Thursday, October 30, 2014

How Apple will Conquer the Mobile Payments Market

Back in 2003, Apple launched the iTunes Music Store with 200,000 songs offered at 99¢ each and forever changed the music recording industry. Apple has a history of being a disruptor -- they're the ultimate opportunist that knows how to exploit fear, uncertainty and doubt.

They find opportunity where the executive leadership of the traditional incumbent players are very weak, indecisive and lack a forward-thinking vision of the future market dynamics. So, is that why they launched Apple Pay, to disrupt the nascent mobile payments industry?

Primed and Ready for Exploitation

The latest market study by Juniper Research has found that there will be 516 million mobile users of Near Field Communication (NFC ) contactless payment services by the end of 2019, that's up from 101 million this year.

Their study findings argue that Apple's introduction of an NFC-based payment mechanism -- now known as Apple Pay -- would stimulate the wider marketplace, helping to address the key challenges of contactless awareness and acceptance.


At the same time, Juniper observed that NFC solutions utilizing HCE (Host Card Emulation) were steadily gaining traction within the banking sector. The current momentum in the global marketplace was starting to have an impact.

It said that several pioneers -- including BBVA and Bankinter in Spain and CUA in Australia -- had already launched commercial services, with pilots in operation in countries such as Russia and New Zealand.

Marginalizing the Mobile Network Operators

However, Juniper also pointed out that both these developments threatened the opportunity within NFC for mobile network operators (MNOs). Besides, given Apple's prior success in using the iPhone business model to manipulate and control the hapless executives at mobile service providers, they were prepared to make their next move.

With Apple Pay, the secure element is embedded on the handset and controlled exclusively by Apple -- with HCE, the SE (secure element) no longer has to be physically present in the handset -- once again removing the requirement for MNO involvement.

"We would envisage that while NFC deployments and consumer activity will be buoyed by these developments, the opportunities for network operator involvement are limited. Hence we are likely to see more operators re-evaluating their existing commitments to NFC and possibly withdrawing from the space," said Dr Windsor Holden, head of consultancy and forecasting at Juniper Research.

That being said, it's still unclear, are the current incumbents within the mobile payment sector willing to let Apple dictate the terms of market development for this huge forward-looking opportunity? Will they capitulate? Moreover, was the iPhone introduction a supreme Trojan Horse marketing strategy?

Other key findings from the study include:

  • Three quarters of smartphones worldwide will contain an NFC controller chip by the end of the decade.
  • While NFC can offer retailers a strong value proposition in terms of customer retention and loyalty opportunities in addition to payment, most retailers remain unclear as to its tangible benefits.

Wednesday, October 29, 2014

Cloud Computing Vendor Professional Service Offerings

Given the current level of cloud-related maturity within the enterprise, and the continued shortage of skilled software engineer talent, most CIOs and IT managers must rely upon the professional services of their vendor partners.

Meanwhile, many IT service providers will continue to consolidate their cloud computing engineer and architect headcount across regions while seeking to optimize global delivery operations though automation.

The latest worldwide market study by Technology Business Research (TBR) provides clients with insights to how increased adoption of cloud-based services delivery and solutions with embedded analytics has compelled vendors to pursue selective hiring.

Savvy cloud service providers have an emphasis on recruiting best-of-breed cybersecurity engineers as well as data scientists and sociologists, which will enable these systems integrators (SIs) to better position their offerings.

"Large SI vendors with established global delivery networks are leveraging industrialized delivery models to improve profits by using automation to offset the cost of retaining highly skilled talent," said Bozhidar Hristov, lead analyst at TBR.

On the other hand, TBR believes that India-centric vendors are betting on hiring new employees with basic STEM skills whom they groom through accelerated training programs and deploy as needed to maintain a lean cost structure.

Attrition is emerging as the biggest threat to vendor profits as a better economic climate and demand for cloud talent allow staff to switch jobs. For example, SIs with support and maintenance portfolios -- such as HP, IBM, Dell -- enacted headcount reduction programs to eliminate positions, which created apprehension among the remaining employees and led to an increase in attrition.

Profitability improvement will depend on a vendor's ability to attain highly skilled workers and/or train new recruits at the pace of evolution within the shifting IT professional services market. Experience with OpenStack DevOps Services, in particular, is a rapidly growing requirement.

Besides, cultivating a broad skills pool will improve vendor abilities to understand and address client business outcomes in creative and holistic ways -- particularly in data analytics, where wide-ranging knowledge of language and consumer behavior improves the precision of algorithms.

