Distilling market noise into market sense

VisionMobile is the leading research company in the app economy and mobile business models. Our research and workshops help clients compete and win in their rapidly changing industries.

2010 in review: Under-the-radar trends at Mobile World Congress

[Following a week of frantic announcements and marketing hype at MWC 2010, VisionMobile's Research Director, Andreas Constantinou looks at what really matters - the under-the-radar trends that will make the biggest impact in the next two years]


The annual Mobile World Congress, besides a circus frenzy of 49,000 people has also traditionally been a barometer of mobile industry trends. This year we look at the under-the-radar trends that may have gone unnoticed, but will make a major impact during 2010-11.

1. Building developer bridges
If there was a theme to this year’s Mobile World Congress it was Developers. This year’s App Planet show-in-a-show gathered 20,000 visitors, making the stands of LTE vendors and the CBoss showgirls look pale in comparison.

Imagine that. After years and years of efforts in ‘pushing’ the next-gen killer technology (on-device portals, Mobile TV, widgets, ..), the mobile industry is finally seeking inspiration beyond its own confines; at the software developers that will generate even more ‘apps for that’ and drive innovation that will actually pay for the bandwidth investments.

The race is on to grab the best mobile developers – and the mobile industry is spending big money on it. This year’s sponsors of mobile developer contests and events are not just platform providers or handset OEMs. Just look at the some of the sponsors of the WIP Jam developer event at MWC: Qualcomm, Alcatel Lucent, Ericsson, NAVTEQ, O2 Litmus, Oracle.

Developer mindshare is expensive as developers have to be attracted away from other platforms which they have invested in; and as such we would argue that the average DAC (developer acquisition cost) is much higher than the average SAC (subscriber acquisition cost). Thankfully there are plenty of marketing budgets to throw into the challenge. Palm is spending $1 million to build its own developer community in a dire effort to win back its once-thriving community of mobile developers.

It’s ironic given that it only took the mobile industry 20 years to learn what the software industry understood since the early 1990s; that the smartest people work for someone else, but they will gladly work for your platform if you give them the right tools and audience. And it’s most appropriate that this realisation is happening right now, as the two industries are coming together in the post-iPhone era.

One of the big announcements at this year’s MWC was the Wholesale Application Community (WAC), the new operator collaborative effort at connecting to developers. WAC is born out of the merge of two initiatives: OMTP’s BONDI (device API specs for securely accessing user information on the device) and the Joint Innovation Lab, JIL (which besides the hype has had delivered only a widget spec). WAC is an intent of operator collaboration, but one which yet needs to decide what it will be delivering.

The GSMA App Planet, WIP Jam, WAC and many other initiatives are trying to capitalise on one of the hottest, yet perhaps understated trends of 2010: building commercial bridges or matchmaking platforms between software developers and the mobile industry. Next question: what’s your platform’s DAC (developer acquisition cost)?

[shameless plug: at VisionMobile, we ‘re running the biggest mobile developer survey to date, spanning 400+ developers, 8 platforms and 35+ data points across the entire developer journey. Best of all, the results will be freely published thanks to the sponsorship by O2 Litmus]

2. Quantum leap in mobile devices
Industry pundits have been overoptimistic about the dominance of smartphones, time and time again.; but contrary to predictions, the smartphone market share has remained at circa 15-17% of sales as phone manufacturers have remained risk averse; Instead of porting high-cost, high-risk operating systems like Symbian and Windows Mobile on mass market phones, OEMs have preferred to patch their legacy low-risk RTOS platforms with high-end features (read touchscreen, widgets and the like) – see earlier analysis here.

Yet the mobile software map is about to change rather abruptly; not because of Android, but as chipset vendors make the leap to sub-40nm manufacturing. Chip cost plays a major role in handset BOM (bill of materials) and that cost is directly proportional to the surface area of the silicon (excluding royalty payments). With the move to sub-40 nm manufacturing processes, you can fit a GPU (graphical processing unit) and even ARM Cortex architectures within the same die size. This means that the smartphone BOM will reduce from $200 to $100 in only 2 years, based on our sources at chipset vendors – and implies that MeeGo, Symbian, Windows Mobile and Android can penetrate into a far large addressable market than was possible before.

