The mobile industry arrived in Barcelona for its annual shindig last week in an upbeat mood, putting the economic troubles of the last 18 months behind it and looking forward to global commercial rollouts of super-fast LTE networks later this year. Among the major announcements at the show were a new worldwide operator-led applications initiative, the unveiling of Microsoft’s new mobile operating system and a glut of top-of-the-range Android devices from the likes of HTC. The Wireless Intelligence team was in Barcelona to analyse developments and identify trends. In no particular order, here are our analysts’ top ten takeaways from Mobile World Congress 2010.

Network optimisation the key to LTE success

Whether mobile operator performances have been challenged by difficult economic conditions or competition in saturated markets, their 2010 capital expenditure mix will be based on either network modernisation or new technology rollout. From what we heard at Congress last week, our view is that it is likely to be an 80-20 mix with operators opting for a more cautious approach. While LTE deployment still very much depends on tomorrow’s higher spectrum allocation (and its regulations), network infrastructure vendors concerned themselves with discussing how to support mobile operators in optimising their network capacity. Ericsson noted that – even though smartphone users own a small share of an operator’s installed base – they use most of the network capacity; around 300-500 MB per month compared to voice users who only dent 10-50 MB per month. It essentially means that networks have to be modernised to address issues linked to increasing demand in data traffic, demand in quality, cost efficiency and energy efficiency. Modernising and optimising mobile backhaul involves equipment with fewer components and a higher life-cycle from which operators can generate cost savings of up to 30 percent (from legacy cost). Ericsson demonstrated its new solutions such as its microwave-optical hybrid system, while Texas Instruments detailed their focus on power allocation depending on consumption and time of the day to improve power efficiency. Hence, even though Congress was full of latency readers showing the speeds LTE can gloriously achieve on a good day, we know that mobile backhaul was what everyone was secretly discussing in the meeting vaults. (Joss Gillet)

 

Microsoft emerges from last chance saloon with guns blazing

We had numerous conversations on the sidelines of the show with industry insiders who predicted that the current number of mobile operating systems was unsustainable and likely to be reduced or consolidated over the next year or so. But opinion was divided on who would succeed and who would fail. Microsoft’s Windows Mobile was one such platform coming into the show on the backfoot and in dire need of a makeover. It got just that. After being in development for what seemed like an age (in fact it was only two years), the newly-named ‘Windows Phone 7 Series’ represented a complete redesign of the operating system. By integrating it with its various gaming (Xbox) and music (Zune) offerings, and with a clear focus on social networking, the new platform marks a belated play for the consumer market and a clear break from the clunky business-focused Windows phones of yore (RIM is one rival that has successfully managed such a transition in recent years). Microsoft clearly plans to take a lot more control over Series 7 than it has done with earlier versions, making it closer to Apple’s model than the Linux-based open-source camp in which Google’s Android is a member. The first Series 7 phones are not expected till year end – by which the point the platform risks already being outdated – so the jury remains out till then. But as one senior mobile figure told us last week, “you underestimate Microsoft at your peril.” Other major developments in the OS space included the launch of the first Samsung smartphone based on its own bada platform, and the merger between Nokia’s Maemo and Intel’s Moblin to create a new Linux platform called MeeGo. However, Nokia released no new handsets at all, making it an ominously quiet Congress for Symbian, which remains – and you’d be forgiven for letting this slip your mind – the world’s largest smartphone OS. (Matt Ablott)

 

