App Stores Turn 4

App stores will turn four in July 2012. Four years ago, mobile apps sparked a vigorous debate about whether "apps" or "Web" were the "best" ways for people to interact with content and experiences on mobile devices and PCs. 


One hears less of that debate these days, in part because users have found uses for both Web and app approaches to content and experiences. And those behaviors are extensive. 


In a next iteration, apps will become hybrid, integrating more naturally with Web approaches, though, says Thomas Husson, Forrester Research analyst. 


A third of European online consumers ages 18 who own a smart phone are using apps daily or more often, Forrester Research says.


Some 17 percent are using apps several times a day. Among European online consumers ages 18 with installed apps on their smart phones, 57 percent use social networking and 48 percent use news apps at least daily, while 69 percent use finance and banking apps at least weekly.

Google Chrome is the World's Number-One Browser

According to figures from online research company StatsCounter, Google’s Chrome overtook Internet Explorer as the world's most widely used browser, at least on desktops. In the mobile browser arena, Chrome and Opera are neck and neck.


You might say browser use is a simple matter of end user preference. But huge advertising and placement revenues are driven by browsers and selection of some browsers as the "default" on mobile devices and PCs. 

Grocers Go Mobile for Loyalty

Mobile devices and apps have lots of value for retailers beyond the use of mobile payment capabilities that replace use of cash, debit or credit cards.


Starbucks might be the best example of a retailer whose mobile payment app is as much about loyalty as it is expediting payments. 


In fact, services such as Google Wallet and Isis think the big value lies in a variety of loyalty and marketing services such payment apps can provide.


Many grocers in the United States are not waiting for such mobile wallet efforts to get established, and are launching their own mobile apps, designed to provide value for customers while they are shopping. The important observation is that there are many ways to use mobile devices in a retail setting aside from the actual payment process, which seems to get most of the attention. 


Neither "showrooming" or "payments" are the problems the grocer apps are trying to solve. Rather, the grocer apps aim to improve the shopping experience in other ways, frequently by enabling mobile shopping lists and applying all relevant coupons and offers, based on a particular shopper's past buying history.


In a way, those efforts aim to personalize the shopping experience by building on past buying behavior and rewarding repeat shopping with special offers that often are customized for each shopper, based on that history.


At least in some part, the branded mobile apps are an attempt to fend off use of third-party shopping lists, and in part an effort to provide more "stickiness" for repeat customers. 


Grocery store chain Safeway is beefing up its mobile strategy with a new shopping application, available for both Android and iOS devices,  that allows users to build shopping lists and then delivers coupons and other offers to a customer’s loyalty card that are applied automatically at check out. 


The "Just for U" app offers "personalized pricing" on items Safeway believes a particular shopper wants, based on buying history, and all special pricing is applied automatically when the shopper checks out, using the loyalty card. 





 Safeway isn't the only grocery chain to start using such apps. Harris Teeter's "ht mobile" app, available for Android and iOS devices, provides automated prescription ordering and refills, a mobile shopping list, barcode scanning, a favorite items feature, automated delivery of coupons,  an item search function and driving directions to the nearest location. 

The Harris Teeter app is similar in many ways to the SuperValu mobile app that can be used at Albertsons, Cub Foods and Shop 'n Save. 

In fact, SUPERVALU's retail technology group provides information technology solutions to other retailers, ranging from electronic payment services to scheduling, shrink-prevention services, computing and mobile infrastructure, gift card programs and other consulting services.

Bandwidth to Grow 15 Times, Operating Expense 2 Times, Next 5 Years

The good news for mobile service providers is that consumer spending on mobile broadband is growing fast. The bad news is that bandwidth demands that threaten to outrun revenue while boosting capital spending and operating expense as well.

In Germany, Solon expects a 15-fold increase in data demand over the next five years. The additional network capacity required would almost double network operating expense from 12 per cent of revenues in 2011 to 23 per cent of revenues in 2016.

In terms of remedies, a move to Long Term Evolution fourth generation networks will help, as LTE is more spectrally efficient by seven to 12 times. Also, new spectrum allocations for LTE are incremental to existing 3G spectrum allocations, so LTE will add net spectrum.

But that will take some time. Analysts at Solon assume that by 2016, not more than 25 to 35 percent of the total Western European data traffic will be handled by 4G networks.

Handling of video streams also might be important. More than half of all video sessions are abandoned before the viewer reaches midpoint, Solon says.

That means “downloading” complete videos is wasteful, if half of all those videos are terminated about half way through.

In some cases, service providers might be able to changing video resolution and compression ratios, or lower the bit-rate of a video, at least when those actions can be taken without damaging user experience.

