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

User Experience Shifting to Mobile

As with just about every other Internet-mediated experience, the experience context is shifting from PC-based to mobile-based. As the way people share information changed in the shift from printed to online products, so the design and display of information and content likewise will be different as the mobile shift continues to gain traction.

People with experience in the production of text content will point out that the way headlines are written, the way text is formatted, the length of stories and distribution channels all have changed. Similar changes will happen with marketing and advertising campaigns as the mobile context becomes more important.

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Mobile Service Providers Jockey to Maintain Relevance in Value Chain

Oddly enough, mobile service providers and device manufacturers are being forced to redefine their value and roles in the mobile ecosystem they long have shaped and dominated. The reasons are not hard to fathom.

The mobile industry's center of gravity is shifting from hardware to software, from voice to data and services, and from traditional telecom stakeholders to new entrants, says Thomas Husson, Forrester Research analyst.

But it is more than that. The mobile industry is reinventing itself, and the biggest changes are the addition of new providers in the value chain. The new and independent role of handset suppliers is one example, but so are software and content providers now parts of the value chain.

In fact, "the mobile environment as we knew it at the end of the 20th century is disappearing," says Husson. Firms such as Apple and Google now are playing huge roles in the business, for example.

That creates new tension as value--and revenue--shares now also are rearranged. In fact, access providers must contend with rapidly-changing shifts in value creation. That does not necessarily mean ISPs are destined to become low-value suppliers of commodity access, though that could happen.

It does mean all the contestants now are in an extended and crucial race to secure their own roles within the value and revenue chains.

Service providers face a limited window of opportunity to reinvent their business models and become smart enablers, says Husson. In part that is because software innovation, rather than hardware, is driving the business.  Increasingly, that innovation is coming from new participants in the business, not the legacy participants.

Global growth also will center on China, India, and emerging markets, as has been the case over the last several years.

In developed markets, the issue will be selling more services and applications to a relatively fixed number of users, as children, seniors, and technology pessimists, the remaining untapped user segments, largely have been tapped. Broadband and data services are the clear focus.

The big question is how well service providers will compete with new value chain participants to create and maintain direct relationships with end users, which traditionally has been the province of service providers. These days, application and device suppliers increasingly are poised to create direct retail relationships on their own.

Global Mobile ARPU Now Depends on Broadband and Data Services

Mobile end-user average revenue per user dropped between six percent to nine percent globally, in the third quarter of 2009, says ABI Research.

In the U.S. market, overall ARPU decreased by $0.45. Average voice ARPU declined by $0.98 while the average data ARPU grew by $0.53, according to mobile analyst Chetan Sharma.

By the end of 2009, average voice ARPU was less than $10 a month while data ARPU was about $15 a month. But average blended ARPU has been flat at around $49.50 since 2003.

ABI Research estimates that ARPU decline is likely to flatten out in developed markets in Europe and North America as mobile data revenue increasingly replaces falling voice revenue, as it has in the United States.

Globally, the growth in minutes of use has also peaked, and is expected to grow at a compound annual growth rate of only 1.4 percent between 2009 and 2015, with much of this growth driven by developing markets in Africa, Asia, and the Middle East.

Minutes of use in the U.S.market are growing at about a three percent rate, says CTIA: The Wireless Association.

Whether in the U.S. market or elsewhere, broadband access and data services are the clear way forward for mobile ARPU, gross revenue and profit margin.

Mobile ARPU Illustrates Service Provider Issues

U.S. mobile service provider average revenue per user decreased by $0.45 over the last year, says analyst Chetan Sharma.

Average voice ARPU declined by $0.98 while the average data ARPU grew by $0.53.

Therein lies the problem: mobile service providers are growing data revenues, but losing voice revenue faster than they are able to replace the lost revenues.

That isn't to say they will not ultimately succeed in replacing the lion's share of lost voice revenue. But few executives likely believe the substitution will be one-for-one, or greater, at least in terms of broadband access replacing core voice revenues.

