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ABI Research Blog (107)

Location Advertising Market will become Location Analytics Market

Jul 6, 2011 12:00:00 AM / by Admin

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The value of location in mobile advertising will become commoditized. To maintain location premiums companies need to begin adopting locationanalytics as soon as possible. This is where the value and differentiation can be maintained in location based advertising.

Initial trial results for location based advertising are proving incredibly successful. Companies like Telmap, Navteq, Placecast and Loc-aid are all reporting far better CTRs than standard mobile ads, with the added benefit of providing trackable and enviable CPAs. Everything is pointing towards a bright future, with advertisers happy to pay a premium for location based advertising with a measureable return on investment.

The current market is still exploring the myriad of ways to implement location; however, the focus is largely on targeting opt-in users through geofencing of local stores, etc. This will localize the advertising, which has a certain value, but there is a strong chance that it may not be personally relevant. Geofencing is a very powerful tool but it can also be extremely expensive to implement, without very clever algorithms and rules in place, which can greatly affect the RoI for advertisers.

The real power of location based advertising will come by building in a variety of other social, geographic, physical, social and emotional indicators to filter the advert being served to the specific user. The best way to easily combine these factors and target them to individuals in a non-intrusive, anonymous way is through location analytics.
Location analytics can take many shapes. PlaceIQ is building up an analytical model of individual places/blocks of cities, which can then be used to infer information on the type of person in that area at a particular time and day can give advertisers feedback. Companies like Sense Networks are taking a slightly different approach, building up anonymous profiles of individuals, which are then carefully grouped into useful advertising demographics. In both cases the level of detail that can be extracted is amazing. Skyhook wireless is using its huge source of over 500 million location requests each day, to identify social and commercial trends, which can then be used to support new applications and advertising.
Outside of the start-ups every major player in the industry is getting involved, including Google, Apple, microsoft, Facebook, Nokia, RiM andnetwork carriers.What is evident is that this will become an inherent part of targetted mobile advertising. In North America alone, ABI Research forecasts that locatio analytics will representalmost $3Billion in 2016, or 85% of total LBA revenue.

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At What Stage Is The Indian UID Project?

Jul 6, 2011 12:00:00 AM / by Admin

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India is well underway in the registration phase of their UID project. On enrollment each citizen is receiving a unique 12 digit UID number. The number is directly linked to each individual’s personal information based on biometrics captured and stored on a central nationwide database.

Of course the mammoth scale of the project meant that it caught the attention of the media and a certain amount of hype around the project was created, but where is the project now and is it living up to its expectations?

Still in the enrolment process I can’t help but feel I was a little mislead by the Indian government’s initial promises and aims, which now seem very unrealistic when you look at the actual progress made so far. Most media coverage you see now is negative arguing that enrolment target figures are not being met and that the project is at risk of running over budget. Of course you have to expect some flexibility in lead times when embarking on a program with remote areas hard to access and with such a massive population to enroll. All these factors need to be taken into consideration, but this said I thought that the initial phase of registration would be conducted at a speedy pace to allow the government to initiate other new and exciting add on services that they have been trialing, directly linked to the UID numbers. This has not really materialized with the enrolment phase still in its infancy.

Trials have taken place for smart pension cards, voter’s registration and welfare cards. For mass distribution to begin the first phase must be completed. We have even seen the possibility of adding payment and banking applications linked to the project using the UID number to allow access to certain ATM services without the need for a card. As innovative as these add on services may seem we must for now wait in anticipation, be patient and hope that the once positively hyped project reproduces what they originally set out to do and does not disappear eventually being forgotten. Although progress is being made I fear (as I am sure others do also) that budgetary constraints could result in parts of the project being scrapped, shelved or watered down.
The Indian project is one of the largest in the world, but many other countries are migrating to different forms of ID documentation and healthcare solutions. The newly released report titled “Government and Healthcare Citizen ID” discusses the trends and forecasted shipments for government issued credentials to their citizens, including the anticipated Russian multi-application smart national ID card, China’s migration to a microcontroller IC and Nigeria’s new attempt to implement another national ID scheme to name but a few. The report can be found under ABI Research’s Smart Cards and Embedded Security group.

