Shipping Cost Drives 42% of Shopping Cart Abandonments

source: Royal Mail

Free shipping--at least in the United Kingdom--really matters, a study of e-commerce behavior has found.

Cart abandonment rates in 2016 are the same as 2015: 91 percent of online shoppers claim to have abandoned a cart over the last twelve months.

However the frequency of shoppers abandoning orders has decreased by 10 percent since 2015.

Website and technical problems showed the biggest improvements, with consumers reporting they less frequently abandoned a possible purchase for those reasons.

There was also a decline in those saying “I wasn’t happy with the delivery charge”, which fell from 44 percent to 42 percent.

Still, delivery costs cause 42 percent of cart abandonments. About 66 percent of online shoppers say they are unlikely to place an order if they feel the cost of delivery is too high.

About half of online shoppers expect no minimum spend to receive free delivery. About 29 percent of respondents said they would shop elsewhere if a retailer had a minimum spend policy.

Younger shoppers are significantly more likely to spend the required amount to qualify for free delivery, while older shoppers will simply switch to another retailer who doesn’t charge for delivery.

Autonomous Vehicles Do Not Absolutely Require IoT; Traffic Management Does

source: McKInsey

At least in lower volumes, self-driving cars do not absolutely require that robust networks operating at a level above the individual vehicle’s sensors be in place.

Uber’s limited launch of autonomous car service in Pittsburgh shows that.  

Even when autonomous vehicles are much more common, it might be true that telemetry will operate at the vehicle level.

Internet of Things networks and edge computing will probably operate at a more systemic level. For example, it has been estimated that 40 percent of urban vehicle congestion is caused by people looking for parking.

IoT-based systems are perhaps more likely to be used for such broader traffic management functions than individual vehicle safety.  

source: Business Insider

Server Market, Metro and WAN Bandwidth Now Driven by Hyperscale Data Centers

source: Cisco

The global server market now is driven by huge data centers, much as global wide area network bandwidth demand is shaped by those same hyperscale data center sites, while metro traffic likewise is shaped by internal data center traffic and data center-to-data center connections.

"The real driver of global growth continues to be the hyper-scale datacenter segment," Gartner analyst Jeffrey Hewitt noted in a statement releasing the quarterly estimate. "The enterprise and small or mid-size business segments remain relatively flat as end users in these segments accommodated their increased application requirements through virtualization and considered cloud alternatives."

source: Cisco

OTT bypass--when OTT app providers terminate calls through an OTT app that have begun life as a normal fixed or mobile telephone call--could reduce carrier revenues as much as 30 percent, argues Andy Gent, Revector CEO.

OTT bypass affects carrier revenue because the bypass shifts call termination revenue away from telcos and to app providers.

“In the past month we have detected OTT Bypass across the globe with several operators reporting a reduction in termination call revenues of 25 percent, month on month,” said Gent.

“We have seen calls that have been made from one mobile phone number directly to another be received on a Viber app across three different continents and more than 15 network operators and national telecommunications regulators have contacted us regarding this issue in the past two weeks,”Gent said.

In the longer term, IDC expects server market growth to be driven by software-defined, disaggregated systems and network edge-deployed Internet of Things (IoT) compute," said Kuba Stolarski, research director, Computing Platforms at IDC.

By 2019, more than four-fifths (86 percent) of workloads will be processed by cloud data centers; 14 percent will be processed by traditional data centers. Much of that traffic will remain in single in metro areas, rather than crossing the wide area network.

Traffic between data centers is growing faster than either traffic to end-users or traffic within the data center, and by 2018,  traffic between data centers will account for almost nine percent of total data center traffic, up from nearly seven percent at the end of 2013, according to Cisco.

The portion of traffic residing within the data center will decline slightly between 2014 and 2019, accounting for 75.5 percent of data center traffic in 2014 and about 73 percent by 2019, Cisco predicts.

Global Data Center Traffic, 2014–2019
	2014	2015	2016	2017	2018	2019	CAGR 2014–2019
By Type (EB per Year)
Data center to user	613	760	946	1,185	1,495	1,886	25%
Data center to data center	234	321	432	564	723	905	31%
Within data center	2,602	3,342	4,233	5,235	6,358	7,566	24%
By Segment (EB per Year)
Consumer	2,103	2,758	3,550	4,444	5,599	6,885	27%
Business	1,346	1,665	2,061	2,540	2,977	3,472	21%
By Type (EB per Year)
Cloud data center	2,110	2,956	4,017	5,328	6,854	8,622	33%
Traditional data center	1,339	1,467	1,594	1,656	1,722	1,735	5%
Total (EB per Year)
Total data center traffic	3,449	4,423	5,611	6,984	8,576	10,357	25%

source: Cisco

source: Cisco

OTT Bypass a New Revenue Challenge for Mobile Operators

OTT bypass--when OTT app providers terminate calls through an OTT app that have begun life as a normal fixed or mobile telephone call--could reduce carrier revenues as much as 30 percent, argues Andy Gent, Revector CEO.

OTT bypass affects carrier revenue because the bypass shifts call termination revenue away from telcos and to app providers.

“In the past month we have detected OTT Bypass across the globe with several operators reporting a reduction in termination call revenues of 25 percent, month on month,” said Gent.

“We have seen calls that have been made from one mobile phone number directly to another be received on a Viber app across three different continents and more than 15 network operators and national telecommunications regulators have contacted us regarding this issue in the past two weeks,”Gent said.

Smartphone Apps Drive U.S. Content Usage

It will not surprise you that smartphones now are the ways most people interact with the Internet, in developed or developing nations and markets. In the U.S. market, for example, smartphones represent a plurality of Internet content use for nearly every age demographic.

comScore

Big Value of Industrial IoT is Protecting Capital Stock from Damage

source: Business Insider

Lower energy consumption is a value often cited for industrial Internet of Things applications, but protecting expensive equipment from potential damage arguably is the bigger driver of value in the industrial Internet of Things space.

Real time process control is the broad reason why edge computing (fog computing) is important, said David King, Foghorn Software CEO.

The reason process control is so important--beyond efficiency gains--is the value of protecting expensive equipment from damage and downtime.

In some cases, as with high-pressure water pumps, engineers might have only milliseconds to detect and prevent pressure conditions that cause cavitation and bubbles that damage a pump, said Sastry Malladi, Foghorn Systems CTO.

That is hard to do in a traditional cloud computing--rather than edge computing--environment. Communications latency alone can prevent proactive adjustments.

In manufacturing settings, $110,000 machines operate with specific winding tension, said Malladi. Equipment operators have only seconds to take machines offline when the winding tension is off, he added.

The point is that process control managers might have seconds to milliseconds to respond to a problem and modify operations to prevent equipment damage.

In other words, the value proposition includes better energy consumption, or more-efficient operations. But the real value is reducing damage to expensive equipment.

For Unconnected, "Killer App" Already Exists

source: Globalwebindex

Occasionally, one hears observers say that a “killer app” is required to get billions of people interested in using the Internet, assuming other barriers also are diminished (service cost, device cost, language, knowing how to use the Internet).

Others might say it is very clear that social networking is the killer app already in place. “Demand” is not the issue.

In other words, "end user demand" on the part of people who do not routinely use the Internet is not really lacking. People know what they want to do. We just have to build networks to deliver it, at prices people are willing and able to pay.

Network Interconnection Now is a Business Model Issue in India

Network interconnection is more than a technical process whereby companies connect their networks. The business rules for exchanging traffic can help some providers and harm other providers.

As Reliance Jio prepares to enter the India mobile market, interconnection rules once again are highlighted as a material contributor to firm revenues and business models. The Telecom Regulatory Authority of India, for example, is taking a look at termination charges.

There is some possibility TRAI could recommend essentially eliminating interconnection charges. That would reduce revenue for the largest mobile companies in India, and reduce cost for Reliance Jio.

The reason is simply that when networks of unequal size exchange traffic, the large networks always will, on balance, terminate many more calls than the small carriers.

At the same time, the small networks will mostly originate traffic, and will get relatively small amounts of terminating traffic from the big networks.

So low or zero-rated termination helps small carriers, and hurts big carriers, since it is the big carriers that terminate most traffic.

If Reliance Jio plans to offer “no incremental cost” (“free”) domestic calling, then interconnection charges to terminate those calls on other networks has to be set at “no incremental cost” levels as well, at a high level, or else Reliance Jio will subsidize every minute of use.

Reliance Jio Will "Crash Prices" and Drive Some Competitors from the Market

Two developments are virtually certain as Reliance Jio enters the India mobile market: revenue will “crash” and markets will consolidate.

Case studies of seven markets over the last 10 years revealed that whenever a "radically new disrupter" came in it has almost always led to two things: first, crash in voice service prices as consumers make a shift to higher data usage and second, demise of weaker players, an analyst said.

Beyond that, the overall trend in the global telecom business for three decades has been lower prices, greater competition and differentiated business strategies. Over time, the pricing trend for telecommunications products has had a tendency to move towards zero, or marginal cost pricing.

The clear problem with marginal cost pricing is that the supplier only recovers the incremental cost of producing the extra units, not the sunk cost of the infrastructure.

In principle, marginal cost pricing assumes that a seller recoups the cost of selling the incremental units in the short term and recovers sunk cost eventually.

The growing question is how to eventually recover all the capital invested in next generation networks, if retail pricing moves to “marginal cost.”

Indeed, some already argue that tier one telcos do not recover their cost of capital, perhaps an indication that marginal cost pricing is dangerous to the long term health of the industry. .

As a rule, any industry touched by Internet distribution tends to see a trimming of supplier profit margins. In fact, that is an important strategy for digital disruptors, where the strategy literally is to destroy profit margins in a traditional business, gaining share and then dominating the new business, with permanently lower profit margins, and possible lower gross revenues.

That is the theory that underpins the pursuit of “zero billion dollar markets.” One sense of the word is that big markets get created when whole new industries are founded. But one other use is more ominous for incumbents.

That is reliance on marginal cost pricing to literally “destroy” the pricing regime in an existing market, allowing a new competitor with radically lower cost structure to displace the current leaders. That is the essence of the phrase “analog dollars, digital dimes and mobile pennies.”