Technology | Media | Telecommunications

Friday, August 28, 2015

Demand Volatility in the Consumer Wearables Market

Over the last 18 months, the wearables market has started to mature and has grown considerably with new players introducing numerous products -- such as fitness bands, smartwatches, smart glasses, and other sensor-enabled devices.

Using data compiled from approximately 328,000 consumer reviews since January 2014, the latest market study by Argus Insights reveals that after the holiday season of 2013, consumers briefly lost interest in wearables before steadily increasing demand reached its high point in January 2015 where it was four times the level of a year earlier.

Since then, however, demand has slowed.

According to the report, all the media buzz about the Apple Watch introduction stole consumer interest away from Fitbit and other wearables, as potential buyers waited to determine whether they wanted the Apple Watch.

Interest in Fitbit devices resumed and grew once the Apple Watch details were announced, as Fitbit and other wearable manufacturers saw a strong 2014 holiday period. Since their IPO, Fitbit has continued to gain mind-share with more stakeholders in the marketplace.


Consumer delight -- measured from the volume and the content of consumer reviews -- showed that Fitbit was achieving a very high level of buzz, though the satisfaction of their consumers is dropping while Apple is quickly gaining in delight.

Other surprising insights include high consumer delight scores for smartwatch manufacturers Motorola and LG, as more consumers report their satisfaction from smartwatches than from fitness bands.

"Our analysis of review volume for the wearables market correlates directly with unit sales volume, and we have seen a significant slowing in consumer demand for both wearables in general and fitness bands in particular," said John Feland, CEO and founder, Argus Insights.

Consumers expect their wearable device to do more than simply count steps, just as they expect to do more than just make phone calls with their smartphone.

Mr. Feland believes it's clear that as the Apple Watch, the Moto 360 and the LG Watch Urbane outperform fitness bands in the hearts of consumers. Fitbit and others in this category will need to add more to their offerings to keep consumers engaged and coming back for more.

Thursday, August 27, 2015

Digital Practitioners will Lead, Plan and Execute Change

We knew this day would come, where the leading enterprise industry analysts would all acknowledge that business technology has evolved. Moreover, the integration of digital requirements into most work processes has resulted in a world where every capable employee is potentially a skilled Digital Practitioner.

"Today's employees possess a greater degree of digital dexterity," said Matt Cain, research vice president at Gartner. "They operate their own wireless networks at home, attach and manage various devices, and use apps and Web services in almost every facet of their personal lives. They participate in sharing economies for transport, lodging and more."

Gartner believes that the traditional IT organizations must figure out how to effectively utilize all employee 'digital dexterity' -- somewhat regardless of their primary role and responsibilities.

Key Point: digital-savvy talent is in short supply, when restricted to just the typical IT support team. Therefore, tap into it, wherever you can find it. The digital expert that you seek may be hidden in plain view.

Gartner also believes that creating today's 'digital workplace' is a key business transformation strategy that promotes employee engagement through a more open, self-directed computing environment.

According to their assessment, making computing resources more accessible in ways that match employees' preferences will foster progress -- by providing empowerment and personal ownership.

The digital workplace strategy should therefore complement HR initiatives, by addressing and improving factors such as workplace culture, autonomous decision making, work-life balance, recognition of digital practitioner contributions and personal growth opportunities.

Over the next several years, Gartner predicts that IT spending will increasingly occur outside the consolidated IT budget. "Already, the Shadow IT investments often exceed 30 percent of total IT spend," said Mr. Cain. "This will only increase, because demand for new apps and services to pursue digital opportunities outstrips the capacity of the IT team to provide them."

At the same time, public cloud services will mature further, whereby power and influence will shift increasingly to those technically-savvy people who are frustrated by the slow pace of traditional enterprise IT.

With accelerating high-tech, Gartner said progressive organizations that can embrace and exploit new and emerging technologies will be in a position to reap a substantial competitive advantage. Besides, some of the more advanced practitioners believe they're ready, willing and able to help lead, plan and execute their company's digital business transformation agenda.

Wednesday, August 26, 2015

Mobile Service Providers Adapt to IoT and M2M Demand

Given the current saturation in many of the mobile communication markets across the globe, it's not surprising that Machine-to-Machine (M2M) and the Internet of Things (IoT) technologies are now a high priority for telecom service providers who seek ways to create new revenue streams.

According to the latest market study by IDC, the global installed base of IoT will reach 28.1 billion devices in 2020, generating a forecast revenue of $7.1 trillion -- with cellular M2M being an important subset of this new growth.

