4G still ways off

In spite of the massive 4G hoopla the world over, our estimate suggests that LTE-based 4G is still a good bit ways off. We expect 2011 when we see some sporadic strength in 4G business models where real money starts coming in with customer adoption. Although carriers like Verizon, Sprint, MetroPCS in USA and others in Europe and Asia are planning LTE based 4G launches beginning this year, customer adoption may remain low and return on 4G investment will take time. 2012 is a good bet where we see LTE 4G beginning to take hold.

Till then, the “other” 4G technology ie WiMAX does have a time to market advantage. We expect substantial uptake in WiMAX until LTE comes around. However, we think that ClearWire and Sprint (and telecom equipment makers) will ultimately find a way to marry WiMAX and LTE and in 5-10 years we may have either a single dominant standard or at least cooperating WiMAX and LTE environment where devices and networks communicate at the IP layer easily.

As to 3G, China has just now come out with 3G licenses and countries like India are way behind on 3G – the license auction for 3G in India got postponed to later this year due to economic turmoil and upcoming General Elections. So WiMAX and LTE on a mass scale still look like distant dreams. Fact is that 3G and HSPDA is very good for many high speed apps which the customers want today. The business models around 4G are not even visualized so far. Of course all our thoughts exclude countries like Japan and Korea – where wireless is generations ahead….

iPhone 3.0 OS Overview

I wanted to write about the new Apple news – that of iPhone 3.0 software. Apparently it is a version which will fulfill many of the things which were missing before :

– 100 new features
– Search iPhone
– Cut, copy and paste capability – sorely lacking in prior versions
– Send photos, contacts, audio files and locations via MMS
– Read and compose email and text in landscape mode. Earlier the safari browser allowed this but not the email and message box. Now the latter will allow landscape also.
– 1000 new APIs for developers
– enable in-app purchase of content like subscriptions, additional game levels and other content
– apps can communicate with other hardware via Bluetooth
– push is available to developers to push content
– multitasking so multiple apps can run simultaneously
– developers can use the map feature of iPhone in their apps
– developers can access the iPod music (or podcasts etc) library stored on the device and use them innovatively in their apps

 

This is a sample list – we will write more as we learn about this exciting new announcement from Apple – we remain die-hard fans of iPhone which is a true mobile revolution as far as we are concerned.

Attended the Wireless Technology Forum (Atlanta) General Meeting on Wireless Consumer Apps

I visited the Wireless Technology Forum‘s General Meeting today. WTF is the top wireless networking group in Atlanta with 550 members and growing rapidly. The topic for today’s session was “Where is the Money in Wireless Consumer Applications?”

The WTF session today had an excellent panel :

Ken Hayes, EVP – Carrier Relations, ThumbPlay

Rob Hyatt, Executive Director, AT&T Mobility

Andy McGuire, VP Mobile Innovation, GSM Association

Andrew Dod, VP Marketing, Whoop Mobile

Ron Kozoman, Director, Mobile Operations, Turner Broadcasting Systems

Moderator : Maury Margol, Sr. Director, Client Relations, Nielsen Telecom Practice

Here are some highlights from the panel discussion :

As one would expect, iPhone has come to dominate all things mobile internet in current times. Basic theme all throughout the discussion was that the iPhone is a game changer in mobile app world. It has shown the world how the mobile user experience should be and how to influence consumer adoption with a compelling application portfolio.

Which mobile apps are making money today ? Ken suggested it is the iPhone apps with its AppStore strategy.  3 years from now, it will be LBS which will be main revenue generator in mobile apps. Andy McGuire suggested that 800 million iPhone application downloads so far is the tip of the iceberg. It is an indicator that developers and consumers are there if the ecosystem is right.  He mentioned that in future, one might see utility models like medical and home apps on mobile phones. One panelist opined that in spite of all the iPhone AppStore hoopla and massive no of apps available, money is still being made in limited categories like games and music.

On the question of wired devices, the panel was of the opinion that in future there will be lot of wireless devices which will preclude the need to have a wired network but higher speed apps will still find a use for wired networking eg in case of high speed TV. Andy quoted Sony CEO’s statement that in the future, 90% of devices may be wirelessly-enabled. Clearly wireless is the future for all networks but for reasons of speed and niche uses, wired devices and network will still prevail in some areas. Some interesting uses of wireless will be wireless blood pressure monitor, reservoir monitors etc.

