Wednesday, April 23, 2014

Mobile Market Evolution - Challenges and Opportunities

Samsung sells more Android smartphones than most other manufacturers, but offering new models with powerful processors, more memory or larger screens may be loosing its appeal in this highly competitive marketplace.

While the Galaxy S5 is an evolutionary product, there is not enough meaningful changes in the latest model to make people want to upgrade from version 4 of this popular smartphone. It doesn't push the innovation envelope, according to the latest market assessment by Frost & Sullivan.

That is not to say that smartphone innovation has stalled. Instead, much of the upcoming advancements will come from the introduction of sensors into the phone, the improvements in software and how the device will interact with wearable technology accessories.

The innovation will move away from hardware towards the kinds of services and platforms that are enabled on the smartphones, via application (app) software enhancements. Services such as ordering taxis, arranging mobile payments, and location-based service capabilities will add substantive value.

In the premium smartphone segment, Samsung's scale and supply chain strength is less of an advantage. The key to success is perceived differentiation -- it's less about features and more about design and brand.

As competitors such as HTC, Huawei and ZTE catch up quickly on design, Samsung's brand differentiation is critical.

However, Samsung is unable to modify the OS software platform, with Google driving Android consistency. In fact, 25 percent of Android handsets sold in China last year did not include any Google services. And, the company is preventing new fragmentation of Android, making it even harder for Samsung to truly differentiate itself.

Margins are under continuing pressure and price leadership is difficult to maintain in emerging markets with OPPO, Wiko, and Micromax all producing low-cost handsets in the $100-200 segment. Moreover, the bulk of Samsung's business -- despite the high profile nature of its Galaxy line -- is in the mid- to low-end.

This is where Samsung is losing share as other manufacturers build capacity and experience, and can utilize lower labor costs. The bulk of growth in the market will come at the $200 and less price points, and these segments are simply less profitable than the high-end.

So, how will Samsung add incremental value in the evolving mobile apps economy? How will they adapt to the emerging wearable tech trends? We'll have to wait and see.

Tuesday, April 22, 2014

Huge Upside for Mobile Internet Services in Latin America

The upcoming 2014 World Cup football tournament in Brazil will raise the region's profile this summer, as soccer fans across the globe tune-in to watch their national teams. Besides, Latin America will also be on the minds of global economists this year, as the region's infrastructure gets a much-needed investment boost.

ABI Research expects growth of 10 percent in mobile telecom service provider capital expenditure (CapEx) within Latin America, rising to $6.1 billion. Upgrades and expansion of 3G WCDMA and 4G LTE coverage will result in radio access network-related spending capturing 40 percent of CapEx.

Investment in small cell base stations is gaining momentum -- with a forecast of 40 percent year-on-year growth in 2014 to $484 million.

"Mobile telecom capital expenditure in Latin America is expected to grow rapidly in 2014 as investment in 4G LTE starts to accelerate. Significant amounts of capital expenditure are still required to build out 4G LTE coverage," said Jake Saunders, vice president at ABI Research.

In particular, mobile cellular CTOs are prioritizing investment in the core network functions as Internet packet traffic and value-added 3G and 4G services are playing an increasingly prominent role in the telecom services of the region.

ABI Research estimates that population coverage stood at just 34 percent at the end of 2013. This should change over the next two years as LTE subscriber adoptions grow from 2.33 million to 23 million.

There is pent-up demand for access to Internet services in Latin America that cannot be addressed by wireline DSL and cable Internet services. Mobile internet adoption could increase dramatically, if the essential wireless broadband infrastructure was available.

Examples of Latin American investment plans include:

  • Telefonica Chile has been consolidating its 3G network infrastructure, including the deployment of fiber. It plans to invest a further $200 million over the next three years.
  • In Peru, Telefonica plans to invest $250 million in LTE-related infrastructure.
  • In 4Q-2013, TIM Brazil rolled out its first 150 small cells to boost signal transmission capacity on its mobile network.
  • In Colombia, Avantel announced in 4Q-2013 it would invest $250 million on the first stage of its 4G roll-out. It was awarded 30 MHz of spectrum in June 2013.

According to ABI's assessment, while some of the economies in Latin America have troubled leadership and a mixed bag of economic growth, when it comes to mobile voice and broadband, the telecom service providers are struggling to keep up with demand.

Monday, April 21, 2014

The Internet of Things Include Smart Home Appliances

While the concept of an automated home was conceived many years ago, various technical limitations have, until recently, meant that a truly connected home was but a dream for the average consumer. With the advent of mass-deployed broadband Internet access and the development of wireless technology, smart connected devices in the home are now a very real possibility.

Juniper Research forecasts that the installed base of connected appliances in Smart Homes will exceed the 10 million mark by 2017 -- that's rising from 4 million units in 2013.

Their latest global market study found that consumer awareness of connected appliances -- such as smart refrigerators and washing machines -- was gradually increasing, but that such devices are not widely considered to offer attractive value-added benefits.

The Internet of Things for an Intelligent Home

According to the Juniper assessment, smart appliances remain a niche item, given their high retail prices, poor use cases and ongoing security concerns.

