Affluent Asia-Pacific Mobile Users are Heavy Mobile App, Skype Users

Over the top VoIP services such as Skype are a major draw for users around the world who need to make cross-border calls, for obvious reasons. And users in China, Malaysia, Indonesia and India are no different. While much Skype usage originates and terminates on PCs, mobile usage of Skype seems might be quite prevalent as well, in those four countries.

Some 44 percent of surveyed mobile consumers with mobile Internet in Malaysia use over the top VoIP services, as do 38 percent of respondents in India, with 69 percent of VoIP-using respondents saying they use Skype, Analysys Mason says.

It isn't clear whether that refers to any use of Skype or other over the top calling apps, or the percentage who use mobile VoIP. In fact, it seems rather doubtful that mobile VoIP constitutes "most" of the Skype usage in those countries.

Much could depend on whether those relatively affluent consumers responding to the Analysys mason poll are akin to "early adopters" with behavior patterns quite different from those of mainstream users.

The impact of over-the-top (OTT) communications services, such as WhatsApp Messenger and Viber, is growing, but used unevenly.

About 11 percent of smart phone owners use mobile VoIP applications regularly, compared with only five percent of mobile users as a whole. 

Usage of over-the-top services [Source: Analysys Mason Connected Consumer Survey 2012

1 Various questions; Denmark, France, Germany, Poland, Spain, the UK and the USA; n = 7485.

Of 107 million mobile VoIP users expected by 2012, more than half will reside in North America and Europe, owing to the fact that 3G, which is required for mobile VoIP to be effective, has been rolled out in those regions, according to Juniper Research.

But Juniper Research also agrees that the Far East and China will account for most of the remaining mobile VoIP growth, followed by the rest of Asia-Pacific.



 Africa and the Middle East, the Indian subcontinent, and Latin America will round out the remaining growth, with roughly equal percentages, Juniper has predicted. 

“Affluent” consumers in emerging Asia–Pacific countries spend 48 percent more time using communications  and media services than those in Europe and the United States, a study by , Analysys Mason suggests. On average, survey respondents with Internet connectivity in major emerging APAC markets spent 13  hours a day using telecoms and media services, compared with 8.8 hours for consumers in Europe and the United States.

The Analysys Mason conclusions were drawn from an online survey of 4,000 consumers 18 and older in China, India, Indonesia and Malaysia.

The caveat is that the survey sample arguably over-selected for “relatively affluent” consumers, Analysys Mason notes.

On average,  total exposure to telecom and media apps and services was highest in Malaysia (14.6 hours each day), followed by Indonesia (14.2), India (13.3) and China (9.9).



The survey also found that usage of mobile content and apps was high among connected consumers, which is probably no surprise. In China some 78 percent of respondents used mobile apps, while and 79 percent of respondents in India said they use mobile apps.

More than 56 percent of survey respondents used a smart phone.

About 11 percent of respondents that buy both fixed and mobile broadband services are planning to give up their fixed broadband service, but that is balanced by13 percent of respondents that have only mobile broadband who report they are considering also buying fixed broadband.

Starbucks Adds Square for Mobile Payments

In a move that in one sense shows the scale of Starbucks mobile payments operations, and might ultimately suggest other opportunities, Starbucks is outsourcing its mobile payment operation to Square. 

Users will simply use the Pay with Square app in place of the current app. At least so far, the advantage for Starbucks might be more tactical than strategic. Some think Starbucks will get better rates on each payment, than it had been able to do using its prior in-house method.

Others might suggest that the cost of supporting the mobile payment operations has grown to the point where outsourcing that particular function makes more sense than doing it in house. 

Basically, the Pay with Square app will be used by Starbucks in a "stripped down" version, allowing users to display a Square bar code that works with the existing Starbucks bar code scanners. 

Starbucks has said nothing about using the Square credit card dongles, or changing out its current point of sale infrastructure. 

In similar fashion, many of the full Square analytics features will not be used, since Starbucks seems comfortable with its own analytics. 

But the move does suggest Starbucks sees some future upside to using Square. What isn't clear is whether that is a tactical decision, such as often made by firms when they switch from an in-house or proprietary application to a "standards-based" alternative, or something more. 

Apple, Samsung, Android Still the Story in Second Quarter 2012

Apple, Samsung and Android remain the story in the global smart phone business in the second quarter of 2012, according to IDC.

In the second quarter, Android had 68 percent market share. All other operating systems lost 15 percent market share, compared to the second quarter of 2011. 

The IDC figures also show Research in Motion's market share decline from an 11.5 percent share in 2011  to 4.8 percent over the last 12 months, Symbian dropping from 16.9 per cent to 4.4 percent.