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Enterprise Workers Ready to Ditch Their PCs for Smartphones?

Something rather unusual seems to be happening in the enterprise mobility space. According to a recent survey taken by iPass, 63 percent of mobile employees prefer to use a smartphone, not a laptop, as their primary mobile device, for trips of any length.

For trips of up to five days, 59 percent of respondents prefer to carry a smartphone, while 41 percent prefer a laptop. For trips lasting longer than 30 days, 64 percent prefer a smartphone to a laptop.

That likely is testament to the high value traveling workers place on voice and text communications, as well as the increased capabilities smartphones now offer, including email and Web access.

But the findings also suggest that some enterprises are over-investing in laptops and software and might need to look at scenarios where mobile or traveling workers can get along just fine with smartphones.

There is another and possibly darker view here as well. Industry suppliers have been touting mobility investments as a driver of productivity. As it now appears, enterprise workers do not even want to carry laptops with them when traveling. So what is the value of all those investments in remote access?

Granted, most enterprises likely are trying to get a better handle on mobile phone expenses, so indiscriminate replacment might not be wise. But the survey also suggests the near-universal embrace of the BlackBerry has "soft" support from users.

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

"Mobility" also once was an issue of supporting traveling workers. Today every employee
is a potential mobile employee, iPass says. While many mobile employees have some business travel, many more are logging in from home.

About 68 percent of iPass survey respondents did not travel during the last quarter of 2009, but  45.8 percent of mobile employees logged in from home at least twice a month, and 16.8 percent logged in more than ten times a month.

Excluding home and the office, mobile employees most often log in from hotels (42.6 percent), airports (27.2 percent), retail outlets and restaurants (27 percent).

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

U.S. is "Most Mobile" Workforce

The U.S. workforce is the most mobile in the world, according to researchers at IDC. As early as 2008, about 72 percent of U.S. workers worked at least part of the time on a mobile basis.

The percentage of mobile workers will grow to about 76 percent by 2013, IDC projects, representing about 120 million workers.

 The world's mobile worker population will pass the one billion mark in 2010, IDC says,  and grow to nearly 1.2 billion people,  more than a third of the world's workforce, by 2013.

The most significant gains will be in the emerging economies of Asia and the Pacific region.

The Asia and Pacific region, excluding Japan, represents the largest total number of mobile workers throughout the forecast, with 546.4 million mobile workers in 2008 growing to 734.5 million or 37.4 percent of the total workforce in 2013. At the end of the forecast, 62 percent of the world's mobile workforce will be based in the APeJ region.

Western Europe's mobile workforce will reach 129.5 million mobile workers, about 50 percent of the workforce, in 2013, surpassing the total number of mobile workers in the United States.

Japan's mobile worker population will total 49.3 million in 2013, representing 75 percent of its total workforce.

The rest of the world will see its mobile worker population grow to 153.2 million by 2013. But mobile workers will represent 13.5 percent of all workers in those markets.

Top Five Hot Topics at Mobile World Congress 2010

The Top-Five hot topics at the Mobile World Congress this year, according to analysts at Juniper Research, are:

1. Flurry of launches to increase competition in the smartphone space
2. Operators announce Apps Community
3. GSMA embarks on LTE interconnection standards
4. NFC payment trial at Mobile World Congress to presage widespread NFC adoption?
5. Android platform gains critical mass- the rise of the open source OS

Smartphone launches from Samsung, Sony Ericsson, ZTE, Motorola Acer and several others will dramatically increase competition in the smartphone space, says John Levett, Juniper Research analyst.

In the apps market, the launch by 24 mobile operators of a "Wholesale Applications Community" should allow for mobile internet and applications to be downloaded without the potential headache of conflicting technologies, he says.

With LTE now boasting several live roll-outs and as many as 75 build-out commitments, some 40 mobile industry organizations have now backed industry association GSMA’s initiative to standardise the delivery of voice and messaging services for LTE.

