U.S. Consumers Show High Interest in Femtocell Services, Survey Finds

More than half of U.S. broadband households with mobile phones are interested in femtocell benefits, and are willing to pay for the devices and associated new services, a survey by Parks Associates, conducted for the Femto Forum has found.

The survey found that fewer than 10 percent of consumers were previously familiar with femtocells. However after hearing a description of the femtocell and its benefits, 56 percent of respondents found femtocells appealing, and two thirds found the technology either “very” or “extremely” appealing. Additionally, 89 percent of those respondents who were already familiar with femtocells  found them appealing.

The primary driver for femtocell interest was improved in-home coverage. Important secondary drivers included increased mobile handset battery life, faster mobile broadband, advanced femtocell services and home-zone calling tariffs.

The survey found that 72 percent of consumers who found femtocells appealing were very interested in at least one advanced femtocell service. Examples of such services include "Virtual Home Number," which rings every cell phone in the home, or "Family Alerts," which warn when a subscriber has left or returned home.

Half of these respondents indicated a willingness to pay $4.99 a month for their single favorite service or $9.99 a month for a bundle of their favorite three services.

Although Wi-Fi is sometimes viewed as a femtocell alternative, the survey showed that 84 percent of people who heavily use Wi-Fi on their 3G devices found femtocells appealing, apparently because of the improved voice coverage and battery life.

Among consumers who consider themselves likely to change operator in the next 12 months, 44 percent said that they would very likely reconsider if their current operator offered a femtocell. Similarly, 35 percent of consumers in multi-operator households said they would likely consolidate their services around a single provider who offered a femtocell.

Demand is highest when upfront device costs are in the $20 to $50 range. This demand is cut in half when device prices are in the $50 to $100 range and halves again when the cost exceeds $100.

“The clear message from this research is that femtocells have widespread appeal and consumers are willing to pay for them," said Harry Wang, director of mobile product research, Parks Associates.

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Are Millennials A Predictable Part of the Generational Cycle? | Millennial Marketing

That "Millennials" might be different from their parents, but neither generation arguably is so "unique and different" as sometimes might appear. Nearly 20 years ago, William Strauss and Neil Howe wrote “Generations,“ which suggested there is a repeating four-generation pattern in American history.

If at all accurate, Millennials are part of a pattern. Though their common generational experiences mark them as different from the three preceding generations in the cycle, the cycle will repeat, with Millennials in turn succeeded by a generation with different, but broadly predictable outlooks.

Sometimes we mistake the forest for the trees, focusing on how much "technology" is simply a background factor for Millennials. What we overlook is the pattern that suggests why their values and views are different from that of their parents, but also that those values are part of an old pattern.

If so, yet another turn is coming.

Are Millennials A Predictable Part of the Generational Cycle? | Millennial Marketing

Clearwire Says It Has 3 Customer Segments

Clearwire says three customer segments already have emerged for the firm's fourth-generation wireless network. "A Clear customer is often a cord-cutter," says Clearwire CEO Bill Morrow. "This customer has a mobile phone, but no fixed line phone in the house." That customer fits the profile of an on-the-go user that wants broadband available outside the house.

"They also probably don't have cable TV service," he says, and tend to substitute Hulu, YouTube or other video sites for TV. It probably goes without saying that this sort of customer is single and younger, without children.

The "cable customer," on the other hand, "can't cut his Internet connection at home," says Morrow. That is because this second sort of customer has a family sharing a single at-home video entertainment connection, as well as a broadband Internet access connection.

In this segment, the 4G wireless service is part of a triple play package.

The third segment consists of mobile customers served by Sprint that wants to add a broadband access service for PCs and other devices, and for whom the convenience of having both mobile phone and broadband access services on the same bill, provided by one carrier, is valuable.

"When you go into the market you see all these different customer segments and it's easy to see that you can get more subscribers in total by marketing to different groups instead of just having one brand," says Morrow.

Clear customers do use much more bandwidth than the typical 3G user, though. "We're finding that customers are using on average 7 GBytes of data per month on our service," says Morrow. "The average amount of data a 3G subscriber uses a month is about 1 GByte to 2.5 GBytes a month.

It is not certain why this is the case. It could be that heavy users are attracted to the unlimited access, with no monthly caps. It could be that knowing there is no cap motivates usage, as broadband leads users to consumer more data than they do when on a dial-up service.

Consumers Spent More on Consumer Electronics Over the Last Year

The average U.S. household spent $1,380 on consumer electronics products in the past 12 months, an increase of $151 from last year, according to a new study released by the Consumer Electronics Association.

The average household spent 12 percent more on consumer electronics devices in the past year, which might be especially surprising considering a dip in most other consumer spending over that same period. Of course, sales took a dip in 2008 as well.