While the technology to leverage the Internet of Things (IoT) devices is already available, no Internet service provider has yet made a system for intelligent automation services available to consumers.


Smart Appliance Manufacturer Market Development

Juniper observed that consumer electronics (CE) manufacturers -- such as Samsung and LG -- are pushing ahead with their range of intelligent appliances, as part of their wider Smart Home strategies.

Samsung is the first major CE manufacturer to demonstrate an entire ecosystem of home appliances and technologies over its Smart Home Service platform.

However, this service only functions with Samsung products, which will very likely stunt the growth opportunity, and discourage brand-agnostic consumer buyers that wish to mix-and-match appliances for their unique needs and requirements.

Other key findings from the study include:

  • Deploying Smart Home services in the cloud will reduce the need for expensive Smart Home device processors, and allow these devices to benefit from the power of Big Data.
  • Service providers should encourage a user community to help diversify Smart Home application possibilities to cater for individual needs.

Friday, April 18, 2014

Exploring the Wearable Technology Market Segmentation

The worldwide wearable computing market is finally expanding beyond the early-adopter segment, with more functional and stylish personal accessories that are making their way onto the pages of lifestyle magazines like GQ and Shape.

According to the latest global market study by International Data Corporation (IDC), wearables took a huge step forward over the past year and shipment volumes will exceed 19 million units in 2014 -- that's more than tripling last year's sales performance.

The global market is forecast to reach 111.9 million units by 2018, resulting in a CAGR of 78.4 percent.

Complex accessories -- such as Nike+ FuelBand, Jawbone UP, and Fitbit devices -- will lead the wearables market through 2018, as users continue to embrace their simplicity and low price points.

These devices are designed to operate partially independent of any other device, but fully operate when connected with IP-capable devices such as a smartphone, tablet, or a PC.

"Complex accessories have succeeded in drawing much-needed interest and attention to a wearables market that has had some difficulty gaining traction," said Ramon Llamas, research manager at IDC.

The increased buzz has prompted more vendors to announce their intentions to enter this market. IDC says that most importantly, end-users have warmed to wearable device simplicity -- in terms of design and functionality -- making their value easy to understand and use.

Another segment of the market, smart accessories, will gain momentum through the forecast period and surpass complex accessory shipments by 2018.

Similar to complex accessories, with their dependence on connecting with IP-capable devices, smart accessories allow users to add third-party applications that boost features and functions for a more robust experience.

While not quite ready for prime time, the smart accessory market will continue to mature as users better understand and accept the value proposition and vendors refine their offerings.

The third segment of the wearables market is smart wearables, such as Google Glass, which function with full autonomy, independent of any other device except to access the Internet.

To succeed, smart wearable vendors must convince users to shift to a new user experience while offering them a robust selection of third-party applications. It is not a question of "if," but "when" wearables as a whole will extend into the enterprise.

Finally, according to the findings from the latest IDC survey of more than 50,000 consumers in 26 countries, Samsung was identified as the most trusted consumer electronics brand for wearables -- ahead of Apple, Sony, and Google.

Thursday, April 17, 2014

PC Shipments Decline for Eight Consecutive Quarters

Low-cost mobile devices, cloud computing and open-source software continue to reshape the Technology, Media and Telecommunication (TMT) sectors of the global economy. The impact from the transformation is far reaching, as growth stalls in some of the more traditional product and service categories.

A case in point; worldwide personal computer (PC) shipments totaled 73.4 million units in the first quarter of 2014 (1Q14) -- that's a decline of -4.4 percent year-on-year, according to the latest market study by International Data Corporation (IDC).

Although still in a downward spiral -- and with continuing weakness in consumer and emerging market segments -- the preliminary results are actually slightly better than a projected decline of -5.3 percent.

Similar to the latter part of 2013, the upside in the first quarter arose primarily from demand in mature commercial markets. Commercial refresh projects, which had already been protracted, received a last push from the impending end of Windows XP support, particularly in Japan.

In addition, the slowing demand for media tablets seems to have helped constrain previously drastic cutbacks in notebook PCs. Nevertheless, emerging regions continued to post weak results, with growth in Latin America and Asia-Pacific (excluding Japan) falling even faster than recent declines as both economic conditions and continued tablet penetration stifled PC shipments.

"Worldwide PC shipments have now declined for eight consecutive quarters as a result of shifting technology usage and competition (notably with tablets and smartphones) as well as economic pressures related to the Great Recession, sovereign debt crises, and their related impact on international trade," said Loren Loverde, vice president at IDC.


According to the IDC assessment, the global economic front seems to be gradually stabilizing or improving. However, this has been a slow process, and it is unlikely that sovereign debt issues will be resolved soon or that growth in emerging markets like China will return to prior levels.

On the technology front, the transition to more mobile devices and cloud-based usage modes is unlikely to slow down, although the short term impact on PC shipments may be reduced as tablet penetration rises -- which is happening in some mature regions of the world.

In summary, the net result remains consistent with IDC's past forecasts -- in particular, that there is some potential for PC shipments to stabilize, but not much opportunity for meaningful growth.

