By Dr. Mehmet Unsoy (with contributions from Falk Müller-Veerse, Jan Vocke and Dhananjay V. Rohini)
Dallas, USA / Munich, Germany – February 24, 2010
The Mobile World Congress (MWC) was held for the fifth time in Barcelona, Spain from February 15-18, 2010. Organizers claimed that the attendance touched 49,000 (representing 200+ countries), up from last year’s figure of 47,000. However, there was a definite drop in the number of exhibitors. We believe that the format of the event should be amended to lay more emphasis on services and applications compared to mobile infrastructure.
How is the industry doing? Latest figures from Wireless Intelligence indicate the mobile industry was fairly resolute in handling the global economic crisis. While GPD in the 30 OECD countries fell by as much 4.1%, mobile operators lost only 0.7% in revenue. Furthermore, we have just crossed the 4.6 billion mobile subscribers mark! China has reached 725 million subscribers at the end of last year, while India is adding 53 million new subscribers every quarter (50% y/y growth), and has reached 525 million subscribers. The industry has every reason to look forward to 2010 and the coming decade with optimism. If people drove the demand for mobile connections during the previous decade, this decade will see the true coming of ubiquitous device connectivity. By 2020, the number of subscribers is expected to hit 8 billion, an impressive growth of nearly 75% from today’s figure. Large as the number might seem, it pales in comparison with Ericsson’s prediction that 50 billion connected devices will be in the cloud by the time the decade draws to an end!
Major themes? The major themes of the Congress were Android phones, LTE deployments, the debate over flat rates, the return of Windows Mobile, mobile device management, mobile cloud computing, the green strategy of the industry, Google embracing mobile, apps and app stores, M-Learning and M-Health, femtocells (yet again!), mobile advertising, location-based services, SIM-based solutions and mobile payments among others. Let’s look at each of these areas.
Android phones: Android was the most talked about subject during the Congress this year. People were showing off their Android phones as opposed to their iPhones! I have lost track of how many new Android phones were released or demoed during the show. But there were new devices at the HTC, Samsung, LG, Sony Ericsson, Dell, Acer, Lenovo and Garmin-Asus booths. The first Android powered tablets were seen at the event. They should be hitting the market soon giving Apple’s iPad a run for its money.
Google’s Nexus One took center stage at Google’s developers’ event, and Google gave away 2000 Nexus One phones to attendees, at the cost of about $1 million. HTC’s Hero, one of the most feature-rich Android phones, won the Best Mobile Handset Award at the end of the show! It is fair to say that Android has truly arrived in the wireless space. Ironically, the personality of the year award went to Steve Jobs, Apple’s CEO, who was not even there in Barcelona!
Is LTE roll-out around the corner? As we predicted last year, Verizon was not able to deploy LTE in 2009 but intends to cover 25 to 30 markets in the U.S. this year. There is a general consensus that LTE handsets will arrive sooner than expected, although the first devices will be dongles and data cards. Huawei unveiled an LTE modem that also supports GSM and HSPA.
Following Verizon’s decision for adopting the new technology last year, AT&T has chosen Alcatel-Lucent and Ericsson for its own LTE deployment. NTT DoCoMo will also launch its LTE network by the end of the year. With much focus on the all-IP packet switched LTE network and wireless broadband so far, the industry has finally turned its attention to voice. The IMS based Voice over LTE initiative, established in November 2009, has about 40 members on board now including the biggest operators and vendors. Operators will have to upgrade processes for billing, service assurance, monitoring and other services. Several players who already have 4G ready solutions such as Germany’s IPTEGO and France’s Volubill should benefit from the trend. International roaming might still be an issue since LTE frequency bands range from the digital dividends (lower bands) to the 2.6 GHz band. Impeding LTE deployments augur rather well for start-ups like Blue Wonder Communications, 4M Wireless, Signalion and mimoOn.
End of ‘all you can eat’ data tariffs? Concerns about 3G+ networks facing capacity issues were heard all too often at the MWC this year. HSPA dongles had an unprecedented year in 2009 and a large part of the traffic already originates from laptops, netbooks and smartphones. AT&T’s capacity problems in some urban areas in the U.S. have been talking points all of last year. CTO John Donovan indicated at this Congress that over 40% of their users have smartphones (probably mostly iPhones) that typically consume much more data traffic. As more networks face capacity problems, does this signal the end of the road for ‘all you can eat’ tariffs? A section of the industry touts the LTE deployments as an all healing panacea for the networks, but even LTE with its radically improved capacity does not escape the laws of physics that puts a cap on throughput. At some point, we believe the heavy users have to be reigned in through differentiated tariffs or off-loaded to WiFi networks. Or is this the rationale for femtocells?
Speaking of femtocells: The seemingly permanent ‘next-big technology’ has matured and has cut down on rhetoric about its potential. Informa Telecoms and Media recently commented on the ‘healthy’ growth that the industry would see with 49 million femtocell units being sold by 2014. picoChip, the leading silicon vendor in this segment, announced six new customers, mostly Taiwanese vendors that have become prerequisite for mass adoption in today’s world. Qualcomm’s impending market entry will provide further traction to the segment. On the operator side, Vodafone and AT&T recently launched their femtocell offerings with the former rebranding it as Sure Signal in the UK at Ł25/month. In general, femtocell prices are falling, sometimes below $100, making them far more viable now. Femtocell software vendors like Continuous Computing and Node-H are enjoying traction in the light of recent developments. One interesting femtocell application that was announced enabled printing using smartphones connected to femtocells: Ubiquisys and Software Imaging announced this service for Android phones. Also Alcatel-Lucent announced its enterprise femtocell solution at this year’s event.
Optimizing backhaul: Since some of the capacity bottleneck is in the backhaul, operators such as AT&T have to either increase the backhaul capacity by putting in optical fiber, and/or consider various backhaul optimization solutions. At this Congress, we saw several backhaul optimization solutions being promoted including application-aware ones that optimize video / YouTube traffic over the backhaul. Companies like Aviat (formerly Harris Stratex), Celtro, Flash Networks, Memotec, Saguna, and UDcast are among those offering solutions. Also companies such as Arieso, Cerion and PIworks are offering optimization tools that reduce OPEX and/or CAPEX for mobile operators.
WACing it away: 24 global carriers and 4 device manufacturers announced a global app store appropriately (but unsexily) named Wholesale Application Community (WAC). The sheer reach of the alliance which covers 3 billion subscribers makes it newsworthy. This move further underlines the concern by operators of turning into dumb bit-pipes. Keep in mind that 3 billion apps have been downloaded from Apple’s App Store to date. While this industry initiative is timely, praiseworthy and would offer developers a single API for app development, it remains to be seen whether and how such a group of operators (often bitter competitors) would work together to offer the user the seamless experience that the App Store currently delivers. The proposition to the developer is clear: develop once for all device platforms in a multi-platform world and reach the largest audience possible. Conspicuous by their absence were Nokia, Google and RIM, who also run their own app stores and will offer the greatest competition to this initiative. With more services moving to the mobile cloud, a clear set of network APIs might give the WAC an advantage. Interestingly, Ericsson, not part of the above initiative, announced its own app store solution during this show.
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