While sustaining a global delivery model is becoming table stakes for IT professional service vendors to maintain competitiveness, the increased commoditization of labor arbitrage is compelling them to invest in IP-based solutions.

This software automation enables them to bundle industry-oriented applications and infrastructure services, helping capture IT transformational opportunities without additional hiring.

Tuesday, October 28, 2014

Why Bold Leadership will Drive the Internet of Things

The Internet of Things (IoT) is poised to potentially generate huge new market opportunities for current information technology (IT) or telecom companies and new start-up companies, according to the latest global market study by CompTIA.

While IT executives are evenly split on the question of whether IoT is reality or hype, CompTIA asserts that the complex mix of hardware, software and professional services in the IoT ecosystem could create a high probability of upside growth for the industry.

"Many IoT elements are rooted in traditional IT components, which is good news for IT companies experienced in building and linking complex systems," said Seth Robinson, senior director, technology analysis, CompTIA.

He added, "At the same time, we're likely to see the emergence of many new firms focused on specific aspects of these systems, such as devices and data analysis. The true value of IoT will come from the combination and connectivity of all pieces."

It's also likely that bold leaders will quickly emerge and they will set the pace for continued momentum, particularly as it relates to concerns about regulatory compliance.

Decisive Leaders vs Hesitant Followers

The CompTIA survey data reveals an element of uncertainty around IoT, likely causing some to withhold judgment until the IoT ecosystem further matures. Meanwhile, as the gutless flock of me-too vendors sit on the sidelines, the pioneers will confidently move forward with their market development strategies.

Besides, while IT industry as a whole sits at the center of developing, supporting and maintaining IoT, revenue and value is open to any vendor that will demonstrate a compelling point of view.

Today's IoT marketplace presents savvy and decisive leaders with the prospect of exploring innovative approaches -- now, before the hesitant followers enter the arena.

According to the CompTIA assessment, IT executives identified several areas where they expect IoT to have the greatest impact and deliver value in the long term. Those areas include:

  • Creating new revenue and business opportunities from connected systems (e.g., smart cities, connected vehicles).
  • Controlling and monitoring newly connected pieces of equipment.
  • Collecting new streams of data.
  • Adding intelligence to previously "dumb" objects and systems.
  • Gathering contextual information about customers.

"The true value of IoT lies not just in the data being generated and captured, but through the services that protect the data, perform the analysis and present findings in a usable way," Robinson concluded.

Monday, October 27, 2014

Pay-TV Service Provider Market will Reach $269B

The video entertainment sector is still going through a period of transition, as consumer viewing habits shift and evolve. Besides, in the mature markets -- such as North America -- more subscribers are expected to totally abandon pay-TV due to the rising cost of traditional services.

Meanwhile, the worldwide pay-TV market is expected to surpass 920 million subscribers by the end of 2014, according to the latest market study by ABI Research.

Overall, pay-TV average revenue per user (ARPU) is expected to drop slightly due to increasing price competition, but at a lower rate compared to the ARPU drop in 2013.

"The growing number of high-definition (HD) subscribers as well as major sporting events such as the World Cup 2014 have contributed to improving ARPU," said Jake Saunders, VP and practice director of core forecasting at ABI Research.

As a result, the total pay-TV service provider market is expected to generate over $269 billion by the end of 2014.

Notably, DirecTV added 543,000 subscribers in 2Q 2014 within the Latin America market. It was a sharp increase compared to subscriber net additions of 165,000 in the same quarter of 2013.

ARPU in local currency also increased 8 percent from 2Q 2013. Subscriber growth in Latin America was mainly driven by the World Cup 2014 matches although DirecTV did not benefit from the event as it lost around 39,000 subscribers in the U.S. market.

ABI Research anticipates that the worldwide pay-TV subscriber base will grow to nearly 1.1 billion subscribers generating $323 billion by 2019. Most of the new subscriber growth will occur in emerging markets.

The IPTV market share grew by just over 1 percent point in 2Q 2014 compared to 2Q 2013. Competition in the global pay-TV market is growing with the rapid evolution of IPTV and over-the-top (OTT) online video services.

In Japan, satellite TV operator, Sky Perfect, lost over 200,000 subscribers over the past year due to increasing competition from alternative pay-TV platforms. To counter churn and maintain service revenue, SKY Perfect has developed VOD services which allows customers to access video content from multiple devices including smartphones and media tablets.

