Wednesday, November 23, 2011
There are a number of major disruptions, or strategic inflections points, in the mobile industry which are radically altering the entire mobile ecosystem as we know it. Some of these disruptions have been slowing building up steam over the last couple of years; although, many of these have just started and have yet to really play out. However, these strategic inflection points are causing, and stand to cause even greater, disruption and uncertainty in the industry.
The following 8 key strategic inflection points that I believe will re-define the mobile ecosystem.
1. Explosive Demand for Mobile Data –a 26-fold between 2010 and 2015
- Cost challenges of building mobile networks to supply explosive demand
- Monetization challenges – how to make money from increased demand?
2. The Rise of Software Platforms – from “walled gardens to walled ecosystems”
- From battle of devices to battle of ecosystems (e.g., Apple, Android, Windows)
- A world dominated by Apple and Android ecosystems
- The ecosystem and its capabilities (e.g., apps) are what is important to the mobile user rather than network connectivity, which is seen as a given
3. Availability of New, Fast Mobile Networks
- LTE Everywhere – battle for new services to get ROI and differentiate from 3G
- Rise of Wi-Fi – quickly becoming a viable alternative or complement to mobile networks as it is often free, good coverage, better experience and fits well with the rapid growth in nomadic devices. Could Wi-Fi be a viable competitor to LTE?
4. A More Active Regulator in Many Countries
- Spectrum gatekeepers – most operators are hungry for more spectrum
- Public policy - desire to have universal broadband coverage
- Net Neutrality – openness of the internet, strengthens the OTT model
- Protecting the mobile customer – concerns over pricing, data caps, roaming fees
- Industry structure and policy – more discerning about acquisitions and consolidation
5. Changing Industry Structure
- Industry consolidation in every segment of the value chain – each segment dominated by 2-3 players
- Major mergers and alliances – e.g., AT&T/T-Mobile, Nokia-Microsoft
- Limited opportunities to expand in a dominant way into other segments of the value chain
- Market and innovation leadership concentrated in few major companies – e.g., Apple, Google
6. Growth of Network Connected Devices – Internet of Things
- Tablets, eReaders, gaming devices, Machine –to-Machine, etc.
- Everything is becoming connected – e.g., home, healthcare
7. Move to Cloud Delivery Models – “everything as a service”
- Happening much faster than anyone had expected
- App store model (application client) vs. the mobile cloud model (service)
8. The Rise of the OTT Threat – largely the battle for video distribution and services
- Threat to existing video providers - e.g., NetFlix and Hulu vs. cable TV
- Monetization for network providers – how do they get a bit of the OTT pie?
- Economic balance of the ecosystem – network providers need a return to invest, OTTs largely successful based on cheaper operating model (content, distribution) – not a sustainable economic model
Future articles will explore how these inflection points will re-shape the mobile ecosystem and successful strategies for different players in the newly defined mobile value chain.
Friday, November 11, 2011
In 97 countries around the world there are now more mobile devices than people. No wonder mobile networks are clogged with massive amounts of new traffic! Mobile operators are struggling with how they can provide customers with the mobile broadband experience they expect, in a cost effective, scalable and profitable manner. Cisco’s Internet Business Solutions Group (IBSG) believes that Wi-Fi, the “silent sleeper” of wireless access networks, may hold the answer.
The mobile industry is on the brink of a fundamental change. Just think of some recent key developments: There has been massive growth in Wi-Fi-enabled smartphones, tablets, cameras, and game consoles—and nearly half of network traffic growth is Wi-Fi. The number of Wi-Fi access points is also growing, with more and more free public access. At the same time, economic modeling by Cisco IBSG shows that mobile operators can reduce costs and improve customer experience by offloading mobile data to Wi-Fi networks. It’s not surprising that Wi-Fi is becoming an integral part of wireless network design. Wi-Fi has truly come of age and now realistically represents a viable wireless access network.
But will Wi-Fi be a complement, or competitor, to mobile wireless networks? Consider the following:
1. Wi-Fi covers most of the places where we are: 80 percent of the time, people connect to the mobile Internet from their home, office or other indoor location—all areas that are addressed by Wi-Fi.
2. Much of what we do is nomadic, not mobile: Two-thirds of the activities people do on smartphones are nomadic activities such as email, web browsing, gaming, using productivity tools and making video calls. Wi-Fi is ideal for these activities.
3. New nomadic devices will consume even greater amounts of mobile data: While a smartphone typically consumes 24 times the data of a standard mobile phone, a tablet consumes 122 times more and a laptop 515 times more than a mobile phone.
4. Consumers will happily use Wi-Fi as an alternative to mobile: Our research shows that U.S. smartphone users already use Wi-Fi a third of the time to access the Web.
5. Wi-Fi can offer a more cost effective solution, and a better user experience: Wi-Fi delivers higher speed, good coverage and a better experience—all at a lower cost than mobile. Complex price structures and device-specific data plans could actually encourage users to migrate to Wi-Fi.
6. There are several ways to make money from Wi-Fi: In addition to the traditional business of retail hotspots, there are now several other viable access models where operators can make money by charging mobile carriers or other Wi-Fi providers.
Several types of service provider can create winning strategies to succeed in Wi-Fi. Mobile operators can use Wi-Fi to offload growing data traffic. Existing Wi-Fi network providers can (1) sell wholesale access to mobile operators for data offload, and (2) sell access and value-added services to retail hotspot owners. Integrated providers, who typically already have both mobile and some Wi-Fi capabilities, can use Wi-Fi to offload data traffic from their mobile networks and differentiate their fixed broadband offers.
Wireless networks will evolve over time, but one thing is certain: Wi-Fi is a critical element in mobile networks. Wi-Fi is not the death of mobile, but it is the beginning of a new chapter for this revolutionary industry.
Download the paper
Download the paper