Individual consumer spending, as opposed to household spending, also was up 10 percent from the previous 12 month period, CEA says. The average adult spent $794 on consumer electronics in the past 12 months, up from $725 in 2009.

Women spent more on consumer electronics products than they did the year before but still trail men in overall spending. Women spent, on average, $631 on consumer electronics, up $73 from 2009. Men report personally spending $969 in the past 12 months, up $67 from the year before. The average household reports owning 25 consumer electronics products, up from 23 products last year.

CEA’s study also shows that video products continue to be the top devices consumers own, with HDTV ownership continuing to increase. About 65 percent of U.S. homes now own at least one HDTV, an increase of 13 percentage points from last year, making it the top industry growth driver of the past 12 months.

Consumers also are buying HDTVs as secondary sets. The average household now owns 1.8 HDTVs, up from 1.5 in 2009. HDTVs also are also the top product consumers say they want to purchase. About 23 percent of households say they plan to buy a new high-definition set in the coming 12 months.

Ownership of computers also continues to increase. Currently, 86 percent of U.S. households own at least one computer, making it the third most owned CE product category behind televisions and DVD players.

The popularity of netbooks, owned by 12 percent of U.S. households, and laptops, now owned by most households (58 percent), is helping drive the computer category.

Status Drivers are Changing: What it Means for Consumer Marketers

Status in "consumer" societies is fragmenting rapidly, say researchers at Trendwatching.com. That's important for every consumer marketer because, "like it or not, the need for recognition and status is at the heart of every consumer trend," the researchers say. "Status is the ultimate hidden motive."

In a traditional consumer society, where consumption is one of the leading indicators of success, those who consume the most, and especially those who consume the rarest and most expensive, will typically also attain the highest status.

Mature consumer societies are changing, though.  Though there is no shortage of the old type of status seeking, an increasing number of consumers are no longer solely obsessed with owning or experiencing the most or the most expensive goods.

In a growing number of cases,  status is about acquired skills, eco-credentials, generosity, love and connectivity, Trendwatching says.

Not a single status symbol is ever safe from devaluation, as these symbols and stories are mere agreements between groups of people. The moment ‘society’ agrees that a car is just a method to safely move from A to B, or a nuisance that needs to be avoided due to environmental worries and space constraints, and not one of the dominant indicators of one’s financial standing, luxury car manufacturers will have a problem.

Status, in other words, is "social" to a large extent. A large part of the satisfaction any product, capability or experience provides is that most other people do not own a product, do not have a skill or have not been to a place.

Traditional consumption is about buying, enjoying and showing off more stuff or better stuff than other people have. That doesn't mean traditional satisfactions are gone; it is just as alternate satisfactions are growing.

It does explain why "experiences" increasingly are valued. The ‘mass’ that consumers are willing to put up with is either the stuff they don't really care about.

However, when it comes to experiences, status can only be derived from being seen by others, while experiencing the experience or by telling others about the experiences afterwards. In a real way, the status comes from the telling of the story.

Consumers increasingly will have to tell each other stories to achieve a status dividend from their purchases. Expect a shift from brands telling a story, to brands helping consumers tell their own status-yielding stories to other consumers, Trendwatching says.

Scotch whiskey brand Laphroaig offers lifetime leases for a square foot of land on the island of Islay (where the distillery is located) to each consumer who buys a bottle, for example.

Owning is no longer the only way for consumers to gain status; the act of giving also confers status.

Generosity is one example. Many consumers not only are disgusted with greed, but also can take advantage of an online-fuelled culture of individuals who share, give, engage, create and collaborate in large numbers.

One example of the "generosity" trend is the collaborative, free, crowdsourced, gift and sharing movement online, that fulfills in entirely new ways the perennial need of individuals to feel part of the greater good, to contribute, to help. But the online world of course also makes it easy to showcase and share one's acts of altruism.

The status-implications for non-profit organizations, and B2C brands big on giving initiatives? Work harder on helping your consumer-donors show and tell others about their donations and contributions.

As entire societies have embraced sustainability in everthing as the way forward, and as millions of consumers are now actively trying to greenify their lives, green credentials are an endless source of status. Just witness a substantial subset of consumers already bestowing recognition and praise on Prius and Insight owners while scorning SUV owners.

Consumers' interest in green credentials will lead to even more eco-friendly goods and services sporting bold, iconic markers and design, that help their eco-conscious owners show off their eco-credentials to their peers.

Also count on a massive increase in green stories (as told by consumers): detailed information on (eco-friendly) sourcing, production, ingredients and distribution all represents a potential benefit to consumers who are keen on sharing their green status stories. And the concept is extra attractive for service providers, who often don't have physical products with which to convey their eco credentials.