On the question as to how a carrier like AT&T makes money in “open mobile” environments like iPhone AppStore, Rob from AT&T mentioned that iPhone has increased data plan sales for AT&T and also AT&T itself makes some of the iPhone apps.  Plus AT&T attracts a huge no of new subscribers due to the iPhone exclusivity. In essence, AT&T has lots of monetization models around iPhone type of devices where the volume of customer adoption more than covers for the revenue lost due to “open” mobile gardens like iPhone AppStore.

Next there was a question – how can developers make money in mobile apps? The panel was of the opinion that there are lot of apps being made and put out most of the times for free. Lot of these apps are simply experimental in nature or are hobby apps with no business model around them. The panel suggested that developers need to think through the business model when writing apps. Most apps peak and then are forgotten in the ever increasing mass of mobile apps on iPhone AppStore. As to mobile ads inside the mobile apps, it is a nascent idea at this point but in future, this will become a bigger source of revenue vs a download fee. One panelist suggested that considering the fact that there are 4 times the no of mobiles in the world compared to no of PCs, there is a dearth of content for mobile so that is an area which developers can look at. Also RIM has stated that minimum pricing for BlackBerry App Store app will be $2.99 – this may invite more serious developers who have a revenue-generating business model in mind.

Per Robb Hyatt from AT&T, iPhone took AT&T Mobility from “2nd innings straight to 5th innings” in mobile data; I found this interesting.

When asked where does Google come into picture, the panelists mused that it is one of many players unlike in internet where it dominates via search. One interesting aspect about Google Android is that it has reduced manufacturing costs for OEMs (read cellphone makers) dramatically. Eg Samsung or Motorola no longer have to spend tons in maintaining custom mobile OS for its phones. It can focus on making compelling phones and just use Android for mobile OS.

On Mobile Payments, the panel thought that Near Field Communications or NFC payments are still in infancy although other countries are slightly ahead of USA in this area.  Also consumers need to become comfortable about security before mass adoption of Mobile Banking will be seen. Andy gave an example of “Banking for the Unbanked” in Kenya on Safaricom network and its mobile payment offering called m-pesa. The 7 million m-pesa customers use mobile as a payment mechanism and receive paychecks on it. This is excellent innovation in mobile payment. Everybody agreed that mobile payments and banking is a trust model as much as it is a technology model.

Then the natural question : has recession effected mobile apps business ? Apparently not, per the panel. It seems consumers will not give up mobile and its little entertainment oriented apps just like they won’t give up on movies in a downtime. Mobile is an essential device today for a consumer.

All panelists agreed that there is lot of innovation remaining in mobile app arena. The primary gaps remain in user experience and business model evolution. iPhone experience is the beginning and not the end.

Well, very informative and highly intuitive discussion. Thanks to the panel and to the organizing team at the WTF – Maury Margol, Bob McIntyre and Steve Bachman.

CellStrat Annual India Mobile Media Survey 2009 – status

We are pleased to report that this survey that we started recently is progressing well. We have received some excellent responses from top executives who have shown high interest in mobile media and related applications on the mobile channel. Some very interesting observations are emerging (this is a sample from responses so far,  survey is still progressing so not done yet) :

– As suspected Airtel is most common operator in use and Vodafone follows after that.

– 93% execs use mobile phone for uses beyond talking

– All execs feel that mobile represents the biggest opportunity in next 5 years

– SMS is the killer data app with IVR also getting high marks

– Browsing, Search and Directions are most popular mobile web uses in that order. Banking is still low relative to these other uses – we feel trust factor is keeping banking low

– Mobile marketing campaigns are primarily about information disbursals rather than for promotions or customer service.

– Most execs give very high marks to mobile advertising. Of course SMS is the main theme here.

Well – we are confident that you will be enriched with the results of this survey. It is indeed coming out very well. We encourage media, marketing and technology heads to participate and others to get access to this survey. It is the most critical and actional business intelligence on the latest and most exciting media channel of today’s time – the mobile device.

To participate or get access to the survey report, please contact us at :

http://www.cellstrat.com/mobilemediasurvey.html

The final survey report will be available at the end of April.

VS

War on Mobile App Store Front soon…

I was at Nokia Forum yesterday in New Delhi while it was being organised by Nokia parallely in Malaysia too. Nokia has started organising these forums/ code camps regularly now to connect with third party developers who come out with very innovative applications every now and then from around the world.

