Wednesday, August 27, 2014

Why the Ultra-HD Video Ecosystem will Grow Slowly

To be totally honest, the introduction of 3D television was an anticlimax. Moreover, the initial forecasts for the upcoming adoption of 4K or Ultra-HD video were overly optimistic.

While 4K will ultimately reach the mainstream consumer, it will remain a small niche market for at least another five years, with widespread viewing of 4K content arriving around 2019, according to the latest market study by TDG Research..

TDG says that short-term viewership of 4K video will be mostly driven by consumer purchases of new smart TVs with 4K functionality.

However, the adoption of 4K televisions will occur more slowly than many believe due to poor consumer awareness, high prices, and lack of 4K video content.

That being said, the emergence of 4K-enabled devices will help to fill this gap, over time.

For example, TDG predicts that set top boxes (iSTBs) from companies like Amazon, Apple, and Roku will join smart TVs in supporting 4K streaming from over-the-top (OTT) streaming video services.

"This will create a halo effect around broadband video quality and provide a strong differentiator for OTT services such as Netflix and Amazon," said Joel Espelien, senior adviser at TDG Research. "This will be a valuable tool in re-calibrating consumer perceptions of video quality and reinforcing the value proposition of broadband streaming services."

According to TDG, iSTBs and Blu-ray players will each account for almost one-fifth of total 4K video viewing in 2017.

While physical discs will enjoy only short-term success, the use of 4K iSTBs will be propelled to even greater heights due to several factors -- including support from the Apple, Amazon, Google, and Microsoft; a 1-2 year replacement cycle (versus 7-8 years for TVs); and a sub-$100 price when they finally arrive in market.

As such, 4K iSTB adoption will remain strong throughout the forecast period and surpass 4K smart TVs to become the single most-important platform used to view 4K video aside from legacy pay-TV operator STBs.

While OTT streaming video will be the most notable short-term driver of 4K video, pay-TV operators will also play a defining role. Beginning with on-demand 4K offerings, pay-TV operators will slowly add live 4K support as the ecosystem matures.

Tuesday, August 26, 2014

Global Mobile Data Traffic will Reach 260.8 Exabytes

In the first quarter of 2014, the overall worldwide mobile service provider revenue increased by just 0.58 percent year-on-year (YoY) to $264 billion, according to the latest global market study by ABI Research.

The aggregate service revenue for 2014 will grow 2.9 percent YoY to $1.01 trillion, mainly driven by the robust growth of the mobile Internet market.

Proliferating mobile data subscriptions and enhanced network capacity will drive global mobile Internet service revenue to $456.7 billion by 2019 -- that's 44.7 percent of total mobile service revenue.

That being said, despite global service revenue growth, the Western European market is shrinking do to aggressive competition and lower proces -- 1Q 2014 service revenue declined by 5.2 percent YoY.

"Facing continued price pressure driven by the competitive mobile market, mobile carriers have had to take on higher subscriber retention and acquisition costs to support their market positions. This has affected profitability," said Marina Lu, research analyst at ABI Research.

The major European carriers -- such as Vodafone, Telefnica, T-Mobile and Orange -- all suffered from gross profit decreases in 1Q 2014, whereas in North America mobile carriers are still demonstrating a positive outlook for gross profit -- due to much less disruptive market competition.

According to the ABI profitability analysis, Verizon Wireless beat China Mobile for the first time, carrying the top position for most profitable mobile carrier in aggregate for 1Q 2014, followed by China Mobile and AT&T respectively.

Strong growth in retail postpaid subscribers, increased smartphone customer base, enhanced 4G LTE smartphone line-up, and attractive pricing plans have contributed to Verizon's profitability.

In addition, Verizon also moved up one position to second in the ranking for quarterly gross profit per subscriber, at $77.10 on average. Relative to other advanced regions of the world, the U.S. subscribers pay more for the same basic services as the leading competitive markets.

ABI believes that there is no doubt that fast-growing mobile data consumption has helped to mitigate the declining voice and messaging ARPU trend.

Japan and South Korea mobile network service providers have spared no effort to boost mobile data usage, expecting monthly data traffic per wireless subscriber will reach 12 Gigabytes in 2019. Global mobile data traffic will reach 260.8 Exabytes by 2019, that nearly a six-fold increase on 2014.

Monday, August 25, 2014

Exploring Market Opportunities for Wearable Bands

As more consumer electronics manufacturers contemplate a future in wearables, it's time to ask the decisive market development questions. Such as, where are the most appealing high-margin opportunities -- are they in making devices or within the software applications?

The wearable band market grew 684 percent on a worldwide basis in the first half of 2014 compared with the first half of 2013, according to the latest global market study by Canalys.

Canalys currently tracks wearable device shipments and segments the market into Smart bands -- which are capable of running third-party applications (apps), and Basic bands, which are not an opportunity for an ecosystem of developers.

Fitbit and Jawbone have very successfully grown and strengthened their relationships with channel partners internationally to grow global shipment volumes. They took first and second place respectively in the basic wearable band market in the first half 2014.

"Nike's market share has fallen as it cuts resources in this area, while new entrant Garmin had a successful launch of its Vivofit device and is chasing third place. The challenge all vendors face is keeping consumers engaged with the devices, 24 hours a day, seven days a week," said Chris Jones, VP and principal analyst at Canalys.