What will make green stories even more powerful is the fact that while each individual can ‘do their bit’ on the environmental issues, their actions are going to be wasted unless everybody else does the same. This gives individuals a great excuse to share their stories and to enjoy a status boost from occupying the moral high ground.

For an increasing number of consumers, the mere act of consuming less is the greenest status fix of all.

Needless to say that practitioners of "unconsumption" will heavily depend on the telling of stories to make their "low or no" impact on the environment known to others.

Growing pockets of consumers find pleasure and gain potential status by mastering skills and acquiring knowledge.

To be on the inside, to be in the know, to have access, to be knowledgeable, but also, to be able to lead the way to the unique, the avant-garde, the cool, the latest, the cutting-edge now is an established source of status.

Anything you as a brand can do to assist the pursuit of deep or trivial knowledge will be appreciated.

Nike’s True City is an iPhone app that aims to give consumers ‘insider’ information on six European cities, while also allowing users to share their own tips and delivering exclusive Nike offers and information.

The Adidas Urban Art Guide is a free iPhone travel guide listing Berlin and Hamburg's best graffiti. Users can click on each marked location to retrieve images and information about the piece and the artist.

Beck's Gig Finder app helps users to find local music gigs. The app's map and GPS interface allow users to see where they are in relation to the gigs.

Closely related to status and knowledge are status and skills. Especially for younger (and younger-at-heart) consumers, participation is the new consumption. Brands that help consumers develop skills and create professional-grade output will gain an appreciative audience.

Tesco’s Wine Finder app is capable of recognizing any wine in the retailer’s database from a photo of the bottle. The app also recommends wines based on price, country of origin and accompanying cuisine.

Swedish food brand Santa Maria offers an iPhone app that offers grilling tips and advice. The application features recipes, a BBQ handbook and a grilling timer.

Where it comes to online status, it’s all about who you connect to, and who connects to you, tribal style. It still is about being unique, but it's about belonging, too: belonging to tribes whose membership renders status to its members.

Unlike in the 'offline world', these connections (in numbers and in profiles) are visible. Then there are virtual goods garnered in online games, or gaming skill itself.

So what can consumer marketers do? Develop a better understanding of who (and how) your customers are trying to impress. If you find your brand is still mainly focusing on bigger and better but your customers aren't, then you might have a problem.

If you already actively serve a diverse crowd of status seekers, figure out how you can help them to better show off their new status symbols or better tell their status stories. Showcasing, visibility, and story ingredients are still often overlooked.

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Verizon and AT&T Equity Performance is a Warning Sign

Communications policymakers in nations where the government does not directly own and control key national carriers in their markets always must balance their preferred regulatory outcomes with the possible responses private firms will make to those initiatives.

Put simply, too much regulatory pressure will lead to reduced investment and innovation, not more. The other issue is that every government considers its national communications infrastructure to be a matter of national interest.

That being the case, most governments will not willingly weaken their own carriers.

So take a look at how AT&T and Verizon equities have fared over the last year or so, compared to the Standard & Poors 500 index. Not so pretty.

What that tells you is that investors believe neither company has much in the way of "growth" ahead of it. In fact, many would argue both companies will increasingly be challenged, in coming years, to stay where they are, given major changes in the underlying business models each company faces.

That suggests policymakers should be cautious about making incorrect assumptions about the underlying financial prospects for the firms that arguably are most important to the national communications infrastructure.

It is not as though either firm were Apple, creating whole new industries and muscling its way into other substantial industries with some regularity. Quite to the contrary, innovation and revenue upside nearly universally are now seen as attributes of the application and handset parts of the communication value chain, not the "access" providers as such.

To be blunt, there may be times when regulatory restraint is the right policy. But there also are times when an industry with national economic and security implications faces enough fundamental challenges that "protection or promotion" is the right policy framework.

It is not the job of other ecosystem participants to worry about the financial health of other segments. But it always is the job of national policymakers to do so, when the issue is the health of the underlying national communications infrastructure.

First-quarter 2010 results posted by AT&T suggest the outlines of the problem. Simply, wireless now is the driver of revenue growth.

But wireless is saturating, forcing mobile providers to find new revenue sources. Also, mobile voice, which has been the segment mainstay, increasingly will come under pressure as landline voice has proven to be a product in a declining lifecycle.

The point is that the appropriate regulatory framework for a fast-growing, vibrant industry is different than for an industry that is fundamentally challenged. That is not to suggest industry executives are unaware of the problems, or that they have failed to show agility in the past; they have.

The point is simply that it might be a grave mistake to assume carriers can bear any burden where it comes to regulations that choke off their ability to create new services and revenues. The financial markets already are signaling their views how the industry is situated.

To the Extent that Housing Instability Slows Cable and Telco Sales, Look at This

You can draw whatever conclusions you want about this chart showing a wave of option adjustable rate mortgages coming up for resets already and peaking next year, not to mention another wave of sub-prime mortgages that is building and will peak at just about the same time as the option ARMs have to be reset.

