Lens logoLens logo
December 22, 2009

Thought Leadership for the Wireless Industry
In This Issue
Ten Themes for 2010
The Great Disrupters
M-Eco/Fierce Live Webcast
Archived Version Available!

Crystal Ball Conference
April 7, 2010, Montreal
Speech on wireless

The Edge Conference
November 17, 2009
Panel on Mobile Advertising

Open Mobile Summit
Nov. 4-5, 2009
San Francisco
Operator fireside chat

Hello all,
As you would expect, the December Lens is a look ahead to 2010. In many respects, 2009 was a year where development occurred along many of the tracks that were laid in 2008. I believe that next year, we will see far more transformative and disruptive developments. See below for "Ten Themes for 2010".

Also, for those of you who missed last week's Webinar,  The Great Disrupters: Technologies That Will Alter The Wireless World, there's still an opportunity to view the full archived version.

Finally, I would like to take this opportunity to thank you for your continued support and business in 2009. We have had a remarkably good year, full of exciting projects and several new initiatives, such as the series of Mobile Dashboard webinars in partnership with Fierce Wireless. Please accept my best wishes for a healthy and fruitful 2010. 

- Mark
Send to a Colleague
Join Our Mailing List!
Ten Key Themes for 2010

In thinking about 2010, I believe 2009 will be viewed as an important transition year. By that, I mean there was nothing ground-breakingly new - it was in 2008 that we saw the introduction of the iPhone 3G, iTunes App Store, Kindle, netbook, and the first Android device. In many respects, 2009 was an outgrowth of these developments: more smartphones, e-readers, netbooks, and app stores, all leading to exponential data traffic growth. There was no further consolidation in the operator space, no major reduction in voice or data pricing, and despite a lot of posturing, no major changes yet from the new FCC. Except for the expected downtick in global handset sales, the industry more than held its own in an otherwise challenging economy.


But lest you interpret my view of 2009 as "boring", two recent developments signal where we're headed: First, was Cisco's $2.9 billion acquisition of Starent, which both reflects the growth trajectory for data and ensures that traditional Internet backbone players will play a greater role in the next stage of wireless networks. Second, was Google's $750 million acquisition of AdMob. This, when combined with the near daily news of some development related to Google's mobile initiatives (look at just last week alone!), shows how the balance of power in this industry is starting to shift.


Building on my column for Fierce Wireless last week, here are ten themes for 2010. These are areas I will be writing, speaking, and consulting a lot more about in the coming months.  


Take a seat, or print this one out for holiday reading - it's longer than usual.


1.            Urgency Around Network Capacity, Economics


We all know the stresses that data traffic growth is putting on wireless network capacity. Another developing issue is the profitability of services, where some devices are averaging 500 MB-1GB per month of usage. I believe this will lead to the following:


  • Robust capex spending. All of the major operators are in the midst of a 3G+ (HSPA+, etc) or 4G deployment, in a race to both keep up with current demand, capacity plan for the future, and reduce the cost per bit delivered.
  • Fast-track for more spectrum. This might be combined with some sort of "deal" on network neutrality.
  • New approaches to data pricing. We might see DSL-esque options (good-better-best), and some experimentation with usage-based pricing. I also think network consumption might be more reflected in content and app store pricing, in a similar way to how iTunes charges a premium for the "HD" version of TV shows and movies.
  • Innovation in infrastructure. There will be a greater diversity of lower cost backhaul solutions. You will also be hearing more about innovations in MIMO antenna configurations, which will deliver greater range and capacity out of current sites.


2.             WiFi, Femto Make a Comeback


Three years ago, WiFi was viewed as a threat to mobile operators' data aspirations. Now it's a lifeline. Expect nearly every smartphone to be equipped with WiFi, going forward. Mobile operators will develop more partnerships with WiFi providers, and WiFi "hotspots" will become a part of a carrier's data "offerings", with incentives to use WiFi networks, where available.


