William Dudley Devices, Network, Payments, Predictions, SMS

2012 Wrap-up and 2013 Predictions for the Mobile Industry

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This post first appeared on my SAP Blog on January 9, 2013.

For the sixth consecutive year, I am happy and honored to offer my 2013 mobile industry predictions, along with a review of how well I did for 2012.  This year has been another banner year for mobile: Everything from Apple news to networks (LTE deployments and RCS as well) to mobile commerce.  Today, an ever-increasing number of subscribers are using smartphones and that is a growing, worldwide phenomenon.  In fact, in many markets, smartphone penetration has exceeded 50% and continues to grow.

Looking back on prediction accuracy, I was 73% accurate in 2008, 80% accurate in 2009, 77.5% accurate in 2010, and 78.3% accurate in 2011.  So how did I do in 2012?  Let’s have a look, shall we.

1.   After significant industry and political wrangling, AT&T’s bid for T-Mobile will be not go forward. At the end of November, the FCC all but denied the acquisition and AT&T has withdrawn their application.      What really happened: This merger did not happen.  AT&T withdrew the offer and that possible merger is a distant memory, although T-Mobile USA ended up with a premium cash boost and is likely buying the Tier 2 operator: metroPCS.  100%.

2.   The new Apple iPhone (iPhone 5) will support mobile purchases and NFC technology, creating a catalyst for jump-starting NFC-triggered Point of Sale purchases in developed markets.  Apple will provide POS capabilities for merchants wishing to support this capability.       What really happened: I totally missed this; however, iOS 6 did introduce the Passbook – and passbook may be the first inklings of a mobile wallet. Apple is being conservative in its approach to NFC and POS terminals.  But, my prediction was very specific, so I’ll call it a complete miss.  0%

3.   Google/Android will accelerate their mobile payment/purchase/mCRM capabilities to more devices, operators and partner payment networks (e.g. Visa, American Express and others).  However, overall, new mobile payment services will mainly be focused on emerging markets utilizing SMS and USSD.       What really happened:  It is obvious now that Point-of-Purchase mobile options will be slower in coming to the market.  This prediction was predicated on #2 happening; however, emerging market mobile payments continue to grow – offering banking to the unbanked, across many markets in Asia and Africa. In the US, true mobile payments still haven’t advanced to mainstream (with the exception of Google’s payments, that you can now find in many retailers). Near complete miss: 10%.

4.   OTT/NUVO service providers will make significant inroads in non-North American markets, which will begin to stabilize operator SMS traffic in markets where pure-OTT (non-SMS interoperable) players have hurt overall SMS traffic and revenues. Global SMS traffic will grow slightly, overall, but remain stable in developed markets, with emerging markets showing the greatest growth.       What really happened:  OTT/NUVO service providers have continued to gain prominence among subscribers.  While North American traffic growth leveled off and even declined in 2012, overall loss of growth seems to have stabilized, based on our traffic numbers during the latter part of the year. OTT/NUVO traffic looks to be 2.6% of total traffic, on average.  Globally, research from Informa and others still show growth in 2012 – driven by growth in the Americas (non-USA/Canada), Africa, and Europe.  100%

5.   The top U.S. Presidential election candidates will all use mobile engagement to their base and the general electorate as a major means of trying to win votes.  Additionally, given the proliferation of smartphones and devices, there will be a wide variety of apps that will be able to track the campaigns and elections.        What really happened:  For the 2012 Presidential election, both the Romney and Obama campaigns used SMS as well as mobile apps to engage with their voting blocs.  SMS was even used for the first time as a vehicle for campaign donations.  Even in the primaries, candidates leveraged the mobile channels more than ever before.  100%

6.   Don’t count out Research in Motion (RIM) yet; in 2012, they will launch several LTE-capable devices and continue to hold their own as they will still have significant markets and demographics where they will remain dominant.      What Really Happened: RIM announced (and demonstrated) Blackberry 10, this year, a new generation OS. Although it won’t be ready until early 2013, it does have some nifty features including a very thin profile, a new way to handle global LTE (via a software switched LTE antenna), NFC and much more. Unfortunately, this did not happen in 2012, but will in 2013; still, RIM did lose market share, but is still limping along.  I call this a partial.  40%