I'm not suggesting anything, one way or the other, about the potential for a double-dip recession or anything of that sort.

It does suggest that any company making a business out of services and products sold to consumers probably should assume the post-recession economy we now are in will be difficult.

U.S. Media Usage Shrinks in 2009

Despite the general trend that Americans consume a bit more media every year, that was not the case in 2009, when U.S. media consumption actually fell about 17 percent in 2009, or about two hours a day, a huge drop.

The conventional wisdom is that media use should increase during a recession, as consumers shift more entertainment to the home, and substitute some amount of entertainment spending for travel, for example. But that doesn't seem to be the case, according to a new study by the Yankee Group.

The big exception was mobile media, which grew 39 percent in 2009.

"We believe the underlying reason is the economy," says Carl Howe,Yankee Group analyst. "It’s hard to spend all evening on the Internet or watching TV when you’re worried about making mortgage payments or trying to find a job."

Online activities decreased by 40 minutes, but TV and video viewing lost a full hour. Web browsing, email and social networking decreased 17 percent from their 2008 figure of 4.9 hours, but TV viewing declined by nearly a third, from 4.3 to 3.3 hours per day.

Music and reading declined the most. "The music, newspaper and magazine industries are all struggling for a reason," says Howe. "Consumers are spending less time with their media."

Listening to the radio and music fell half an hour to just 1.4 hours a day. Reading magazines and newspapers fared even worse; those activities combined total only 25 minutes a day, down from 40 minutes in 2008, says Howe.

Mobile is the only category that experienced growth. Consumers spent 40 minutes per day talking on mobile phones, up 12 percent from 2008. Mobile Internet use grew 36 percent to 11 minutes a day, and texting grew 55 percent to 27 minutes a day.

The Yankee Group findings contradict some other studies which indicate that TV watching was up in 2009. One of the differences is that Yankee Group includes both "at work" and "at home" consumption, while Nielsen only measures "at home" consumption.

But anyway one looks at the matter, consumers spend nearly half of every 24-hour day with media.

Respondents report they spend an average of 712 minutes, or 11.9 hours each day, with various types of media, with the greatest amount of time spent online, using Web browsing, email, instant messaging and social networking for an average of 4 hours and 13 minutes each day.

TV and video represents three hours and 17 minutes watching TV, pre-recorded programs on their DVRs, and DVDs and videos. TV watching takes up just over 2 hours and 19 minutes per day, on average.

Consumers report they spend an average of one hour and 26 minutes each day listening to the radio, CDs or MP3s, while all mobile phone activities consume one hour and 18 minutes on average.

Gaming time now exceeds reading. Consumers report spending an average of 36 minutes each day playing video games, but only 24 minutes reading newspapers or magazines.

Consumers routinely multitask while watching TV. "Two thirds of our respondents say they talk on the phone regularly while watching TV," says Howe. "More than half surf the Web or write email as well."

That is one reason why Apple and some observers believe the iPad will create a new niche in the market. People already have the habit of using the Internet while watching TV, so a more convenient device for doing so should be able to get traction, tablet supporters believe.

Interactive activities engage consumers in ways TV doesn’t. The top four activities on this list are all what the media industry calls “lean forward” tasks; that is, they engage the consumer interactively. Consumers naturally give cognitive priority to these “lean forward” activities over “lean back” ones like watching TV. What does that mean? It means that when consumers multitask, TV advertising takes a back seat to more interactive forms of engagement.

Competitive Pressure Remained the Story in 4Q 2009, Says Fitch Ratings

Competitive pressures remained strong throughout the industry in the fourth quarter of 2009, say analysts at Fitch Ratings, especially among local exchange carriers and cable companies, as those firms increasingly compete in identical spaces, with similar products.

The fourth quarter revealed especially aggressive marketing and competitive pricing and discounting strategies, Fitch says. This trend is expected to affect the competitive landscape going forward, especially putting pressure on average revenue per user and profit margins on discrete products.

The big problem for telco contestants is fixed voice line losses. Although high unemployment continues to affect sales of business lines, and the effect of wireless substitution continues, affecting residential lines, total access-line losses began to decelerate toward the end of 2009 as service bundling, including network-based video services offered by operators such as AT&T and Verizon continued to gain scale.

Cable operators had an arguably easier time, gaining high-speed data subscriber market share growth during the fourth quarter of 2009 despite a decrease in overall broadband additions caused by the persistently weak economy and maturation of the broadband market.

The wireless segment of the business arguably faced the fewest problems. Total wireless net additions were strong, says Fitch.

The industry’s capital spending grew by approximately 20 percent from the third to the fourth quarter of 2009 but remained below fourth-quarter 2008 levels. It is Fitch’s opinion that all communication service providers must invest in their respective networks in 2010 in order to maintain or improve their competitive positions.