A SIM-based mobile payments trial by the GSMA, Samsung, Telefonica, and several partners could herald a new era in the development of mobile payments using near field communications technology.

MWC 2010 also has seen a proliferation of mobile handsets using Google’s Android platform with announcements from Alcatel, Dell, HTC, LG, Motorola, Samsung, Sony Ericsson and ZTE. that means a higher-profile for open source operating systems overall.

http://www.juniperresearch.com/analyst-xpress-blog/2010/02/17/top-five-hot-topics-at-mobile-world-congress-2010/

Multiple Tools Needed to Preserve Mobile Bandwidth

Chetan Sharma Consulting forecasts that if left unchecked, the costs of delivering mobile data will likely outstrip incremental revenues by the second half of 2011 in the U.S. market and become unsustainable by 2013.

The rapid growth in mobile data costs has prompted operators to look at more sophisticated network congestion management strategies that fall into four categories: policy control, data traffic offload, infrastructure investment, and network optimization.

Shifting data traffic off a congested mobile network and onto another access technology fundamentally changes the economics of delivering that data. Offload is being implemented by operators globally, including offload to Wi-Fi and offload to femtocells.

Operators deploying a mixed multi-access offload strategy can expect savings in the range of 20 to 25 per cent per year. In the US market, operators will save between $30 and $40 billion per annum by 2013 through an offload strategy alone.

More-efficient new networks will help as well. Infrastructure evolution to 3.5G (HSPA) and 4G (LTE ) lowers the cost-per-bit for data throughput on the network, thereby reducing overall costs.

Chetan Sharma Consulting forecasts that evolving to HSPA and LTE will result in cost savings of just under 20 per cent or almost $25 billion per year in the U.S. market by 2013.

Network optimisation, through techniques such as compression and caching also adds incremental
savings by reducing the total number of bits traversing the network. Typically, Sharma reports,
operators can generate savings of five to 10 per cent by 2013 through this strategy.

Anecdotally, operators have reported that 80 per cent of the traffic in urban centers is being
generated by 10 per cent of the cell sites. So policy control (how, when and under which circumstances subscribers can access networks) can contribute annual cost savings of over 10 per cent, equating to over $15 billion in annual cost reduction by 2013 in the US market, Chetan Sharma says.

But cost reduction is only one side of the equation. Tiered and usage-based pricing also is required. Such policies need not be heavyhanded, top-down service provider rules but rather flexible, dynamic, and personalised pricing models that reflect subscribers’ preferences and context.

Taken as a whole, all the optimization techniques and new pricing models will be needed as the whole mobile business changes from a voice revenue model to an "bandwidth-based" business.

Is Verizon a "Wireless" Company as AT&T Is?

Is Verizon now a "wireless company with a wireline business"? Some might argue that is the case. Others might argue Verizon is a company with significant wireless and broadband businesses. At AT&T, it is easier to make argument that the company really now is a wireless company with wireline businesses.

Part of the reason for the difference is Verizon's decision to go to a "fiber to the home" access network, while AT&T has chosen a less-costly "fiber-to-neighborhood" approach. But those decisions are conditioned by the different potential customer bases in each telco's territory. AT&T is less dense, so FTTH is aq more expensive choice. Verizon also has more business customers, and fewer consumer customers, relatively speaking.

Analysts at Trefis, for example, estimate that mobility counts for 34 percent of Verizon's equity value, with broadband access contributing 36 percent. Services to larger businesses and organizations account for 17 percent of Verizon's equity value.

The consumer and smaller business revenue stream accounts for just 10 percent of Verizon's equity value.

At AT&T, wireless accounts for a whopping 51 percent of equity value, while Internet and television services account for 16 percent. Services to business customers, plus wholesale, accounts for 12 percent of equity value. The landline voice business accounts for 12 percent of equity value.

AT&T really is a wireless company with a wireline business.

