Major Industry Trends
Growing Popularity of Mobile Threatens Fixed-Line Sector
The telecoms industry can be divided into two principal sectors: fixed-line services, and mobile services. The mobile sector has proved the main engine of growth over the past decade, and has proved a boon to many consumers in emerging economies with little or no access to fixed-line services. However, it is not just in the developing world that the growth of mobile services threatens the position of traditional fixed-line operators. Broadband experts in developed economies have also predicted that the mobile-phone network could replace copper wire as the principal method by which people connect to the internet in the next few years.
Increased sales of laptops (which can be connected to the internet via the owner’s mobile-phone connection or via a dongle and a subscription to a mobile services provider), allied to the widespread rollout of high-speed mobile networks, and the falling price of connecting to such networks, have all contributed to the uptake of mobile broadband in developed economies.
Smartphones Selling Well
After years of rapid growth, sales of mobile handsets were dealt a blow by the global economic slowdown. Worldwide mobile phone sales to end-users totaled 1.211 billion units in 2009, a 0.9% decline from 2008, according to Gartner, an IT research and advisory company. However, in the fourth quarter of 2009, the market registered strong single-digit growth again, as mobile phone sales to end-users exceeded the 340 million mark, an 8.3% increase from the fourth quarter of 2008.
“The mobile devices market finished on a very positive note, driven by growth in smartphones and low-end devices,” said Carolina Milanesi, research director at Gartner. “Smartphone sales to end-users continued their strong growth in the fourth quarter of 2009, totaling 53.8 million units, up 41.1% from the same period in 2008. For 2009 as a whole, smartphone sales reached 172.4 million units, a 23.8% increase from 2008. In 2009, smartphone-focused vendors, such as Apple and Research In Motion (RIM), successfully captured market share from other larger device producers, controlling 14.4% and 19.9% of the worldwide smartphone market, respectively.”
In April 2011 Gartner predicted that worldwide smartphone sales would reach 468 million units by the year end, up a whopping 57.7% from 2010. The operating system wars on smartphones seem to be resolving in favor of Google’s Android, which Gartner predicts will become the most popular operating system going into 2012, accounting for 49% of the market. In 2010 Nokia’s Symbian operating system was the clear leader, with 111.5 million units versus Android’s 67.2 million. However, things move rapidly in the smartphone market and the perception that Nokia’s products were lagging behind rivals’ based on the Android model pushed Nokia into a major rethink, a massive company restructuring under a new CEO, and dismal Q2 2011 results. Gartner’s prediction is that by 2011 Nokia will have under 90 million unit sales to end users while Android-based smartphones will rack up almost 180 million unit sales. Nokia has since announced that it is abandoning the Symbian OS for its high-end smartphones and switching to Microsoft’s mobile OS. Gartner’s long-range prediction is for Android to be selling almost 540 million units by 2015, with sales of Microsoft OS smartphones totaling 215 million units. Apple’s iOS is expected to be selling just under 190 million units.
Fixed-Line Sector
The number of fixed-line subscribers around the world as a proportion of the population has been in decline since 2006, according to the International Telecommunication Union (ITU). The figure of fixed-line subscribers amounted to 17.8 per 100 inhabitants in 2009. By contrast, there were 67 mobile phone subscriptions per 100 inhabitants in 2009, with the proportion of mobile phone subscriptions overtaking fixed-line subscriptions in 2002. The ITU says that one important challenge in bringing more people online is the limited availability of fixed broadband access, which is primarily confined to internet users in developed countries and some developing countries. Certainly, the outlook for fixed lines in many parts of the world appears bleak. The ITU says that “promising developments are currently taking place in the mobile broadband sector. The introduction of high-speed mobile internet access in an increasing number of countries will further boost the number of internet users, particularly in the developing world. Indeed, the number of mobile broadband subscriptions has grown steadily and in 2008 surpassed those for fixed broadband.”
According to market research firm Infonetics, the number of mobile phone subscribers will grow to 6.4 billion by 2015, only a fraction less than the current global population of 6.9 billion. By 2010 the Asia-Pacific region accounted for nearly half of all mobile subscribers. The number of wireless broadband subscribers hit 500 million worldwide in 2010, according to Infonetics.
Market Analysis
New Mobile Technologies
In March 2010, Gartner outlined the major technologies that would influence the development of the mobile handset market in 2010 and 2011. The 10 technologies included:
Bluetooth (3 and 4)
Two new Bluetooth versions emerged by 2011: Bluetooth 3 introduces 802.11 as a bearer for faster data transmission, and Bluetooth 4 introduces a new low-energy (LE) mode that will enable communication with external peripherals and sensors. Both versions will include other technical improvements to improve battery life and security. Gartner believes that Bluetooth 3 will facilitate corporate and consumer functions demanding large bandwidth (for example, downloading images and videos from handsets). Bluetooth LE will enable a range of new sensor-based business models in industries such as fitness, healthcare, and environmental control, and will be used by handset and PC peripherals to enable new functions, such as PCs that autolock when users move away from them. Devices using Bluetooth 4 are expected to consume a fraction of the power of classic Bluetooth-enabled products, with a battery life of up to a year without recharging. There are some interesting security implications involved in the potential proliferation of a whole new generation of long-life, smart-sensing devices with wireless communications capabilities able to feed data back over a short range to a server.