And though some object, traffic shaping can be used in ways that change user behavior or otherwise match revenue to data consumption while lessening network congestion. Usage caps, time-based tariffs, or rate-limiting after a certain download volume is reached are some basic tools for “steering user behavior” and managing traffic loads at peak usage periods.

Solon also estimates that only about 30 percent of today’s mobile usage actually takes place at locations without access to fixed-line services. So Wi-Fi offload can help, as well.

Is 11% North American Telecom Revenue Growth Possible?

Insight Research predicts that global telecommunications services revenue will grow from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3 percent. For most people, that will seem reasonable, given the growth of wireless services globally.

Wireless subscriber growth, particularly in Asia and other emerging markets, will raise wireless revenues by 64 percent from current levels, while wireline revenues show only modest growth. And what growth occurs in the fixed network realm will happen in broadband services.

Wireless 3G and 4G broadband services are projected to grow at a compounded rate of 24 percent over the forecast period and wireline broadband services projected to grow at a 13 percent compounded rate over the same forecast horizon, the Insight Research predicts.  

The most-surprising prediction, by far, is the forecast that, between 2011 and 2016, North American carrier revenue will  rise from $287 billion to $662 billion, representing 11 percent compound annual revenue growth.


Granted, there is lots of activity in the U.S. and Canadian markets around mobile payments, mobile banking, advertising, commerce and machine-to-machine services. But not many think those initiatives will produce lots of revenue within the next five years. 


So if an 11-percent compound revenue growth rate were to occur, it would have to be driven by the basic services people already buy.
That rapid growth, on a compound basis, would lead to a doubling of industry revenue in five years. Unlike the global forecast, that will raise some eyebrows.

For starters, since U.S. firms represent about 90 percent of North American revenue, that forecast has to be based on U.S. revenue growth. And since just a few U.S. firms control about 80 percent of all revenue, that forecast also assumes a few firms, necessarily including AT&T and Verizon Wireless, will find huge new markets, fast.

That isn’t to discount what Sprint, T-Mobile USA, Comcast, Tme Warner Cable and others might be able to do. It’s just that a doubling of revenue in such a short time would require extraordinary growth, likely requiring an assumption that every North American customer will double the amount they are spending on communications services over the next five years.

That is not “impossible,” but would be extraordinarily rare. Consider that revenue growth in Europe, a similar market in many respects, might grow at far-lower rates of perhaps four percent annually.

Most rational observers would probably agree that North American growth rates of four percent a year for the next five years would be reasonable.

Likewise, global carrier revenue is expected to achieve a nine percent compound annual growth rate  from 2011 to 2016, growing to a total of $5.13 trillion, Insight Research says.

In terms of segment revenue, the latest forecast projects a 45 percent CAGR for global wireless broadband revenue, 14 percent for fixed-line broadband, about six percent growth for narrowband wireless services and negative three percent revenue change for fixed network narrowband services.

One way to look at the structure of the global market is to note that, by 2016, wireless broadband will account for about 28 percent of all communications service revenue. Narrowband wireless services will account for 38 percent of global revenue. Altogether, wireless will represent 66 percent of total industry revenue.

Fixed-line broadband will account for 11 percent of global revenue, while fixed-line narrowband services will represent 23 percent of total revenue. In aggregate, fixed line revenue will account for 34 percent of total service provider revenue, on a global basis.

For some of us, the big surprise is the aggressive forecast for North American growth.

Business Spending on Telecommunications Has Shifted to Wireless

U.S. businesses will spend $154 billion for telecommunications services in 2012, growing to $184 billion by the close of 2016, representing a compound annual growth rate (CAGR) of 4.8 percent over the forecast period,  according to Insight Research.


Significantly, business spending for cellular and other wireless services is creating all of the business revenue growth, the firm says.

While U.S. business spending for wireline services is essentially flat over the five year forecast horizon, wireless expenditures are expected to grow at a compounded rate of 9.4 percent from 2011 to 2016, Insight Research forecasts.

Four vertical industries, including wholesale trade; financial, insurance, and real estate services; professional business services; and communications, accounted for 68 percent of total business telecom expenditures in 2011.


Of course, one might also note that consumer spending is shifting to wireless as well.


Insight Research also predicts that global telecommunications services revenue will grow from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3 percent.


Wireless subscriber growth, particularly in Asia and other emerging markets, will raise wireless revenues by 64 percent from current levels, while wireline revenues show only modest growth.


Nearly all of the growth in both sectors is expected to occur in broadband services, with wireless 3G and 4G broadband services projected to grow at a compounded rate of 24 percent over the forecast period and wireline broadband services projected to grow at a 13 percent compounded rate over the same forecast horizon, the company predicts.

Voyager Mobile: $19 a Month Mobile Service Leans on Wi-Fi

Voyager Mobile, a new mobile virtual network operator using wholesale Sprint facilities, is going to test the notion that outsourcing virtually everything but sales and marketing will allow it to build a profitable business selling basic voice and texting service at $19 a month, without a contract, and smart phone service with mobile broadband at $39 a month.


