We’ve just come out of another Mobile World Congress in Spain—now the largest and most influential mobile/telecoms trade show in the world. Mobile continues to grow in strategic importance and is at an interesting cross-road where digital content, the Internet, faster mobile networks, better phones, and heightened consumer awareness/engagement are coming together to fuel some very dramatic growth.
MWC has grown incredibly quickly over the last few years, from being a show for mobile carriers and phone manufacturers to now including vendors from across computing, Web, music, film, television, infrastructure, retail, and countless other sectors. Mobile’s intersection with the Internet is probably its most interesting chapter yet: Fittingly, Google CEO Eric Schmidt gave the main keynote at MWC this year (a true first for the show) and spent much of it assuring the old guard of the mobile industry that Google could co-exist with them without stealing all their revenue—a pretty telling message and a portent of pretty serious change in what’s traditionally been a very conservative industry. These are interesting times for those of us following this sector.
Below is a recap of some of the major trends/themes we observed at MWC. We also created a short (informal) video diary from the show, available above. Those of you interested in mobile/telecoms please come back to us with feedback, additional input, observations, etc—we’re keen to keep up the discussion around mobile/telecoms – we also encourage you to follow the Telecom team on Twitter via @Edel_Telecom.
Key learnings from MWC
Cautious optimism: Following a rather gloomy MWC last year, this year’s show was marked by business optimism. There’s recognition that while the global markets felt the pain of the recession, the mobile industry for the most part sidestepped the crisis, particularly in APAC and the US. For many countries, 2009 was something of a banner year for new mobile data services (e.g. mobile email, Twitter, location services, surfing the Web) —the gold standard of progress for the mobile industry— with some markets exceeding 90% subscription penetration of these services. On the down side, some operators (particularly in Europe) are still extricating themselves from years of stagnation, and there is awareness that carriers in general are struggling to convert network traffic gains to meaningful revenue and need to up their game.
Telecoms as a force for good: Beyond the exhibition stands, there was much discussion this year around the economic and social impact that mobility is having on the developing world, and what the industry can do to accelerate that. The Mobile Money Working Group (an initiative promoting the use of mobile for micro-financing in poor countries) made lots of noise at the show this year, endorsed by a number of high-profile celebrities. Vodafone announced the world’s cheapest smartphone, part of a growing effort to make mobility accessible in countries where many people’s first-ever experience of the Internet is happening via mobile phones rather than PCs. Various education initiatives such as 1GOAL are banking on mobile advertising and messaging to drive global support and revenue generation. Meanwhile, Vodafone’s CEO used his keynote speech to remind the world of the telecoms industry as an engine of growth, and to push governments to ease regulation of the industry (telecoms remains one of the most heavily regulated industries in the world).
New kids on the block: Some of the biggest brands at the show this year were from outside Europe, North America or developed markets—testament to how the mobile industry is growing, diversifying and globalizing. These vendors had some of the biggest booths of the show. They span infrastructure (Huawei, ZTE), service provision (China Telecom, TurkCell), hardware (HTC) and any sector within telecoms you can name. What’s interesting is that these guys are not just selling big in their native markets; they are also pushing plenty of fresh thinking and innovation in all sectors of the industry, from hardware design (e.g. HTC) through to new services such as mobile marketing and mobile payments (e.g. Turkcell, Bharti Airtel). Some of them are famously encroaching on the turf of established Western incumbents (and provoking lots of mergers), as in the case of the Chinese infrastructure vendors versus the Ericssons and Alcatel-Lucents of the world.
Mobilizing the ‘cloud’: This year’s show was all about the mobile Internet (again). For years, the mobile industry has talked of the ‘mobile Internet’ as a version of the Internet specifically adapted to work on phones with small screens and poor Web browsers, but this year it was all back to the Internet (the one) and getting people onto it from mobile phones. Pretty timely, as some analysts are estimating that mobile broadband connections multiplied by over 150% in the last year, fuelled by better, cheaper phones with functional browsers (the ‘i-Phone effect’). Some of the more daring speakers at MWC talked of a tantalizing future of mobile content usage driven directly out of the Web, as it’s portended for PCs in the ‘cloud computing’ context. Fittingly, Google Eric Schmidt’s used his show keynote to make a point that operators are not just ‘dumb-pipes’ and have a role to play in facilitating and regulating mobile services. This was understandable if not entirely predictable: Mobile operators generally view Google with suspicion, arguing that it takes advantage of their network assets (on which they have invested heavily) with so-called ‘over-the-top’ (OTT) services where operators bear the network costs but don’t see any of Google’s revenue. These conversations are likely to develop in Google’s favor as value shifts towards content and applications.