7.   Windows Phone will begin to make a resurgence in the 2nd part of 2012, partially helped by Nokia devices and as well as their Skype acquisition. By the end of the year, it will surpass Samsung’s Bada moving into the top 4 smartphone platforms:  Android, iOS, Blackberry, Windows Mobile.      What Really Happened: Even though you may see a lot of publicity, television commercials about the Nokia 920 with Windows 8 (and don’t get me wrong, this does have a nice, fresh and powerful look and feel), Windows has dropped to 6th.  From Tomi Ahonen Consulting (estimates as of November 14, 2012):

  1.     Android                70.7% market share on Samsung, Huawei, Sony, HTC, ZTE, LG
  2.     iOS                     15.7% market share on Apple (down from 17% in Q2)
  3.     Blackberry           4.3% market share on RIM devices (down from 5.1% in Q2)
  4.     Bada                   3.0% market share on Samsung
  5.     Symbian              2.0% market share on Nokia
  6.     Windows Phone    1.9% market share on Samsung, HTC, and Nokia

      I’ll have to call this a miss, but not 0%, as Windows Phone 8 and Nokia 920 may drive a late-year resurgence. 20%

8.   Major, global brands will expand their mobile engagement of consumers via multiple mobile channels (e.g. mobile CRM) such as SMS, Mobile Web, Push notifications, location, and dedicated applications.  Some of this will expand to include integrated mobile payments.       What Really Happened: Mobile engagement to consumers accelerated in 2012 across all mobile channels.  Mobile Web and Push as well as apps were the biggest winners; however, SMS also continued to be a major mobile channel to reach consumers.  Apps like Shopkick (an app that rewards customers for walking into and buying in partner stores), Groupon, LivingSocial, and many retailer apps are growing in popularity.   Many of the supporting mobile bonus cards and even gift or reward cards can now be used for payment, via the store-specific apps.  100%

9.   Amazon will not launch a mobile phone in 2012. Amazon looks to be quite savvy in their acceptance of mobile as a channel to reach their consumers and will continue to build on their amazing online library of multimedia content.  Consequently, if they do launch a true mobile phone, it could cause issues with their large Android base of mobile users.  Instead, look for them to support additional mobile platforms.           What Really Happened: Amazon mobile phones rumors won’t go away. For example, it was rumored in the fall that a Kindle / Windows mobile phone was in the works. The rumor persists for 2013.  Amazon has a nicely successful Android and Kindle store for now.  No new mobile platforms, but we might see a Windows 8 store as well next year.  Let’s call this mostly right. 90%.

10.  The operators fight back.  Rich Communications Environments around RCS/RCSe will become more prevalent as alternatives to the myriad of OTT communications that are becoming prevalent in the marketplace today, further leveraging new LTE networks. These will be interoperable with legacy technologies for messaging (SMS/MMS) and voice, but add integrated, rich communications options for users of advanced smartphones.       What Really Happened: joyn happened, that’s what.  Joyn (the GSMA brand for an RCSe implementation) was launched across many operators in Europe, including Movistar, Orange and Vodafone in Spain, becoming the first to offer cross-network RCS.  Additionally, metroPCS in the USA also launched RCS services on its LTE network.  RCS is now discussed hand in hand with LTE networks, and we believe it will become an integrated, prevalent P2P communications solution in the coming years.  All RCS implementations support backward compatibility to SMS/MMS.  100%.

Overall, my 2012 predictions scored 66%.  Not my best year in predictions; however, my primary downfall was my optimism on Apple moving ahead with NFC capabilities in its new iPhone 5 as well as a surge in building out infrastructure for more widespread support of Point-of-Sale mobile payments.  Now, it is obvious that technology will come to us all – eventually; however it is still very fragmented ecosystem with numerous players, partners, operators, card companies, and more all jockeying to see who will become the predominate mobile payment ecosystem in developed markets.  I guess I should know better by now!