Voyager Mobile plans to operate nationwide, but currently is selling actively only in  Alabama, Delaware, Georgia, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Rhode Island,South Carolina, South Dakota, Tennessee, Virginia, Washington and West Virginia at the moment.


Users buy their own devices at full retail, online only. The company plans to sell USB dongles, personal hotspot devices and tablets as well. 


A loyalty program is a distinguishing feature of its marketing pitch.  For every minute you use Voyager's service, users receive reward points they can use for airline tickets, gift cards, pay for monthly service, or to upgrade their phones. 

Backbone Optical Investments Drop, Wireless Climbs

Service provider spending on optical gear dropped 23 percent globally in the first quarter of 2012, compared to the fourth quarter of 2011, Infonetics Research reports, with the biggest declines occurring in all regions except North America. 


"While optical hardware revenue trends in all world regions were not positive in the first quarter of 2012, the most alarming development is that year-over-year in EMEA, particularly Europe,  spending on WDM optical equipment decreased faster than spending on legacy SDH equipment," notes Andrew Schmitt, principal analyst for optical at Infonetics Research.


That might indicate a longer-term change, not just a quarterly fluctuation, Schmitt says. Of course, it is not uncommon for capital investment in various forms of infrastructure to fluctuate a bit, especially in the long-haul networks, where new construction projects drive spending above baseline "maintenance" and "upgrade" investments. 

Family Data Plans Will Have More Revenue Impact than Capped Plans

Verizon Wireless is getting ready to launch a new "family data plan" or "multiple device plan" that could have important ramifications for the whole U.S. mobile business. 


As customers now can buy plans that support multiple users or phones on a single account, so Verizon Wireless is planning to allow users to purchase multiple-device plans where a single bucket of mobile data can be shared across a number of account devices.


That will represent the biggest change in mobile data pricing since the advent of capped plans, but will have more-important consequences. If history proves an accurate guide, Verizon Wireless will sell many more smart phones, while many more users will start to use mobile-connected tablets as well. 


That, in fact, was the reason family plans for voice and texting were adopted as well. At the point where almost every adult already had a cell phone, family plans were designed to effectively lower the cost of adding incremental devices for the one big population of untapped users: teenagers. 


In principle, the same thing should happen as Verizon Wireless and other service providers adopt the same approach. AT&T has said it also will do so, while T-Mobile USA says it will not do so. One suspects that objection by T-Mobile USA will fall, if the plans reshape consumer expectations, as one might suspect will be the case. 


The big difference for family data plans is that Verizon also is trying to wean customers off "unlimited" data plans for smart phones. The "stick" of capped data plans will be counter balanced by the "carrot" of multiple-device plans. 


"A lot of our 3G base is on unlimited," Verizon Communications CFO Fran Shammo said. "When they migrate off 3G they will have to go to data share. That is beneficial to us," Shammo says. 


One might expect that gross revenue will grow as users adopt the new plans, the same way gross revenues have grown when users have switched to family plans for voice and data. On the other hand, revenue per device should decline. 

Conceptually, family data plans and capped data plans are distinct issues, but are linked to an extent as Verizon is making changes to both policies at the same time. 

Verizon says "customers will not be automatically moved to new shared data plans."  If a 3G or 4G smart phone customer is on an unlimited plan now, and they do not want to change their plan, they will not have to do so. But the expectation generally is that, as new devices are purchased, most of those new phones will be bought with capped data plans. 

The exception is that customers who purchase phones at full retail price and are on an unlimited smart phone data plan will be able to keep that plan. 

Still, the big change is that Verizon's revenue metrics increasingly will shift from "revenue per customer" to "revenue per account." For service providers, the revenue impact of family data plans will have more impact than the shift to capped data plans. 

Amazon likely to launch 10.1-inch Kindle Fire in 3Q12

Amazon is likely to launch a 10.1-inch Kindle Fire in the third quarter, while tentatively suspending the launch of a speculated 8.9-inch model. That move, coupled with a potential move by Apple into the seven-inch form factor, could set up an interesting battle between the two tablet suppliers with the most-robust content ecosystems. 


On the other hand, end user choices might hinge on what tablet applications they "mostly" use and require. Some might find the more "general purpose" iPad is preferable to the "content optimized" Amazon Fire approach.


It might also be easier for work-related tablet apps to be supported on the iOS platforms, rather than the Kindle platform. 

63% of U.K. Homes can Buy Service at 24 Mbps

Some 63 percent of U.K. households now have access to superfast broadband, Ofcom, the U.K. communications regulator, now says. That represents is a combination of coverage now provided by the Openreach network as well as service provided by Virgin Media. 