Apps war further fragments market

Apps and application storefronts took centre stage at Congress this year, not least due to App Planet, and a proclamation of 2010 being the “year of the developer” during Tuesday’s opening keynote stream. Yet reaction was mixed and some platforms left many questions unanswered. Last year’s show exhibited the inevitable rush of vendors and operators alike to replicate Apple’s success with ‘App Store,’ some of which were clearly pushed too soon to market. Announcements this year were yet again a mixed bag. Kick-starting the week was the announcement that at least 24 of the world’s largest mobile operators would be combining forces to form the Wholesale Applications Community (WAC), a ‘write once, run everywhere’ initiative aimed at lowering the developer boundaries to publishing on multiple platforms. The move, backed by vendors including LG, Samsung and Sony Ericsson, also held the support of the operators behind the Joint Innovation Lab (JIL). While the venture appears initially noble, the next 12 months will tell whether the group is stifled by committee design or if the disparate aims of the group can be evolved into a common standard. Vodafone, meanwhile, separately ramped up its Vodafone 360 platform with the ability for independent developers to publish apps through the JIL developer portal. Again, the ambition to involve the three remaining founders of JIL as well as now the wider WAC is an ambitious goal which for now leaves developers with eight European Vodafone 360 markets to target while core components of the deployment service – such as automated payment – have yet to be established. How, or if, this will tie in with the GSMA’s own OneAPI billing, location and messaging framework (currently being tested in Canada) is also yet to be known. The operator cited that 7,000 apps are now available via 360. Elsewhere, the huge presence of Samsung’s bada platform could be felt throughout Hall 8 as well as around the city with a substantial advertising push for Wave, its first bada smartphone. Initial reaction was positive and Samsung made a concerted effort to prove that bada’s app selection will complement their existing app store with the launch of a developer fund to the tune of US$2.7 million. Samsung’s play was perhaps the most tangible of all the announcements and its strategy – sitting close to Apple and Google’s platform-based offerings – will yield the vendor control over its app quality and experience in a similar manner. Even network vendor Ericsson got in on the act, unveiling a white label app store as a service to mobile operators that will launch with 30,000 apps (some of which will be free). Amongst other announcements, Microsoft won over critics with initial impressions of its Windows Phone 7 Series unveiling, but failed to answer any questions surrounding its developer ecosystem. With all the talk of cohesion at the show, in reality, the app store landscape looks as fragmented as ever, with almost a need for a ‘store of stores’ – a view shared by the CTO of Australian operator Telstra. As these initiatives build steam, we fully expect to see consolidation within the operator community while the existing top vendor-led platforms such as Apple’s App Store and Google’s Android Marketplace will continue to prosper by virtue of their device-focused simplicity and thriving developer communities. (Will Croft)

 

Momentum builds behind embedded mobile; now the real work begins

With many mobile markets around the world already at over 100 percent penetration amid flattening ARPU, this year’s Congress was the first time we have seen a concerted push behind the potential of embedded mobile technology (sometimes referred to as M2M) as the industry’s next growth driver. The concept of an ‘Internet of things’ has been touted for a while (with carriers such as China Mobile, AT&T, KPN, Telefonica and T-Mobile already announcing their own trials and initiatives), but there’s now a real sense that operators and vendors are highly motivated to make this market work. Ericsson’s forecast on the first day of Congress that it expects to see 50 billion connected devices by 2020 set the tone, with the world’s largest mobile network vendor claiming that this timeframe will coincide with some markets hitting 500 percent mobile penetration (Ericsson also predicts 7 billion total mobile devices within five years). New developments at the event included Vodafone, Verizon Wireless and nPhase (a Verizon Wireless/Qualcomm JV) teaming up in an effort to bolster adoption of M2M deployments in Europe and the US. The sector also has serious support from industry association the GSMA, visible by the presence of a large Embedded Mobile Zone at the show (with partners Accenture and Qualcomm), publication of a set of industry guidelines, and the award of Embedded Mobile competition winners. Elsewhere, Telefonica announced its decision to invest in connected e-book readers and stressed its commitment to encourage growth of connected devices for e-learning in the education sector, whilst Nokia and Intel’s move to merge their Linux initiatives sees the duo target a broad range of connected consumer electronics. Meanwhile, Deutsche Telekom launched an International Competence Center to drive M2M innovation, and Accenture (in partnership with the GSMA) also released the results of an in-depth study on embedded that pinpointed challenges and opportunities. Certainly, 2010 will be a critical year for implementation of embedded mobile technology, with telematics, consumer electronics, healthcare and smart grids the biggest areas of opportunity. Controlling the hype (see Ericsson’s forecast above), ensuring supply of interoperable, low-cost modules, and demystifying the various platform offerings from vendors (in what is already a very fragmented market) will be key to ensuring the latest iteration of this sector has legs. (Justin Springham)

 

M&A on the agenda

Orascom chairman Naguib Sawiris presented one of the more enlivening sessions at Congress as he outlined his thoughts on the future shape of the industry. He predicted a period of operator consolidation and suggested that no more than 10-12 global operator groups will be the result, bringing the community closer to the number of vendors. He also expressed his view that a lack of unification was holding the industry back, which he blamed on operators previously “making money too easily” and that operators now “need more than a good looking girl” to sell their services. He also expressed his strong support for the Wholesale Application Community initiative announced on the eve of the Congress and said that majority – rather than unanimous – agreements are required on industry initiatives or they will take over 20 years to agree, as was the case for the universal charger. Sawiris painted a bleak picture for single market and mid-sized operators, which he believes will struggle to compete with the efficiencies of scale available to the likes of Vodafone. Personally, he stated that he was not looking to looking to sell Orascom but rather was looking to join the big league of global players. However, he expressed his desire to maintain control and referred to the proposed 50/50 Orange/T-Mobile merger in the UK as a “model for failure” as it would be “like a ship with two captains.” Doing his best audition for Stephen Fry’s gig at the GSMA Awards Party, he proclaimed that he has doesn’t have any great affinity to telecoms but “likes making money.” Etisalat Chairman Mohammed Omran also expected M&A activity in the coming year and nominated six MENA markets that the group is actively examining. In India, he expected there to be no more than six nationwide operators within three years with Etisalat aiming to be an acquirer. He also highlighted the announcement during Congress of Bharti’s US$10.7 billion bid for Zain’s African assets as a sign of things to come. (Jon Groves)