VZW added 2.2 million net wireless subscribers in the last three months of 2009. Verizon remains the marker leader in size, quickly approaching the 100 million-sub mark with 91.2 million total mobile customers.

Total wireless service revenues remained flat quarter-over-quarter at $13.5 billion and were up only five percent year-over-year.

But wireless data revenues continued to balloon, increasing $200 million over the third quarter to $4.3 billion and 26.6 percent  year-over-year. Data now accounts for 31.9 percent of all service revenues.

Wireline service revenues fell $100 million quarter over-quarter to $11.5 billion, representing a 3.9 percent drop year-over-year. On the residential side, access line loss showed no signs of improving with Verizon posting a further 12.3 percent decline.

Verizon also is losing digital subscriber line accounts as it switches customers over to the FiOS service. Verizon lost 107,000 broadband lines, primarily DSL accounts, as its FiOS service grew by153,000 net new customers, including both broadband access and video customers.

FiOS now has 2.9 million TV subscribers (25 percent penetration) and 3.4 million Internet customers (28 percent penetration).

But wireline figures also were distorted by the addition of Alltel assets.

Wireless profit margins also are higher than wireline. Wireless had 45 percent margins in the fourth quarter of 2009, while wireline margins fell to 23 percent.

Are Social Networks More Like Email or Google?

Social networks already have become a lead application for mobile devices. A new study by Accenture finds that “increased demand for smart connected wireless devices such as smartphones is being driven by social-networking applications," in both developed and developing economies.

But you likely still can get a good argument about whether social networking is a "feature" or a business model. Email for the most part remains a "feature." Early in the development of the dial-up business, email was so important it actually drove adoption of Internet access. These days, with the advent of Web mail and business and organization email, it simply is a feature, but not a direct revenue model (except for providers of email hardware and software).

Google and other Web mail providers have started building an advertising revenue stream, but it largely is ancillary.

The same sort of argument can be made about social networking applications. Skeptics point to Twitter, Facebook, MySpace,  Bebo and Geocities, which either are struggling to create a business model, or have been shut down.

Optimists might say that although many attempts will fail, a normal situation for the Internet applications business, one or two of the players will discover a sustainable business model and possibly even achieve "Google" style success.

Most believe advertising will be significant, and skeptics say social networks are not conducive to most types of display advertising, for example.

That would explain why no social networking company has yet emerged as a public company: there is not yet a viable business model.

It is possible that some new model will be discovered in time. Twitter, for example, is nearly at breakeven as a result of a search results deals with Google and Bing. That's not a complete answer, but it helps.

It is not yet possible to determine the final outcome. It is conceivable that some social networks will drive so much engagement and value that some will be acquired by larger firms able to leverage the networks to deepen and extend their other existing business models. In that scenario social networking winds up more like email than Google.

Right now, it likely is a coin toss which model is most believed.

66% of U.S. Mobile Devices Will Be Replaced Over the Next 2 Years

About 66 percent of U.S. mobile devices will be replaced within the next two years, says ICR/International Communications Research, a prediction that should not surprise anybody. Mobiles break, get lost and typically have two-year contracts.

As might be expected, the younger generation is more likely to make a change sooner: 77 percent of those 18 to 34 plan to replace their mobile devices within the next two years, compared to  46 percent of those 65 or older.

About 78 percent of respondents believe they will need to replace their devices within the next two years because the items will break or be lost, while only 19 percent think they will want to upgrade to the latest version.

Upgraders also vary by age with 26 percent of 18 to 34 year-olds saying they do so, compared to 14 percent of respondents 55 or older.

Over the Next 6 Months, 3 Million More U.S. Households Will go "Wireless Only"

At current rates, over the next six months about three million more U.S. homes will go "wireless only" for phone service, a new study by the Centers for Disease Control suggests.

About 22.7 percent of U.S. homes apparently had wireless-only phone service in June 2009, according to a preliminary analysis of the most-recent survey by the Centers for Disease Control, up from about 20 percent in December of 2008.