SKY Perfect encouraged 126,000 of its customers to subscribe to VOD services at the end of 1Q 2014. The advent of multi-screen services are helping some of the more progressive pay-TV operators to reduce subscriber churn and boost revenue.

Friday, October 24, 2014

Mobile Operators are Seeking New Revenue Sources

Mobile service providers will find the next decade to be full of new challenges and opportunities. Meanwhile, the mobile internet phenomena has offered a welcomed increase in service revenue, but there were also some unanticipated negative side effects.

Juniper Research claims that voice and messaging traffic lost to Over-the-Top (OTT) mobile internet application providers -- such as WhatsApp, Facebook and Skype -- will cost mobile network operators $14 billion in lost revenues globally this year, that's up by 26 percent since 2013.

Their worldwide market study found that in a number of European markets -- including Italy, Spain and the UK -- operator mobile voice revenues had fallen to less than 60 percent of their value five years ago.

Juniper analysts argue that a combination of instant messaging (IM), Voice over IP (VoIP) and social media substitution was primarily responsible, resulting not only in lost revenues but in additional costs due to the scale of signalling traffic.


However, according to the Juniper assessment, there's an array of new product or service opportunities with the potential to deliver cumulative revenues to mobile service providers in excess of $66 billion over the next five years.

Juniper believes that the resulting upside revenue potential from these new offerings could more than offset the ongoing decline of core service revenues on an annual basis by 2018.

"In areas such as M2M (Machine to Machine) and mobile money, mobile operators can achieve a substantial revenue uplift by focusing on full service provision rather than simple connectivity," said Dr. Windsor Holden, Head of Consultancy and Forecasting at Juniper Research.

Additionally, Juniper recommends that mobile network operators implement direct carrier billing to retain a foothold in the lucrative mobile content space, and enhance their big data analytics capabilities to monetize consumer insights that can be gleaned by studying their subscriber's historical transaction data.

Other findings from the market study include:
  • Without optimization, mobile data delivery costs will increase by more than three times over the next three years.
  • Implementation of NFV (Network Function Virtualization) solutions offer operators the potential of both cost savings gained by reducing their dependency on legacy proprietary hardware, and by accelerating their new go-to-market activities.
  • Mobile network operators can also boost core revenues by introducing higher-value shared data plans or by bundling content into a monthly subscription fees.

Thursday, October 23, 2014

Next-Gen Data Center Fuels Open Platform Demand

The ongoing shift to next-generation data center architectures continues to impact the legacy vendor community. The advent of cloud and mobile computing -- as well as exponential growth in data variety and velocity -- is upending the traditional data center innovation model.

This shift drove average gross margin down 60 basis points year-to-year to 41.9 percent in the second quarter of 2014 for server, storage and networking original equipment manufacturers (OEMs) tracked by Technology Business Research (TBR).

"OEMs willing to share intellectual property -- and profits -- with ecosystem partners are setting themselves up to reap the benefits of tapping niche innovation, driving partner loyalty and remaining in-tune with customer's evolving application requirements, all while reducing up-front investment risk," said Krista Macomber, data center analyst at TBR.

These benefits will include more stable bottom-line hardware performance, as well as higher-margin, higher-profile software and services opportunities.

While previously the partner ecosystem served the primary purpose of reselling point products for server, storage and networking OEMs, TBR research indicates it is through the ecosystem that OEMs are able to tap niche, value-add innovation and facilitate workload-optimized solutions increasingly.

Some OEMs embraced the trend toward collaborative, open-source software- and services-led innovation delivered on top of low-cost, customized bare-metal hardware. Others continue investing in the channel and bringing reference solutions to the market, but have been slower to shed their proprietary hardware-led business models.

The shift from proprietary to industry-standard hardware is evident in the financial performances of the data center vendors. TBR estimates x86 server revenue for these vendors rose a cumulative 8 percent year-to-year in 2Q14, with aggregate ASP rising 9.7 percent as customers deploy mission-critical workloads increasingly on these platforms.

In contrast, proprietary server revenue for legacy vendors tracked in TBR fell by 16.7 percent year-to-year during the quarter. "The competitive landscape is in flux across the server landscape, and it’s no longer just about sheer processing performance and efficiencies," Macomber said.

With a server refresh spurred by Intel’s recent “Grantley” chip launch underway, OEMs are jockeying to regain market share lost in recent quarters to original design manufacturers (ODMs) including Quanta and Wistron that have grown exponentially on the back of their ability to deliver high-volume orders of customized hardware at near-zero margins.