 

Minor vendors steal the handset thunder

As usual, there were some exciting new handsets unveiled at Congress this year, but – this time around – not by the usual suspects. Nokia posted itself outside of the Congress gates and selected its visitors like a bouncer would select who’s coming in and out of its VIP club – but nothing new came out of that door except a few software updates. LG also took the decision to keep it low-key and broke with its usual tradition to expose its wide portfolio in a blaze of glory. Motorola did attract some attention around its new Android devices but the real buzz came from elsewhere. In the hot corner of Hall 8, the most exciting handsets present at the show were staring at each other, starting with the Puma phone made by Sagem. This partnership managed to produce a very refreshing consumer experience and is ready to go mass market in April. This touchscreen device features a user-friendly interface which combines all of Puma’s sport and lifestyle widgets in a few simple clicks. On top of that, the device holds a solar panel on its back to improve battery life and is home to ‘Dylan’ (your friendly Puma pet). We believe that the Puma phone will do particularly well, along with Sony Ericsson’s X10 which was very captivating – based on Android and Qualcomm’s chipset. But the firm’s X10 Mini was the real surprise, which again refreshed our views of what a cool and user-friendly touchscreen device can look like, taking us away from the giant displays and form factors we have seen so far. Last but not least, Samsung’s Wave – based on the manufacturer’s new operating system, bada – splashed excitement out of the same corner. The device presents some great features, including its AMOLED display which renders HD videos and will make you want to watch a full length movie on a mobile screen. Outside of Hall 8, HTC was very much present especially with the introduction of its ‘Desire’ and ‘Legend’ Android devices, while ODMs were also making some noise around low-cost smartphones. (Joss Gillet)

 

Google embraces mobile; but leaves handsets to vendors

While Apple has always kept the mobile industry at arm’s length, Google swooped into Barcelona this year to give the sector the equivalent of an over-amorous bear hug. Attendees at the special Google keynote appeared split between those who were thoroughly seduced by the Internet giant’s latest character recognition and translation apps, and those who thought it should pay some attention to how it will help fund the infrastructure to support such services. Inevitably, this saw CEO Eric Schmidt drawn into a rather predictable argument around ‘dumb-pipes’ and net neutrality, which saw him do his best to soothe operator fears (which is more than Steve Jobs has ever managed, incidentally). Schmidt also provided an update on Google’s Android platform, claiming that handset vendors are now shifting more than 60,000 Android devices per day, a figure that has doubled over the last quarter. He said that Android was now on 26 devices, though this figure may also double soon judging by the number of new Android-powered devices unveiled at the show; these ranged from low-end smartphones (such as the sub-EUR200 phone announced by Alcatel) to high-end tablets. But Google gave no hint that it was planning to continue with its strategy of launching its own Android devices in a similar vein to its Nexus One, which it launched to mixed reviews at the beginning of the year. Indeed, arguably the most impressive device on show running on any operating system was HTC’s Desire, which is believed to be the very same Nexus One (which HTC manufactures) but using the Taiwanese vendor’s own user interface, known as ‘Sense.’ This gives the device all the power of the Nexus One but in a slicker package. This ability to build attractive and customisable UIs on top of Android was a key theme at Congress (as demonstrated by vendors such as Mentor Graphics), and one of the main reasons for the varied range of Android-powered devices on show. This should provide much food for thought at Google as it mulls its next move in mobile. (Matt Ablott)

 

Tomorrow’s world, today…

Always of interest at Congress are the weird and wonderful glimpses into the future offered up by operators and vendors alike. Top honours had to go to Japan’s Docomo, which showcased its eye-controlled headphones throughout the week, aided by an unfaltering employee who seemingly blinked only when told (presumably, thus avoiding skipping tracks…). The operator stated its focus was on making the future of handheld devices that much more personal, utilising levels of interaction more natural to the day-to-day routine. Naturally, there was no word on availability or pricing, but the technology could well see future adoption in a wide range of hands-free activities, including in-car navigation. Texas Instruments was also close by to unveil ‘touchless gesturing’ in partnership with XTR3D, a little-known Middle Eastern company. The duo presented a 3D human interface device, capable of real-time recognition of motion and gestures in the air surrounding a device. Pointing, scrolling and clicking were all demonstrated to control interfaces as well as play games and navigate maps. Expect this technology to take a little longer to catch on given the current requirement to fully train the software against each user’s movements. Equally admired were the latest revisions to the company’s range of Pico chipsets, which allow for projector technology to be included as an embedded chip in handsets and consumer electronics. Qualcomm dazzled crowds with its advances in Mirasol; an interferometric modulation display technology which uses light interference to create colours on a paper-like surface without the need for any backlight, thus removing one of the biggest drains on phone battery life from the equation. The company expects retail devices with Mirasol to emerge by the end of the year; a milestone of significant importance to current devices utilising electronic-ink, such as Amazon’s Kindle. Finally, having seen a resurgence of late in cinemas, 3D content popped up all over the show floor, from 3D flat-screen TVs to embedded 3D graphics in the handset display (again from Docomo and Texas Instruments, respectively). Time will tell which of these fascinating innovations will become the Bluetooth of tomorrow, given the futuristic timescale of such investment roadmaps. (Will Croft)