Though mobile connectivity provisioning has historically been the telecom service provider's primary value proposition in M2M, their strategies are now evolving to embrace other parts of the value chain -- particularly those with higher margins, such as software and services.

IDC believes that telecom network operators will continue to play a key role in building the M2M IoT market. According to the IDC assessment, telecom providers should act as hubs for innovation and keep educating the market about the benefits of their M2M solutions.

This transition is most essential in developing markets that are still in the very early stages of maturity -- such as those within the Central and Eastern Europe (CEE) region.

"With the telecommunications services revenues from core voice and messaging services declining, telcos are on the lookout for new growth opportunities. M2M is certainly one of them," said Ina Malatinska, research analyst at IDC.

IDC believes that mobile connectivity represents only about 10-15 percent of the total M2M revenue pie. It has become a commodity and we expect connectivity ARPUs to continue falling dramatically.

Telecom providers are expected to place more emphasis on developing critical data analytics capabilities. As the market evolves from remote monitoring and control to business processes optimization and identification of new business models, data analytics will become essential.

IDC says that in the near future, data will represent the most important enterprise asset, and companies will need capable software tools to extract relevant information from their big data storage.

This is where data analytics delivers value -- enabling enterprises to develop new business models, deploy innovative services, get closer to their customers and generate new revenue streams.

Tuesday, August 25, 2015

How Mobile Apps Enable Breakthroughs in Healthcare

Telecom services and American healthcare technology are becoming closely intertwined. According to the latest market study by Parks Associates, over two-thirds of U.S. broadband households already use a healthcare related mobile software app or portal on a monthly basis.

"Connected health devices and apps are starting to open healthcare services to larger populations, but right now, consumers spend less than 1 percent of their time interacting with the healthcare system through hospitals, clinics, doctors, and health coaches," said Harry Wang, research director at Parks Associates.

Online health services are starting to open new engagement opportunities, and companies in the connected home space -- such as broadband and security service providers -- can help to drive consumer engagement by integrating connected home technology with healthcare solutions.

By 2019, millions of households will benefit from a smart home platform that offers solutions in at least one of three categories -- safety or independent living, wellness, and health.

"The influx of direct-to-consumer healthcare marketing and mobile applications is driving change in behaviors, both on the clinical side and the patient side," said Nancy Green, healthcare global lead at Verizon Enterprise Solutions.

Moreover, wearable technologies are enabling home-bound patients to stay in close contact with their healthcare providers, particularly in between clinical visits.

This important new mobile connection will go a long way in helping reform the healthcare system through remote monitoring, while better providing care for patients.

New care pathways through telemedicine and remote patient monitoring are being opened up, offering patients and their care providers greater options in terms of how, when, and where treatment and follow-up are provided.

While these advances are helping to improve the quality of and access to patient care, the digital transformation of healthcare delivery is also triggering new skills and new organizational structures.

Parks Associates believes that the integration of these new approaches into existing care models will require significant coordination along the entire healthcare value chain. That said, it's all good progress.

Monday, August 24, 2015

Pay-TV Subscriber Losses Continue in North America

The video entertainment distribution sector is still evolving. Case in point: the pay-TV operators within North America continue to be challenged during the second quarter of 2015, as significant new subscriber losses pose an ongoing threat to their core business model.

The latest market study by Strategy Analytics indicates that the top twenty pay-TV operators in the U.S. -- accounting for more than 95 percent of the total market -- reported subscriber losses of 479,000, while the Pay-TV operators in Canada lost 53,000 customers.

According to their assessment, total subscribers among the tracked pay-TV operators in North America declined at the highest rate that they've seen so far.

The transition from analogue to digital television platforms hasn't improved the situation. Digital TV subscriptions in the U.S. market fell by 62,000. Moreover, in Canada, digital TV subscriptions declined for the second straight quarter -- with estimated losses totaling 9,000.

While subscriber counts have been somewhat volatile for several years, the Average Revenue per User (ARPU) has almost consistently been on an upward trajectory.

By and large, pay-TV service providers in North America have been able to maintain their profitability by consistently increasing subscription fees for their remaining customers.

"The subscriber losses in the second quarter were across all of the pay-TV platforms, including cable, satellite, and IPTV. However, going forward, we believe there are clear opportunities for the pay-TV providers as they begin to roll out Over-the-Top (OTT) video services, similar to the Dish Network Sling TV offering," said Jason Blackwell, research director at Strategy Analytics.

