Indian smartphone markets is witnessing explosive growth in the smartphone segment primarily driven by lower priced smartphones from domestic handset makers are eating into market share of feature phones in India. IDC’s Q3 2013 report records increase in smartphone numbers by 229% (YoY) to clock 12.8 mln units in Q3, 2013.
The overall mobile phone market (Feature Phones and Smartphones) had a 12% growth YoY and a 7% growth quarter over quarter (QoQ) with the share of feature phones sliding further to make 81% of the total market in 3Q13 despite the feature phone market growing at 3% in 3Q2013 over 2Q2013.
The growth trend in smartphones is expected to continue in the future because of the narrowing price points between high end feature phones and the entry price point of low end smartphones.
Data is migrating from Radio and Microwave to Light. Light Fidelity or Li-Fi is seen as the next order in wireless communication systems moving past radio communications to light based communications. Light emitting diodes are used to transfer light from one source to another – with every light blip signifying binary 1 and 0 otherwise.
1. While the spectrum of Radio communications is limited, light spectrum is endless – with no limitations on capacity. The visible light spectrum is 10,000 times larger than the entire radio frequency spectrum. In contrast, US Federal Communications Commission has warned of a potential spectrum crisis because wi-fi is close to full capacity.
2. LiFi has the advantage of being used in radio/electromagnetic sensitive areas such as aircrafts and nuclear power plants without interference
3. Also LiFi is limited in terms of ability to penetrate walls – making it relatively secure to WiFi
The key scale scenario is the ability to use LED lights / 14 billion LEDs in synch with sensors and photo-detectors which could then be used to beam data to the remotest corners of the planet. Even while some parts of the technology are not detailed fully i.e uplink for data from a receptor device to source – it is expected that answers to such issues would come through in the next few years.
The LiFi consortium which is an eco-system of LiFi promoting partners believes that while 1.6Gbps speeds have been simulated in controlled environments, LiFi has the potential of getting to 10Gbps data thruputs in near future.
So what Android dominates device shipments with a 80% market share and Apple is dropping down at 14%. NetApplications’ November 2013 report shows that Apple still rules the mobile internet space contributing to 55% of traffic to internet from devices.
Apple has been loosing on the mobile internet share over the last 12 months given the onslaught of Android devices. Given that Apple is now reduced to a minority with no low end presence to take on the might of the Android’s, this share is set to fall further.
The first 3D printer is now soon to be reality. Far from the more fancied use cases of 3D printing AK47s, Human Organs and more complex systems; the first 3D printer by Israeli firm Camtek Ltd., will 3D print Printed circuit boards. This will world’s first commercial grade 3D printer for circuit boards. Camtek is expected to debut the device by early 2014. The 3D inkjet Solder mask printer is currently in advanced stages of technical maturity for commercial launch.
Given the huge opportunity and scope for 3D printing technology, Camtek’s printer may be the first baby step and the industry would see n revolutions before technology stability and product maturity – but the significance is in taking the first step. It will be interesting to follow the advent and the march of 3D printers.
Nokia’s not finished, Nokia’s device division is going out with a bang, and while most view Nokia as a device-less company once the Microsoft deal closes in Q1 2014, this post delves into the other halves of Nokia and the tricks up its sleeve.
Microsoft paid $7.2bln for the Nokia devices and services portfolio – expected to close by Q1, 2014. However the other “not so significant” parts of Nokia could provide the value up end in the next 2-5years horizon.
While Nokia hasn’t really created any splash around its Lumia range of smartphones, but it is in the process of diversifying portfolio to phablets, tablets and wearables (smartwatch). Wearables alone are expected to number 485million by 2015. However, analysts and industry mavens are betting their monies on Nokia diversifying its portfolio from phones to “any communication” device. This includes amongst others cloud operated devices, sensors and receivers powering the Internet of things.