In addition, nearly 15 percent of surveyed homes had a landline yet received all or almost all calls on wireless telephones.

A "family" can be an individual or a group of two or more related persons living together in the same housing unit (a "household"). Thus, a family can consist of only one person, and more than one family can live in a household (including, for example, a household where there are multiple single-person families, as when unrelated roommates are living together).

Approximately 21 percent of all adults--approximately 48 million people--live in households with only wireless telephones.

The percentage of households that are wireless-only has been steadily increasing, and the 2.5-percentage-point increase from 2008 through the first six months of 2009 is about equal to the 2.7-percentage-point increase observed from the first six months of 2008 through the last six months of 2008.

The percentage of households that are wireless-only increased by about five percentage points in just 12 months, from 17.5 percent in the first six months of 2008 to 22.7 percent in the first six months of 2009.

There are about 113 million U.S. homes with fixed telephone lines, and about 118 million U.S. dwellings, according to the Federal Communications Commission. A five-percent increase in homes using wireless only would amount to about six million homes.

Should that rate of shift continue, one would expect a further attrition of about three million homes to the wireless-only category over the next six months.

A large majority of households using wireless-only communications (68.5 percent) were in households lived in by unrelated adult roommates. Think college students and younger workers early in their careers and you get the picture.

Likewise, 41 percent of adults renting their homes had only wireless telephones. About 13 percent of adults owning their home are wireless only, the CDC says.

Nearly half of adults aged 25 years to 29 years (45.8 percent) lived in households with only wireless telephones, the study suggests.

More than a third of adults aged 18 to 24 (37.6 percent) and approximately a third of adults aged 30 to 34 (33.5 percent) lived in wireless-only households.

Some 21.5 percent of adults aged 35 to 44 were wireless only; 12.8 percent of adults 45 to 64; and 5.4 percent of those 65 and over. However, the percentage of wireless-only adults within each age group has increased over time, the CDC says.

Among all wireless-only adults, the proportion of adults aged 30 years and over has steadily increased. In the first 6 months of 2009, the majority of wireless-only adults (57.2 percent) were aged 30 and over, up from 48.4 percent three years earlier.

Adults working at a job or business (19.5 percent) and adults going to school (21.1 percent) were more likely to be living in wireless-mostly households than were adults keeping house (12.7 percent) or with another employment status such as retired or unemployed (nine percent).

Adults with college degrees (19.7 percent) were more likely to be living in wireless-mostly households than were high school graduates (13.7 percent) or adults with less education (12.1 percent).

You might suspect that households with children are less likely to be wireless only, but that seems not to be the case. In the CDC survey, adults living with children (20.5 percent) were more likely than adults living alone (10 percent) or with only adult relatives (14.7 percent) to be living in wireless-mostly households.

You might suspect that more users are wireless only in urban area, and that seems to be the case. Adults living in metropolitan areas (16.9 percent) were more likely to be living in wireless-mostly households than were adults living in more rural areas (13.5 percent).

Mobile Terminations Now Exceed Fixed

Mobile subscribers have become a powerful force in the international voice market. In 2008, mobile-originated international traffic grew 19 percent, and accounted for 36 percent of total international traffic, up from 32 percent in 2007, according to TeleGeography.

Mobile terminated traffic grew 18 percent in 2008 and accounted for 48 percent of international traffic terminated in 2008. TeleGeography projects that mobile terminated traffic will exceed traffic terminated on fixed lines in 2009.

If you want to know why Sprint is selling "no incremental cost" calling to any domestic U.S. mobile, that is one of the reasons.

That would be a first. Up to this point, more calls have been terminated on fixed phone lines. To be sure, more calls still are originated on fixed lines than mobiles, but even that gap is narrowing.

Mobile phone subscriptions overtook fixed lines in 2002, TeleGeography notes.  By 2008, there were four billion
active mobile accounts globally, accounting for 77 percent of global phone lines. In recent years, growth has shifted to developing countries. Mobile subscriber growth in Africa has led the world in recent years, growing 35 percent in 2008 after having increased 39 percent in 2007.

