Technology | Media | Telecommunications

Friday, September 16, 2016

Pay-TV High Cost Continues to Drive Shrinking Demand

Video entertainment demand has been evolving rapidly. Yet traditional pay-TV service providers are still challenged to address the needs of more progressive consumers. Case in point: subscriber awareness of their "TV Everywhere" offerings -- the ability to watch programming from their pay-TV provider on devices other than a TV -- remains low at 36 percent, which is unchanged since 2013.

Meanwhile, pay-TV marketers are attempting to capitalize on another growing trend. Skinny bundles, TV subscription packages composed of selected channels targeting specific customer segments, have the potential to attract elusive younger consumers to pay-TV, according to the latest market study by Altman Vilandrie & Company.

However, their survey also finds that two-thirds of older consumers, typically the most loyal subscribers of legacy pay-TV, say they are wasting money for channels they don’t use -- so, skinny bundles could cannibalize the service provider's existing subscriber base.

Skinny Bundles Market Development

Skinny bundles are designed to appeal to younger viewers, who have come to expect more consumer choices and flexibility, with targeted, affordable packages.

Nearly 70 percent of non-subscribing 18-24 year-olds -- more than any other age market segment -- agree that they would consider subscribing to pay-TV if there were "more affordable channel lineups that fit my viewing tastes."

The traditional pay-TV industry is anxious to appeal to young consumers, who subscribe at much lower rates than other age groups. This market segment includes both cord-cutters, who have dropped pay-TV, and cord-nevers, who have never subscribed (and likely never will, given the current cost of pay-TV services).

"The surprising level of dissatisfaction with unwanted channels we found among older subscribers shows the difficult balancing act skinny bundles create for pay TV providers," said Jonathan Hurd, director at Altman Vilandrie & Company. "It is critical for providers to design optimal bundles that maximize adoption of new subscribers while simultaneously limiting appeal to existing customers – no small task, based on simulations we've run using the survey findings."

Skinny bundles of live TV channels from internet providers Sling TV, PlayStation Vue, and soon Hulu seek to target price sensitive consumers who are comfortable watching online video. But Dish’s new Flex Packs have extended the skinny bundle concept to traditional pay-TV.

Skinny bundles may end up attracting older consumers disproportionately: 63 percent of pay-TV subscribers aged 55 and older -- more than any other age range -- agree that they are "wasting money because my pay TV service includes many TV channels that my household does not watch."

Outlook for Pay-TV Subscriber Growth

And yet, this age group is far less likely to switch to online video services -- only 30 percent watch TV shows or movies online weekly -- but may end up downsizing to skinny bundles that include traditional pay-TV channels.

The survey confirmed that young consumers turn to more economical online video options rather than traditional pay-TV services. Seventy-five percent of 18-34-year-olds watch online video from Netflix, Amazon Prime, or Hulu Plus at least once per week -- that's far more than the 22 percent of consumers age 55 and above.

And the trend among younger consumers toward online sources continues to grow. In a typical week, nearly 80 percent of 18-24-year-olds watch TV shows or movies on the Internet -- that's up from 60 percent five years ago.

Thursday, September 15, 2016

Blockchain: Exploring the Numerous eCommerce Apps

The emergence of Bitcoin, an alternative cryptocurrency, has been a catalyst of change for the financial services sector. A significant amount of these currencies has been traded across the globe on the dedicated exchanges, while some forward-thinking merchants already support Bitcoin as a payment option.

However, with a relatively small base of current users, attention is turning away from Bitcoin towards the wider potential of the Blockchain technology that underpins them. Several traditional banks are now testing the core blockchain technology as a means of reducing settlement costs, while a host of other use cases -- i.e. smart contracts and ID verification -- are also seeing their first deployments.

Blockchain Application Market Development

Meanwhile, blockchain technology will likely have a key role to play in the future of transaction settlements. Many of the legacy 'clearing houses' currently process many millions of commodities derivatives and securities transactions per year. Today, those organizations involved in these transactions have independent processing systems.

According to findings from the latest worldwide market study by Juniper Research, the introduction of a common blockchain-based system would substantially reduce the risk of transaction error -- and the time taken for ongoing error checking.