Mostly present there were talking about how different manufacturers like Research In Motion (RIM), Google Inc., Microsoft and Nokia etc. are all tryting to get a pie of the app store market share, a trend started by Apple. Most of them agreed that Apple actually told the world that phone is not just for talking or sms but a lot more then that, through it’s iPhone and the app store. However in India, iPhone is not as popular in absence of 3G networks.

Now, other companies like RIM and Nokia are going to leverage that customer knowledge (imparted originally by Apple)  to monetise the huge opportunity available now as Nokia and RIM both have far greater market share in India then Apple’s iPhone.

Research in Motion (RIM) in October 2008 announced two major distribution initiatives for smartphone applications for its BlackBerry handheld, including an online store called BlackBerry Application Storefront and an application center. RIM began accepting applications and content from developers for inclusion in the storefront in December and the store is scheduled to launch this month. The storefront will allow developers to set their own prices for applications. RIM is working with PayPal, an online payment service, to provide consumers with a way to pay for applications from BlackBerry smartphones.

Nokia is launching their app store on OVI starting first from western world by end of first quarter and later entering in India by around mid of this year. Nokia is also tying up with various payment platforms including credit card payment gateways online for cutomers to pay for applications.

A key question for technology executives is what value, if any, do these app stores provide to business users? So far, experts say, the usefulness for business appears to be limited. But with the influx of new players in the market, the number of business applications might increase.

Top Trends in Mobile Space

Next 2-3 will see radical changes happening in mobile space, making smartphones, netbooks and yet-to-be introduced devices even more indispensable parts of our lives. Here I am quoting ( from CIO Zone) some of the developments in US and will also try to give my views from India’s persective that will power this next phase of evolution?

Long Term Evolution (LTE)

The so-called fourth generation of mobile (4G) is expected to be rolled out across North America over the next three years, making it possible for corporate users to run business applications on their devices simultaneously with Voice over IP (VoIP) capabilities. Where as in India 3G is yet to roll out for masses. People are eagerly waiting for the same as slowly people are switching on to smart 3G phones.

WiMax

As LTE and WiMax networks are deployed in the U.S. through 2012, expect to see more netbooks and laptops equipped with built-in radio frequency identification (RFID) and wireless support. We sometimes get queries in India for development of applications in healthcare etc. but simple are not able to serve these clients due to unavailability of wimax infrastructure India wide.

3G & 4G interoperability

Sprint has developed a dual mode card which will enable mobile device users to work on both 3G and 4G networks. Other carriers are expected to follow suit.

Smartphone applications

Third-party software vendors will increasingly make enterprise applications available for smartphones, including inventory management, electronic medical records management, warehousing, distribution and even architectural and building inspection data for the construction industry.

GPS

Global Positioning Systems will increasingly be used to identify end users by their whereabouts and also to analyze route optimization for delivery workers and service technicians.

Security

As new and different types of mobile devices are introduced, corporate IT departments will find it increasingly challenging to identify and authenticate individual end users. As such, expect to see a combination of improvements in both Virtual Private Network (VPN) software and hardware-based VPNs to support multiple device types.

Tody, I was in Nokia Forum and there I came to know that last year, they had selected an pplication in International level competition where in with the use of cell-phone, you can convert your television into a touch screen device. These are the kinds of technologies that will change the world and bring all kinds of functionality of operating virtually anything, right in the hands of the mobile device owner.

How will netbooks affect mobile marketing?

The growing popularity of netbooks – smaller, lighter and cheaper laptops with almost similar Web capabilities as big-screen versions – is set to change the world of mobile marketing and media.

Brands such as Acer, Hewlett-Packard and Asus have already launched netbooks priced between $300 and $400. Dell is expected to debut its own version, although there is no inkling that Apple may come out with its netbook.

According to Pholop Solis, ABI principal analyst for mobile broadband in Oyster Bay, NY, A netbook is easier to carry out of the home because it is smaller and lighter, and it is also easier to tote around the home. Also, some people are buying them to use for email and presentations when they travel for business so they can travel light. The popularity of netbooks is possible because of their price range – mostly between $300 and $400, so far.

ABI Research expects netbooks’ sales to more than double to about 35 million units in 2009, and for that to continue to climb in 2010. Some of these will be purchased as secondary devices to get on the Internet by consumers who would not have bought a second laptop.  Some of them will be purchased by consumers as a replacement for an older laptop instead of buying a new laptop.  Today’s netbooks resemble small laptops – they practically are except that they have processors that are less powerful. Early movers in netbook space have been Acer and Asus as two main leaders in the market.

