Technology | Media | Telecommunications

Tuesday, November 30, 2010

UK 4G Mobile is a Solution in Search of a Problem

It's not economically viable to upgrade the current UK mobile broadband networks to address traffic demands and improve user experience until 2015, according to the latest market study by Informa Telecoms & Media.

Due to the dense deployment needed to meet coverage requirements, UK HSPA networks will be able to handle current and future traffic demands in the medium-term. Informa does not expect traffic congestion to start appearing until 2013 -- and even then only in certain high-usage areas.

As such, Informa believes that large-scale 4G LTE deployments are not a required solution, unless user behavior changes significantly -- putting additional strain on mobile broadband networks.

"UK mobile broadband operators are faced with fierce competition while margins from voice are shrinking. Even though there is growing demand for mobile data by smartphones and USB modems, current UK mobile network deployments are so dense that it would make the introduction of LTE both an investment heavy and somewhat unjustifiable decision," said Dimitris Mavrakis, a senior analyst for Informa Telecoms & Media.

By upgrading current HSPA networks, UK mobile operators will be able to meet traffic demands and alleviate capacity constraints until 2015, after which the upgrade to LTE may be justifiable -- since economies of scale for hardware will have reduced infrastructure costs. Plus, a complete LTE ecosystem will be established, including handsets and portable devices.

Informa estimates that a new LTE deployment will cost an additional $58 million compared to upgrading existing networks, assuming that the LTE deployment begins during 2013.

According to Informa's assessment, the cost of each gigabyte (cost/GB) of traffic on the network is $6.5 during 2011, gradually declining to under $2 during 2015.

Given that network deployment is primarily coverage driven and networks are densely deployed, there is significant unused capacity in the network throughout the forecast period, increasing cost/GB above average values.

Monday, November 29, 2010

Apple iOS, Google Android Gain 75% of App Market

According to the latest market study by ABI Research, annual mobile application downloads will continue to increase and eventually peak in 2013, with Asia-Pacific becoming a key growth market.

With North America and Europe slowly reaching maturity after experiencing a period of high growth, emerging countries in the Asian market are expected to take the spotlight.

According to ABI's latest forecasts, application downloads in Asia-Pacific will experience a CAGR of early 30 percent and growth in application revenues of just over 20 percent during the period 2009-2015.

Apple iOS and Google Android handset owners currently account for 75 percent of total application downloads and the are expected to continue leading the market until 2015.

"We are getting more announcements of 3G networks about to launch commercially in Asian countries such as India, and more smartphones being shipped to Asia. This will prime these large untapped markets for mobile application downloads," says Fei Feng Seet, research associate with ABI research.

However, revenues generated from sales of mobile applications are expected to decline, due to high competition driving down average selling price of applications.

Application downloads in the Asia-Pacific region are forecast to reach 2.4 billion, or about 20 percent of the world's total available market, by 2013. India and China, the two most populated countries, are expected to generate much of that Asia-Pacific application growth.

ABI Research practice director Neil Strother adds, "With more applications being added daily, competition will be tough. Developers have to consider alternative business models such as in-app purchases and advertisements, to boost their profit margins and revenue."

Saturday, November 27, 2010

SEO and Social Media Marketing Gaining Share

As American marketers choose to invest more of their budget in social media marketing and search engine optimization activities, a new eMarketer report highlights the accelerating downside for traditional advertising.

Is 2011 set to be the year of Facebook, even among search marketers? Based on what U.S. advertisers told search marketing agency Covario, it's definitely the year that social media and social networking is adopted by everyone -- including the prior market laggards.

Traditional advertisers that are also savvy about unpaid search results have discovered how social media marketing can help build their search engine optimization efforts.

Respondents to the Covario survey said their top priority for SEO next year was integration with social media programs.

Social media will also play an important part in paid search efforts next year. Search ad campaigns on sites like Facebook and LinkedIn were top of mind for nearly half of advertisers surveyed -- far ahead of priorities like local search or dealing with recent changes to major search engines.

The report noted that major spending increases on Facebook search advertising are planned for 2011. Covario estimated advertisers would be spending 10 to 20 percent of their pay-per-click budgets on Facebook next year, giving the social networking site a bigger share of that market.

The report also indicated that rather than pulling dollars away from other paid search spending areas, these would be additions to the search budget -- essentially taken from other parts of the budget instead.

The anticipated outcome: traditional advertising share of budget will decline further, as a result of the continued shift in budget priorities and greater emphasis on improving marketing's return on investment.

Friday, November 26, 2010

Consumers have Spent $7 Billion on Virtual Goods

The development and ongoing adoption of social networking sites and the increasing use of feature-rich mobile smartphones have recently brought online gaming to the mainstream consumer market.

The rise of the virtual goods revenue model, which allows people to play for free and later pay for individual items within the online game or virtual world, has also contributed to explosive revenue growth of this market.

In-Stat now forecasts that by the end of 2010, over $7 billion will have been spent on virtual goods.

"Traditionally computer games have been the realm of teenage boys. However, social networking and pervasive smartphones are driving gaming beyond this core base," says Vahid Dejwakh, Industry Analyst at In-Stat.

Before, the gamer had to go and specifically find games he or she wanted to play, but now games are delivered via your social networking profile and your mobile phone.