While growth rates in Africa are tremendous, the subscriber base remains very small—mobile penetration in Africa is still only 39 percent.

Still, India gained 112 million new mobile subscribers in 2008, a net increase that exceeds the total number of mobile subscribers in Germany, says TeleGeography.

China gained 89 million mobile subscribers in 2008, and Brazil, Indonesia and Vietnam all gained more than 30 million mobile subscribers. Conversely, mobile subscription growth in more mature markets has slowed.

Good News for VoIP, Bad News for Wired Telecom Providers

"VoIP" was the "industry of the decade," according to IBISWorld, which says the industry earned that accolade because of its 1,655 percent growth rate between 2000 and 2009. IBISWorld notes that VoIP, as a new industry, only began to earn any revenue in 2002, so it is starting from a "zero" base.

Wireless telecommunications ranked eighth for industries of the 2000 to 2009 period, posting revenue growth of 183 percent.

IBISWorld also predicts VoIP will show the most revenue growth in the coming decade as well, growing 150 percent between 2010 and 2019.

The bad news for the 2010 to 2019 period is that wired telecommunicatons carriers will show negative 52 percent revenue growth. Telecommunications resellers likewise will show negative 26 percent revenue growth over that same period.

What Business is Google In?

Looking back from where we are, and recalling the vigorous debates analysts and observers once had about "whether Google wants to be a phone company," it now appears the original question has no simple, unambiguous answer.

Does Google want to be a regulated common carrier providing communication services to consumers and businesses? No. Does Google want to be a provider of Web-enabled IP telephony services? Yes. That's what Google Voice does.

Does Google want to be a "Skype-like" provider of international calling services? Perhaps it was not originally thinking it wanted to do so, but Google Voice now supports for-fee global calling from whatever handsets Google Voice users wish to employ.

Does Google want to be a facilities-based wireless services provider? No, but it has an investment stake in Clearwire. Does Google want to be a mobile phone manufacturer? No, but it is increasingly partnering with others, including hardware and service provider partners, to create new applications and business practices within the mobile industry, planning to introduce the "Nexus One," a Google-branded open and unlocked GSM phone, in 2010.

The point is that there is no unambiguous answer to any of these questions. Google slowly has been adding new roles in the communication ecosystem, but primarily to increase its core business model of indexing information and creating advertising revenue streams around the ways people use information.

To "answer" the decades-old question about whether an "ad-supported" telephony model can be created, again we are left with an ambiguous answer. The consumer voice apps Google provides are partially supported by end user fees, while the business-focused "Google Apps" productivity suite primarily is supported by user fees.

It remains unclear whether any sustainable "telephony services" business model can be 100-percent ad supported. But it seems likely such an effort can be partially ad supported, just as cable TV service provider evenues are partially ad supported.

So here's the next question: Will Google Voice, still in private beta, be configured as a small business service, much as Google Apps comes in both a consumer version and an enhanced business version? Michael Arrington at TechCrunch thinks that will happen.

"From what we've heard, Google is very seriously planning to add a version of the Google Voice product to its Apps suite of applications for businesses," says Arrington.

So far it sounds as though the service will be most applicable to the very-small business setting, as the likely deployment will feature a single inbound line and then mapped extensions that will redirect calls to a home business line, mobile or VoIP device.

The key here is management of the single trunk line. To keep the single trunk line available, Google Voice would have to connect an inbound call to the virtual extension, creating a direct connection between the caller number and the virtual extension, and then release the trunk line.

The same thing would have to be done for outbound calls, allowing the Gooble Voice virtual number to do the outbound dialing, setting up the connection between two physical phone devices, and then releasing the Google Voice trunk.

If that isn't done, there will be danger of high "line is busy" blocking.