Adobe is banking on this very trend, planning (hoping?) that Flash penetration will reach 50% of smartphones by 2010, or circa 150M devices sold per year. Similarly, Nokia sees revenue contributions from S40 handsets dwindle from around 55% in 2009 to 35% in 2011, replaced by MeeGo (circa 10%) and Symbian (circa 55%) – see slide from Nokia’s Industry Analyst event. This also goes to show Nokia’s continuing investment in Symbian, at a time when the future of the Symbian Foundation is shady.

Virtualisation technology is further accelerating the BOM reduction, by allowing the likes of Android and Symbian OSes to sit on the same CPU as the modem stack. OK Labs introduced off-the-shelf reference designs for virtualised Android and Symbian earler in 2009, while at MWC 2010 Virtualogix announced similar deals with ST Ericsson and Infineon. The third (and last!) virtualisation vendor, VMWare (who acquired Trango), is yet to make a similar move.

Last but not least, we are seeing new attempts at re-architecting low-cost smartphone software. Qualcomm is making a comeback with its BREW MP software positioning this as a feature-phone operating system and getting major commitments by AT&T. Kvaleberg (a little-known Norwegian engineering company) has productised its 10-years of feature phone integration know-how into Mimiria, a feature phone OS with a clean-room UI architecture that makes variant creation a swift job requiring only 2-3 engineers to customise. Myriad has announced an accelerated Dalvik implementation to speed up Android apps up to 3x, allowing those to run more comfortably in mass market designs.

3. Analytics everywhere
Another under-the-radar trend at MWC 2010 was analytics, which was making inroads into the feature set of products across the spectrum – from SIM cards and devices to network infrastructure solutions.

Application analytics is the only visible tip of of the iceberg for now, with analytics services available from Adobe, Apprupt, Bango, Distimo, Flurry (merged with PinchMedia), Localytics, Medialets, Mobclix and Motally. There is also plenty of innovation to be had here, with a startup (still in stealth mode) delivering design-time analytics on the type of applications and their use cases. Or another startup which is delivering personal TV program management, and monetising (among others) on the analytics on what TV programs users are watching, searching and sharing.

Moreover, analytics is slowly penetrating into operator networks for delivering smarter campaign management, subscriber analysis or network performance. There is a long list of vendor solutions here from Agilent, Airsage, Aito, CarrierIQ, Rewss, Umber Systems, Velocentm Wadaro and xTract among others. One related under-the-radar announcement was that from SIM manufacturer Giesecke & Devrient (G&D) who is launching a product for measuring network quality on the handset.

Taking analytic to the next level, the GSMA and comScore recently launched the Mobile Media Metrics product. This is the first census-level analytics product for measuring ad consumption and performance, starting with the UK market, which follows the lucrative business model of TV metrics.

Analytics is indeed the most underhyped trend, whose magnitude the industry will only realise in 5-10 years from now.

4. Mobile identity in the cloud
Cloud storage for personal data is ubiquitous on the Internet; Google Buzz, Facebook and Dropbox are perhaps the epitomy of this trend. The mobile industry has traditionally fallen behind, but is rapidly catching up in 2009-10 with the cloud-stored Windows Mobile UI, the social networking connectivity layer on the idle screen as seen in Microsoft’s One App, the socially-connected handsets from INQ Mobile, HTC and Motorola (Motoblur), and the 10+ solution vendors who offer addressbook syncing solutions (Colibria, Critical Path, Funambol, FusionOne, Gemalto, Miyowa, Newbay and many more).

We used to think of user data as migrating from the SIM card (the operator stronghold) to the handset (the OEM territory). Now the data is once again migrating away from the handset to the cloud, the home-turf of Internet players.

This is the next battlefield, in the landgrab to define the interfaces that determine access to our mobile identity. There are two camps competing here; the Internet players who have defined user data access standards (Google, Facebook and Twitter), versus the players who have defined mobile data access standards to date (network operators – see Vodafone 360 and handset OEMs – see Nokia Ovi).