As for Femto, those who proclaim this market "dead" because not than many have been sold to date are viewing the market through its first iteration prism of "in-building coverage solution". I see the Femto market to be positioned more as a broad-based "residential network gateway" solution for the office and home, playing a critical role in adjudicating how content and traffic flows across various networks and devices. But note this is a longer term play: femtos are still a year or two away from seriously addressing this opportunity in a cost-effective manner.


3.            Year of Google


Here's a provocative statement: Google has accomplished more in wireless in the past year than Microsoft has in the past five years combined. It's hard to sum up what Google is doing in a neat paragraph, save to say that it is playing in nearly every key aspect of mobile: search, advertising, operating systems, apps marketplace, mobile-centric products/services, (location, commerce, video, voice, to name a few), and even devices. Google is re-defining the co-opetition model in wireless: working with operators and OEMs on some initiatives, and around them on others.


Two broad-based aspects of Google's strategy could start to have more far-reaching implications in 2010. One, is that despite its adherence to "open", it is also making more of a vertical integration play, with the rumored Google phone and deeper incursions than even Apple into the services stack. Second, it is one of the key players in a more "cloud-based" approach to mobile (see next point). I believe the capability of the Chrome OS will make or break the netbook market.


4.            Mobile and The Cloud


The evolution toward cloud-based services will be one of the transformative elements of our industry over the next three-to-five years. It has the potential to propel sales of a range of new devices, improve the economics of data, address power consumption, and reduce the complexity of our "multi-screen" world. But there's still lots to be sorted out, as far as mobile is concerned. For example, how will cloud-based services and apps work in "off-line" mode? And while Internet heavyweights such as Amazon will surely play a role, I believe cloud services represent an important strategic opportunity for the operators - after all, they own significant network, storage, billing, and customer information assets.


5.             Important Year for Mobile Advertising


Despite the lofty purchase price for AdMob, mobile remains a rounding error in most brands' ad budgets. I think 2010 is when it starts to get real. First, we are crossing important thresholds with respect to the installed base of smartphones and devices with good HTML rendering. We don't generally see pushback from customers presented with ads on devices with a good UI. I also think we're going to move toward more of a TV/Internet model for mobile advertising, with some aspect of free or reduced price content in return for willingness to view ads, and perhaps willingness to allow some information to be shared in order to deliver more targeted, contextually relevant ads. Also, expect one or two more acquisitions by big Internet players (Microsoft, Yahoo, AOL, Amazon) of the leading mobile ad network players (Quattro Wireless, Jumptap, Millenial).


6.             Lots of Activity in Imaging


We're entering the third phase of imaging in mobile. Phase One was the proliferation of camera phones. Phase Two was finding ways to more effectively get pictures and videos from phones onto photo share sites and social networking platforms. With good quality cameras and even video now on phones, there's huge potential to do more. Some areas to keep your eyes on:

  • Greater focus on image quality (and it's not just about megapixel count)

  • Improved video recording, quality, and file compression, as we see a morphing of the Flip and the phone.

  • Search, advertising, and commerce opportunities. Goggles, announced last week, is an important example. Images captured from camera phones will be used to deliver product information, targeted ads, and coupons. We're also in the early stage of bar code/QR code capture -  an area that has developed rapidly in Japan and South Korea but has lagged here.

7.            Operators Reach For Relevancy.


When is the last time there was a major operator go-to-market for a new "product" - a la mobile television, navigation, etc.? Most of their major launches are for new phones, price plans, and improved network capabilities. And even though operators are more than happy to collect $80-100 from smartphone subscribers, I believe they will get more aggressive and creative in 2010 about leveraging their assets in order to be more than a "pipe". Examples:


  • Leveraging - albeit cautiously - their vast customer data, to deliver an improved user experience, more contextualized information, and enable more targeted ads.
  • Thinking about how billing and customer care - currently cost centers - might become revenue opportunities.
  • Offering exclusive apps and content


8.            Mobile Becomes an Effective Transactions Tool


Good news and bad news story here. This holiday season was a tipping point, where we saw mobile phones being used much more extensively in transactions, including the popular Shop Savvy application, and a reasonably good phone-based commerce experience with retailers such as Amazon. Expect many more brands to roll out a "mobile shopping" capability next year. 


