Upside for Multi-Screen Video Delivery via Gateways

This year, many broadband service providers in developed markets will have to make a strategic choice -- just cut costs and plan to report more pay-TV subscriber losses, or seek ways to offer greater value-added services and make the required investment in infrastructure.

Infonetics Research released excerpts from its latest market study which delves into service provider strategies for deploying residential gateways, the applications driving their deployments, and their top picks for residential gateway vendors, services, technologies, and associated features.

"Operators continue to morph their fixed broadband network strategies to focus not only on the size of the connection to the subscriber, but also on the services and revenue these broadband connections can deliver," said Jeff Heynen, directing analyst for broadband access and pay-TV at Infonetics Research.

According to the Infonetics assessment, residential gateways are critical to ensuring the successful delivery of these services within the home -- particularly new video services.

Their most recent survey shows that the percentage of service providers offering multi-screen video -- wireless delivery of video to mobile phones, PCs, and tablets -- using a residential gateway device is growing quickly, from just 6 percent today to 50 percent by 2014.

The savvy video entertainment service providers are looking to differentiate basic pay-TV services and keep customers from moving to competitors or, increasingly, deciding to terminate services entirely.

Other highlights from the market study include:

• Broadband data, IPTV, WiFi hotspot access, and VoIP are the main applications operator respondents are currently offering using a residential gateway.
• The number of operators offering home automation services using a residential gateway grows to 44 percent by 2014.
• Well over half of respondents are using copper Ethernet to deliver broadband services.
• Huawei and ZTE are perceived as the top residential gateway vendors by over a third of survey respondents.

136.7 Million Americans Now Own a Smartphone

The growth of smartphone adoption in the U.S. marketplace has me wondering, how much more upside is available and when will we likely see full market saturation?

comScore released data that reported the key trends in the U.S. smartphone industry during the three month average period ending March 2013.

Apple ranked as the top smartphone manufacturer with 39 percent OEM market share, while Google Android led as the number one smartphone platform with 52 percent platform market share.

136.7 million people in the U.S. owned smartphones -- that's 58 percent mobile market penetration -- during the three months ending in March, up 9 percent since December.

Apple ranked as the top OEM with 39 percent of U.S. smartphone subscribers (up 2.7 percentage points from December).

Samsung ranked second with 21.7 percent market share (up 0.7 percentage points), followed by HTC with 9 percent, Motorola with 8.5 percent and LG with 6.8 percent.

Google Android ranked as the top smartphone platform with 52 percent market share (71.1 million subscribers), while Apple’s share increased 2.7 percentage points to 39 percent (53.3 million subscribers).

BlackBerry ranked third with 5.2 percent share, followed by Microsoft (3 percent) and Symbian (0.5 percent).

More recent reports from other market researchers say that Microsoft may be gaining market share globally, we'll have to wait and see if that's reflected in the U.S. marketplace.

Tablet Shipments Reached 49.2 Million in 1Q 2013

Driven by increasing demand worldwide, media tablet shipments continue to surge across the globe, growing 142.4 percent year over year in the first quarter of 2013 (1Q13), according to the latest market study by International Data Corporation (IDC).

Tablet shipments totaled 49.2 million units in 1Q13 -- surpassing that of the entire first half of 2012. With growth fueled by increased market demand for smaller screen devices, tablets sales have shown no sign of slowing down.

Apple outperformed IDC's most recent projections for the quarter, shipping 19.5 million units compared to a forecast of 18.7 million units. The company, which historically has experienced a steep drop off in first quarter shipments (following strong holiday sales in the fourth quarter), saw some smoothing of that seasonality this year.

Number two vendor Samsung also performed above expectations and managed to grow its shipments over the fourth quarter 2012 as more of the company's smaller-sized tablets began to gain traction in the market.

Samsung has also used its recent Android smartphone growth to help bring its tablet product line into new markets and channels, leveraging the opportunity to package and bundle.

