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.

Will Wi-Fi Be the Death of Mobile?

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. 

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A “Marriage Made in Heaven”: Mobile Devices Meet the Mobile Cloud

The huge popularity and rapid growth of smartphones over the past couple of years has been truly breathtaking. At the same time, cloud computing has become the new way of delivering—and charging for—IT services and functionality.

While research has been conducted on mobile and cloud computing as separate trends, to date very little data has existed on the impact of mobility and cloud together—especially with regards to the impact on devices. To understand this dynamic market better, Cisco Internet Business Solutions Group (IBSG) surveyed 1,016 U.S. mobile users to understand their current and future needs with regard to the mobile cloud.

Findings from the research about mobile devices provide important insights for SPs. For example:

·        Almost half (45 percent) of survey respondents already have smartphones. Most remarkable, the survey revealed that up to 60 percent of U.S. mobile phone subscribers could be smartphone users by the end of 2013.

·        Smartphone owners are selecting their devices primarily to acquire the best functionality. Fifty percent of smartphone respondents indicated that device functionality is their key buying criteria, followed by brand and ease of use.

·        Smartphone users are much more comfortable using cloud services than non-smartphone users. Given smartphone users’ demographic profile and technological sophistication, it is probably no surprise they are already big consumers of cloud-based services in the traditional PC world.

·        Smartphone users are particularly excited about the opportunity to move unique mobile-specific features and capabilities to the cloud. They especially want to combine the microphone and speaker capabilities of their devices for speech recognition (75 percent over the next one to two years).

·        Smartphone users are also interested in a thin-client device that would allow them to access all of their content and smartphone functionality from the cloud. Similarly, smartphone users were interested in a mobile-cloud-based virtual desktop infrastructure (VDI) service that would allow them to arrange a computer desktop to reflect their personal preferences and view the same configuration on any mobile (or other) device.

Mobile operators are well positioned to prosper from the mobile cloud. On average, respondents rated their level of satisfaction with the overall mobile experience a 7.8 out of 10. By studying the findings and implementing the recommendations described in this paper, SPs can benefit by understanding the size of the opportunity, developing strategies for growth, and differentiating their offerings. Note: This is one in a series of papers that evaluate the Cisco IBSG survey results from four distinct perspectives: overview, business users, consumers, and devices (this paper).

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Top 5 Predictions for the Future World of Mobile Cloud for Businesses

Mobility and cloud computing are colliding. So, what does this mean for the future of mobile devices? How soon will video-conference calls on our mobile devices become commonplace? How can service providers (SPs) enhance their competitive position by delivering cloud and managed services?

While research has been conducted on mobile and cloud computing as separate trends, to date very little data has existed on the impact of mobility and cloud together. To understand this dynamic market better, Cisco IBSG surveyed more than 1,000 business users to understand their current and future needs with regard to the mobile cloud.

The top findings may surprise you:

1) By the end of 2012, business users will routinely attend video-conference calls on their mobile phones while making use of other video endpoints such as desktop webcams and telepresence stations. Today, only 20 percent of users have this capability.

2) Business users also want to switch back and forth between device types in real time. For example, if I’m on a call on my mobile device and I walk into the office, the call would seamlessly switch to my office phone.

3) Additionally, using virtual desktop integration (VDI), many users are seeking to replicate the desktop experience on their mobile devices, enabling these devices to become true extensions of both work and personal desktops. This will provide more flexibility and improved productivity while on the go.

4) By 2012, professional and personal boundaries will blur on mobile devices. Business users want a unified mobile cloud experience to access both professional and personal content from one device to increase productivity and improve work-life balance.

5) We will see a shift from smartphones to thin-client, cloud-based mobile devices. Applications and data will also be stored in the cloud, rather than on the desktop. Our survey respondents felt a thin-client approach would enhance security by reducing the risk of losing content and applications in case their devices were lost or stolen.

Developing a portfolio of mobile cloud services now—including mobile extensions of enterprise cloud applications such as video conferencing and collaboration—will be the key to success for SPs.