In-Stat's latest market study findings include:

- The top 10 virtual goods companies earn 73 percent of current worldwide revenues.

- The emergence of social and casual games on social networking sites and mobile phones has created a 2D virtual goods market that exceeds $2 billion.

- The Americas and EMEA regions now have grown to account for well over a quarter of all virtual goods sales. However, Asia-Pacific still dominates the global market.

- In-Stat forecasts total virtual goods revenues will more than double by 2014.

- Several legal and tax issues could impact the virtual goods market, creating both risk and opportunity.

Thursday, November 25, 2010

Americans View 4.6 Billion Online Video Ads in October

comScore released market data showing that 175 million U.S. Internet users watched online video content in October for an average of 15.1 hours per viewer. The total U.S. Internet audience engaged in more than 5.4 billion viewing sessions during the course of the month.

Google Sites, driven primarily by video viewing at, ranked as the top online video content property with 146.3 million unique viewers. Yahoo! Sites captured the #2 spot with 53.8 million viewers, followed by Viacom Digital, jumping 4 positions in October with 52.9 million viewers.

VEVO secured fourth place with 47.6 million viewers, closely followed by with 47.4 million. Google Sites had the highest number of viewing sessions, crossing the 2.0 billion mark in October, and average time spent per viewer at 272 minutes, or 4.5 hours.

Americans viewed more than 4.6 billion video ads in October, with Hulu generating the highest number of video ad impressions at a record 1.1 billion. Tremor Media Video Network ranked second overall (and highest among video ad networks) with 533 million ad views, followed by ADAP.TV (435 million) and BrightRoll Video Network (374 million).

Video ads reached 45 percent of the total U.S. population an average of 34 times during the month. delivered the highest frequency of video ads to its viewers with an average of 50.8 over the course of the month.

Findings from comScore's October 2010 market study include:

- The top video ad networks in terms of their potential reach of the total U.S. population were: ScanScout at 44.3 percent, Break Media at 42.0 percent and BrightRoll Video Network at 41.9 percent.

- 84.1 percent of the U.S. Internet audience viewed online video.

- The duration of the average online content video was 5.0 minutes, while the average online video ad was 0.4 minutes.

- Video ads accounted for 12.8 percent of all videos viewed and 1.2 percent of all minutes spent viewing video online.

Wednesday, November 24, 2010

Mobile Phone Apps to Transform Business Models

The mobile phone applications market continues to grow. According to the latest market study by Generator Research, in 2015 over 255 million people worldwide will have downloaded and used mobile applications -- which represents about 22 percent of the worldwide smartphone user base.

Meanwhile, the revenue from mobile applications -- including in-app payments -- will grow to over $23 billion in less than five years.

By way of comparison, according to IFPI -- the recorded music industry trade group -- the value of worldwide sales of recorded music in 2009 was $17 billion. The modern mobile applications market is only 5 years old, whereas the recorded music industry is over 100 years old.

Although the mobile application market was pioneered in the late 1990s by companies like Nokia, the adoption was limited to mobile-savvy users who were prepared to spend time working around the technical intricacies and clumsy user interfaces typical of early smartphones.

However, the launch of the iPhone in June 2007 -- and the introduction of the Google Android mobile phone operating system in November -- were the keys that provided access to the mass market.

While the iPhone raised the competitive benchmark for smartphones, Android provided rival handset vendors with a high-quality operating system that had been designed specifically for smartphones, and at no cost to the handset vendor.

The ensuing wave of competitive activity has produced a range of attractive smartphones that are generally equipped with large, high-resolution, touch-enabled screens and are better optimized for browsing the web.

Consumers are now beginning to use their phones for more than making voice calls and sending text messages. And, one of the most important new usage patterns is the download and customization of mobile applications.

Strongly adopted by both the consumer and enterprise segments, and seeing impressive uptake in both developed and emerging markets, mobile applications are transforming the mobile industry and their associated business models.

Tuesday, November 23, 2010

U.S. Small Business Purchasing More Smartphones

American small businesses are embracing current mobile phone technology to increase their productivity. The total Small Office and Home Office (SOHO) smartphone market will grow 18 percent in 2014 compared to 2010, according to the latest market study by In-Stat.

The SOHO business category is comprised of U.S. businesses with one to four employees. In this category, the education and professional services sector will be the highest growth vertical market segment.

"Smartphone purchases across all verticals and all U.S. business sizes will increase 14 percent in 2014 compared to 2010," says Frank Dickson, In-Stat Research Vice President.

As both manufacturers and service providers increase the number of smartphone models and applications, In-Stat sees U.S. businesses finding greater utility from smartphones, thus enhancing worker productivity. The return on investment for providing smartphones is easily understood by these companies.

The total U.S. business handset market, which includes smartphones, feature phones, and basic handsets will see a slight contraction in 2010 before returning to slow but positive growth in 2011.

The utilities, mining, and manufacturing vertical markets are exceptions to the trend and will continue to see declines in handsets purchased over the forecast period.

Highlights from the In-Stat market study include:

- Purchases of basic mobile phones by U.S. businesses will decrease to 3.9 million.

- Feature phone purchases by U.S. businesses are set to decline 12.3 percent from 2010 - 2014.