PC shipment growth in the United States remained slightly faster than most other regions in the first quarter. However, the passing boost from XP replacements, constrained consumer demand, and no clear driver of a market rebound are expected to keep growth below zero going forward.

A rebound in consumer or a continuation of accelerated commercial upgrades could boost growth slightly, but low demand for upgrades in general -- combined with competition from tablets and lower-cost 2-in-1 systems -- limit the growth potential.

The American market continued to stabilize with growth near zero -- in line with forecasts. With shipments totaling 14.3 million PCs in 1Q14, the U.S. market contracted by -0.6 percent from the same quarter a year ago. Desktop shipments were slightly stronger, posting 3.5 percent growth, while portables remained in negative territory.

Wednesday, April 16, 2014

Exploring the Impact of Network Functions Virtualization

The forward-looking effects of Software Defined Networking (SDN) and Network Functions Virtualization (NFV) on the traditional wireline and wireless broadband service provider sector will truly be unprecedented. Vendors of deeply-rooted proprietary technologies are most at risk.

Moreover, plans for open-source hardware and software adoption will potentially reshape the whole value-chain, as major service providers start to procure new equipment and services that are based upon open innovation-related business models.

By leveraging virtualization and cloud technologies, SDN and NFV is looming as a disruptive force that is leading some telecom service providers to evaluate new network architectures and driving traditional equipment vendors to dramatically shift product development, according to the latest market study by Dell’Oro Group.

Some traditional networking vendors have already made dramatic shifts in their go-to-market strategy. Indeed, the Open Hybrid Cloud era has ushered in new thinking that was previously considered "unthinkable" just twelve months ago.

Market Outlook for Network Functions Virtualization

A new report published by Dell’Oro analyzes the potential effects of NFV, in particular, on the legacy telecom equipment market over the next five years.

"Over the past 18 months, NFV has rapidly gained attention across the industry as the future of network design, but the effect of this movement on equipment vendor and service provider businesses is largely unknown," said Shin Umeda, vice president at Dell’Oro Group.

According to their assessment, Dell’Oro now sees NFV as potentially affecting a change of technologies, business processes, and financial models in a way that can have either positive or negative results -- depending on where a vendor is positioned within the rapidly evolving industry.

Dell’Oro Group’s "NFV Advanced Research Report" assesses the NFV market over the next five years as it relates to telecom service providers and their equipment vendors.

The report includes a revenue forecast for NFV in selected technology segments and discusses the technology, business, and financial implications of this burgeoning technology.

Questions addressed in their report include:

Will NFV cannibalize or compliment network equipment?
Will NFV create a Service Provider evolution or revolution?
How will vendors implement – open or proprietary?
Will there be cross-vendor interoperability?
What are the long-term financial implications for SP CAPEX, OPEX, and revenue?
Will there be security, network stability or disruption issues?

One more very significant question needs to be answered -- what happens to the status-quo when SDN and NFV introduces open-source vendors directly into the core networking and data center infrastructure category of the telecom equipment marketplace?

Tuesday, April 15, 2014

As the British Embrace Mobile Internet, Marketers Follow

The mobile marketing channel is gaining momentum in the UK. Why now? Over one in four British consumers owns a media tablet, as advertisers spent a record £6.3 billion in 2013 to reach people via the mobile internet, according to a market study for the Internet Advertising Bureau UK (IAB), conducted by PwC.

Over one third (36%) of people accessing the internet are now doing so via their personal tablets, as tablet ownership grew 63% year-on-year from 11.0 million to 17.9 million Britons in February 2014.

Almost six in 10 (57%) tablet owners online say it's their go-to device to browse the internet at home. Two-thirds of owners (66%) say it’s easier to go online using a tablet. Almost two-thirds (65%) like to use them while watching TV.

Survey data shows that advertising on the internet and mobile phones overall increased, like-for-like, by 15.2% or £853 million to £6.30 billion in 2013 -- that's up from £5.45 billion in 2012.

"Digital advertising continues to grow at impressive rates simply because marketers are becoming more responsive and savvy to the increasing ways people consume content across different devices," says Tim Elkington, director of research & strategy at the UK Internet Advertising Bureau.

Among media owners who submitted revenue data to the IAB/PwC study, tablet-dedicated advertising has grown over 400% to reach at least £34.4 million in 2013 -- that's up from £6.8 million in 2012.

With smartphones now accounting for over three quarters (76%) of handsets in the UK, advertisers are continuing to invest more in mobile advertising. It grew, like-for-like, by 93% to £1.03 billion in 2013 from £529 million in 2012.

Mobile now accounts for 16% of all digital advertising spend – £1 in every £6 – compared to 10% in 2012.

Social media advertising spend on mobile increased to £221.8 million in 2013. Across digital overall, social media advertising grew 71% to £588.4 million. Consequently, the mobile channel now accounts for over one third (35%) of total digital social media advertising.

"Mobile is now more of a storytelling tool for advertisers rather than just an information device. Almost half of mobile ad spend is accounted for by TVs biggest advertiser categories – consumer goods and entertainment brands – which is testament to how important mobile has become for brands," said Dan Bunyan, the market study manager at PwC.