Mobile Solutions CI

the role of mobile operators in the retail experience remains dominant

This post from tomi ahonen contains a basic but vital point which is still poorly understood in the mobile industry. The retail experience for handsets, which bring to life all web 2.0 experiences, remains very poor and dominated by mobile operators.

 

I have written many articles on this blog to explain the retail side of the mobile handset business. The mobile phone business is totally different from other high tech and consumer industries, like TVs, PCs, videogaming consoles, DVD players, digital cameras, MP3 players etc - where in those industries if you make a good product and sell it at a competitive price, you tend to have market performance commensurate with the 'merits' of your device and its price. That is not true in mobile phones. In this industry, the success of any handset brand is primarily controlled by the carriers/operators of the world. Look at the iPhone. Early on it sold only on one network in many markets such as AT&T in the USA, O2 in Britain, Softbank in Japan etc. When the iPhone expanded to more carriers, it achieved far bigger sales. And look at the Microsoft Kin youth phones. Even as these were highly praised and were expected big sellers, the sudden collapse of carrier support resulted in the phones being discontinued - in only six weeks. This even though Microsoft is the global IT giant who has thousands of resellers to its brand. When the carriers refused the Kin, no matter how 'great' Microsoft was, the handset was doomed.

In mobile phones, the success of any single phone is most determined by the support of the carriers/operators and their stores. In mobile phones, different from any other major home electronics or consumer high tech, there is a gatekeeper that decides who wins and who loses. It is the reseller channel, mostly controlled by the carriers/operators.

via communities-dominate.blogs.com

 

Which carrier hit, got hit during Q2 - RCR Wireless News

Verizon Wireless, which not only posted the strongest growth across the domestic market, but continues to be the prime destination for high-valued contract customers. With iPhone on board and expanding LTE-device lineup, the industry's postpaid space looks set to be a monopoly.

via www.rcrwireless.com

Wrapup of the domestic US carrier space. In analyst reports this has been described as the forming of a "barbel" in the wireless market where AT&T and VZW dominate post-paid, subsidy-based segments due to the marketing and promotional scale required (as well as leverage with suppliers). Meanwhile the middle market is migrating rapidly downward into lower tiers of subsdidy-based prepaid, hurting what was the bottom of the market and is now a "new middle", (see Leap and MetroPCS results) leaving a gap in the middle where TMO and Sprint feel the pain.

Average U.S. Smartphone Data Usage Up 89% as Cost per MB Goes Down 46% | Nielsen Wire

In just the last 12 months, the amount of data the average smartphone user consumes per month has grown by 89 percent from 230 Megabytes (MB) in Q1 2010 to 435 MB in Q1 2011. A look at the distribution of data consumption is even more shocking: data usage for the top 10 percent of smartphone users (90^th percentile) is up 109 percent while the top 1 percent (99^th percentile) has grown their usage by an astonishing 155 percent from 1.8GB in Q1 2010 to over 4.6GB in Q1 2011

via blog.nielsen.com

Here is the demand side pressure driving operator consolidation. More users (smartphones rapidly heading to 50% of mobile subscribers) using more data for less money.

The CapEx needs to sustain this don't square up against the consumer ability and willingness to pay for mobile data (with the exception of the top end of the post-paid segments).

The pressure this creates on the industry has resulted in over-the-top content platforms--Apple, Google, Facebook, Amazon--harvesting the bulk of the profit. However their services are accelerating the crunch on operators, which willl in turn force more consolidation, which will then create disruption as alternative business models emerge. 

For example, the post-paid model of subscriber acquisition cost funding OEM price promotion in return for 2-year commitments will continue to migrate up market. Larger opportunities will emerge from prepaid and alternative pricing models similar to Kindle. 

The next three years will be interesting. I expect we will see massive change from areas few expect.

Blogs | Wireless Week

Leap/Cricket, along with MetroPCS, often have been thought of as “bottom feeders,” as Bernstein Research analysts said in a research note released today,but they’re emerging as the new middle market. Nearly all of the industry’s subscriber growth is now coming from the prepaid segment. Prepaid and reseller net adds accounted for an all-time high of 91 percent of the industry’s total net additions in the first quarter, according to Bernstein. In fact, the analysts figure that excluding “connected devices” – laptop cards, MiFi devices and others – it’s likely that the postpaid industry actually lost traditional subscribers in Q1 for the first time ever.

 

At the very bottom, the low-end prepaid subscribers are trading down to USF-assisted SafeLink (TracFone) and Assurance Wireless (Sprint) plans for low-income people who qualify, Bernstein says. At the high end are AT&T and Verizon Wireless, with Sprint (postpaid) and T-Mobile USA getting caught in the middle.

via www.wirelessweek.com

Here is the US wireless industry in a nutshell...

When you look at the structure of the value added content service deal mentioned (Muve) in that context it signals a huge opportunity for someone who recognizes Apple's (and Google's) dependency on consumers basing their activity on a PC and using mobile devices secondarily. Increasingly the middle and bottom thirds of the US market look like EMEA and APAC regions where internet growth happens off PC.

Intel CEO on Android chaos, Apple control | Nanotech - The Circuits Blog - CNET News

Intel CEO Paul Otellini sees "chaos" in the Android universe versus control in Apple's world, but he believes Google will gravitate to a more controlled model.

via news.cnet.com

Intel is experiencing the harsh realities of disruptive market growth. I am skeptical that their revised chipset roadmap for Atom is enough to break them into a meaningful player in the smartphone and tablet space (the sub-20nm story is great, but how will they transform top to bottom to deliver power management, graphics management, etc?)

The key players to watch in this space are the ones mastering relationships at the GPL layers through participation in open source communities. Those partnerships are driving expertise which will be hard to otherwise replicate.