- Small business feature phone purchases will decline by 14 percent from 2010 to 2014.

- The healthcare and social services vertical will purchase over 4.5 million handsets in 2014.

Monday, November 22, 2010

Cable Pay-TV Upside Now Limited to Fewer Markets

During the ongoing global recession and an increasingly competitive telecommunications environment, cable's triple-play of video, voice, and high-speed data services continues to attract new subscribers.

However, while worldwide growth in cable pay-TV video subscribers has been impressive, the North American and European growth has essentially halted -- those market are saturated and are already in a decline.

The majority of new cable TV subscribers will come from China (with low-cost services, when compared to the saturated markets), which will be the primary market that drives worldwide cable TV subscribers to over 500 million by 2014, according to the latest market study by In-Stat.

Meanwhile, the Latin America market is showing strong growth across all three of the triple-play components of the video, modem, and telephony service bundle.

"In the past, most cable TV operators viewed themselves simply as video service providers," says Mike Paxton, Principal Analyst at In-Stat. "But as the competition for pay-TV services evolved, cable's triple-play became an important tool to hold on to video customers, while up-selling additional services."

Today, in many mature cable TV markets, cable telephony and broadband cable modem subscribers are providing some revenue growth while cable pay-TV video subscribers are either experiencing no growth or lower demand is decreasing revenue.

In-Stat's latest market study reveals the following:

- Latin America will have over 4 times as many cable telephony subscribers in 2014 as compared to 2009.

- On a worldwide basis, cable TV subscriber households increased by 3 percent between October 2009 and September 2010. During that same twelve month period, cable modem cable telephony service subscribers grew by low double-digit percentages.

- Between October 2009 and September 2010, China added approximately 15 million new subscriber households.

- A combination of economic stress and cutthroat competition from satellite TV, telco TV and low-cost OTT service providers has driven down total U.S. cable pay-TV subscriber households by over 1 million in the past year.

Saturday, November 20, 2010

70% of UK Households Have Broadband Access

According to the latest market study by eMarketer, internet users in the United Kingdom have embraced the web and numerous online applications, but some demographic groups still remain offline.

eMarketer estimates more than 44 million people are online in the UK in 2010 and nearly 70 percent of all households have broadband access -- a higher rate of penetration compared to the U.S. market.

"The cultural divide between web users and non-users is widening," said Karin von Abrams, senior analyst at eMarketer. "For the majority of marketers, though, this is not a problem; their audiences are online in ever-greater numbers."

Apparently, Internet users of all ages are increasingly multitasking, connecting with brands on multiple platforms and responding directly to marketer campaigns, promotions and other offers online or via mobile.

Mobile web use, via smartphones, is up sharply in the UK.

About 31 percent of Internet users said they went online via mobile phone in 2010, compared to 23 percent in 2009, the Office for National Statistics (ONS) reported.

And, 26 percent said they accessed the web through a laptop's wireless connection away from home or work -- men were more likely than women to take advantage of mobile Internet access options.

"Growing numbers of people are using mobile phones, tablets or netbooks to access the Internet," said von Abrams. "Much of this activity still takes place at home, but web users are quickly discovering the entertainment and utility value of being able to network, watch video, read, search, shop and transact on the go."

E-tailers and brands may struggle to keep up with the demands of this audience as mobile takes a central role in enabling Internet access.

Friday, November 19, 2010

Standalone Mobile Hotspots Gaining New Adoption

A mobile Internet access hotspot, a device that connects to a wireless broadband service and provides a shared Wi-Fi LAN capability, is a relatively new concept -- with the first devices appearing during the last two years.

Yet, the number and types of mobile hotspots is growing almost daily and In-Stat now forecasts that revenue from standalone mobile hotspot devices will approach $500 million by the end of 2010.

Mobile hotspot service revenue is projected to reach into the tens of billions of dollars annually.

"Mobile hotspot device shipments are expected to grow for several years, but we expect some jockeying for the top position occurring between device categories," says Allen Nogee, Principal Analyst at In-Stat.

Smartphones with embedded mobile hotspots have already cut into shipments for battery-powered mobile hotspot devices. Automotive hotspot devices might do the same. Standalone mobile hotspot adoption will increase as they're positioned as home gateway devices -- mobile operators will sell these broadband services for in-home applications.

In-Stat's latest market study reveals the following:

- Smartphone mobile hotspot functionality allows a mobile operator to typically charge an additional $20 per month.

- While many automobiles will have mobile hotspot capabilities, only a small percentage of these car owners will activate their hotspot and pay for monthly services.

- A large market opportunity exists for mobile operators to provide 4G WiMAX or LTE broadband services to home users and compete with DSL and cable providers.

Thursday, November 18, 2010

How Pay-TV Providers Failed the A-la-carte Test

As consumers demanded greater flexibility and convenience in acquiring entertainment content, personalization of the user experience wasn't merely a nice-to-have feature -- it became a key requirement.

Unfortunately, most traditional pay-TV providers failed the test of providing more consumer-centric offerings. That mistake may prove to be deeply regrettable.

On-demand viewing of TV programs and movies in the U.S. will generate $10 billion dollars in online video annual revenue. In contrast, revenue from retail DVD video disc sales and rentals will continue in decline, with no future leveling in sight. Also, traditional pay-per-view service revenues are still flat across the board.