Samsung again became the worldwide leader in the smart wearable band market in the first half of 2014 with the release of three new products in the second quarter -- the Gear 2, Gear 2 Neo and Gear Fit. In July, Samsung released its fifth smart band in less than a year, the Gear Live, based on Android Wear.

But Samsung must improve device sell-through otherwise it will again have to resort to heavy discounting through promotions to move inventory. The Pebble Steel helped Pebble keep its momentum and its app store continues to grow while Sony completes the top three.


Android Wear shipments will appear in Canalys' Q3 shipment tracking, with LG’s G Watch and Samsung’s Gear Live officially launching the platform. Motorola's Moto 360 and others are also coming soon. These devices have used off-the-shelf smartphone components to get to market sooner.

Mobile operating systems and software apps must be extensively pared back for smart wearable bands. Android Wear represents an initial first step by Google. It will undoubtedly continue to refine and improve the Wear platform as it has done with Android.

Many have speculated that Apple will soon launch a smart wearable band. Canalys expects that such a product would make extensive use of custom components. Its hardware design will require innovation related to wireless charging, waterproofing, and display and battery technologies.

According to the Canalys assessment, smart wearable bands need tremendous advances across the entire component ecosystem to achieve multiple days of battery life. Smart wearable bands should not necessarily resemble watches, but should instead adhere to their own unique design constraints.

New products will be launched at IFA, but most technology companies are waiting to see what Apple will do first. The market will see dramatic change in the coming months and vendors with early-mover advantages will come under pressure.

Friday, August 22, 2014

Global Digital Music Revenues will Reach $13.9B by 2019

Across a variety of formats, digital music is undoubtedly the most mature segment of mobile entertainment. Mobile devices are uniquely positioned to become a key platform in the music industry, given their ubiquity, connectivity and continual presence with the end-user.

That being said, the music industry itself continues to be plagued with difficulties, particularly as far as recorded music is concerned. Juniper Research found that the digital music industry will experience slow growth in revenue over the next 5 years, growing from $12.3 billion this year to $13.9 billion in 2019.

The latest global market study also found that a strong performance in the robust streamed music sector will largely be offset by decline in revenues from legacy services -- such as mobile ringtones and ringback tones.

Streaming Music in the Mobile Cloud 

According to the market study findings, the worldwide digital music market will be characterized by consumer migration to cloud based services.

Juniper observed that offerings from pure-play music providers -- such as Spotify and Pandora -- will increasingly find themselves competing with personalized services from the leading OTT (over-the-top) players, including Apple and Google.


However, the report cautioned that piracy was still responsible for major revenue leakage, particularly in emerging markets, such as China, where only a small percentage of content is legally acquired.

Nevertheless, it pointed to instances where the industry had successfully reined in such activity, such as the government policy in Singapore that allows for the blocking of sites that contain infringed content.

Why Music Discovery Remains a Challenge

Looking to the future, Juniper argues that music consumption is likely to become a highly sociable activity -- with features such as music discovery and social media integration that connects music fans online.

However, finding ways to expand the pool of their subscribers and increase the ease of discovery remains a key challenge for all streaming music service providers.

Moreover, Juniper believes that smartphones and tablets will be the main platforms of growth, although digital music revenues on PCs will remain robust over the forecast period.

Additionally, emerging markets are expected to strengthen in terms of digital music consumption, as disposable income levels continue to rise and streaming music services expand into these regions.

Thursday, August 21, 2014

Wireless Technologies Enable the Internet of Everything

Imagine a world where all manner of electrical and electronic devices are connected together via a wireless link -- that's the Internet of Everything. The installed base of active wireless connected devices will exceed 16 billion in 2014, that's about 20 percent more than in 2013, according to the latest market study by ABI Research.

Moreover, the number of devices will more than double from the current level, with 40.9 billion forecast for 2020.

"The driving force behind the surge in connections is that usual buzzword suspect, the Internet of Things (IoT)," said Aapo Markkanen, principal analyst at ABI Research.

If we look at this year’s installed base, smartphones, tablets, PCs, and other hub devices still represent 44 percent of the active total, but by the end of 2020 their share is likely to drop to 32 percent.

In other words, 75 percent of the growth between today and the end of the decade will come from non-hub devices -- such as wireless sensor nodes and accessories.

From every technology supplier's strategic point of view, the critical question is how this plethora of IoT devices will ultimately be connected to each other and the Internet.

Until recently, the choices that product OEMs have faced have been fairly straightforward, with cellular, Wi-Fi, Bluetooth, and others all generally addressing their relative comfort zones.

Going forward, they will be in an increasing competition with each other, so for the suppliers the strategic stakes are getting much higher.

ABI says that the recently introduced Thread protocol, spearheaded by Nest Labs, is the clearest example of this convergence. It is not only setting the bar higher for ZigBee in the 802.15.4 space, but also piling up pressure on Bluetooth suppliers to enable mesh networking.

In the meantime, the LTE-MTC and LTE-M initiatives may well expand the market for cellular M2M, while start-ups like Electric Imp and Spark could do the same for Wi-Fi.

And finally, we also shouldn't ignore what’s going on with passive, proximity-based connectivity offered by RFID and NFC. For example, Thinfilm's plans with printed electronics warrant attention.