However it is the alternate portfolio of Nokia that is particularly interesting-
1. Nokia Networks which contributes to 90% of the Nokia (minus devices and services) is a key holder of 4G patents and has been on a comeback trail with associations with Sprint, US Cellular, T Mobile working out post the Nokia takeover of the better half. Nokia Networks also has a good patent portfolio in the 5G space and is expected to be a network driver in this technology.
2. Here Maps – is possibly the unsung Hero in the Nokia portfolio. What started as acquisition of Navteq has ended up in a strong suit of solutions around Mapping- It allows Offline use, Augmented Reality wrappers and a good accuracy (compared to Apple atleast). However, it is Here Map’s telemetry portfolio that is the strongest asset – Here Maps can leverage a robust and long standing relationships with key car makers to push the solutions to driverless cars. Here maps is quite clearly a very strong alternative to Google maps.
3. Finally, Nokia has a good portfolio of patents. Nokia has allowed Samsung to continue licensing its patents for 5 years (2010-15), with a settlement amount to be determined by arbitration in 2015. Nokia will also receive additional compensation beginning in 2014. Given the number of smartphones that Samsung is selling, there is a significant windfall from this settlement that is due to Nokia. Nokia’s venture into 5G technology, self-driving cars, Graphene, and its current core holding of essential 4G patents should ensure royalty fees from many technology companies for years to come.
Bottomline – Nokia after Nokia looks to be a great series of propositions. Now then, do we expect the rise of the phoenix?
Telecoms and operators must change – more out of survival necessity. Voice revenues are shrinking and “Over the top” challenges are eating into P2P revenues. Then there are technology disruptions such as Soft SIM. A study from Ovum suggests that by 2016, operators will have lost $54 billion in SMS revenues due to the growing popularity of online messaging.
79% of operators believe that OTT clients on smartphones are a threat to traditional SMS and voice based services.
In 2011, 67.6% of operators identified messaging as the most challenged service by OTT, but that figure has increased to 73.7% in 2012.
43% of operators expect 11% and over of revenues to be impacted by OTT in 2012
52.1% of the operators claim OTT has impacted on 1-20% of traffic in 2012, up from 29.7% in 2011.
The denial charecterestic of operators is slowly on the wane – as operators grapple to hold on to shifting sands. This is reminiscent of the way movie and music industry has been disrupted and laid asunder by the Torrents of the world. The key realization that needs to come through for operators is that they need to realize that they are not in the pipe business – rather they own a significant part of the media business. Realization along these lines, could be critical in opening up thought processes around creation of content and media platforms, leased services on the cloud, location centric services, context awareness, semantics awareness… operators need to pull up the game from the pipe to compelling internet based services.
A part of this new services paradigm would depend on creating platforms that host eco-systems and users co-creating and consuming real time. A lot of the operator mentality is bound around the pipe syndrome with customer ownership. However, an open system/platform is key to creating value in terms of experience, discovery and revenues/profits for the ecosystem. Operators need to graduate from the walled thinking to a shared approach.
1. 1 billion smartphones per year! Latest smartphone numbers from Gartner round Smartphones at 250M a quarter. As low end smartphones penetrate the feature phone price points, Smartphones are beginning to look past the 1 billion mark.
2. With 82% market share Android is unrivalled emperor of the smartphone kingdom feebly contested by Apple iOS. Google’s conquest of the internet space at least on mobiles is near complete even while problem around gray Androids and Platform fragmentation remain.
3. Samsung remains the No.1 in smartphone device space – the fabled fifth horseman of the technology space – but this is more due to the momentum effect than anything really outstanding.
4. As the china smartphone markets swell, there will be more of Lenovos, Huaweis, ZTEs, Alcatels and Coolpads who would enter in the top 10 and start eating into Samsung’s 32%.
5. By the same logic – with the growing Indian smartphone volumes, i am hopeful of Micromax breaking into top 10 in a quarter or two – if it hasn’t already.