U.K. consumers in February 2012 were getting access about 22 percent faster  than they were in February 2011, Ofcom says. 

In November 2011, the average actual U.K. residential broadband speed was 7.6 Mbps, compared with 6.2 Mbps in December 2010, and 6.8 Mbps in May 2011. 

The increases mainly are a result of consumers moving onto higher-speed packages.  In November 2011, for the first time more than half (58 percent) of U.K. residential broadband connections had an advertised speed of above 10 Mbps, up from 48 percent in May 2011.

However, more than 40 percent of broadband consumers remain on packages with speeds of 10 Mbps or less, even though many of them would be able to get a higher speed at little or no extra cost if they switched package or provider.

That gap, as much as anything suggests why getting consumers to buy faster broadband access is anything but automatic. 

Coupons Boost Sales, Even When Consumers Don't Use Them

Coupons are a popular advertising marketing tool. In 2010, U.S. consumers redeemed 3.3 billion coupons, cutting about $3.7 billion from purchase prices, though only about one percent are ever used.

But a new study suggests strong sales lift, even from consumers who do not use those coupons.

The study by University of Virginia Darden School of Business professors found that unredeemed coupons are still valuable to the companies that issue them.

“In fact, the coupons that wind up in the trash ultimately may deliver greater returns to a company than the coupons that are redeemed,” Rajkumar Venkatesan and Paul Farris write in the article “Unused Coupons Still Pay Off” in the May issue of Harvard Business Review.

Venkatesan and Farris analyzed the advertising campaigns of eight national retailers involving more than 500,000 targeted coupons for items representing more than 300 brands mailed out over 16 months.

The professors found that consumers who got the coupons but didn’t use them still “typically increased their purchases in the associated stores.”

In fact, these consumers accounted for 60 percent of the coupons’ “sales lift," the additional amount spent on both promoted and unpromoted items.

The professors predict that a company targeting 1,575 households with customized coupons for groceries over one week should succeed on two levels, first by prompting coupon redeemers to spend more than non-redeemers who nonetheless will be prompted to visit the store and spend.

Also, as a group, the non-redeemers will spend more at the store than the redeemers simply because there are more of them.

Coupons often get tagged as “bottom of the funnel” tools but clearly they also drive brand awareness and sales lift, says BIA/Kelsey. Redemption rates, while important, are not the only success metric.

Venkatesan and Farris conclude that new media players such as Groupon and Living Social are best evaluated not just in terms of list building and redemption but also in terms of long term sales lift even from non-redeemers and presumably even those on the list but who never bought the coupons.

Apple Might See Little Value in Mobile-Capable Retailer POS

Apple is among the few firms that one would expect to take a "revolutionary" approach to mobile payments, if it decides the capability is important, and can create or transform the device market. 


Already, when consumers buy inside Apple stores, there is no use of traditional point of sale terminals. 


Apple’s patents and stores suggest that the company envisages a world in which POS terminals are no longer fixed or discrete devices within the retail environment, but simply use standard mobile devices.


In other words, Apple, given its device focus, likely sees the mobile device itself as the way to do "check out."

74% of Smart Phone Owners Use Location Features

Some 74 percent of smart phone owners get real-time location-based information on their phones, a  February 2012 study by the Pew Internet and American Life Project has found. Those inquires typically involve getting directions, recommendations or information related to their current location. 


That has implications for content and app providers, retailers and advertisers and marketers, as the unique feature of a smart phone is its "always with you" and location-aware properties, providing a contextual capability no other device possesses. 

Mobile Banking Adds Value, But Does it Add Revenue?

In Africa, use of mobile phones as a substitute for branch banking has clear upside for banks. In developed markets, the business case is much softer.

In fact, it is possible that mobile banking actually will wind up costing banks money, in a direct sense. The problem is that mobile banking now is becoming one more channel a bank has to support, while incremental revenue opportunities do not exist.

The business model essentially hinges on the "soft" advantages, such as ability to help retain high-value customers, retain parity with other banks in terms of new customer acquisition, and possibly some incremental value in terms of avoided retail branch openings. 

A study by the Federal Reserve System shows that mobile phones are changing the way consumers access financial services. 

Today, 87 percent of the U.S. population has a mobile phone, and according to Nielsen, more than 50 percent of U.S. consumers already are using a smart phone.

Some 21 percent of mobile phone owners have used mobile banking in the past 12 months. 

Some 68 percent of those consumers with Internet access and a bank account have used online banking in the past 12 months, by way of contrast. So some would note that mobile banking already is a channel a third the size of online banking. 

You might argue that online banking has the advantage of allowing users to conduct transactions and get information without creating additional needs for tellers. Mobile banking, though, doesn't necessarily even provide that advantage, since the online channel already is widely used.