TBR believes that value-add software capabilities -- such as automation and unified management -- will prove just as critical to competitive displacements and customer loyalty, as customers seek to reduce the IT administrative burden and increase flexibility and optimization in their infrastructures.

Cloud, Big Data and Mobile industry disruptors also continue to impact financial performance within the storage segment. Overall revenue for vendors tracked in TBR dipped 1.8 percent year-to-year during the quarter.

As the lines between servers and external storage arrays blur due to the industry trending toward converged and open-source software-defined infrastructures, storage vendors are pushing portfolio boundaries through a blend of alliances, acquisitions and organic innovation to capitalize on exponential data growth.

From a networking standpoint, legacy vendors continue to experience year-to-year revenue declines as a result of its struggles in emerging markets, demonstrating the negative impact of a proprietary, closed hardware business model when competing for infrastructure build-out and modernization contracts.

Average networking revenue for the segment, however, increased 0.4 percent year-to-year in 2Q14 for vendors covered within TBR's Data Center Benchmark.

Wednesday, October 22, 2014

Designing Mobile Device User Interface Innovations

Small consumer electronics, such as smart wearable devices, create new challenges for user interface (UI) designers that must find innovative ways to enable human interaction via emerging technologies. As a result, semiconductor component integration and software development will also evolve.

The dominance of touchscreen user interfaces will reduce over the next 5 years as more sensors are introduced to mainstream products and entirely new product form-factors emerge, enabling and necessitating new user interfaces -- such as voice, gesture, eye-tracking, and neural.

The latest ABI Research market study examined popular UI methods as well as the natural sensory technologies transitioning from research labs into future consumer electronics product solutions.

"Touch got mobile device usability to where it is today, but touch will become one of many interfaces for future devices as well as for new and future markets," said Jeff Orr, Senior Practice Director at ABI Research.

Orr believes that the really exciting opportunity arrives when multiple user interfaces are blended together for entirely new experiences.

Across 11 unique features from wireless connectivity to embedded sensors, ABI Research found that hand and facial gesture recognition will experience the greatest growth in future smartphone and media tablet shipments, with a CAGR of 30 percent and 43 percent respectively from 2014 to 2019.

The range of applications for gesture recognition span user attentiveness to device navigation control. The impact of UI innovation in mobile devices will be felt across a wide range of consumer electronics applications, including the car and in the home.

As mobile applications integrate more technology, the UI must be kept simple enough to be intuitive. Packing a mobile device with sensors goes little beyond being a novelty. Complexity contradicts good UI design and a critical mass of engaging mobile applications are required for mainstream adoption.

This balancing act is best observed in today’s automobiles where myriad of subsystems are working with the driver to arrive at a destination safely with a minimal amount of learning.

Key components have also evolved from single-function elements into multi-sensor, single-chip packages. This has not only benefited the handheld form-factor, but been the premise for the leading commercially available wearable devices.

As multiple sensors and gadgets work real-time to collect data from an individual and the surrounding environment, the potential for complexity arises once again with each person looking to have their own personalized experience.

Tuesday, October 21, 2014

Enterprise Networking Vendors Prepare for Disruption

The introduction of open source software platforms and bare-metal systems into the legacy enterprise network realm will eventually disrupt the status-quo for leading vendors that have previously benefited from the lack of unruly innovation.

Meanwhile, established vendors can still take advantage of the apparent resistance to change within many traditional IT organizations that depend upon the conservative leadership of cautious CIOs.

Results from the latest market study by Technology Business Research (TBR) indicate growth in the enterprise networking market is accelerating, as demand for cloud, mobility and security solutions -- particularly in developed markets -- escalated and major suppliers leveraged their dominant market positions to capture customer spending.

Total enterprise networking revenue among the benchmarked companies grew 4.3 percent year-to-year in the first half of 2014, that's more than the 0.9 percent growth in second half of 2013.

Vendors capitalized on improved discretionary IT spending in developed regions like Northern and Central Europe and the U.S. market, although demand slowed in emerging markets such as Russia and China.

Network Security’s leading growth of 13.5 percent year-to-year in the first half of 2014 underscores the importance enterprises place on maintaining a secure network amid the advent of mobile cloud computing.

"Protecting their IT infrastructure remains a top priority for enterprises, and vendors are reaping the benefits," said Scott Dennehy, senior analyst at TBR.

TBR believes that in addition to solidifying mission-critical relationships with customers, expanding in the security space generates opportunities for high-margin add-on software and services sales.

With hardware commoditization driven by cloud and software-defined networking (SDN) threatening to upend the networking industry, leading vendors are transforming their business models to maintain relevancy and drive long-term growth.