According to the latest In-Stat market assessment, there will be three growing on-demand video revenue streams:

- Transaction- Video-on-Demand (T-VOD) encompasses online TV rentals, pay-TV VOD rentals and pay-per-view.

- Subscription VOD (S-VOD) includes online video subscription services, premium TV channels, as well as free VOD with a pay-TV service.

- Electronic Sell-Through (EST) covers the purchase of TV and movie content, independent of subsequent content delivery methods.

The success of on demand electronic sell through (EST) will hinge primarily on the buy vs. rent decision. Realistically, EST cannot replace historic retail DVD video sales.

However, the migration of DVD rentals to online T-VOD services, will help fill this revenue gap. Subscription VOD will see the highest growth rate, but also the most intense competition.

"The transition to on-demand video does not mean that linear TV is coming to an end," according to Keith Nissen, Principal Analyst at In-Stat. "What we are seeing is the economics of the digital entertainment world have begun to shift. The future will be a hybrid ecosystem, made up of both linear TV and on-demand video revenue streams."

Pay-TV and broadcast TV services still generate the majority of the revenue, but both business models are currently under stress. On-demand viewing of video content, whether by transaction or subscription, is taking hold. In order to ensure the continuation of existing revenue streams, new value propositions must be created.

That said, many consumers demonstrated an interest in a-la-carte service offerings years ago. However, the incumbent pay-TV providers resisted the requirement. Now, it appears that those alienated consumers have found what they desire elsewhere. Even as providers show signs of a willingness to adapt to market requirements, it may already be too late to regain the trust of the marketplace. Only time will tell.

In-Stat's latest market study findings include:

- U.S. TV download revenue will more than triple between 2010 and 2014.

- Online a-la-carte rental of TV episodes will directly compete with online subscription TV services, such as Hulu Plus and Netflix, and may detrimentally impact the use of incumbent "TV Everywhere" services.

Wednesday, November 17, 2010

Why UK Superfast Broadband Plan is Underfunded

Delegates at the recent Westminster e-Forum were warned by Point Topic that the £530 million allocated to the planned broadband infrastructure development across the UK is inadequate funding.

The warning came from Point Topic Chief Analyst, Tim Johnson. Speaking to an audience of top broadband executives and politicians, Mr Johnson said, "The Coalition says it aims to provide the UK with the best superfast broadband in Europe, with a minimum 2 megabits per second connection speed for every household. To hit that they will have to find a lot more money from somewhere."

For example, Point Topic estimates that about 6.3 million homes and businesses will need some degree of subsidy to get superfast broadband services at an affordable price. But the whole amount proposed in the Spending Review would be needed just for the 900,000 or so who would require the biggest subsidy, leaving 5.4 million without up-to-date broadband services.

Johnson pointed out that the French are now proposing to spend €660 million (£570 million) of public money per year between now and 2025 to achieve their broadband aims, more than the UK is budgeting for over the whole Spending Review period.

Another €200 million (£170 million) per year is due to come from local government and European funds. "If anything, the French objectives are less ambitious than ours are supposed to be," according to Johnson. "They are also working on a more realistic timescale."

The French program will be funded mainly by a tax on fixed and mobile phone connections, very similar to that proposed for the UK by the previous government. "But that's water under the bridge now," said Johnson. "I’m sure the Coalition won't want to raise the money that way."

Johnson suggests instead that the money could be found by changing the priorities of the Coalition's £40 billion infrastructure investment program.

"Broadband helps more people, provides more benefits per pound and is greener than even the most modern railway," he said. "George Osborne needs to shave another billion or so out of other investment program to give us a truly modern economy."

Tuesday, November 16, 2010

Mobile Internet Revenue to Surpass $198B by 2015

According to the latest market study by ABI Research, the Asia-Pacific region is expected to consume 2,400 petabytes of mobile data annually by 2015, an estimated 23 percent of global data traffic.

The Asia-Pacific region is close behind North America, the global market leader with an expected consumption of 3,100 petabytes of mobile data.

However, mobile Internet services are forecast to generate $80 billion in Asia-Pacific, which only accounts for 14.5 percent of global revenue.

The disparity between high data consumption and low revenue contribution will largely be attributed to India's emerging 3G networks, which will be major contributors to the Asia-Pacific region's overall mobile traffic.

"In emerging markets such as India where penetration of personal computers is low, mobile Internet on handsets will be popular among consumers due to its affordability and portability," says ABI Research research associate Fei Feng Seet.

Competition is expected to drive mobile data revenue down -- seven private operators successfully secured Indian 3G licenses in September 2010. Tata DoCoMo and Bharti Airtel will be launching their 3G networks in India by year-end, joining in the action with state-owned operators BSNL and MTNL.

Competition for 3G subscribers in India will likely be intense, with Tata's plan to open 4,000 3G retail outlets, and the other private operators to launch by next year, it will be a buyer's market where consumers demand faster speeds, larger download volume, and lower price.

Mobile Internet service revenue will surpass $198 billion globally by 2015 with a 15.7 percent CAGR from 2009 to 2015, lagging in comparison to the expected 47 percent CAGR in global 3G data traffic volume which will eclipse 10 exabytes by 2015.

