Network effects might ultimately decide whether mobile service provider investments in “Rich Communications Suite” are successful in competing with over the top voice and messaging apps supplied by third parties.
The obvious example is Skype, which now has such a large community, and provides sufficient value, that it is doubtful RCS will damage Skype. RCS services might be more effective against smaller communities, but Skype simply has gotten to the point where scale issues are fairly minimal. Most users assume other users have Skype and know how to use it.
ARCchart expects that instant messages will exceed text messaging (short message service, or SMS) volumes by 2014 and continue growing rapidly thereafter, accounting for 65 percent of all message traffic pushed over mobile networks by 2016.
The issue is whether RCS can reach critical fast enough to stop that migration. Rational observers might say the answer is “no.” So the issue will then become whether RCS can take back share carrier messaging already has lost to other providers.
The hope is that a standards-based RCS service will provide the needed “everybody else can get a message using this app” problem.
ARCchart anticipates a strong uptake of RCS-e, with around 35 percent of mobile VoIP users going through an RCS-e solution by 2016 and 19 percent of mobile IM users choosing RCS-e.
“Nonetheless, several mobile OTT communications providers have critical mass and the evidence shows that even when SMS and voice are priced comparatively cheaper than IM and VoIP, many customers continue to use their OTT solutions because of the richer experience,” says ARCchart.
In other words, there is reason to question how much success RCS actually will obtain.
Thursday, October 18, 2012
OTT App Network Effects Might Decide RCS Success
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Gartner Says Big Data Will Drive $28 Billion of IT Spending in 2012
Big data will drive $28 billion of worldwide IT spending in 2012, according to Gartner. In 2013, big data is forecast to drive $34 billion of IT spending.
Most of the current spending is used to adapt traditional solutions to the big data demands (machine data, social data, widely varied data) and only $4.3 billion in software sales will be driven directly by demands for new big data functionality in 2012.
Big data currently has the most significant impact in social network analysis and content analytics with 45 percent of new spending each year.
Most of the current spending is used to adapt traditional solutions to the big data demands (machine data, social data, widely varied data) and only $4.3 billion in software sales will be driven directly by demands for new big data functionality in 2012.
Big data currently has the most significant impact in social network analysis and content analytics with 45 percent of new spending each year.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Western Europe, U.S. Mobile Markets Heading in Opposite Directions
Significant regional variations can and o exist in the global telecom business. The largest U.S. mobile providers, for example, seem to be able, at least for the moment, to turn in predictable growth in revenue, quarter after quarter, as third quarter 2012 Verizon financial results indicate.
In Western Europe, competition is having the opposite effect, reducing revenue. In fact, argues STL Partners, mobile service provides in Spain, Italy, France, Germany and the United Kingdom stand to lose as much as 50 billion euros over the next seven or so years.
Verizon, in contrast, reported double-digit increases in operating income and earnings. Wireless segment revenue grew more than seven percent, year over year, while prepaid wireless revenue grew nearly 43 percent, year over year. Fixed network revenue in the consumer segment also grew, despite the ongoing trend of voice line abandonment.
Most observers expect AT&T will report earnings that likewise show continued growth.
In Western Europe, competition is having the opposite effect, reducing revenue. In fact, argues STL Partners, mobile service provides in Spain, Italy, France, Germany and the United Kingdom stand to lose as much as 50 billion euros over the next seven or so years.
Verizon, in contrast, reported double-digit increases in operating income and earnings. Wireless segment revenue grew more than seven percent, year over year, while prepaid wireless revenue grew nearly 43 percent, year over year. Fixed network revenue in the consumer segment also grew, despite the ongoing trend of voice line abandonment.
Most observers expect AT&T will report earnings that likewise show continued growth.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Internet Now Affects Most Businesses in Same Way as "Deregulation" Used to Affect Some Businesses
Historically, formerly highly-regulated industries have faced major deregulation with some predictable results. Virtually all highly-regulated industries, whether formal monopolies or not, have had high cost structures, typically because rates and service quality were regulated.