Smartphone OS World market shares Q2 2012 and 2011

Tablets Indirectly Threaten HP's Business Model

Tablets are not a direct cause of HP's strategic disarray. PCs and the consumer hardware business arguably are the problem, clashing with HP's ability to become a pure-play enterprise services supplier. 

But tablets represent both a threat to the PC revenues and a device that relies on the cloud services that HP might alternatively focus upon. The problem remains that HP is a firm with conflicting pressures and interests. 

HP is still the biggest maker of PCs in the world – excluding tablets – but Steven Milunovich at UBS Investment Research reckons the tech giant should get rid of its PC hardware business and focus on services related to cloud computing and business products. 

Of course, that course has been at least temporarily rejected. Former CEO Leo Apotheker proposed doing so and was dumped. New CEO Meg Whitman reversed course. And now Milunovich essentially argues Apotheker was right. 

Doing two things stops HP doing either well, he argues: "HP lacks the pure enterprise focus of IBM and EMC yet will have trouble competing for consumers without strong tablet and phone businesses like Apple and Samsung," 

So, indirectly, tablets represent the latest twist in the rather lengthy story of HP vacillating about its strategy. Without a robust tablet and smart phone business, the consumer business looks vulnerable, longer term. But since the PC and printer business is about half of HP, the continual debate about remaining in the consumer and enterprise businesses 
is tough to resolve. 

U.S. Mobile Business Now is Unstable

There are growing signs that the U.S. mobile service provider market is unstable, in terms of market structure, and on the cusp of changes that could include a significant wave of provider restructuring, despite the failure of the AT&T bid to buy T-Mobile USA. 

"What is clear for now, in our view, is that the current strategy, indeed the entire current business, isn't working," said Craig Moffett, an analyst at Sanford C. Bernstein. Moffett seems to be referring to the whole business operated by regional U.S. wireless carriers. 

To be sure, Moffett has been saying that the U.S. mobile business is saturated since at least 2009. 

Oddly enough, to some of us the new stresses resemble the earlier transition from dial-up Internet access to broadband access. In this case, the transition is from feature phone to smart phone business models. 

In that earlier transition, many suppliers that had made a business of supplying dial-up access found they no longer could compete in the broadband business. Now, in mobile, it appears that the cost of supporting handset subsidies is pinching operating revenue, while the cost of building fourth generation networks likewise will hit earnings. 

Of the "big four" U.S. mobile carriers, only T-Mobile USA seems to have experienced a subscriber loss. 

In its second quarter of 2012, AT&T added 1.5 million net new customers. Verizon Wireless added 1.2 million net new subscribers. Sprint added postpaid net additions of 442,000 postpaid net additions. But T-Mobile USA, one the "big four" U.S. mobile service providers, lost 510,000 subscribers in the first quarter. 

The immediate stress is heavy for the regional mobile providers, often using prepaid models. 

Regional or prepaid service providers clearly have had a tougher 2012 than had been the case in the mid-2000s, for example. Leap hasn't been profitable since 2005, for example. MetroPCS profits dropped 63 percent during the first quarter of 2012.

A study undertaken by Tellabs suggests that mobile service provider profitability could become extremely challenging for some mobile operators within three years, with costs surpass revenues for many operators.

In North America that could happen by the fourth quarter of 2013 or as early as Q1 2013. Developed Asia Pacific service providers could see problems by the third quarter of 2014. In some cases this could happen as early as Q3 2013, Tellabs said. 

Service providers in Western Europe could run into trouble by the first quarter of 2015. In some cases this could happen as early as the first quarter of 2014.

Photo of Mars Rover "Curiosity" Heat Shield Dropping Away

Here's a shot of Mars Rover Curiosity dropping its heat shield on the Martian descent. Also, lots of dusty brown rocks, eh?

M2M Mobile Connections: 2.5 Billion by 2020

Mobile network machine to machine (M2M} connections will grow from 277 million in 2012 to 2.5 billion by 2020, growing at a 30 percent compound annual growth rate between now and 2020, according to Strategy Analytics.

Health, meter reading, energy management and transportation applications are expected to lead the growth.

Mobile Broadband Subscriptions for Tablets: $15 Billion Incremental Revenue in 2017

Consumers will add 150 million new data subscriptions for their tablet devices in the next five years, creating a new data access market representing $15 billion in revenue by the end of 2017, when tablet subscriptions will reach 172 million worldwide, Strategy Analytics says.

"Less than 13 percent of the global tablet installed base will have active mobile broadband service in 2012, yet in the US, both AT&T and Verizon Wireless saw tablets play a key role in net subscriber additions in the second quarter this year," says Susan Welsh de Grimaldo, Director, Mobile Broadband Opportunities (MBO) at Strategy Analytics.

