Wednesday, November 23, 2011

8 Strategic Inflection Points Redefining the Mobile Industry

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.

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