SPs should begin by using mobility as a lead value proposition for cloud strategy versus non-SP competitors. Next, it is important to develop an integrated device strategy by utilizing capabilities such as speech recognition and messaging history that lend themselves to the features and functionality of mobile devices. The strategy should include the creation of cloud services that address both business and personal use (e.g., gaming and social networking). Finally, SPs should deliver the promise of fixed mobile convergence for business users with seamless voice and data experiences that span fixed and mobile networks.

Mobile Consumers Reach for the Clouds

The collision of two powerful trends—mobility and cloud computing—is radically altering the way people live, work, learn, and play. To help SPs better understand the impact of the mobile cloud on consumers, Cisco Internet Business Solutions Group (IBSG) conducted a Mobile Cloud Watch survey of 1,016 U.S. mobile users.

From our findings, one thing is clear—mobile consumers are reaching for the clouds. Highlights from the research include:

· Consumers are already embracing the cloud with more than 50 percent of respondents currently accessing web-based email, updating their social networks, and shopping from their mobile devices.

· Mobile consumers anticipate using even more advanced features over the next one to two years including watching and recording video, video calling, accessing documents, and storing content.

· There is a high level of interest in several next-generation cloud-based services including a virtual desktop interface and a service that would allow users to access personal content stored on their home computers or laptops from their mobile devices.

Fortunately, mobile operators are well positioned benefit from the mobile cloud. On average, respondents rated their level of satisfaction with the overall mobile experience a 7.8 out of 10. By studying the findings and implementing the recommendations described in this paper, SPs can benefit from the mobile cloud by understanding the size of the opportunity, developing strategies for growth, and differentiating their offerings. Note: This is one in a series of papers that evaluate the survey results from four distinct perspectives: overview (this paper), business users, devices, and consumers.

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The Mobile Cloud: When Two Explosive Markets Collide

Mobility and cloud computing are colliding. So, what does this mean for the future of mobility? What types of mobile cloud services do users want most? How can service providers (SPs) enhance their competitive position by delivering cloud and managed services?

While research has been conducted on mobile and cloud computing as separate trends, to date very little data has existed on the impact of mobility and cloud together. To understand this dynamic market better, Cisco Internet Business Solutions Group (IBSG) surveyed 1,016 U.S. mobile users to understand their current and future needs with regard to the mobile cloud.

Findings from the research may surprise you. For example:

·        Cloud-delivered services (e.g., storing, sharing, conferencing) are expected to explode in the near future. In fact, 70 percent of all mobile users expect to consume these capabilities in the next one to two years.

·        Mobile users want more than just mobile access to wired cloud services. Ideally, they would like to exploit the cloud to experience new services that combine the unique capabilities of their mobile devices with the benefits of mobility.

·        Business users are already much bigger users of PC-based cloud services—for example, photo and video sharing, file storing, and web conferencing—than consumers. Business users’ familiarity with the value of PC-based cloud services will make them key adopters of similar and next-generation services over the cloud.

Mobile operators are well positioned to benefit from the mobile cloud. On average, respondents rated their level of satisfaction with the overall mobile experience a 7.8 out of 10. By studying the findings and implementing the recommendations described in this paper, SPs can benefit from the mobile cloud by understanding the size of the opportunity, developing strategies for growth, and differentiating their offerings.

Note: This is one in a series of papers that evaluate the survey results from four distinct perspectives: overview (this paper), business users, devices, and consumers.

 Download the Paper

Digital Megatrends 2015: The Role of Technology in the New Normal Market

In the “new normal” economy, typified in part by slowed growth in developed markets, new global competitors and overall heightened risk, executives and government leaders must rethink their strategies to become more responsive to rapidly shifting market forces. At the same time, the downturn has hastened the adoption of key technologies—mobility, cloud computing, business intelligence and social media—that are transforming businesses and sparking a new wave of wealth creation, particularly in the emerging world.

This research summary, produced in cooperation with AT&T, Cisco, Citi and SAP, offers a first glimpse into the findings of a global study of more than 360 executives, and highlights the key economic and technology trends that are reshaping how companies do business and how markets will transform over the next five years. The study highlights four key digital megatrends:
• Mobile devices reach ubiquity
• Cloud computing comes of age
• The rise of on-demand business intelligence
• Social media and collaboration become the norm

Download the paper