Let’s turn to some 2013 predictions.  Well, we’ve made it past of the hype around the supposed end-of-the-Mayan calendar on December 21st, so another banner mobile year is extremely likely.  The one thing that I’ll say about this industry as it never fails to surprise.  2013 will be no exception.  Overall, we’ll see much more emphasis on mobile operators trying to take back the subscriber – and that will be through superior network performance (read: significant LTE build-out), new services like RCS or further partnerships with OTT players.  Secondly, I think we might see some mitigation in pricing for mobile broadband.  As it will become more central to everything we do on mobile networks, including voice, the pricing schemes that are in play today, are not sustainable for all-IP ecosystems.  Finally, the evolution to a more mobile-friendly, cashless society will continue its slow slog towards ubiquitous mobile payments.

Without further introduction, here are my top 10 predictions for 2013 (in no particular order):

1.       The device wars (as some have called them) will continue to reshuffle.  I still have some confidence that Windows Phone will overtake Bada and Symbian in 2013, becoming the 4th place mobile OS behind Android, iOS and Blackberry.  Blackberry 10 will help solidify its 3rd place ranking in 2013, bringing new life to Blackberry, as its innovative LTE models hit the streets.

2.       We will see significant LTE build out by mobile operators around the world, thereby almost doubling the number of LTE networks by the end of 2013.  We should have approximately 160-165 networks at the end of this year.  That means I am expecting greater than 200 commercial LTE networks by the end of 2013.

3.       Of those more than 200 LTE networks, at the end of 2013, we will see more than 50 networks supporting commercial LTE roaming with other networks. Roaming and global ubiquity is a key benefit for LTE; however, due to frequency fragmentation and new infrastructure needs, implementation of LTE roaming is not as easy as it was for 3G.  Virtually all of these networks will utilize IPX and LTE Roaming hubs (e.g. Diameter hubs) to support roaming.

4.       Based on these LTE networks, RCS rollout will continue across the world, with no fewer than 35 operators supporting RCS, by the end of the year.   Many of these will support in-country interoperability.    These will include RCS messaging (IM-like), voice, video and presence-based address books, supported on many devices – both via downloadable apps and OEM-provided RCS clients.

5.       The wide-open SMS-enabled OTT/NUVO community will expand to markets outside the United States, including Western Europe and Asia-Pacific.  This phenomenon will also provide new opportunities for SMS-enabled OTT providers to help stabilize SMS traffic, including working in harmony with mobile operators, where non-SMS-interoperable had previously made some inroads. 

6.       SMS will remain the dominant medium, worldwide.  .   Apple’s overall market share will stay around 15-17% and with more non-iOS devices hitting the market, which means a greater chance that the other party will be a non-iOS device – hence, SMS will be used.  Additionally, SMS remains the dominant communications channel in emerging markets.

7.       Mobile consumer engagement becomes more mainstream in 2013.  This means that within the top 10 shopping apps, more than half are direct-shopping engagement apps such as Groupon, ShopKick or Store-specific Apps to help push both retailers and brands.  We’ll see additional mobile CRM solution apps to engage consumers that will offer even more coupons and rewards to help build brand loyalty than ever before on both national and local levels. Both brick-and-mortar and online brands will benefit from expanded mobile customer engagement.

8.       I’ll go out on a limb again and state that in 2013, we’ll see more options for Point-of-Sale payments through channels such as iOS Passbook, PayPal and a few more without NFC, although more devices with NFC will enter the market.  One more out on a limb prediction:  the next iPhone (6?) will have NFC support, leading to or becoming a catalyst for more consolidation (finally) in the PoS payment market – a good thing for consumers.

9.       A new option to iOS, Android, Blackberry and Windows Mobile will be introduced in 2013 that will steal headlines and pique interest from the top 4.  Will it be Jolla’s Sailfish?  Or something else new, like a browser-based mobile OS.  There is a great deal of innovation in this industry and I think that some in the top 4 will not be the top 4 by the end of this decade.  By the end of 2013, a new mobile OS / platform – possibly supporting emulation modes for various OS’s will enter the market and grow rapidly in market share, attracting a number of OEM device makers.

10.   Mobile Big Data will become prominent as mobile operators begin to understand the importance of the data contained within their CDRs.  CDR data will be brought into the cloud where service providers can run behavioral analytics to provide aggregated demographics, protecting consumer identities,  which can be used to better engage the consumers. 

So there you have it – I think 2013 is poised to be another prosperous mobile year.  There will be plenty headlines, some certain surprises, along with new names and functionality that will become commonplace by the end of year.   Have a safe and healthy new year.