Long Term Evolution will become the access technology of choice for mobile network connections, accounting for nearly 68 percent of mobile broadband tablet subscriptions by the end of 2017, Strategy Analytics says.

Tablet Users Don't "Work" on Tablets

There will be nearly 70 million tablet users in the United States by the end of 2012, an increase of more than 100 percent over 2011, eMarketer estimates.  Aside from representing the fastest-adopted digital device ever, tablet usage also shows the way digital device activities have changed since the advent of the "PC" era.

Of the top 10 or 11 categories of things people report doing on a tablet, only using email is arguably something that could sometimes be called a "work activity," most of the time.

And that also is something not specific to a tablet, as more people can use email on their smart phones, as well.

Granted, we all have been at meetings where an attendee looked something up using a browser and search engine. But those things also are done by other attendees on smart phones or PCs. The point is that PCs, smart phones and tablets all are multiple-function devices. But the lead functions of each device are distinct.

For many observers, that suggests tablets are not a "replacement" for a PC so much as an indicator of the ways digital appliances now have become content consumption vehicles. True, tablets are smarter than TVs, radios, DVRs or some older MP3 players. But they are content consumption or media players as much as anything.

For all tablet owners under age 50, playing games was the most common activity. For the youngest tablet owners, ages 18 to 29, this was followed by shopping, reading books and email.

Email had a much greater importance among 30- to 49-year-olds, who were about twice as likely to use their tablets for email purposes than were their younger counterparts.

For 50- to 64-year-olds, email was the most common tablet activity overall.

Apple Co-Founder Wozniak Thinks Cloud is a Huge Problem

"I really worry about everything going to the cloud," he said. "I think it's going to be horrendous. I think there are going to be a lot of horrible problems in the next five years," says Steve Wozniak, Apple co-founder. 

The reason is not that the cloud won't work. Instead, he worries about content ownership.  "With the cloud, you don't own anything," he says. "You already signed it away" through the legalistic terms of service with a cloud provider that computer users must agree to."

iOS and Android Tablets Capturing Different Consumer Segments

Clear customer segments emerged from a comScore analysis of tablet purchasing, and the findings might strike you as entirely believable. 

Apple iPad owners skewed male (52.9 percent), slightly younger (44.5 percent under the age of 35) and wealthier (46.3 percent residing in households with income of $100k or greater) compared to an average tablet user during the three-month average period ending June 2012. That over-indexing for younger and richer users has been a notable characteristic of iPad adopters since the product first launched. 

In comparison, Kindle Fire owners saw their audience skew female with 56.6 percent of its audience base represented by females. 

Both Android and Kindle Fire users saw household income below that of iPad owners, aligning more closely with household income reported by smart phone owners. 

Demographic Profile: Tablet* and Smartphone Audience 3 month avg. ending June 2012  Total U.S. Tablet Owners and Smartphone Subscribers, Age 13+ Source: comScore TabLens and comScore MobiLens
	Total Smartphone	Total Tablet	iPad	Android** Tablet	Kindle Fire
Gender
Male	51.9%	50.0%	52.9%	50.9%	43.4%
Female	48.1%	50.0%	47.1%	49.1%	56.6%
Age
13-17	6.0%	5.5%	4.7%	6.2%	5.5%
18-24	17.5%	13.0%	14.0%	12.9%	12.2%
25-34	24.6%	24.2%	25.8%	22.5%	24.7%
35-44	21.0%	20.6%	21.4%	20.1%	20.5%
45-54	16.7%	18.1%	16.8%	19.7%	16.9%
55-64	9.0%	11.0%	9.7%	10.8%	12.5%
65+	5.3%	7.6%	7.5%	7.8%	7.6%
Household Income
<$25k	12.0%	7.8%	5.5%	11.7%	7.0%
$25k to <$50k	19.6%	18.1%	14.4%	20.4%	20.9%
$50k to <$75k	19.3%	19.1%	17.2%	20.0%	21.3%
$75k to <$100k	15.6%	16.7%	16.6%	15.3%	17.5%
$100k+	33.5%	38.4%	46.3%	32.5%	33.3%

Does Mobile Commerce Make More Sense Than Mobile Advertising?

If you are a tier-one mobile service provider exploring large potential future opportunities, it matters greatly how big each potential new business might be. Though most such firms will place lots of bets, and wait to see what develops, tier one service providers cannot waste time on "small" opportunities. 

Typically, services such as mobile advertising, mobile payments or mobile commerce, machine to machine communications or enterprise-oriented services are on the list of such possibilities. So how big might "advertising" be, compared to "commerce?" 