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Net Neutrality Should Be Followed by Network Sharing

Jul 5, 2011 12:00:00 AM / by Admin

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​The Dutch policymakers have done the right thing by introducing a law that will enshrine net neutrality also in the mobile sector. Other countries in Europe and elsewhere should follow their example.

The biggest implication of wireless net neutrality to mobile operators is that their toolkit to differentiate service bundles and monetize data traffic becomes suddenly much emptier. They can’t charge the subscriber a premium for carrying traffic for certain applications, and the same goes for requiring the providers of these applications to pay for guaranteed QoS.

I’d like to stress that it is very important that both fixed and mobile environments will be covered by net neutrality laws, for excluding the mobile could pretty much immobilize future innovations. A killer app that works only over Wi-Fi is like a sport car with flat tires. That would be a huge loss, given that the innovation of consumer applications has thus far been done by over-the-top players and not by operators: Skype and Whatsapp aren’t only cheaper than the carrier services they substitute, but also better.

It is understandable that the requirement of net neutrality may well push mobile operators to the wall and force them compromise their network investments, but it would be unwise to get carried away by that threat. The solution is simple: let’s face the facts and start treating their industry as a utility business, which is what it essentially has become.

In other utility sectors such as energy and water, overlapping infrastructures are considered waste of resources and the same approach should be gradually applied to mobile operators as well. MNOs should be permitted and encouraged to consolidate their networks into a mutually owned partnership (along the lines of what for instance Telenor and TeliaSonera have announced for their Danish ops) and compete merely as service providers.

This road ahead is not ideal, but I’d argue that it’s the one that results in the highest possible network investment under net neutrality, and thus in the highest possible level of consumer welfare.​​

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Bye Bye "Unlimited" Wireless Data Plans - Verizon Wireless Is Latest to Move to Usage Pricing

Jul 5, 2011 12:00:00 AM / by Admin

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As expected, thisThursday Verizon Wireless will switch its smartphone data pricing to a usage-based model - similar to what AT&T and T-Mobile have already done.

The NewCaps

New Verizon smartphone subscribers will have to choose a plan that will have monthlyusage caps:2GB for $30, 5GB for $50, and 10GB for $80. Customers will pay $10 for each additional GB they use beyond their plan. Existing customers can keep their unlimited data plans. (Feature phone owners will pay $10 per month for 75MB of data usage.)

The new pricing schemecomes as mobile operators in the U.S.seek ways tooffset explodingdemand for mobile Internet accessand media consumption againstnetwork capacity.

Reality: the usage capswon't bother most smartphone owners very much.Typically, they stay under 2GB.Only the heaviest users will be affected.

Still, as these data plans become the norm over the next several years, consumers will have to adjust to a new wirelessreality: Figuring out how much data they really useper month.Hardly anyone (includingthe wireless "experts" I talk to) hasa clue.People justknow they wantto avoid the dreadedsurprise bill that blows a budget.

Somewhat Confusing Time

So,it's going to be a somewhat confusing time formany consumersas they figure out what price levelis best for them. And it won't get easier as multiple-device mobile data plans (e.g., smartphone, tablet, family combinations) become common as well.

Smart operators will offereasy-to-understand comparisons(and historical data) so people can make intelligent choices. If they don't,consumer backlash could get ugly, and that's never good for business. Or, consumerscould go to Sprint, which for now is the lone Tier 1 operator in the U.S. sticking with unlimited data plans.

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Texas Instruments (TI) and Netflix unveil Netflix HD certification

Jul 5, 2011 12:00:00 AM / by Admin

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Today, Texas Instruments made a big deal (http://goo.gl/gUBvt) announcing they were the first to achieve certification for the Netflix HD Silicon Reference Implementation. Ignoring for a moment the importance of HD video on small screen devices including smartphones and tablets – this is good news for the Android marketplace as a whole. In February, I wrote about the fragmented Android marketplace for Android devices, including both the Boxee box and a number of Android-based tablet devices. (Boxee did manage to overcome those hurdles and release Netflix onto Boxee Box on Valentine’s day -- February 14, 2011.) The fact that TI and Netflix cooperated to develop a reference implementation implies that other vendors will soon follow. We hope to see Qualcomm in the mobile device space and Broadcom, Intel, Sigma, Zoran, Trident and others in the TV space.

