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 détente, 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.

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