The strong performance of the two market leaders helped drive total shipments to an impressive 49.2 million units for the quarter.

"Sustained demand for the iPad mini and increasingly strong commercial shipments led to a better-than expected first quarter for Apple," said Tom Mainelli, Research Director, Tablets at IDC.

In addition, by moving the iPad launch to the fourth quarter of 2012, Apple seems to have avoided the typical first-quarter slowdown that traditionally occurred when consumers held off buying in January and February in anticipation of a new product launch in March.

ASUS managed to move into the number 3 vendor spot as it continued to see decent tablet shipment demand from the highly marketed Nexus 7 device. But, the company will need to find a way to sustain its momentum. Amazon fell to the number 4 position, once again the victim of a highly seasonal product cycle.

Microsoft, which is a focal point for many in the tablet space, entered the top five for the first time as shipments of its Surface RT and Surface Pro tablets combined for a total of just 900,000 units. Many of those units were Surface Pro, which the company started shipping to the U.S. and Canada in February.

Beyond the Surface products, Microsoft Windows 8 and Windows RT tablets continued to struggle to gain traction in the market. Total combined Windows 8 and Windows RT shipments across all vendors reached 1.8 million units.

Clearly the market is moving toward smart 7-8 inch devices, but Microsoft's larger challenges center around consumer messaging and lower cost competition. Perhaps they can recover from the many setbacks they've had entering the tablet market. We'll have to wait and see.

Top 10 Mobile Operators Achieve $202 Billion Profit

Worldwide mobile service provider revenue, year-on-year (YoY) for 4Q-2012 grew 2.8 percent reaching $240.5 billion. According to the latest market study by ABI Research, the regional dynamic is varied.

Western Europe and Africa’s mobile operator actually demonstrated a contraction in service revenue YoY of 8.2 percent and 6.9 percent, respectively. Middle East, Latin America, and Asia-Pacific are still showing reasonably robust rates of growth of 7 percent to 11 percent.

Eastern Europe and North America, however, are only barely keeping their mobile service revenue growth in positive territory.

"As the underlying lift from accumulating subscribers has matured, carriers are starting to cast around for additional revenue streams that don’t just boost revenues but also profitability,” said Jake Saunders, VP for core forecasting at ABI Research.

There is still tremendous income to be generated from mobile network services. ABI estimates that the top ten mobile carriers alone generated $202 billion in gross profit, that's up by 4.2 percent year-on-year in 2012.

For some of those in the top ten, subscriber growth is still a major contribution (e.g. China Mobile, is 1st; MTN is 6th; and China Telecom, 8th). These mobile service providers may rely on expanding subscriber bases to drive overall profit for another 3 to 5 years. But after that, they will need to tap other sources of revenue.

For the other carriers in the top ten, securing a significant market share in their domestic or regional markets, combined with pooling infrastructure resources such as data centers, as well as group-level handset and equipment purchasing, has led to economies of scale.

Verizon Wireless (2nd), Vodafone Group (3rd), AT&T (4th), and NTT DoCoMo (5th) do hold significant market shares, but this does not entirely explain their success.

These companies have aggressively hopped onto the fourth innovation wave shaping the mobile telecommunications industry -- namely, IP-based value-added services.

OTT players can potentially sap the revenue opportunities for incumbent mobile telecom players but carriers, such as Verizon and AT&T, are showing that it's possible to put ARPU back on an upwards trajectory through the introduction of, for example, multi-device tariffs and M2M services.

4G LTE Revenue will Reach $340 Billion in 2017

According to the latest market study by Juniper Research, the cumulative 4G LTE mobile broadband service revenues over the next five years will account for over $1 trillion.

That growth represents 17 percent of the cumulative global operator billed service revenue from all mobile services.

4G LTE revenues are set to grow rapidly and will reach more than $340 billion globally in 2017, reflecting the continued success of LTE in serving higher value mobile network subscribers.