Cross-border remittance, in particular, is seen as an area where blockchain technology could have a very positive impact on the old business process. The total value of 'official' cross-border remittance in 2015 was $582 billion, of which $436 billion was sent to recipients in emerging or developing nations.

That said, a substantial amount is sent through unofficial channels that offer no security -- typically in the form of cash that's mailed to the recipient. According to the Juniper assessment, the perceived high cost of remitting through the most popular 'official' channels creates demand for better service offerings.

Case in point: the average cost of sending $200 via Money Transfer Operators was a 6.6 percent fee in October 2015 -- when the same amount is processes via traditional banks, this fee rose to 11 percent.

Several leading remittance firms charge rates significantly higher than the average -- sometimes up to 25 percent of the amount being transferred. With blockchain expected to reduce the processing costs to the remitting organizations, these benefits could be passed-on to consumers and enable fees of ~3 percent.

The hope is that more unofficial remittance will move to improved official channels, and also a net increase in remittance flows, helping to boost local economies which are somewhat dependent upon these incoming funds from the nation's migrant worker population.

Upside Opportunity for Smart Legal Contracts

Yet another potential use case for blockchain technology is commercial contracts. Smart contracts can self-execute by, for example, triggering the release of payment when certain conditions are fulfilled.

These contracts run on networks beyond the control of the contract’s participants, thereby providing a record of the terms of the contract and ensuring its eventual fulfillment.

Besides, smart contracts can offer additional benefits to participants -- i.e. less human intervention in the procedure would result in a lower resource cost. Plus, another benefit is real-time updates -- as the contract exists on the blockchain, transaction processing tasks are automated and can occur instantaneously.

Juniper analysts believe that smart contracts could be particularly useful for national and local governments, in that they inherently automate the prior manual processes which are proven to be time-consuming and relatively expensive.

Wednesday, September 14, 2016

Mobility as a Service Revenues will Reach $1 Trillion

Urban transportation is undergoing a revolution that's being driven by a variety of technologies. They've enabled new and disruptive business models. Recent research findings now indicate more changes are coming.

Where there's big change, there's often big opportunities. The emerging category of Mobility as a Service (MaaS), which provides aggregated, single account, on-demand multi-modal transportation services, is quickly gaining momentum.

According to the latest market study by ABI Research, global MaaS revenues will exceed $1 trillion by 2030. The anticipated impact on traditional transportation modes -- such as car ownership, buses, trains, taxis, and rental cars -- is causing a reevaluation of the economic foundation for legacy transportation companies.

Everything as a Service Market Development

"Driverless technology, through the Car as a Service (CaaS) paradigm, will be the defining factor for the success of on-demand mobility, offering consumers the possibility to summon transportation on the fly," said Dominique Bonte, vice president at ABI Research.

ABI analysts believe that MaaS concepts will result in more transportation offerings through the deployment of fleet-based, alternative energy-efficient powertrain vehicles and reduced congestion through improved utilization rates of available resources.

Autonomous vehicle operation will eliminate the need for paid drivers, reduce insurance costs, increase utilization rates to more than 70 percent, and enable Over the Air-based self-servicing and preventive maintenance.

When combined, this development will drive down the total variable cost-per-mile to a level that undercuts the cost of car ownership and enable MaaS ecosystem development. Vehicle-to-Grid, demand-response charging of electric powertrains and the economies of scale from fleet deployments will further lower costs.

The MaaS ecosystem will create dynamic transportation marketplaces, public private partnerships, plus aggregators managing the supply and demand according to government policies and associated frameworks.

Private and Public Transit Market Outlook

While the multi-modal character and complex interdependence of different transportation models is at the heart of MaaS, personal CaaS models will remain the dominant contributor to on-demand mobility though 2030.

Bicycle rental revenues will remain small. Moreover, Transit as a Service -- i.e. on-demand bus and driverless shuttle -- business models will likely start to become a significant market segment by about 2025.

But rail-based and other fixed route and fixed schedule public transit will become part of the MaaS paradigm, with digital technology and open platforms allowing automated multi-modal routing and single account billing.

