Gartner has predicted that Money transfer applications, Location based services and mobile search will be amongst the top 5 mobile application categories by 2012. The predictions are basis the revenue projections, loyalty and business model, consumer value and estimated market size and penetration of each of these application categories. Consumer mobile applications and services will no longer the prerogative of mobile carriers. The increasing consumer interest in smart-phones, the participation of Internet players in the mobile space, and the emergence of application stores and cross-industry services are reducing the dominance of mobile carriers. Each player will influence how the application is delivered and experienced by consumers, who ultimately vote with their attention and spending power.
A few inferences that can be drawn about the mobile applications perspective: The Importance of the eco-system approach to develop and deploy applications and the emergence of MVNAs (Content aggregators) and MVNEs (Content Enablers)!
Gartner also predicts customers will use no more than 5 mobile applications, which would be chosen according to their needs and demands. There will be opportunities from niche market apps as well.
1.Money transfer ranks No. 1 on Gartner’s 2012 biggest applications list, contending the service’s lower costs, speed and overall convenience boast strong appeal to users in developing markets.
2.Gartner believes the LBS user base will grow from 96 million worldwide in 2009 to 526 million in 2012, crediting its ability to meet a range of needs spanning from productivity and goal fulfillment to social networking and entertainment
3.Mobile search, is listed third due to its dramatic impact on technology innovation and industry revenue.
4.Mobile browsing–according to Gartner, browsers will be available on about 80 percent of handsets shipping in 2012, compared to 60 percent of devices in 2009.
5.Mobile health monitoring is fifth, followed in descending order by mobile payment, NFC, mobile advertising, instant messaging and mobile music.
World over sales of smart-phones will exceed that of regular handsets by 2015, so much so that by 2016, smart-phones will constitute 2/3rds of total mobile phone sales.This has been reported by a Telecom trends international study. The report goes on to say that Smartphones will become the primary mobile device recording robust growth of 28% through 2016. On the other hand, the sales of the regular handsets will start declining.
A few thoughts-
1. Africa and Asia are the two markets which will power the growth in mobile handset population. The present population of handsets world over is 4 billion handsets.
2. Between 2010-2015, Asian markets would reach high volume penetrations. There would also be a strong demand of higher end handsets on a replacement basis.
3. However, I am apprehensive of African numbers.
4. Overall however, the replacement demand will have strong contribution from Latin and North America, Asia, Europe and Oceania.
5. A 66% contribution of replacement devices is thus a strong possibility
6. World over adoption of 3G and 4G mobile broadband will again bolster demand for Internet browsing devices.
7. Even with an internet sidedness of mobile communication and the utility of smart-phones, price would be a hindrance to smart-phones mass acceptance as the primary device.
8. Then, there are other devices and technologies which would emerge to be strong contenders to smart-phone functionality. Net-books could be an example. And you never know what radical innovation lies round the corner.
Net of all things, 66% of handset sales from smart phones by 2016 will be a tough one. Upgrades and high end devices, probably yes, but smart-phone @ 66% looks a bit stretched.
What are your thoughts: Can smart-phones be 2/3rds of the market by 2016?
Last month Indian Telecom subscribers crossed 500 million. There are enough and more studies on the impact of telecom penetration on the economy. One study correlates 10% increase in tele-density to .6% increase in GDP. The canvas is $520 billion increase in GDP over 8 years time frame.
The need is for a communications model that reaches out to the remotest citizen and low cost wireless solutions. The existing industry spectrums: 850MHz/ 900 MHz/1800 MHz are grossly inadequate for the traffic. The 3G option is being looked at as a solution providing greater bandwidth for voice and data traffic. Given the high 3G auction fees, the 3G option ensures service qualities at a high CAPEX and OPEX. High speed telecom networks would be the key for a long term momentum in the economy as suggested by McKinsey,2009.
- 3G investment in India will deliver over $70 billion economic benefit
- India would have gained over $16 billion (PPP) in the last 2 years but for delay in introduction of high speed mobile BB.
- 10% increase in broadband penetration can deliver up to 1.4% increase in GDP
The spectrum: How it pans out and how the digital dividend is a part of it?
Digital compression technologies and coding systems make it possible to squeeze much more information into a radio signal than in the case of analogue technology. Digital TV is many times more spectrally efficient than analogue TV, which means UHF spectrum will be freed up. Large amount of spectrum that would be freed up in case of switchover from analogue to digital terrestrial TV is known as the Digital Dividend.
Refer to the slideshare presentation for a full description on the Digital Dividend:
The analogue TV switch-off represents a “once in a generation” opportunity for a significant reallocation of spectrum. This spectrum has excellent propagation characteristics and can be used very effectively to roll out mobile broadband services in rural areas and to provide in-building coverage. It is approximately 70% cheaper to provide mobile broadband coverage in the 698-806MHz band than at 2100MHz. This means networks can be rolled out quickly and cost-effectively, bringing cheaper services to consumers.
It is approximately 70% cheaper to provide mobile broadband coverage at frequencies (approx. 800MHz) than over 2100MHz.This means networks can be rolled out quickly, cost effectively, bringing cheaper services to consumers.
As a technology the advantages of Digital Dividend over contemporary spectrum allocation are as follows:
- Better propagation characteristics.