Still, one would guess that the inevitable question--does Google want to be a provider of communications services to small business--likewise will wind up being only ambiguously answerable. The only unambiguous observation is that Google now is well entrenched in the mobile, communications, application, advertising, IP communications spaces.

It is part of the ecosystem, but uncomfortably (for other ecosystem partners) unconfined to one role in the full ecosystem. Perhaps a better way of phrasing the question is: "Does Google want to make itself the center of a new ecosystem?". There's likely a single answer to that question.


Google started out as a search engine, and have since expanded, through product development and acquisitions, to include services in every link of the information chain, says Jay Neeley, a Web strategy consultant. So one way of looking at how Google might see itself is that it operates in core parts of the information ecosystem.

As part of its activities in the "Internal Information Creation" segment, Google hosts or enables the creation of content.
But Google also is heavily involved in the "External Information Creation" segment, indexing information it has not created.

In the "Information Usage" segment, Google facilitates ways to share, edit, talk about, use, remix, and do all kinds of other things with information. In the "Information Reception" segment, Google offers a variety of ways for users to access and keep track of information.

"Information Aggregation" is another part of what Google does, culling information by popularity or usefulness and
making that information available in other ways, such as in Google Maps. "Information Analysis" is part of the analytics portion of the information business.

It just so happens that to extend its information business, Google might want to do lots of other things that impinge on other existing businesses in the communications, entertainment, applications, software, media and hardware spaces.

How Will "No Contract" Smartphone Sales Affect Adoption?

What happens to smartphone sales, data plan sales, consumer behavior and mobile service provider marketing if phones cannot be provided at subsidized prices? If sales of smartphones fall, then use of mobile broadband services likely will grow more slowly. So smartphone prices do matter.

Up to this point, mobile phone subsidies have been seen as a “necessary evil” for the development of mobile phone services and have helped kick start the mass market for mobile phone services in many markets around the world. And it would be hard to underestimate the role subsidized handet pricing has had.

Handset subsidies are viewed as a loss leader strategy, a means for bringing new subscribers onboard, or encouraging existing subscribers to churn away from their existing network and onto a competitor’s.

But investors do not like the practice, as it puts pressure on service provider cash flow. Regulators do not seem to like the practice because subsidies mean contracts, and contracts lessen consumer ability to change carriers.

Global smartphone volumes will represent 14 per cent of total mobile devices sales in 2009, growing by 23.6 per cent from 2008 and to 38 per cent by 2013, say analysts at Gartner.

Smartphone prices are falling as shipment volumes increase, and a new study from ABI Research finds that while in 2007 only 18 percent of smartphones on offer cost under $200 retail, that percentage has already grown to 27 percent in 2009. By 2014, say the firm’s forecasts, 45 percent of the smartphones shipped that year will be priced below $200.

“Manufacturers see consumers increasingly demanding smartphones, because of their better understanding of the value that a smartphone delivers,” says mobile devices practice director Kevin Burden.

The result: more and more smartphones and conventional phones are priced in similar ranges. According to ABI Research, by far the greatest increase in smartphone shipment volumes over the next five years will be found in the $100-200 price range.

But what happens if new government regulations bar the practice of phone subsidies, and consumers must pay full retail price for new high-end models? Less buying.

On the other hand, there will be more buying of cheaper models. That doesn't necessarily mean smartphone sales overall will plunge, but it will be far more difficult to sell massive quantities of new high-end devices, as few consumers have shown any willingness to spend $600 for unlocked devices.

Of course, there are other possibilities. Perhaps some providers will be able to create new payment models, such as offering installment plans for purchase of new high-end devices. A few might consider other subsidy programs that serve up ads and default applications in exchange for lower-cost devices.

Advantage also will be gained by manufacturers that can wring out costs, offering high-performance devices that just cost less to begin with.

What seems clear, though, is that mandated sales of full price devices, sold without contracts, will have massive impact on the take rate for high-end devices.

U.S. Mobile Handset Sales to Double in 2010?