"MaaS will fuel economic growth through lower transportation pricing," concludes Mr. Bonte. "But it will have to overcome resistance from both private and public entrenched players before it begins to progress."

Tuesday, September 13, 2016

Software Defined Networking Moves into Mainstream

Telecom service providers are embracing open source software and are moving beyond trial deployments. Moreover, they're seeking ways to free themselves from the technology constraints and associated costs of maintaining legacy networking equipment.

Three-quarters of carriers participating in a survey of software-defined networking (SDN) technology demand say they've already deployed, or will deploy, in 2016 -- plus, 100 percent say they plan to deploy at some point in the future.

Ongoing SDN Market Development

The top drivers for service provider SDN investments are simplification and automation of network and service provisioning. Meanwhile, most operators are moving from initial SDN proof-of-concept evaluations to their first commercial deployments in 2016 and 2017.

According to findings from the latest survey of carrier SDN strategies by IHS Markit, it’s clear that service providers around the globe are investing in SDN as part of a larger move to transform their infrastructure, internal processes, operations and service offerings.

Informed telecom service providers believe that SDN will fundamentally improve network architecture and deliver substantive benefits in service agility, time to revenue, operational efficiency and Capex savings.


Survey respondents report that their top three SDN-targeted network domains for deployment consideration by the end of 2017 are within data centers, between data centers and access for businesses.

Most start cautiously with SDN, targeting small parts of their networks called “contained domains” in which they will explore, trial, test and make initial deployments. That said, IHS Markit analysts believe that it will take time before entire telecom networks are controlled by SDN technologies.

However, there are a few forward-thinking global network operators already planning major, comprehensive SDN deployments -- such as AT&T, Level 3, Colt, Orange Business Systems, SK Telecom and Telefónica.

SDN and NFV Market Outlook

IHS Markit says that the industry is still in the early stages of a long-term transition to SDN and network functions virtualization (NFV). Respondent operators indicated that their top barriers to deployment are the lack of carrier-grade vendor products and integration of virtual networking into their existing infrastructure.

Regardless, survey respondents rated virtual customer premises equipment (vCPE) managed services as the top SDN and NFV related application, specifically as a new source of telecom service provider revenue.

Survey participants also report that some SDN/NFV apps are not being adopted as expected, and telecom equipment vendors and software suppliers need to invent new approaches that create more added-value.

Monday, September 12, 2016

Digital Assistants will Transform Consumer Electronics

The mobile phone already does so much more than enable person-to-person communication. It's being used to browse across the world wide web, capture digital photos, access social network apps, play games and get travel directions.

The introduction of smartphones has been a game changer, impacting what we expect from a mobile handset. Now mobile device manufacturers have created new modes of voice control, utilizing cognitive computing capabilities in the cloud, that allow smartphone users to operate the device without touching it.

A new study from Juniper Research concluded that increased use of Digital Voice Assistants -- such as Google Now, Siri and Cortana -- on smart devices will provide new paid search advertising opportunities within the coming years.


Digital Assistant Market Development

Juniper forecasts that over $12 billion of advertising spend per year will be made through this rapidly growing medium by 2021 -- that's an increase of over 3,000 percent on estimated spend for 2016.

The new market study found that besides integration into devices like smartphones and PCs, digital assistant capabilities will be part of many home and automotive devices in future -- creating new spaces for human-computer interaction.

Improvements in artificial intelligence have led to a proliferation of new voice controlled programs. The list of consumer electronics vendors offering these Assistant services keeps growing -- such as Amazon, Nuance, SoundHound and Vi -- as alternative solutions to those from Google, Apple and Microsoft.

Market Outlook for Digital Assistants

As much of the technology grew out of voice search, Juniper expects Digital Assistants to follow a similar monetization strategy, with companies paying to provide specific targeted marketing results.

However, they often rely on data gathered about users, such as search and location history, shopping habits and demographic information. The consumer data liability issue will be concerning for some vendors and marketers, who could avoid the technology for privacy and security reasons.

"Voice Assistants are a great opportunity to create more convenient ways to interact with devices," said James Moar, senior analyst at Juniper Research.

However, they must balance the need for accurate data with consumer privacy requirements, and this will drive changes in how digital assistants are programmed in future, in order to make the data secure and totally under user control.