Netbooks are increasingly being offered with mobile broadband and increasingly coming with GPS as well, these devices certainly bring opportunities around location-aware services and advertising.  They will used while walking the way smarpthones and mobile Internet devices will be used, but they certainly will be used on-the-go more often than laptops.

Mobile devices, in general, are expanding from just cellular handsets to include laptops, netbooks, mobile Internet devices (MIDs) and even mobile consumer electronics devices – things like game devices, portable media players, cameras and camcorders are gaining mobile broadband connections for data-only to increase their usefulness. 

In this context, smartphones with better browsers, netbooks, and MIDs are filling the need to be able to access the Internet from anywhere on just the right device, depending on the person’s preferences and needs. This means Internet will be consumed, via the smartphone and netbook channels in the longrun. On-the-go, various devices will fill the need to get on the Internet. However at home, nothing can fully replace the PC.

How should marketers and advertisers react to this phenomenon?
The fact that Internet access is being done more and more from anywhere means that advertisers have to take this into account. 

Location-based advertising is one part of this.  Properly done, mobile advertising can be very useful to people who are already searching for places and using services in the context of their current location and next destination.

(Excerpts from Mobile Marketer)

IPhone – an operator’s friend or a foe…

Strand Consult laid out, why having the Apple iPhone on your network might not be the best thing in the world. In their own words:

Strand Consult is not in the business of creating hype around technology, our business is to explain to mobile operators how the future market will evolve and how to make money for their shareholders.

…so their ten points on the iPhone are well worth reading in this article. You can read the details here, but their main topics are given below, with little notes of my own thoughts on each area.

1. The iPhone attracts a limited market segment, Apple’s goal was a global market share of 1%. But despite this, the iPhone is not a mass-market product; it is a product that attracts a niche segment. In India too, there are not many serious takers of iPhone. Many just carry the same just as their style statement while carrying a second phone to make or recieve calls. I have personally come across many who are out of reach when somebody sitting next to them tries to call them.
 
2. Marketing the iPhone takes away staff from more profitable sectors.

3. Customers not interested in iphone have been the neglected lot.  Could some of those customers that are not interested in an iPhone feel more welcome with operators that do not carry the iPhone and is not it likely that focusing on a niche product will result in neglecting customers that are the actual foundation of an operator’s existence?

4. While the data usage of the iPhone is promoted, most people are switching to the iphone from other data handsets, not coming into the network specifically for that, so the actual educational effect of the iPhone is minimal. Perhaps operators should take a closer look at these customers voice ARPU rather than their data consumption?
 
5. Having iPhone customers using large data volumes sounds good, but when data is being sold at a flat rate, a high data consumption results in high production costs without the corresponding increased revenue. You could compare the operators’ attitude towards the iPhone’s data consumption with a restaurant owner that has a “all you can eat for 10 Euro” buffet and that is proudest of the customers that eat the most! In this business the idea is to generate revenue for the shareholders, not to increase the production volume and costs, while at the same time minimising revenue.
 
6. When you examine the iPhone data consumption, you will see that iPhone customers use their browser to view ordinary websites and that they often choose not to view the websites in XHTML – optimised for low bandwidth and mobile phone sized screens. In practice this results in that when an iPhone user browses a typical news site, an ordinary web page will be around 1 MB, while the mobile version of the same page will often be less than 100 Kb. It is significantly cheaper for an operator to produce 100 Kb data than it is to produce 1 MB data and it is much more fun to deliver 100 KB rather than 1 MB when you are selling data at a flat rate.
 
7. Apple’s App store gives no fees to the operator (in the same way as Nokia share revenue via the N-Gage on device store), and has a kickback from the data tariffs. In short they regard networks as dumb bit pipes.

8. Strand’s research shows that there is not one single Apple partner in the world among the mobile operators that has increased their overall turnover due to the iPhone. So apart from the press coverage, what value has the iPhone actually created for the shareholders of the operators that have chosen to become Apple iPhone partners?
 
9. The unlocking handset market worldwide is huge for unofficial handsets. These phones are most often used on other non-Apple partner networks thus depriving the apple partner networks off the revenue.
 
10. Other Operators and MVNO’s are directly benefiting from (9) without having to invest in all the other iPhone structure requested by Cupertino.

