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With the global economic crisis casting a cautionary shadow over proceedings, the mobile industry’s annual jamboree in Barcelona this year adopted a more serious and sombre tone than in recent times. Nevertheless, the show saw the industry’s leading players announce an array of new products, deals and strategies that will shape the direction of the industry over the next 12 months. The Wireless Intelligence team was at the show to analyse developments and identify trends. In no particular order, here are our analysts’ top ten takeaways from Mobile World Congress 2009.

 

1) Android hype disappoints
Leading up to Congress, speculation was rife that a number of major ‘Tier 1’ handset manufacturers would showcase new devices based on Google’s Android operating system. It turned out that only two players unveiled such products at the show, Huawei and HTC. Huawei’s smartphone – looking almost identical to Apple’s iPhone – was kept under wraps on the Chinese vendor’s exhibition stand, but is expected to ship in Q3 via a rumoured deal with T-Mobile. HTC meanwhile made a slightly bigger splash by signing up global operator Vodafone as an exclusive partner in Europe for its new ‘Magic’ smartphone. These two new products, when launched, will take the total number of commercially available Google-powered handsets to just three. Such a small portfolio of products will not be enough to keep the Android hype machine ticking over for the rest of the year. To maintain momentum and achieve critical mass, it is important that some of the ‘Big Five’ handset players unveil their own Android-based devices. Until then Android will remain only a very minor player in the operating system space and risks failing to live up to expectation. Fortunately for Android’s backers, rival operating system Symbian had a relatively quiet show in terms of product announcements. The LiMo Foundation, on the other hand, was quick to take some of the spotlight off Android; the consortium – backing mobile Linux-based operating system LiMo Platform (a direct rival to mobile Linux-based Android) – showcased nine new handsets supporting its platform, claiming that this brings the total number of commercially available handsets to 33. It announced a raft of new members (including Telefonica and Swisscom) and sparked controversy by suggesting operators are fearful of Google’s high-profile platform. (Justin Springham)

 

2) Application stores go mass market
The success of Apple’s pioneering App Store was felt throughout this year’s Congress, even if Apple’s physical presence wasn’t. Both Nokia’s ‘Ovi Store’ and Microsoft’s Windows Mobile ‘Marketplace’ were unveiled as contenders to Apple and Google’s existing offerings. Nokia’s play will differ by delivering location-aware and socially recommended content while Microsoft instead chose to tout figures; some 20,000 existing Windows Mobile apps are expected to be available at launch. While few details are known of Microsoft’s store, Nokia’s platform opens out two big opportunities for the ecosystem. Firstly, by treating S40 and the mid-range as equal customers to smartphone users on the Ovi Store, they have shifted the focus from a “me too” race to a mass-market offering that other vendors will need to replicate. Secondly, to help the mass-market proposition, Nokia is tackling operator and billing issues head-on. As with traditional premium content delivery, Nokia will offer operator-billing alongside credit cards, allowing the operators to take an initial cut of the purchase price. To facilitate this, Nokia stated at Congress that it has agreements in place with the operators of each and every European launch country and is willing to provide additional operator-branded store pages and/or applications. As other vendors follow suit and extend their App Store content to all media – much of which treads on the hallowed grounds of ‘premium content’ for operator revenue – this invitation will come at a welcome time for operators who are looking to avoid the ‘dumb pipe’ scenario. (Will Croft)

 

3) Mobile broadband is gaining traction
Mobile broadband is a success story and mobile operators are calling for regulatory initiatives to unlock spectrum availability. Telstra has been paving the way in terms of successful high-speed network adoption. The Australian operator has deployed a nationwide HSPA network and announced at Congress the launch of its 21Mb/s modem, delivering typical downlink data rates of up to 8Mb/s. Telstra is reporting tremendous growth in mobile broadband adoption and argued that as coverage and bandwidth increase, “the value of the network goes up log linearly.” In Western Europe, operators have deployed HSPA networks mainly in urban areas, limiting its mass market appeal. Mobile operators have to invest to improve HSPA network coverage to reach mass market opportunities and deliver good user experience. The numbers released so far are showing slow – but encouraging – adoption with T-Mobile announcing that it sold 60,000 HSPA enabled laptops across its markets, and Telstra reporting in June 2008 it had 588,000 ‘wireless broadband’ subscribers (dongles and laptops) which represents around 6 percent of its total subscriber base. (Joss Gillet)