Monday, November 15, 2010

58.7 Million People in the U.S. Own Smartphones

comScore reported key trends in the U.S. mobile phone industry during the three month average period ending September 2010. The report ranked the leading mobile original equipment manufacturers (OEMs), smartphone operating system (OS) platforms and associated applications in the U.S. market.

The September report found Samsung to be the top handset manufacturer overall with 23.5 percent market share, while RIM led among smartphone platforms with 37.3 percent market share.

For the three month average period ending in September, 234 million Americans ages 13 and older used mobile devices. Device manufacturer Samsung ranked as the top OEM with 23.5 percent of U.S. mobile subscribers, up 0.7 percentage points from the three month period ending in June. LG ranked second with 21.1 percent share, followed by Motorola (18.4 percent share), RIM (9.3 percent share, up 0.5 percentage points) and Nokia (7.4 percent share).

58.7 million people in the U.S. owned smartphones during the three months ending in September, up 15 percent from the preceding three month period. RIM was the leading mobile smartphone platform in the U.S. with 37.3 percent share of U.S. smartphone subscribers, followed by Apple with 24.3 percent share. Google continues to gain ground in the market, rising 6.5 percentage points to capture 21.4 percent of smartphone subscribers. Microsoft accounted for 10.0 percent of smartphone subscribers, while Palm rounded out the top five with 4.2 percent.

Despite losing share to Google Android, most smartphone platforms continue to gain subscribers as the smartphone market overall continues to grow.

In September, 67.0 percent of U.S. mobile subscribers used text messaging on their mobile device, up 1.4 percentage points versus the prior three month period, while browsers were used by 35.1 percent of U.S. mobile subscribers (up 2.2 percentage points).

Subscribers who used downloaded applications comprised 33.1 percent of the mobile audience, representing an increase of 2.5 percentage points. Accessing of social networking sites or blogs increased 1.8 percentage points, representing 23.2 percent of mobile subscribers.

Playing games represented 23.1 percent of the mobile audience (up 0.5 percentage points), while listening to music increased 0.8 percentage points, representing 15.2 percent of subscribers.

Saturday, November 13, 2010

Online Advertising Spend in China at $3.7B in 2010

China's consumer market is the second-largest in the world, making economists, marketers and brand managers all bullish about the nation's upside potential. Moreover, a growing percentage of the population has access to the public Internet.

Advertisers are eager to reach those Chinese consumers. eMarketer estimates that online advertising spending in China will reach $3.7 billion this year -- up 37 percent over 2009.

Double-digit growth rates will continue through 2014, when ad spending in China will hit $9.5 billion -- more than double of this year's total.

"Online advertising spending will outpace all other media, as local and global brands target an internet user population larger than the entire population of the U.S.," said Mike Froggatt, eMarketer research analyst.

Online is dominated by display and rich media, but search advertising is gaining quickly.

eMarketer estimates display spending in China at $1.78 billion this year, compared with $1.44 billion for search and $480 million for all other online ad formats. By 2014, $4.28 billion will go to display and a similar $4.23 billion will be spent on search.

Total media spending will also see double-digit increases. Overall ad spending in China is projected to rise from $33.64 billion this year to nearly $60 billion by 2014.

Friday, November 12, 2010

Enterprise Wireless Apps Need Creative Marketing

Growth in wireless data spending by U.S. businesses will slow, moving down from an annual growth rate of 5.2 percent during 2009-2010 to 2.5 percent during 2013-2014, according to the latest market study by In-Stat.

Overall, In-Stat expects that U.S. businesses will spend close to $27 billion on wireless data in 2010.

"The strongest growth comes from the Administrative and Support Services, and the Education and the Professional Services verticals," says Frank Dickson, VP Research, Mobile Internet at In-Stat.

The mining vertical segment will have the steepest percentage decline, dropping from a 10 percent growth rate for 2009-2010 to a (-2 percent) contraction in 2013-2014.

I believe there's still a considerable upside opportunity in the U.S. market, but that growth will require significantly more creative -- enterprise user-centric -- market development activities.

The current marketing approach, to let the customers define the value prop and promote the service via word-of-mouth, clearly needs a boost from mobile carriers.

Additional data points from In-Stat's study include:

- Wireless handset spending by U.S. businesses will decline from $4.5 to $3.2 billion from 2010 to 2014 with the largest decline coming in the utility and manufacturing vertical segments at 10,000+ size of business.

- U.S. business spending on wireless voice will grow a modest $600 million from 2010 to 2014 with the 500-999 and 1,000-4,999 size-of-business markets showing only a slightly higher increase than the overall market.

Thursday, November 11, 2010

Average Traffic Per User is a Key Mobile Metric

According to the latest market study by Informa Telecoms & Media, mobile smartphone users generate two-thirds of the total mobile network traffic worldwide, despite the fact that only 13 percent of mobile phone service subscribers currently use smartphones.

Smartphone users spend more time on the Internet, and the data traffic that each one generates -- their average traffic per user (ATPU) -- will increase by a staggering 700 percent over the next five years.

Informa estimates that ATPU per smartphone currently averages 85MB per month. The iPhone is the highest-traffic-generating device followed by Android devices. It will retain this lead because Android devices will be spread across high-, mid- and low-user segments.

