Apple/Google spat represents opening shot in high-stakes wireless data battle

EL SEGUNDO, USA: Apple Inc.’s recent move to reject Google Inc.’s Google Voice software from its App Store represents an initial skirmish in the escalating battle among wireless operators, cell phone makers, and content developers and aggregators over who will control revenue generated by applications and data services, according to iSuppli Corp.

Google Voice is a free Voice-Over-Internet-Protocol (VOIP) application that provides no-cost phone calls in the United States along with a range of services, including call screening, voice mail with transcriptions and Short Messaging Service (SMS).

With Apple not giving a reason for rejecting Google Voice, speculation has been rife that the company’s wireless operator for the iPhone—AT&T—demanded the application’s denial, fearing it could erode its service revenue from iPhone subscribers.

Apple’s move, and the news following afterward that Eric Schmidt—chief executive officer of Google—would resign from Apple’s board, reflect changing circumstances in the global wireless industry due the rise of data applications and services for the new generation of smart phones.

“The explosive growth in wireless data service revenues, mobile applications and smart-phone device unit shipments during the past two years is spurring a dramatic shift for the global cell phone industry,” said Dr. Jagdish Rebello, director and principal analyst with iSuppli.

“Companies including Apple, Google, Nokia, RIM and Microsoft are trying to muscle in on the wireless carriers for a share of the lucrative and growing mobile premium content, service and application pies. Regardless of who wins, this battle will alter the balance of power in the mobile value chain.”

Global revenue for wireless data services, excluding messaging, is projected to grow by 26.2 percent to reach $87.7 billion in 2009. This follows 57.1 percent growth in 2007 and a 60.3 percent expansion in 2008 for total data revenue among the world’s wireless carriers.

iSuppli is forecasting that total data revenues of carriers worldwide, excluding messaging, will grow to approximately $188 billion by 2013. In contrast, total revenues for all services offered by the world’s wireless carriers will remain roughly flat at approximately $866 billion in 2009.

Mobile applications, such as those on Apple’s App Store, are key to stimulating the data service revenue growth.

“Clearly, mobile data revenue is key to the continued health of wireless carriers and the cell phone value chain in the future,” Rebello said. “In this battle, ownership of customers and who can monetize data services and applications are up for grabs.”

Apple’s rejection of Google Voice is a dramatic illustration of this fight for data revenues.

“By introducing applications and services that allow customers to make calls and send text messages without paying the operators, wireless operators have no incentive to invest in network upgrades,” Rebello said.

“This is the reason why many carriers are pushing out the upgrades of their networks to 2010/2011, compared to 2009/2010 before. With billions of dollars in expected investments, the stakes are huge for the wireless carriers.”

The figure presents iSuppli’s forecast of global wireless data revenue excluding messaging revenue.

iSuppli: Global Wireless Operator Non-Messaging Data Revenue by Country (Millions of US Dollars)Source: iSuppli, Aug. 2009

Wireless carrier success strategies
To sustain the growth momentum in data revenues while maintaining their relations with other players in the value chain, wireless carriers must develop and implement carefully thought-out business models. Operators need to develop strategies that are built around four central tenets:

* Monetizing broadband access.
* Co-operating with the mobile value chain to develop and offer compelling applications and content.
* Offering revenue-generating services that take advantage of mobility.
* Leveraging mature billing capabilities and inherent customer trust to develop new applications that can take the industry to the next level.

Specifically, it’s critical for wireless service providers to implement new strategies and to develop business models optimized for each of the different revenue opportunities in mobile broadband access, content and applications marketing and value-added service offerings

“Failure to do so will result in contraction in data and total revenues, excessive subscriber churn and a slowdown in market development,” Rebello warned.

Low-cost handsets to account for over half of all mobile phones by 2014

HAMPSHIRE, UK: New research has shown how the mobile handset market is becoming increasingly polarised between low cost handsets for emerging markets and high-end smartphones for developed regions –- with the mid-range handset market being squeezed.

Low-cost handsets and smartphones will together account for almost 79 percent of all new mobile phones by 2014, or just over 1 billion units in all. Operators and vendors are preparing to deal with a massive influx of new users from low-income socio-economic groups in developing markets and a rising demand for complex ‘smart’ devices from affluent users in developed markets.

Vendors such as Nokia, Apple and RIM (makers of Blackberry) are well positioned to benefit from these trends whilst players operating more in the mid range market such as Sony Ericsson and Motorola are having to rethink their strategy.