Although 2009 was not the best year for mobile device sales most places in the world, the United States was a rather salient exception. But 2010 will be an even-better year for U.S. mobile device sales, says TNS. In fact, moble phone sales could double in 2010.

About 53 percent of American respondents and 55 percent of Canadian respondents say they plan to buy a mobile phone in the next six months, up from just 24 percent of U.S. respondents a year ago and 19 percent of Canadian respondents.

Touchscreen phones are set to be the big winners, with 29 percent of U.S. consumers and 28 percent of Canadian respondents saying they will buy one as their next phone.

Mobiles with Qwerty keyboards are also rising in popularity, with 23 percent of U.S. respondents indicating they will buy such a device, and 19 percent of  Canadians.

But there are some issues.  TNS’ research shows that consumers find it hard to distinguish one device from another. Also, 27 percent of Amercian consumers and 29 percent of Canadians consumers say "ease of use" problems as preventing them from using some of the new mobile services offered.

Another mobile device that stands to do well in 2010 is the netbook. About 19 percent of American consumers say they are likely to buy one in the next six months, compared to 19 percent for larger notebooks and only five percent for desktop PC’s.

In Canada, about 20 percent of consumers say they are likely to buy a netbook, 22 percent a notebook and five percent a desktop machine.

TNS studied 24,000 consumers in 35 markets to develop its findings.

Will 2010 be a Turning Point for the Telecommunications Industry?

Will 2010 be a turning point in the telecommunications industry? Maybe, says Mike Cansfield, Forrester Research analyst.

Cansfield argues that the recession has brought a new realism to the sector, forcing telcos to cut costs and adopt better operating practices. Might might argue this trend has been underway for several years, though.

Uncertain economic growth also will weigh on the industry.

But new converged services might explode, as the boundaries between Internet, telecom, voice, data video and applications continues to blur.

Cansfield argues that a major telco will disappear in a merger or go bankrupt in 2010. The merger of T-Mobile and Orange in the United Kingdom, the unsuccessful merger of Bharti Airtel and MTN Group in Africa, and the purchase of HanseNet in Germany by Telefonica are examples.

"Green" initiatives will be back on the telco agenda in a big way, Cansfield believes.

Mobile device wars will renew with extra intensity and the battle for the mobile apps market will begin in earnest. Just as iTunes in conjunction with the iPod changed the music industry and the MP3 device market, so the Apple App Store in conjunction with the iPhone transformed the mobile data and applications market for both consumers and, now, businesses.

The boundaries between "work" technology and "home" technology will continue to blur. Traditionally customers have bought different communications services depending on whether they were at work or at home.

But these distinctions are blurring, Cansfield says. Many of us today work part of our week at home and connect with the office through our own terminals and fall into the trap of dealing with business emails at home in our supposed down time. But this is not a one-way-street — hence the high number of personal SMS and Twitter messages sent from the workplace.

Net neutrality will be a major issue in 2010, because the evolution of stable and sustainable revenue models for the entire ecosystem is at stake, though most for network service providers.

Also, 2010 will be the year that many governments will recognize that broadband connectivity is essential for economic competitiveness, the delivery of public services, and an inclusive society, and they will step up to the plate to close the digital divide, Cansfield argues.

All of us likely have opinions about the importance of 2010. I suspect some of us really believe 2010 will not be especially noteworthy in terms of marking a turning point in the telecommunications business, but only because the underlying changes are irresistible forces not dependent on economic conditions, government regulations or industry consolidation.

The business is changing in profound ways because end user needs and interests, provider business models and powerful technology trends are profoundly aligned. Nothing is going to stop those changes.

Global Revenue Now Lead by Mobile

Global telecom services revenue now is lead by mobile services, at 46 percent of total revenue, say researchers at Analysys Mason.

Wired voice revenues now account for 21 percent of total revenues.

Business services account for 14 percent of revenue, while consumer broadband now represents eight percent of total, the firm says.

Video represents about eight percent of total.