Regarding the specific second quarter results of the pay-TV operators, Dish Network lost 81,000 subscribers, even after accounting for growth in the company's new OTT service, Sling TV.

At the same time, the Dish Network Video ARPU increased by 2.5 percent quarter-over-quarter and 4.5 percent year-over-year. Similar increases were reported by DirecTV, Charter, and Time Warner Cable.

Blackwell added, "Verizon will debut its OTT service this year, along with Comcast and CenturyLink. Although nothing has been announced, AT&T (with its DirecTV acquisition) is predicted to roll out an OTT video service, and the company is uniquely positioned to tie that into a variety of nationwide bundles that could also include fixed or mobile broadband, satellite TV, and wireless phone service."

Friday, August 21, 2015

Telecom Providers Deliver Managed Healthcare Solutions

In most developed markets around the globe, there's a key trend that has been in motion for some time. The convergence of digital business technology and internet connectivity is disrupting, transforming and sometimes collapsing industries.

Technologies like cloud computing, enterprise mobility, big data and the Internet of Things are driving the surge in digital business transformation and rapidly accelerating the pace of change.

"Customers are no longer interested in silo-based apps or services. They demand holistic, end-to end solutions for their connected lives and companies understand the importance of convergence for those solutions to materialize, thus creating partnerships between many sectors," said Andrew Milroy, senior vice president at Frost & Sullivan.

Milroy says connectivity is enabled by the proliferation of connected devices and digital technology enablers create disruptions in various commercial sectors that are already in transition, forcing convergence and thereby creating possibilities to build solutions for emerging demand.

Moreover, identifying new convergence areas could help to stimulate the development of new business models and new product development. For many business leaders in highly competitive industries, the best way to enable their forward-looking growth is to fully understand the convergence landscape.

Besides, Frost & Sullivan believes that digital technology is allowing the savvy leaders to totally rethink and radically improve their effectiveness, as they transform their organizations and core business processes to meet key stakeholder requirements.

With a culture of innovation, the progressive companies can turn these market disruptions into new opportunities -- but only of they're able to respond in a timely manner. Conversely, the laggard companies are likely to put their business at risk when they don't monitor disruptive changes in other industries and then learn how to innovate within their own realm.

Managed Healthcare Market Opportunities

Clearly, telecom service providers are well positioned to provide solutions to these emerging digital business application scenarios. Social trends, like aging societies, demand specific forward-thinking solutions around assisted-living.

As the cost of healthcare rises and leaders address the challenges posed by aging populations, greater focus must be placed upon preventive care and providing assistance within the home -- essentially creating the environment for managed aging-in-place.

Milroy said, "This new healthcare paradigm will see the hospital is coming to you rather than you going to the hospital, and there are huge new opportunities for information and communication technology (ICT) suppliers whose solutions will enable and drive this transformation."

Established telecom service providers, such as AT&T and Deutsche Telekom, have used the power of convergence in their connected home platforms -- called "Digital Life" and "QIVICON" respectively. Also, Google has evolved from their traditional business area to form new partnerships. This is merely the early stages of a series of related trends that are just beginning to unfold.

Thursday, August 20, 2015

Entertainment, Media & Communications Market Update

Consolidation continues across the key sectors of the digital technology markets within America. According to the latest market study report from PwC, entitled the "U.S. Entertainment, Media & Communications (EMC) Deal Insights," the second quarter (Q2) 2015 deal value reached $76 billion -- that's compared to $39 billion in the first quarter (Q1) 2015.

Furthermore, PwC believes that this trend is being driven by major deals in the Cable ($63 billion), Internet & Information ($6 billion) and Communications ($3 billion) sub-sectors.

The abandonment of a major Cable consolidation in Q1 2014 originally valued at $46.2 billion had opened the door for a new and even bigger proposed consolidation in Q1 2015 valued at $55.6 billion.

Meanwhile, overall mergers and acquisitions (M&A) deal volume, which declined markedly in Q1 2015 (198), recovered some lost ground in Q2 2015 (208) – spurred by Advertising & Marketing (57), Publishing (37) and Internet & Information (28) sub-sectors.

While deal volumes typically soften over the summer months, PwC says that they now foresee the M&A market to remain robust into the third quarter of 2015, and potentially beyond.

Following on the strength of Q1 2015 (which included six megadeals with $34 billion of value) the latest megadeals -- defined by PwC as deals with value greater than $1 billion -- in Q2 2015 closed even higher with seven megadeals and $71 billion of announced value.

