2010 Mobile Industry Predictions Survey

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2010 Mobile Industry Predictions Survey



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Mobile Industry Predictions 2010

First things first. From all of us at Chetan Sharma Consulting, we wish you and yours a very happy, healthy, and prosperous 2
010
. Thanks to all who
participated in our 2010 Mobile Predictions Annual Survey. We have found it is the best way to think about the trends coming
our

way. Before we
dive into the survey results, let’s do a quick wrap
-
up of the year that was. Well, since we just completed one heck of a mobile

decade, let’s do a
quick jog down the memory lane.

The Last Decade: 2000
-
2009

Each new decade brings its own consumer and technology trends. During the 2000s mobile cemented its place in the global socie
ty
fabric, the use of
mobility became addictive and pervasive, to be without mobile seemed a curse and innovation blossomed and took user expectati
ons

to new
heights.

From a pure statistical point of view, the global mobile subscription penetration grew from 12% in 2000 to approximately 68%
in
2009
-

phenomenal by
any measure. The overall revenues grew over 400%, the data revenue grew 32,600% and the total subscriptions grew 563%. NTT Do
CoM
o
paved the way with the imode launch in 1999 and they were the operator to emulate throughout the last decade, leading every s
ing
le year in
data revenues, in new application and service revenue sources, and in innovation and risk taking. They tried to export the su
cce
ss to other
regions with little reward but DoCoMo clearly led the industry in taking mobile devices where they have never gone before.

China and India were late to the party but during the second half of the decade caught up with the western world and eventual
ly
surpassed all nations
becoming number one and two nations by subscriptions respectively. In 2006, China Mobile became the most valuable operator pa
ssi
ng
Vodafone. Mobile devices went significant transformation as well. From the early Bluetooth, camera, and music phones to the i
Pho
nes, the
Storms, and the Androids, the industry was transformed by the introduction of Apple’s iPhone in 2007. While Bluetooth, sleek
des
igns, camera
phone defined the first half of the decade, the second half was all about the applications and the mobile web. While Nokia do
min
ated the entire
decade in terms of the sales and profits, having missed the touch revolution, it leaves the decade a bit battered and a bit b
ehi
nd playing catch
-
up
to the newcomers who profoundly disturbed the status quo.

Razr carried Motorola through 2006 when its global share peaked but was left to reinvent itself during the second half. It se
ems

to have redeemed itself
with the successful launch of Droid and upcoming Android devices. While many in the industry predicted RIM’s demise, the comp
any

has only
gotten stronger and is looking good for the 2010s. The emergence of Samsung and LG as strong players in the mobile ecosystem
was

also a big
story of the decade with Samsung increasing its share by 380% and LG by 575% becoming the number 2 and 3 players respectively
. W
hile
Microsoft’s Windows Mobile had an early start and the enterprise market share, it lost its way through several missteps and i
s o
n dialysis as we
enter the new decade. One shouldn’t count WM out though but there is a lot of work to be done before it can capture the imagi
nat
ion of the
ecosystem which has been sequestered away by iPhone and Android.

While many new application areas were introduced during 2000s, none was able to displace SMS as the leading app category by u
sag
e and revenues.
However, it’s relative share has started to come down especially in North America and Western Europe. As data usage grew, so
did

the data
traffic bringing many data networks to their knees. We expect the data traffic consumption to only accelerate. Many people ar
e u
nderestimating
the growth rates (as they did previously) and the strain the increase in consumption will put on the unprepared networks. Pro
jec
tor phones will
take media consumption to a new level. Data management is going to be big business in the 2010s. Overall, the mobile industr
y b
ecame a
trillion dollar industry in 2008 and the data revenues are increasing in almost all regions. Voice is being commoditized at f
ast

pace and that has
put the traditional economics and ecosystem wealth distribution in topsy
-
turvy.


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Mobile Industry Predictions 2010

The US market also experienced tremendous growth with mobile data service revenues climbing 21,327% and becoming a mainstay i
n t
he
mobile economy. In 2008 it crossed Japan as the most valuable mobile data market. US was late in adopting SMS but caught fire

on
ce
American Idol started using it and even played a good role in the 2008 Presidential election in showcasing the power of mobil
e.
Verizon
started the decade being the number one operator and after trading places with Cingular and ATT grabbed the title back in 200
9 (
after the
Alltel acquisition) to become the most dominant carrier in North America. Many smaller players competed by being innovative w
ith

Cincinnati Bell launching the fist UMA device, Sprint the first mobile eReader, and TMO launched the hotspot business which h
as
now
become an essential component of an operator strategy going forward.

Mobile is also replacing landline at a much faster pace than expected and within the first half of the new decade, we will ha
ve
majority of the
users using mobile vs. landline. Just like the last decade, this one starts with a new standard deployment of LTE that will k
eep

operators
and vendors busy throughout the decade. However, a lot of the developing markets will still be deploying 3G during the first
hal
f of the
decade.