The Mobile Web
As we have seen in the handset statistics for 2011, more than 85% of handsets shipped globally now include some form of browser. In mature markets, such as western Europe and Japan, approximately 60% of handsets shipped are smartphones with sophisticated browsing capability and the ability to render conventional HTML sites in some manner.
Mobile Widgets
“Widgets” are installable Web applications that use technologies such as JavaScript and HTML. Many handsets support widgets running on their home screens, where they are easily visible and accessible. Despite the lack of standards, widgets provide a convenient way to deliver simple, connected applications, especially those involving real-time data updates (such as weather forecasts, e-mail notifications, marketing, blogs, and information feeds). Because widgets exploit well-understood tools and technologies, they have lower entry barriers than complex native applications, and thus can be a good first step to assess the demand for an application on a specific platform before undertaking expensive native development, according to Gartner.
Platform-Independent Mobile AD Tools
Mobile platforms will become more diverse through 2012, although consolidation will not have started, and, in some markets, five or more platforms may have a significant presence, according to Gartner. Therefore, tools that can reduce the burden of delivering installable applications to several platforms will be very attractive. Platform-independent application development (AD) tools cannot deliver a “write once, run anywhere” equivalent to native code; however, they can significantly reduce the cost of delivering and supporting multiplatform applications that provide a more sophisticated experience than the mobile web and operate outside signal coverage, Gartner concludes.
App Stores
App stores will be the primary (and, in some cases, the only) way to distribute applications to smartphones and other mobile devices, says Gartner. App stores also provide a range of business support functions, such as payment processing, that assist smaller organizations. Gartner believes that app stores will play many roles in an organization’s B2C and B2E strategies. They will be a distribution channel for mobile applications and a commercial channel to sell applications and content (especially in international markets), and they will provide new options for application sourcing. Many applications will exploit ecosystem cloud services, according to Gartner.
Enhanced Location Awareness
Gartner believes that, by the end of 2011, over 75% of devices shipped in mature markets will include a Global Positioning System (GPS) sensor. GPS will be the primary, but not the only, means of establishing handset location. Wi-fi and cell ID systems will remain important in situations where GPS is unavailable or unreliable. The popularity of location-aware handsets will enable a wide range of B2E and B2C location-aware applications, and will serve as a foundation for more-sophisticated contextual applications in the future. However, organizations must be sensitive to local privacy regulations, ensure that applications that expose location are “opt in,” and remain on alert for new risks and concerns that will be raised by location awareness, according to Gartner.
Cellular Broadband
During 2011, the availability of multimegabit wireless broadband will continue to grow as mobile networks enhance their broadband performance. Continuous improvements in wireless broadband performance will increase the range of applications that no longer require fixed-line networking, and will make cellular broadband either a highly effective fallback when fixed connections fail or a real alternative to fixed lines. Embedded cellular networking will become a standard feature of many corporate laptops, and will enable new types of network-connected devices and business models, such as e-books and media players, says Gartner.
Touchscreens
Touchscreens are emerging as the dominant user interface for large-screen handsets, and are already included in more than 60% of mobile devices shipped in western Europe and North America in 2011. Touch-enabled devices will also make increasing use of techniques such as haptics (touch feedback) to enhance user experience. Organizations developing native handset applications may need to exploit single and multitouch interfaces and haptics to give their applications a compelling and competitive user experience.
M2M
Many network service providers increased their commitment to machine-to-machine (M2M) in 2009, so a good range of both national and multinational M2M service options became available in mature markets during 2011. Although the M2M market is very fragmented, it is growing at more than 30% per year, and Gartner says that low-cost M2M modules will enable a wide range of new networked devices and business models. Key applications include smart grid, meter reading, security/surveillance, automotive systems, vending and point of sale, remote monitoring, and track and trace.
Device-Independent Security
This isn’t strictly a single technology, but refers to a collection of security technologies, application technologies, and sourcing options that enable the provisioning of applications that are secure, but less tightly tied to specific devices and platforms, and that, in many cases, do not require security tools to be installed on the client, according to Gartner. Device-independent tools cannot provide the rigor of fully installed security, but a blend of several of these tools can enable CIOs to deliver applications that can run on a wider range of devices while reducing security risks, says Gartner.
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