What remains stuck in low gear is a broader "mobile wallet" capability for contactless payments, which are huge in Japan. This is an ecosystem problem, not a technology problem. The relatively low hanging fruit app of using your phone to pay for public transportation, for example, requires cooperation among a lot of actors, or a major private or public sector champion, to make happen.


9.            Shifts in the Device World


I might get some pushback on this one - but I think netbooks will fail in their current incarnation. They are too underpowered and mobile broadband services remain expensive for mass market penetration. I'll be writing more about this in the coming months, but I only see netbooks appealing when cloud services are more developed and a major catalyst such as Google (with Chrome) is involved in creating a more end-to-end experience.


Another area of debate is the future of Microsoft in mobile. They are living on borrowed time, in my view, as Apple, Google, and Nokia pass them by. Yes, Windows Mobile 7 is due out in late 2010, but I think they need a more fundamental re-think of how they participate in an increasingly crowded field where their relevancy diminishes by the day. 


Apple will remain a powerhouse in devices, with a tablet product, more operator distribution, and more hooks to expand their ecosystem. RIM, which has (somewhat surprisingly) held its own, is looking vulnerable to me, particularly if enterprises start validating and supporting Apple and Android devices (a better than even chance, in my view).


10.            Business Model Innovation


The rather monolithic structure of wireless pricing will change in 2010. First, we will see many more options for the pricing of data services, in order to both expand the market (especially for mobile broadband) and address network performance and capacity concerns. Second, expect more diversity in the way content and apps for mobile are priced. On one end will be more ad-sponsored content, while on the other, we'll see efforts to price content that is highly consumptive of network resources at a premium.


There will also be tectonic shifts in the broader content universe, as the TV, PC, and other "screens" become more intertwined and we migrate to a model where consumers purchase content and own the rights to it over a multitude of devices (such as the iTunes model). Major media and entertainment companies are working hard on building the licensing and back office infrastructure for just such as reality, and mobile will be part of it.


In sum, 2009 was a year where development occurred along many of the tracks that were laid in 2008. I believe that in 2010, we will see far more transformative and disruptive developments.

The Great Disrupters: Technologies That Will Alter the Wireless World

Dec Fierce Event Logo

Did you miss it? A fully archived version - audio and all visuals - is available. Click here!

The Great Disrupters: Technologies That Will Alter the Wireless World
December 16 at 2pm ET                Presented in Partnership with Fierce Wireless

Behind the scenes are some exciting technologies that will have a disruptive effect on wireless as we know it. What might change the economics of data delivery? Create a fundamentally different user experience? Enable multiple devices to talk to each other? Solve our power management problems?  Join Mark Lowenstein and some of the industry's leading visionaries on December 16 for our next Mobile Dashboard planning event. This provocative discussion will focus on the Revolutionary, not just the Evolutionary.

Moderated by: Mark Lowenstein, Managing Director, Mobile Ecosystem. Leading industry consultant, former Verizon exec, and Fierce Wireless columnist

With the Participation of:
Jon Auerbach, General Partner, Charles River Ventures and Member, Core Working Group, 4G Venture Forum 
Dr. Henri Tirri, SVP, Head of Nokia Research Center, Nokia 
Alistair Fulton, Director, Strategy and New Product Incubation, Microsoft

Key areas of focus:
  • Network developments that might significantly alter the cost model
  • Coming attractions in chipset and device technology
  • Major changes in the user experience
  • "Unsexy" back office innovations that could transform the way wireless apps are offered and lead to true mobile commerce
Recent Opinion Columns