 

4) LTE is the future, but the future isn’t here yet
LTE was much hyped during the Congress by vendors vowing commercial availability as soon as next year. Such interest in the next-generation technology was fuelled by Verizon’s announcement of its network equipment suppliers (Alcatel-Lucent and Ericsson), a move that may make the US operator the first in the world to commercially launch networks. LTE promises to generate mass market demand for mobile broadband services, to connect the telecom industry with its adjacent industries, to improve user experience, and to lower mobile operators’ operating costs. Whilst we agree that these are some of the next steps the industry should focus on, the challenges behind LTE’s business case are significant. The deployment scenario outlined during Congress suggests the following: LTE is likely to be deployed mainly in urban areas; capex increase is huge and network rollout will take time; regulators will have to go through the lengthy process of spectrum allocation; voice over LTE will not be introduced before 2011; multi-mode devices are not likely to target the mid to low price tiers at launch; LTE will add cost to devices as it implies improvements in features and power consumption management; LTE implies that mobile operators radically improve their consumer segmentation and successfully address new areas of marketing opportunities. Today, the reality is that mobile operators have to manage HSPA network expansion in a difficult economic climate. Mobile broadband services (dongles and laptops) represent a small portion of most markets where it has been introduced and there is no clear formula yet to speed its adoption in more price sensitive consumer segments. Hence, LTE is not likely to reach mass market anytime before 2012 when we expect to see the first big wave of commercial availability. (Joss Gillet)

 

5) The (long) wait for new spectrum 
At a GSMA-led press conference on the first day, operator and vendor CEOs joined forces to call on governments to allocate some of the lower frequency spectrum freed-up via the switchover to digital TV – the so-called Digital Dividend – for mobile use. The industry is asking for 100MHz of the 400MHz available and sees the new spectrum as vital for meeting the increasing capacity demands of next generation mobile technologies such as LTE. Some countries – those in Finland, Sweden, Switzerland, France and the UK, for example – are already sold on the idea, while the industry’s argument that it can help lift economies out of recession will surely see many more follow suit. However, governments agreeing in principal to release the spectrum is only the start of what could be a long process. Many of the first movers are not expected to have fully freed-up the new spectrum until 2012, and many other countries could be several years after that. The recent delay in allocating the 700MHz spectrum in the US is a case in point. Despite auctioning off the new spectrum almost a year ago, the new US administration was forced recently to delay the switch to digital TV as many households were deemed not to have their new digital equipment in place. This should serve as a cautionary tale for operators elsewhere banking on receiving the valuable new spectrum anytime soon. (Matt Ablott)

 

6) Industry’s green push builds momentum
 ‘Going green’ was a major discussion point during the week. The potential for green technology to reduce operating costs was probably the major catalyst for such debate (especially in light of the general industry slowdown) but there is also now a clear growing interest from vendors and operators to reduce their carbon footprint and build on global momentum in this area. Solar-powered handsets were all the rage last week – with LG and Samsung among the big-name vendors to unveil such devices – but ZTE grabbed most attention with its claim that its new handset is the world’s first ‘low-cost’ solar-powered mobile phone. The challenge now is how many of these solar-powered devices can be sold commercially, and where? On the equipment side, many of the world’s major network infrastructure vendors – including Nokia Siemens Networks, Alcatel-Lucent and Ericsson – touted energy-efficient kit, whilst the GSMA highlighted progress in its efforts to promote green power for base stations via operator deployments in Sri Lanka and Vanuatu. Taken in terms of general mobile industry development, such progress could be viewed as relatively small-scale and niche. But it likely marks the beginning of a much stronger eco push over the next few years by both operators and vendors. (Justin Springham)

 