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Will LTE Bend the Cost Curve?

Mobile service providers hope Long Term Evolution will "bend the cost curve." They also hope it will provide the foundation for new services, but many of us would guess the primary advantage lies in bending the cost curve.

Telcordia Warns of Mobile Operator Marginalization

Broadband access is becoming a commodity, even for mobile service providers, who must figure out what else they can offer consumers once basic mobile broadband connections have become a feature purchased by the majority of mobile phone users.

The good news for mobile operators in many regions around the globe, data average revenue per user (ARPU) has quadrupled over the past six years and now is nearly half of voice ARPU.

But that product will saturate, as has fixed broadband, leaving mobile providers to look for the next wave of services and applications to sell.

"The popularity of video and other third-party over-the-top services are breaking mobile broadband networks and business models because they siphon off revenue while adding to the network's workload," says Pat McCarthy, Telcordia VP.

Since Telcordia believes that effort must include measures to differentiate3 access services, it is obvious why extending "strong" versions of network neutrality to wireless networks is so dangerous: it would close off most of the ways such differentiated service can be provided.

McCarthy says operators must distinguish between different types of traffic and prioritize them. For example, personalized end user services that generate revenue for an operator and its business partners should enjoy priority access to network resources, while zero-revenue OTT content should be managed with a tiered bandwidth management solution, he says.

Most-if not all-service providers undoubtedly would agree, a fact that illustrates why network neutrality rules or even reregulating broadband access as a common carrier service would be so devastating.

"An operator's need to manage bandwidth is the first step toward realizing a profitable business, and they must build on that capability, forming active partnerships with end users and their choice of content providers, to get their fair share of the profits," says McCarthy.

Already, mobile broadband traffic continues to grow, but revenues aren’t keeping pace, McCarthy says.

Perhaps the biggest threat of all comes from over-the-top players, McCarthy notes.  Operators will be required to make all the investments in infrastructure and provide a reliable customer experience. And yet, if they aren’t careful, they will absorb the bulk of the costs, while allowing third-party content
providers to reap the biggest profits.

Print content and video content providers say they have learned the same lesson from the music industry's experience with online music. Telecom industry executives probably have to learn their own lessons from the experiences of the fixed-line broadband experience.

None of that will be easy, as application providers largely will resist. But revenue sharing across the ecosystem is the only stable way forward, where maximum innovation and network investment can occur.

"For a time, while the priority is building out the mobile broadband infrastructure, there may be a
competitive advantage in offering a better network," McCarthy says. "But soon enough, the pipe will become a commodity, and the long-term potential revenues will be in the delivery of services, applications, and other user-demanded content."

Ecosystem conflict is inevitable as the new value chains are constructed. But service providers can help themselves by figuring out ways to leverage assets they already have, and offerng them to business partners, for example. It won't be easy, but it is necessary.

Consumers Will Decide what iPad Is, Not Apple

It isn't clear yet whether the Apple iPad is a "mobile" device used outside the home, or a "cordless" device used inside the home. The notion that the iPad is a device "between a smartphone and notebook" suggests a "mobile" device that can be used both outside the home and inside it.

The "cordless" use case is different: the iPad ultimately winds up being a media consumption device mostly used around the house as a shared device, where a mobile phone or a netbook or notebook tends to be a "personal" device used by discrete people.

Imagine something that lies around on coffee and end tables, on kitchen counters and gets picked up and used for various reasons on a casual basis, but which is a "shared" device rather more like a cordless phone  or remote control. That implies a lower price than currently is the case, but everybody expects that to happen.

Nobody can say for sure whether these, or even other undiscovered use cases will eventually emerge. In the near term, the iPad might wind up being used as a game platform, an e-book reader, a video consumption device and an educational content platform, at least if user consumption matches the current supply of applications in the App Store.

According to App Store analytics company Distimo, out of 2,385 iPad-only apps, 833 of them are games, about 35 percent of all the iPad-only apps currently available in the App Store.

The other popular categories are ‘entertainment’ with 260 apps, and ‘education’ with 205 apps.

But the emphasis on games and entertainment also is true of the iPod as well. In fact, 70 percent of the most popular applications on the iPhone are published in entertainment and education categories, compared to 40 percent on the iPad.

About  83 percent of applications on the iPad are offered on a paid basis, while 73 percent of all applications are offered "for fee" on the iPhone. The average price of all paid applications that are solely compatible with iPad is $3.61 compared to $3.55 for applications compatible with iPhone.

Medical applications are most expensive on both the iPad ($9.39) and iPhone ($10.73). On the contrary, Education ($9.10), Healthcare & Fitness ($4.41), Music ($6.86) and Sports ($4.95) applications are significantly more expensive on the iPad.

