Social media and mobile will be at forefront of market strategy

February 10, 2010

William Dudley

By William Dudley

As we begin the second decade of the 21st century, let us reflect last year’s industry predictions and offer some new predictions for 2010.

In 2009, we did well with 73 percent accuracy in forecasting. Last year should be called the year that mobile broadband came of age. Smartphones now account for an ever-increasing market share of handsets sold and consumers continue to have an insatiable appetite for mobile applications and services, requiring more bandwidth.

Some wireless carriers are already feeling the pinch of not enough 3G bandwidth to go around for some highly dense metropolitan markets. At the end of 2009, several of the Tier 1 carriers battled to determine who has the fastest and most reliable data network.

These trends should not only continue for 2010, but accelerate and grow substantially.

Cisco projected that mobile IP traffic will be responsible for 2 exabytes (1 exabyte=1000 petabytes, or 1 billion gigabytes) by 2013 in its Cisco Visual Networking Index (VNI) Market Forecast for 2008-2013.

Messaging – both SMS and MMS – continues to grow and improve with more enterprises adoption and several verticals such as the financial and CRM industries embracing messaging as their primary mobile communications medium.

This year will be an evolutionary year, as LTE will roll out into production and we will see more WiMAX deployments with competition between the two in certain markets.

Indeed, 4G comes at an opportune moment for many carriers, since for some their 3G and 3.5G capacity will start to run out. Let us review our 2009 predictions, determine how we did, and review our predictions for 2010.

2009 predictions and results

Despite the global recession – or the severe global economic downturn – the mobile industry will remain robust. Overall, the mobile industry did fairly well. U.S. wireless revenue was up almost 8 percent in 2009, which surprised some analysts given that some see messaging and mobile data services as “discretionary spending.”

Many say that growth would have even been much stronger without the recession. I would say that the iPhone, new Android phones, and a strong build-out of 3G/3.5G services were strong contributors.

Several carriers continued to have issues, but overall, the industry held on with few casualties, with subscriber average revenue per user (ARPU) remaining strong and messaging and broadband continuing to help grow the data ARPU components, around the world.

(100 percent right.)

Motorola’s handset division will barely survive the year. Palm will have to restructure, possibly embracing a new operating system, such as Windows or Android. Apple, HTC, Nokia and Research In Motion will continue leading the smartphone markets. We were right on about Apple, HTC, Nokia and RIM. Motorola did have plenty of trouble.

However, the new Droid handsets, heavily promoted by Verizon – and running the Android operating system – may have helped them at the last minute. But that is more due to Google than to Motorola.

Palm, though it had some success with Pre, is having less luck with Pixi and is running into trouble from the likes of Droid, BlackBerry and, of course, Apple.

But let us call this a partial miss, since Motorola has survived and Palm has not yet embraced a new OS.

(25 percent right.)

Google’s Android will be deployed on more than two dozen handset models by the end of year. This aspect would help to build the prominence in touch-screen handsets as well as the usage of basic and advanced data services including browser-based, MMS and SMS, as well as mobile VoIP and specialized widget-based services.

A full win here for Google’s premier mobile operating system and, in fact, gaining market share. Android is on dozens of phones with hundreds, if not thousands of applications.

(100 percent right.)

The Apple iPhone will support native MMS. At long last, (June 2009), the Apple iPhone finally added native MMS support along with many other missing features.

When AT&T finally pulled the switch on supporting Apple iPhone MMS at the end of September, the resulting U.S. ecosystem MMS traffic growth was nearly 50 percent for the month of October.

(100 percent right.)

Text messaging will continue to gain prominence in the United States. Due to the momentum from the various presidential campaign usages, the election coverage and the holidays, SMS is currently used by just more than 50 percent of the subscriber population. By the end of 2009, that number should have exceeded 60 percent.

Increased strategically-targeted mobile advertising alerts and expanded major-brand usage of messaging will help fuel that person-to-person (P2P) growth in addition to the application-to-person (A2P) growth.

Text messaging had another banner year, with volumes increasing almost 100 percent over 2008.

Furthermore, as of October 2009, overall texting usage nationwide increased to 62 percent of the total subscriber population, with many age groups – from ages 13 to 44 – accounting for more than 70 percent of usage. Brands, advertising and enterprises greatly expanded their usage of SMS in 2009, with much more expected for several years to come.

(100 percent right.)

As text messaging continues to expand in key markets such as the United States, so will MMS expand its application-to-person (A2P) usage – not only here, but in Europe and Asia. 2009 will be a banner year for A2P MMS.

A2P MMS also expanded with a number of both brands and enterprises using MMS to reach subscribers: Usage and promotion of various types of bar codes for MMS also gained prominence in 2009.

Let us call this a 75 percent win, as the lack of iPhone support for MMS for more than half of 2009 slowed some A2P MMS uptake in the world’s largest MMS market.

(75 percent right.)

Numerous Long Term Evolution (LTE) networks will be launched around world in both test and production markets. One of the first, Verizon Wireless, completed initial tests in Boston and Seattle, with each having 10 LTE 4G cell sites up and running on the 700 MHz spectrum.

Verizon intends to launch 30 markets in 2010, covering over 100 million POPS.

Also in 2009, TeliaSonera began building out its first LTE network with Ericsson and Huawei, and launched commercial service in Oslo, Norway and Stockholm, Sweden in December – the first two commercial LTE services.