It's a hard question to answer, in part because "mobile advertising" and "mobile commerce" clearly overlap, while mobile commerce overlaps with mobile payments and banking. 

Google Wallet or Isis, for example, both envision their mobile wallets becoming a hub or intermediary for all sorts of deals, offers, coupons and loyalty and reward programs, even though mobile wallets are seen as intimately related to mobile payments. 

In fact, it might be the case that the interest in "mobile advertising" now should better be described as an interest in mobile commerce, anchored initially by mobile wallet efforts. 

At least in part, mobile commerce also makes sense because research from Nielsen in 2011 already was showing that 29 percent of smart phone owners use their phone for shopping-related activities. 

But at least so far, few of the top activities conducted by mobile shoppers are extremely conducive to direct mobile service provider participation. Some 38 percent of respondents conduct in-store price comparisons (38 percent of mobile shoppers), about 38 percent browse products through their mobile Web or apps while 32 percent report reading online product reviews.

The opportunity for mobile service providers to create value and a role in those activities and ecosystems is largely unclear. Mobile wallets, on the other hand, could represent a much more logical role for a mobile service provider. 

Mobile advertising, for example, might represent $2.6 billion in 2012 revenue, and little of that flows to mobile service providers. Mobile commerce includes sales of mobile content, purchasing of services and products, mobile offers and deals, for example. That activity, even exclusive of sales of ring tone, mobile video or games, shows, already had reached 




   



 Apps, which account for the majority of mobile phone time in the U.S., may be the key to shifting consumers from browsing products on their phone to making purchases, some would argue.

There also is a relationship to mobile payments as well. Although only nine percent of mobile shoppers have used their phone to pay for a purchase at a retail point of service terminal, 71 percent of app downloaders would be interested in an app that allows them to use their phone as a credit card. 

Even those preliminary figures suggest the potential, from a mobile service provider perspective, of pursing mobile commerce, wallet and payment initiatives, compared to mobile "advertising," in a narrow sense.

Loyalty, offers and other revenue streams related directly to mobile wallets are feasible and logical, but might more logically be seen as mobile commerce rather than mobile advertising revenue streams. 

Where Providers Can Make Money In Cloud Services, Now

If you agree with the notion of product life cycles, then you might also agree that new technologies have adoption cycles, and "hype cycles," as well. 


The Gartner notion of how technologies develop incorporates the notion that a period of high expectations normally is followed by period where those initial hopes are dashed, eventually followed by a period where innovations are well understood and adopted.


You might argue that most of the money will be made once that occurs. If so, you might expect that email has been mainstream and throwing off substantial revenues for a while, and is maturing. 


Cloud-based advertising (think Google) and cloud-based sales force automation (think Salesforce.com) and other software as a service apps are in the full deployment stage. 


Infrastructure as a service is getting close to full deployment and acceptance. Public cloud storage has a ways to go before it will reach full deployment, though. 

Mars Rover Curiosity Beats Odds

Almost 70 percent of previous missions to Mars had ended in failure, which explains the significance of Mars Rover "Curiosity" making a safe landing on the red planet. 


A heat shield had to slow the spacecraft from 13,000 mph to about 800 mph. Then a giant supersonic parachute unfurled to slow the rover further to about 200 mph. 


Then onboard radar has to detect the surface, and rocket engines aboard a kind of jet pack have to fire, slowing Curiosity to a crawl. Finally, a bridle had to lower the rover from the jet pack to the surface. 




The landing sequence, dubbed “seven minutes of terror,” required the largest supersonic parachute ever deployed in space, and 76 pyrotechnic explosions. If any one of those explosions had not occurred, Curiosity would have crashed. 

Mobile Commerce Looks to be Bigger than Mobile Advertising

Though some might disagree, it appears that mobile commerce is poised to offer bigger financial returns for suppliers than mobile advertising, despite the headstart mobile advertising has had. To be sure, mobile advertising already represents $2.6 billion in U.S. market revenue  in 2012. 


Mobile payments transaction value on a global level will total $171.5 billion in 2012, Gartner estimates. If you assume payments revenue is two percent of the transaction value, that represents perhaps $3.43 billion in payment transaction revenue. 


By some estimates, U.S. mobile payments transactions represent about $81 billion in 2012. If so, at two percent of gross transaction value, the mobile payment processing portion of the business is about $1.6 billion. 


Of course, "mobile payments" represent multiple discrete lines of business, including remote purchases ("online" purchases), mobile purchases of content goods, retail point of sale payments and money transfers. 


Gartner also projects annual rates of growth ranging from 40 percent to 70 percent in various countries,  with U.S. rates closer to 70 percent annually.