ATPU is a new metric devised by Informa to help the mobile industry measure the potential of new services and revenue streams -- such as mobile advertising. It could be a key differentiating parameter for judging the popularity of different OS platforms and related ecosystems.

"The traffic disparity between smartphone and non-smartphone is most pronounced in North America where 86 percent of mobile data traffic is currently generated by smartphone users, notably those using an iPhone or high-end Android devices," notes Malik Kamal-Saadi, principal analyst at Informa Telecoms & Media.

Smartphone ATPU here is forecast to reach a staggering 776MB/month by 2015.

Western Europe will experience similar growth. The smartphone ATPU in the region will increase almost 17 times to over 736MB/month in 2015 from under 44MB/month in 2009.

The rapid growth in these regions will be driven by both the fast migration of subscribers to higher-speed mobile networks, the proliferation of flat-rate data plans, and the availability of wide range of smartphones targeting different consumer groups with different lifestyles -- which enables people to consume content and services most relevant to them.

However, the highest smartphone ATPU will continue to come from South Korea and Japan with respective values of 271MB/month and 199MB/month expected in 2010 -- which is 2-3 times higher than the global average. These countries continue to be the overall market leaders in the global networked economy.

Wednesday, November 10, 2010

Right and Wrong Way to Launch Mobile TV Service

The costly failure of Qualcomm's FLO TV venture in North America will likely be used by business school professors as case study material -- to demonstrate how misguided product and market development strategy can lead to lost opportunity. But it's just one of the lessons-learned about mobile TV service launches.

Free-to-Air broadcast analog mobile video is booming in Latin America and China, and digital mobile TV services are ramping up throughout Asia, as well as Latin America.

In the U.S. market, new ATSC mobile DTV services are launching and will drive solid growth in a few short years. As a result, In-Stat forecasts that the worldwide market value of mobile TV tuners to exceed $400 million by 2014.

"The biggest problem for mobile TV services is that they are developing on a country-by-country basis," says Gerry Kaufhold, Principal Analyst at In-Stat.

"The fragmentation of standards in different regions with different adoption rates, poses a challenge for technology manufacturers developing unique decoder technologies for each segment. However, the growing revenue opportunity is still appealing."

In-Stat's latest market study research findings include:

- The CAGR for worldwide value of all mobile TV tuners will be over 12 percent from 2009 through 2014, and units will grow at nearly double that rate.

- Unit shipments for digital mobile TV tuners are expected to triple from 2009 to 2014.

- Devices that may incorporate a mobile TV tuner include mobile phones, laptops and notebooks, portable media players, PDAs & smartphones, portable navigation devices (GPS), portable game consoles, and automotive TVs.

- Some highly integrated tuner/demodulator SoCs include channel filtering, digital carrier and timing recovery, channel selectivity, gain control, and LO (local oscillator) generation, which eliminates the need for an external low-noise amplifier.

Tuesday, November 09, 2010

India and Indonesia Mobile Phone Market Growth

Total shipments of mobile phone handsets are expected to total 1.34 billion by 2010 and should maintain their momentum all the way to 2015 -- with more than 1.7 billion in handset shipments.

"The Asia-Pacific region currently makes the largest contribution to global handset sales," says ABI Research industry analyst Celia Bo.

Handset sales are projected to increase 9 percent this year compared to 2009, and will account for 38 percent of total shipments. China is clearly a major source of handset demand, but it is not the only one. India and Indonesia are also expanding their domestic demand.

The Indian handset market is expected to grow from 84.3 million handsets in 2009 to 104 million in 2010, a Year-over-Year growth of 24 percent. Within Indonesia, many of its 240 million people confidently purchased 33 million handsets in 2009 -- that figure is expected to surpass 37 million by the end of 2010.

Both markets have traditionally been fertile ground for Nokia distributors and dealers. In those markets, the Finnish manufacturer has enjoyed a market-share well above its global average.

Nokia has been very effective in producing ultra-low cost handsets that are robust and user-friendly and at the right price-point. However, Nokia has seen its market-share steadily eroded in the mid- to high-tiers as India's and Indonesia's aspiring middle classes purchase high-end feature phones and smartphones.

Vendors such as Samsung, LG and RIM have been net beneficiaries.

"A number of local handset vendors such as Micromax and Spice Mobile in India, and Nexian and SPC Mobile in Indonesia, are intent on catering to low-end and mid-tier end-users," notes ABI VP and practice director Kevin Burden. "Their game-plan is to push the envelope on providing increasingly feature-rich handsets at aggressive price-points."

Monday, November 08, 2010

Mobile Enterprise Apps are Improving Productivity

I've recently shared details about the renewed interest in enterprise mobile data applications. That interest has included both internal and and external mobile service applications. A desire to enhance employee productivity is often at the core of this market development activity.

According to the latest ABI Research industry vertical market analysis of mobile enterprise customers, global services business revenues are forecast to grow at a 4.3 percent CAGR over the next four years, reaching $133 billion by 2014.

Enterprise practice director Dan Shey says, "Mobile revenue growth for services businesses is driven by data usage. Mobile messaging, information access and applications delivered to the growing cadre of enterprise mobile devices help employees in this sector improve productivity, and serve and win customers."