Once they have cooperated (with Netflix as referee) on this silicon implementation establishing security and video decoding for an HD video platform could make conditional access (CA) and digital rights management (DRM) security implementations less fragmented – further enabling Android’s role in the digital home and setting the stage for video delivery to Android devices.

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Goodbye Google PowerMeter!

Jul 4, 2011 12:00:00 AM / by Admin

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On 24th June 2011, Google announced that it was shutting down its Google PowerMeter project. This project was launched two years ago to raise awareness about the importance of giving people access to data. Google stated that “While they didn't catch on the way we would have hoped, we believe they did highlight the importance of access to information in areas where it’s traditionally been difficult.”
The tool will be shut down on 16th September 2011 to give users enough time to download their data before the end of the service.

PowerMeter originated from Google’s philanthropic arm Google.org and in the early days of PowerMeter, Ed Lu, one of the key members behind this project stated that it was not trying to build a business model around it. True to his words, its viability did raise some questions, at least at this juncture. Despite its exit, PowerMeter has demonstrated what consumption information can mean to the user.
In essence, Google has been a good advocate of energy efficiency management through their global outreach to individuals, which is good for all these roll-outs in the smart energy space, especially, with the recent spate of events experienced by PG&E on consumer backlash. Awareness has been a missing part in numerous smart meter deployments, so Google, in its ways, has been instrumental in that aspect. Give yourself a pat, Google!
What Google could have done was to leverage its forte in algorithm expertise in terms of analytics of energy consumption data with focus on the users, this could have been a more valuable resource to utilities as a value added service, rather than portraying an image of being the wall between utilities and customers. ABI Research has published a research report on the smart metering market . For additional information, please refer to the variety of products in our M2M Research Service and WSN Research Service
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ABI Research Publishing Cellular M2M Module Vendor Market Shares for 2010

Jul 2, 2011 12:00:00 AM / by Admin

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​Cinterion, a Gemalto company, is the cellular M2M embedded module market share leader for unit shipment volume in 2010. Concurrently, Sierra Wireless is the cellular M2M embedded module market share leader for vendor revenue in 2010. In early July 2011, ABI Research will publish our estimate of cellular M2M embedded module vendor market shares for 2010 unit shipment volume, and, for the first time, revenue. ABI Research has been analyzing market share on a unit shipment volume basis since 2003, and since that time through 2010, Cinterion has been the market share leader each year, including in its previous incarnations as a standalone pure-play module vendor, and as a unit of Siemens AG.

The top five vendors on a unit shipment volume basis in 2010 were, in order: Cinterion, SimCom Wireless Solutions, Sierra Wireless, Telit, and Sagemcom.
The top five vendors on a revenue basis in 2010 were, in order: Sierra Wireless, Cinterion, SimCom Wireless Solutions, Telit, and Motorola Wireless Modules.

A few points are worth noting. First, the module count included here does not factor in sales to connected CE devices (such as eBook Readers, and portable gaming devices.) Nor does it include modules used in embedded mobile PCs – notebooks and tablets. This vendor market share analysis is purely counting “traditional” cellular M2M applications, such as consumer telematics, vending machine connectivity, and telehealth.
For the revenue market share analysis, we included not only revenue from direct module sales, but also included revenue from modem and software sales. We believe this approach more accurately captures the economic value derived by each vendor from the M2M market.

Going forward into 2011, it will be interesting, in particular, to see Telit’s progress: the company has been one of the fastest growing vendors over the past several years, and with the addition of Motorola’s business, we anticipate they could rise up the market share rankings significantly in 2011.
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A Tough Environment for M2M MVNOs

Jul 2, 2011 12:00:00 AM / by Admin

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​Can MVNOs survive over the long term in the cellular M2M market? With mobile operators directly entering the market – with M2M business units, service delivery platforms, and development centers – MVNOs would seem to be in a precarious position. And looking at the history of MVNOs in traditional voice/data services certainly does not inspire confidence (remember Disney Mobile?).

Nevertheless, MVNOs are developing several strategies in an attempt to differentiate themselves from their mobile operator competitors. For example, KORE Telematics recently announced the acquisition of Mach Communications, an Australia-based M2M MVNO, as part of an overall effort to expand its geographic footprint.