Apps, apps, apps and more apps: One message at the show was clear this year: the mobile industry is going through a major transition from being voice-centric to data-centric, from consumers spending most of their time talking on the phone to a significant portion of their time (now upwards of 80% in some markets) on new services driven by data and online content. Mobile applications (think of the iPhone App Store) are reaching the mainstream, no longer the remit of the early adopter or tech geek. Facebook and social media are starting to dominate mobile use in some countries. MWC was awash with talk of apps ranging from mobile healthcare apps to presence apps linking to social media features.
So it’s no surprise that this was the show of the ‘mobile app’. From their respective corners, all major mobile vendors want to get a slice of the application action. Attention now shifts to the world’s huge pool of application/content developers and the tools and revenue models that the mobile industry needs to bring them to the table and incentivize them. This is one of the elusive last-frontiers of the mobile industry: Everyone seems to want to support developers, but everyone supports them differently. Despite the success of the iPhone (and increasingly Android) in building cottage industries around apps, nobody has solved the question of how all these cooperative players manage to combine their efforts to create something stable, easily supported and capable of generating scalable revenue. That discussion continues. This year for the first time ever, MWC hosted a separate conference dedicated to applications (aptly named ‘App Planet’) that pitted mobile vendors with app developers in a series of high-intensity workshops and networking sessions. It was at times a shambolic event that will surely improve in its next iterations, but a symbolically important one. It’s also telling that it was sponsored by some of the large mobile operators, who for years have been perceived as being too dictatorial with developers and too greedy with content revenues.
The platform wars: So one of the many big questions of the show was: who are the big facilitators of the application boom—the operators? The handset makers? The software vendors? In a flurry of news on day-one of the show, some of the major operators and phone companies banded together to announce an initiative called the Wholesale Application Community—an effort to try to get themselves back in the market for providing apps for use in mobiles. But the announcement quickly met its sceptics and couldn’t take the spotlight away from Apple (still the app provider extraordinaire, owning 95% of the mobile app market) or the various software and platform vendors who made some of the splashiest news at the show this year: Microsoft made an extraordinary return-from-the-dead announcement with its announcement of Windows Phone 7; Google’s Android, which is starting to drive wide adoption in emerging markets such as China and is widely credited for reviving Motorola’s handset business, found its way into some of the sexiest hardware announced at the show by companies like HTC; Samsung shouted from the rooftops about its new Bada platform, which promised seamless video and one-stop social media integration; and Nokia and Intel banded together to announce yet another oddly-named mobile platform.
Skott Ahn, the head of LG’s handset unit, speculated that mobile software platforms will consolidate to only three within a few years. Many doubt consolidation will be that aggressive—but certainly nobody believes the big mobile operators are going to account for any of these platform ecosystems: A study by Nielsen timed with the MWC found that over 65% of consumers in the next six months will use applications tailored to their personal preferences and location/context. But the catch is that consumers don’t expect to get these services from their carrier—they expect to get them from the likes of Google and Facebook.
Bandwidth: It made for some big headlines this year: Wireless networks are running out of capacity. The FCC chairman called it “a looming spectrum crisis.” Nokia-Siemens Networks CEO Rajeev Suri warned of a ‘mobile data tsunami’ on its way. Operators, who only five years ago were scrambling to find customers for their new networks (in which they had invested billions) now find themselves struggling to catch up with network demand driven by the i-Phone and applications craze. Even as operators add more spectrum, pervasive flat-rates for data services means that the added bandwidth doesn’t necessarily translate to extra revenue, forcing operators to find ways to use networks more efficiently. Mobile operators are struggling to make a business case out of mobile broadband when the acceleration in data traffic volume is outstripping the pace of mobile data revenue growth. So much of the talk at MWC this year was about how to resolve this crisis. There was much talk about how traditional transmission technologies like Fiber and Microwave will benefit from technologies such as Optical Wireless to provide backhaul capacity that is economical as well as future-proof. Vendors discussed the pros and cons of emerging network technologies such as HSPA+ and LTE.
The Gadgets: At its heart, MWC is still about phones and gadgets. Hardware announcements still set the tone for the show. This year was the year of the smartphone: Gone are the days of talking of smartphones as a niche product at the high-end of the market—the smartphone is now mainstream. The ‘iPhone effect’ has had a huge impact on phone design and functionality in the last years, causing a flurry of innovation and an increase in computing power and functionality. Hardware is now also inextricably bound to software and applications. This year’s buzz at the show was around ‘integrated apps’ —meaning that all of your personal ‘feeds’ (email, social media updates, messaging, photos, etc) are accessible easily and intuitively through icons directly from your phone’s home screen, without the need to open/close applications. Samsung and HTC made plenty of noise around this trend. A few of the manufacturers showed off phones and notebooks fitted for advanced networks. Touch-screens continue to make news, and the economics of the hardware market mean that new phone/device categories (different types for different users) are born all the time and almost any brand out there can make and brand its own phone.
Thanks to all and see you at next year’s show.