 

Voice over LTE finally finds a unified home

Given that ‘voice’ has only ever been the one true killer app for mobile technology, it now seems difficult to believe that prior to this year’s Congress the industry was split on the best approach to providing voice and text services over next-generation (all-IP, data-focused) LTE networks. This uncertainty is all the more surprising given the fact that LTE networks are already a commercial reality in Sweden and Norway and will be switched on throughout China, Japan and the US by the end of this year. However, news that more than 40 organisations – including operator titans such as AT&T, China Mobile, Telefonica, Vodafone and Verizon Wireless; vendors Alcatel-Lucent, Ericsson, Nokia, NSN, LG, Qualcomm and Samsung; and industry bodies NGMN Alliance and 3GPP – have thrown their weight behind an IMS-based initiative looks set to unite this previously fragmented sector. The initiative – dubbed VoLTE (Voice over LTE) – was previously known as One Voice and will now be led by the GSMA, which expects to complete production of specifications (that will enable interconnection and international roaming) by the first quarter of next year. Verizon’s support for the IMS approach was particularly telling, especially given the US operator’s new partnership with Skype (also announced last week). However, Verizon played down the idea of using Skype as its voice solution for LTE networks, stating that its 3G EV-DO network will be used for voice services during the early stage of LTE launch, whilst the IMS (VoLTE) solution is being developed. General long-term industry support for VoLTE is likely to sound the death knell for rival initiatives such as the VoLGA (Voice over LTE via Generic Access) Forum, which touts a circuit-switch-over-packet approach to the issue (where the circuit-switch voice or SMS traffic is tunnelled over LTE). Although a number of vendors signed up to VoLTE have also previously pledged support to VoLGA, it’s telling that VoLGA can only claim one operator member (T-Mobile, also now a supporter of VoLTE). At best, VoLGA will serve as an interim solution on the path to IMS, a battleground where it could compete with a ‘circuit-switch fallback’ approach (another interim solution championed by the NGMN Alliance). (Justin Springham)

 

LatAm: Opportunities and challenges

A new feature on this year’s Congress agenda focused on operator strategies in the high-growth Latin American markets. José María Álvarez-Pallete López, chairman and CEO of Telefónica Latinoamerica, spoke about the rapid growth of mobile broadband in the region and predicted that subscriptions will increase by a factor of five in the next four years and that all operators will face pressure on bandwidth to keep up with “exploding data demand.” He also confirmed that Telefónica is actively considering its options for expanding into Colombia. João Silveira, director of marketing at Brazilian operator Oi, revealed some insights for relative late comers entering new markets, highlighting how Oi has achieved a 31 percent revenue share despite being the fourth market entrant. He outlined how Oi focused on simplicity by having a single brand and SIM-only strategy as opposed to the handset subsidies offered by rivals. He also extolled the virtues of triple-play offerings being key in attracting and retaining customers from established competitors. On a similar theme, Greg Santoro, chief marketing and strategy officer at NII Holdings, indicated that the benefits they expected from the deal, confirmed during the Congress, to sell a 30 percent stake in Nextel Mexico to Televisa (subject to successfully acquiring a 3G licence) would be access to content for mobile broadband offerings. Despite the focus on mobile broadband, Rogerio Takayanagi, chief marketing officer at TIM Brasil, predicted that voice still has 2-3 years before being overtaken by data in driving revenue growth in the region. Marco Quatorze of Telcel (America Movil) also sounded a note of caution that they had underestimated the demand for mobile broadband services and they found that they had priced the services too low, forcing them to pull back from marketing the services. He also cautioned that ROI for data was lower than for voice. The operators also warned that taxes which “take up to 50 percent of revenues” present barriers for growth of application stores in the region. The 12 month limit on mobile contracts in Brazil was also highlighted as an issue holding back the growth of subsidised data capable handsets. (Jon Groves)

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members