TMO fastest network at CES -- real world speed tests from Vegas

Here is a blatant push for the home team from an RCR Wireless article:

http://www.rcrwireless.com/article/20110112/CARRIERS/110119980/3g-4g-networks-tested-by-ces-crowds

"The recently completed Consumer Electronics Show in Las Vegas provided a unique proving ground for wireless networks. With tens of thousands of the geekiest of the geeks roaming around a couple of square miles, chances are slim that there is ever a denser concentration of mobile devices fighting for airwaves than at this event.

Overall, RootMetrics found that T-Mobile USA...provided the fastest average data speeds... Using a Google Nexus One, RootMetrics recorded an average download speed of nearly 2.5 megabits per second and 730 kilobits per second on the uplink over T-Mobile USA’s HSPA-based 3G network. 

AT&T Mobility managed to score the second fastest download speeds with RootMetrics measuring an average speed of 570 kbps also using a Nexus One device. The carrier’s download speeds just surpassed the 545 kbps recorded on Verizon Wireless’ 3G network using a Motorola Droid X device. Sprint Nextel’s 3G network posted by far the slowest average download speed of 153 kbps using an HTC Evo 4G device with the “4G” mode disabled."

Overall the tests showed the wireless industry overall has a lot of ground to cover in speed, reliability, and coverage. Much work to do!!

 

CES 2011 starts early with processor, tablet, android news

CES this year is making me reflect upon the evolution of the event over the past few years. As the recession has turned into the new now the event has become more and more of a hype fest. It started out as a consumer-focused trade show for electronics vendors. It has turned into a technology fetish event which is a perfect parallel world to the other big trade show which happens, non-accidentally, also during this week.

The LTE and WiMAX announcements are rolling out today. Once the show gets going there will be a tablet launch every hour to keep track of time. 3D announcement will mark the half-hours.

Another announcement thread catching my eye is from the chipset vendors. Freescale has a release out this morning saying they have commercial-ready quad core available: "The dual-core and quad-core versions of i.MX6 also include three separate graphics cores - a 3D and 2D core and a bit-blip engine to offload the 3D graphics core for gaming. They can both handle simultaneous playback and recording of 1080p stereoscopic 3D video, and complex augmented reality apps, which can dedicate one core to location calculations, one to processing live video and a third to overlaying the tactical information on the live video feed". 

Wow. Get ready for more sloppy programming as OEMs race to take advantage of the spec war. I've yet to see the manufacturer taking the time to get good--or even better than the crowd at xda developers--at making wise choices on optimizing read/write blocks, write software for multi-threading/multi-core, etc. Raw computing needs, mostly encoding and rendering, will be the only aspects to really benefit but overall performance as perceived by consumers will as likely suffer as benefit. 

Each of the main topic areas of CES make me think this is not the consumer electronics show, it is the vendors electronics show where a huge echo chamber attempts to generate enough frantic energy to convince actual consumers they want products which have no meaningful benefit to them.

Not sure how this post turned so cranky. I guess I should go back home and have some excellent coffee until my optimism returns.

Nielsen claims American teens average 3,339 texts a month

Nielsen is reporting that texting has become the number one reason to buy a cell phone. They also show rising usage on both sms, browsing, and app downloading.

I like that this comes from actual user data:

"Using recent data from monthly cell phone bills of more than 60,000 mobile subscribers as well as survey data from over 3,000 teens, The Nielsen Company analyzed mobile usage data among teens in the United States for the second quarter of 2010 (April 2010 – June 2010). No one texts more than teens (age 13-17), especially teen females, who send and receive an average of 4,050 texts per month. Teen males also outpace other male age groups, sending and receiving an average of 2,539 texts. Young adults (age 18-24) come in a distant second, exchanging 1,630 texts per month (a comparatively meager three texts per hour)."

One thing not mentioned here is what percentage of this traffic and usage is directly user generated and what is sms serving as transport protocol--updates, alerts, notifications, etc from Twitter, Facebook, ESPN, etc. That would be very interesting to pull apart.

Because the most interesting thing about any of the non-voice use cases of a phone, particularly a smartphone, is that they are not substitute activities for other data activities. They seem to be cannibalizing voice somewhat but most of this would seem to come from PC activities such as email or media consumption from newspapers and TV.

Is there a Deloitte study showing apps don't drive smartphone sales?

In a typically internet experience, the smartphone news of today is dominated by links to a cnet story about a Deloitte study which "surveyed 1,960 people between the ages of 14 and 75 in June and July, 58 percent of consumers say a smartphone's size, quality, keyboard style, and price factor into their smartphone buying decisions. Just 18 percent of respondents said that mobile applications influence which smartphone they eventually decide to buy."

Begin lengthy commentary...

Except--there is no such study on the Deloitte website. Or listed in Deloitte press releases. And every mention of this study I can find eventually links back to the same CNet story. So what is this study and how do I get it?

Because I question the conclusion. I wonder what relationship the 20% -ish of people who supposedly care about mobile applications bear to the 25% -ish of consumers who HAVE a smartphone. The article gives some commentary about application uptake within the smartphone base but without being able to see the study (or more precisely it's data) it is hard to know what is actually claimed.

Tech bloggers report on...tech bloggers?

Amazingly, I am not making this up. PaidContent is hosting a media event in New York which features tech bloggers and writers talking about tech bloggers and writers. The echo chamber has reached new levels of self reference which were previously only obtainable in Monty Python skits and South Park.

http://paidcontent.org/event/the-state-of-gadget-media/

Coming right after the latest iPhone and iPad rumors this is a particularly blatant reminder of how little critical thinking emerges from the constant churn of press releases posing as "news".

And now, back to obsessing about feature specifications so we can all cross-post...