Those seven megadeals accounted for 94 percent of total announced deal value during the quarter. However, regulatory approval of one of the seven transactions remains outstanding, with another megadeal in the Cable space contingent upon its completion.

Broader M&A volume within Entertainment, Media & Communications may have gotten off to a slow start in 2015, but PwC says that they have already seen the anticipated increase in deal volume and value by the halfway mark of this year.

Outside of the megadeals that dominate the EMC landscape, PwC continues to see technology innovation and digital transformation as key drivers of M&A in this sector. Moreover, when coupled with shareholder pressure on companies to deliver ongoing growth, PwC expects M&A activity will continue to be robust well into the second half of 2015.

Example Sub-Sector Activity and 2015 Outlook:

The Internet & Information services sub-sector announced deal volumes fell from 42 in Q1 2015 to 28 in Q2 2015 -- PwC notes that's this sub-sector's lowest quarterly total in recent history.

While volumes lagged, announced deal value increased $3.8 billion over the prior quarter, buoyed by two megadeals. It remains to be seen whether the most recent quarter volume represents an anomaly or the beginning of a sustained trend.

As one of the most natural conduits for all things digital, it is likely that deal volumes will rebound going forward. We'll have to wait for the results from the next quarter, to see if the deal upside improves the overall market outlook.

Wednesday, August 19, 2015

Portable Computing Market Outlook Remains Flat

The personal computing (PC) market has now undergone numerous attempts to stimulate a high-growth revival, without success. Back in March of 2014, I shared a market update entitled "Final Closure: End of the Wintel Era is Now Undeniable."

To some market observers, that perspective may seem overly pessimistic. And yet, here we are in August of 2015 and the outlook doesn't appear to have materially changed. Granted, there's some pent-up demand that exists in the PC marketplace, but the real solution is unlikely to be 'more of the same' vendor response.

​The recent launch of Microsoft Windows 10 during the second half of 2015 now has many PC OEM vendors hoping that the revamped operating system software will trigger a replacement opportunity for aging laptop and notebook computers.

According to the latest market study by ABI Research, total system shipments for portable computing are predicted to reach 165 million units for full-year 2015 -- which is essentially flat compared to 2014 levels.

That said, assuming that the no-cost upgrade promotion to Microsoft Windows 10 is successful, much of the existing installed base are likely to use their current computer hardware for at least a little while longer.

From a market research perspective, the portable Notebook PC category consists of four segments: netbooks, laptops, Chromebooks and ultrabooks.

"Segment growth is occurring in Chromebooks, much in part due to purchases by schools," said Jeff Orr, research director at ABI Research.

ABI believes that growth for 2015 is also in affordable ultra-portable PCs, where thin and light designs address more mobile use cases by reversing the display panel flat like a tablet, or having the screen separate entirely from the keyboard.

Other key findings from the latest study include:
  • Chromebook shipments are expected to increase 35 percent annually by the end of calendar year 2015 to 7 million units.
  • Sales led until now by North American educational buyers will yield to purchases in other geographic markets over the next 5 years, resulting in a 22 percent CAGR.
  • Ultra-portable PCs, including the so-called 2-in-1 convertible and detachable display models, experienced typical 1Q seasonality with a 24 percent drop in quarter-over-quarter shipments to 7.2 million units.
  • Apple MacBook Air continues to lead all ultra-portable PC OEMs, though Lenovo and Dell are closing the gap. The balance of the year is expected to remain soft for growth.
  • Laptops, the bulk of the Notebook PC category, are forecast to experience a unit volume decline of about 7 percent year-over-year.

Tuesday, August 18, 2015

Latin American Wireline Telecom to Reach $44.8 Billion

Traditional wireline communication investment has stagnated in numerous developed markets around the globe, but there's still some upside opportunity for new infrastructure deployment within the emerging markets.

Case in point: the number of fixed lines for voice and Internet services in Latin America will reach 163.8 million in 2015, that's an increase of 2.3 percent over 2014 deployments, according to the latest market study by Pyramid Research.

This represents a broadband penetration rate of just 12 percent and a voice telephony penetration rate of 17 percent of the population. Clearly, the forward-looking growth potential is still significant.

While the overall number of fixed lines will grow at a CAGR of 2.1 percent, fiber-to-the-home or business (FTTH/B) connections will increase at a CAGR of 34.9 percent over the next five years.