This includes realigning resources to capture growth opportunities in areas such as cloud, software and services. Many vendors will face challenges executing in these new areas, as the focus on applications and services does not play to their core strengths in hardware.

However, vendors such as Cisco increasingly will leverage strategic partnerships -- such as Red Hat for its open source enterprise software portfolio -- and apply supplementary acquisitions to remain key players in the changing enterprise IT and networking landscape.

The TBR "Enterprise Network Vendor Benchmark" identifies revenue and growth leaders in Network Infrastructure, Wireless Networks, Unified Communications and Collaboration (UC&C), Network Security and Services, and highlights vendor strategies and future moves as well as overall market trends in each segment and geography.

Monday, October 20, 2014

Growth Potential for Enterprise Mobility Applications

As we approach the end of 2014, it's important to revisit the enterprise mobility application marketplace. Clearly, the mobile cloud apps trend will be far reaching in 2015 -- it will touch every department within many organizations and it will be adopted by most forward-thinking industries.

The upside for further market development and growth is already significant. 451 Research expects the Enterprise Mobility Management (EMM) market to grow from $3.8 billion in revenue in 2014 to $9.6 billion in 2018.

EMM, defined as a set of tools that include mobile device management, mobile application management, mobile email container applications, mobile application platforms, mobile back-end as a service (MBaaS) and mobile virtualization, can be used solo, in parallel or in a tiered fashion across a mobile environment.

451 Research sees these as important tool-sets adopted by the enterprise, and as critical enablers of future mobile computing. As enterprises increasingly adopt EMM, they believe this will lead to a market CAGR of 22 percent from 2013 to 2018.

This forecast is based on the latest global market study by 451 Research, which presents data generated via a bottom-up analysis of 125 vendors that participate across the six EMM segments that they currently track.


"EMM is moving from tools that control mobility, to instrumental elements that enable productivity for a growing number of mobile-enabled employees," said Chris Hazelton, research director at 451 Research.

According to their market assessment, mobile apps in the enterprise are growing in importance and are the key to driving business transformation, and EMM will play a key role in putting these apps in the hands of users.

As companies move from a reactive to a mobile-first strategy, EMM technologies will be the foundation for any deployment.

While 43 mobile device management vendors currently generate the largest proportion of total EMM revenue, 451 Research expects an uptick in revenue from all segments -- especially from 38 market participants in the mobile application management segment.

Friday, October 17, 2014

Explore the Internet of Things - Market Outlook in 2020

The Global Networked Economy is entering the next phase of its ongoing evolution. Emerging phenomena, such as the Industrial Internet, will help to launch progressive applications that will require new market development leadership.

The outlook for these upside opportunities are boundless.

Imagine a highway where cars are able to safely navigate to their destinations without a driver. Imagine a home where an elderly patient’s health is closely monitored by her hospital physician. Imagine a city that significantly reduces waste through sensor-embedded water pipes, buildings, parking meters and more. These are no longer scenarios from a distant future -- they're happening today.

Nearly 12 billion internet-connected devices will be in use worldwide by the end of 2014, according to the latest global market study by Strategy Analytics.

That is equivalent to 1.7 devices for every person on the planet -- a ratio which will rise to 4.3 by 2020, when 33 billion devices will be in use.

"Back in 2007 PCs accounted for two thirds of internet devices -- now it's only 10 percent," said David Mercer, principal analyst at Strategy Analytics.

The impact of the internet on daily lives has increased rapidly in recent years. Huge growth potential still lies ahead, in terms of both the number of devices relying on internet connectivity and its geographic reach.


The report that resulted from the study, "Connected World: The Internet of Things and Connected Devices in 2020," quantifies the scale of the connected device opportunity across the Internet of Things (IoT), smart home, smartphones, PCs, media tablets, smart TVs, internet media devices and wearable devices.

According to the Strategy Analytics assessment, traditional connected devices like PCs, smartphones and media tablets now account for less than a third of all connected devices in use.

Emerging categories alone will connect an additional 17.6 billion devices to the internet by 2020.

The Internet of Things is leading to rapid growth in new categories like machine-to-machine (M2M), smart objects, smart grid and smart cities. But this is just the beginning of what's to come.

"The Internet of Things has already connected five billion devices and we are only at the beginning of this revolution," says Andrew Brown, executive director at Strategy Analytics. "Smart cities and smart grid are just two of the ways in which the internet of things will touch everyone’s lives over the coming years and decades."