Certainly, the KORE/Mach news is not an isolated example of an MVNO attempting to increase its reach and area of service, though it is a rare case of the actual consolidation of two players. Other instances of a growing global presence include Numerex (which rejects the “MVNO” label) opening an office in London to establish a European HQ, and ASPIDER Solutions and Wireless Logic growing in Europe. And some MVNOs have made international expansion a key aspect of their value proposition from the beginning, such as Wyless PLC’s “global SIM”. Indeed, KORE Telematics itself earlier this year announced a partnership with Vodafone to expand its European presence.
However, it is likely that a growing global footprint will prove to be a necessary, but no sufficient, factor to MVNOs’ survival in the cellular M2M market. While not all mobile operators are interested in providing a global M2M footprint, many are. Telenor Connexion just went on a North American roadshow, for instance, to tout its capabilities beyond its core European market. But wide coverage is not the only trick up the sleeves of the MVNOs.

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South Korea Wakes Up to LTE

Jul 1, 2011 12:00:00 AM / by Admin

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A few hours ago, when the clock struck midnight and June 30th handed over the baton to July 1st, South Korean mobile operatorsSK Telecom (SKT)andLG U+ both launched their 4G LTE services in Seoul. The news is so exciting that stories about the service launches have temporarily pushed even the closely followedApple-Samsung tit-for-tat off the front pages of Korean newspapers.

At the moment, LTE service from both operators is data-only. LG U+ is offering anLTE dongle from LG Electronics (LGE)and anLTE wireless router from Samsung Electronics which can support up to 10 users simultaneously. SKT is offeringa dongle from LGEand a modem fromC-motech which can support up to 7 users simultaneously. http://www.tworld.co.kr/html/phoneinfo/LTE/LTE_unit.html. SKT promises 5 types of smartphones from September and two types of tablet PC from October.

It will obviously be a week or two before we really get an idea of how the LTE networks are performing, so most of the Korean news stories are just repeating the well-known facts. SK Telecom, the dominant service provider in South Korea with roughly half of the mobile subscribers in the country, has a significant coverage advantage due to the 800 MHz spectrum where LTE has been deployed, compared to the 2.1 GHz spectrum that LG U+ is using. But perhaps LG U+, the smallest of the three mobile operators in Korea, is not trying to compete with SKT, but rather with #2 Korea Telecom (KT). Newspapers are already speculating that LTE could help LG U+ move into second place, leapfrogging HSDPA and WiBro operator KT. KT recently announced that they will launch LTE voice and data servicesin November, when LTE handsets might be available in sufficient volumes. KT claims that the real demand is for voice and data, so their competitors will not gain much advantage from launching data-only services now. Sour grapes, indeed.

All three Korean operators plan to have nationwide coverage by 2013. Meanwhile, SK Telecom is already talking about launching LTE Advanced in 2013. Lots of excitement in the Land of the Rising Won. Keep an eye on the ABI Research blog for news about LTE in South Korea.

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What is really driving mobile revenue growth in Latin America?

Jun 28, 2011 12:00:00 AM / by Admin

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Our latest release of Mobile Subscriber Usage and Traffic Market Data and Mobile Carrier and Revenue Market Data has shown that Latin America out grew other regions in terms of mobile revenues. This leads us to this question: what is causing all these increases?

One of the main factors was the migration from CDMA/TDMA to GSM/WCDMA networks. This brought about cheaper handsets and services which greatly boosted the 2G and 3G adoption rate as well as led to a strong year on year MOU growth of 14.4%. Putting these factors together, the operators benefitted from growth in ARPU . Other regions experienced ARPU decline or only meager gains.

Another factor that led to this growth was the increasing affluence in Latin America, achieving a GDP CAGR of 4% from 2006-2010. With higher disposable income, consumer are becoming more willing to spend on better mobile devices and value added services pushing ARPU and subscription rates higher.
The final factor would be due to the massive smart phone subsidies by operators in the region to accelerate the uptake of mobile internet services, a new engine of growth for many telecommunication operators in the world. One of such operator is America Movil who employed this tactic in the Mexico and Brazil markets.
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