(100 percent right.)

Leap Wireless (Cricket) and MetroPCS will not merge. These lower cost carriers, along with Tracfone (America Móvil), will grow and add millions of new subscribers due to their various, low-cost, unlimited pricing plans.

True – Leap and MetroPCS have not merged, although one analyst firm suggested that they should.

Both Leap and MetroPCS have gained markets and grown subscribers, substantially. However, the top-tier carriers have also been aggressive with their prepaid plans, causing these pre-paid only operators to drop their all-you-can-eat pricing, and cutting into revenues and margins.

Sprint did buy Virgin Mobile and is aggressively pursuing the acquired brand’s prepaid market.

(100 percent right.)

Successful collaborative mobile commerce models involving carriers and financial institutions will see increased customer adoption. Mobile commerce made plenty of headlines in 2009, with most, if not all of the top banks now supporting one or more mobile banking initiatives.

Additionally, mobile payments and remittances were up across the globe, setting the stage for an even larger mobile commerce ramp-up in 2010.

(100 percent right.)

U.S. carriers will launch a new type of enhanced messaging – similar to, but different from the GSMA’s Personal Instant Messaging. This did not happen.

While the CTIA: The Wireless Association had noted considerable carrier support in press releases in 2009, none of the domestic carriers have launched an enhanced messaging offering to date.

However, several carriers around the world have begun trialing the GSMA RCS (Rich Communications Suite) even though significant handset OS vendors such as Microsoft, Apple and RIM, as well as Yahoo and Google are not involved in the RCS project.

RCS-compliant handsets may not hit the market until 2010. Most carriers, while feeling “forced” into RCS, still do not have a complete understanding of the RCS business model.

(We will call this a “miss.” 0 percent right, or 100 percent wrong.)

For 2009, my projection accuracy was 80 percent – much better than 2008.

2010 predictions

Handsets: Apple iPhone will increase and hold its market share in all markets where it is deployed. However, Google Android-based handsets, including its own, will make inroads. This Android move will erode and hurt market share for Nokia, RIM, Palm and Microsoft Windows mobile devices.

LTE network production deployments will quickly ramp up in 2010, now that Telia-Sonera launched LTE in markets such as Oslo, Norway and Stockholm, Sweden in December 2009.

Verizon will be aggressive in its LTE launch. Look for other U.S. carriers to launch LTE as well. Downlink data rates will be realistically in the 5-12 Mb/s rates.

Non-handset devices – for example, Amazon Kindle, Apple iPad – will help mobile data revenues grow even more than they did in 2009. In 2009 Morgan Stanley noted that mobile data revenues grew 20 percent to $284 billion – during a recession.

Virtually all of these devices will support some sort of mobile Internet connectivity – whether that is 3G, 4G, or WiFi. Most will support 3G networks.

Interestingly, but not surprising, Netbooks will rapidly decline in popularity and eventually disappear as we know them today.

SMS/MMS traffic and revenue will grow in 2010, but not at the rate of previous years. IPhone MMS nationwide has already caused a heavy jump in ecosystem traffic. However, expect normal organic growth for MMS.

SMS worldwide will certainly not decline. Instead, continued growth is projected throughout the year.

Enterprise and brand usage of SMS will continue to drive more A2P volume than ever before, as this type of capability becomes more mainstream.

RCS/Enhanced Messaging/MIM will make inroads with more carriers worldwide, but will not yet have a material effect on overall messaging growth this year.

There are still technical and business cases to work out for real-time messaging and it must peacefully coexist with the current messaging environment before carriers will consider it to be the “next-generation messaging.”

Mobile commerce and mobile banking expansion. Banks will be more willing to offer mobile capabilities such as mobile payment support, bill payment and, of course, basic mobile banking services.

Mobile remittance will become more popular with the backing of various banks.

Finally, banks and financial institutions have already begun to realize that they have a valuable marketing channel to their customers through mobile devices. This will increase in 2010.

Carrier consolidation. In the U.S. and other countries, we will see additional carrier consolidation as the traditional carriers realize that, to compete in today’s heavy mobile broadband economy, combining networks rather than building them out themselves can add broadband capacity.

I think that 2010 will be the year that we will see (a) Leap and MetroPCS merge, or (b) one of the top four carriers acquire Leap or MetroPCS or both for the U.S. market.

We will see other consolidations in Europe, similar to Britain’s T-Mobile and Orange merger. Look for Vodafone, Orange and T-Mobile to be players in this consolidation.

U.S. network neutrality rules go into effect and affect wireless broadband, but there will be exceptions that enable wireless broadband carriers to be able to prioritize traffic in order to manage bandwidth limitations. Network neutrality will continue to invoke strong emotions on both sides of the issue.

The net result will be further changes in wireless broadband pricing from carriers, probably ending unlimited data plans.

App stores that are well-established for operating platforms that are relatively open – Apple, Android – will continue to flourish, but many other vertical app stores will suffer and several will disappear. There are already too many vertically targeted app stores to support the number of devices out there.

Social media strategy and a mobile strategy will be the forefront of market strategy for successful enterprises in 2010. Successful enterprises will learn how to adopt both social media and mobile strategies to compete in the next decade.

A mash-up of Web, social media – Facebook, Twitter and blogs – and mobile will be acknowledged as a key formula for customer and prospect interaction.

Bill Dudley is group director of product management at Sybase 365, Reston, VA. Reach him at