7) Social networking is the new address book
Social networking was at the forefront of discussion in Barcelona. Announcements from the show included a raft of application development plans from MySpace to bring its social platform to S60 and Palm’s upcoming webOS, noise from Ericsson to provide back-end support for the social graph, and strategy shifts from Nokia and Sony Ericsson, centring user’s devices around the social network. Then there was the INQ1, winning the ‘Best Mobile Handset’ category at the GSMA Global Mobile Awards, a device built with Facebook networking in mind. Google’s ‘Latitude’ stole the pre-show social buzz and, amid some concerns for privacy, there were encouraging notions that social services are successfully pushing in this direction. A key tenet of socio-location data is that a user can know what his or her friends are doing, and where. Yet, for content providers and advertisers alike, being able to map the social graph has implications far beyond knowing where your friends are. So far only one social network has tackled this head-on, the US-based Loopt, but has yet to see staggering success to the tune of Facebook or MySpace. Turning to the vendors, Sony Ericsson’s ‘Entertainment Unlimited’ strategy – announced at the show – highlights the importance of social networking, not just as a function of the phone, but as an intrinsic service that reflects the personal and spontaneous nature of social updates. Sony Ericsson should be in the enviable position of being able to leverage the Walkman and Cybershot brands to aid its growth in this area, but we have yet to see any serious push into content sharing. Nokia’s Ovi finds itself in a similar position and again, hinted at social-device integration with a new (but still lukewarm) version of Contacts on Ovi. On a fundamental level, social networks are the new address book and we expect to see a shift towards this mentality in the mobile OS, both as users demand the integration of their existing services and as developers embrace the wider social graph through OpenID and media content-centric hubs. (Will Croft)

8) Nokia and Qualcomm making friends is good for all
In an alliance that would have been unthinkable a year ago, Qualcomm and Nokia announced at Congress that they are joining forces to develop Symbian-based 3G devices, focusing initially on the North American market. It is the first time that the world’s largest device maker and the mobile industry’s largest silicon vendor have worked together on a WCDMA product. The agreement is the culmination of a deal struck in July 2008 that ended years of litigation between the two mobile heavyweights. At one stage, the ugly legal battle (over patent royalties) had threatened to stall development of the 3G devices market altogether. The new alliance is a classic case of better-late-than-never; the combination of Nokia and Qualcomm has the potential to make a formidable partnership that could ultimately benefit the entire industry. It’s just a pity they couldn’t have sorted out their differences earlier. (Matt Ablott)

 

9) Touchscreens are dominating handset development
A couple of years ago, handset vendors were fighting about hardware – from thickness to colour strategies – but this year’s Congress was very much about software and touchscreen capabilities. Most top manufacturers announced at least one touchscreen addition to their handset portfolio. Among the touchscreen devices announced were the media-centric Samsung Omnia HD and BeatDJ, Sony Ericsson’s Idou, the Vodafone-HTC Magic, Nuvifone G60 Garmin-Asus, Nokia N97 (and 5800), HTC Touch2, LG Arena, Acer Smartphone and Huawei Android. Most of the touchscreen portfolio that we have seen is mainly located at the high-end of consumer segments aiming at increasing data usage. User experience can vary depending on level of customisation and in most cases manufacturers support multiple software platforms from Symbian to Windows Mobile or Android. Mobile operators are expected to favour (and maintain subsidies) in the high-end consumer segment this year. (Joss Gillet) 

 

10) Mobile advertising gets real
Activity around mobile advertising was subdued during the week, possibly due to the acknowledgement that ad spend – on mobile and elsewhere – is contracting due to the credit crunch. Most ominously, Nokia revealed that it is to cut staff from its Nokia Interactive Advertising group, only a year after it was launched. Blyk, the pioneering ad-funded MVNO, is also thought to be feeling the pinch and said at the show it was now in discussions to launch its model in conjunction with operators rather than go it alone. Microsoft was more bullish, announcing that it signed-up several major European publishers to its mobile ad platform and had been chosen by Orange Spain for the operator’s mobile display advertising. Following on from it winning the race to become Verizon Wireless’ ad search partner earlier in the year (beating off competition from Google in the process), mobile advertising is fast becoming a key area for the software giant. Elsewhere, the GSMA announced that it is ready to commercialise its Mobile Media Metrics audience measurement initiative. The service will launch in the second half of the year and will provide advertisers with mobile user behaviour and demographic information allowing them to more effectively plan mobile advertising campaigns. It is hoped that the initiative should go someway to revitalising the sector. (Matt Ablott)