Tuesday, January 31, 2012

A New World for the Mobile Industry


As I described in earlier articles, I believe that there are  Eight Core Industry Disruptors that are driving key tipping points – The Mobile Seesawthat are ultimately redefining the mobile ecosystem.  These tipping points, or key strategic questions, serve as a useful framework for developing scenarios for the potential future of the mobile industry.   The creation of industry scenarios is a valuable means to comprehend and envisage a multitude of uncertain and interconnected factors in a tangible and actionable way.  These scenarios paint a picture of plausible future worlds in five years time.
 While there are several plausible future scenarios, I believe that there are two key scenarios that are both more likely to transpire, and are the most informative in identifying  key business choices and helping in developing winning strategies for future success.
Mobile Segments – Back to the Future
This is a world not that dissimilar to today, or to the industry over the past five years or so. Mobile 2.5 or Mobile 3.0?  Industry consolidation continues with large players dominate in each segment of the value chain.  The large players focus on their core strengths in their respective segments of the value chain, seldom venturing into other parts of the ecosystem.  The traditional application to device to connectivity model continues, although it is dominated by 3 largely independent operating platforms.  The mobile operators retreat back to largely providing connectivity and leaving other aspects of the customer experience to be delivered by the dominate players in the other relevant parts of the value chain.  This d├ętente, or coopetition, amongst all of the players means that they all seek way to create extra value by using their core strengths and capabilities (e.g., network, channels, advertising) to augment other offers.  Most of the industry innovation in this scenario occurs in the start-ups; although, successful ones are quickly gobbled up by the behemoths in the consolidating industry seeking innovation.
The key attributes of the tipping point continuum that characterize the Mobile Segments scenario are:
1.             Applications – applications resident on the device purchased through a traditional app store
2.             Mobile Networks – traditional mobile, licensed spectrum networks rule and continue to explode; alternative networks largely remain for niche uses
3.             Device Centric – largely independent, and non-interoperable devices, based on 3 independent operating platforms, continue to be subsidized by MNOs
4.             Traffic Growth – operators cope with continued explosive growth by lowering network costs and improving efficiencies, as they focus primarily on being connectivity providers
5.             Mobile Operators – Core mobile services (e.g., voice, SMS, email) will continue to be largely delivered by the MNOs

Mobile Explosion – A World Without Wires
This is a world where everything is wireless.  Aside from big pipes to big TVs and fixed devices, everything else is connected over a wireless network.   Access type doesn’t matter, as the end user is completely unaware as to which of the multiple, inter-related, licensed and unlicensed, networks he is using to connect his device to the Internet.  Although three large platform ecosystems still dominated, there is good interoperability between devices, networks and applications or services.  Much of this interoperability is driven by mobile cloud.  The most compelling mobile services are delivered through the mobile cloud; finally delivering on the long awaited promise of services delivered anywhere, anytime and on any device.  Competition increases within, and across parts of the mobile value chain, as the number of networks increases, platforms and devices become interoperable and services are easily delivered at scale through the mobile cloud.  The lines between the segments in the value chain begin to blur as each of the players both compete and seek ways to partner or collaborate with others to help to enhance and differentiate their offering.  Once arch rivals, mobile operators and OTTs (over-the tops), seek collaborative opportunities to leverage their core capabilities to create new value for themselves.
The key attributes of the tipping point continuum that characterize the Mobile Explosion scenario are:
1.             Mobile Cloud – while applications will not completely disappear, innovative and integrative services will largely be delivered through the mobile cloud
2.             Mixed Networks – a HetNet (heterogeneous network) of licensed and unlicensed access will provide the most cost efficient and effective network at time of need
3.             Ecosystems – inter-operative ecosystems will allow people to use what they want, on whatever network, without any control from the mobile operators
4.             Profitability –  players will seek new sources of value and revenue enhancement strategies as the scope of competition increases
5.             Over-the-Tops – With multiple networks and platforms available , OTTs find new ways to connect with their customers; although they do value collaboration with MNOs for competitive differentiation
Future articles will explore the challenges and key choices that each of these scenarios will impose and successful strategies for different players in the newly defined mobile value chain.

Thursday, January 5, 2012

The Mobile See-Saw - Tipping Points Re-Defining the Mobile Industry


The eight industry disruptors that I described earlier are creating a number of tipping points in the mobile industry – the outcome of which could radically alter the mobile ecosystem as we know it.  These key strategic questions are defining the future framework of how the mobile industry looks and operates.  The answers to these questions fall along a continuum, like a child’s see-saw or  teeter tooter, strongly tipping the industry in one direction or another.  Understanding these tipping points and their possible outcomes allows us to better define the future characteristics of the mobile industry.
I believe that the following 5 tipping points, or key strategic questions, are fundamental in framing the future characteristics of the mobile ecosystem.
1.       Applications versus Mobile Cloud
-        Will services continue to be delivered from an application resident on the device or be delivered on-demand through the cloud?
-        Will the business model switch from purchasing per application to paying for a service per usage or subscription?
2.       Mobile Networks versus Wi-Fi
-        Will the explosive growth of data traffic require that mobile operators increasingly use Wi-Fi to meet demand?
-        Will the cost to the user and improved experience force people to increasingly use Wi-Fi over mobile networks for connectivity?
-        Will the rise of Wi-Fi centric devices, increased availability and technology advances create an  alternative “mobile” Wi-Fi network?
3.       Devices versus Ecosystems
-        Will users purchase the device , for its own value, or simply as a means to access a broader ecosystem?
-        Will we have a universal, interoperable mobile ecosystem or a number of powerful, closed systems?
-        Will the mobile operator continue to exert power to control and subsidize  devices and functionalities on their networks or will all devices be equally welcome on all networks?
4.       Traffic Growth versus Profitability
-        Will mobile operators find ways to increase the revenue per MB or will they be forced to focus largely on cost containment to maintain network profitability?
-        Will mobile operators continue to make significant network investments or will they drastically scale back because they can’t get adequate returns on investment?
5.       Mobile Operator versus Over-the-Tops (OTTs)
-        Will OTTs displace significant revenues from the mobile operator’s core services (e.g., voice, SMS) or will they be more niche players?
-        Will mobile operators control or collaborate with OTTs or will they be relegated to principally transporting the OTT services on their mobile networks?
-        Will end users consume services beyond connectivity from mobile operators or will they see OTTs as the key providers of these services?
Future articles will explore how the potential outcome of the these tipping points will re-shape the mobile ecosystem and successful strategies for different players in the newly defined mobile value chain.