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Touch Screens Lead to Higher Device Satisfaction, Survey Suggests

Overall satisfaction among smartphone and traditional handset owners whose phones are equipped with touch screens is considerably higher than satisfaction of owners of phones that have other input mechanisms, according to J.D. Power and Associates. That likely comes as no surprise, given the impact the Apple iPhone has had on the entire handset business.

Among smartphone owners whose device has a touch screen, satisfaction averages 771 on a 1,000-point scale, nearly 40 index points higher than among those whose smartphone uses other input methods, such as a text keyboard.

In order of importance, the key factors of overall satisfaction with traditional wireless handsets are: operation (30 percent); physical design (30 percent); features (20 percent); and battery function (20 percent).

For smartphones, the key factors are: ease of operation (26 percent); operating system (24 percent); physical design (23 percent); features (19 percent); and battery function (eight percent).

Apple ranks highest in customer satisfaction among manufacturers of smartphones with a score of 810, and performs particularly well in ease of operation, operating system, features and physical design. RIM BlackBerry (741) follows Apple in the rankings.

LG ranks highest in overall wireless customer satisfaction with traditional handsets with a score of 729, and performs well in all five factors, particularly physical design, features and operation. Sanyo (712) and Samsung (703) follow LG in the rankings.

The study finds that both smartphone and traditional handset owners are increasingly using their phones for entertainment and sharing media. Among traditional handset owners, 25 percent indicate they frequently send and receive multimedia and picture messages, an increase of 25 percent from just six months ago.

Smartphone users are nearly twice as likely to share multimedia messages. In addition, nearly one-fifth (17 percent) of smartphone owners with touch screen-equipped handsets indicate they frequently download and watch video content on their device, which is significantly higher than the segment average.

Global Positioning System capabilities are a desired feature among both traditional mobile phone and smartphone users. More than one-third (35 percent) of traditional mobile phone owners say they want GPS features on their next handset purchase, while 15 percent of smartphone owners say they want GPS.

Some 60 percent of smartphone owners say they download third-party games for entertainment, while 46 percent say they download travel software, such as maps and weather applications.

About 31 percent say they download utility applications, while 26 percent say they download business-specific programs, indicating that smartphone owners are continuing to integrate their device usage into both their business and personal lives.

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Mobile for the Next Billion Users

Is it possible that simple tools, such as low-cost mobile phones, can have more positive economic and social impact than our typical large-scale government-to-government and typical development aid efforts? The aid establishment might not like the question, or the answers, but MIT NextLab project staff seem to believe the answer is "yes."

“Traditional aid does little for the very poor,” says Jhonatan Rotberg, founder and director of the NextLab program. “Only a fraction of the donated money trickles down to those who need it most."

"But with a mobile phone, poor people can get ahead," he says.

By any measure, recent progress, especially over the past few years, has been quite dramatic: mobile cellular penetration in developing countries has more than doubled since 2005, when it stood at only 23 per cent.

Last year, mobile cellular penetration in developing countries passed the 50 per cent mark, reaching an estimated 57 per 100 inhabitants at the end of 2009. Even though this remains well below the average in developed countries, where penetration exceeds 100 per cent, the rate of progress is remarkable.

Android might be the next big evolution, not that voice and text messaging are propagating. Using Android, devices could be customized for any number of applications that might otherwise be run on a PC, an important development in markets where device cost and access to electricity are issues.

Already, over four billion mobile phones are in use in the world today. The next billion new users, Rotberg says, will be spread out in the developing countries, mainly in Africa and Asia. Android could be important in that regard.

http://www.xconomy.com/boston/2010/03/31/mits-nextlab-designing-technology-for-the-next-billion-mobile-phone-owners/?single_page=true

Why Buy a Kindle if You Can Use an iPad?

An app to read e-books from Amazon’s Kindle store on the iPad has arrived in iTunes. If that is the case, why buy a Kindle at all? Price, you might correctly note, but wait a couple of years and that problem goes away.

That suggests a major Kindle price cut has to be coming. Historically, many multi-purpose computing devices have sold better than single-purpose devices, when there is a choice. That's why iPhone sales are cannibalizing iPod sales.

With the arrival of the Kindle app, iPad owners will be able to choose whether to read books from Amazon or from Apple. Using the iPad gives users access to all Kindle inventory, with Apple inventory thrown in, as well as color support and the ability to do lots of other things that require Internet access, ranging from email to Web browsing to messaging.

Google Optimizes Apps For iPad: Which Raises a Question

Google says it has optimized applications for the iPad to take advantage of its large display. Using Gmail on the iPad, for example, users will see a two-pane display that mimics what they are used to seeing on PCs, notebooks or netbooks.

The YouTube and Google Maps apps are preloaded on iPads.