Infrastructure providers suffered the most in the decade bookended by the two recessions. Consolidation of giants (Alcatel Lu
cen
t, Nokia
Siemens), bankruptcies of the famous (Nortel), and uprising of the upstarts (Huawei) pretty much defined the decade for the s
egm
ent.
Ericsson and Huawei enter the new decade from a strong position and looking to dominate the global markets.

The last decade was also marked by some prominent IP battles such as RIM vs. NTP, Qualcomm vs. Broadcom, Sony Ericsson vs. Sa
msu
ng,
Upaid vs. Satyam etc. (disclaimer: we worked on some of these cases and testified as an expert)


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Mobile Industry Predictions 2010

Here is our “subjective” list of movers and shakers of the last decade


2000
-
2009

2010
-
2019

Operator of the Decade

NTT DoCoMo

DCM led the way in almost all new category of
apps and services. Its data service revenue was
highest in each of the last 10 years

DCM will continue to lead along with KDDI and SKT.
However, it might be the carriers with tremendous
scale who will have the calling cards in the new
decade. Watch for China Mobile, Vodafone/Verizon,
Telefonica, Orange, Bharti, Unicom, Singtel

OEM of the Decade

Nokia

Nokia dominated in sales and revenues in each of
the 10 years and while the last couple of years
took some shine off its glorious past, the
company nevertheless came out ahead

RIM, Apple,
Nokia, Samsung

Smartphone OEM of the Decade

Apple

Smartphones as we know them were introduced
by RIM but Apple defined the category and the
subsequent ecosystem

This space will be very competitive with Apple still the
gold standard to beat

Infrastructure Provider of the Decade

Ericsson

Its prime rivals struggled to stay afloat while
Ericsson grabbed most of the revenues from
infrastructure contracts and is very well
positioned for the next decade

Ericsson is joined by Huawei as the two top
infrastructure provider with Huawei giving tough
competition for LTE contracts. ZTE and other Chinese
infrastructure providers will also replace some of the
incumbents

Nation that led in mobile data

Japan

This is a no brainer. Japan led with Korea a close
second. Finland, UK also impressed

US, China, and India are well positioned to make an
impression but most likely during the second half.
Japan will still be a major player

Device of the decade

iPhone followed by
Razr

iPhone impressed with form and function while
Razr

with its global sales making it a top selling
device of all times

The field might get more crowded as all OEMs
focusing on the smartphone category. However,
OEMs who also focus on the 90% of the market w/o
smartphones might win the top prize

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Mobile Industry Predictions 2010

The year 2009

Apple continued to dominate the headlines for the third straight year
-

whether it was the launch of 3GS or the upcoming introdu
ction of the
fabled tablet. Google too kept the ecosystem active. It has executed on its mobile strategy with brilliant acumen though caus
ing

significant
consternation amongst its partners who it needs to be successful. It has been often misunderstood by competitors, regulators,

an
d
partners. Often, they have focused on Google’s tactics vs. its strategy. Look for these two players to be very aggressive as
the
y try to fight
for the mantle and the mindshare. While Nokia leads the OEM space by a good distance, its momentum in the smartphone space le
ft
a lot
of question marks. Motorola made a credible comeback with
Cliq

and Droid. Samsung and LG continued to innovate and expanded on
their share of shipments and revenues.

India outpaced China in net
-
adds and crossed 500M though it is still quite behind China’s 750M. The M&A and the consolidation pr
ocess
became active in Asia with several of the big regional operators looking to flex muscles in the international markets. After
sev
eral delays,
China started deploying 3G while India again fumbled and postponed its 3G auction.

US mobile data market continued its pace in 2009 with each of the four quarters exceeding $10B in data service revenues. The
gap

between
the top two operators and the rest grew to be the biggest in the decade and the industry weathered the recession with ease. T
her
e was a
clear shift towards prepaid especially for Sprint, T
-
Mobile, and the tier 2/3 operators.

2009 was also defined by significant activity on the application front. With Facebook eclipsing 100M subscribers and Appstore

ex
ceeding 2.5B
downloads, sky is the limit. The year also saw an unprecedented growth in mobile data consumption. As we had predicted, for s
ome

of
the networks, the growth proved to be a double
-
edged sword. Many in the industry are banking on LTE to help relieve the pain but

will be
surprised that depending solely on the upgrade strategy will not be enough. Declaring spectrum as a looming crisis, FCC also
sta
rted
tinkering with the mobile industry and the broadband plan.

Japan exceeded 90% in 3G penetration while US subscriptions ventured into the 90% territory. Most of western Europe is way pa
st
130%.

All in all, a terrific year considering that we went through one of the worst recessions in a generation. As we bid goodbye t
o t
he last decade,
Nexus One and
iTablet

only serve to whet our appetite of what’s to come.