Deregulation has lead to needs for lower cost structures because competitors attack with lower prices. Typically, profit margins also drop, even when gross revenue does not.
Industry boundaries also tend to change, as new suppliers enter the market, as entities are allowed to compete in new geographies, serve new customers or provide products prohibited in the past.
As a result of revenue, profit margin and other competitive pressures, legacy market leaders are never completely happy with their share of ecosystem revenue in a business that either is contracting, or undergoing major restructuring, as the global telecom business surely is experiencing.
You might say that a major business impact of the Internet is that it effectively represents a "deregulation" of just about any business it touches. It leads to all the functional marketplace changes a highly-regulated industry faces upon deregulation.
New competitors enter the market, profit margins fall, industry boundaries are changed, products and pricing strategies are altered as new pricing competition is introduced.
In fact, of the dozen or so changes a newly deregulated industry will face, competition from players outside the industry is commonplace. These days, the effective impact of the Internet is that it “deregulates” all industries, businesses and processes.
In the global telecom business, there have been complaints for years from telecom executives that third party app providers build businesses on the back of telco-provided access services, but that the access providers do not share in the revenue created.
In a potentially new development, some application providers might be taking a similar view, sensing that they create huge value for telcos, but do not participate in the access revenue stream, for example.
Strand Consult now speculates on whether Facebook, for example, is willing to look beyond advertising as a source of revenue, and whether Facebook would become a mobile virtual network operator, as a way to create a new revenue stream, as well as recapture some of the value it believes it is creating in the ecosystem.
As some have speculated about the value of Facebook creating its own branded smart phone, Strand Consult now speculates about the value of Facebook becoming a service provider.
Becoming an “MVNO is a logical step for Facebook the world’s largest communication platform,” Strand Consult analysts argue.
One billion users already consider Facebook as their de facto telephone book for friends and family and use the platform for communicating by SMS, text, image and video, the firm argues.
Aside from its huge user base, Facebook has credit card credentials on file already for millions of its users, many of whom purchase premium games, driving one sixth of Facebook’s revenue.
How much could Facebook earn as an MVNO? Facebook currently earns annual revenue per user of $4. An MVNO can earn between $10 a month and $50 a month per customer with an operating margin between 20 percent and 25 percent.
The global telecom industry has over the last few decades been formally deregulated. But most industries eventually will discover the Internet has effectively deregulated their industries as well.
Deregulation has lead to needs for lower cost structures because competitors attack with lower prices. Typically, profit margins also drop, even when gross revenue does not.
Industry boundaries also tend to change, as new suppliers enter the market, as entities are allowed to compete in new geographies, serve new customers or provide products prohibited in the past.
As a result of revenue, profit margin and other competitive pressures, legacy market leaders are never completely happy with their share of ecosystem revenue in a business that either is contracting, or undergoing major restructuring, as the global telecom business surely is experiencing.
You might say that a major business impact of the Internet is that it effectively represents a "deregulation" of just about any business it touches. It leads to all the functional marketplace changes a highly-regulated industry faces upon deregulation.
New competitors enter the market, profit margins fall, industry boundaries are changed, products and pricing strategies are altered as new pricing competition is introduced.
In fact, of the dozen or so changes a newly deregulated industry will face, competition from players outside the industry is commonplace. These days, the effective impact of the Internet is that it “deregulates” all industries, businesses and processes.
In the global telecom business, there have been complaints for years from telecom executives that third party app providers build businesses on the back of telco-provided access services, but that the access providers do not share in the revenue created.
In a potentially new development, some application providers might be taking a similar view, sensing that they create huge value for telcos, but do not participate in the access revenue stream, for example.
Strand Consult now speculates on whether Facebook, for example, is willing to look beyond advertising as a source of revenue, and whether Facebook would become a mobile virtual network operator, as a way to create a new revenue stream, as well as recapture some of the value it believes it is creating in the ecosystem.
As some have speculated about the value of Facebook creating its own branded smart phone, Strand Consult now speculates about the value of Facebook becoming a service provider.
Becoming an “MVNO is a logical step for Facebook the world’s largest communication platform,” Strand Consult analysts argue.