Friday, September 09, 2016

Enterprise Hybrid Cloud Configurations Gain Momentum

Most of the large IT systems vendors have shifted their focus to cloud computing. Meanwhile, more enterprise CIOs have adopted a cloud-first mindset -- that's an approach where a cloud solution is primarily considered for new workload deployments, whenever possible.

By and large, outside forces are pushing for IT infrastructure to support digital transformation projects. From the line of business (LoB) leader's perspective, the motivation is compelling. Cloud is being driven by a desire to become more agile and innovative, with the goal to create a competitive advantage.

It's a key point that should always be top of mind. This market transition is less about the underlying technology capabilities, it's more about applying technology to achieve bold strategic business outcomes.

Cloud Computing Market Development

According to the latest worldwide market study by 451 Research, 41 percent of all enterprise IT workloads are now in some type of public or private cloud. By mid-2018, that will rise to 60 percent of all workloads.

Among the various types of cloud deployment models, enterprises are most likely to use on-premises private cloud and software as a service (SaaS), each accounting for 14 percent of all applications. This would explain why industry analysts say that the ongoing adoption of Hybrid Cloud scenarios are anticipated.

That being said, survey respondents indicate usage of on-premises private cloud will remain flat while SaaS is expected to grow sharply to nearly one-quarter (23 percent) of all enterprise workloads by mid-2018.

While infrastructure as a service (IaaS) has many early adopters in the enterprise, 451 Research notes that just 6 percent of enterprise workloads are currently running on IaaS -- it's the smallest portion for any public or private cloud type.

This would indicate the few enterprises have, so far, moved beyond proof-of-concept deployments. However, the survey findings also reveal that IaaS is likely to see the highest growth, with usage predicted to double to 12 percent of workloads over the next two years.

Cloud usage is currently strongest in categories that have traditionally been drivers of IaaS adoption. In fact, 14 percent of web/media and 8 percent of application development now run on cloud computing IaaS today.

451 Research predicts strong growth in critical enterprise workload categories -- such as big data analytics and business applications. Moreover, usage is predicted to more than double, from 7 percent to 16 percent for data workloads, and from 4 percent to 9 percent for business applications.

Cloud Computing Market Outlook

"The predicted doubling of IaaS usage is the highest growth expectation for any type of cloud and points to significant revenue potential for vendors in this space," said Andrew Reichman, research director of 451 Research.

According to the 451 Research assessment, cloud-first strategy is common among enterprises -- with 38 percent of respondents indicating that they have adopted such a policy. The study also reveals that the most common triggers for increased cloud computing usage include business-related events -- such as mergers, acquisitions and divestitures.

451 Research believes the vendor battle for cloud services domination is by no means over. They say the cloud usage growth points to greater opportunities -- i.e. new hybrid cloud services-- for many kinds of vendors to expand their presence as the market continues to expand.

Thursday, September 08, 2016

M2M Service Revenues will Reach $67 Billion by 2021

Mobile network operators are investing in infrastructure that enables the delivery of Internet of Things (IoT) service offerings. They're also establishing relationships with leading technology vendor partners -- to create a viable ecosystem that will attract software application developers.

Cellular machine-to-machine (M2M) connections will reach 733 million globally by 2021, according to the latest worldwide study by Ovum. Moreover, they also have forecast that total cellular M2M service revenues will reach a global annual total of $67 billion in 2021.

Ongoing M2M Market Development

The greatest revenue contributions will come from three key regions across the globe -- Asia-Pacific ($22 billion), North America ($16 billion) and Western Europe ($14 billion).

Many wireless service providers will maximize their revenue opportunity by extending beyond connectivity, therefore Ovum also includes the proportion of revenue from the M2M service layers. Their forecast has identified the segmentation by the existing mobile network technology family.


Of all the current wireless generations, 4G LTE will likely become dominant, accounting for 212 million connections in 2021. Ovum notes that LTE is an adaptive technology for machine communications, because unlike 2G and 3G it's tunable to the specific needs of the service provider.

In 2021, 2G and 4G will be at a point of parity, while 3G will account for 172 million connections. Yet, by this time, 2G and 3G will be plateauing, while LTE will be firmly in ascendance.