According to Low-cost handsets report author Andrew Kitson: “Low-cost handset shipments will number more than 700 million in 2014, up by 31 percent from levels seen in 2008, albeit down slightly from a peak of 716 million in 2012 as some users begin to upgrade to costlier devices.

“At the same time, smartphone shipment volumes will grow continuously across the forecast period, reaching almost 360 million by the end of the period. We therefore expect that mid-range device sales volumes will fall by more than 41 percent over the period.”

Other findings from the low-cost handsets research include:
* In 2008, the Indian Sub Continent region accounted for the majority (23 percent) of low-cost handset sales, due to efforts by operators such as Vodafone to meet low-income users’ needs in markets such as India: by 2014, the region will account for 22 percent of sales.

* Take-up in emerging markets will be boosted by the availability of low-cost, highly targeted localised information services, such as Nokia’s Life Tools offering.

Mobile handset inventories bulk up

NEW YORK, USA: The handset vendors are still telling us it is a frosty market out there but there is a spring in their step as 2Q-2009 results start to pour in.

“269 million handsets were shipped in 2Q-2009,” says Jake Saunders, VP for Forecasting at ABI Research. “That bodes well for 2H-2009. Shipments should build sequentially in a constructive manner with 4Q-2009 potentially returning the industry to better sales form.”

North America may be struggling to shrug off its economic woes, but Asian economies have been lifted by regional stimulus packages and by an anticipation of improved retail sales conditions in the latter part of 2H-2009. ABI Research is revising downwards its forecast 2009 contraction to -7.5 percent from -8.1 percent (1.11 billion).

Samsung (19.4 percent) and LG (11.1 percent) did particularly well. LG notched up a 2.2 percent increase in percentage points, Samsung, 1.45 percent. Nokia staged a remarkable swing in fortunes to achieve a 1.67 percent percentage point increase to 38.3 percent. Nokia is doing all it can to get a number of smartphone models into the market.

It will be interesting to see how Nokia’s market share holds up in 2H-2009, as Samsung and LG have carried out major refreshes to their smartphone product lineups. Sony-Ericsson experienced a 0.56% percent point reduction in its market-share while Motorola and RIM also saw contractions.

“It is well documented that smartphones are proving to be one of the main engines of growth, but they are not just benefiting the Tier 1 players”, says practice director Kevin Burden.

“A number of Tier 3 vendors are also making headway in a competitive market, including Apple and HTC but also vendors such as Huawei and ZTE. While a consolidation is widely expected in the industry, it will not be happening in 2009.”

The pressures for consolidation may not necessarily come from tightening shipment volumes but also from greater integration of hardware, OS and applications development. ASPs for smartphones are higher than the overall average, and have supported R&D to date; but in such a competitive environment, the R&D pricetag can only go up.

Mobile UC: high on vendor agenda

UK: Comment from Claudio Castelli, Senior Analyst, Ovum.

There are many different types of player involved in providing end-to-end UC solutions to mobile users. Carriers, IP telephony vendors, handset manufacturers, application developers and system integrators all have a role to play in mobile UC. Vendors are currently taking the lead. Several have recently launched mobile UC products and are now promoting the ecosystem required to drive their solutions into the market.

Cisco has announced Collaboration in Motion, which expands its enterprise mobility strategy introduced last year with Cisco Motion. The approach combines its own products with a new programme for third-party vendors and partners. Significantly, it also includes Cisco’s own professional services, which we think is especially important at the beginning of a solution cycle.

Cisco relies primarily on its traditional SI partners as channels to market. The unified wireless network approach to mobility on-premises and off-premises currently focuses on delivering solutions to enterprises rather than hosting by service providers.

Another new offering comes from Research in Motion (RIM). Unlike Cisco, it favours its carrier channels. As an important player in enterprise mobility, RIM is also working to solve the puzzle behind mobile UC. It has repositioned its Mobile Voice Solutions (MVS), acquired from Ascendent in 2006, and recently announced deeper integration with Cisco Unified Communication Manager.

Current economic climate to frustrate expectations
Despite the excitement among vendors, there might be one dark cloud on the horizon, at least in the short term. Our recent research with MNCs found that some large enterprises are likely to delay significant UC integration and fixed–mobile convergence (FMC) implementation projects while they look to cut costs during the financial downturn.

