for the year to over
$8.6B. They also crossed the 75% mark for 3G penetration. China
Unicom edged past SK Telecom to occupy the number 9 spot. Rest of
the rankings remained the same.
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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%.
Your feedback is always welcome.
Chetan Sharma
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“Very rarely do books like this offer equal value
to both advertising buyers and sellers but Mobile Advertising is
a wonderful primer on the mobile landscape and advertising opportunity
from both perspectives. Its completeness and clarity makes it an
essential resource for any company or person looking to help pioneer or
participate in this emerging category.”
Chamath Palihapitiya,
Vice President Product Marketing & Operations, Facebook
“This book is a critical contribution to
defining the biggest opportunity in the wireless industry today -
Mobile Advertising. And more importantly, it provides a blueprint to
exploit that opportunity! Brilliant insights, clearly written -- a
must-read.”
Paul Palmieri,
President & CEO, Millennial Media |
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Coming
Soon |
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Chetan's Interviews with two Industry
Pioneers for
The PiTech Magazine (a magazine that focuses on IITs, IITians, and
Technology)
Padmasree Warrior,
EVP & CTO, Motorola: The Future is Mobile &
Ravi Venkatesan,
Chairman, Microsoft India: Microsoft: Innovating from, for, and
with India
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Recent
Publications/Media Interviews/Mentions |
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The New York Times |
Google Enters the Wireless World |
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Bloomberg News |
US Mobile Advertising Market |
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GigaOM |
Google Launches Mobile Phone
Platform: Android |
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Nikkei Electronics |
Google Android and OHA |
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Christian Science Monitor |
Hurdles ahead of Google's cellphone
plan |
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O'Reilly OnLamp |
Google Calling: Inside Android, the
gPhone SDK |
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PR Week |
The Buzz of Google's Android |
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Inside Digital Media |
Google's Android |
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Wireless Wave (CTIA) |
A Continental Idea |
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Podcast (CTIA) |
Global Mobile Market: Does the US
Measure Up? |
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Conference Coverage |
CTIA Wireless IT & Entertainment
2007 Roundup |
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Research Update |
Global Wireless Update 1H 2007 |
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Whitepaper |
What is your Patent Portfolio Quotient (PPQ)? |
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Whitepaper |
Unified Mobile Data Platform |
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Upcoming
Events |
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5 Dec |
Why Mobile? Why India? Why Now?
Stanford University. Chetan will be on the panel with executives from
Yahoo (Ojas Rege), Qualcomm (Jeff Belk), NEA-IndoUS Ventures
(Vin Dham), and others.
Limited Entries. Please let me know if you would like to attend |
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17 Jan |
Pacific Northwest Wireless
Conference, Vancouver BC. Chetan will be discussing research
from his upcoming book on Mobile Advertising |
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11-14 Feb |
3GSM World Congress, Barcelona |
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1-3 Apr |
CTIA, Las Vegas |
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26-27 Jun |
Global Wireless Security Conference,
Kuala Lumpur. Chetan will be giving a talk to leading CTOs and
CIOs on Mobile Security trends and opportunities |
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July |
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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Track the
progress/discussion of the Mobile Advertising Book |
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Upcoming
Research |
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December |
2007 Roundup |
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February |
2007 Global Wireless 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
helped companies like NTT DoCoMo, Samsung, KDDI, Alcatel-Lucent, Sony, Virgin
Mobile, KTF, Sprint Nextel, Reuters,
Disney, Qualcomm, Infospace, Reliance, BEA, HP, Merrill Lynch,
Cincinnati Bell, Bain, SAP, Vulcan, American Express, and many
others. What can we do for you?
www.chetansharma.com |
If you have questions or
suggestions or feedback on this subject or on the wireless & mobile industry at large,
please contact us at
feedback@chetansharma.com - we look forward to hearing from
you.
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