"Aggregating the data by technology family reveals interesting trends in M2M, the dynamics of which are quite different to those in consumer markets" said Jamie Moss, principal analyst at Ovum.

M2M contracts typically reach the end-of-life stage before any network migration occurs. Consequently, 2G, specifically GSM, will persist for far longer in the M2M marketplace.

Outlook for M2M Service Evolution

According to the Ovum assessment, large carrier groups with established M2M businesses will not seek to switch off their 2G networks until 2020 -- and for some carriers this will not occur until 2025.

But this decision is not merely for the sake of legacy support: 2G M2M connections will continue to be added, because 2G still represents the most affordable and internationally available form of wireless network coverage.

Although both 2G and LTE are forecast to have approximately 212 million M2M connections by 2021, 2G like 3G will be plateauing with LTE firmly in ascendance. As a result, Ovum says the increasingly competitive nature of the M2M market now demands forecasts with greater segmentation and more accuracy.

Wednesday, September 07, 2016

Cognitive Computing Enables Smart Marketing to Thrive

The core goals of artificial intelligence (AI) in computing are problem solving and task completion. These capabilities are intended to replace, or complement human function. The application of AI in the emerging new cognitive technology era is driven by big data analytics, cloud computing and abundant Internet access.

The confluence of these combined forces have enabled cloud-based Machine Learning concepts to be applied at a much lower cost than was previously possible. Moreover, the productivity advances made possible by cognitive computing are going to be truly remarkable.

One of the most promising new use cases is within the media, advertising and smart programmatic marketing-related arena.

Machine Learning Market Development

Juniper Research has found that machine learning algorithms used to enable more efficient ad bids over real-time bidding (RTB) networks will generate an estimated $42 billion in annual advertising spend by 2021 -- that's up from an estimated $3.5 billion in 2016.

Machine learning, a subset of AI, has arrived at a point where it's both accessible as well as affordable to a wide range of stakeholders. Juniper anticipates that the technology will eventually permeate into nearly all industries in the next five years.

In the case of the media industry, machine learning is being used to develop so-called bots and digital assistants, as well as maximize returns on digital advertising. In the case of the former, companies such as Facebook and Google are leading the drive, with companies like Rocket Fuel and Datacratic developing innovative solutions for the latter use case.


The latest Juniper market study has found that today's RTB bidding mechanisms are based on simplistic segmentation, as opposed to the individual, while rules for determining bid amounts are often rudimentary.

In contrast, machine learning can transform this segment of the digital advertising market, because algorithms will predict the successful outcome of an advert impression, and thus adjust bid amounts dynamically.

For example, when a consumer has recently been exposed to a digital advert, it's unlikely they'll respond positively again to another ad impression that's identical. Meanwhile, behavioral and contextual attributes are being used to predict how successful an advert impression may be, on a personal level.

Market Outlook for Machine Learning Apps

"Typical RTB allows the advertiser to target demographics or various population subsets," said Steffen Sorrell, senior analyst at Juniper Research. "Adding machine learning into the mix effectively allows RTB networks to target the individual. This is a much more powerful tool."

In addition, the study found that machine learning is likely to lead to an era of fully-personalized advertising delivery. This concept was demonstrated last year by M&C Saatchi via their adaptive digital poster in London, England.

Meanwhile, advances in machine learning will enable cloud-based computer systems to understand both the images and text delivered to web pages, offering an opportunity for unique advertising campaigns.

Tuesday, September 06, 2016

Much Lower Prices will Drive Global Smartphone Upside

More people are satisfied with the smartphone they own and have no interest to replace the device -- that's a problem for some vendors. Worldwide smartphone shipments will reach 1.46 billion units with a year-over-year growth rate of just 1.6 percent in 2016, according to the latest market study by International Data Corporation (IDC).

Although growth remains slightly positive, it is down significantly from the 10.4 percent growth in 2015. Much of the smartphone sales slowdown is also being attributed to the ongoing market saturation and decline expected in developed regions (such as North America) during 2016.

Developed markets as a whole are expected to experience a compound annual growth rate (CAGR) of -0.2 percent, while emerging markets will experience a CAGR of 5.4 percent over the 2015-2020 forecast period.