Unique enterprise requirements must be understood
We believe that vendors are doing a good job in developing solutions to help the ‘standard’ enterprise to be more efficient but they are not putting enough effort into understanding the detailed business requirements of each company.

UC strategies need to be more than just technical solutions that provide fancy functionality. It is important to develop a better understanding of the factors that motivate people to connect, share and collaborate with each other. The increased collaboration supported by UC will translate into business benefits according to the profile, culture and social character of each enterprise.

Mobile UC will bring substantial benefits to enterprises but not every company will value it in the same way.

HP, RIM announce strategic BlackBerry alliance

PALO ALTO, USA: HP and Research In Motion (RIM) announced they are establishing a strategic alliance to deliver a portfolio of solutions for business mobility on the BlackBerry platform.

The solutions, which include support for BlackBerry® Enterprise Server 5.0, are focused on increasing service levels, reducing operations costs and improving productivity for customers.

HP and RIM plan to design and launch offerings to increase the productivity levels of the growing number of global mobile employees, enabling businesses to extend the return on their investments in mobility.

“As businesses look for new ways to increase service levels, reduce operational costs and improve productivity, they can meet these challenges by transforming how they manage the infrastructure that powers their mobile workforces,” said Ann Livermore, executive vice president, Technology Solutions Group, HP. “Emerging models of communications and collaboration have created an opportunity for RIM and HP to provide service-based mobile solutions that deliver value to customers.”

“RIM and HP are working together to deliver solutions to customers that weave mobility into their daily operations – from innovative new services in the cloud to managed mobile services for the enterprise,” said Jim Balsillie, co-chief executive officer, Research In Motion. “Through our collaboration with HP, businesses will have access to an expanded set of applications and services for their BlackBerry smartphone deployments.”

At this year’s Wireless Enterprise Symposium (WES) in Orlando, Fla., HP will be demonstrating two new solutions -– HP CloudPrint for BlackBerry smartphones and HP Operations Manager for BlackBerry Enterprise Server.

HP CloudPrint for BlackBerry Smartphones
HP CloudPrint for BlackBerry smartphones is a web services based solution that allows users to print emails, documents, photos and web pages using a BlackBerry smartphone, wherever they are -– in the office, at home or on the road.

The CloudPrint service enables mobile users to easily print to the nearest printer. The service is printer-agnostic and driverless and requires simple Internet access. HP and RIM plan to make CloudPrint available to BlackBerry Internet Service subscribers as well as BlackBerry Enterprise Server customers.

The CloudPrint technology was invented by HP Labs, the company’s central research arm.

HP Operations Manager for BlackBerry Enterprise Server
HP also is introducing software to centrally monitor and manage the extended BlackBerry solution ecosystem, whether it is virtual or physical. This ecosystem includes the BlackBerry Enterprise Server software, mail servers, databases, Microsoft Active Directory and server operating systems such as Windows Server.

Plans also include extending the capabilities of the monitoring solution to provide an end to end view of enterprise applications running on the BlackBerry platform.

HP Operations Manager for BlackBerry Enterprise Server correlates events from each part of the mobile ecosystem to help customers pinpoint potential issues and take corrective actions to remediate them.

This single console reduces costs associated with monitoring multiple consoles and provides customers with a consolidated view into events, enabling them to manage performance and deliver optimal service levels for BlackBerry messaging services.

In addition, HP delivers services and products to optimize customers’ mobility infrastructures:

Managed BlackBerry Services
Managed BlackBerry Services, part of EDS Mobile Workplace Services, allow organizations to outsource the management of their BlackBerry smartphone deployments so they can focus on their core businesses. The services are designed to integrate the mobility ecosystems for large enterprises, whether they are hosted in EDS’ data centers or in a client’s own environment.

Currently, EDS manages close to 500,000 BlackBerry smartphones for clients.
HP ProLiant servers trusted to run BlackBerry Enterprise Server

HP’s enterprise customers can use HP ProLiant servers to run BlackBerry Enterprise Server software. The latest generation of HP ProLiant G6 servers brings together the best HP innovations in energy efficiency, virtualization and services to enable large and small customers to do more with less. HP redefines server economics to deliver double the performance of previous generations, enabling customers to get more value out of every IT dollar.

Shane Robison, HP executive vice president and chief strategy and technology officer, will deliver a keynote address at the Wireless Enterprise Symposium 2009 in Orlando, Fla., on May 6.