But those features still raise the as-yet-unanswered question: can the iPad uncover significant demand for a new category of device in between a smartphone and a netbook or notebook? Or is the iPad really going to wind up succeeding or failing as a replacement for the netbook or notebook?

Those are quite different outcomes. For me it comes down to the irreducible number of devices I must carry, both locally and when traveling. Around town, the irreducible and desired number is "one." When traveling, because when push comes to shove I use a laptop for work, the irreducible number is "two." Well, actually three, as I carry two mobiles.

Years ago, the irreducible number when traveling briefly floated up to four, when I added the iPod. That turned out to be one item too many, and I no longer travel with it, except when running.

My point is that consumers weighing use of an  iPad will have to decide what it is, before they buy. And that means an identity "crisis" has to be solved before it becomes a huge mass market success. It seems to me to be a very-good media consumption platform, crudely put, an iPod touch on steroids. That will raise the question of the physical need to add more more portable device to the purse or backpack. For some users, that will be a point of friction.

But some people very quickly are going to try seeing whether, in their circumstances, an iPad can displace an existing netbook or notebook. And that could point the way to the iPad becoming a new form of netbook, rather than creating a new category of devices people generally use.

Apple could win, in either scenario, but wins most if it can create a new product category.

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Tiered Mobile Broadband Pricing "Inevitable"

Tiered pricing--where higher amounts of use will result in higher prices--is inevitable, say analysts at Coda Research Consultancy, driven by U.S. mobile data consumption toward 327TB per month in 2015.

With compound annual growth rates of 117 percent, tiered pricing for mobile internet access will become unavoidable, the company predicts. Most of that increase will come from video, which is growing at a
138 percent CAGR to reach 224TB per month in 2015. At that point, mobile video will represent two thirds of mobile handset data traffic.

The key problem, though, is peak demand, at only some cell sites, as already is the case.

“As carrier networks now stand, network utilization will reach 100 percent in 2012 during peak times," says Steve Smith, Coda Research Consultancy co-founder. That is going to mean actual blocking of access during peak hours, much as users on older fixed networks once experienced occasional "fast busy" signals that indicated no circuits were available for use.

Use of pricing mechanisms will help, as it always does, by allowing consumers to make choices about their consumption. Many object that tiered pricing will face huge opposition from consumers conditioned to "unlimited" usage.

I suspect that will prove wrong. Buckets of usage already have been accepted by consumers who understand they can pay less for lower buckets of use, or more money for higher or unlimited use.

What users manifestly do not like is unpredictability; uncertainty about how high their bills will be at the end of the month. So long as consumers have accurate ways to measure their own usage, and an ability to adjust their plans as needed, without penalty, users will adapt easily to buckets of broadband usage.

In fact, consumers may well appreciate being able to decide for themselves whether they want to pay more to get more, or can simply adjust their usage at certain times of day, or at some places, or delay using some applications, in exchange for lower prices.

Mobile video users will grow at about a 34 percent CAGR, to reach 95 million users in the U.S. market in 2015. Use of mobile social networking will grow at a 21 percent CAGR to 2015.

Non-text-messaging-derived data revenues will climb at a 17 percent CAGR, and will comprise 87 percent of all data revenues in 2015, says Coda.

It doesn't appear that consumers view the iPad primarily as an e-book reader, but more as a media appliance, a comScore study suggests.

Though 37 percent of respondents indicated they were “likely” or “very likely” to read books on the device, nearly half indicated a high likelihood of using the iPad for browsing the Internet (50 percent) and receiving and sending email (48 percent).

More than one third said they would use it for listening to music (38 percent), maintaining an address book or contact list (37 percent), watching videos or movies (36 percent), storing and viewing photos (35 percent) and reading newspapers and magazines (34 percent). says comScore.

“These devices have the potential to be incredibly disruptive to the way consumers currently access digital content," says Serge Matta, comScore EVP.

The big issue is whether there exists a sizable market for a digital appliance somewhere between a netbook or notebook PC and an iPhone. In that regard, when asked whether they would use an iPad “instead of” or “in addition to” other digital devices, the highest amount of potential substitution was for the iPod Touch (37 percent).

Conversely, despite widespread belief that the iPad might threaten netbook adoption, only 22 percent of consumers said they would use an iPad in place of a netbook.

The most important device attributes that consumers indicated they would like to have included in the iPad were: ability to use multiple applications/programs at once (43 percent), having a screen the same size as a laptop or desktop computer (37 percent) and having a built-in camera (34 percent). Among iOwners, the percentages were substantially higher at 56, 66 and 51 percent, respectively.

Some 34 percent of males indicated they were likely to use the iPad for playing action, strategy or role-playing games, as did 28 percent of females. More than half of those 18 to 24 year olds (53 percent) said they were likely to use the iPad for gaming.