One billion users already consider Facebook as their de facto telephone book for friends and family and use the platform for communicating by SMS, text, image and video, the firm argues.
Aside from its huge user base, Facebook has credit card credentials on file already for millions of its users, many of whom purchase premium games, driving one sixth of Facebook’s revenue.
How much could Facebook earn as an MVNO? Facebook currently earns annual revenue per user of $4. An MVNO can earn between $10 a month and $50 a month per customer with an operating margin between 20 percent and 25 percent.
The global telecom industry has over the last few decades been formally deregulated. But most industries eventually will discover the Internet has effectively deregulated their industries as well.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Wednesday, October 17, 2012
Sprint to Take Control of Clearwire
Sprint Nextel Corp.will gain control of Clearwire Corp. without an acquisition, Wall Street Journal reports. Apparently, Sprint will simply buy stakes held by selling shareholders Intel and Comcast. By doing so, Sprint which already owns a 48 percent stake, will gain control of Clearwire without having to acquire all of the company.
You might say that ends any immediate speculation about any potential Clearwire acquisition with a whimper, not a bang. The move will make sense for observers who assumed Softbank would want clear control of Clearwire as part of its purchase of 70 percent of Sprint.
You might say that ends any immediate speculation about any potential Clearwire acquisition with a whimper, not a bang. The move will make sense for observers who assumed Softbank would want clear control of Clearwire as part of its purchase of 70 percent of Sprint.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Retail Contactless Mobile Payments Volume $640 Million in 2012
Retail mobile payments using any form of contactless technology will total just $640 million in 2012, eMarketer estimates. That’s an increase of 283 percent over 2011, and eMarket predicts such payments will grow even 234 percent in 2013. By 2016, proximity mobile payments transaction value will hit $62.24 billion.
That adoption forecast assumes that, at least initially, most consumers will experiment with mobile payment for low-dollar purchases. A smaller segment of heavy users will habitually buy products such as coffee.
The significant jump in total and per-user spending over the forecast period will be driven by consumers adopting mobile payments for medium-priced purchases such as groceries, gas and fast-casual dining, eMarketer predicts.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
France may oppose SFR Transaction
The French government may oppose a sale of SFR to French cable operator Numbericable, telecoms minister Fleur Pellerin said.
"SFR is a sensitive and strategic company for France," Pellerin said, according to Reuters.
"We will do everything in our power to make sure this company does not end up in the hands of unscrupulous shareholders," he said.
Some might find the language a bit odd, but the transaction would not reduce the number of major players in the French market, for example. That might normally be expected to be an issue, if the proposed transaction reduced the number of leading mobile providers to three, for example. But that isn't the case.
Nor would it seem to be a problem if a leading cable company and mobile company were to combine. Many would call that a reasonable move in a highly-competitive market where the ability to sell multiple products to the same customer is an advantage.
Separately, the Financial Times says Vivendi also is in talks about a possible sale of GVT, its Brazilian fixed-line telephone company, and its stake in Maroc Telecom, Morocco’s biggest telecoms operator.
Vivendi’s directors have said asset sale proceeds would be used to pay down €14bn of net debt.
"SFR is a sensitive and strategic company for France," Pellerin said, according to Reuters.
"We will do everything in our power to make sure this company does not end up in the hands of unscrupulous shareholders," he said.
Some might find the language a bit odd, but the transaction would not reduce the number of major players in the French market, for example. That might normally be expected to be an issue, if the proposed transaction reduced the number of leading mobile providers to three, for example. But that isn't the case.
Nor would it seem to be a problem if a leading cable company and mobile company were to combine. Many would call that a reasonable move in a highly-competitive market where the ability to sell multiple products to the same customer is an advantage.
Separately, the Financial Times says Vivendi also is in talks about a possible sale of GVT, its Brazilian fixed-line telephone company, and its stake in Maroc Telecom, Morocco’s biggest telecoms operator.
Vivendi’s directors have said asset sale proceeds would be used to pay down €14bn of net debt.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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