- Ideal for providing wireless service in low population density regions, such as rural India
- Target resource for rural broadband wireless access worldwide.
- Less Infrastructure – Reduced costs
- Reduce capital expenditure, which makes deployment in rural or high-cost regions economically viable.
- An LTE network at 700 MHz would be 70% cheaper to deploy than an LTE network at 2.1 GHz – GSMA.
- Two to three times as many less sites required for initial coverage at 700 MHz compared to 2.1 or 2.5 GHz
Spectrum: Cost versus Coverage
Spectrum Infrastructure: 700 MHz versus Others!
The iPhone was officially released in mid 2007. In two and half years, it has captured the fanfare and frenzy of the device and telecom geeks acquiring the status of an Icon and fuelling Apple’s growth story.
There have been many challengers from Samsung, HTC, Sony Ericsson, Nokia and others, but iPhone has held its ground because it combines a glitzy UI, a remarkable device and a 100 thousand strong applications store to its strength. That doesnot stop the challengers from take shots at the frailties of the iPhone.
One of the strongest challenge to iPhone yet is the upcoming Motorola Droid on the Verizon Network and backed by the new Android OS 2.0 (Eclair). That is a strong proposition and they have their sights set on iPhone if the “Droid Does” campaign is to seen. Watch the video here.
The latest in this round is the Droid stealth commercial which is an announcer of the launch date amidst a hyper technology scenario. Catch the video here!
What the “Droid does” to the “iPhone” will be an interesting thing to watch. Watch this space.
Read more about the Droid here! http://ronnie05.wordpress.com/2009/10/21/1141u/
I have been writing about the how a price war in the Indian Telecom industry would be a future in vain. I have also written about why Telcos should explore future in data and consumer centric services rather than price wars. The pay per second bloodbath was clearly inevitable. However, i cant think, why would Large Telcos in the country miss the trick. A price led strategy would never be sustainable, and yet the whole industry seems to have rushed into 1 paise per second formula. Am i missing something?
The explosion of subscribers in India has put a lot of pressure on the existing telecom infrastructure and the frequencies available. While there have been efforts like sharing of infrastructure between operators which has allowed to keep Capex under control, there are also minefields such as Mobile Number Portability which adds a lot of uncertainty relating to the subscriber adds and churn. 3G is seen as an answer to the lack of bandwidth, but the license fees demanded by the government is exorbitant and will require long periods of gestation. India has also attracted players like MTS, Telenor, Etisalat, DoCoMo adding a lot of uncertainty in the existing market conditions.
The principal source of operator revenue is voice and data. (Data services here also implies SMS and MMS services). Under the present bandwidth shortages, existing operators have only been able capitalize on the voice led growth. SMS is the only the significant other contributor to revenues in Indian telecom eco-system. The current contribution of data services to operator revenues range from 8 to 11%. This includes SMS and also includes the Tata Teleservices and Reliance CDMA connections, which are typically data heavy services. GSM’s data revenues would be much lesser than CDMA. India being a 80% GSM country, the ratio of data services to Telecom services thus lags the international numbers. World over the higher percentage of Data revenue balances the fall in ARPU.(The Data ARPUs are on the rise globally). In India, data services provide no such safety net.
A case in point is the US telecom market which is the world’s highest consumer of telecom based data solutions. Over the last 5 years, Data ARPU has increased 7X while the Voice ARPU has reduced by 30% in the same period. A $15 dollar ARPU loss in Voice has been compensated by a $12 increase in Data ARPU. One might argue that this be the case in US which is a 3G country. But the point made in Indian context though different in regulatory and eco-system aspects, draws from this example.
- While voice tariffs in India is the lowest, Data tariffs in India are amongst the highest in the world. Cost being an important determinant of penetration, higher data costs have acted as barriers to data spread.
- Application and Content Revenue sharing models sometimes make it difficult for higher levels of applications to be built because of cost/higher break even periods. Even if applications are made, the revenue sharing with Telcos in India, would make it difficult for the Apps provider to advertise or communicate the offering to consumers.
- There is little in terms of consumer services to High ARPU consumers. Telcos in India could perhaps learn from Indian banks a few lessons in differential treatment of HNIs.
- All this time, Telcos in India have done little to tie up with content providers such as Googles of the world. LBS, Maps, Navigation and Social Networking could have been a great apps. This is a “Blue ocean” where Telcos have not ventured yet at all.
- The CEOs of one of the biggest Telcos in India once dismissed the MVNOs as “loss making”. Perhaps it is time to re-think strategy in terms of branded and exclusive content. (Read Report)
- All this while, Nokia has been preparing its platforms to differentiate itself through services. Telcos were in a far better position to aggregate service bundles and yet they didnot. Did all of them miss the trick? Did they fall into the Operator Dumb Pipe syndrome trap!
So, when it was sunny, all the Telcos in India did was to make good subscriber numbers in falling ARPUs. That was the low lying fruit. Nobody perhaps looked at the next levels, because they were rolling in money anyways. The bloodbath in terms of per second tariffs is now catching the Telcos. They still prefer to look at market shares rather than the EVAs and Bottom-lines.
Next story in making would be the inevitable shake out and age of acquisitions.
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Read the earlier posts here: