How Big Will M2M Market Be, Near Term?

Verizon Wireless and Encore Networks today announced the availability of Machine-to-Machine (M2M) solutions, with particular emphasis on enabling wireless capabilities for utility apps that traditionally have run over voice lines.


To be sure, M2M revenues are in an earlier stage of development than mobile broadband, which will account for most mobile service provider revenue growth over the near term.



The two companies will offer Encore's entire “Bandit”  line of enterprise routers, including devices that enable data transmission using the Verizon Wireless mobile network.



Many legacy applications could benefit, including automated teller machines, point-of-sale terminals, elevators, vending machines, kiosks and healthcare devices.



Power distribution sub-stations, refineries and transportation fleets are other expected application scenarios.



M2M is among a handful of potentially-important new mobile applications believed to be big enough, in terms of revenue, to sustain mobile service provider growth as voice and messaging revenues decline, and after mobile broadband uptake has saturated. Global M2M market in Euros

Groupon Move Hints at Mobile Commerce Ambitions

Mertado, a venue for shopping (social e-commerce), is being acquired by Groupon, the daily deals company. The move represents an expansion of Groupon's activities in the e-commerce space. 


Groupon Goods , for example, already has been selling physical products directly to end users, rather than simply offering other merchants a way to stimulate walk-in traffic at retail locations.

Mertado TV, which uses video content to sell products, is one capability Groupon seems to value. Mertado becomes Groupon

Will Mobile Revenues Fall Below Costs Between 2014 and 2016?

Though not every mobile service provider will face such issues, many mobile executives will be facing huge profitability challenges between now and 2016, according to Juniper Research, which forecasts that mobile service providers face potential capital investment and operating costs that actually exceed revenues by about 2014, Juniper Research says. 



Separately, analysts at Analysys Mason concluded that carriers in many regions around the world face the risk of an "end to profit" in 2015 if not before.

A study carried out by mobileSquared surveyed 31 global mobile operators and found that one third of operators already see traffic and revenue decline, while 75 percent of are worried about losing revenues to mobile application providers.

The research confirmed that over-the-top apps already are affecting traffic and revenues. Some 32 percent of respondents thought operator traffic from messaging, voice and video calling would decline between 11 percent and 20 percent over the next five to 10 years. About 20 percent of respondents estimated revenue would fall 31 percent to 40 percent over the next five to 10-year period. 

My own framework calls for a decline of as much as 50 percent in the legacy lines of service over 10 years, based on price trends in long distance. 

The problem, according to Juniper Research, is that profit margins are running between 15 percent and 20 percent, which means many service providers are at about break even.

By 2015, costs will exceed revenues slightly, and fall below capital and operating expense by about 2016.


Separately, analysts at Tellabs also predict that revenue could fall below costs "within four years."

The Analysys study assumes a continuation of current cost and revenue trends, especially the current pricing of bandwidth. The findings also suggest the immediate need mobile service providers have for changes in retail packaging and pricing to keep revenues above cost. 

Coming Top 10 Uses for Mobiles

You don't have to be a believer or supporter of "mobile payments" to guess that, at some point, mobile devices will be used for many "commerce" applications that turn a "communications" device into a "transaction" device.

In 2011, Gartner analysts predicted worldwide mobile payment users would surpass 141.1 million, a 38.2 percent increase from 2010, when mobile payment users reached 102.1 million.
Worldwide mobile payment volume was forecasted to total $86.1 billion, up 75.9 percent from 2010 volume of $48.9 billion. Gartner forecast

Money transfers and prepaid top-ups clearly drove transaction volumes in developing markets. These are seen as the "killer apps" in developing markets, where people value the convenience of sending money to relatives and topping up mobile accounts. This is most obvious in Eastern Europe, the Middle East and Africa, where these two services were expected to account for 54 percent and 32 percent of all transactions in 2011, Gartner said.

It might take until 2014 before retail mobile payments really becomes a mass market behavior in developed markets, though.

The top mobile apps, though, will show the growing importance of commerce and payment-related mobile apps, whether in 2012, as Gartner originally projected in 2009, or by 2014, which seems a more reasonable scenario at this point.


The top 10 consumer mobile applications in 2012 were projected to include money transfer, mobile payment and mobile advertising. 

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PayPal to Expand Home Depot Retail Payments Test

PayPal is expanding its test of PayPal retail payments with Home Depot from the limited "friends and family" test it has been conducting, to about 50 Home Depot locations in the San Francisco Bay Area. PayPal expands Home Depot test 


Up to this point, the pilot customers (said to be PayPal employees, only)  have been able to pay for items using their PayPal account at Home Depot’s point of sale systems. 


They can either use a pin code on their mobile phone or a  PayPal credit card that can be swiped.


PayPal has been agnostic about actual transaction technologies, so the test is probably more oriented towards assessing end user demand and preferences, more than the particular payment technology.

The logical approach, no matter which technology is chosen, is to link an existing PayPal account with the mobile device. 

In-App or On-Site Commerce is the Ultimate Goal for Many Business Sites

Many observers would argue that the ultimate goal for providers of business and consumer voice services is to make voice and communications a feature of virtually every business application, and most consumer applications.


In the same way, many of us would argue that the ultimate goal for many business apps and sites is the ability to "sell things" directly from the site, which implies a payment mechanism.


Payment processing arguably is a lot easier when it is integrated with any application, rather than an external function. That is why the notion of "in-app" order and payment processing is so important. 


Card.io has created a new version of its software development kit that adds the payment feature to any mobile app.

Any app developer can download the SDK, integrate with their app (iOS or Android), and start accepting payments. There's no merchant account, and payments are deposited directly into a bank account or PayPal account. There are no monthly fees or setup fees, and app providers pay card.io only when a customer conducts a transaction.

The fee is 3.5 percent of the transaction amount, plus 30 cents.


The new feature means any app can accept credit card payments. The card.io feature could be used by any app to allow users to split the tab at lunch, pay a friend back for gas on that road trip, or make a craigslist purchase. Card.io introduces full payment system

Mobile a Work in Progress for "Prestige" Brands

Prestige fashion brands have been inconsistent in their adoption of mobile commerce and other mobile features, a study sponsored by L2 Research has found. That mobile remains a work in progress should not be surprising.

Mobile commerce and marketing encompasses a wide range of processes, channels and business objectives and functions. At this early stage, it might be unusual indeed if retailer programs and end user behavior were to produce an upheaval in terms of customer behavior or business results.

About 66 percent of prestige brands maintain a mobile-optimized site, and about 33 percent of these mobile development efforts do not yet support commerce.

Fewer than 20 percent of brands have created unique app content for the iPad and other tablets, a fact some will say is a missed opportunity as these devices register high usage among affluent consumers.

About 16 percent of brands have yet to develop a mobile-optimized site or mobile site, the study finds.

The study also suggests that mobile searches disproportionately are conducted by users with a higher than average propensity to buy luxury products, the study suggests.

This observation underscores the urgency to adapt search engine optimization, email marketing, and other digital efforts for mobile platforms, the study suggests.


As a product class, tablet devices have proven a boon to m-commerce. Tablet shoppers demonstrate a conversion rate of four to five percent compared with three percent on a PC.

Even when compared directly to smart phones, 25 percent of “dual owners” surveyed by Ipsos demonstrate a preference to purchase on sites while using a tablet.

Although 37 percent of all prestige brands have a presence on both the iPhone and iPad, only 16 percent have created a unique experience for iPad users rather than simply replicating the same app across both devices. Given the dramatic difference in screen sizes, that will not continue to be the case, one might argue.

“Location” also is the defining and unique smart phone capability. But we are early in the process of adapting marketing and commerce to user location in real time.

Only five percent of Americans use geo-local apps (check in services, for example) at least once a month, but these active users represent a high-value demographic. They skew younger, register higher income, and are twice as likely to share product information.

Also, 14 percent of global monthly Google searches for prestige brands originate from mobile devices, which is significant given that non-computer devices account for less than seven percent of traffic in the U .S. and less than five percent of traffic in France, Germany, Italy, Spain, and U.K. markets.

Mobile efforts often also are marketing or commerce “silos,” isolated from other marketing channels. Only 28 percent of the brands in the Index are developing mobile apps promote them on their main sites. But 82 percent of the brands link to their Facebook pages and 66 percent to their Twitter accounts.

Nor are older communication channels unimportant, compared to the newer tools. During the second half of 2011, mobile email open rates increased 34 percent, with consumers opening 23 percent of all emails on their mobile devices.

About 78 percent of the surveyed prestige brands engage in email marketing, only 24 percent have links to mobile-optimized versions of their email content, and 55 percent opt to provide
links to plain HTML versions.