5. Android, Microsoft and Apple – are the last men standing as Blackberry, Bada, Symbian and all others fade out from the three horse OS race
6. Would Nokia break back into top 5 with its Lumia range? We would watch this.
If there is anything static about the evolving technology paradigm today, it is the regularity of disruptions.Nicholas Taleb christened such disruptions as Black swans – We could look at naming it Thunderstorms.Technology disruption trends are driven by ‘thunderstorms’. Everything seemed calm and static, then suddenly the Web comes and changes the rules. The cellphone business appeared static and then the iPhone changed the dynamics.
Some trends are predictable: like the power of processors doubles every 18 months or storage capacity doubles every 12 months. Some are unpredictable: like growth of mobility and Web.For example, we had smartphones long before iPhone. But they were difficult to use devices and not accepted until Steve Jobs made an easy-to-use device in 2007.Today, the mobile handset is in flux. Microsoft has bought Nokia. Earlier, Google bought Motorola. Huawei and lenovo almost bought over Blackberry. The key here is that convergence of solutions, internet and mobile is driving the Applications based internet as the next thunderstorm.
Web is dying. It’s like AM radio of the digital era. Web will be here, but that’s not where major commerce will happen. Smartphones are becoming so powerful that to use them as just file viewers makes no sense. The future architecture will be one where there are very powerful apps, connected to resources in the cloud, and this connection is the future architecture.
The dominant players in the tech industry will have an app Internet ecosystem — a phone, tablet, PC, app architecture and a group of partners. Now, who will dominate it? One is obviously Apple, which has 30 billion app downloads; Android has 27 billion downloads, but 80% money is made on iOS.
It wasn’t a surprise when Google bought Motorola, or when Microsoft bought Nokia, as they needed a phone to complete the ecosystem. Amazon could well be a very important app Internet ecosystem player. There are feelers that within 12 months, maybe six months, Amazon will have a phone. They already have a tablet, an operating system called Silk, and they might have a PC as well. Amazon buying Dell is an interesting possibility. As a trends, every 10 years in the tech industry, one big player, who looks like dying, comes back. In the 1980s, it was Intel. In the 1990s, it was IBM. In the 2000s, it was Apple and now it could be Amazon. Having said that Apple, Android and Amazon, Microsoft, Facebook are possibilities in phone business – making the mobile scene shift extremely.
Two of those five — Apple and Amazon — have a big advantage. They have customer credit card details. Apple has 450 million credit cards, Amazon has 220 million, Microsoft has 50 million via Xbox. Google and Facebook have zero. That’s the thunderstorm — in terms of a loyal user base — one can expect here. Every company in the world, selling insurance, tyres, banking will have to be a software company, via apps.
A recent report released by IAMAI and IMRB estimates 243 million internet users in India by June 2014 there by overtaking US(200 million users) and putting India at no.2 Internet population globally, behind China at 300 million. This study also states that the internet population in India would cross 200 million by October 2013 (exact number 205 million). The caveat served is that while all the 205 million may not be active internet users currently, but they would become “active” soon.
Internet in India took more than a decade to move from 10 million to 100 million and only 3 years from 100 to 200 million. From here on, we can hope to develop a robust Internet ecosystem with a multitude of local and global players and a thriving Internet economy. Internet is now, clearly, mainstream in India. the number of Computer Literates in rural India by June 2013 has risen nearly two-fold to 125 Million. The number of internet users in urban India is 137 Million in October 2013 and is estimated to touch 141 Million by December 2013. In Rural India, there are 68 Million Internet users in October 2013 and will reach 72 Million by December 2013. Mobile Internet, too, has garnered a huge base among the Active Internet Users. This is a 18%+ jump over the June 2013 numbers, when there were 59.6 Million users in Rural India who have accessed internet at least once in their lives. Although this number is witnessing a steady growth, the penetration of 6.7% among the total rural population is still very low considering the huge rural population of 889 Million.
Mobility driving Internet
The number of mobile internet users has also witnessed a steady rise, with 110 million mobile internet users in October, and is estimated to reach 130 million by the end of December. In June, there were 91 Million users accessing the Internet on mobile devices, with 70.2 million users in urban India. This number rose to 85 million in October and is estimated grow by 47% and reach 103 Million by December 2013. Rural India is not that far behind in this regard with a base of 21 Million Mobile Internet Users in June 2013. It reached 25 Million in October 2013 and will touch 27 Million by December 2013. Mobile usage and hence, mobile internet usage has seen huge jump from the 2012 penetration levels. Compared to the 0.4% mobile internet users in 2012, the penetration has grown to 2.4%, indicating a substantial growth in the mobile internet user penetration levels.
While Indians primarily use the internet for communication, largely in the form of email, social media is also an important driver of internet use in India. This facet of the IMAI report can be corroborated with data from other sources such as Facebook, according to which India had 82 million monthly active users by June 30, 2013, the second largest geographical region for Facebook after the US and Canada. Facebook does not operate in China.
Internet penetration in India is driven largely by mobile phones, with some of the cheapest and most basic hand-sets today offering access to the internet. India has 110 million mobile internet users of which 25 million are in rural India. The growth of internet penetration in rural India is driven largely by the mobile phone; 70% of rural India’s active internet population access the web via mobile phones. This may have to do with the difficulty in accessing PCs.
While the IMAI report paints an optimistic picture of internet use in the country, another report by the Broadband Commission for Digital Development, ranked India 145 of around 200 countries for the percentage of individuals using the internet.
What this means for service providers, handset OEMs and the VAS eco-system?
1. 42% of rural India’s internet users prefer using the internet in local languages. The high prevalence of content in English is a hurdle for much of rural India. Hence Vernacular medium is now key to greter penetration2. Given the poor connectivity and the lack of 3G accessibility in India – one would need to design experiences on mobile and web differently making sure that content is served first and pages are kept light. One must plan for delivery of internet on EDGE/2.75G networks
3. With projects such as UIDAI taking wings – a lot of economic activity i.e banking, payments, money transfer would also migrate online – thereby concerns on security is key
4. WiMAX could have been a great local area internet enabler – but then this technology is done and dusted. Something like the Google Balloon could be a good solution – but it may be a few years away yet.
The worldwide smartphone market grew 38.8% year over year in the third quarter of 2013 (3Q13), according to the IDC. Thus, a total of 258.4 million smartphones were shipped in 3Q13, establishing a new record for units shipped in a single quarter by more than 9.0%. The previous high was 237.0 million units shipped in the second quarter of 2013. Price points have declined significantly, driven largely by low-cost Android solutions.China has become one of the fastest growing smartphone markets in the world, accounting for more than one third of all shipments last quarter. This trend is expected to continue going forward. The Android smartphone platform has created vast opportunities for new vendors to get into the smartphone space and, in turn, has produced new competitive pressures at the top of the market. Vendors from outside the top 5 continue to control nearly half the worldwide smartphone market in terms of shipments. In 3Q13, Chinese vendors Huawei and Lenovo moved past LG, and not far behind are two more Chinese companies, Coolpad and ZTE. Any of these vendors could change position again next quarter. But in addition to having close shipment volumes, they all have one key ingredient in common: Android. This has been a huge factor in their success, but it also speaks to the challenges of differentiation on the world’s most popular platform.Looking ahead, strong momentum is expected to continue going into the fourth quarter, and another record quarter and year in the worldwide smartphone market. With already strong growth in 3Q13 and multiple vendors launching flagship models, the market will be poised to reach one billion units for the year. It’s a significant milestone considering the market shipped just half a billion units in 2011. Moving forward, what remains to be seen is how the various companies and platforms will stay differentiated and relevant in the increasingly competitive market.
In the worldwide mobile phone market (inclusive of smartphones), vendors shipped 467.9 million units in 3Q13 compared to the 442.7 million units shipped in 3Q12, representing 5.7% year-over-year growth. Third quarter shipments were up 7.0% when compared to the 437.4 million units shipped in 2Q13.
Interestingly enough the category of phones apart from the smartphones reduced by 18.4% from 256.5mln handsets in Q3 2012 to 209.5mln Q3 2013. Feature Phones are thus a shrinking category globally!