Moreover, data services including text and email messaging, applications (apps), and data plans are a growing portion of this sector's revenues. Currently the mobile data related-service share of total mobile services revenues has already reached 32 percent -- by 2014 it will reach 42 percent.

However, while the services sector employs over twice as many people as industrial businesses, its share of mobile services revenues varies widely by region. But there's the apparent global upside opportunity.

For instance, for North America and Western Europe, the service sector will constitute 83 percent of all enterprise mobile services revenues and grow at a CAGR of 4.6 percent by 2014.

In contrast, the services sector in all other regions including Eastern Europe, Asia Pacific, Latin America, Middle East and Africa will equal 65 percent of enterprise mobile services revenues and grow at a more modest 3.3 percent CAGR through 2014.

Saturday, November 06, 2010

Renewed Demand for SMS Mobile Commerce Apps

Consider this U.S. retailer scenario. A customer calls a store about product availability. The product isn't in stock, so the in-store salesperson enters the consumer's mobile phone number into an automated alert system -- whereby an SMS message is sent to the consumer when the product is re-stocked. The consumer replies by SMS, and the product is put aside -- awaiting pick-up.

If you live in the United States, when has a retailer offered this simple value-added service to you? Yes, it's a rhetorical question. I've been asking similar questions since I wrote a related editorial for Telephony magazine -- way back in 2004.

Fast-forward to today. eMarketer reports that tech-savvy shoppers place great demands on multichannel retailers. A majority expect to be able to track, modify, complete and order from any channel -- according to a July 2010 survey from Sterling Commerce.

Busy consumers expect "smart-shopping" options: from product research to purchase and delivery.

As smartphones continue to proliferate and people routinely use their phone as a shopping channel, retailers must be ready to offer capabilities through a mobile device. Keeping in mind, the de facto capability on all phones is still SMS, and remains under-utilized by most businesses.

While many retailers focus on the price-comparison ability of smartphones, web users surveyed by Sterling Commerce said the single most important shopping function of a mobile phone is stock checks.

Retailers apparently still struggle with accurate assessments of in-store product availability. But as the Sterling Commerce report says, product availability is becoming a necessity for impatient shoppers: "Nearly two thirds (66 percent) of consumers surveyed considered it important to very important to be able to conveniently determine in-stock availability before visiting a store."

Internet users also told Sterling Commerce that looking up product availability was the feature they would most like to see in a retailer's branded mobile app. It was valued over store location info and in-store product reviews.

Friday, November 05, 2010

Mobile Video Calling Revenue at $1 billion by 2015

Numerous attempts, since the early 1960s, have been made to develop and commercialize video telephony products and services. Most ventures have since proven to be unsuccessful.

However, with the launch of mobile devices featuring front-facing cameras and pre-loaded mobile calling applications, interest in making real-time video calls on mobile phones has reemerged.

In-Stat forecasts that mobile video calling revenue will exceed $1 billion by 2015.

"The market for mobile video calling is hardly new," says Frank Dickson, VP, Mobile Internet at In-Stat.

He adds, "What is new is implementing mobile video calling over IP in a significant way. Apple's launch of the iPhone 4 and Facetime marks the point at which the competition for mobile video calling dominance began in earnest. Apple's capability to revolutionize the mobile video calling market is very real and no one in the ecosystem wants to be left behind."

In-Stat's market study found the following:

- The number of mobile video calling users will grow at a 115 percent CAGR through 2015.

- Asia-Pacific will consume 53 percent of the mobile video calling minutes used by 2015.

- Mobile video calling participants of note include Apple, Fring, OoVoo, Qik and Skype.

- In 2015, mobile video calling will result in over 9 exabytes in data traffic in North America alone.

Thursday, November 04, 2010

Low-Prices Driving Smartphone Shipment Growth

The global market for smartphones continues to forge ahead at a record pace. According to the latest market study by ABI Research, smartphones made up 19 percent of all handsets shipped in the second quarter -- that represents a 12 percent increase over the first quarter, and a 50 percent jump compared to the same quarter in 2009.

ABI's senior analyst Michael Morgan says that growth is being driven by falling handset prices. Cost is no longer much of an obstacle. One of the key remaining barriers to smartphone adoption in subsidized markets is now the cost of the data plan -- rather than the cost of the handset.

According to ABI, 10 percent would normally be considered very good quarter to quarter growth, Morgan notes, but in the smartphone segment that's not the case.

"The market is exploding," he says, "but there are so many players and so many operating systems that the question becomes, Can this market structure be sustained? Most observers say no -- it needs to boil down to three or perhaps four key operating systems."

In addition, the huge numbers of smartphones now connected in the U.S. market -- especially iOS and Android models -- are creating network capacity concerns that are impacting the value chain within the mobile ecosystem.

Apple shipped about 8.4 million iPhones in Q2, of which about 3 million were iPhone 4 models that only launched a couple of weeks before the end of the quarter. The Q3 results were even more impressive, posting a 68 percent quarter-over-quarter growth.

HTC also did very well, with shipments growing from 3.3 million to 5.3 million units the by the start of the third quarter, and its improvement continued through Q3.