"Growth within fixed communications markets will be mainly driven by the increase in broadband lines," said Marcelo Kawanami, senior analyst at Pyramid Research. "By year-end 2020, Pyramid Research expects Latin America to have 181.9 million fixed broadband lines."

Pyramid Research now forecasts that fiber-optic communication connections will account for 6.9 percent of broadband lines (5.1 million lines) by year-end 2015 -- that's up from 5.1 percent in 2014.

While this indicates rapid growth, xDSL remains the broadband technology that is most widely used, representing 57.5 percent of the total Latin American broadband lines in 2014.

Telecom network operators continue to grow FTTH/B service deployment, but given the typical high-price for broadband internet access through fiber-optic technology in this market, service coverage is likely to be restricted to selected areas within major cities.

That being said, Pyramid Research expects that xDSL technology will remain the dominant wireline broadband method within Latin America during the next few years -- still maintaining over 40 percent of all broadband connections at the end of 2020.

"In all major Latin American countries, governments have developed National Broadband Plans to foster the expansion of broadband in remote locations which have not been historically served due to the high cost of network deployment and uncertain revenue potential," says Kawanami.

Over the next five years, traditional voice services carried through circuit-switched networks will decline by a CAGR of 6.3 percent in Latin America, even though the market will experience the increased adoption of VoIP services.

However, Internet service revenue is forecast to expand at a CAGR of 6 percent in the LATAM region between 2015 and 2020. Pyramid Research now expects the Latin American fixed communications service market to be worth $44.8 billion in 2015. Note, mobile communications revenue is not included in this forecast.

Monday, August 17, 2015

Ongoing Status-Quo for U.S. Broadband Internet Market

If you look back over the past decade, while the Global Networked Economy has evolved as the leading nations in the Asia-Pacific region continue to expand their infrastructure capabilities, the market for broadband Internet access in America has been remarkably stable.

While the FCC has historically been tasked with administering the nation's communications laws and associated regulation, it has struggled to have an impact with the part of its charter that's focused on "supporting the nation's economy by ensuring an appropriate competitive framework for the unfolding of the communications revolution."

By and large, even in the major metropolitan areas of the country, a duopoly still exists -- where the majority of wireline broadband internet subscribers are being served by either a single local incumbent cable company and/or a single legacy telephone service provider.

Once again, Leichtman Research Group (LRG) has provided some illuminating market data that really demonstrates how the status-quo is being preserved, and how active competition in each area is essentially contained to small, relatively insignificant, changes.

LRG found that the thirteen largest pay-TV providers in the U.S. marketplace – representing about 94 percent of the total market – acquired nearly 1.2 million net additional broadband Internet subscribers in the first quarter of 2015. In summary, at the current average price for broadband service, the market is saturated.

Moreover, these top broadband providers now account for over 88.5 million subscribers -- with top cable companies estimated to have about 53 million broadband subscribers, and the top telephone companies (Telcos) estimated to have over 35.5 million subscribers.

Other key findings from the quarterly study include:
  • Overall within the U.S. market, broadband additions in the first quarter (1Q) 2015 were similar to those in 1Q 2014.
  • The leading cable companies accounted for 86 percent of the net broadband additions for the quarter, versus the leading Telcos.
  • The top cable companies added over 1,000,000 broadband subscribers in 1Q 2015, representing 104 percent of the net additions for the top cable companies in 1Q 2014.
  • The top Telcos added about 160,000 subscribers, estimated at 81 percent of the total net additions the top telephone companies achieved in 1Q 2014.
  • AT&T and Verizon added 573,000 subscribers via their U-verse and FiOS fiber-based services in 1Q 2015, while having a net loss of 463,000 legacy DSL subscribers.
  • It's estimated that U-verse (AT&T) and FiOS (Verizon) broadband subscribers now account for 54 percent of Telco broadband subscribers  -- that's compared to 40 percent two years ago.
  • The top cable broadband providers now have a 60 percent share of the total market versus Telcos for the first time since 2Q 2005.
  • Over the past year, there were about 3,000,000 net broadband subscriber adds – compared to about 2,700,000 over the prior year.

According to the LRG assessment, cable companies maintained their position for broadband service offerings in 1Q 2015, adding over 1,000,000 subscribers during that quarter. This was the first quarter with over a million net broadband adds for cable since 1Q 2008.

Cable also accounted for 90 percent of the 3,000,000 broadband additions over the past year, growing their market share versus Telcos back to 60 percent for the first time in nearly a decade.