Younger consumers indicated a high willingness to pay for news and magazines specially formatted for e-readers. About 68 percent of 25 to 34 year olds and 59 percent of 35 to 44 year olds said they were willing to pay for this type of content.

If comScore's results prove to be correct, the iPad will emerge as a media appliance.

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CTIA Reports Gains, As It Always Does

Almost nothing is more predictable than the CTIA reporting that revenues, subscribers and wireless data increased over the last six-month period. In fact, many of us cannot remember a six-month period where that has not happened. So it is that the CTIA says wireless data service revenues increased 25.7 percent from the last half of 2008 to reach more than $22 billion for the last half of 2009, CTIA-The Wireless Association says.
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Wireless data revenues now represent more than 28 percent of all wireless service revenues. The number of data-capable devices has grown to 257 million units, up from 228 million at the end of 2008.

About 50 million of these devices are smart phones or wireless-enabled PDAs and nearly 12 million are wireless-enabled laptops, notebooks or aircards.

More than 822 billion text messages sent and received on carriers’ networks during the last half of 2009, amounting to almost five billion messages per day at the end of the year.

As of December 2009, the industry survey recorded more than 285 million wireless connections. This represents a year-over-year increase of more than 15 million.

Also, wireless penetration is now equal to more than 91 percent of the U.S. population, CTIA says.

Other highlights of the survey include wireless customers using more than 1.12 trillion minutes in the last half of 2009, up 38 billion from the last half of 2008—and breaking down to 6.1 billion minutes-of-use per day. Wireless service revenues for the last half of 2009 amounted to almost $77 billion—up from a little more than $75 billion in the last half of 2008.

Service Providers Now Will Have to Contend with Decades of Belt-Tightening

As if forecasting telecom, cable and Internet spending were not hard enough, it is about to become much-more uncertain, for reasons most of us probably could never have expected: a decades-long suppression of end user consumption to re-balance structural deficits.

Developed countries with big budget deficits--including the United States--must start now to prepare public opinion for the belt-tightening that will be needed starting next year, John Lipsky, says International Monetary Fund first deputy managing director.

Gross general government debt in the advanced economies will rise from an average of 75 percent of gross domestic product at end-2007 to 110 percent of GDP at end-2014, even assuming that temporary, crisis-related stimulus steps are withdrawn in coming years.

Reducing the ratio to the pre-crisis average of 60 percent by 2030 would require raising the structural primary balance -- before interest payments -- from a deficit of about four percent of GDP in 2010 to a surplus of about four percent of GDP in 2020 and keeping it at that level for the following decade.

That clearly implies an eight percent swing in balances, before interest payments.

Lipsky also says the scale of the adjustment is so vast that less-generous health and pension benefits, government spending cuts and increased tax revenues are needed.

The drops in government services to individual citizens and businesses could be unprecedented, some therefore suggest.

The obvious danger is that the U.S. Congress seems hell-bent on making the problem worse by continuing to spend as though it had the means to pay for its spending. The IMF has for decades both scolded and disciplined developing nations unable to balance their budgets.

Now it appears the United States, for the first time, is headed that way as well. The ramifications are not entirely certain, but slower economic growth is likely and social strife virtually inevitable.

It is not immediately certain what all of this fundamental change will mean for providers of communication and other services to businesses and consumers, but it probably will a mixed impact.

If one assumes consumers will have less disposal income, one would expect pressure on overall revenues and profit margins. But consumers will also have to make choices about discretionary spending, and past behavior suggests that communications and entertainment services are high priorities.

All indications are that broadband access will become, with mobility, anchor and foundational services, the key issues for service providers being the cost of delivering those and other services, as well as creating a sustainable new role in the revenue chain for application usage.

It is not so clear what will happen to demand for today's packaged multi-channel video services. So far, mobile and online video usage seems incremental to other existing forms of video consumption, but much depends on what content owners decide is in their best long-term interests. Major change in distribution methods is possible, but not likely in the short term.

But businesses also will be forced to operate more frugally, which could have a variety of effects. In the recent recession business revenue dropped, except for providers taking market share.

The upshot is that most consumers will have less to spend, though. That could send the United States and other developed nations into a downward spiral where muted consumer activity undermines GDP growth.

The point is that our historical experiences with post-recession recoveries will be stressed in new ways this time around, specifically because the macro-economic stresses are so novel. The United States never before has had to be told by the IMF to adopt austerity measures, and people have not had to live through such a period.

But we are about to. And means everybody who tries to forecast revenue for telecom, cable and Internet companies, as well as others in the ecosystem, must face increased uncertainty. That doesn't necessarily mean the underlying assumptions will change. They might not. But it is not clear at the moment what could change, and we might not know for several years what the nature of those changes are.

Reuters article