The conclusion is simple. This is not good business for shareholders of operators that are Apple and iPhone partners – on the contrary it is far better business not been an Apple and iPhone partner. Operators that choose not to carry iPhone products have an increased probability of serving their shareholders interests over those that move their management’s focus, subsidies, marketing and distribution power on a product that is as beautiful as Paris Hilton, but increases production costs and where there may not be a relationship between revenue and costs.

Mobile Coupons

Mobile phone is the most economic and ideal medium for communicating promotions to targeted consumers these days in wake of global melt-down and continually increasing cuts in expense by companies world wide.

In the west, advertisers are increasingly launching campaigns that include mobile coupons, driving retail traffic and increasing sales. Mobile phones are always with the consumer at checkout.

For that reason, mobile coupon redemption rates today exceed print coupon redemption – on average 5 to 6 percent versus paper’s 2 percent.

Effective approaches to mobile coupons

Mobile couponing is evolving in many forms, each with its own strengths and limitations. Some of the are:

• Landing page coupons : In many cases, a mobile coupon itself is not an actual coupon, but rather a promotional communication displayed on the consumer’s mobile device.
• A simple text message alert offering discounts and promotions. For example, “Flat 10 percent off on all goodies. This weekend only.” A major advantage of text-alert campaigns: They reach a mass-market audience across virtually all phones, and are relatively easy to execute.
• A uniquely coded offer that requires validation at point of sale. Advertisers often want to offer unique promotions to select customers through a conventional coupon.In this case, only consumers who opt-in to receive mobile promotions get the offer. Consumers simply display the offer on their phones at the point of sale, validating their discount or promotion.
• An alert containing a link to an advertiser’s promotional offer. A mobile text message can be sent with a link that, when selected, opens to a page with a coupon image (for example, “$100 off on first 100 earlybird registrations”).
• A mobile coupon tied to a retailer’s loyalty program
• MMS-based mobile coupons. Mobile alerts can be delivered to consumers via an MMS (Multimedia Messaging Service), which can contain multimedia objects such as images, audio, video and rich text. They are good and attractive, however, they are much costlier to send then simple text messages.
• Coupons within branded mobile applications. A mobile coupon can be packaged as a feature within a retailer’s mobile Internet (WAP) site or downloadable handset-resident application. The coupon appears as one of several menu choices. For example, WAP sites and applets might display a menu item such as “Alerts and Coupons.” Consumers who click on “Alerts and Coupons” can opt in to receive periodic text messages for store specials, promotions and discount offers. Coupons delivered within a mobile application give advertisers the ability to track and capture the behavior of consumers. They understand, for example, how often particular offers are viewed and how many are forwarded to friends. 
• Coupons within branded mobile games. This one comes as an extension to the above. In this consumers play the games like car races etc. where racig track is surrounded by various brand banners inside the game. Incentive for the consumers winning various stages of the game are given discounts on various purchases or sometimes even free goodies for crossing all stages.

[Excerpts from Mobile Marketer]

Indian Telecom Industry

Lately, I went through quiet a bit of mobile related events. Today, I am trying to sum-up the main points from some of them.

According to one of the largest mobile operators in India, there are five pillars in innovation space i.e. Music, Bollywood, Sports, Games and M-Commerce. These five are 80% need of Indian customers. If these are served by ay operator, they will be quiet successful now and more when 3G comes into play in India.

One of the top executives from the above operator mentioned that they had recieved 200,000 interested consumers for 3G iphone when they were expecting price to be around US$199 as was in USA. But finally when the phone was launched in India, the number of actual buyers fell sharply. He, however declined to give the exact figures. But, he also said that in first phase of roll out of 3G, top 10% of the market will be the first ones to adopt the iPhone. This, however is untrue in the west where it has been seen that iPhone is more popular amongts the lower salaried people then the higher salaried ones. This is quiet a contrast.

According to some operators VAS is picking up very well in India. But still, it only contributes about 10% to the overall revenues of the companies. And amazingly, some people in India feel that SMS will not last long. But off the total of 10% revenue, about 5%+ revenue comes from SMS only. Many operators in India are highly focussing on revenues out of SMS business as this is ones of the core components of revenues being generated out of rural areas.

The top three issues on which call centres of operators recieve the most number of calls are network, billing and VAS. These are the top three areas which require improvement and innovation on every operator’s part and each operator is putting it’s best efforts to achieve highest efficiency upto 2010 before the start of Common Wealth Games.

Vishal