The demand for high bandwidth wireless broadband services from end users and the availability of Wi-Fi on most mobile devices has compelled operators to address consumer expectations around quality and user experience while creating new opportunities for the industry.

"Along with the 4G network roll-out, the 4G/Wi-Fi combination will continue to provide a scalable and cost effective solution. It offers long term benefits, with the present offload platforms supporting future network infrastructures, and is now a priority for many operators," said Nitin Bhas, senior analyst at Juniper Research.

Their market study also uncovered that mobile network operators need to integrate Wi-Fi offload with other monetisation opportunities -- such as location based services (indoor and outdoor) -- to generate additional revenues.

The study found that with 4G LTE having gained momentum over the past 12 months, it is now critical that mobile network operators get their pricing models right, thereby avoiding a slowdown in adoption and revenue generation.

For example, in the UK, EE felt obliged to cut its initial LTE pricing by approximately 14 percent within weeks of its network launch, while Three UK announced 4G access at no extra cost.

Meanwhile, in the U.S. market, Verizon Wireless announced strong adoption of its "Share Everything" 4G data plans.

Other key findings from the market study include:

• Mobile network operators who do not have deployment plans, will need to develop and implement their 4G strategies in order to remain competitive in the market.
• Vendors need to continue to collaborate and address some of the remaining Wi-Fi or Small Cell challenges and issues.

Building Automation Market will Reach $43 Billion

After years of steady but low growth, the commercial building automation systems (BAS) market is experiencing a rapid period of change and investment.

Traditionally, growth and adoption has been closely tied to new building completion but new entrants and new connectivity are driving greater investment.

According to the latest market study by ABI Research, over the next five years the building automation services market will grow to $43 billion -- that's up from $35 billion this year.

Two key factors are driving a new round of growth. Greater environmental and financial demands have raised the appeal of reducing energy consumption in commercial buildings and the benefits for optimizing building automation systems.

In addition, a new level of connectivity that stretches the reach of BAS apps from new sensors and actuators through to cloud application management and data analysis.

"This is a market long dominated by a handful of major players who deploy and manage commercial building management systems,” says Jonathan Collins, principal analyst at ABI Research.

Now these players are developing new ways to integrate and compete with a host of new service offerings. Perhaps we'll start to see some more meaningful examples of smart, connected building technology applications.

Dominant players Siemens, Johnson Controls, Honeywell, and Schneider Electric are increasingly seeing demand for their BAS systems connected to third-party player software as building owners gradually look to gain savings and offer additional level of control within their properties.

Within the BAS market, software and services will see the greatest revenue growth while hardware will lag as the pricing of actuators and switches fall.

In its latest market data analysis of the BAS market, ABI Research charts and forecasts the growing demand and revenue potential for building automation systems and the devices that connect to them.

Top 3 Mobile Service Innovation Demands in China

The essential components of the mobile Internet -- network, device and application -- are all undergoing changes, along with the ongoing evolution of mobile communication industry.

Today, mobile devices increasingly meet various demands for communication, entertainment, learning, living, working, and access to innovative m-commerce applications.

They also enhance people’s sense of hearing, sight and touch; expand the breadth and depth of communication; and speed up the transformation of people’s way of thinking, lifestyle and working style.

These changes have directly contributed to the transformation of the mobile industry environment and ecosystem within China.

Device manufacturers are gradually penetrating into the traditional business areas of content providers, virtual operators and integrated managed service providers. Internet companies are expanding their territory into operation and device manufacturing. Software enterprises are extending from traditional enterprise applications to support growing mobility.

According to the latest market study by IDC, mobile network service providers are beginning to lose their competitive edge. In IDC’s opinion, the complexity and breadth of the mobile ecosystem requires telecom operators to have three new open competition strategies:

1. Be open to accepting and promoting mutual penetration and convergence of industry ecosystem players to maximize the business values of mobility technology, and build a win-win mobile ecosystem.