Smartphone Market Development Challenges

"Growth in the smartphone market is quickly becoming reliant on replacing existing handsets rather than seeking new users," said Jitesh Ubrani, senior research analyst at IDC. "From a technological standpoint, smartphone innovation seems to be in a lull as consumers are becoming increasingly comfortable with 'good enough' smartphones."

However, with the launch of trade-in or buy-back programs from top vendors and mobile service providers, the industry is aiming to spur early replacements and shorten lifecycles. Upcoming innovations in augmented and virtual reality (AR/VR) may also help stimulate upgrades in the next 12 to 18 months.

Consumer preference for larger screens is expected to continue and the growing interest in AR/VR could drive that forward as phablets (5.5 inches and larger) go from roughly one quarter of the smartphone market to one third by 2020.

IDC analysts believe that as phablets gain in popularity, they expect to see vendors further expanding their portfolio of large-screened devices, but at much more affordable price points -- compared to market leaders Samsung and Apple.

Smartphone Vendor and Global Market Outlook

Over the past two years, high-priced flagship phablets from the likes of Apple, Samsung, and LG have set the bar for power, performance, and design within the phablet category. Looking ahead, IDC now anticipates many new phablets will reach the global mainstream market at considerably lower prices.

Average selling prices (ASPs) for phablets are expected to reach $304 by 2020 -- that's down 27 percent from $419 in 2015, while regular smartphones (5.4 inches and smaller) are expected to drop only 12 percent ($264 from $232) during the same time frame.

IDC expects that Android will maintain greater than 85 percent of the smartphone market. Google's introduction of Daydream and Project Tango will help usher in new use cases and will help participating hardware vendors to offer differentiated experiences in the premium segment.

Monday, September 05, 2016

The Internet of Things will Drive Most 5G Use Cases

Wireless technology vendors are preparing for the fifth generation (5G) of mobile communication services. The latest worldwide survey by IHS Markit assessed 5G technologies, market trends and mobile network operator plans for deploying the required infrastructure.

54 percent of the IHS Markit survey respondents see 5G as evolutionary to 4G -- meaning, it's an extension of current Long Term Evolution (LTE), LTE-Advanced and LTE‑Advanced Pro. However, the rest of the survey respondents think 5G is revolutionary, moving away from cellular and requiring a brand new architecture.

Meanwhile, three-quarters of respondents believe that 5G should be codependent with LTE and LTE-Advanced, which suggests the evolutionary camp should have garnered a larger lead.

5G and The Internet of Things

A variety of industries will drive new Internet of Things (IoT) related applications, and consequently 5G networks should be designed to enable vast IoT device connectivity. This explains why IoT was rated as the top use case for 5G by 79 percent of operator respondents -- that's up from 55 percent in last year's study.

This year's 5G survey also clearly indicates that 5G developments are booming and well underway with pre-commercial trials set for 2017 or 2018 and commercial deployments starting in 2020 or later.


Because the 5G standard won’t be available until 2020, this ongoing 5G race is quickly leading to a vendor marketing battle around what 5G truly is, similar to what happened with 4G versus LTE in 2010.

According to the IHS Markit assessment, there is substantial work ahead aimed at defining 5G standards. In fact, in June 2015, the ITU chose IMT-2020 as its official designation of what will one day be standardized as 5G. The ITU-R Working Party 5D of the UN's telco arm finalized its 5G vision and rubber-stamped it as IMT-2020.

5G Market Development Outlook

The next step is to establish detailed technical performance requirements for the radio systems that will support 5G, taking into account a wide portfolio of future scenarios and use cases. The Working Party will then set out its evaluation criteria for how it will assess candidate radio interface technologies.

The IHS Markit survey data suggests a gradually clarifying picture: 4G will not evolve to meet 5G requirements, so 5G requires a new radio access technology (RAT), architecture, etc. All of this means that 4G will continue to evolve in parallel to 5G and won’t be superseded by it.

Meanwhile, one of the other key findings is that ultra-low latency is a primary 5G upgrade driver for the survey participants, as well as their toughest new technology adoption challenge.