This is one of the important battles that will determine who can reap the most profits out of user information by controlling the interfaces that connect them to the outside world (for background see Clayton Christensen’s thesis on the relationship between interfaces and profits). And it’s also what network operators should be rushing to standardise right now, in one of the last battles that will determine their smart-pipe vs bit-pipe future.

Comments welcome as always,

- Andreas

  • http://blog.miyowa.com/ Pascal Lorne

    Thanks Andreas for mentioning Miyowa!

  • http://www.openwave.com Chris Goswami

    Thanks for a very interesting article Andreas. Just 2 quick comments:

    1) On the Mobile Identity, a realted, important consumer issue is Single Sign On – users are increasingly suffering from “password fatigue” and we have recently seen 3 or 4 RFXs that relate to providing a SSO solution – providing access to a whole suite of applications with a single login. There are a few solutions out there but mainly relating to fixed web applications. It is a distinct yet related issue to the Network Offload paradigm which operators are also looking into as one way of combating the Mobile Data Tsunami.

    2) On the Quantum Leap item, It’s the definition of a SmartPhone the industry may need to review – originally open OS was the key but now it seems to be more about having a large touch screen and the ability to download from an App Store. As you rightoy say the industry is making its feature phones smarter rather than substantially increasing the penetration of SmartPhones (although they are enjoying an increased penetration in many markets) – thus blurring the SP/FP distinction.

    Cheers

    Chris Goswami (Openwave Systems)

  • http://visionmobile.com/blog Andreas Constantinou

    Hi Chris,

    Mobile Identity: what's interesting is also the demand in user profiling solutions – ie that in addition to the single-sign-on provide an aggregation of user-related information across the network elements (HLR, CDRs, network edge proxies, etc) to provide a rich, consistent user profile.

    Smartphone definitions: yes, it's completely irrelevant as a term and is in fact being stretched to suit the messaging each player wants to convey. The only meaningful metric now is the transfer (sale) price from the OEMs to the channel/operator, but that is far more difficult to objectively and ubiquitously track.

    Cheers,

    Andreas

VISIONMOBILE BLOG

Distilling market noise into market sense

The 3 key Apple Watch features that nobody talks about. Yet.

apple-watch-09

If Apple wants to create a new, large product category out of smart watches, it must empower developers to discover…

Continue reading ...

Uber API launch validates the “Gurley scenario”

Uber API

[With the release of Uber’s API, their ploy to achieve world domination has just gotten a lot more probable. Uber…

Continue reading ...

Will developers stop playing the app lottery?

illu

[How long will developers be loyal to ecosystems that seemingly set them up for failure? The odds are clearly stacked…

Continue reading ...

VISIONMOBILE STRATEGY

Workshops & research on Developer-centric Business Models

Apps for connected cars? Your mileage may vary

Automotive-report_illustration_web

Car makers are now entering unfamiliar territory as some of their latest product innovations have nothing to do with driving.…

Continue reading ...

M2M Ecosystem Recipe

M2M-Ecosystem

M2M is rapidly approaching a tipping point. Lower technological barriers pave the way for new entrants in the market. As…

Continue reading ...

Mobile Innovation Economics

profit recipe

Mobile Innovation Economics is a strategy workshop focused on business models and asymmetric competition of mobile ecosystems. Mobile ecosystems are…

Continue reading ...

VISIONMOBILE RESEARCH

Research on the app economy and developer ecosystems

App Profits and Costs

AppProfits

This research report examines the critical success factors for a profitable app, and how business and technology choices, such as…

Continue reading ...

Developer Segmentation 2013

Developer Segmentation 2013

The Developer Segmentation 2013 report delivers a needs-based segmentation model that actually works, with extensive profiling of the eight principle…

Continue reading ...

App Economy Forecasts 2013-2016

App Economy Forecasts

This report investigates the relative sizes of the app economy: developer population by region and platform, distribution of revenues, revenue…

Continue reading ...