Globally, more operators are paying increasing attention to data traffic monetization and to improving the capability of converting data traffic to actual income. They're attempting to achieve service innovation and business model transformation via the opening up of service capabilities and cooperation with other ecosystem players.

Meanwhile, traditional telecom services are highly challenged in the era of mobile Internet and telecom operators are looking for new revenue streams within the growth of the sector.

However, it is very difficult for operators to achieve service innovation under their existing organizational structure and mechanism. Therefore, increasingly telecom operators are trying to cope with the mobile Internet challenges and opportunities by adjusting their organizational structure, merger and acquisition or establishing subsidiaries.

In the competition with Internet companies, telecom operators start to explore possibilities of utilizing their superior resources to seek cooperation in competition -- including launching service packages jointly and mobile advertising.

2. Grasp the technology trends. IDC believes that the third platform based on mobility, cloud computing, Big Data and social media will be the mainstream or even the single platform for future Information and　Communications Technologies. The four pillar technologies will be crucial to service innovation and operation management of telecom operators in future.

Since the low-cost smart phones entered the market in 2011, China’s smartphone market has maintained a high growth momentum in 2012 with a growth rate of 135 percent. The smartphone shipment has exceeded that of feature phones in Q2 2012, accounting for 52.5 percent of the total mobile phone shipment.

The gap between mobile devices and PC in terms of processing power is narrowing. IDC forecasts that by 2016 there will be 150 million people in China with more than two smart connected devices, nearly 100 million people with three smart connected devices. And the total install base of smart phones in China will exceed 600 million as of 2016.

Personal storage and sharing will become an important factor for the continuing rapid development of smart connected devices in 2013. IDC believes that consumers will gradually change the current local storage modes in the coming five years, and network storage will be the major storage approach for consumers in future.

Telecom operators can provide personal cloud storage services by leveraging the brand and security trust built among consumers for a long time, however for business differentiation they need to accelerate the transition from low-value storage and synchronization service to high-value intelligent Big Data analytic-based service.

Therefore, the value of Big Data for telecom operators not only lies in their internal operation and management, but more importantly in how to utilize Big Data mining and analytics to improve service innovation and precision marketing capabilities. It will be a tool for operators to enhance their competitiveness in the era of mobile Internet.

3. The development of third platform technology blurs the boundary of individuals and enterprises, creates new business opportunities for operators, and enables them to penetrate into the enterprise mobility market by leveraging their advantages in individual user market.

Mobility technology has been regarded by more enterprises as a key element of future workplaces. Developing a comprehensive mobility strategy, comprising various elements such as device, platform, network, application, social media, unified communication and security, has become a critical requirement for many enterprises.

Furthermore, employees are beginning to expect the same or similar device and application experience in the enterprise environment just like in their personal life. However, comparing with personal mobile applications, enterprise mobility involves a more complicated ecosystem, directly leading to the slow launch of large-scale enterprise mobility project.

Therefore, enterprises need a trustworthy partner with strong resource integration to guide them through the mobility journey from employee mobility to process mobility, then to channel and business mobility.

IDC study indicates that nearly 60 percent commercial smartphones in China are sold via telecom operators. IDC’s survey on corporate users also shows that telecom operators are the preferred partners for enterprises in deployment of their mobile applications. Hence, telecom operators can make full use of their advantages as device channel to provide integrated mobile application services for enterprises.

During this process, operators need to cooperate fully with other vendors in the mobility ecosystem and integrate resources to provide users with comprehensive enterprise mobility solutions, and complete the transition from being product-oriented to solution-oriented.

"Telecom operators have been confronted with unprecedented challenges under the impact of mobile Internet. Promoting ecosystem cooperation by utilizing their unique advantages and capabilities; exploring new changes arising from third platform; and enhancing the resource integration capacity to provide enterprises with integrated mobility solutions will help operators create business opportunities in the fast-changing mobile Internet era," said Kitty Fok, general manager of IDC China.