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.