RIM recently launched its latest OS but, says Morgan, "RIM hasn't seen the full benefit of its OS launch yet," with QoQ growth moving only from 10.5 to 11.2 million shipments.

Wednesday, November 03, 2010

$10 Billion Global Mobile Gaming Upside by 2014

The rapid growth in mobile phone game apps continues to drive the mobile gaming industry, with the total market on track to reach nearly $10 billion worldwide by 2014, according to the latest market study by Futuresource Consulting.

In 2010, the Apple App Store alone, excluding iPad, is forecast to generate around $1.7 billion in games revenues globally, accounting for almost 30 percent of the total mobile gaming market.

In comparison, traditional mobile games account for 60 percent, with other apps stores, in particular the Android market, representing the remaining 10 percent.

"There is no doubt that paid-for apps games are leading the gaming charge," says Patrik Pfandler, Lead Mobile Analyst at Futuresource, "and our forecasts show apps-based gaming will account for more than 95 percent of total mobile gaming revenues by 2014 -- that's despite the glut of free game apps out there."

The growth of in-apps payments is a key ingredient in the commercial success of apps gaming. The freemium business model -- where the game is downloaded for free, but incorporates micro-transactions and virtual currencies -- is encouraging users to unlock additional features, new levels and premium content.

According to Futuresource, the accelerating adoption of smartphones has been the primary driver in apps growth, with high quality touchscreens, powerful programmable processors, improved graphics and cameras, increased storage, accelerometer and GPS all becoming standard.

Futuresource expects smartphone ownership to grow by 50 percent in 2010, achieving 270 million units worldwide, with the uptake being driven by the increased availability of devices, continued strong sales of iPhones and a growing demand for Android-powered mobile handsets.

And, although the Android market currently lacks the variety of quality apps and games titles that can be found in the Apple App Store, Google's mobile platform is rapidly gaining a share of the apps market, as more games developers and publishers begin to migrate across.

Tuesday, November 02, 2010

169 Million 4G Mobile Phone Subscribers in 2015

At the end of the second quarter of 2010, more than five billion mobile subscriptions were active worldwide, according to the latest market study by ABI Research.

Emerging markets such as India, Indonesia and China have continued to add mobile connections at a rapid clip, and show no signs of slowing down. Africa led the growth cycle, registering 4 percent in new subscribers between 1Q and 2Q 2010.

"Africa's low mobile penetration and usage are now attracting multinational mobile operators such as Bharti and Vodafone to the world's last remaining growth market," says ABI Research vice president, Jake Saunders.

This new competition will lead to lower monthly tariffs and will allow more people on the continent to access a mobile phone.

In developed markets, subscriptions continue to grow despite penetration levels greater than 100 percent. The introduction of high-speed 4G data technologies such as WiMAX and LTE will ensure that subscription growth remains robust even in these hyper-saturated markets.

WiMAX, the first-to-market 4G technology, has grown 91 percent between Q1 and Q2 2010, driven by the strong growth of operators such as Clearwire in United States and UQ Communications in Japan.

"The success of the HTC EVO and popularity of Clearwire's service shows that consumers are very interested in fast, reliable mobile broadband," notes Saunders. "The imminent launch of LTE in the United States, Japan and Europe will also ensure continued growth in mobile subscriptions over the next few years."

ABI Research expects mobile subscriptions to reach 6.4 billion by 2015, of which 169 million will be subscribed to 4G technologies.

Monday, November 01, 2010

Were Cable MSOs Prepared for the OTT Disruption?

Why are the legacy U.S. cable service providers only now starting to address industry analyst concerns that they seem unprepared for the emerging alternative low-cost over-the-top (OTT) video offerings? Could this unfortunate scenario have been avoided, and did they have the means to counter this offensive?

Traditionally, the cable TV industry has relied upon MPEG-based technology to transport digital video signals. But there has also been a longstanding awareness of Internet Protocol (IP) video solutions, according to the latest market study by In-Stat.

There's three reasons that MSOs should have acted sooner: In comparison to MPEG, IP is considered to be less-expensive and more efficient. An integrated DOCSIS cable modem is a capable, and yet often underutilized, part of the digital cable set-top box. The availability and applications of IP video has expanded exponentially -- this ongoing transformation was apparent for several years. There's no mystery here.

"When it comes to IP transport, the cable modem is the perfect conduit of IPTV to the cable TV household," says Mike Paxton, Principal Analyst.

"In fact, cable modems are already performing this task in millions of households, just not through the digital set-top box to the TV set. Instead, this IP video is commonly being displayed on the PC."

Of course, IP video is also on more TV screens as a result of the agile upstart vendors, such as Roku, having the foresight to got direct-to-consumer -- by-passing the sedate legacy pay-TV service distributors.

In-Stat's latest market study reveals the following:

- The percentage of cable set-top boxes (STB) with integrated modems will double from 2009 to 2014.

- Worldwide legacy digital cable STB unit shipments are forecast to decline by 8 percent in 2010.

- Regional markets poised for growth include Europe, where the demand for high-definition (HD) cable STBs is fueling some growth.

- Revenue from digital cable STBs in Latin America will approach $200 million by 2014.

- The value of semiconductor components used in cable STB products was $2.8 billion in 2009, only fractionally higher than in 2008.