On a personal note, we started our consulting practice this last decade as we were coming out of the bubble recession and hav
e b
een fortunate
to work with some of the brightest brains and companies in the global ecosystem. We also had a chance to work on some key ini
tia
tives
that impacted the ecosystem in profound ways. Many thanks to our clients, colleagues, friends, and readers. We will be involv
ed
with
many new initiatives over the next decade and are looking forward to the conversations through the research notes, books, spe
ech
es,
panels, whitepapers, blog posts, facebook and twitter feeds, and more.

Thanks and Happy New Year. May the upcoming decade leave you happier, healthier, and more successful than the previous one.

As we eluded to earlier, 2010 will be a pretty eventful year from several perspectives: business models, user experience and
exp
ectations, ecosystem
posturing, disruption, and friction. How are things going to shape up? What will be hot and what will fade into oblivion? How

wi
ll competition shape
up the new sub
-
segments?




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Mobile Industry Predictions 2010

We put some of the questions to our colleagues in the industry.

We were able to glean some valuable insights from their choices
and comments. This survey is
different from some of the others in the sense that it includes industry movers and shakers participation. Executives and ins
ide
rs (n=150) from leading
mobile companies across the value chain and around the world opined to help us see what 2010 might bring.

11 names were randomly drawn for 3 special prizes. The winners are:

1.
Claire Boonstra, Cofounder, Layar
-

INQMobile 3G Chat device

2.
Michael Libes, CTO, GroundTruth
-

Open Mobile Book

3.
Henri Moissinac, Head of Mobile, Facebook
-

Open Mobile Book

4.
Subba Rao, CEO, TataDoCoMo
-

Open Mobile Book

5.
Saumil Gandhi, Product Manager, Microsoft
-

Open Mobile Book

6.
Sarah Reedy, Senior Editor, Connected Planet
-

Open Mobile Book

7.
Mike Vanderwoude, VP & GM, Cincinnati Bell Wireless
-

2010 Mobile Almanac

8.
Pinney Colton, VP, GfK
-

2010 Mobile Almanac

9.
Tim Chang, Principal, Norwest Ventures
-

2010 Mobile Almanac

10.
Laura Marriott, President, LM Ventures
-

2010 Mobile Almanac

11.
Asha Vellaikal, Director, Orange
-

2010 Mobile Almanac


Thanks to INQMobile and Ajit Jaokar for contributing the prize gifts.

Despite conventional wisdom, what will not happen in 2010?

There were many. Sampling
-

Verizon iPhone, Microsoft Phone, Sprint will not be bought, Femtocells won’t gain traction, RCS will

not happen, Google will not
enter handset market directly, iPhone won’t lose steam, Android won’t bring coherence, NFC won’t take off, WiMAX won’t disapp
ear
, Nokia won’t bounce
back, Palm won’t die, “Year of Mobile” noise won’t subside, carriers won’t be delegated as dumb
-
pipes. It is hard to cover the m
obile industry in 20
questions. As pointed out by our panelists, there are a number of other issues and opportunities that will help shape our eco
sys
tem
-

monetization of
social networks, augmented reality, the fight for mobile advertising dollars, continued impact of globalization, security and

pr
ivacy, NFC, IMS, VoIP,
enterprise apps beyond email, battery improvements, new interaction modalities, health risks of RF radiation, Mobile 3.0, LTE
, s
ingle purpose devices, 3G
in India, Bada, app vs web, developer turmoil, featurephones, smart grids, M2M, Chrome, etc. However, be rest assured, we wil
l b
e tracking these and
much more throughout the year and sharing them through various channels.

Thanks again to everyone who contributed. We will be calling on you again next year. We are clearly living in "interesting ti
mes
" with never a dull moment in our
dynamic industry. It has been a terrific year for us here at Chetan Sharma Consulting and we are looking forward to the next
dec
ade and seeing many of
you along the way. We hope you enjoyed gaining from the collective wisdom. Your feedback is always welcome.

Be well, Do Cool Work, Stay in touch.

Thanks.With warm wishes,

Chetan Sharma

Disclaimer: Some of the companies mentioned in this note are our

clients
.


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MOBILE INDUSTRY: THE LAST
DECADE

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Global Mobile Industry: The Last Decade

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US Mobile Industry: The Last Decade

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Mobile Handsets: The Last Decade

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2010 MOBILE INDUSTRY
PREDICTIONS SURVEY

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Composition of Respondents

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Biggest Stories of 2010

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Impact of Recession

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Who will be the most “Open”?

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Android and iPhone

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Tiered Pricing

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US Prepaid

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Mobile Advertising

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FCC Impact

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Comeback Kid of 2010

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Google Phone

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Mobile Data Consumption

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Carrier
AppStores

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Mobile Cloud Computing

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Non
-
Mobile
-
Phone devices in 2010

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Breakthrough category for 2010

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LTE vs.
WiMAX

for 2010

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Netbooks

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Mobile Standards

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Mobile Payments

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